UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19141
CNL INCOME FUND V, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-2922869
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street, Suite 500
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interest ($500 per Unit)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes X No
----------- -----------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is
no market value for such Units. Each Unit was originally sold at $500 per
Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
ITEM 1. BUSINESS
CNL Income Fund V, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 17, 1988. The general partners of the Partnership are
Robert A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on December 16, 1988, the
Partnership offered for sale up to $25,000,000 in limited partnership
interests (the "Units") (50,000 Units at $500 per Unit) pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended. The offering terminated on June 7, 1989, as of which date the
maximum offering proceeds of $25,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant
chains (the "Restaurant Chains"). Net proceeds to the Partnership from its
offering of Units, after deduction of organizational and offering expenses,
totalled $22,125,000, and were used to acquire 30 Properties, including
interests in three Properties owned by joint ventures in which the Partnership
is a co-venturer. During the year ended December 31, 1995, the Partnership
sold its Property in Myrtle Beach, South Carolina, to the tenant of this
Property and accepted a promissory note for the full sales price of the
Property. As a result of the above transaction, the Partnership currently
owns 29 Properties, including interests in three Properties owned by joint
ventures in which the Partnership is a co-venturer. Generally, the Properties
are leased on a triple-net basis with the lessee responsible for all repairs
and maintenance, property taxes, insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to
sell Properties, the General Partners will consider factors such as potential
capital appreciation, net cash flow and federal income tax considerations.
Certain lessees also have been granted options to purchase Properties,
generally at the Property's then fair market value after a specified portion
of the lease term has elapsed. In general, the General Partners plan to seek
the sale of some of the Properties commencing seven to 12 years after their
acquisition. The Partnership has no obligation to sell all or any portion of
a Property at any particular time, except as may be required under property or
joint venture purchase options granted to certain lessees.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership
and the joint ventures in which the Partnership is a co-venturer provide for
initial terms, ranging from seven to 20 years (the average being 18 years) and
expire between 1997 and 2012. All leases are on a triple-net basis, with the
lessee responsible for all repairs and maintenance, property taxes, insurance
and utilities. The leases of the Properties provide for minimum base annual
rental payments (payable in monthly installments) ranging from approximately
$37,800 to $150,400. Generally, the leases provide for percentage rent, based
on sales in excess of a specified amount, to be paid annually. In addition, a
majority of the leases provide that, commencing in the sixth lease year, the
percentage rent will be an amount equal to the greater of the percentage rent
calculated under the lease formula or a specified percentage (ranging from
one-fourth to five percent) of either the purchase price paid by the
Partnership for the Property or gross sales.
Generally, the leases of the Properties provide for two to four five-
year renewal options subject to the same terms and conditions as the initial
lease. Certain lessees also have been granted options to purchase Properties
at the Property's then fair market value, or pursuant to a formula based on
the original cost of the Property, after a specified portion of the lease term
has elapsed. Additionally, one lease provides the lessee an option to
purchase up to a 49 percent interest in the Property, after a specified
portion of the lease term has elapsed, at an option purchase price similar to
those described above multiplied by the percentage interest in the Property
with respect to which the option is being exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
During 1993, CNL/Longacre Joint Venture, in which the Partnership has a
66.5% interest, terminated its original lease relating to the Property in
Lebanon, New Hampshire, and entered into a new lease with the same tenant.
The new lease provided for reduced base rental amounts. The tenant defaulted
under the terms of the lease and in February 1995, ceased operations of the
restaurant on the Property. The Partnership is currently seeking a
replacement tenant.
In February 1994, the tenant of the Properties in Belding and South
Haven, Michigan, defaulted under the terms of its leases and a new operator
began occupying the Properties on a month-to-month basis for reduced rental
amounts. In October 1994, the new operator ceased operations of the Belding
Property and in October 1995, the new operator of the South Haven Property
ceased operations. The Partnership is currently seeking a replacement tenant
for both Properties.
