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CNL RETIREMENT PROPERTIES, INC.
(Formerly CNL Health Care Properties, Inc.)
Supplement No. 2, dated September 5, 2000
to Prospectus, dated March 31, 2000
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This Supplement is part of, and should be read in conjunction with, the
Prospectus dated March 31, 2000. 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.
Information as to the Property acquired by the Company is presented as
of August 3, 2000, and all references to the Property acquisition should be read
in that context. Proposed properties for which the Company receives initial
commitments, as well as property acquisitions that occur after August 3, 2000,
will be reported in a subsequent Supplement.
RECENT DEVELOPMENTS
On April 20, 2000, the Company acquired a Brighton Gardens(R) by
Marriott(R) assisted living Property located in Orland Park, Illinois. The
assisted living community, which is located southwest of Chicago, is
approximately six miles from two medical facilities, Palos Community Hospital
and Oak Forest Community Hospital, and less than two miles from the Orland
Square Shopping Center. According to a report published by Project Market
Decision and Claritas, a research and data collection firm, the greater Chicago
area is the third largest seniors market in the country with more than 263,800
seniors age 75 and older. The number of seniors in the ten-mile area surrounding
the Property is expected to grow by 11% between 1999 and 2004. The newly
constructed assisted living Property, which commenced operations in October
1999, has 106 units. The Company' s interest in the Property is focused on real
estate only, not assisted living operations. The Company has entered into a
long-term, "triple-net" lease with the tenant of this Property.
As a result of the acquisition of the Property in Orland Park,
Illinois, and the commencement of rental income under the lease, the Company
increased its monthly distribution rate, effective April 20, 2000, to an
annualized rate of 7%. See "Distribution Policy" for information on how
distributions are declared.
At a special meeting of stockholders of CNL Health Care Properties,
Inc. (the "Company"), held on August 22, 2000, the stockholders approved an
amendment to the Company's Amended and Restated Articles of Incorporation
proposed by the Board of Directors to change the Company's name. Effective
August 24, 2000, the Company changed its name to CNL Retirement Properties, Inc.
The Board of Directors believes that this will provide better name recognition
of the Company in the context of its business.
THE OFFERINGS
As of August 3, 2000, the Company had received subscription proceeds of
$9,013,762 (901,376 Shares). As of August 3, 2000, net proceeds to the Company
from its offering of Shares and capital contributions from the Advisor, after
deduction of Selling Commissions, marketing support and due diligence expense
reimbursement fees and Organizational and Offering Expenses of three percent
totalled approximately $8,200,000. The Company had used approximately $5,800,000
of Net Offering Proceeds and $8,100,000 in advances relating to its line of
credit, described in "Business -- Borrowing," to invest approximately
$13,900,000 in one assisted living Property . As of August 3, 2000, the Company
had repaid advances totalling $1,785,000 relating to its line of credit and had
paid approximately $880,000 in Acquisition Fees and Acquisition Expenses,
leaving approximately $265,000 of Net Offering Proceeds available to invest in
Properties and Mortgage Loans.
<PAGE>
As described in "The Offering" section of the Prospectus, the Board of
Directors may determine to engage in future offerings of Common Stock. In
connection therewith, the Board of Directors has approved a second offering by
the Company of up to 15,500,000 Shares, of which up to 500,000 Shares are being
offered to participants in our Reinvestment Plan in connection with the second
offering. The second offering will be at the same price and on substantially the
same terms as this offering. The Company will not commence the second offering
until after the completion of this offering.
The Company currently anticipates that any net offering proceeds
received from the second offering will be invested in health care and seniors'
housing Properties or, to a lesser extent, to make Mortgage Loans to operators
of Health Care Facilities. The Company believes that the net proceeds received
from the second offering and any additional offerings will enable the Company to
continue to grow and take advantage of acquisition opportunities until such
time, if any, that the Company lists on a national exchange. Under the Company's
Articles of Incorporation, if the Company does not list by December 31, 2008, it
will commence an orderly liquidation of its assets, and the distribution of the
proceeds therefrom to its stockholders.
RISK FACTORS
FINANCING RISKS
The following information updates and replaces the first full paragraph
on page 19 of the Prospectus.
We have no commitment for long-term financing. We intend to obtain
long-term financing; however, we have not yet obtained a commitment for any
long-term financing, and we cannot be sure that we will be able to obtain any
long-term financing on satisfactory terms. If we do not obtain long-term
financing, we may not be able to acquire as many properties or make as many
loans and leases as we anticipated, which could limit the diversification of our
investments and our ability to achieve our investment objectives.
MANAGEMENT COMPENSATION
For information concerning compensation and fees paid to the Advisor
and its Affiliates since the date of inception of the Company, see "Certain
Relationships and Related Transactions."
CONFLICTS OF INTEREST
The following information updates and replaces the Conflicts of
Interest table beginning on page 33 of the Prospectus.
The Company will be subject to various conflicts of interest arising
out of its relationship to the Advisor and its Affiliates, as described below.
<PAGE>
The following chart indicates the relationship between the Company, the
Advisor and CNL Holdings, Inc., including its Affiliates that will provide
services to the Company.
CNL Holdings, Inc. (1)
Subsidiaries, Affiliates and Strategic Business Units
Capital Markets: Retail:
CNL Capital Markets, Inc. (2) Commercial Net Lease Realty, Inc.(8)
CNL Investment Company
CNL Securities Corp. (3) Restaurant:
CNL Asset Management, Inc. CNL American Properties Fund, Inc.(9)
CNL Institutional Advisors, Inc.
Hospitality:
Administrative Services: CNL Hospitality Properties, Inc. (6)
CNL Shared Services, Inc. (4)
Health Care:
Real Estate Services: CNL Retirement Properties, Inc.
CNL Real Estate Services, Inc. (5)
CNL Hospitality Corp. (6) Financial Services:
CNL Hotel Development Company CNL Finance, Inc.
CNL Retirement Corp. (7) CNL Capital Corp.
CNL Retirement Development Corp.
CNL Realty & Development Corp.
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(1) CNL Holdings, Inc. is the parent company of CNL Financial Group, Inc.
(formerly CNL Group, Inc.) and its affiliates. James M. Seneff, Jr.,
Chairman of the Board and Chief Executive Officer of the Company,
shares ownership and voting control of CNL Holdings, Inc. with Dayle L.
Seneff, his wife.
(2) CNL Capital Markets, Inc. is a wholly owned subsidiary of CNL Financial
Group, Inc. and is the parent company of CNL Investment Company.
(3) CNL Securities Corp. is a wholly owned subsidiary of CNL Investment
Company and has served as managing dealer in the offerings for various
CNL public and private real estate programs, including the Company.
(4) CNL Shared Services, Inc. is a wholly owned subsidiary of CNL Holdings,
Inc., and together with other Affiliates provides administrative
services for various CNL entities, including the Company.
(5) CNL Real Estate Services, Inc., a wholly owned subsidiary of CNL
Financial Group, Inc., is the parent company of CNL Hospitality Corp.,
CNL Retirement Corp. and CNL Realty & Development Corp.
(6) CNL Hospitality Properties, Inc. is a public, unlisted REIT. James M.
Seneff, Jr. holds the positions of Chief Executive Officer and Chairman
of the Board, and Robert A. Bourne holds the positions of President and
Vice Chairman of the Board of CNL Hospitality Properties, Inc. CNL
Hospitality Corp., a majority owned subsidiary of CNL Real Estate
Services, Inc., provides management and advisory services to CNL
Hospitality Properties, Inc. pursuant to an advisory agreement.
(7) CNL Retirement Corp., a wholly owned subsidiary of CNL Real Estate
Services, Inc., provides management and advisory services to the
Company pursuant to the Advisory Agreement.
(8) Commercial Net Lease Realty, Inc. is a REIT listed on the New York
Stock Exchange. Effective January 1, 1998, CNL Realty Advisors, Inc.
and Commercial Net Lease Realty, Inc. merged, at which time Commercial
Net Lease Realty, Inc. became self advised. James M. Seneff, Jr.
continues to hold the positions of Chief Executive Officer and Chairman
of the Board, and Robert A. Bourne continues to hold the position of
Vice Chairman of the Board of Commercial Net Lease Realty, Inc.
<PAGE>
(9) CNL American Properties Fund, Inc. is a public, unlisted REIT.
Effective September 1, 1999, CNL Fund Advisors, Inc., CNL Financial
Services, Inc., CNL Financial Corp. and CNL American Properties Fund,
Inc. merged, at which time CNL American Properties Fund, Inc. became
self advised. James M. Seneff, Jr. continues to hold the position of
Chairman of the Board and Robert A. Bourne continues to hold the
position of Vice Chairman of the Board of CNL American Properties Fund,
Inc.
COMPETITION TO ACQUIRE PROPERTIES AND INVEST IN MORTGAGE LOANS
The following information updates and replaces the second paragraph on
page 35 of the Prospectus.
The Company will supplement this Prospectus during the offering period
to disclose the acquisition of a Property at such time as the Advisor believes
that a reasonable probability exists that the Company will acquire the Property,
including an acquisition from the Advisor or its Affiliates. Based upon the
experience of management of the Company and the Advisor and the proposed
acquisition methods, a reasonable probability that the Company will acquire a
Property normally will occur as of the date on which (i) a commitment letter is
executed by a proposed lessee, (ii) a satisfactory credit underwriting for the
proposed lessee has been completed, (iii) a satisfactory site inspection has
been completed and (iv) a nonrefundable deposit has been paid on the Property.
CERTAIN CONFLICT RESOLUTION PROCEDURES
The following information updates and replaces Item 3 on page 37 of the
Prospectus.
3. The Company will not make loans to the Sponsor, Advisor, Directors
or any Affiliates thereof, except (A) mortgage loans subject to the restrictions
governing mortgage loans in the Articles of Incorporation (including the
requirement to obtain an appraisal from an independent expert) or (B) to wholly
owned subsidiaries of the Company. Any loans to the Company by the Advisor or
its Affiliates must be approved by a majority of the Directors (including a
majority of the Independent Directors) not otherwise interested in such
transaction as fair, competitive, and commercially reasonable, and no less
favorable to the Company than comparable loans between unaffiliated parties. It
is anticipated that the Advisor or its Affiliates shall be entitled to
reimbursement, at cost, for actual expenses incurred by the Advisor or its
Affiliates on behalf of the Company or Joint Ventures in which the Company is a
co-venturer, subject to the 2%/25% Guidelines (2% of Average Invested Assets or
25% of Net Income) described in the section of the Prospectus entitled "The
Advisor and the Advisory Agreement -- The Advisory Agreement."
BUSINESS
GENERAL
The following information updates and replaces the second full
paragraph and the first table on page 43 and the first and second paragraphs on
page 44 of the Prospectus.
The Company believes that demographic trends are significant when
looking at the potential for future growth in the health care industry. For
1999, the Administration on Aging found there were over 34.4 million Americans
over the age of 65, representing approximately 13% of the U.S population or
about one in eight Americans. According to statistics cited from Age Power: How
the 21st Century Will Be Ruled by the New Old, by Ken Dychtwald, Ph.D., today's
baby boomers (those born between 1946 and 1964) will begin reaching age 65 as
early as 2011. Baby boomers will grow in number to 60 million "elder boomers"
and will be a large percentage of the approximately 75 million seniors by the
year 2035. According to data released from the U.S. Bureau of Census in January
2000, the elderly population is projected to more than double between now and
the year 2050, to 80 million. As illustrated below, most of this growth is
expected to occur between 2010 and 2030 when the number of elderly is projected
to grow by an average of 2.8% annually.
<PAGE>
Elderly Population Estimates
Date Over 85 Population (000) Over 65 Population (000)
----------------- --------------------------- --------------------------
July 1, 1998 4,054 34,401
July 1, 2000 4,312 34,835
July 1, 2005 4,968 36,370
July 1, 2010 5,786 39,715
July 1, 2015 6,396 45,959
July 1, 2020 6,763 53,733
July 1, 2025 7,441 62,641
July 1, 2030 8,931 70,319
July 1, 2035 11,486 74,774
July 1, 2040 14,284 77,177
July 1, 2045 17,220 79,142
July 1, 2050 19,352 81,999
Source: U.S. Bureau of Census
Based on information from the Economic and Statistic Administration of
the U.S. Department of Commerce, management believes that all of these trends
suggest that as more people live to the oldest ages, there may also be more who
face chronic, limiting illnesses or conditions. These conditions result in
people becoming dependent on others for help in performing the activities of
daily living. According to the Health Care Financing Administration, nearly one
quarter of all seniors over age 65 have health problems severe enough to limit
their ability to perform one or more activities of daily living. The U.S.
General Accounting Office anticipates that the number of older people needing
assistance with activities of daily living will increase to 14 million by 2020,
from 7 million in 1994.
In addition to an aging population, according to 1997 data from the
U.S. Department of Commerce, a significant segment of the elderly population has
the financial resources to afford seniors' housing facilities, with people age
55 to 64 making a mean household income of $58,000 per year. The mean household
income for those age 65 and over is more than $33,000 per year. In addition,
according to June 30, 1999 data from the U.S. Bureau of Census, the average
household wealth for those age 65 and over exceeds the national average for all
age groups by 54%, and 27% of those households have an annual income in excess
of $50,000. According to statistics cited from Age Power: How the 21st Century
Will Be Ruled by the New Old, men and women now in their 50s and older control
80% of all the money in U.S. savings-and-loan institutions and represent $66 of
every $100 invested in the stock market. Individuals age 50 and over currently
earn approximately $2 trillion in annual income, control more than $7 trillion
in wealth and own 77% of the financial assets in America.
America's seniors are also preparing for their future health care
needs. They currently purchase more than 90% of long-term care insurance,
representing $800 million in premiums, a figure growing 23% each year. American
families are also exploring current and future health care needs. An estimated
22 million households are involved in elder care, a number that has tripled over
the past decade and is expected to double in the next two decades. According to
an April 2000 Newsweek article, more than 62% of today's baby boomers are
concerned about care for an aging parent or relative.
More than 70% of working-age Americans believe a comfortable retirement
is a fundamental part of the American dream according to Age Power: How the 21st
Century Will Be Ruled by the New Old. To adequately prepare for future
retirement needs, it is estimated that the baby boom generation will need to
have saved at least $1 million per household to maintain their standard of
living.
Management believes that other changes and trends in the health care
industry will create opportunities for growth of seniors' housing facilities,
including (i) the growth of operators serving specific health care niches, (ii)
the consolidation of providers and facilities through mergers, integration of
physician practices, and elimination of duplicative services, (iii) the
pressures to reduce the cost of providing quality health care, (iv) more
dual-income and
<PAGE>
single-parent households leaving fewer family members available for in-home care
of aging parents and necessitating more senior care facilities, and (v) an
anticipated increase in the number of insurance companies and health care
networks offering privately funded long-term care insurance.
INVESTMENT OF OFFERINGS PROCEEDS
The following information updates and replaces the last full paragraph
on page 47 of the Prospectus.
The Company has undertaken to supplement this Prospectus during the
offering period to disclose the acquisition of Properties at such time as the
Company believes that a reasonable probability exists that any such Property
will be acquired by the Company. Based upon the experience and acquisition
methods of the Affiliates of the Company and the Advisor, this normally will
occur, with regard to acquisition of Properties, as of the date on which (i) a
commitment letter is executed by a proposed lessee, (ii) a satisfactory credit
underwriting for the proposed lessee has been completed, (iii) a satisfactory
site inspection has been completed and (iv) a nonrefundable deposit has been
paid on the Property. However, the initial disclosure of any proposed
acquisition cannot be relied upon as an assurance that the Company ultimately
will consummate such proposed acquisition or that the information provided
concerning the proposed acquisition will not change between the date of such
supplement and the actual purchase or extension of financing. The terms of any
borrowing by the Company will also be disclosed by supplement following receipt
by the Company of an acceptable commitment letter from a potential lender.
PROPERTY ACQUISITIONS
The following "Property Acquisitions" section updates and replaces the
"Pending Investments" section beginning on page 48 of the Prospectus.
Brighton Gardens(R) by Marriott(R) located in Orland Park, Illinois. On
April 20, 2000, the Company acquired a Brighton Gardens assisted living Property
located in Orland Park, Illinois (the "Orland Park Property") for $13,848,900
from Marriott Senior Living Services, Inc. The Company, as lessor, has entered
into a long-term lease agreement relating to this Property. The general terms of
the lease agreement are described in " -- Description of Property Leases" of the
Prospectus. The principal features of the lease are as follows:
o The initial term of the lease expires on April 24, 2015.
o At the end of the initial lease term, the tenant will have four
consecutive renewal options of five years each.
o The lease requires minimum rent payments of $1,350,268 per year for the
first and second lease years and $1,384,890 for each lease year
thereafter.
o In addition to minimum rent, the lease requires percentage rent equal
to seven percent of gross revenues in excess of the "Baseline Gross
Revenues." The Baseline Gross Revenues will be established when the
facility achieves average occupancy of 93% for four consecutive
quarters.
o A security deposit equal to $553,956 has been retained by the Company
as security for the tenant's obligations under the lease.
o The tenant has established a reserve fund which will be used for the
replacement and renewal of furniture, fixtures and equipment relating
to the assisted living Property (the "FF&E Reserve"). Deposits to the
FF&E Reserve are made every four weeks as follows: 1% of gross receipts
for the first through fourth lease year; 2% of gross receipts for the
fifth through eighth lease year; and 3% of gross receipts every lease
year thereafter.
o Marriott International, Inc. has, with certain limitations, guaranteed
the tenant's obligation to pay minimum rent under the lease. The
guarantee terminates on the earlier of the end of the fifth lease year
or at such time as the net operating income from the Property exceeds
minimum rent due under the lease by 25% for any trailing 12-month
period. The maximum amount of the guarantee is $2,769,780.
The estimated federal income tax basis of the depreciable portion of
the Orland Park Property is approximately $12.5 million.
The Orland Park Property, which opened in October 1999, is a newly
constructed Brighton Gardens by Marriott located in Orland Park, Illinois. The
Orland Park Property includes 82 assisted living units and 24 special care units
for residents with Alzheimer's and related memory disorders. The facility
provides assistance with daily living activities such as bathing, dressing and
medication reminders. Special amenities include a common activities room and
common dining room, a private dining area, library and garden. The assisted
living community, which is located southwest of Chicago, is approximately six
miles from two medical facilities, Palos Community Hospital and Oak Forest
Community Hospital, and less than two miles from the Orland Square Shopping
Center. According to a report published by Project Market Decision and Claritas,
a research and data collection firm, the greater Chicago area is the third
largest seniors market in the country with more than 263,800 seniors age 75 and
older. The number of seniors in the ten-mile area surrounding the Property is
expected to grow by 11% between 1999 and 2004. Other senior living facilities
located in proximity to the Orland Park Property include Victorian Village,
Sunrise of Palos Park, Peace Memorial Village and Arden Courts of Manor Drive.
The average occupancy rate and the revenue per available unit for the period the
assisted living facility has been operational are as follows:
Orland Park Property
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Average Revenue
Occupancy per Available
Year Rate Unit
---- ---- ----
*1999 23.30% $118.11
**2000 41.40% $109.89
* Data for the Orland Park Property represents the period October 11, 1999
through December 31, 1999.
** Data for 2000 represents the period January 1, 2000 through June 16, 2000.
The Company believes that the results achieved by the Property for 1999
and year-to-date 2000, are not indicative of its long-term operating potential,
as the Property had been open for less than twelve months during the reporting
period.
Marriott Brands. Brighton Gardens by Marriott is a quality-tier
assisted living concept which generally has 90 assisted living suites, and in
certain locations, 30 to 45 nursing beds in a community. In some communities,
separate on-site centers also provide specialized care for residents with
Alzheimer's or other memory-related disorders. According to Marriott
International, Inc.'s 1999 Form 10-K, Marriott Senior Living Services, Inc.,
which is a wholly owned subsidiary of Marriott International, Inc., operates 99
assisted senior living communities principally under the names "Brighton Gardens
by Marriott," "Village Oaks," and "Marriott MapleRidge," and 45 independent
living communities. Marriott Senior Living Services, Inc. is one of the largest
participants in the seniors' housing industry with $559 million in sales for
1999. The communities are designed in a comfortable, home-like setting and
provide residents with a sense of community through a variety of activities,
restaurant-style dining, on-site security, weekly housekeeping and scheduled
transportation. The communities are distinguished by an innovative wellness
program that enables residents to remain as independent as possible for as long
as possible, while providing a personally tailored program of services and care.
Marriott Senior Living Services, Inc. has provided seniors with excellent
service and quality care since 1984. In 1999, the American Seniors Housing
Association, a seniors housing trade association, ranked Marriott Seniors Living
Services, Inc. as the nation's second largest manager of senior housing.
SITE SELECTION AND ACQUISITION OF PROPERTIES
The following information updates and replaces the second full
paragraph on page 51 of the Prospectus.
