FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
0-16824
CNL Income Fund II, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-2733859
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street
Orlando, Florida 32801
- ---------------------------- -------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
<PAGE>
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4-5
Notes to Condensed Financial Statements 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-13
Part II
Other Information 14
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
ASSETS 1998 1997
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $3,466,727
and $3,302,095 $12,999,936 $13,164,568
Investment in joint ventures 4,372,510 3,568,155
Mortgage note receivable 42,734 42,734
Cash and cash equivalents 839,544 470,194
Restricted cash - 2,470,175
Receivables, less allowance for
doubtful accounts of $74,652
and $83,254 48,506 80,577
Prepaid expenses 10,668 5,510
Lease costs, less accumulated
amortization of $13,512 and
$11,520 7,051 9,043
Accrued rental income 162,573 148,103
----------- -----------
$18,483,522 $19,959,059
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 4,186 $ 7,170
Accrued and escrowed real estate
taxes payable 5,426 4,656
Distributions payable 515,625 594,000
Due to related parties 177,666 126,284
Rents paid in advance and deposits 30,441 25,300
----------- -----------
Total liabilities 733,344 757,410
Partners' capital 17,750,178 19,201,649
----------- -----------
$18,483,522 $19,959,059
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------- -------- ---------- ---------
<S> <C>
Revenues:
Rental income from
operating leases $438,324 $517,524 $ 871,144 $1,044,384
Interest and other
income 19,785 9,237 42,739 16,945
-------- -------- ---------- ----------
458,109 526,761 913,883 1,061,329
-------- -------- ---------- ----------
Expenses:
General operating and
administrative 34,944 29,717 64,870 59,729
Bad debt expense - 18,033 - 18,033
Professional services 19,924 6,335 25,640 10,350
Real estate taxes - - - 1,259
State and other taxes 167 203 14,732 10,403
Depreciation and
amortization 83,312 104,661 166,624 210,548
-------- -------- ---------- ----------
138,347 158,949 271,866 310,322
-------- -------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures, Gain on Sale of
Land and Building and Real
Estate Disposition Fees 319,762 367,812 642,017 751,007
Equity in Earnings of
Joint Ventures 105,499 33,050 214,915 292,907
Gain on Sale of Land and
Building - 158,251 - 158,251
Real Estate Disposition Fees - - (45,150) -
-------- -------- ---------- ---------
Net Income $425,261 $559,113 $ 811,782 $1,202,165
======== ======== ========== ==========
Allocation of Net Income:
General partners $ 4,252 $ 5,516 $ 8,569 $ 11,947
Limited partners 421,009 553,597 803,213 1,190,218
-------- -------- ---------- ----------
$425,261 $559,113 $ 811,782 $1,202,165
======== ======== ========== ==========
Net Income Per Limited
Partner Unit $ 8.42 $ 11.07 $ 16.06 $ 23.80
======== ======== ========== ==========
Weighted Average Number
of Limited Partner Units
Outstanding 50,000 50,000 50,000 50,000
======== ======== ========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
1998 1997
---------------- -----------
General partners:
Beginning balance $ 373,111 $ 342,375
Net income 8,569 30,736
----------- -----------
381,680 373,111
----------- -----------
Limited partners:
Beginning balance 18,828,538 17,595,394
Net income 803,213 3,609,144
Distributions ($45.27 and
$47.52 per limited partner
unit, respectively) (2,263,253) (2,376,000)
----------- -----------
17,368,498 18,828,538
----------- -----------
Total partners' capital $17,750,178 $19,201,649
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1998 1997
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 1,088,196 $ 1,041,712
----------- -----------
Cash Flows from Investing
Activities:
Proceeds from sale of land
and building - 623,882
Additions to land and buildings
on operating leases - (29,526)
Investment in joint ventures (834,888) -
Decrease (increase) in
restricted cash 2,457,670 (623,882)
Payment of lease costs - (1,930)
----------- -----------
Net cash provided by (used
in) investing activities 1,622,782 (31,456)
----------- -----------
Cash Flows from Financing
Activities:
Proceeds from loans from
corporate general partner - 371,000
Repayment of loans from
corporate general partner - (371,000)
Distributions to limited
partners (2,341,628) (1,188,000)
----------- -----------
Net cash used in financing
activities (2,341,628) (1,188,000)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 369,350 (177,744)
Cash and Cash Equivalents at Beginning
of Period 470,194 318,756
----------- -----------
Cash and Cash Equivalents at End of
Period $ 839,544 $ 141,012
=========== ===========
4
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
Six Months Ended
June 30,
1998 1997
----------- ----------
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Mortgage note accepted in exchange
for sale of land and building $ - $ 42,000
=========== ===========
Deferred real estate disposition
fees incurred and unpaid at end
of period $ 45,150 $ -
=========== ==========
Distributions declared and unpaid
at end of period $ 515,625 $ 594,000
=========== ===========
See accompanying notes to condensed financial statements.