Major Tenants
During 1995, one lessee of the Partnership and its consolidated joint
venture, Shoney's, Inc., contributed more than ten percent of the
Partnership's total rental income (including rental income from the
Partnership's consolidated joint venture and the Partnership's share of the
rental income from two Properties owned by unconsolidated joint ventures). As
of December 31, 1995, Shoney's, Inc. was the lessee under leases relating to
four restaurants. It is anticipated that, based on the minimum rental
payments required by the leases, Shoney's, Inc. will continue to contribute
more than ten percent of the Partnership's total rental income in 1996 and
subsequent years. In addition, three Restaurant Chains, Perkins, Denny's and
Wendy's Old Fashioned Hamburger Restaurants, each accounted for more than ten
percent of the Partnership's total rental income in 1995 (including rental
income from the Partnership's consolidated joint venture and the Partnership's
share of the rental income from two Properties owned by unconsolidated joint
ventures). In subsequent years, it is anticipated that these three Restaurant
Chains each will continue to account for more than ten percent of the total
rental income to which the Partnership is entitled under the terms of the
leases. Any failure of Shoney's, Inc. or these Restaurant Chains could
materially affect the Partnership's income. No single tenant or group of
affiliated tenants lease Properties with an aggregate carrying value,
excluding acquisition fees and certain acquisition expenses, in excess of 20
percent of the total assets of the Partnership.
Joint Venture Arrangements
The Partnership has entered into three separate joint venture
arrangements, CNL/Longacre Joint Venture, Cocoa Joint Venture and Halls Joint
Venture, to purchase and hold three Properties through such joint ventures.
Each joint venture arrangement provides for the Partnership and its joint
venture partners to share in all costs and benefits associated with the joint
venture in proportion to each partner's percentage interest in the joint
venture. The Partnership and its joint venture partners are jointly and
severally liable for all debts, obligations, and other liabilities of the
joint ventures.
Each joint venture has an initial term of 20 to 30 years and, after the
expiration of the initial term, continues in existence from year to year
unless terminated at the option of either joint venturer or unless terminated
by an event of dissolution. Events of dissolution include the bankruptcy,
insolvency or termination of any joint venturer, sale of the Property owned by
the joint venture and mutual agreement of the Partnership and its joint
venture partner to dissolve the joint venture.
The Partnership has management control of the CNL/Longacre Joint Venture
and shares management control equally with affiliates of the General Partners
for Cocoa Joint Venture and Halls Joint Venture. The joint venture agreements
restrict each venturer's ability to sell, transfer or assign its joint venture
interest without first offering it for sale to its joint venture partner,
either upon such terms and conditions as to which the venturers may agree or,
in the event the venturers cannot agree, on the same terms and conditions as
any offer from a third party to purchase such joint venture interest.
Net cash flow from operations of CNL/Longacre Joint Venture, Cocoa Joint
Venture and Halls Joint Venture is distributed 66.5%, 43.0% and 49.0%,
respectively, to the Partnership and the balance is distributed to each of the
other joint venture partners. Any liquidation proceeds, after paying joint
venture debts and liabilities and funding reserves for contingent liabilities,
will be distributed first to the joint venture partners with positive capital
account balances in proportion to such balances until such balances equal
zero, and thereafter in proportion to each joint venture partner's percentage
interest in the joint venture.
Certain Management Services
CNL Investment Company, an affiliate of the General Partners, provided
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership through December 31,
1994. Under this agreement, CNL Investment Company was responsible for
collecting rental payments, inspecting the Properties and the tenants' books
and records, assisting the Partnership in responding to tenant inquiries and
notices and providing information to the Partnership about the status of the
leases and the Properties. CNL Investment Company also assisted the General
Partners in negotiating the leases. For these services, the Partnership had
agreed to pay CNL Investment Company an annual fee of one percent of the sum
of gross operating revenues from Properties wholly owned by the Partnership
plus the Partnership's allocable share of gross revenues of joint ventures in
which the Partnership is a co-venturer, but not in excess of competitive fees
for comparable services. Under the management agreement, the management fee
is subordinated to receipt by the Limited Partners of an aggregate, ten
percent, cumulative, noncompounded annual return on their adjusted capital
contributions (the "10% Preferred Return"), calculated in accordance with the
Partnership's limited partnership agreement (the "Partnership Agreement").
Effective January 1, 1995, certain officers and employees of CNL
Investment Company became officers and employees of CNL Income Fund Advisors,
Inc., an affiliate of the General Partners, and CNL Investment Company
assigned its rights in, and its obligations under, the management agreement
with the Partnership to CNL Income Fund Advisors, Inc. In addition, effective
October 1, 1995, CNL Income Fund Advisors, Inc. assigned its rights in, and
its obligations under, the management agreement with the Partnership to CNL
Fund Advisors, Inc. All of the terms and conditions of the management
agreement, including the payment of fees, as described above, remain
unchanged.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60
days' prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains,
including those offering different types of food and service.