The purchase of each Property will be supported by an appraisal of the
real estate prepared by an independent appraiser. The Advisor, however, will
rely on its own independent analysis and not on such appraisals in determining
whether or not to recommend that the Company acquire a particular property. The
purchase price of each such Property, plus any Acquisition Fees paid by the
Company in connection with such purchase, will not exceed the Property's
appraised value. (In connection with the acquisition of a Property that has
recently been or is to be constructed or renovated, the comparison of the
purchase price and the appraised value of such Property ordinarily will be based
on the "stabilized value" of such Property.) The stabilized value is the value
at the point which the Property has reached its level of competitiveness at
which it is expected to operate over the long term. It
<PAGE>
should be noted that appraisals are estimates of value and should not be relied
upon as measures of true worth or realizable value. Each appraisal will be
maintained in the Company's records for at least five years and will be
available for inspection and duplication by any stockholder.
BORROWING
The following information updates and replaces the last full paragraph
on page 61 of the Prospectus.
On April 20, 2000, the Company entered into an initial revolving line
of credit and security agreement with a bank to be used by the Company to
acquire health care Properties. The line of credit provides that the Company
will be able to receive advances of up to $25,000,000 until April 19, 2005, with
an annual review to be performed by the bank to indicate that there has been no
substantial deterioration, in the bank's reasonable discretion, of the credit
quality. Interest expense on each advance shall be payable monthly, with all
unpaid interest and principal due no later than five years from the date of the
advance. Generally, advances under the line of credit will bear interest at
either (i) a rate per annum equal to LIBOR plus the difference between LIBOR and
the bank's base rate at the time of the advance or (ii) a rate per annum equal
to the bank's base rate, whichever the Company selects at the time advances are
made. The interest rate will be adjusted daily in accordance with fluctuations
with the bank's rate or the LIBOR rate, as applicable. Notwithstanding the
above, the interest rate on the first $9,700,000 drawn will be 8.75% through
April 1, 2002, and thereafter will hear interest at either (i) or (ii) above as
of April 1, 2002. Each loan made under the line of credit will be secured by the
assignment of rents and leases. In addition, the line of credit provides that
the Company will not be able to further encumber the applicable health care
Property during the term of the loan without the bank's consent. The Company
will be required, at each closing, to pay all costs, fees and expenses arising
in connection with the line of credit. The Company must also pay the bank's
attorneys fees, subject to a maximum cap, incurred in connection with the line
of credit and each advance. On April 20, 2000, the Company obtained one advance
totalling $8,100,000 relating to the line of credit. In connection with the line
of credit, the Company incurred an origination fee, legal fees and closing costs
of $55,917. The proceeds were used in connection with the purchase of one health
care Property described in "-- Property Acquisitions."
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>
Six Months Ended
June 30, June 30, 1999
2000 (1) Year Ended December 31,
(Unaudited) (Unaudited) 1999 (1) 1998 (1) 1997 (1)(2)
-------------- ----------------- ---------- ---------- -----------
Revenues $ 368,584 -- $ 86,231 $ -- $ --
Organizational costs -- -- 35,000 -- --
Other operating expenses 211,299 -- 79,621 -- --
Net earnings (loss) 157,285 -- (28,390) -- --
Cash distributions declared (3) 152,525 -- 50,404 -- --
Cash from operations 657,668 -- 12,851 -- --
Funds from operations (4) 214,136 -- (28,390) -- --
Earnings (loss) per Share .24 -- (.07) -- --
Cash distributions declared
per Share .23 -- .13 -- --
Weighted average number of Shares
outstanding (5) 665,899 -- 412,713 -- --
June 30, 2000 June 30, 1999 (1) December 31,
(Unaudited) (Unaudited) 1999 1998 1997
-------------- ----------------- ---------- ---------- -----------
Total assets $15,366,232 $1,592,442 $5,088,560 $976,579 $280,330
Total stockholders' equity 6,149,193 200,000 3,292,137 200,000 200,000
</TABLE>
(1) No operations commenced until the Company received minimum offering
proceeds of $2,500,000 and funds were released from escrow on July 14,
1999. The Company did not acquire its first Property until April 20,
2000; therefore, revenues for the year ended December 31, 1999
consisted only of interest income on funds held in interest bearing
accounts pending investment in a Property.
(2) Selected financial data for 1997 represents the period December 22,
1997 (date of inception) through December 31, 1997.
(3) Cash distributions are declared by the Board of Directors and generally
are based on various factors, including cash available from operations.
For the six months ended June 30, 2000 and the year ended December 31,
1999, 0% and 100%, respectively, of cash distributions represent a
return of capital in accordance with generally accepted accounting
principles ("GAAP"). Cash distributions treated as a return of capital
on a GAAP basis represent the amount of cash distributions in excess of
net earnings on a GAAP basis, including organization costs that were
expensed for GAAP purposes for the year ended December 31, 1999. The
Company has not treated such amount as a return of capital for purposes
of calculating Invested Capital and the Stockholders' 8% Return.
(4) Funds from operations ("FFO"), based on the revised definition adopted
by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT") and as used herein, means net earnings
determined in accordance with GAAP, excluding gains or losses from debt
restructuring and sales of property, plus depreciation and amortization
of real estate assets and after adjustments for unconsolidated
partnerships and joint ventures. FFO was developed by NAREIT as a
relative measure of performance and liquidity of an equity REIT in
order to recognize that income-producing real estate historically has
not depreciated on the basis determined under GAAP. However, FFO (i)
does not represent cash generated from operating activities determined
in accordance with GAAP (which, unlike FFO, generally reflects all cash
effects of transactions and other events that enter into the
determination of net earnings), (ii) is not necessarily indicative of
cash flow available to fund cash needs and (iii) should not be
considered as an alternative to net earnings determined in accordance
with GAAP as an indication of the Company's operating performance, or
to cash flow from operating activities determined in accordance with
GAAP as a measure of either liquidity or the Company's ability to make
distributions. Accordingly, the Company believes that in order to
facilitate a clear understanding of the consolidated historical
operating results of the Company, FFO should be considered in
conjunction with the Company's net earnings and cash flows as reported
in the accompanying financial statements and notes thereto. See
Appendix B-- Financial Information.
(5) The weighted average number of Shares outstanding is based upon the
period the Company was operational.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements generally are characterized by
the use of terms such as "believe," "expect" and "may." Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, the Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include the following: changes in
general economic conditions, changes in local and national real estate
conditions, the availability of capital from borrowings under the Company's Line
of Credit, availability of proceeds from the Company's offering, the ability of
the Company to obtain Permanent Financing on satisfactory terms, the ability of
the Company to continue to identify suitable investments, the ability of the
Company to continue 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. Given these uncertainties, readers are cautioned not
to place undue reliance on such statements.
THE COMPANY
CNL Retirement Properties, Inc. (formerly CNL Health Care Properties,
Inc.) is a Maryland corporation that was organized on December 22, 1997. CNL
Retirement GP Corp. and CNL Retirement LP Corp. are wholly owned subsidiaries of
CNL Retirement Properties, Inc., organized in Delaware in December 1999. CNL
Retirement Partners, LP is a Delaware limited partnership formed in December
1999. CNL Retirement GP Corp. and CNL Retirement LP Corp. are the general and
limited partner, respectively, of CNL Retirement Partners, LP. Assets acquired
are expected to be held by CNL Retirement Partners, LP and, as a result, owned
by CNL Retirement Properties, Inc. through the Partnership. The term "Company"
includes , unless the context otherwise requires, CNL Retirement Properties,
Inc., CNL Retirement Partners, LP, CNL Retirement GP Corp. and CNL Retirement LP
Corp.
The Company was formed to acquire Properties related to 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 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 may also
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 Gross Proceeds.
LIQUIDITY AND CAPITAL RESOURCES
Common Stock Offerings
During the period December 22, 1997 (date of inception) through
December 31, 1998, a capital contribution of $200,000 from the Advisor was the
Company's sole source of capital. On September 18, 1998, the Company commenced
this offering of Shares of Common Stock. As of August 3, 2000, the Company had
received subscription proceeds of $9,013,762 (901,376 Shares), including $50,463
(5,046 Shares) through its Reinvestment Plan. As of August 3, 2000, net proceeds
to the Company from this offering of Shares and capital contributions from the
Advisor, after deduction of Selling Commissions, marketing support and due
diligence expense reimbursement fees and Organizational and Offering Expenses of
three percent totalled approximately $8,200,000. In April 2000, the Company used
approximately $5,800,000 of Net Offering Proceeds and $8,100,000 in advances
relating to its line of credit, described in "Business -- Borrowing," to invest
approximately $13,900,000 in one assisted living Property . As of August 3,
2000, the Company had repaid advances of $1,785,000 relating to its line of
credit and had paid approximately $880,000 in Acquisition Fees and Acquisition
Expenses, leaving approximately $265,000 of Net Offering Proceeds available to
invest in Properties and Mortgage Loans. See "Business -- Property Acquisitions"
for a description of the Property owned as of August 3, 2000. As of August 3,
2000, the Company had not entered into any Mortgage Loans.
On May 19, 2000, the Company filed a registration statement on Form
S-11 with the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to an additional 15,500,000 Shares of Common Stock
($155,000,000) (the "2000 Offering") in an offering expected to commence
immediately following the completion of this offering. Of the 15,500,000 Shares
of Common Stock to be offered, up to 500,000 will be available to stockholders
purchasing Shares through the Reinvestment Plan. The price per Share and the
other terms of the 2000 Offering, including the percentage of gross proceeds
payable (i) to the Managing Dealer for Selling Commissions and expenses in
connection with the offering and (ii) to the Advisor for Acquisition Fees, are
substantially the same as those for this offering.
The Company expects to use any additional Net Offering Proceeds from
the sale of Shares in this offering, plus any net offering proceeds from the
2000 Offering, to purchase additional Properties and, to a lesser extent, make
Mortgage Loans. See "Investment Objectives and Policies" in the Prospectus. 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 borrowings. The Company currently has a $25,000,000 revolving line of
credit available, as described below. The line of credit may be increased at the
discretion of the Board of Directors and may be repaid with offering proceeds,
proceeds from the sale of Assets, working capital or Permanent Financing. The
Company may also obtain Permanent Financing; although, it has not yet received a
commitment for any Permanent Financing, and there is no assurance that the
Company will obtain any Permanent Financing on satisfactory terms. The aggregate
amount of any Permanent Financing shall not exceed 30% of the Company's total
Assets and the maximum amount the Company may borrow is 300% of the Company's
Net Assets. The number of Properties to be acquired and Mortgage Loans to be
invested in will depend upon the amount of net offering proceeds received from
this offering and future offerings and loan proceeds available to the Company.
The amount invested in Secured Equipment Leases is not expected to exceed 10% of
Gross Proceeds.
<PAGE>
Indebtedness
On April 20, 2000, the Company entered into a $25,000,000 revolving
line of credit and security agreement with a bank to be used by the Company to
acquire health care Properties. The line of credit provides that the Company may
receive advances of up to $25,000,000 until April 19, 2005, with an annual
review to be performed by the bank to indicate that there has been no
substantial deterioration, in the bank's reasonable discretion, of the Company's
credit quality. Interest expense on each advance shall be payable monthly, with
all unpaid interest and principal due no later than five years from the date of
the advance. Generally, advances under the line of credit will bear interest at
either (i) a rate per annum equal to London Interbank Offered Rate (LIBOR) plus
the difference between LIBOR and the bank's base rate at the time of the advance
or (ii) a rate equal to the bank's base rate, whichever the Company selects at
the time advances are made. The interest rate will be adjusted daily in
accordance with fluctuations with the bank's rate or the LIBOR rate, as
applicable. Notwithstanding the above, the interest rate on the first $9,700,000
drawn will be 8.75% through April 1, 2002, and thereafter will bear interest at
either (i) or (ii) above as of April 1, 2002. In addition, a fee of 0.5% per
advance will be due and payable to the bank on funds as advanced. Each advance
made under the line of credit will be collateralized by the assignment of rents
and leases. In addition, the line of credit provides that the Company will not
be able to further encumber the applicable Property during the term of the
advance without the bank's consent. The Company will be required, at each
closing, to pay all costs, fees and expenses arising in connection with the line
of credit. The Company must also pay the bank's attorneys fees, subject to a
maximum cap, incurred in connection with the line of credit and each advance.
During the six months ended June 30, 2000, the Company obtained an advance for
$8,100,000 and repaid $1,300,000 relating to the line of credit. In connection
with the line of credit, the Company incurred an origination fee, legal fees and
closing costs of $55,917. The proceeds were used in connection with the purchase
of a Property.
The Company may be subject to interest rate risk through any
outstanding balances on its variable rate line of credit. The Company may
mitigate this risk by paying down any outstanding balances on the line of credit
from offering proceeds should interest rates rise substantially.
Property Acquisition and Investments
On April 20, 2000, the Company acquired its first Property, a
private-pay assisted living community in Orland Park, Illinois. In connection
with the purchase of the Property, the Company, as lessor, entered into a
long-term, triple-net lease agreement.
As of August 3 , 2000, the Company had not entered into any
arrangements creating a reasonable probability that an additional Property would
be acquired or a particular Mortgage Loan or Secured Equipment Lease would be
funded. The Company is presently negotiating to acquire additional Properties,
but as of August 3, 2000, the Company had not acquired any such Properties or
entered into any Mortgage Loans.
Cash and Cash Equivalents
Until Properties are acquired, or Mortgage Loans are entered into, Net
Offering Proceeds are held in short-term (defined as investments maturing in
less than 30 days), highly liquid investments, such as demand deposit accounts
at commercial banks, certificates of deposit and money market accounts, which
management believes to have appropriate safety of principal. This investment
strategy provides high liquidity in order to facilitate the Company's use of
these funds to acquire Properties at such time as Properties suitable for
acquisition are located or to fund Mortgage Loans. At June 30, 2000, the Company
had $659,311 invested in such short-term investments as compared to $4,744,222
at December 31, 1999. The decrease in the amount invested in short-term
investments was primarily attributable to the purchase of one Property and
repayments on the line of credit, partially offset by subscription proceeds
received from the sale of Shares from this offering during the six months ended
June 30, 2000. The funds remaining at June 30, 2000, along with additional funds
expected to be received from the sale of Shares, will be used primarily to
purchase Properties, to make Mortgage Loans, to pay offering expenses and
acquisition expenses, to pay Distributions to stockholders and other Company
expenses and, in management's discretion, to create cash reserves.
<PAGE>
Liquidity Requirements
The Company expects to meet its short-term liquidity requirements,
other than for offering expenses, the acquisition and development of Properties
and the investment in Mortgage Loans and Secured Equipment Leases, through cash
flow provided by operating activities. The Company believes that cash flow
provided by operating activities will be sufficient to fund normal recurring
operating expenses, regular debt service requirements and Distributions to
stockholders. To the extent that the Company's cash flow provided by operating
activities is not sufficient to meet such short-term liquidity requirements as a
result, for example, of unforeseen expenses due to the tenant defaulting under
the terms of its lease agreement, the Company will use borrowings under its Line
of Credit.
Due to the fact that the Company leases its Property, and expects to
lease Properties acquired in the future , on a long-term, triple-net basis,
meaning that tenants are generally required to pay all repairs and maintenance,
property taxes, insurance and utilities, management does not believe that
working capital reserves are necessary at this time. Management believes that
the Property is adequately covered by insurance. In addition, the Advisor has
obtained contingent liability and property coverage for the Company. This
insurance policy is intended to reduce the Company's exposure in the unlikely
event a tenant's insurance policy lapses or is insufficient to cover a claim
relating to the Property. The Company expects to meet its other short-term
liquidity requirements, including payment of offering expenses, the acquisition
and development of Properties and the investment in Mortgage Loans and Secured
Equipment Leases, with additional advances under its line of credit and proceeds
from its offerings. The Company expects to meet its long-term liquidity
requirements through short- or long-term, unsecured or secured debt financing or
equity financing. Rental payments under the leases are expected to exceed the
Company's operating expenses. For these reasons, no short-term or long-term
liquidity problems associated with operating the Properties are currently
anticipated by management.
Distributions
During the six months ended June 30, 2000 and the year ended December
31, 1999, the Company generated cash from operations (which includes cash
received from tenant and interest received, less cash paid for operating
expenses) of $657,668 and $10,409, respectively. Based on current and
anticipated future cash from operations, the Company declared Distributions to
its stockholders of $152,525 and $50,404 during the six months ended June 30,
2000 and the period July 14,1999 (the date operations commenced) through
December 31, 1999, respectively. No Distributions were paid or declared for the
period December 22, 1997 (date of inception) through July 13, 1999 because
operations had not commenced. On July 1, August 1 and September 1, 2000, the
Company declared Distributions of $0.058 per Share to stockholders of record on
July 1, August 1 and September 1, 2000, respectively, payable in September 2000.
For the six months ended June 30, 2000 and the year ended December 31, 1999,
100% of the Distributions received by stockholders were considered to be
ordinary income for federal income tax purposes. No amounts distributed or to be
distributed to the stockholders as of August 3, 2000, were required to be or
have been treated by the Company as a return of capital for purposes of
calculating the Stockholders' 8% Return on Invested Capital. The Company intends
to continue to make Distributions of cash available for such purpose to the
stockholders on a monthly basis, payable quarterly.
Due to Related Parties
During the six months ended June 30, 2000, the years ended December 31,
1999 and 1998, and the period December 22, 1997 (date of inception) through
December 31, 1997, Affiliates incurred on behalf of the Company $178,708,
$421,878, $562,739 and $43,398, respectively, for certain organizational and
offering expenses. In addition, during the six months ended June 30, 2000 and
the year ended December 31, 1999, Affiliates of the Company incurred $56,129 and
$98,206, respectively, for certain Acquisition Expenses and $93,920 and $41,307,
respectively, for certain operating expenses on behalf of the Company. As of
June 30, 2000 and December 31, 1999, the Company owed the Affiliates $1,795,033
and $1,775,256, respectively, for such amounts and unpaid fees and
administrative expenses. The Advisor has agreed to pay all organizational and
offering expenses (excluding selling commissions and marketing support and due
diligence expense reimbursement fees) in excess of three percent of Gross
Proceeds of the offering. In addition, pursuant to the Advisory Agreement, the
Advisor is required to reimburse the Company the amount by which the total
Operating Expenses paid or incurred by the Company exceed in any four
consecutive fiscal quarters (the "Expense Year") the greater of two percent of
average invested assets or 25 percent of net income (the "Expense Cap"). During
the four quarters ended June 30, 2000, the Company's Operating Expenses exceeded
the Expense Cap by $213,886; therefore, the Advisor reimbursed the Company such
amount in accordance with the Advisory Agreement. The amount to be received from
the Advisor was treated as a reduction of the amount due to related parties as
of June 30, 2000.
Other
As of June 30, 2000, the tenant of the Property owned by the Company
had established an FF&E Reserve. Funds in the FF&E Reserve have been paid,
granted and assigned to the Company. For the six months ended June 30, 2000,
revenue relating to the FF&E Reserve totalled $3,616. Due to the fact that the
Property is leased on a long-term, triple-net basis , management does not
believe that other working capital reserves are necessary at this time.
Management has the right to cause the Company to maintain additional reserves
if, in their discretion, they determine such reserves are required to meet the
Company's working capital needs.
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 generated from operations will be
adequate to pay operating expenses and to make Distributions to stockholders.
RESULTS OF OPERATIONS
No operations commenced until the Company received the minimum offering
proceeds of $2,500,000 on July 14, 1999.
As of June 30, 2000, the Company had acquired one Property consisting
of land, building and equipment, and had entered into a long-term, triple-net
lease agreement relating to the Property. The lease provides for minimum base
rental payments of $103,867 payable every four weeks. The lease also provides
that, after 24 months, the base rent required under the terms of the lease will
increase. In addition to annual base rent, the tenant is required to pay
contingent rent computed as a percentage of tenant's gross sales at the
Property. The lease also requires the establishment of an FF&E Reserve. The FF&E
Reserve is owned by the Company and has been recognized as additional rent. For
the quarter ended June 30, 2000, the Company earned $272,119 in rental income
from the Property. The Company also earned $3,616 in FF&E Reserve income during
the quarter ended June 30, 2000. Because the Company has not yet acquired all of
its Properties, revenues for the six months ended June 30, 2000, represent only
a portion of revenues which the Company is expected to earn in future periods.
During the six months ended June 30, 2000, the Company owned one
Property. The lessee, BG Orland Park, LLC, contributed 100 percent of the
Company's total rental income. In addition, the Property is operated as a
Marriott(R) brand chain. Although the Company intends to acquire additional
Properties located in various states and regions and to carefully screen its
tenants in order to reduce risks of default, failure of this lessee or the
Marriott(R) brand chain could significantly impact the results of operations of
the Company. However, management believes that the risk of such a default is
reduced due to the essential or important nature of this Property for the
ongoing operations of the lessee. It is expected that the percentage of total
rental income contributed by this lessee will decrease as additional Properties
are acquired and leased during 2000 and subsequent years.