5
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 1998 and 1997
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and six months ended June 30, 1998, may not be indicative
of the results that may be expected for the year ending December 31,
1998. Amounts as of December 31, 1997, included in the financial
statements, have been derived from audited financial statements as of
that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund II, Ltd. (the "Partnership") for the year ended December
31, 1997.
2. Investment in Joint Ventures:
In January 1998, the Partnership acquired a 39.42% and a 13.38%
interest in a property in Overland Park, Kansas, and a property in
Memphis, Tennessee, respectively, as tenants-in-common with affiliates
of the general partners. The Partnership accounts for its investments
in these properties using the equity method since the Partnership
shares control with affiliates, and amounts relating to its investments
are included in investment in joint ventures.
6
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 1998 and 1997
2. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures and
properties held as tenants-in-common at:
June 30, December 31,
1998 1997
Land and buildings on
operating leases, less
accumulated depreciation $8,503,711 $7,091,781
Net investment in direct
financing leases 2,124,411 518,399
Cash 35,244 56,815
Receivables 828 4,685
Accrued rental income 157,227 102,913
Other assets 1,004 418
Liabilities 32,415 31,673
Partners' capital 10,790,010 7,743,338
Revenues 624,342 399,579
Gain on sale of land and
building - 360,002
Net income 522,063 687,021
The Partnership recognized income totalling $214,915 and $292,907 for
the six months ended June 30, 1998 and 1997, respectively, from these
joint ventures, $105,499 and $33,050 of which was earned for the
quarters ended June 30, 1998 and 1997, respectively.
3. Allocations and Distributions:
Generally, all net income and net losses of the Partnership, excluding
gains and losses from the sale of properties, are allocated 99 percent
to the limited partners and one percent to the general partners.
Distributions of net cash flow are made 99 percent to the limited
partners and one percent to the general partners; provided, however,
that the one percent of net cash flow to be distributed to the general
partners is subordinated to receipt by the limited partners of an
aggregate, ten percent, noncumulative, noncompounded annual return on
their adjusted capital contributions (the "10% Preferred Return").
7
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 1998 and 1997
3. Allocations and Distributions - Continued:
Generally, net sales proceeds from the sale of properties, to the
extent distributed, will be distributed first to the limited partners
in an amount sufficient to provide them with their cumulative 10%
Preferred Return, plus the return of their adjusted capital
contributions. The general partners will then receive, to the extent
previously subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds will be distributed 95
percent to the limited partners and five percent to the general
partners. Any gain from the sale of a property is, in general,
allocated in the same manner as net sales proceeds are distributable.
Any loss from the sale of a property is, in general, allocated first on
a pro rata basis to partners with positive balances in their capital
accounts; and thereafter, 95 percent to the limited partners and five
percent to the general partners.
During the six months ended June 30, 1998 and 1997, the Partnership
declared distributions to the limited partners of $2,263,253 and
$1,188,000, respectively ($515,625 and $594,000 for each of the
quarters ended June 30, 1998 and 1997, respectively). This represents
distributions of $45.27 and $23.76 per unit for the six months ended
June 30, 1998 and 1997, respectively ($10.31 and $11.88 per unit for
each of the quarters ended June 30, 1998 and 1997, respectively).
Distributions for the six months ended June 30, 1998, included
$1,232,003 as a result of the distribution of net sales proceeds from
the 1997 sale of the Properties in Avon Park, Florida and Farmington
Hill, Michigan. This amount was applied toward the limited partners'
10% Preferred Return. No distributions have been made to the general
partners to date.
4. Related Party Transactions:
An affiliate of the Partnership is entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties based on the lesser of one-half of a competitive
real estate commission or three percent of a competitive real estate
commission or three percent of the sales price if the affiliate
provides a substantial amount of services in connection with the sale.
Payment of the real estate disposition fee is subordinated to receipt
by the limited partners of their aggregate 10% Preferred Return, plus
their adjusted capital contributions. For the six months ended June 30,
1998, the Partnership incurred $45,150 in deferred, subordinated, real
estate disposition fees as a result of the 1997 sales of properties
8
<PAGE>
CNL INCOME FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Six Months Ended June 30, 1998 and 1997
4. Related Party Transactions - Continued:
in Avon Park, Florida and Farmington Hills, Michigan. No
deferred, subordinated, real estate disposition fees were
incurred for the six months ended June 30, 1997.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CNL Income Fund II, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on November 13, 1986, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants were to
be constructed, which are leased primarily to operators of national and regional
fast-food restaurant chains (collectively, the "Properties"). The leases
generally are triple-net leases, with the lessees responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of June 30, 1998,
the Partnership owned 38 Properties, including three Properties owned by joint
ventures in which the Partnership is a co-venturer and six Properties owned with
affiliates as tenants-in-common.