At the time the Partnership elects to dispose of its Properties, other
than as a result of the exercise of tenant options to purchase Properties, the
Partnership will be in competition with other persons and entities to locate
purchasers for its Properties.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who
may also perform certain services for the Partnership.
ITEM 2. PROPERTIES
As of December 31, 1995, the Partnership owned, either directly or
through joint venture arrangements, 29 Properties located in 12 states.
Reference is made to the Schedule of Real Estate and Accumulated Depreciation
filed with this report for a listing of the Properties and their respective
costs, including acquisition fees and certain acquisition expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 12,300
to 135,000 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
Buildings. Generally, each of the Properties owned by the Partnership
includes a building that is one of a Restaurant Chain's approved designs. The
buildings generally are rectangular and are constructed from various
combinations of stucco, steel, wood, brick and tile. Building sizes range
from approximately 1,700 to 10,100 square feet. All buildings on Properties
acquired by the Partnership are freestanding and surrounded by paved parking
areas. Buildings are suitable for conversion to various uses, although
modifications may be required prior to use for other than restaurant
operations.
Generally, a lessee is required, under the terms of its lease agreement,
to make such capital expenditures as may be reasonably necessary to refurbish
buildings, premises, signs and equipment so as to comply with the lessee's
obligations, if applicable, under the franchise agreement to reflect the
current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenant as of December 31, 1995 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Shoney's, Inc. leases two Shoney's restaurants and two Captain D's
restaurants with an initial term of 20 years (expiring in 2008) and average
minimum base annual rent of approximately $63,000 (ranging from approximately
$49,000 to $84,700).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
ITEM 3. LEGAL PROCEEDINGS
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to,
or subject to, any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of February 29, 1996, there were 2,507 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. Limited Partners
who wish to sell their Units may offer the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited
Partners who wish to have their distributions used to acquire additional Units
(to the extent Units are available for purchase), may do so pursuant to such
Plan. The General Partners have the right to prohibit transfers of Units.
The price paid for any Unit transferred pursuant to the Plan has been $475 per
Unit. The price to be paid for any Unit transferred other than pursuant to
the Plan is subject to negotiation by the purchaser and the selling Limited
Partner. The Partnership will not redeem or repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1995 and 1994 other
than pursuant to the Plan, net of commissions (which ranged from zero to 19
percent).
1995 (1) 1994 (1)
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High Low Average High Low Average
------ ----- ------- ------ ----- -------
First Quarter $475 $450 $472 $460 $381 $424
Second Quarter 475 440 452 383 327 355
Third Quarter 475 415 442 475 460 470
Fourth Quarter 475 340 460 475 396 432
(1) A total of 1,133 and 211 Units were transferred other than pursuant to
the Plan for the years ended December 31, 1995 and 1994, respectively.
The capital contribution per Unit was $500. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For each of the years ended December 31, 1995 and 1994, the Partnership
declared cash distributions of $2,300,000 to the Limited Partners.
Distributions of $575,000 were declared at the close of each of the
Partnership's calendar quarters during 1995 and 1994 to the Limited Partners.
These amounts include monthly distributions made in arrears for the Limited
Partners electing to receive distributions on this basis. No amounts
distributed to partners for the years ended December 31, 1995 and 1994, 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. No distributions have been made to the General
Partners to date.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31:
Revenues (1) $ 2,314,818 $ 2,354,981 $ 2,421,786 $ 2,474,896 $ 2,538,267
Net income (2) 1,679,820 1,743,029 1,794,894 1,975,431 1,993,775
Cash distributions
declared 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000
Net income per
Unit (2) 33.26 34.51 35.54 39.11 39.48
Cash distributions
declared per Unit 46.00 46.00 46.00 46.00 46.00
At December 31:
Total assets $20,760,182 $21,299,865 $21,850,488 $21,749,120 $22,108,301
Long-term
obligations - - - - -
</TABLE>
(1) Revenues include equity in earnings of unconsolidated joint ventures and
minority interest in income or loss of the consolidated joint venture.
(2) Net income for the year ended December 31, 1995, includes $5,924 from a
gain on sale of land and building.
The above selected financial data should be read in conjunction with the
financial statements and related notes contained in Item 8 hereof.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership was organized on August 17, 1988, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains.
The leases are triple-net leases, with the lessee generally responsible for
all repairs and maintenance, property taxes, insurance and utilities. As of
December 31, 1995, the Partnership owned 29 Properties, either directly or
indirectly through joint venture arrangements.