During the six months ended June 30, 2000 and the year ended December
31, 1999, the Company earned $92,849 and $86,231, respectively, in interest
income from investments in money market accounts. Interest income is expected to
increase as the Company invests subscription proceeds received in the future in
highly liquid investments pending investment in Properties and Mortgage Loans.
However, as Net Offering Proceeds are invested in Properties and used to make
Mortgage Loans, the percentage of the Company's total revenues earned from
interest income from investments in money market accounts or other short-term,
highly liquid investments is expected to decrease.
Operating expenses , including interest expense and depreciation and
amortization expense, were $211,299 and $114,621 for the six months ended June
30, 2000 and the year ended December 31, 1999, respectively. Operating expenses
represent only a portion of operating expenses which the Company is expected to
incur during a full six-month and twelve-month period in which the Company owns
Properties. The dollar amount of operating expenses is expected to increase as
the Company acquires additional Properties and invests in Mortgage Loans.
However, general and administrative expenses as a percentage of total revenues
are expected to decrease as the Company acquires additional Properties and
invests in Mortgage Loans. Operating expenses included $35,000 in organizational
expenses for the year ended December 31, 1999. Organizational expenses represent
the cost related to forming a new entity and are not expected to be incurred on
an ongoing basis.
Pursuant to the Advisory Agreement, the Advisor is required to
reimburse the Company the amount by which the total Operating Expenses paid or
incurred by the Company exceed the Expense Cap in an Expense Year. During the
Expense Year ended June 30, 2000, the Company's Operating Expenses exceeded the
Expense Cap by $213,886; therefore, the Advisor reimbursed the Company such
amount in accordance with the Advisory Agreement.
Other
The Company has elected , pursuant to Internal Revenue Code Section
856(c)(1), to be taxed as a REIT under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended, and related regulations. As a REIT, for
federal income tax purposes, the Company generally will not be subject to
federal income tax on income that it distributes to its stockholders. If the
Company fails to qualify as a REIT in any taxable year, it will be subject to
federal income tax on its taxable income at regular corporate rates and will not
be permitted to qualify for treatment as a REIT for federal income tax purposes
for four years following the year during which qualification is lost. Such an
event could materially affect the Company's net earnings. However, the Company
believes that it is organized and operates in such a manner as to qualify for
treatment as a REIT for the year ended December 31, 1999. In addition, the
Company intends to continue to operate the Company so as to remain qualified as
a REIT for federal income tax purposes.
The Company anticipates that its leases will be triple-net leases and
will contain provisions that management believes will mitigate the effect of
inflation. Such provisions will include clauses requiring the payment of
percentage rent based on certain gross sales above a specified level and/or
automatic increases in the base rent at specified times during the term of the
lease. Management expects that increases in gross sales volumes due to inflation
and real sales growth should result in an increase in rental income over time.
Continued inflation also may cause capital appreciation of the Company's
Properties. Inflation and changing prices, however, also may have an adverse
impact on the sales of the Properties and on potential capital appreciation of
the Properties.
In April of 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. During the year ended
December 31, 1999, operating expenses include a charge of $35,000 for
organizational costs.
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.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following information updates and replaces the "Directors and
Executive Officers" section beginning on page 71 of the Prospectus.
<PAGE>
The Directors and executive officers of the Company are listed below:
Name Age Position with the Company
------------------------ ------ -----------------------------------------
James M. Seneff, Jr. 54 Director, Chairman of the Board, and Chief
Executive Officer
Robert A. Bourne 53 Director and President
David W. Dunbar 48 Independent Director
Timothy S. Smick 48 Independent Director
Edward A. Moses 58 Independent Director
Phillip M. Anderson, Jr. 40 Chief Operating Officer and Executive
Vice President
Thomas J. Hutchison III 58 Executive Vice President
Lynn E. Rose 51 Secretary and Treasurer
James M. Seneff, Jr. Director, Chairman of the Board and Chief
Executive Officer. Mr. Seneff also is a director, Chairman of the Board and
Chief Executive Officer of CNL Retirement Corp., the Advisor to the Company. Mr.
Seneff is a principal stockholder of CNL Holdings, Inc., the parent company of
CNL Financial Group, Inc. (formerly CNL Group, Inc.), a diversified real estate
company, and has served as a director, Chairman of the Board and Chief Executive
Officer of CNL Financial Group, Inc. and its subsidiaries since CNL's formation
in 1973. CNL Financial Group, Inc. is the parent company, either directly or
indirectly through subsidiaries, of CNL Real Estate Services, Inc., CNL
Retirement Corp., CNL Capital Markets, Inc., CNL Investment Company and CNL
Securities Corp., the Managing Dealer in this offering. CNL and the entities it
has established have more than $4 billion in assets, representing interests in
more than 2,000 properties and 900 mortgage loans in 48 states. Mr. Seneff also
serves as a director, Chairman of the Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as CNL Hospitality Corp., its advisor. Since 1992, Mr. Seneff has served
as a director, Chairman of the Board and Chief Executive Officer of Commercial
Net Lease Realty, Inc., a public real estate investment trust that is listed on
the New York Stock Exchange. In addition, he has served as a director and
Chairman of the Board since inception in 1994, and served as Chief Executive
Officer from 1994 through August 1999, of CNL American Properties Fund, Inc., a
public, unlisted real estate investment trust. He also served as a director,
Chairman of the Board and Chief Executive Officer of CNL Fund Advisors, Inc.,
the advisor to CNL American Properties Fund, Inc., until it merged with such
company in September 1999. Mr. Seneff has also served as a director, Chairman of
the Board and Chief Executive Officer of CNL Securities Corp. since 1979; CNL
Investment Company since 1990; and CNL Institutional Advisors, a registered
investment advisor for pension plans, since 1990. Mr. Seneff formerly served as
a director of First Union National Bank of Florida, N.A., and currently serves
as the Chairman of the Board of CNLBank. Mr. Seneff 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 is Florida's principal investment advisory and
money management agency and oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne. Director and President. Mr. Bourne also serves as a
director and President of CNL Retirement Corp., the Advisor to the Company. Mr.
Bourne is also the President and Treasurer of CNL Financial Group, Inc.; a
director, Vice Chairman of the Board and President of CNL Hospitality
Properties, Inc., a public, unlisted real estate investment trust; as well as, a
director, Vice Chairman of the Board and President of CNL Hospitality Corp., its
advisor. Mr. Bourne also serves as a director of CNLBank. He has served as a
director since 1992, Vice Chairman of the Board since February 1996, Secretary
and Treasurer from February 1996 through 1997, and President from July 1992
through February 1996, of Commercial Net Lease Realty, Inc., a public, real
estate investment trust listed on the New York Stock Exchange. Mr. Bourne has
served as a director since inception in 1994, President from 1994 through
February 1999, Treasurer from February 1999 through August 1999, and Vice
Chairman of the Board since February 1999, of CNL American Properties Fund,
Inc., a public, unlisted real estate investment trust. He also served as a
director and held various executive positions for CNL Fund Advisors, Inc., the
advisor to CNL American Properties Fund, Inc. prior to its merger with such
company, from 1994 through August 1999. Mr. Bourne also serves as a director,
President and Treasurer for various affiliates of CNL Financial Group, Inc.,
including CNL Investment Company, CNL Securities Corp., the Managing Dealer for
this offering, and CNL Institutional Advisors, Inc., a registered investment
advisor for pension plans. Since joining CNL Securities Corp. in 1979, Mr.
Bourne has overseen CNL's real estate and capital markets activities including
the investment of nearly $2 billion in equity and the financing, acquisition,
construction and leasing of restaurants, office buildings, apartment complexes,
hotels and other real estate. Mr. Bourne began his career as a certified public
accountant
<PAGE>
employed by Coopers & Lybrand, Certified Public Accountants, from 1971 through
1978, where he attained the position of tax manager in 1975. Mr. Bourne
graduated from Florida State University in 1970 where he received a B.A. in
Accounting, with honors.
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 board of trustees of Bay Care Health
System, an alliance of ten non-profit hospitals in the Tampa Bay area, as well
as vice chairman of the board of directors of Morton Plant Mease Health Care,
Inc., an 841-bed, not-for-profit hospital and a member of the board of directors
of North Bay Hospital, a 122-bed facility. He is a former member of the board of
directors of Morton Plant Mease Hospital Foundation. 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 1981 through 1988 and 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 and currently serves on the Florida Elections
Commission. Mr. Dunbar began his professional career with Southeast Banking
Corporation in Miami, from 1975 through 1981, serving as a regional vice
president of commercial mortgage lending. Mr. Dunbar received a B.S. degree in
finance from Florida State University in 1975. He is also a 1977 graduate of the
American Bankers Association National Commercial Lending School at the
University of Oklahoma and a 1982 graduate of the School of Banking of the South
at Louisiana State University.
Timothy S. Smick. Independent Director. Mr. Smick is currently an
independent investor. 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. 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.
Edward A. Moses. Independent Director. Dr. Moses served as dean of the
Roy E. Crummer Graduate School of Business at Rollins College from 1994 to 2000,
and has served as a professor and Bank of America professor of finance since
1989. As dean, Dr. Moses established 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, and is a member of the board of
directors of HTE, Inc. Dr. Moses received a B.S. in Accounting from the Wharton
School at the University of Pennsylvania in 1965 and a Masters of Business
Administration (1967) and Ph.D. in finance from the University of Georgia in
1971.
Phillip M. Anderson, Jr. Chief Operating Officer and Executive Vice
President. Mr. Anderson joined CNL Retirement Corp. 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 also currently serves as the Chief Operating Officer of both
CNL Retirement Corp., the Company's Advisor, and of CNL Retirement Development
Corp. 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.
Thomas J. Hutchison III. Executive Vice President. Mr. Hutchison also
serves as an Executive Vice President of CNL Retirement Corp., the Advisor of
the Company, as well as President and Chief Operating Officer of CNL Real Estate
Services, Inc., which is the parent company of CNL Retirement Corp. and CNL
Hospitality Corp. He also serves as the President and Chief Operating Officer of
CNL Realty & Development Corp. In addition, Mr. Hutchison serves as an Executive
Vice President of CNL Hospitality Properties, Inc. Mr. Hutchison joined CNL
Financial Group, Inc. in January 2000 with more than 30 years of senior
management and consulting experience in the real estate development and services
industries. He currently serves on the board of directors of Restore Orlando, a
nonprofit community volunteer organization. Prior to joining CNL, Mr. Hutchison
was president and owner of numerous real estate services and development
companies. From 1995 to 2000, he was chairman and chief executive officer of
Atlantic Realty Services, Inc. and TJH Development Corporation. Since 1990, he
has fulfilled a number of long-term consulting assignments for large
corporations, including managing a number of large international joint ventures.
From 1990 to 1991, Mr. Hutchison was the court-appointed president and chief
executive officer of General Development Corporation, a real estate community
development company, where he assumed the day-to-day management of the $2.6
billion NYSE-listed company entering re-organization. From 1986 to 1990, he was
the chairman and chief executive officer of a number of real estate-related
companies engaged in the master planning and land acquisition of forty
residential, industrial and office development projects. From 1978 to 1986, Mr.
Hutchison was the president and chief executive officer of Murdock Development
Corporation and Murdock Investment Corporation, as well as Murdock's nine
service divisions. In this capacity, he managed an average of $350 million of
new development per year for over nine years. Additionally, he expanded the
commercial real estate activities to a national basis, and established both a
new extended care division and a hotel division that grew to 14 properties. Mr.
Hutchison was educated at Purdue University and the University of Maryland
Business School.
Lynn E. Rose. Secretary and Treasurer. Ms. Rose also serves as
Secretary, Treasurer and a director of CNL Retirement Corp., the Advisor to the
Company, and as Secretary of the subsidiaries of the Company. Ms. Rose is
Secretary and Treasurer of CNL Hospitality Properties, Inc., a public, unlisted
real estate investment trust, and serves as Secretary of its subsidiaries. In
addition, she serves as Secretary, Treasurer and a director of CNL Hospitality
Corp., its advisor. Ms. Rose served as Secretary of CNL American Properties
Fund, Inc., a public, unlisted real estate investment trust, from 1994 through
August 1999, and served as Treasurer from 1994 through February 1999. She also
served as Treasurer of CNL Fund Advisors, Inc., from 1994 through July 1998, and
served as Secretary and a director from 1994 through August 1999, at which time
it merged with CNL American Properties Fund, Inc. 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, and as Secretary and a director of CNL Realty Advisors, Inc., its advisor,
from its inception in 1991 through 1997. She also served as Treasurer of CNL
Realty Advisors, Inc. from 1991 through February 1996. Ms. Rose, a certified
public accountant, has served as Secretary of CNL Financial Group, Inc. since
1987, served as Controller from 1987 to 1993 and has served as Chief Financial
Officer since 1993. She also serves as Secretary of the subsidiaries of CNL
Financial Group, Inc. and holds various other offices in the subsidiaries. In
addition, she serves as Secretary for approximately 75 additional corporations
affiliated with CNL Financial Group, Inc. and its subsidiaries. Ms. Rose has
served as Chief Financial Officer and Secretary of CNL Securities Corp. since
July 1994. Ms. Rose oversees the tax and legal compliance for over 375
corporations, partnerships and joint ventures, and the accounting and financial
reporting for over 200 entities. 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.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information updates and replaces the last paragraph on
page 74 of the Prospectus.
Each Director is entitled to receive $6,000 annually for serving on the
Board of Directors, as well as fees of $750 per meeting attended ($375 for each
telephonic meeting in which the Director participates), including committee
meetings. In addition to the above compensation, the Director serving as
Chairman of the Audit Committee is entitled to receive fees of $750 per meeting
attended with the Company's independent accountants ($375 for each telephonic
meeting in which the Chairman participates) as a representative of the Audit
Committee. No executive officer or Director of the Company has received a bonus
from the Company. The Company will not pay any compensation to the officers and
Directors of the Company who also serve as officers and directors of the
Advisor.
THE ADVISOR AND THE ADVISORY AGREEMENT
THE ADVISOR
The following information updates and replaces "The Advisor" section on
page 75 of the Prospectus.
CNL Retirement Corp. (formerly CNL Health Care Corp.) is a Florida
corporation organized in July 1997 to provide management, advisory and
administrative services. The Company originally entered into the Advisory
Agreement with the Advisor effective September 15, 1998. CNL Retirement Corp.,
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
Thomas J. Hutchison III Executive Vice President
Lynn E. Rose Secretary, Treasurer and Director
The backgrounds of these individuals are described above under
"Management -- Directors and Executive Officers."
Management anticipates that any transaction by which the Company would
become self-advised would be submitted to the stockholders for approval.
The Advisor currently owns 20,000 Shares of Common Stock. The Advisor
may not sell these Shares while the Advisory Agreement is in effect, although
the Advisor may transfer such shares to Affiliates. Neither the Advisor, a
Director, or any Affiliate may vote or consent on matters submitted to the
stockholders regarding removal of the Advisor, Directors or any of their
Affiliates, or any transaction between the Company and any of them. In
determining the requisite percentage in interest of shares of Common Stock
necessary to approve a matter on which the Advisor, Directors, and any Affiliate
may not vote or consent, any shares of Common Stock owned by any of them will
not be included.
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 of Common
Stock for services in connection with the offering of Shares, a substantial
portion of which may be paid as commissions to other broker-dealers. For the
years ended December 31, 1999 and 1998, the Company incurred $388,109 and
$1,912, respectively , of such fees, of which $370,690 and $1,785, respectively,
has been paid by CNL Securities Corp. as commissions to other broker-dealers. In
addition, during the period January 1, 2000 through August 3, 2000, the Company
incurred $286,011 of such fees, the majority of which has been or will be paid
by CNL Securities Corp. as commissions to other broker-dealers.
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, all or a portion of which may be
reallowed to other broker-dealers. For the years ended December 31, 1999 and
1998, the Company incurred $25,874 and $128, respectively, of such fees, the
majority of which has been or will be reallowed to other broker-dealers and from
which all bona fide due diligence expenses will be paid. In addition, during the
period January 1, 2000 through August 3, 2000, the Company incurred $19,067 of
such fees in connection with this offering, the majority of which has been or
will be reallowed to other broker-dealers and from which all bona fide due
diligence expenses will be paid.
In addition, in connection with this offering, 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 of Common Stock from the Company
at a price of $12.00 during the five-year period commencing with the date the
offering began. No Soliciting Dealer Warrants, however, will be exercisable
until one year from the date of issuance. During the six months ended June 30,
2000, the Company issued approximately 24,000 Soliciting Dealer Warrants. As of
June 30, 2000, CNL Securities Corp. was entitled to receive approximately 6,100
additional Soliciting Dealer Warrants for Shares sold during the quarter then
ended.
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. For the years ended December 31, 1999 and 1998, the
Company incurred $232,865 and $1,148, respectively, of such fees. In addition,
during the period January 1, 2000 through August 3, 2000, the Company incurred
$171,606 of such fees.
The Company and the Advisor have entered into an Advisory Agreement
pursuant to which the Advisor will receive a monthly Asset Management Fee of
one-twelfth of 0.60% of the Company's Real Estate Asset Value and the
outstanding principal balance of any Mortgage Loans as of the end of the
preceding month. The Asset Management Fee, which will not exceed fees which are
competitive for similar services in the same geographic area, may or may not be
taken, in whole or in part as to any year, in the sole discretion of the
Advisor. All or any portion of the Asset Management Fee not taken as to any
fiscal year shall be deferred without interest and may be taken in such other
fiscal year as the Advisor shall determine. During the six months ended June 30,
2000, the Company incurred $13,849 of such fees. No such fees were incurred
during the years ended December 31, 1999 and 1998.
The Company incurs Operating Expenses which, in general, are those
expenses relating to administration of the Company on an ongoing basis. Pursuant
to the Advisory Agreement described above, the Advisor is required to reimburse
the Company the amount by which the total Operating Expenses paid or incurred by
the Company exceed, in any four consecutive fiscal quarters (the "Expense
Year"), the greater of 2% of Average Invested Assets or 25% of Net Income (the
"Expense Cap"). During the four fiscal quarters ended June 30, 2000, the
Company's Operating Expenses exceeded the Expense Cap by $213,886; therefore,
the Advisor reimbursed the Company such amount in accordance with the Advisory
Agreement.
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 six months ended June 30, 2000, the years ended December 31, 1999 and 1998,
and the period December 22, 1997 (date of inception) through December 31, 1997,
the Company incurred $176,284, $373,480, $196,184 and $15,202, respectively, for
these services. For the six months ended June 30, 2000 and the year ended
December 31, 1999, $25,687 and $328,229, respectively, of such costs represented
stock issuance costs, $30,491 and $6,455, respectively, represented acquisition
related costs and $120,106 and $38,796, respectively, represented general
operating and administrative expenses. For 1998 and 1997, such amounts are
included in deferred offering costs.
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.
<PAGE>
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/or 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. In addition,
Messrs. Bourne and Seneff currently serve as directors 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 as directors and officers of CNL Hospitality Properties
Inc., an unlisted public REIT organized to invest in hotel properties, mortgage
loans and secured equipment leases. Both of the unlisted public REITs have
investment objectives similar to those of the Company. As of June 30, 2000, the
18 partnerships and the two unlisted REITs had raised a total of approximately
$1.9 billion from a total of approximately 94,000 investors, and owned
approximately 1,500 fast-food, family-style and casual-dining restaurant
properties, and 15 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)
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 $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 January 20, 1999 (3) 37,373,221 (3) February 1999 (3)
Properties Fund, Inc. (37,373,221 shares)
CNL Hospitality $425,072,637 (4) (4) (4)
Properties, Inc. (42,507,264 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. The number of shares of common stock for CNL
American Properties Fund, Inc. ("APF") reflects a one-for-two reverse
stock split, which was effective on June 3, 1999.
(2) For a description of the property acquisitions by these programs, see the
table set forth on the following page.
(3) In April 1995, APF 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, APF 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, APF 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, APF 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. The 1998 Offering
closed in January 1999, upon receipt of the proceeds from the last
subscriptions. As of March 31, 1999, net proceeds to APF from its three
offerings totalled $670,151,200 and all of such amount had been invested
or committed for investment in properties and mortgage loans.
(4) Effective July 9, 1997, CNL Hospitality Properties, Inc. ("CHP")
commenced an offering of up to 16,500,000 shares ($165,000,000) of common
stock. On June 17, 1999, the initial offering closed upon receipt of
subscriptions totalling $150,072,637 (15,007,264 shares), including
$72,637 (7,264 shares) through the reinvestment plan. Following
completion of the initial offering on June 17, 1999, CHP commenced a
subsequent offering (the "1999 Offering") of up to 27,500,000 shares
($275,000,000) of common stock. As of June 30, 2000, CHP had received
subscriptions totalling $235,011,997 (23,501,200 shares), including
$965,145 (96,514 shares) through the reinvestment plan, from the 1999
Offering. As of such date, CHP had purchased, directly or indirectly, 15
properties. Upon completion of the 1999 Offering, CHP intends to commence
a subsequent offering (the "2000 Offering") of up to 45,000,000 shares
($450,000,000) of common stock.