Liquidity and Capital Resources
During the six months ended June 30, 1998 and 1997, the Partnership
generated cash from operations (which includes cash received from tenants,
distributions from joint ventures, and interest and other income received, less
cash paid for expenses) of $1,088,196 and $1,041,712, respectively. The increase
in cash from operations for the six months ended June 30, 1998, as compared to
the six months ended June 30, 1997, is primarily a result of changes in the
Partnership's working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 1998.
During January 1998, the Partnership used net sales proceeds from the
1997 sale of two Properties to acquire a Property in Overland Park, Kansas, and
a Property in Memphis, Tennessee, as tenants-in-common with affiliates of the
general partners. In connection therewith, the Partnership and the affiliates
entered into separate agreements whereby each co-venturer will share in the
profits and losses of each Property in proportion to its applicable percentage
interest. As of June 30, 1998, the Partnership owned a 39.42% and a 13.38%
interest in the Property in Overland Park, Kansas and the Property in Memphis,
Tennessee, respectively.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments pending
the Partnership's use of such funds to pay Partnership expenses or to make
distributions to the partners. At June 30, 1998, the Partnership had $839,544
invested in such short-term investments, as compared to $470,194 at December 31,
1997. The increase in cash and cash equivalents during the six months ended June
30, 1998, is primarily attributable to the release of the funds held in escrow
at December 31, 1997 relating to the sales of certain Properties during 1997.
The funds remaining at June 30, 1998, after payment of distributions and other
liabilities, will be used to meet the Partnership's working capital and other
needs.
10
<PAGE>
Liquidity and Capital Resources - Continued
Total liabilities of the Partnership, including distributions payable,
decreased to $733,344 at June 30, 1998, from $757,410 at December 31, 1997. The
decrease in liabilities for the six months ended June 30, 1998 is primarily due
to a decrease in distributions payable to the limited partners at June 30, 1998,
as compared to December 31, 1997. The decrease was partially offset by an
increase in due to related parties from the Partnership accruing deferred,
subordinated real estate disposition fees as described below in "Results of
Operations." The general partners believe that the Partnership has sufficient
cash on hand to meet its current working capital needs.
Based on current and anticipated future cash from operations, and for
the six months ended June 30, 1998, a portion of the proceeds received from the
1997 sales of the Properties as described above, and to a lesser extent for the
six months ended June 30, 1997, loans received from the corporate general
partner in April and July 1997, the Partnership declared distributions to
limited partners of $2,263,253 and $1,188,000 for each of the six months ended
June 30, 1998 and 1997, respectively ($515,625 and $594,000 for each of the
quarters ended June 30, 1998 and 1997, respectively). This represents
distributions for each applicable six months of $45.27 and $23.76 per unit,
respectively ($10.31 and $11.88 for each of the quarters ended June 30, 1998 and
1997, respectively). Distributions for the six months ended June 30, 1998
include $1,232,003 as a result of the distribution of net sales proceeds from
the 1997 sale of the Properties in Avon Park, Florida and Farmington Hills,
Michigan. This special distribution was effectively a return of a portion of the
limited partners' investment, although, in accordance with the Partnership
agreement, it was applied to the limited partners' unpaid preferred return. As a
result of the sale of the Properties, the Partnership's total revenue was
reduced, while the majority of the Partnership's operating expenses remained
fixed. Therefore, distributions of net cash flow were adjusted for the six
months ended June 30, 1998. No distributions were made to the general partners
for the quarters and six months ended June 30, 1998 and 1997. No amounts
distributed to the limited partners for the six months ended June 30, 1998 and
1997, are required to be or have been treated by the Partnership as a return of
capital for purposes of calculating the limited partners' return on their
adjusted capital contributions. The Partnership intends to continue to make
distributions of cash available for distribution to the limited partners on a
quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
11
<PAGE>
Liquidity and Capital Resources - Continued
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Results of Operations
During the six months ended June 30, 1997, the Partnership owned and
leased 36 wholly owned Properties (including seven Properties sold in 1997), and
during the six months ended June 30, 1998, the Partnership owned and leased 29
wholly owned Properties to operators of fast-food and family-style restaurant
chains. In connection therewith, during the six months ended June 30, 1998 and
1997, the Partnership earned $871,144 and $1,044,384, respectively, in rental
income from these Properties, $438,324 and $517,524 of which was earned during
the quarters ended June 30, 1998 and 1997, respectively. The decrease in rental
income during the quarter and six months ended June 30, 1998, as compared to the
quarter and six months ended June 30, 1997 is primarily attributable to a
decrease in rental income as a result of the sales of seven Properties during
1997.