As of June 30, 2000, 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 June 30, 2000. These 69 partnerships
raised a total of $185,927,353 from approximately 4,600 investors, and
purchased, directly or through participation in a joint venture or limited
partnership, interests in a total of 216 projects as of June 30, 2000. These 216
projects consist of 19 apartment projects (comprising 10% of the total amount
raised by all 69 partnerships), 11 office buildings (comprising 4% of the total
amount raised by all 69 partnerships), 169 fast-food, family-style, or
casual-dining restaurant properties 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),
ten commercial/retail properties (comprising 11% 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 37 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 June 30, 2000 (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 June 30,
2000, regarding property acquisitions by the 18 limited partnerships and the two
unlisted REITs .
<TABLE>
<CAPTION>
<S> <C>
Name of Type of Method of Type of
Entity Property Location Financing Program
------ -------- -------- --------- -------
CNL Income Fund, 22 fast-food or AL, AZ, CA, FL, GA, All cash Public
Ltd. family-style LA, MD, OK, PA, TX,
restaurants VA, WA
CNL Income Fund II, 50 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
<PAGE>
Name of Type of Method of Type of
Entity Property Location Financing Program
------ -------- -------- --------- -------
CNL Income Fund 40 fast-food or AL, AZ, CA, CO, FL, All cash Public
III, Ltd. family-style GA, IA, IL, IN, KS,
restaurants KY, MD, MI, MN, MO,
NC, NE, OK, TX
CNL Income Fund IV, 47 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, 36 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, 60 fast-food or AR, AZ, CA, FL, GA, All cash Public
Ltd. family-style IL, IN, KS, MA, MI,
restaurants MN, NC, NE, NM, NY,
OH, OK, PA, TN, TX,
VA, WA, WY
CNL Income Fund 52 fast-food or AL, AZ, CO, FL, GA, All cash Public
VII, Ltd. family-style IN, LA, MI, MN, NC,
restaurants OH, PA, SC, TN, TX,
UT, WA
CNL Income Fund 43 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, 46 fast-food or AL, CA, CO, FL, GA, All cash Public
Ltd. family-style IL, IN, LA, MI, MN,
restaurants MS, NC, NH, NY, OH,
SC, TN, TX
CNL Income Fund X, 55 fast-food or AL, AZ, CA, CO, FL, All cash Public
Ltd. family-style ID, IL, LA, MI, MO,
restaurants MT, NC, NE, NH, NM,
NY, OH, PA, SC, TN,
TX, WA
CNL Income Fund XI, 44 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
<PAGE>
Name of Type of Method of Type of
Entity Property Location Financing Program
------ -------- -------- --------- -------
CNL Income Fund 52 fast-food or AL, AZ, CA, FL, GA, All cash Public
XII, 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
CNL Income Fund 68 fast-food or AL, AZ, CO, FL, GA, All cash Public
XIV, Ltd. family-style IL, KS, LA, MN, MO,
restaurants MS, NC, NJ, NV, OH,
SC, TN, TX, VA
CNL Income Fund XV, 57 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 49 fast-food or AZ, CA, CO, DC, FL, All cash Public
XVI, Ltd. family-style GA, ID, IN, KS, MN,
restaurants MO, NC, NM, NV, OH,
PA, TN, TX, UT, WI
CNL Income Fund 32 fast-food, CA, FL, GA, IL, IN, All cash Public
XVII, Ltd. family-style or MI, NC, NV, OH, SC,
casual-dining TN, TX, WA
restaurants
CNL Income Fund 26 fast-food, AZ, CA, FL, GA, IL, All cash Public
XVIII, Ltd. family-style or KY, MD, MN, NC, NV,
casual-dining NY, OH, PA, TN, TX, VA
restaurants
CNL American 703 fast-food, AL, AZ, CA, CO, CT, (1) Public REIT
Properties Fund, family-style or DE, FL, GA, IA, ID,
Inc. casual-dining IL, IN, KS, KY, LA,
restaurants MD, MI, MN, MO, MS,
NC, NE, NH, NJ, NM,
NV, NY, OH, OK, OR,
PA, RI, SC, TN, TX,
UT, VA, WA, WI, WV
CNL Hospitality 15 limited AZ, CA, CO, GA, MA, (2) Public REIT
Properties, Inc. service, extended NV, PA, TX, WA
stay or full
service hotels
</TABLE>
<PAGE>
---------------------
(1) As of March 31, 1999, all of APF's net offering proceeds had been
invested or committed for investment in properties and mortgage loans.
Since April 1, 1999, APF has used proceeds from its lines of credit and
other borrowing to acquire and develop properties and to fund mortgage
loans and secured equipment leases.
(2) In 1998, CHP used proceeds from its line of credit and net offering
proceeds to fund the acquisition of two of its properties. As of June 30,
2000, CHP had repaid amounts borrowed on its line of credit using
additional net offering proceeds. In 1999, CHP acquired an interest in
seven additional properties through CNL Hotel Investors, Inc. ("CHI"), a
real estate investment trust jointly owned by CHP and Five Arrows Realty
Securities II L.L.C. ("Five Arrows"). In connection with the acquisition
of these seven properties, CHI used proceeds from permanent financing, in
addition to net offering proceeds from CHP and cash contributions from
Five Arrows. In addition, CHP acquired a majority interest in a limited
liability company (the "LLC") that owns one property. In connection with
the acquisition of the property, the LLC used permanent financing to fund
part of the acquisition.
A more detailed description of the acquisitions by real estate limited
partnerships and the two 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 July 1995 and June 2000, 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
programs, for more detailed information concerning the experience of Messrs.
Seneff and Bourne.
INVESTMENT OBJECTIVES AND POLICIES
CERTAIN INVESTMENT LIMITATIONS
The following information updates and replaces Item 16 on page 86 of
the Prospectus.
16. The Company will not make loans to the Advisor or its Affiliates,
except (A) mortgage loans subject to the restrictions governing mortgage loans
in the Articles of Incorporation (including the requirement to obtain an
appraisal from an independent expert) or (B) to wholly owned subsidiaries of the
Company.
DISTRIBUTION POLICY
DISTRIBUTIONS
The following information updates and replaces the "Distributions"
section on page 87 of the Prospectus.
<PAGE>
The following table reflects total Distributions and total
Distributions per Share declared by the Company during each month since the
Company commenced operations.
Total Distributions
Month Distributions per Share
-------------------- -------------- ---------------
August 1999 $ 7,422 $0.025
September 1999 9,038 0.025
October 1999 10,373 0.025
November 1999 11,289 0.025
December 1999 12,282 0.025
January 2000 13,501 0.025
February 2000 14,530 0.025
March 2000 15,562 0.025
April 2000 24,822 0.037
May 2000 40,804 0.058
June 2000 43,306 0.058
July 2000 50,847 0.058
August 2000 53,716 0.058
September 2000 57,134 0.058
The Company intends to continue to make regular Distributions to
stockholders. Distributions will be made to those stockholders who are
stockholders as of the record date selected by the Directors. Currently,
Distributions are declared monthly and paid quarterly during the offering
period. In addition, Distributions are expected to be declared monthly and paid
quarterly during any subsequent offering, and declared and paid quarterly
thereafter. However, in the future, the Board of Directors, in its discretion,
may determine to declare Distributions on a daily basis during the offering
period. The Company is required to distribute annually at least 95% of its real
estate investment trust taxable income (90% in 2001 and thereafter) to maintain
its objective of qualifying as a REIT. Generally, income distributed will not be
taxable to the Company under federal income tax laws if the Company complies
with the provisions relating to qualification as a REIT. If the cash available
to the Company is insufficient to pay such Distributions, the Company may obtain
the necessary funds by borrowing, issuing new securities, or selling Assets.
These methods of obtaining funds could affect future Distributions by increasing
operating costs. To the extent that Distributions to stockholders exceed
earnings and profits, such amounts constitute a return capital for federal
income tax purposes, although such Distributions might not reduce stockholders'
aggregate Invested Capital. Distributions in kind shall not be permitted, except
for distributions of readily marketable securities; distributions of beneficial
interests in a liquidating trust established for the dissolution of the Company
and the liquidation of its assets in accordance with the terms of the Articles
of Incorporation; or distributions of in-kind property as long as the Directors
(i) advise each stockholder of the risks associated with direct ownership of the
property; (ii) offer each stockholder the election of receiving in-kind property
distributions; and (iii) distribute in-kind property only to those stockholders
who accept the Directors' offer.
For the six months ended June 30, 2000 and the period July 13, 1999
(the date operations of the Company commenced) through December 31, 1999, 100%
of the Distributions declared and paid were considered to be ordinary income for
federal income tax purposes. No amounts distributed to stockholders for the
periods presented are required to be or have been treated by the Company as a
return of capital for purposes of calculating the Stockholders' 8% Return on
Invested Capital. Due to the fact that the Company had only acquired one
Property and was still in the offering stage as of June 30, 2000, the
characterization of Distributions for federal income tax purposes is not
necessarily considered by management to be representative of the
characterization of Distributions in future periods. In addition, the
characterization for tax purposes of Distributions declared for the six months
ended June 30, 2000 may not be indicative of the results that may be expected
for the year ending December 31, 2000.
Distributions will be made at the discretion of the Directors,
depending primarily on net cash from operations (which includes cash received
from tenants except to the extent that such cash represents a return of
principal in regard to the lease of a Property consisting of building only,
distributions from joint ventures, and interest income from lessees of Equipment
and borrowers under Mortgage Loans, less expenses paid) and the general
financial condition of the Company, subject to the obligation of the Directors
to cause the Company to qualify and remain qualified as a REIT for federal
income tax purposes. The Company intends to increase Distributions in accordance
with increases in net cash from operations.
SUMMARY OF THE
ARTICLES OF INCORPORATION AND BYLAWS
DESCRIPTION OF CAPITAL STOCK
The following information updates and replaces the last paragraph on
page 88 and the first paragraph on page 89 of the Prospectus.
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 August 3, 2000,
the Company had 921,376 Shares of Common Stock outstanding (including 20,000
Shares issued to the Advisor prior to the commencement of this offering and
5,046 Shares issued pursuant to the Reinvestment Plan) 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.
The Company will not issue share certificates except to stockholders
who make a written request to the Company. Each stockholder's investment will be
recorded on the books of the Company, and information concerning the
restrictions and rights attributable to Shares (whether in connection with an
initial issuance or a transfer) will be sent to the stockholder receiving Shares
in connection with an issuance or transfer. A stockholder wishing to transfer
his or her Shares will be required to send only an executed form to the Company,
and the Company will provide the required form upon a stockholder's request. The
executed form and any other required documentation must be received by the
Company on or before the 15th of the month for the transfer to be effective the
following month. Subject to restrictions in the Articles of Incorporation,
transfers of Shares shall be effective, and the transferee of the Shares will be
recognized as the holder of such Shares as of the first day of the following
month on which the Company receives properly executed documentation.
Stockholders who are residents of New York may not transfer fewer than 250
shares at any time.
<PAGE>
APPENDIX B
FINANCIAL INFORMATION
----------------------------------------------------
THE UPDATED PRO FORMA FINANCIAL STATEMENTS AND THE UNAUDITED
FINANCIAL STATEMENTS OF CNL RETIREMENT PROPERTIES, INC.
(FORMERLY CNL HEALTH CARE PROPERTIES, INC.) CONTAINED IN THIS
ADDENDUM SHOULD BE READ IN CONJUNCTION WITH APPENDIX B TO THE
ATTACHED PROSPECTUS, DATED MARCH 31, 2000.
----------------------------------------------------
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CNL RETIREMENT PROPERTIES, INC.
(formerly CNL Health Care Properties, Inc.)
<TABLE>
<CAPTION>
<S> <C>
Page
----
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of June 30, 2000 B-2
Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2000 B-3
Pro Forma Consolidated Statement of Operations for the year ended December 31, 1999 B-4
Notes to Pro Forma Consolidated Financial Statements for the six months ended
June 30, 2000 and the year ended December 31, 1999 B-5
Updated Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 B-7
Condensed Consolidated Statements of Earnings for the quarters and six months ended
June 30, 2000 and 1999 B-8
Condensed Consolidated Statements of Stockholders' Equity for the six months ended
June 30, 2000 and the year ended December 31, 1999 B-9
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 B-10
Notes to Condensed Consolidated Financial Statements for the quarters and six months
ended June 30, 2000 and 1999 B-12
</TABLE>
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of CNL
Retirement Properties, Inc. (formerly CNL Health Care Properties, Inc.) and
subsidiaries (the "Company") gives effect to (i) the receipt of an initial
capital contribution of $200,000 from the Advisor, $8,521,527 in gross offering
proceeds from the sale of 852,153 shares of common stock for the period from
inception through June 30, 2000, and the application of such funds to pay
offering expenses and miscellaneous acquisition expenses and to purchase a
property, (ii) the receipt of $492,235 in gross offering proceeds from the sale
of 49,224 additional shares for the period July 1, 2000 through August 3, 2000
and the accrual of related offering expenses, acquisition fees and miscellaneous
acquisition expenses, as reflected in the pro forma adjustments described in the
related notes. The Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
2000 includes the transactions described in (i) above, from the historical
balance sheet, adjusted to give effect to the transactions in (ii) above as if
they had occurred on June 30, 2000.
The Unaudited Pro Forma Consolidated Statements of Operations for the
six months ended June 30, 2000 and the year ended December 31, 1999, include the
operating results of the property described in (i) above from the date the
property became operational through the end of the pro forma period presented.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates or been in effect during the periods
indicated. This pro forma consolidated financial information should not be
viewed as indicative of the Company's financial results or conditions in the
future.
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
(formerly CNL Health Care Properties, Inc.)
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ------------- -------------
Land, building and equipment on operating lease $14,553,953 $ -- $ 14,553,953
Cash and cash equivalents 659,311 492,235 (a) 1,151,546
Receivable 3,631 -- 3,631
Loan costs -- 53,711
53,711
Other assets 95,626 22,151 (a) 117,777
------------- ------------- -------------
$ 15,366,232 $ 514,386 $ 15,880,618
============= ============= =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Line of credit $ 6,800,000 -- $ 6,800,000
Accounts payable and accrued expenses 4,445 -- 4,445
Due to related parties 1,795,033 61,530 (a) 1,856,563
Interest payable 16,705 -- 16,705
Security deposits 553,956 -- 553,956
Deferred rental income 46,900 -- 46,900
------------- ------------- -------------
Total liabilities 9,217,039 61,530 9,278,569
------------- ------------- -------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- -- --
Excess shares, $0.01 par value per share.
Authorized and unissued 103,000,000 shares -- -- --
Common stock, $0.01 par value per share.
Authorized 100,000,000 shares; issued and
outstanding 872,153 shares; issued and
outstanding, as adjusted, 921,377 shares 8,721 492 (a) 9,213
Capital in excess of par value 6,214,506 452,364 (a) 6,666,870
Accumulated deficit (74,034) -- (74,034)
------------- ------------- -------------
Total stockholders' equity 6,149,193 452,856 6,602,049
------------- ------------- -------------
$ 15,366,232 $ 514 ,386 $ 15,880,618
============= ============= =============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
(formerly CNL Health Care Properties, Inc.)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
<S> <C>
Pro Forma
Historical Adjustments Pro Forma
----------- --------------- ------------
Revenues:
Rental income from operating lease $ 272,119 $ 417,761 (1) $ 689,880
FF&E Reserve income 3,616 9,809 (2) 13,425
Interest and other income 92,849 (90,959) (3) 1,890
----------- --------------- ------------
368,584 336,611 705,195
----------- --------------- ------------
Expenses:
Interest 129,776 216,563 (4) 346,339
General operating and administrative 193,613 -- 193,613
Asset management fees to related party 13,849 27,698 (5) 41,547
Reimbursement of operating expenses from
related party (213,886) 125,624 (6) (88,262)
Depreciation and amortization 87,947 134,694 (7) 222,641
----------- --------------- ------------
211,299 504,579 715,878
----------- --------------- ------------
Net Earnings (Loss) $ 157,285 $ (167,968) $ (10,683)
=========== =============== ============
Earnings (Loss) Per Share of Common Stock
(Basic and Diluted) (8) $ 0.24 $ (0.02)
=========== ============
Weighted Average Number of Shares of Common
Stock Outstanding 665,899 712,042
=========== ============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
(formerly CNL Health Care Properties, Inc.)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Pro Forma
Historical Adjustments Pro Forma
----------- --------------- --------------
Revenues:
Rental income from operating lease $ -- $ 304,141 (1) $ 304,141
FF&E Reserve income -- 7,296 (2) 7,296
Interest and other income 86,231 (43,169) (3) 43,062
----------- --------------- --------------
86,231 268,268 354,499
----------- --------------- --------------
Expenses:
Interest -- 161,438 (4) 161,438
General operating and administrative 79,621 -- 79,621
Asset management fees to related party -- 13,849 (5) 13,849
Organizational costs 35,000 -- 35,000
Depreciation and amortization -- 100,180 (7) 100,180
----------- --------------- --------------
114,621 275,467 390,088
----------- --------------- --------------
Net Loss $ (28,390) $ (7,199) $ (35,589)
=========== =============== ==============
Loss Per Share of Common Stock (Basic and
Diluted) (8) $ (0.07) $ (0.07)
=========== ==============
Weighted Average Number of Shares of Common
Stock Outstanding 412,713 514,035
=========== ==============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
(formerly CNL Health Care Properties, Inc.)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND
YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $492,235 from the sale of 49,223 shares
during the period July 1, 2000 through August 3, 2000 and the accrual
of related acquisition fees, selling commissions and offering expenses
which have been netted against stockholders' equity.
Unaudited Pro Forma Consolidated Statements of Operations:
(1) Represents adjustment to rental income from the operating lease for the
property acquired by the Company on April 20, 2000 (the "Pro Forma
Property") for the period commencing the date the Pro Forma Property
became operational by the previous owner to the earlier of (i) the date
the Pro Forma Property was acquired by the Company or (ii) the end of
the pro forma period presented. The date the Pro Forma Property is
treated as becoming operational by the previous owner as a rental
property for purposes of the Pro Forma Consolidated Statements of
Operations was October 11, 1999.
The lease provides for the payment of percentage rent in addition to
base rental income; however, no percentage rent was due under the lease
for the Pro Forma Property during the period the Company was assumed to
have held the property.
(2) Represents reserve funds which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the Pro Forma
Property (the "FF&E Reserve"). The funds in the FF&E Reserve and all
property purchased with funds from the FF&E Reserve will be paid,
granted and assigned to the Company. In connection therewith, FF&E
Reserve income was earned at approximately $2,200 per month.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the period commencing the date the Pro Forma Property became
operational by the previous owner to the earlier of (i) the date the
Pro Forma Property was acquired by the Company or (ii) the end of the
pro forma period presented, as described in Note (1). The pro forma
adjustment is based upon the fact that interest income from interest
bearing accounts was earned at a rate of approximately five percent per
annum by the Company during the year ended December 31, 1999 and the
six months ended June 30, 2000.
(4) Represents adjustment to interest expense incurred at a rate of 8.75%
per annum in connection with the assumed borrowings from the line of
credit of $8,100,000 on October 11, 1999.
(5) Represents increase in asset management fees relating to the Pro Forma
Property for the period commencing the date the Pro Forma Property
became operational by the previous owner to the earlier of (i) the date
the Pro Forma Property was acquired by the Company or (ii) the end of
the pro forma period presented, as described in Note (1). Asset
management fees are equal to 0.60% per year of the Company's Real
Estate Asset Value as defined in the Company's prospectus.
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
(formerly CNL Health Care Properties, Inc.)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS - CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statements of Operations - Continued:
(6) Pursuant to the advisory agreement, CNL Retirement Corp. (the
"Advisor") is required to reimburse the Company the amount by which the
total operating expenses paid or incurred by the Company exceed in any
four consecutive fiscal quarters (the "Expense Year") the greater of
two percent of average invested assets or 25 percent of net income (the
"Expense Cap.") During the Expense Year ended June 30, 2000, the
Company's operating expenses exceeded the Expense Cap by $213,886.
As a result of the Pro Forma Property being treated in the Pro Forma
Consolidated Statements of Operations as operational since October 11,
1999, the Expense Cap increased based on two percent of average
invested assets; therefore, the amount of the reimbursement of
operating expenses from related party was adjusted for the six months
ended June 30, 2000.
(7) Represents increase in depreciation expense of the building and the
furniture, fixture and equipment ("FF&E") portions of the Pro Forma
Property accounted for as an operating lease using the straight-line
method. The building and FF&E are depreciated over useful lives of 40
and seven years, respectively. Also represents amortization of the loan
costs of $55,917 (.5% origination fee on the $8,100,000 from borrowings
on the line of credit, associated legal fees and closing costs)
amortized under the straight-line method over a period of five years.
(8) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the six
months ended June 30, 2000 and the year ended December 31, 1999.
As a result of the Pro Forma Property being treated in the Pro Forma
Consolidated Statements of Operations as operational since October 11,
1999, the Company assumed approximately 670,638 shares of common stock
were sold, and the net offering proceeds were available for the
purchase of this property. Due to the fact that approximately 270,400
of these shares of common stock were actually sold subsequently, during
the period October 11, 1999 through April 20, 2000, the weighted
average number of shares outstanding for the pro forma periods were
adjusted. Pro forma earnings per share were calculated based upon the
weighted average number of shares of common stock outstanding, as
adjusted, during the six months ended June 30, 2000 and the year ended
December 31, 1999.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C>
June 30, December 31,
2000 1999
------------- ------------
ASSETS
Land, building and equipment on operating lease, net $14,553,953 $ --
Cash 659,311 4,744,222
Receivables 3,631 --
Loan costs, less accumulated amortization of $2,206 53,711 --
Other assets 95,626 344,338
-------------- -------------
$15,366,232 $5,088,560
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $6,800,000 $ --
Due to related parties 1,795,033 1,775,256
Accounts payable and accrued expenses 4,445 21,167
Interest payable 16,705 --
Security deposit 553,956 --
Deferred rental income 46,900 --
-------------- -------------
Total liabilities 9,217,039 1,796,423
-------------- -------------
Stockholders' 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 100,000,000 shares, issued and
outstanding 872,153 and 540,028 shares, respectively 8,721 5,400
Capital in excess of par value 6,214,506 3,365,531
Accumulated deficit (74,034) (78,794)
-------------- -------------
Total stockholders' equity 6,149,193 3,292,137
-------------- -------------
$15,366,232 $5,088,560
============== =============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
<S> <C>
Quarter Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------- ------------ -------------- ------------
Revenues:
Rental income from operating lease $ 272,119 $ -- $ 272,119 $ --
FF&E Reserve income 3,616 -- 3,616 --
Interest income 19,887 -- 92,849 --
--------------- ------------- -------------- -------------
295,622 368,584
--------------- ------------- -------------- -------------
Expenses:
Interest 129,776 -- 129,776 --
General operating and administrative 95,473 -- 193,613 --
Asset management fees to related party 13,849 -- 13,849 --
Reimbursement of operating expenses
from related party (213,886) -- (213,886) --
Depreciation and amortization 87,947 -- 87,947 --
--------------- ------------- -------------- -------------
113,159 -- 211,299 --
--------------- ------------- -------------- -------------
Net Earnings $ 182,463 $ -- $ 157,285 $ --
=============== ============= ============== =============
Net Earnings Per Share of Common Stock
(Basic and Diluted) $ 0.25 $ -- $ 0.24 $ --
=============== ============= ============== =============
Weighted Average Number of Shares of
Common Stock Outstanding 730,041 -- 665,899 --
=============== ============= ============== =============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2000 and Year Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Common stock
--------------------------- Capital in
Number Par excess of Accumulated
of Shares value par value deficit Total
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1998 20,000 $ 200 $ 199,800 $ -- $ 200,000
Subscriptions received for common
stock through public offering
and distribution reinvestment plan 543,528 5,435 5,429,848 -- 5,435,283
Subscriptions held in escrow (23,500) (235) (234,765) -- (235,000)
Stock issuance costs -- -- (2,029,352) -- (2,029,352)
Net loss -- -- -- (28,390) (28,390)
Distributions declared and paid
($.125 per share) -- -- -- (50,404) (50,404)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1999 540,028 5,400 3,365,531 (78,794) 3,292,137
Subscriptions received for common
stock through public offering and
distribution reinvestment plan 332,125 3,321 3,317,941 -- 3,321,262
Stock issuance costs -- -- (468,966) -- (468,966)
Net earnings -- -- -- 157,285 157,285
Distributions declared and paid
($.229 per share) -- -- -- (152,525) (152,525)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2000 872,153 $ 8,721 $6,214,506 $ (74,034) $ 6,149,193
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S> <C>
Six Months Ended
June 30,
2000 1999
-------------- --------------
Increase (Decrease) in Cash and Cash Equivalents:
Net Cash Provided by Operating Activities $ 657,668 $ --
-------------- --------------
Net Cash Provided by Investing Activities:
Additions to land, building and
equipment on operating lease (13,848,900) --
Payment of acquisition costs (366,078) --
-------------- --------------
Net cash used in investing activities (14,214,978) --
-------------- --------------
Net Cash Provided by Financing Activities:
Repayment of offering and acquisition costs paid by
related party on behalf of the Company --
(223,302)
Proceeds from line of credit 8,100,000 --
Payment of loan costs (55,917) --
Repayment of borrowings on line of credit (1,300,000) --
Subscriptions received from stockholders 3,321,262 --
Distributions to stockholders (152,525) --
Payment of stock issuance costs (217,119) --
-------------- --------------
Net cash provided by financing activities 9,472,399 --
-------------- --------------
Net Decrease in Cash and Cash
Equivalents (4,084,911) --
Cash and Cash Equivalents at Beginning
of Period 4,744,222 92
-------------- --------------
Cash and Cash Equivalents at End of
Period $ 659,311 $ 92
============== ==============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
<S> <C>
Six Months Ended
June 30,
2000 1999
-------------- --------------
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Amounts paid by related parties
on behalf of the Company and
its subsidiaries:
Acquisition costs $ 56,129 $ --
Deferred offering costs -- 235,071
Stock issuance costs 178,708 --
-------------- --------------
$ 234,837 $ 235,071
============== ==============
Costs incurred by the Company and unpaid
at period end:
Acquisition costs $ 360,336 $ 110,915
Deferred offering costs -- 269,877
Stock issuance costs 67,956 --
-------------- --------------
$ 428,292 $ 380,792
============== ==============
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
1. Organization and Nature of Business:
CNL Health Care Properties, Inc. was organized pursuant to the laws of
the state of Maryland on December 22, 1997. CNL Health Care GP Corp.
and CNL Health Care LP Corp. are wholly owned subsidiaries of CNL
Health Care Properties, Inc., each of which was organized pursuant to
the laws of the state of Delaware in December 1999. CNL Health Care
Partners, LP is a Delaware limited partnership formed in December 1999.
CNL Health Care GP Corp. and CNL Health Care LP Corp. are the general
and limited partner, respectively, of CNL Health Care Partners, LP. The
term "Company" includes, unless the context otherwise requires, CNL
Health Care Properties, Inc., CNL Health Care Partners, LP, CNL Health
Care GP Corp. and CNL Health Care LP Corp.
The Company intends to use the proceeds from its public offerings after
deducting offering expenses, primarily to acquire real estate
properties (the "Property" or "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
percent 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.
The Company was a development stage enterprise from December 22, 1997
through July 13, 1999. Since operations had not begun, activities
through July 13, 1999 were devoted to the organization of the Company.
The Company acquired its first Property, a Brighton Gardens(R) by
Marriott(R), on April 20, 2000. This Property is located in Orland
Park, Illinois. In connection with the purchase of the Property, the
Company, as lessor, entered into a long-term, triple-net lease
agreement.
2. Basis of Presentation:
The accompanying unaudited condensed consolidated 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 condensed consolidated
financial statements reflect all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of the management,
necessary to a fair statement of the results for the interim periods
presented. Operating results for the quarter and six months ended June
30, 2000 may not be indicative of the results that may be expected for
the year ending December 31, 2000. Amounts included in the financial
statements as of December 31, 1999 have been derived from audited
financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Form 10-K of
CNL Health Care Properties, Inc. and its subsidiaries for the year
ended December 31, 1999.
The accompanying unaudited condensed consolidated financial statements
include the accounts of CNL Health Care Properties, Inc. and its wholly
owned subsidiaries, CNL Health Care GP Corp. and CNL Health Care LP
Corp., as well as the accounts of CNL Health Care Partners, LP. All
significant intercompany balances and transactions have been
eliminated.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
3. Public Offerings:
The Company has 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 (the "Initial Offering"),
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 to be granted to
the managing dealer of the Initial Offering as Shares are sold. As of
June 30, 2000, the Company had received subscription proceeds of
$8,521,527 (852,153 shares), including $50,427 (5,043 shares) through
the distribution reinvestment plan.
On May 19, 2000, the Company filed a registration statement on Form
S-11 with the Securities and Exchange Commission in connection with the
proposed sale by the Company of up to 15,500,000 additional shares of
common stock ($155,000,000) (the "2000 Offering") in an offering
expected to commence immediately following the completion of the
Company's Initial Offering. Of the 15,500,000 shares of common stock to
be offered, up to 500,000 will be available to stockholders purchasing
shares through the reinvestment plan. The price per share and other
terms of the 2000 Offering, including the percentage of gross proceeds
payable (i) to the managing dealer for selling commissions and expenses
in connection with the offering and (ii) to the Company's advisor for
acquisition fees, are substantially the same for the Company's Initial
Offering. The Company expects to use the net proceeds from the 2000
Offering to purchase additional Properties and, to a lesser extent,
make Mortgage Loans.
4. Land, Building and Equipment on Operating Lease:
The Company leases its land, building and equipment to a health care
facility operator. The lease is accounted for under the provisions of
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases," and has been classified as an operating lease. The lease is
for 15 years, provides for minimum and contingent rent and requires the
tenant to pay executory costs. In addition, the tenant pays all
property taxes and assessments and carries insurance coverage for
public liability, property damage, fire and extended coverage. The
lease options allow the tenant to renew the lease for four successive
five-year periods subject to the same terms and conditions of the
initial lease. The lease also requires the establishment of a capital
expenditure reserve fund, which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the health
care Property (the "FF&E Reserve"). Funds in the FF&E Reserve have been
earned, granted and assigned to the Company as additional rent.
The company records the acquisition of land, building and equipment at
cost, including acquisition and closing costs. Building and equipment
are depreciated on the straight-line method over their estimated useful
life of 40 and seven years, respectively. Land, building and equipment
on operating lease consisted of the following at:
June 30, December 31,
2000 1999
------------- ------------
Land $2,083,948 $ --
Building 11,530,358 --
Equipment 1,025,388 --
------------- ------------
14,639,694 --
Less accumulated depreciation (85,741) --
------------- ------------
$14,553,953 $ --
============= ============
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
4. Land, Building and Equipment on Operating Lease - Continued:
The lease provides for an increase in the minimum annual rent at a
predetermined interval during the term of the lease. Such amount is
recognized on a straight-line basis over the term of the lease
commencing on the date the Property was placed in service. Deferred
rental income represents the aggregate amount of cash payments received
in excess of rental revenue recognized on a straight-line basis to
date.
The lease requires that the tenant pay lease payments every four weeks
in advance. The following is a schedule of future minimum lease
payments to be received on the noncancellable operating lease at June
30, 2000:
2000 $ 675,134
2001 1,350,267
2002 1,373,391
2003 1,384,890
2004 1,384,890
Thereafter 14,223,932
--------------
$ 20,392,504
==============
Since the lease is renewable at the option of the tenant, the above
table only presents future minimum lease payments due during the
initial lease term. In addition, this table does not include any
amounts for future contingent rents, which may be received on the lease
based on a percentage of the tenant's gross sales.
5. Other Assets:
Other assets as of June 30, 2000 and December 31, 1999 were $95,626 and
$344,338, respectively, which consisted of acquisition fees and
acquisition expenses which will be allocated to future Properties and
miscellaneous prepaid expenses.
6. Line of Credit:
On April 20, 2000, the Company entered into a revolving line of credit
and security agreement with a bank to be used by the Company to acquire
health care Properties. The line of credit provides that the Company
may receive advances of up to $25,000,000 until April 19, 2005, with an
annual review to be performed by the bank to indicate that there has
been no substantial deterioration, in the bank's reasonable discretion,
of the Company's credit quality. Interest expense on each advance shall
be payable monthly, with all unpaid interest and principal due no later
than five years from the date of the advance. Generally, advances under
the line of credit will bear interest at either (i) a rate per annum
equal to the London Interbank Offered Rate (LIBOR) plus the difference
between LIBOR and the bank's base rate at the time of the advance or
(ii) a rate equal to the bank's base rate, whichever the Company
selects at the time advances are made. The interest rate will be
adjusted daily in accordance with fluctuations with the bank's rate or
the LIBOR rate, as applicable. Notwithstanding the above, the interest
rate on the first $9,700,000 drawn will be 8.75% through April 1, 2002,
and thereafter will bear interest at either (i) or (ii) above as of
April 1, 2002. In addition, a fee of 0.5% per advance will be due and
payable to the bank on funds as advanced. Each advance made under the
line of credit will be collateralized by the assignment of rents and
leases. In addition, the line of credit provides that the Company will
not be able to further encumber the applicable Property during the term
of the advance without the bank's consent. The Company will be
required, at each closing, to pay all costs, fees and expenses arising
in connection with the line of credit. The Company must also pay the
bank's attorney's fees, subject to a maximum cap, incurred in
connection with the line of credit and each advance.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
6. Line of Credit - Continued:
The Company had obtained an advance of $8,100,000 relating to the line
of credit and had an outstanding balance of $6,800,000 as of June 30,
2000. In connection with the line of credit, the Company incurred a
commitment fee, legal fees and closing costs of $55,917. The proceeds
were used in connection with the purchase of a health care Property.
7. Stock Issuance Costs:
The Company has incurred certain expenses of its offering, including
commissions, marketing support and due diligence expense reimbursement
fees, filing fees, legal, accounting, printing and escrow fees, which
have been deducted from the gross proceeds of the offering. Preliminary
costs incurred prior to raising capital were advanced by an affiliate
of the Company, CNL Health Care Corp. (the "Advisor") and its
affiliates. The Advisor has agreed to pay all 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 in connection
with the offerings.
During the six months ended June 30, 2000 and 1999, the Company
incurred $468,966 and $504,200, respectively, in stock issuance costs,
including $265,700 and $197,184, respectively, in commissions and
marketing support and due diligence expense reimbursement fees (see
Note 9). These amounts have been charged to stockholders' equity.
8. Distributions:
For the six months ended June 30, 2000, 100 percent of the
distributions paid to stockholders were considered ordinary income for
federal income tax purposes. No amounts distributed to the stockholders
for the six months ended June 30, 2000 are required to be or have been
treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital. The
characterization for tax purposes of distributions declared for the six
months ended June 30, 2000 may not be indicative of the
characterization of distributions that may be expected for the year
ending December 31, 2000.
9. Related Party Arrangements:
Certain directors and officers of the Company hold similar positions
with the Advisor and the managing dealer, CNL Securities Corp. These
affiliates receive fees and compensation in connection with the
offerings, and the acquisition, management and sale of the assets of
the Company.
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, a substantial portion of which has been
or will be paid as commissions to other broker-dealers. During the six
months ended June 30, 2000, the Company incurred $249,094 of such fees,
of which $216,037 has been or will be paid by CNL Securities Corp. as
commissions to other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing
support and due diligence expense reimbursement fee equal to 0.5% of
the total amount raised from the sale of shares, all or a portion of
which may be reallowed to other broker-dealers. During the six months
ended June 30, 2000, the Company incurred $16,606 of such fees, the
majority of which was reallowed to other broker-dealers and from which
all bona fide due diligence expenses were or will be paid.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
9. Related Party Arrangements - Continued:
In addition, in connection with the Initial Offering, the Company has
agreed to issue and sell soliciting dealer warrants ("Soliciting Dealer
Warrants") to CNL Securities Corp. The price for each warrant is
$0.0008 and one warrant is issued for every 25 shares sold by the
managing dealer except where prohibited by federal or state securities
laws. 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 began. No Soliciting Dealer
Warrant, however, will be exercisable until one year from the date of
issuance. During the six months ended June 30, 2000, the Company issued
approximately 24,000 Soliciting Dealer Warrants. As of June 30, 2000,
CNL Securities Corp. was entitled to receive approximately 6,100
additional Soliciting Dealer Warrants for shares sold during the
quarter then ended.
The Advisor is entitled to receive acquisition fees for services in
identifying Properties and structuring the terms of leases of the
Properties and Mortgage Loans equal to 4.5% of gross proceeds of the
offering, loan proceeds from permanent financing and amounts
outstanding on the line of credit, if any, at the time of listing the
Company's shares of common stock 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 six
months ended June 30, 2000, the Company incurred $149,456 of such fees.
These fees are included in land, building and equipment on operating
lease and other assets at June 30, 2000.
The Company incurs operating expenses which, in general, are those
expenses relating to administration of the Company on an ongoing basis.
Pursuant to the advisory agreement, the Advisor is required to
reimburse the Company the amount by which the total operating expenses
paid or incurred by the Company exceed in any four consecutive fiscal
quarters (the "Expense Year") the greater of two percent of average
invested assets or 25 percent of net income (the "Expense Cap"). During
the four quarters ended June 30, 2000, the Company's operating expenses
exceeded the Expense Cap by $213,886; therefore, the Advisor will
reimburse the Company such amount in accordance with the advisory
agreement. The amount to be received from the Advisor has been treated
as a reduction of the amount due to related parties as of June 30,
2000.
The Company and the Advisor have entered into an advisory agreement
pursuant to which the Advisor will receive a monthly asset management
fee of one-twelfth of 0.60% of the Company's real estate asset value
and the outstanding principal balance of any Mortgage Loan as of the
end of the preceding month. During the quarter ended June 30, 2000, the
Company incurred $13,849 of such fees.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
9. Related Party Arrangements - Continued:
The Advisor and its affiliates provide various administrative services
to the Company, including services related to accounting; financial,
tax and regulatory compliance reporting; stockholder distributions and
reporting; due diligence and marketing; and investor relations
(including administrative services in connection with the offering), on
a day-to-day basis. The expenses incurred for these services were
classified as follows for the six months ended June 30:
<TABLE>
<CAPTION>
<S> <C>
2000 1999
------------- -------------
Deferred offering costs $ -- $ 167,392
Stock issuance costs 25,687 --
Other assets 30,491 --
General operating and administrative expenses 120,106 --
------------- -------------
$ 176,284 $ 167,392
============= =============
Amounts due to related parties consisted of the following at:
June 30, December 31,
2000 1999
------------- -------------
Due to (from) the Advisor:
Expenditures incurred for organizational and offering
expenses on behalf of the Company $1,570,983 $1,432,291
Accounting and administrative services due to
(reimbursable from) the Advisor (179,027) 6,739
Acquisition fees and expenses 358,238 336,226
------------- -------------
1,750,194 1,775,256
------------- -------------
Due to CNL Securities Corp.:
Commissions 42,027 --
Marketing support and due diligence
expense reimbursement fee 2,812 --
------------- -------------
44,839 --
------------- -------------
$1,795,033 $1,775,256
============= ============
</TABLE>
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 2000 and 1999
10. Concentration of Credit Risk:
All of the Company's rental income for the six months ended June 30,
2000 was earned from one lessee, BG Orland Park, LLC, which operates
the Property as a Brighton Gardens(R) by Marriott(R).
Although the company intends to acquire Properties located in various
states and regions and to carefully screen its tenants in order to
reduce risks of default, failure of any one health care chain or lessee
that contributes more than ten percent of the Company's rental income
could significantly impact the result of operations of the Company.
However, management believes that the risk of such a default is reduced
due to the essential or important nature of this Property for the
ongoing operations of the lessee.
It is expected that the percentage of total rental income contributed
by this lessee will decrease as additional Properties are acquired and
leased in 2000 and subsequent years.
11. Subsequent Events:
During the period July 1 through July 31, 2000, the Company received
subscription proceeds for an additional 35,723 shares ($357,230) of
common stock. As of July 31, 2000, the Company had received total
subscription proceeds of $8,878,760.
On July 1, 2000 the Company declared distributions totaling $50,847, or
$0.058 per share of common stock, payable in September 2000, to
stockholders of record on July 1, 2000.
<PAGE>
INDEX TO OTHER FINANCIAL STATEMENTS
The following financial information is provided in connection with the Company's
acquisition of the Orland Park Property. Due to the fact that the tenant of the
Company is a newly formed entity, the information presented represents the
historical financial information of the operations of the assisted living
facility. The Orland Park Property became operational on October 11, 1999. This
information was obtained from the seller of the Property. The Company acquired
the Property on April 20, 2000, but does not own any interest in the tenant's
operations of the assisted living facility. For information on the Property and
the long-term, triple-net lease which the Company entered, see "Business --
Property Acquisitions."