In addition, during the six months ended June 30, 1998 and 1997, the
Partnership earned $42,739 and $16,945, respectively in interest and other
income, $19,785 and $9,237 of which was earned during the quarters ended June
30, 1998 and 1997, respectively. The increase in interest and other income for
the quarter and six months ended June 30, 1998 is primarily due to an increase
in interest income earned on net sales proceeds relating to the sales of several
properties during 1997 described above, pending the reinvestment of the net
sales proceeds in additional Properties.
For the six months ended June 30, 1997, the Partnership also owned and
leased four Properties indirectly through joint venture arrangements (including
one Property in Show Low Joint Venture, which was sold in January 1997) and one
Property as tenants-in-common with an affiliate of the general partners. In
addition, for the six months ended June 30, 1998, the Partnership owned and
leased three Properties indirectly through joint venture arrangements and six
Properties as tenants-in-common with affiliates of the general partners. In
connection therewith, during the six months ended June 30, 1998 and 1997, the
Partnership earned $214,915 and $292,907, respectively, attributable to net
income earned by these joint ventures, $105,499 and $33,050 of which was earned
during the quarters ended June 30, 1998 and 1997, respectively. The decrease in
net income earned by joint ventures for the six months ended June 30, 1998, is
primarily attributable to the fact that in January 1997, Show Low Joint Venture,
in which the Partnership owns a 64 percent interest, recognized a gain of
approximately $360,000 for financial reporting purposes as a result of the sale
of its Property. Show Low Joint Venture reinvested the majority of the net sales
proceeds in an additional property in June 1997. The decrease in net income
earned by joint ventures during the six months ended June 30, 1998, is partially
offset by, and the increase in net income earned by joint ventures during the
12
<PAGE>
Results of Operations - Continued
quarter ended June 30, 1998 is primarily attributable to, the fact that
subsequent to June 30, 1997, the Partnership reinvested the net sales proceeds
from the sale of five Properties during 1997, in five Properties with affiliates
of the general partners as tenants-in-common.
Operating expenses, including depreciation and amortization, were
$271,866 and $310,322 for the six months ended June 30, 1998 and 1997,
respectively, of which $138,347 and $158,949 were incurred for the quarters
ended June 30, 1998 and 1997, respectively. The decrease in operating expenses
during the quarter and six months ended June 30, 1998, as compared to the
quarter and six months ended June 30, 1997, is partially attributable to a
decrease in depreciation expense as a result of the sales of several Properties
during 1997, as described above.
During the six months ended June 30, 1998, the Partnership recorded
deferred, subordinated real estate disposition fees payable to CNL Fund
Advisors, Inc. relating to the 1997 sales of the Properties in Avon Park,
Florida and Farmington Hills, Michigan. Initially, the Partnership considered
reinvesting the sales proceeds in additional Properties and therefore did not
include these amounts in the determination of the gain on sale for financial
reporting purposes during 1997. However, during the six months ended June 30,
1998, the Partnership declared a special distribution of net sales proceeds from
these Properties payable to the limited partners. Accordingly, the Partnership
recorded these subordinated real estate disposition fees during the six months
ended June 30, 1998. The payment of these fees is subordinated to the limited
partners receiving their ten percent preferred return and their adjusted
capital.
As a result of the sale of the Property in Eagan, Minnesota in June
1997, the Partnership recognized a gain of $158,251 for financial reporting
purposes during the quarter and six months ended June 30, 1997. No Properties
were sold during the quarter and six months ended June 30, 1998.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter
ended June 30, 1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 28th day of July, 1998.
CNL INCOME FUND II, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
---------------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
---------------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund II, Ltd. at June 30, 1998, and its statement of income
for the six months then ended and is qualified in its entirety by reference to
the Form 10Q of CNL Income Fund II, Ltd. for the six months ended June 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 839,544
<SECURITIES> 0
<RECEIVABLES> 123,158
<ALLOWANCES> 74,652
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,466,663
<DEPRECIATION> 3,466,727
<TOTAL-ASSETS> 18,483,522
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,750,178
<TOTAL-LIABILITY-AND-EQUITY> 18,483,522
<SALES> 0
<TOTAL-REVENUES> 913,883
<CGS> 0
<TOTAL-COSTS> 271,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 811,782
<INCOME-TAX> 0
<INCOME-CONTINUING> 811,782
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 811,782
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund II, ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