BRIGHTON GARDENS BY MARRIOTT
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Updated Financial Statements (unaudited):
<TABLE>
<CAPTION>
<S> <C>
Condensed Statement of Assets and Liabilities as of March 24, 2000 B-20
Condensed Statement of Revenues and Operating Expenses for the period from
January 1, 2000 through March 24, 2000 B-21
Condensed Statement of Excess of Assets Over Liabilities for the period from
January 1, 2000 through March 24, 2000 B-22
Condensed Statement of Cash Flows for the period from January 1, 2000 through
March 24, 2000 B-23
Notes to Condensed Financial Statements for the period from January 1, 2000
through March 24, 2000 B-24
</TABLE>
<PAGE>
Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Assets and Liabilities
March 24, 2000
--------------------------------------------------------------------------------
Assets
Current Assets:
Cash $ 9,339
Other assets 5,015
-------------
Total current assets 14,354
Property and Equipment, at cost, less accumulated
depreciation of $191,602 12,593,208
-------------
$12,607,562
=============
Liabilities and Excess of Assets Over Liabilities
Current Liabilities:
Accounts payable and accrued expenses $ 12,678
Unearned revenue 27,280
Due to Marriott Senior Living Services, Inc. 259,690
-------------
Total current liabilities 299,648
Excess of Assets Over Liabilities 12,307,914
-------------
$12,607,562
=============
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Revenues and Operating Expenses Period from January 1,
2000 through March 24, 2000
--------------------------------------------------------------------------------
Revenue:
Resident fees $ 402,195
Other income 10,846
-------------
413,041
-------------
Expenses:
Operating, selling, general and administrative 538,173
Depreciation 100,843
-------------
639,016
-------------
Excess of Operating Expenses Over Revenues $ (225,975)
=============
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Excess of Assets Over Liabilities
Period from January 1, 2000 through March 24, 2000
--------------------------------------------------------------------------------
Balance at Beginning of Period $ 12,533,889
Excess of operating expenses over revenues (225,975)
----------------
Excess of Assets Over Liabilities at March 24, 2000 $ 12,307,914
================
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Condensed Statement of Cash Flows Period from January 1, 2000 through
March 24, 2000
--------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net loss $ (225,975)
Depreciation 100,843
Changes in assets and liabilities:
Decrease (increase) in assets:
Decrease in accounts receivable 7,333
Decrease in other assets 2,744
Increase (decrease) in liabilities:
Decrease in accounts payable and accrued expenses (2,546)
Increase in unearned revenue 27,280
Increase in due to Marriott Senior Living Services, Inc. 83,131
-----------
Net cash used in operating activities (7,190)
Cash at Beginning of Period 16,529
-----------
Cash at End of Period $ 9,339
===========
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Brighton Gardens by Marriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Notes to Condensed Financial Statements Period from January 1, 2000 through
March 24, 2000
--------------------------------------------------------------------------------
1. Organization and Nature of Business:
Brighton Gardens by Marriott (the "Property") is an assisted-living
facility located in Orland Park, Illinois. The Property includes 82
assisted-living units and 24 Alzheimer's units. The Property is an
unincorporated division of Marriott Senior Living Services, Inc. (the
"Owner"), a subsidiary of Marriott International, Inc. The property
became operational on October 11, 1999.
2. Basis of Presentation:
The accompanying unaudited condensed financial statements do not
include all of the information and note disclosures required by
generally accepted accounting principles. The condensed financial
statements reflect all adjustments, consisting of normal recurring
adjustments, which are, in the opinion of management, necessary to a
fair statement of results for the interim period presented. Operating
results for the period from January 1, 2000 to March 24, 2000 may not
be indicative of the results that may be expected for the year ending
December 29, 2000. These unaudited financial statements should be read
in conjunction with the audited financial statements as of December 31,
1999.
<PAGE>
APPENDIX C
PRIOR PERFORMANCE TABLES
------------------------------------------------------
| |
| THE FOLLOWING INFORMATION UPDATES AND REPLACES |
| THE CORRESPONDING INFORMATION IN APPENDIX C TO |
| THE ATTACHED PROSPECTUS, DATED MARCH 31, 2000. |
| |
------------------------------------------------------
<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 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 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 June 30, 2000. The following is a brief description of the
Tables:
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 July 1995 and June 2000.
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.
C-1
<PAGE>
Table II - Compensation to Sponsor
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to 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 July 1995 and June 2000. 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 June 30, 2000.
Table III - Operating Results of Prior Programs
Table III presents a summary of operating results for the period from
inception through December 31, 1999, of the Prior Public Programs, the offerings
of which became fully subscribed between July 1995 and June 2000.
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 July 1995 and June 2000.
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 American CNL Income CNL Income CNL Hospitality
Properties Fund, Fund XVII, Fund XVIII, Properties,
Inc. Ltd. Ltd. Inc.
----------------- -------------- --------------- -------------------
(Note 1) (Note 2)
<S> <C> <C> <C>
Dollar amount offered $747,464,420 $30,000,000 $35,000,000 $150,072,637
================= ============== =============== ===================
Dollar amount raised 100.0% 100.0% 100.0% 100.0%
----------------- -------------- --------------- -------------------
Less offering expenses:
Selling commissions and discounts (7.5) (8.5) (8.5) (7.5)
Organizational expenses (2.2) (3.0) (3.0) (3.0)
Marketing support and due diligence
expense reimbursement fees
(includes amounts reallowed to
unaffiliated entities) (0.5) (0.5) (0.5) (0.5)
----------------- -------------- --------------- -------------------
(10.2) (12.0) (12.0) (11.0)
----------------- -------------- --------------- -------------------
Reserve for operations -- -- -- --
----------------- -------------- --------------- -------------------
Percent available for investment 89.8% 88.0% 88.0% 89.0%
================= ============== =============== ===================
Acquisition costs:
Cash down payment 85.3% 83.5% 83.5% 84.5%
Acquisition fees paid to affiliates 4.5 4.5 4.5% 4.5%
Loan costs -- -- -- --
----------------- -------------- --------------- -------------------
Total acquisition costs 89.8% 88.0% 88.0% 89.0%
================= ============== =============== ===================
Percent leveraged (mortgage financing
divided by total acquisition costs) -- -- -- --
Date offering began 4/19/95, 9/02/95 9/20/96 7/09/97
2/06/97 and
3/02/98
Length of offering (in months) 22, 13 and 9, 12 17 23
respectively
Months to invest 90% of amount
available for investment measured
from date of offering 23, 16 and 11, 15 17 29
respectively
</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 (7,529,588
shares), including $591,765 (29,588 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 (12,593,633 shares), including
$1,872,648 (93,632 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 January 31, 1999, APF had received
subscriptions totalling approximately $345,000,000 (17,250,000
shares), from the 1998 Offering, including $3,107,848 (155,393
shares) 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.
C-3
<PAGE>
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. ("CHP") 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 CHP commenced September 11, 1997, and
upon completion of the Initial Offering on June 17, 1999 had
received $150,072,637 (15,007,264 shares), including $72,637
(7,264 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 June 17, 1999,
CHP registered for sale up to $275,000,000 of shares of common
stock (the "1999 Offering"). The 1999 Offering of CHP
commenced following the completion of the Initial Offering on
June 17, 1999. As of June 30, 2000, CHP had received
subscription proceeds of $235,011,997 (23,501,199 shares) from
its 1999 Offering, including $965,145 (96,514 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 23, 2000, CHP registered for sale up to
$450,000,000 of shares of common stock (the "2000 Offering").
The 2000 Offering is expected to commence immediately
following the completion of the 1999 Offering.
C-4
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
<TABLE>
<CAPTION>
CNL American CNL Income CNL Income CNL Hospitality
Properties Fund, Fund XVII, Fund XVIII, Properties,
Inc. Ltd. Ltd. Inc.
------------------- --------------- ---------------- -------------------
<S> <C> <C> <C> <C>
(Notes 1, 2 and 6) (Note 4)
Date offering commenced 4/19/95, 2/06/97 9/02/95 9/20/96 7/9/97 and 6/17/99
and 3/02/98
Dollar amount raised $747,464,420 $30,000,000 $35,000,000 $385,084,634
=================== =============== ================ ===================
Amount paid to sponsor from proceeds
of offering:
Selling commissions and discounts 56,059,832 2,550,000 2,975,000 27,756,378
Real estate commissions -- -- -- --
Acquisition fees (Notes 5, 6 and 8) 33,604,618 1,350,000 1,575,000 17,257,561
Marketing support and due diligence
expense reimbursement fees
(includes amounts reallowed to
unaffiliated entities) 3,737,322 150,000 175,000 1,850,425
------------------- --------------- ---------------- -------------------
Total amount paid to sponsor 93,401,772 4,050,000 4,725,000 46,864,364
=================== =============== ================ ===================
Dollar amount of cash generated from (used in)
operations before deducting payments
to sponsor:
2000 (6 months) (Note 7) (46,945,156) 1,051,688 1,342,621 15,248,151
1999 (Note 7) 311,630,414 2,567,164 2,921,071 13,348,795
1998 42,216,874 2,638,733 2,964,628 2,985,455
1997 18,514,122 2,611,191 1,471,805 29,358
1996 6,096,045 1,340,159 30,126 --
1995 594,425 11,671 -- --
1994 -- -- -- --
1993 -- -- -- --
Amount paid to sponsor from operations
(administrative, accounting and
management fees) (Note 6):
2000 (6 months) 956,233 66,591 72,061 501,203
1999 4,369,200 117,146 124,031 458,634
1998 3,100,599 117,814 132,890 208,490
1997 1,437,908 116,077 110,049 6,889
1996 613,505 107,211 2,980 --
1995 95,966 2,659 -- --
1994 -- -- -- --
1993 -- -- -- --
Dollar amount of property sales and
refinancing before deducting payments
to sponsor:
Cash (Note 3) 25,163,154 1,675,385 688,997 --
Notes -- -- -- --
Amount paid to sponsors from property
sales and refinancing:
Real estate commissions -- -- -- --
Incentive fees -- -- -- --
Other -- -- -- --
</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 (7,529,588
shares), including $591,765 (29,588 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 (12,593,633 shares), including
$1,872,648 (93,632 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 January 31, 1999, APF had received
subscriptions totalling approximately $345,000,000 (17,250,000
shares), from the 1998 Offering, including $3,107,848 (155,393
shares) 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 January 31, 1999, including shares issued pursuant to the
company's reinvestment plan.
C-5
<PAGE>
TABLE II - COMPENSATION TO SPONSOR - CONTINUED
Note 2: For negotiating secured equipment leases and supervising the
secured equipment lease program, APF was required to pay its
external advisor 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 (see Note 6).
During the years ended December 31, 1999, 1998, 1997 and 1996,
APF incurred $77,317, $54,998, $87,665 and $70,070,
respectively, in secured equipment lease servicing fees.
Note 3: Excludes properties sold and substituted with replacement
properties, as permitted under the terms of the lease
agreements.
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. ("CHP") 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 offering of shares of CHP commenced September 11, 1997,
and upon completion of the Initial Offering on June 17, 1999,
had received subscription proceeds of $150,072,637 (15,007,264
shares), including $72,637 (7,264 shares) issued pursuant to
the reinvestment plan. Pursuant to a Registration Statement on
Form S-11, as amended, effective June 17, 1999, CHP registered
for sale $275,000,000 of shares of common stock (the "1999
Offering"). The 1999 Offering of CHP commenced following the
completion of the Initial Offering on June 17, 1999. The
amounts shown represent the combined results of the Initial
Offering and the 1999 Offering, including subscription
proceeds issued pursuant to the reinvestment plan as of June
30, 2000. Pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933, as amended, effective May
23, 2000, CHP registered for sale up to $450,000,000 of shares
of common stock (the "2000 Offering"). The 2000 Offering is
expected to commence immediately following the completion of
the 1999 Offering.
Note 5: In addition to acquisition fees paid on gross proceeds from
the offerings, prior to becoming self advised on September 1,
1999, APF also incurred acquisition fees relating to proceeds
from its line of credit to the extent the proceeds were used
to acquire properties. Such fees were paid using proceeds from
the line of credit, and as of December 31, 1999, APF had
incurred $6,175,521 of such fees (see Note 6).
Note 6: On September 1, 1999, APF issued 6,150,000 shares of common
stock (with an exchange value of $20 per share) to affiliates
of APF to acquire its external advisor and two companies which
make and service mortgage loans and securitize portions of
such loans. As a result of the acquisition, APF ceased payment
of acquisition fees, administrative, accounting, management
and secured equipment lease servicing fees. APF continues to
outsource several functions to affiliates such as investor
services, public relations, corporate communications,
knowledge and technology management, and tax and legal
compliance.
Note 7: In September 1999, APF acquired two companies which make and
service mortgage loans and securitize portions of loans.
Effective with these acquisitions, APF classifies its
investments in mortgage loans, proceeds from sale of mortgage
loans, collections of mortgage loans, proceeds from
securitization transactions and purchases of other investments
as operating activities in its financial statements. Prior to
these acquisitions, these types of transactions were
classified as investing activities in its financial
statements.
Note 8: During 1999, CHP with Five Arrows Realty Securities II L.L.C.
("Five Arrows") formed a jointly owned real estate investment
trust, CNL Hotel Investors, Inc. ("Hotel Investors"), which
acquired seven hotel properties. In order to fund the
acquisition of the properties, Five Arrows invested
approximately $48 million and CHP invested approximately $38
million in Hotel Investors. Hotel Investors funded the
remaining amount of approximately $88 million with permanent
financing, collateralized by Hotel Investors' interests in the
properties. The advisor is entitled to receive acquisition
fees for services relating to identifying the properties,
structuring the terms of the acquisition and leases of the
properties and structuring the terms of the mortgage loans
equal to 4.5% of the gross proceeds of the offerings, loan
proceeds from permanent financing and the line of credit that
are used to acquire properties, but excluding amounts used to
finance secured equipment leases. In April 1999, CHP paid the
advisor approximately $1.9 million related to the permanent
financing for the properties held by Hotel Investors. These
acquisition fees were not paid using proceeds from the
offering and; therefore, were excluded from the table.
C-6
<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
Gain (loss) on sale of assets (Notes 7, 15 and 18) 0 0 0 0
Provision for losses on assets (Notes 12, 14 and 17) 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)
Transaction costs 0 0 0 0
Interest expense 0 0 0 0
Depreciation and amortization 0 (104,131) (521,871) (1,795,062)
Advisor acquisition expense (Note 16) 0 0 0 0
Minority interest in income of consolidated
joint ventures 0 (76) (29,927) (31,453)
------------ ------------ ------------- -------------
Net income (loss) - 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 (Notes 7, 15 and 18) 0 0 0 (41,115)
============ ============ ============= =============
Cash generated from (used in) operations (Notes 4, 5
and 19) 0 498,459 5,482,540 17,076,214
Cash generated from sales (Notes 7, 15, 18 and 20) 0 0 0 6,289,236
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------- -------------
Cash generated from (used in) operations, sales and
refinancing 0 498,459 5,482,540 23,365,450
Less: Cash distributions to investors (Note 9)
- from operating cash flow (Note 4) 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 sales of equipment direct
financing leases 0 0 0 962,274
Investment in joint venture 0 0 0 0
Increase in restricted cash 0 0 0 0
Purchase of other investments (Note 19) 0 0 0 0
Investment in mortgage notes receivable (Note 19) 0 0 (13,547,264) (4,401,982)
Collections on mortgage notes receivable (Note 19) 0 0 133,850 250,732
Investment in equipment and other notes
receivable 0 0 0 (12,521,401)
Collections on equipment and other notes
receivable 0 0 0 0
Investment in (redemption of) certificates of
deposit 0 0 0 (2,000,000)
Proceeds of borrowing on line of credit and
note payables 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
Proceeds from borrowings on mortgage
warehouse facility 0 0 0 0
Payments on mortgage warehouse facility 0 0 0 0
Payments of loan costs 0 0 0 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
============ ============ ============= =============
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
6 months
1998 1999 2000
(Note 3) (Note 3) (Note 3)
--------------- --------------- --------------
<S> <C> <C> <C>
Gross revenue $33,202,491 $ 62,165,451 $ 42,275,405
Equity in earnings of joint venture 16,018 97,307 48,665
Gain (loss) on sale of assets (Notes 7, 15 and 18) 0 (1,851,838) 198,682
Provision for losses on assets (Notes 12, 14 and 17) (611,534) (7,779,195) (174,641)
Interest income 8,984,546 13,335,146 10,110,235
Less: Operating expenses (5,354,859) (12,078,868) (11,481,633)
Transaction costs 0 (6,798,803) (6,702,955)
Interest expense 0 (10,205,197) (18,288,098)
Depreciation and amortization (4,054,098) (10,346,143) (7,742,567)
Advisor acquisition expense (Note 16) 0 (76,333,516) 0
Minority interest in income of consolidated
joint ventures (30,156) (41,678) (208,663)
--------------- --------------- --------------
Net income (loss) - GAAP basis 32,152,408 (49,837,334) 8,034,430
=============== =============== ==============
Taxable income
- from operations (Note 8) 33,553,390 58,152,473 7,777,866
=============== =============== ==============
- from gain (loss) on sale (Notes 7, 15 and 18) (149,948) (789,861) (482,056)
=============== =============== ==============
Cash generated from (used in) operations (Notes 4, 5
and 19) 39,116,275 307,261,214 (47,901,389)
Cash generated from sales (Notes 7, 15, 18 and 20) 2,385,941 5,302,433 6,486,944
Cash generated from refinancing 0 0 0
--------------- --------------- --------------
Cash generated from (used in) operations, sales and
refinancing 41,502,216 312,563,647 (41,414,445)
Less: Cash distributions to investors (Note 9)
- from operating cash flow (Note 4) (39,116,275) (60,078,825) 0
- from sale of properties 0 0 0
- from cash flow from prior period (265,053) 0 (33,164,804)
- from return of capital (Note 10) (67,821) 0 0
--------------- --------------- --------------
Cash generated (deficiency) after cash distributions 2,053,067 252,484,822 (74,579,249)
Special items (not including sales of real estate and
refinancing):
Subscriptions received from stockholders 385,523,966 210,736 0
Sale of common stock to CNL Fund
Advisors, Inc. 0 0 0
Retirement of shares of common stock
(Note 13) (639,528) (50,891) 0
Contributions from minority interest 0 740,621 0
Distributions to holder of minority interest (34,073) (66,763) (52,585)
Stock issuance costs (34,579,650) (737,190) 0
Acquisition of land and buildings (200,101,667) (286,411,210) (27,279,430)
Investment in direct financing leases (47,115,435) (63,663,720) (23,301,254)
Proceeds from sales of equipment direct
financing leases 0 2,252,766 483,669
Investment in joint venture (974,696) (187,452) 0
Increase in restricted cash 0 0 (3,467,086)
Purchase of other investments (Note 19) (16,083,055) 0 0
Investment in mortgage notes receivable (Note 19) (2,886,648) (4,041,427) 0
Collections on mortgage notes receivable (Note 19) 291,990 393,468 0
Investment in equipment and other notes
receivable (7,837,750) (26,963,918) (4,152,100)
Collections on equipment and other notes
receivable 1,263,633 3,500,599 1,712,462
Investment in (redemption of) certificates of
deposit 0 2,000,000 0
Proceeds of borrowing on line of credit and
note payables 7,692,040 439,941,245 333,401,000
Payment on line of credit (8,039) (61,580,289) (278,000,000)
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) (1,492,310) (1,422,056)
Increase in intangibles and other assets (6,281,069) (1,862,036) (1,776,564)
Proceeds from borrowings on mortgage
warehouse facility 0 27,101,067 71,481,448
Payments on mortgage warehouse facility 0 (352,808,966) (549,093)
Payments of loan costs 0 (5,947,397) (3,209,908)
Other (95,101) 0 0
--------------- --------------- --------------
Cash generated (deficiency) after cash distributions
and special items 75,613,060 (77,188,245) (10,710,746)
=============== =============== ==============
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
1994 1997
(Note 1) 1995 1996 (Note 2)
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Notes 9 and 11)
- from operations (Note 8) 0 20 61 67
============== ============= ============== =============
- from recapture 0 0 0 0
============== ============= ============== =============
Capital gain (loss) (Notes 7, 15 and 18) 0 0 0 0
============== ============= ============== =============
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 (Note 4) 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 (Notes 6 and 21) 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) (Notes 7, 15 and 18) N/A 100% 100% 100%
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
6 months
1998 1999 2000
(Note 3) (Note 3) (Note 3)
------------------ --------------- ---------------
<S> <C> <C> <C>
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED (Note 6)
Federal income tax results:
Ordinary income (loss) (Notes 9 and 11)
- from operations (Note 8) 63 74 9
================== =============== ===============
- from recapture 0 0 0
================== =============== ===============
Capital gain (loss) (Notes 7, 15 and 18) 0 (1) (1)
Cash distributions to investors ================== =============== ===============
Source (on GAAP basis)
- from investment income 60 0 9
- from capital gain 0 0 0
- from investment income from prior
period 0 0 0
- from return of capital (Note 10) 14 76 29
------------------ --------------- ---------------
Total distributions on GAAP basis (Note 11) 74 76 38
================== =============== ===============
Source (on cash basis)
- from sales 0 0 0
- from refinancing 0 0 0
- from operations (Note 4) 73 76 0
- from cash flow from prior period 1 0 38
- from return of capital (Note 10) 0 0 0
------------------ --------------- ---------------
Total distributions on cash basis (Note 11) 74 76 38
================== =============== ===============
Total cash distributions as a percentage of
original $1,000 investment (Notes 6 and 21) 7.625% 7.625% 7.625%
Total cumulative cash distributions per
$1,000 investment from inception 246 322 360
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 7, 15 and 18) 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 (7,529,588
shares), including $591,765 (29,588 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 (12,593,633 shares), including
$1,872,648 (93,632 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 January 31, 1999, APF had received
subscriptions totalling approximately $345,000,000 (17,250,000
shares), from the 1998 Offering, including $3,107,848 (155,393
shares) 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 from inception through
September 1999 included cash received from tenants, less cash
paid for expenses, plus interest received. In September 1999,
APF acquired two companies which make and service mortgage
loans and securitize portions of loans. Effective with these
acquisitions, APF classifies its investments in mortgage
loans, proceeds from sale of mortgage loans, collections of
mortgage loans, proceeds from securitization transactions and
purchases of other investments as operating activities in its
financial statements. Prior to these acquisitions, these types
of transactions were classified as investing activities in its
financial statements.
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.
Note 8: Taxable income presented is before the dividends paid
deduction.
Note 9: For the six months ended June 30, 2000 and the years ended
December 31, 1999, 1998, 1997, 1996 and 1995, 67%, 97%,
84.87%, 93.33%, 90.25% and 59.82%, respectively, of the
distributions received by stockholders were considered to be
ordinary income and 33%, 15%, 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 six months ended June 30, 2000 and the years ended
December 31, 1999, 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-10
<PAGE>
TABLE III - CNL AMERICAN PROPERTIES FUND, INC. (continued)
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 (loss) 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. During the year ended December 31, 1999, accumulated
net loss included a non-cash deduction for the advisor
acquisition expense of $76,333,516 (see Note 16).
Note 11: Tax and distribution data and total distributions on GAAP
basis were computed based on the weighted average dollars
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. During 1999,
as a result of the stockholders approving a one-for-two
reverse stock split of common stock, the Company agreed to
redeem fractional shares (2,545 shares).
Note 14: During the year ended December 31, 1999, APF recorded
provisions for losses on buildings in the amount of $7,779,495
for financial reporting purposes relating to several
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, 1999 and the estimated net realizable value for
these properties.
Note 15: During the year ended December 31, 1999, APF sold six
properties and received aggregate net sales proceeds of
$5,302,433, which resulted in a total aggregate loss of
$781,192 for financial reporting purposes. APF reinvested the
proceeds from the sale of properties in additional properties.
In addition, APF recorded a loss on securitization of
$1,070,646 for financial reporting purposes.
Note 16: On September 1, 1999, APF issued 6,150,000 shares of common
stock to affiliates of APF to acquire its external advisor and
two companies which make and service mortgage loans and
securitize portions of loans. APF recorded an advisor
acquisition expense of $76,333,516 relating to the acquisition
of the external advisor, which represented the excess purchase
price over the net assets acquired.
Note 17: During the six months ended June 30, 2000, APF recorded
provision for losses on buildings in the amount of $174,641
for financial reporting purposes relating to several
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
June 30, 2000 and the estimated net realizable value for these
properties.
Note 18: During the six months ended June 30, 2000, APF sold nine
properties for aggregate net sales proceeds of $9,262,269
(after deduction of construction costs incurred but not paid
by APF as of the date of the sale). As of June 30, 2000, APF
had collected $6,486,944 of these net sales proceeds and in
July 2000, collected the remaining $2,775,325 in net sales
proceeds.
Note 19: In September 1999, APF acquired two companies which make and
service mortgage loans and securitize portions of loans.
Effective with these acquisitions, APF classifies its
investments in mortgage loans, proceeds from sale of mortgage
loans, collections of mortgage loans, proceeds from
securitization transactions and purchases of other investments
as operating activities in its financial statements. Prior to
these acquisitions, these types of transactions were
classified as investing activities in its financial
statements.
Note 20: Cash generated from sales during the six months ended June 30,
2000 do not include net sales proceeds totaling $2,775,325
relating to the June 30, 2000 sales of the properties in
Nanuet, New York, Jefferson City, Missouri and Alton,
Illinois. The net sales proceeds were recorded as accounts
receivable for financial reporting purposes at June 30, 2000
due to receiving the net sales proceeds in July 2000.
Note 21: Certain data for columns representing less than 12 months have
been annualized.
C-11
<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 0 4,834 100,918 140,595
ventures
Loss on dissolution of consolidated joint
venture (Note 7) 0 0 0 0
Provision for loss on land and buildings (Note 8) 0 0 0 0
Interest income 12,153 244,406 69,779 51,240
Less: Operating expenses (3,493) (169,536) (181,865) (168,542)
Transaction costs 0 0 0 (14,139)
Interest expense 0 0 0 0
Depreciation and amortization (309) (179,208) (387,292) (369,209)
Minority interest in income of
consolidated joint venture (Note 7) 0 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 (loss) on sale (Note 7) 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 (Note 7) 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 prior period 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 contributions 5,696,921 24,303,079 0 0
General partners' capital contributions 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)
Distribution to holder of minority interest
from dissolution of consolidated joint
venture 0 0 0 0
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) (Note 7) 0 0 0 0
============== ============== ============= ==============
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
6 months
1999 2000
----------------- --------------
<S> <C> <C>
Gross revenue $ 2,403,040 $ 1,042,922
Equity in earnings of unconsolidated joint
ventures 182,132 90,427
Loss on dissolution of consolidated joint
venture (Note 7) (82,914) 0
Provision for loss on land and buildings (Note 8) 0 (353,622)
Interest income 44,184 14,771
Less: Operating expenses (219,361) (157,897)
Transaction costs (71,366) (23,382)
Interest expense 0 0
Depreciation and amortization (384,985) (199,123)
Minority interest in income of
consolidated joint venture (Note 7) (31,461) 0
----------------- --------------
Net income - GAAP basis 1,839,269 414,096
================= ==============
Taxable income
- from operations 2,003,243 898,708
================= ==============
- from gain (loss) on sale (Note 7) (23,150) 0
================= ==============
Cash generated from operations (Notes
2 and 3) 2,450,018 985,097
Cash generated from sales (Note 7) 2,094,231 0
Cash generated from refinancing 0 0
----------------- --------------
Cash generated from operations, sales and
refinancing 4,544,249 985,097
Less: Cash distributions to investors (Note 4)
- from operating cash flow (2,400,000) (985,097)
- from prior period 0 (214,903)
----------------- --------------
Cash generated (deficiency) after cash
distributions 2,144,249 (214,903)
Special items (not including sales and
refinancing):
Limited partners' capital contributions 0 0
General partners' capital contributions 0 0
Contributions from minority interest 0 0
Distribution to holder of minority interest (46,567) 0
Distribution to holder of minority interest
from dissolution of consolidated joint
venture (417,696) 0
Syndication costs 0 0
Acquisition of land and buildings 0 (1,630,164)
Investment in direct financing leases 0 0
Investment in joint ventures (527,864) (12)
Reimbursement of organization, syndication
and acquisition costs paid on behalf of
CNL Income Fund XVII, Ltd. by related
parties 0 0
Increase in other assets 0 0
Reimbursement from developer of
construction costs 0 0
Other 0 0
----------------- --------------
Cash generated (deficiency) after cash
distributions and special items 1,152,122 (1,845,079)
================= ==============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 66 30
================= ==============
- from recapture 0 0
================= ==============
Capital gain (loss) (Note 7) (1) 0
================= ==============
</TABLE>
C-13
<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
- from return of capital 0 0 0 0
-------------- ------------- ------------- -------------
Total distributions on GAAP basis (Note 4) 4 23 73 80
============== ============= ============= =============
Source (on cash basis)
- from sales 0 0 0 0
- from prior period 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 (Notes 5 and 9) 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) (Notes 6 and 7) N/A 100% 100% 100%
TABLE III - CNL INCOME FUND XVII, LTD. (continued)
<CAPTION>
6 months
1999 2000
------------------ ----------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 61 14
- from capital gain 0 0
- from investment income from prior
period 19 0
- from return of capital 0 26
------------------ ----------------
Total distributions on GAAP basis (Note 4) 80 40
================== ================
Source (on cash basis)
- from sales 0 0
- from prior period 0 7
- from operations 80 33
------------------ ----------------
Total distributions on cash basis (Note 4) 80 40
================== ================
Total cash distributions as a percentage of
original $1,000 investment (Notes 5 and 9) 8.00% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 260 300
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 6 and 7) 94% 100%
</TABLE>
C-14
<PAGE>
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, 1997, 1998 and 1999 are reflected in the 1996,
1997, 1998, 1999 and 2000 columns, respectively, due to the
payment of such distributions in January 1996, 1997, 1998,
1999 and 2000, respectively. As a result of distributions
being presented on a cash basis, distributions declared and
unpaid as of December 31, 1995, 1996, 1997, 1998 and 1999, and
June 30, 2000, are not included in the 1995, 1996, 1997, 1998,
1999 and 2000 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 XVII 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. During 1999, CNL XVII had
reinvested these amounts, plus additional funds, in a property
as tenants-in-common with an affiliate of the general partners
and in Ocean Shores Joint Venture, with an affiliate of CNL
XVII which has the same general partners.
Note 7: During 1999, CNL/El Cajon Joint Venture, CNL XVII's
consolidated joint venture in which CNL XVII owned an 80%
interest, sold its property to the 20% joint venture partner
and dissolved the joint venture. CNL XVII did not recognize
any gain or loss from the sale of the property for financial
reporting purposes. As a result of the dissolution, CNL XVII
recognized a loss on dissolution of $82,914 for financial
reporting purposes. In January 2000, the Partnership
reinvested approximately $1,630,200 of the net sales proceeds
received from the 1999 sale of this property in a Baker's
Square property in Wilmette, Illinois.
Note 8: During the six months ended June 2000, the Partnership
recorded a provision for loss on land and building in the
amount of $353,622 for financial reporting purposes relating
to the Boston Market property in Long Beach, California. The
tenant of this property filed for bankruptcy in October 1998
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 June 30, 2000 and the
estimated net realizable value for this property.
Note 9: Certain data for columns representing less than 12 months have
been annualized.
C-15
<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
Gain on sale of properties (Note 7) 0 0 0 0
Provision for loss on land (Note 5) 0 0 0 (197,466)
Lease termination refund to tenant (Note 8) 0 0 0 0
Interest income 0 30,241 161,826 141,408
Less: Operating expenses 0 (3,992) (156,403) (207,974)
Transaction costs 0 0 0 (15,522)
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 (Note 7) 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 (Note 7) 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 prior period 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 contributions 0 8,498,815 25,723,944 854,241
General partners' capital contributions 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)
Decrease (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) (Note 7) 0 0 0 0
============== ============== ============= ==============
</TABLE>
C-16
<PAGE>
<TABLE>
<CAPTION>
6 months
1999 2000
--------------- -------------
<S> <C> <C>
Gross revenue $ 3,075,379 $ 1,366,920
Equity in earnings of joint venture 61,656 32,475
Gain on sale of properties (Note 7) 46,300 0
Provision for loss on land (Note 5) 0 0
Lease termination refund to tenant (Note 8) 0 (84,873)
Interest income 55,336 33,111
Less: Operating expenses (256,060) (130,979)
Transaction costs (74,734) (22,874)
Interest expense 0 0
Depreciation and amortization (392,521) (193,400)
--------------- -------------
Net income - GAAP basis 2,515,356 1,000,380
=============== =============
Taxable income
- from operations 2,341,350 1,066,303
=============== =============
- from gain on sale (Note 7) 80,170 0
=============== =============
Cash generated from operations (Notes
2 and 3) 2,797,040 1,270,560
Cash generated from sales (Note 7) 688,997 0
Cash generated from refinancing 0 0
--------------- -------------
Cash generated from operations, sales and
refinancing 3,486,037 1,270,560
Less: Cash distributions to investors (Note 4)
- from operating cash flow (2,797,040) (1,270,560)
- from prior period (2,958) (129,440)
--------------- -------------
Cash generated (deficiency) after cash
distributions 686,039 (129,440)
Special items (not including sales and
refinancing): 0 0
Limited partners' capital contributions 0 0
General partners' capital contributions 0 0
Contributions from minority interest 0 0
Syndication costs (25,792) 0
Acquisition of land and buildings 0 0
Investment in direct financing leases (526,138) (1,001,592)
Investment in joint venture (688,997) 688,997
Decrease (increase) in restricted cash
Reimbursement of organization, syndication
and acquisition costs paid on behalf of CNL
Income Fund XVIII, Ltd. by related parties (2,495) 0
Increase in other assets 0 0
Other (117) 0
--------------- -------------
Cash generated (deficiency) after cash
distributions and special items (557,500) (442,035)
=============== =============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 66 30
=============== =============
- from recapture 0 0
=============== =============
Capital gain (loss) (Note 7) 2 0
=============== =============
</TABLE>
C-17
<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 return of capital 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 (Note 7) 0 0 0 0
- from prior period 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 (Note 9) 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) (Note 7) N/A 100% 100% 100%
<CAPTION>
6 months
1999 2000
---------------- -------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 71 28
- from capital gain 1 0
- from return of capital 0 9
- from investment income from prior
period 8 3
---------------- -------------
Total distributions on GAAP basis (Note 4) 80 40
================ =============
Source (on cash basis)
- from sales (Note 7) 0 0
- from prior period 0 4
- from operations 80 36
---------------- -------------
Total distributions on cash basis (Note 4) 80 40
================ =============
Total cash distributions as a percentage of
original $1,000 investment from
inception (Note 9) 8.00% 8.00%
Total cumulative cash distributions per
$1,000 investment (Note 6) 189 229
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) 98% 100%
</TABLE>
C-18
<PAGE>
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,
1997, 1998 and 1999 are reflected in the 1997, 1998, 1999 and
2000 columns, respectively, due to the payment of such
distributions in January 1997, 1998, 1999 and 2000,
respectively. As a result of distributions being presented on
a cash basis, distributions declared and unpaid as of December
31, 1996, 1997, 1998 and 1999, and June 30, 2000, are not
included in the 1996, 1997, 1998, 1999 and 2000 totals,
respectively.
Note 5: During the year ended December 31, 1998, CNL XVIII 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 estimated 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: In December 1999, CNL XVIII sold one of its properties and
received net sales proceeds of $688,997, resulting in a gain
of $46,300 for financial reporting purposes. In June 2000, the
Partnership used the net sales proceeds from this sale to
enter into a joint venture arrangement with CNL Income Fund
VII, Ltd., CNL Income Fund XV, Ltd. and CNL Income Fund XVI,
Ltd., each a Florida limited partnership and an affiliate of
the general partners, to hold one restaurant property.
Note 8: The lease termination refund to tenant of $84,873 during the
six months ended June 30, 2000 is due to lease termination
negotiations during the six months ended June 30, 2000 related
to the 1999 sale of the Partnership's Property in Atlanta,
Georgia. The Partnership does not anticipate incurring any
additional costs related to the sale of this property.
Note 9: Certain data for columns representing less than 12 months have
been annualized.
C-19
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL HOSPITALITY PROPERTIES, INC.
<TABLE>
<CAPTION>
6 months
1996 1997 1999 2000
(Note 1) (Note 1) 1998 (Note 2) (Note 3)
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Gross revenue $ 0 $ 0 $ 1,316,599 $ 4,230,995 $ 6,456,916
Dividend income (Note 10) 0 0 0 2,753,506 1,853,735
Interest and other income 0 46,071 638,862 3,693,004 3,961,188
Less: Operating expenses 0 (22,386) (257,646) (802,755) (1,140,802)
Interest expense 0 0 (350,322) (248,094) (16,222)
Depreciation and amortization 0 (833) (388,554) (1,267,868) (2,000,144)
Equity in loss of unconsolidated
subsidiary after deduction of
preferred stock dividends (Note 10) 0 0 0 (778,466) (260,437)
Minority interest 0 0 0 (64,334) (266,210)
------------ ------------ ------------ ------------- -------------
Net income - GAAP basis 0 22,852 958,939 7,515,988 8,588,024
============ ============ ============ ============= =============
Taxable income
- from operations (Note 6) 0 46,071 886,556 7,488,184 5,730,974
============ ============ ============ ============= =============
- from gain (loss) on sale 0 0 0 0 0
============ ============ ============ ============= =============
Cash generated from operations (Notes
3 and 4) 0 22,469 2,776,965 12,890,161 14,746,948
Less: Cash distributions to investors (Note 7)
- from operating cash flow 0 (22,469) (1,168,145) (10,765,881) (11,936,334)
- from sale of properties 0 0 0 0 0
- from cash flow from prior period 0 0 0 0 0
- from return of capital (Note 8) 0 (7,307) 0 0 0
------------ ------------ ------------ ------------- -------------
Cash generated (deficiency) after cash
distributions 0 (7,307) 1,608,820 2,124,280 2,810,614
Special items (not including sales of real
estate and refinancing):
Subscriptions received from
stockholders 0 11,325,402 31,693,678 245,938,907 96,126,550
Sale of common stock to CNL
Hospitality Corp. (formerly CNL 200,000 0 0 0 0
Hospitality Advisors, Inc.)
Contribution from minority interest 0 0 0 7,150,000 0
Distributions to holders of minority
interest 0 0 0 0 (264,022)
Stock issuance costs (197,916) (1,979,371) (3,948,669) (26,472,318) (12,414,132)
Acquisition of land, buildings and
equipment 0 0 (28,752,549) (85,089,887) (78,421,993)
Investment in unconsolidated subsidiary 0 0 0 (39,879,638) 0
Investment in certificate of deposit 0 0 (5,000,000) 0 0
Increase in restricted cash 0 0 (82,407) (193,223) (445,355)
Proceeds of borrowing on line of credit 0 0 9,600,000 0 0
Payment on line of credit 0 0 0 (9,600,000) 0
Payment of loan costs 0 0 (91,262) (47,334) 0
Increase in intangibles and other assets 0 (463,470) (676,026) (5,068,727) (2,844,259)
Retirement of shares of common stock 0 0 0 (118,542) (578,455)
Other 0 (7,500) 7,500 0 (15,002)
------------ ------------ ------------ ------------- -------------
Cash generated (deficiency) after cash
distributions and special items 2,084 8,867,754 4,359,085 88,743,518 3,953,946
============ ============ ============ ============= =============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED (Note 5)
Federal income tax results:
Ordinary income (loss) (Note 9)
- from operations (Note 6) 0 7 37 47 22
============ ============ ============ ============= =============
- from recapture 0 0 0 0 0
============ ============ ============ ============= =============
Capital gain (loss) (Note 7) 0 0 0 0 0
============ ============ ============ ============= =============
</TABLE>
C-20
<PAGE>
TABLE III - CNL HOSPITALITY PROPERTIES, INC. (continued)
<TABLE>
<CAPTION>
6 months
1996 1997 1999 2000
(Note 1) (Note 1) 1998 (Note 2) (Note 2)
------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 3 40 47 22
- from capital gain 0 0 0 0 0
- from investment income from
prior period 0 0 0 0 0
- from return of capital (Note 8) 0 1 9 21 13
------------ ----------- ----------- ------------- -----------
Total distributions on GAAP basis
(Note 9) 0 4 49 68 35
============ =========== =========== ============= ===========
Source (on cash basis)
- from sales 0 0 0 0 0
- from refinancing 0 0 0 0 0
- from operations 0 3 49 68 35
- from cash flow from prior period 0 0 0 0 0
- from return of capital (Note 8) 0 1 0 0 0
------------ ----------- ----------- ------------- -----------
Total distributions on cash basis (Note 9) 0 4 49 68 35
============ =========== =========== ============= ===========
Total cash distributions as a percentage
of original $1,000 investment (Notes
5 and 11) N/A 3.00% 4.67% 7.19% 7.38%
Total cumulative cash distributions per
$1,000 investment from inception N/A 4 53 121 213
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 N/A N/A 100% 100% 100%
in program)
</TABLE>
Note 1: 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. ("CHP") 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 CHP commenced September 11, 1997, and
upon completion of the Initial Offering on June 17, 1999, had
received subscription proceeds of $150,072,637 (15,007,264
shares), including $72,637 (7,264 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 June 17, 1999, CHP registered for sale $275,000,000
of shares of common stock (the "1999 Offering"). The 1999
Offering of CHP commenced following the completion of the
Initial Offering on June 17, 1999. As of June 30, 2000, CHP
had received subscription proceeds totalling $235,011,997 from
the 1999 Offering, including $965,145 issued pursuant to the
company's reinvestment plan. Activities through October 15,
1997, were devoted to organization of CHP and operations had
not begun. Pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933, as amended, effective May
23, 2000, CHP registered for sale up to $450,000,000 of shares
of common stock (the "2000 Offering"). The 2000 Offering is
expected to commence immediately following the completion of
the 1999 Offering.
Note 2: The amounts shown represent the combined results of the
Initial Offering and the 1999 Offering.
Note 3: Cash generated from operations includes cash received from
tenants and dividend, interest and other income, less cash
paid for operating expenses.
Note 4: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows
included in the consolidated financial statements of CHP.
Note 5: Total cash distributions as a percentage of original $1,000
investment are calculated based on actual distributions
declared for the period.
Note 6: Taxable income presented is before the dividends paid
deduction.
Note 7: For the six months ended June 30, 2000 and the years ended
December 31, 1999, 1998 and 1997, approximately 51%, 75%, 76%
and 100%, respectively, of the distributions received by
stockholders were considered to be ordinary income and
approximately 49%, 25%, 24% and 0%, respectively, were
considered a return of capital for federal income tax
purposes. No amounts distributed to stockholders for the six
months ended June 30, 2000 and the years ended December 31,
1999, 1998 and 1997 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>
TABLE III - CNL HOSPITALITY PROPERTIES, INC. (continued)
Note 8: 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.
In addition, cash distributions presented as a return of
capital on a cash basis represents the amount of cash
distributions in excess of cash generated from operating cash
flow and excess cash flows from prior periods. These amounts
have not been treated as a return of capital for purposes of
calculating the amount of stockholders' invested capital.
Note 9: Tax and distribution data and total distributions on GAAP
basis were computed based on the weighted average shares
outstanding during each period presented.
Note 10: In February 1999, the company executed a series of agreements
with Five Arrows Realty Securities II, L.L.C. to jointly own a
real estate investment trust, CNL Hotel Investors, Inc., for
the purpose of acquiring seven hotels. During the six months
ended June 30, 2000 and the year ended December 31, 1999, the
company recorded $1,853,735 and $2,753,506, respectively, in
dividend income and $260,437 and $778,466, respectively, in an
equity in loss after deduction of preferred stock dividends,
resulting in net earnings of $1,593,298 and $1,975,040,
respectively, attributable to this investment.
Note 11: Certain data for columns representing less than 12 months have
been annualized.
C-22
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program 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
Golden Corral -
Kent Island, MD (21) 11/20/86 10/15/99 870,457 0 0 0 870,457
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) (14) 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 (14) 09/02/87 12/10/97 501,975 0 0 0 501,975
Golden Corral -
Columbia, MO 11/17/87 03/23/99 678,888 0 0 0 678,888
Little House -
Littleton, CO 10/07/87 11/05/99 150,000 0 0 0 150,000
KFC -
Jacksonville, FL (14) 09/01/87 06/15/00 601,400 0 0 0 601,400
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
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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
Golden Corral -
Kent Island, MD (21) 0 726,600 726,600 143,857
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) (14) 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 (14) 0 345,000 345,000 156,975
Golden Corral -
Columbia, MO 0 511,200 511,200 167,688
Little House -
Littleton, CO 0 330,456 330,456 (180,456)
KFC -
Jacksonville, FL (14) 0 441,000 441,000 160,400
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
</TABLE>
C-23
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund III, Ltd.
(Continued):
Pizza Hut -
Kissimmee, FL 02/23/88 04/08/97 673,159 0 0 0 673,159
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
Perkins -
Flagstaff, AZ 09/30/88 04/30/99 1,091,193 0 0 0 1,091,193
Denny's -
Hagerstown, MD 08/14/88 06/09/99 700,977 0 0 0 700,977
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
Wendy's
Detroit, MI (14) 10/21/88 06/29/00 1,056,475 0 0 0 1,056,475
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 (14) (24) 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
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 III, Ltd.
(Continued):
Pizza Hut -
Kissimmee, FL 0 474,755 474,755 198,404
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)
Perkins -
Flagstaff, AZ 0 993,508 993,508 97,685
Denny's -
Hagerstown, MD 0 861,454 861,454 (160,477)
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
Wendy's
Detroit, MI (14) 0 614,500 614,500 441,975
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 0 986,418 986,418 53,582
Ponderosa -
St. Cloud, FL (14) (24) 0 996,769 996,769 134,243
Franklin National Bank -
Franklin, TN 0 1,138,164 1,138,164 (177,423)
</TABLE>
C-24
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund V, Ltd.
(Continued):
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
Perkins -
Port St. Lucie, FL 11/14/89 09/23/97 1,216,750 0 0 0 1,216,750
Hardee's -
Richmond, IN 02/17/89 11/07/97 397,785 0 0 0 397,785
Wendy's -
Tampa, FL (14) 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
Wendy's -
Ithaca, NY 12/07/89 03/29/99 471,248 0 0 0 471,248
Wendy's -
Endicott, NY 12/07/89 03/29/99 642,511 0 0 0 642,511
Burger King -
Halls, TN (20) 01/05/90 06/03/99 433,366 0 0 0 433,366
Hardee's -
Belding, MI 03/08/89 03/03/00 124,346 0 0 0 124,346
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
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 V, Ltd.
(Continued):
Shoney's -
Smyrna, TN 0 554,200 554,200 82,588
KFC -
Salem, NH 0 1,079,310 1,079,310 192,827
Perkins -
Port St. Lucie, FL 0 1,203,207 1,203,207 13,543
Hardee's -
Richmond, IN 0 695,464 695,464 (297,679)
Wendy's -
Tampa, FL (14) 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
Wendy's -
Ithaca, NY 0 471,297 471,297 (49)
Wendy's -
Endicott, NY 0 471,255 471,255 171,256
Burger King -
Halls, TN (20) 0 329,231 329,231 104,135
Hardee's -
Belding, MI 0 630,432 630,432 (506,086)
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)
</TABLE>
C-25
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund VI, Ltd.
(Continued):
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
Burger King -
Greeneville, TN 01/05/90 06/03/99 1,059,373 0 0 0 1,059,373
Burger King -
Broadway, TN 01/05/90 06/03/99 1,059,200 0 0 0 1,059,200
Burger King -
Sevierville, TN 01/05/90 06/03/99 1,168,298 0 0 0 1,168,298
Burger King -
Walker Springs, TN 01/10/90 06/03/99 1,031,274 0 0 0 1,031,274
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 (14)(25) 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
Burger King -
Maryville, TN 05/04/90 06/03/99 1,059,954 0 0 0 1,059,954
Burger King -
Halls, TN (20) 01/05/90 06/03/99 451,054 0 0 0 451,054
Shoney's
Pueblo, CO 08/21/90 06/20/00 1,005,000 0 0 0 1,005,000
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
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 VI, Ltd.
(Continued):
Perkin's -
Melbourne, FL 0 692,850 692,850 (139,940)
Hardee's -
Bellevue, NE 0 899,512 899,512 488
Burger King -
Greeneville, TN 0 890,240 890,240 169,133
Burger King -
Broadway, TN 0 890,036 890,036 169,164
Burger King -
Sevierville, TN 0 890,696 890,696 277,602
Burger King -
Walker Springs, TN 0 864,777 864,777 166,497
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 (14)(25) 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
Burger King -
Maryville, TN 0 890,668 890,668 169,286
Burger King -
Halls, TN (20) 0 342,669 342,669 108,385
Shoney's
Pueblo, CO 0 961,582 961,582 43,418
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
</TABLE>
C-26
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
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
Shoney's -
Corpus Christi, TX 10/28/91 02/12/99 1,350,000 0 0 0 1,350,000
Perkins -
Rochester, NY 12/20/91 03/03/99 1,050,000 0 0 0 1,050,000
Perkins -
Williamsville, NY 12/20/91 05/15/00 693,350 0 0 0 693,350
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
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
Perkins -
Amherst, NY 02/26/92 03/03/99 1,150,000 0 0 0 1,150,000
Shoney's -
Fort Myers Beach, FL 09/08/95 08/26/99 931,725 0 0 0 931,725
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
Long John Silver's -
Morganton, NC (23) 07/02/93 05/17/99 467,300 0 55,000 0 522,300
Denny's -
Cleveland, TN 12/23/92 03/03/00 797,227 0 0 0 797,227
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
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 IX, Ltd.:
Burger King -
Woodmere, OH (15) 0 918,445 918,445 0
Burger King -
Alpharetta, GA 0 713,866 713,866 339,705
Shoney's -
Corpus Christi, TX 0 1,224,020 1,224,020 125,980
Perkins -
Rochester, NY 0 1,064,815 1,064,815 (14,815)
Perkins -
Williamsville, NY 0 981,482 981,482 (288,132)
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
Jack in the Box -
Sacramento, CA 0 969,423 969,423 264,752
Pizza Hut -
Billings, MT 0 302,000 302,000 57,990
Perkins -
Amherst, NY 0 1,141,444 1,141,444 8,556
Shoney's -
Fort Myers Beach, FL 0 931,725 931,725 0
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
Long John Silver's -
Morganton, NC (23) 0 304,002 304,002 218,298
Denny's -
Cleveland, TN 0 622,863 622,863 174,364
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 0 286,411 286,411 0
Checkers -
Richmond, VA 0 413,288 413,288 136,712
</TABLE>
C-27
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
CNL Income Fund XIII, Ltd.
(Continued):
Denny's -
Orlando, FL 09/01/93 10/24/97 932,849 0 0 0 932,849
Jack in the Box -
Houston, TX 07/27/93 07/16/99 1,063,318 0 0 0 1,063,318
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
Long John Silver's -
Stockbridge, GA 03/31/94 05/25/99 696,300 0 0 0 696,300
Long John Silver's -
Shelby, NC 06/22/94 11/12/99 494,178 0 0 0 494,178
Checker's -
Kansas City, MO 03/31/94 12/10/99 268,450 0 0 0 268,450
Checker's -
Houston, TX 03/31/94 12/15/99 385,673 0 0 0 385,673
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
Long John Silver's -
Gastonia, NC 07/15/94 11/12/99 631,304 0 0 0 631,304
Long John Silver's
Lexington, NC 10/22/94 01/12/00 562,130 0 0 0 562,130
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 XIII, Ltd.
(Continued):
Denny's -
Orlando, FL 0 934,120 934,120 (1,271)
Jack in the Box -
Houston, TX 0 861,321 861,321 201,997
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
Long John Silver's -
Stockbridge, GA 0 738,340 738,340 (42,040)
Long John Silver's -
Shelby, NC 0 608,611 608,611 (114,433)
Checker's -
Kansas City, MO 0 209,329 209,329 59,121
Checker's -
Houston, TX 0 311,823 311,823 73,850
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
Long John Silver's -
Gastonia, NC 0 776,248 776,248 (144,944)
Long John Silver's
Lexington, NC 0 646,203 646,203 (84,073)
</TABLE>
C-28
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
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
Boston Market -
Lawrence, KS 05/08/98 11/23/99 667,311 0 0 0 667,311
CNL Income Fund XVII, Ltd.:
Boston Market -
Troy, OH (18) 07/24/96 06/16/98 857,487 0 0 0 857,487
Golden Corral -
El Cajon, CA (22) 04/29/97 12/02/99 1,675,385 0 0 0 1,675,385
CNL Income Fund XVIII, Ltd.:
Black Eyed Pea -
Atlanta, GA 03/26/97 12/06/99 688,997 0 0 0 688,997
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 (26) 08/18/95 04/14/98 950,361 0 0 0 950,361
Boston Market -
Grand Island, NE (27) 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
Boston Market -
Dubuque, IA (28) 10/04/95 05/08/98 969,159 0 0 0 969,159
Boston Market -
Merced, CA (29) 10/06/96 05/08/98 930,834 0 0 0 930,834
Boston Market -
Arvada, CO (30) 07/21/97 07/28/98 1,152,262 0 0 0 1,152,262
Boston Market -
Ellisville, MO 09/03/96 04/28/99 822,824 0 0 0 822,824
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
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 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
Boston Market -
Lawrence, KS 0 774,851 774,851 (107,540)
CNL Income Fund XVII, Ltd.:
Boston Market -
Troy, OH (18) 0 857,487 857,487 0
Golden Corral -
El Cajon, CA (22) 0 1,692,994 1,692,994 (17,609)
CNL Income Fund XVIII, Ltd.:
Black Eyed Pea -
Atlanta, GA 0 617,610 617,610 71,387
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 (26) 0 950,361 950,361 0
Boston Market -
Grand Island, NE (27) 0 837,656 837,656 0
Burger King -
Indian Head Park, IL 0 670,867 670,867 3,453
Boston Market -
Dubuque, IA (28) 0 969,159 969,159 0
Boston Market -
Merced, CA (29) 0 930,834 930,834 0
Boston Market -
Arvada, CO (30) 0 1,152,262 1,152,262 0
Boston Market -
Ellisville, MO 0 1,026,746 1,026,746 (203,922)
</TABLE>
C-29
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
Selling Price, Net of
Closing Costs and GAAP Adjustments
---------------------------------------------------------------
Purchase
Mortgage money Adjustments
balance mortgage resulting from
Date Date of Cash received net at time taken back application of
Property Acquired Sale of closing costs of sale by program GAAP Total
============================== ============ =========== ================= ========= =========== ============ ============
<S> <C> <C> <C> <C> <C> <C> <C>
CNL American Properties
Fund, Inc.
(Continued):
Golden Corral -
Brooklyn, OH 08/23/96 05/18/99 974,560 0 0 0 974,560
Boston Market -
Edgewater, CO 08/19/97 08/11/99 634,122 0 0 0 634,122
Black Eyed Pea -
Houston, TX (31) 10/01/97 08/24/99 648,598 0 0 0 648,598
Big Boy -
Topeka, KS (32) 02/26/99 09/22/99 939,445 0 0 0 939,445
Boston Market -
LaQuinta, CA 12/16/96 10/13/99 833,140 0 0 0 833,140
Sonny's -
Jonesboro, GA 06/02/98 12/22/99 1,098,342 0 0 0 1,098,342
Golden Corral -
Waldorf, MD (32) (33) 04/05/99 01/03/00 2,501,175 0 0 0 2,501,175
Jack in the Box -
Los Angeles, CA 06/30/95 02/18/00 1,516,800 0 0 0 1,516,800
Golden Corral
Dublin, GA 08/07/98 05/01/00 1,323,205 0 0 0 1,323,205
Boston Market -
San Antonio, TX 04/30/97 05/02/00 517,495 0 0 0 517,495
Boston Market -
Corvallis, OR 07/09/96 06/20/00 717,019 0 0 0 717,019
Big Boy -
St. Louis, MO 01/19/99 06/28/00 1,463,050 0 0 0 1,463,050
Ground Round -
Nanuet, NY 12/02/97 06/30/00 964,825 0 0 0 964,825
Big Boy -
Jefferson City, MO 01/19/99 06/30/00 905,250 0 0 0 905,250
Big Boy -
Alton, IL 01/19/99 06/30/00 905,250 0 0 0 905,250
<CAPTION>
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------------
Excess
Total (deficiency)
acquisition cost, of property
capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
============================== ============== ============= ============ =============
<S> <C> <C> <C> <C>
CNL American Properties
Fund, Inc.
(Continued):
Golden Corral -
Brooklyn, OH 0 997,296 997,296 (22,736)
Boston Market -
Edgewater, CO 0 904,691 904,691 (270,569)
Black Eyed Pea -
Houston, TX (31) 0 648,598 648,598 0
Big Boy -
Topeka, KS (32) 0 1,062,633 1,062,633 (123,188)
Boston Market -
LaQuinta, CA 0 987,034 987,034 (153,894)
Sonny's -
Jonesboro, GA 0 1,098,342 1,098,342 0
Golden Corral -
Waldorf, MD (32) (33) 0 2,430,686 2,430,686 70,489
Jack in the Box -
Los Angeles, CA 0 1,119,567 1,119,567 397,233
Golden Corral
Dublin, GA 0 1,272,765 1,272,765 50,440
Boston Market -
San Antonio, TX 0 757,069 757,069 (239,574)
Boston Market -
Corvallis, OR 0 925,427 925,427 (208,408)
Big Boy -
St. Louis, MO 0 1,345,100 1,345,100 117,950
Ground Round -
Nanuet, NY 0 927,273 927,273 37,552
Big Boy -
Jefferson City, MO 0 1,113,383 1,113,383 (208,133)
Big Boy -
Alton, IL 0 1,012,254 1,012,254 (107,004)
</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 $991,331 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 $1,105,715 in July 2000.
(4) 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 $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 $200,063 in December 2005.
(6) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.75% per annum and provides
for 12 monthly payments of interest only and thereafter, 24 equal monthly
payments of principal and interest until November 1999, when the remaining
144 equal monthly payments of principal and interest will be reduced due to
a lump sum payment received in March 1999 in advance from the borrower.
(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.
C-30
<PAGE>
(9) CNL Income Fund, Ltd. owned 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,
Inc. 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.
(20) CNL Income Fund V, Ltd. owns a 49 percent interest and CNL Income Fund VII,
Ltd. owns a 51 percent interest in this joint venture. The amounts
presented for CNL Income Fund V, Ltd. and CNL Income Fund VII, Ltd.
represent each partnership's percent interest in the property owned by
Halls Joint Venture.
(21) Cash received net of closing costs includes $50,000 received as a lease
termination fee.
(22) CNL Income Fund XVII, Ltd. owned an 80 percent interest in this joint
venture. The amounts presented represent the partnership's percent interest
in the property owned by El Cajon Joint Venture. A third party owned the
remaining 20 percent interest in this joint venture.
(23) 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 60 equal monthly payments of principal and interest.
(24) Amount shown is face value and does not represent discounted current value.
The mortgage note bore an interest rate of 10.75% per annum and provided
for 12 monthly payments of interest only and thereafter, 168 equal monthly
payments of principal and interest. The borrower prepaid the mortgage note
in full in April 1999.
(25) Amount shown is face value and does not represent discounted current value.
The mortgage note bore an interest rate of 10.00% per annum and was paid in
full in July 1999.
(26) 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.
(27) 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.
(28) 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.
(29) 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.
(30) 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.
(31) The Black Eyed Pea property in Houston, TX was exchanged on August 24, 1999
for a Black Eyed Pea property in Dallas, TX at the option of the tenant as
permitted under the terms of the lease agreement. Due to the exchange, the
Black Eyed Pea property in Dallas, TX is being leased under the same lease
as the Black Eyed Pea property in Houston, TX.
(32) This property was being constructed and was sold prior to completion of
construction.
(33) Cash received net of closing costs includes $1,551,800 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-31
<PAGE>
APPENDIX E
STATEMENT OF ESTIMATED
TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
------------------------------------------------------
| |
| THE FOLLOWING INFORMATION UPDATES AND REPLACES |
| THE CORRESPONDING INFORMATION IN APPENDIX E TO |
| THE ATTACHED PROSPECTUS, DATED MARCH 31, 2000. |
| |
------------------------------------------------------
<PAGE>
CNL RETIREMENT PROPERTIES, INC.
(formerly CNL Health Care Properties, Inc.)
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
OF PROPERTIES ACQUIRED FROM INCEPTION
THROUGH AUGUST 3, 2000
For the Year Ended December 31, 1999 (Unaudited)
The following schedule presents unaudited estimated taxable operating
results before dividends paid deduction of the Property acquired by the Company
as of August 3, 2000 The statement presents unaudited estimated taxable
operating results for the Property as if it had been acquired and operational on
January 1, 1999 through December 31, 1999. The schedule should be read in light
of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. The estimates were prepared on the
basis described in the accompanying notes which should be read in conjunction
herewith.
Brighton Gardens by Marriott
Orland Park Property
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (1) $1,350,268
FF&E Reserve Income (2) 32,476
Asset Management Fees (3) (83,093)
Interest Expense (4) (708,750)
General and Administrative
Expenses (5) (110,422)
------------
Estimated Cash Available from
Operations 480,479
Depreciation and Amortization
Expense (6) (7) (453,025)
------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 27,454
============
See Footnotes
<PAGE>
FOOTNOTES:
(1) Rental income does not include percentage rents which will become due
if specified levels of gross receipts are achieved.
(2) Reserve funds will be used for the replacement and renewal of
furniture, fixtures and equipment related to the Orland Park Property
("FF&E Reserve"). The funds in the FF&E Reserve and all property
purchased with the funds from the FF&E Reserve will be paid, granted
and assigned to the Company. In connection therewith, FF&E Reserve
income will be earned at 1% of gross receipts for lease years one
through four and has been estimated based on projected gross revenues.
(3) The Properties will be managed pursuant to an advisory agreement
between the Company and CNL Retirement Corp. (the "Advisor"), pursuant
to which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such
agreement. See "Management Compensation."
(4) Estimated at 8.75% per annum based on the bank's base rate as of April
20, 2000.
(5) Estimated at 8% of gross rental income, based on the previous
experience of Affiliate of the Advisor with another public REIT.
(6) The estimated federal tax basis of the depreciable portion of the
property and the number of years the assets have been depreciated on
the straight-line method is as follows:
Furniture and
Buildings Fixtures
(39 years) (5-15 years)
----------- -----------
Orland Park Property $11,530,358 $1,025,388
(7) Loan costs of $55,917 (.5% origination fee on the $8.1 million from
borrowings on the Line of Credit, legal fees and closing costs)
amortized under the straight-line method over a period of five years.