Liquidity and Capital Resources
The Partnership's primary source of capital for the years ended December
31, 1995, 1994 and 1993, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and interest
received, less cash paid for expenses). Cash from operations was $2,142,918,
$2,177,079 and $2,215,658 for the years ended December 31, 1995, 1994 and
1993, respectively. The decrease in cash from operations during 1995 and
1994, as compared to the previous year, is primarily a result of changes in
income and expenses as discussed in "Results of Operations" below and changes
in the Partnership's working capital, during each of the respective years.
Cash from operations was also affected by the following during the years ended
December 31, 1995, 1994 and 1993.
During 1994, the tenant of the Properties in Belding and South Haven,
Michigan, continued to be in default under the terms of a promissory note with
the Partnership. In addition, in February 1994, the tenant defaulted under
the terms of its leases with the Partnership and vacated the Properties. As a
result, the Partnership established an allowance for doubtful accounts of
$138,716 for amounts relating to the note and other rental payments due to the
Partnership for these two Properties and a new operator began operating the
Properties on a month-to-month basis for reduced rental amounts. The new
operator ceased operations and rental payments in October 1994 and October
1995 for the Properties in Belding and South Haven, Michigan, respectively.
Due to the fact that the Partnership does not expect to receive any additional
amounts from the original tenant of these Properties, the Partnership reversed
all past due rental and other amounts relating to these two Properties, and
the related allowance for doubtful accounts of $138,716 during 1995.
Other sources and uses of capital included the following during the
years ended December 31, 1995, 1994 and 1993.
In August 1995, the Partnership sold its Property in Myrtle Beach, South
Carolina, to the tenant of the Property for $1,040,000, and in connection
therewith, accepted a promissory note in the principal sum of $1,040,000,
collateralized by a mortgage on the Property. The note bears interest at a
rate of 10.25% per annum and is being collected in 59 equal monthly
installments of $9,319, with a balloon payment of $1,006,004 due in July 2000.
Collections commenced August 1, 1995. In accordance with Statement of
Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate,"
the Partnership recorded the sale of the Property using the installment sales
method. Therefore, the gain on the sale of the Property was deferred and is
being recognized as income proportionately as payments under the mortgage note
are collected. The Partnership recognized a gain of $1,571 for financial
reporting purposes for the year ended December 31, 1995, and had a deferred
gain in the amount of $141,641 at December 31, 1995. The mortgage note
receivable balance at December 31, 1995, was $895,736 including accrued
interest of $8,786 and net of the remaining deferred gain of $141,641. The
General Partners anticipate that payments collected under the mortgage note
will be reinvested in additional Properties or used for other Partnership
purposes.
In October 1995, the Partnership sold a portion of the land relating to
its Property in Daleville, Indiana, as the result of a right of way taking.
In connection therewith, the Partnership received sales proceeds of $7,625 and
recognized a gain of $4,353 for financial reporting purposes for the year
ended December 31, 1995.
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. During the year ended December 31,
1995, the corporate General Partner contributed $31,500 in connection with the
operations of the Partnership. No such contributions were made during the
years ended December 31, 1994 and 1993. In addition, in January 1996, the
corporate General Partner contributed capital of $100,000 in connection with
the operations of the Partnership.
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 December 31, 1995, the Partnership had
$319,052 invested in such short-term investments as compared to $425,600 at
December 31, 1994. The balance of funds at December 31, 1995, will be used
for the payment of distributions and other liabilities.
None of the Properties owned by the Partnership or the joint ventures in
which the Partnership owns an interest is or may be encumbered. Under its
Partnership Agreement, the Partnership is prohibited from borrowing for any
purpose; provided, however, that the General Partners or their affiliates are
entitled to reimbursement, at cost, for actual expenses incurred by the
General Partners or their affiliates on behalf of the Partnership. Affiliates
of the General Partners from time to time incur certain operating expenses on
behalf of the Partnership for which the Partnership reimburses the affiliates
without interest.
During 1995, 1994 and 1993, affiliates of the General Partners incurred
on behalf of the Partnership $114,204, $126,417 and $107,496, respectively,
for certain operating expenses. As of December 31, 1995 and 1994, the
Partnership owed $61,519 and $19,934, respectively, to affiliates for such
amounts and accounting and administrative services. Amounts payable to other
parties, including distributions payable, increased to $673,098 at December
31, 1995, from $663,368 at December 31, 1994. Liabilities at December 31,
1995, to the extent they exceed cash and cash equivalents at December 31,
1995, will be paid from future cash from operations, from General Partner
capital contributions of $100,000 received in January 1996, from amounts
collected under the mortgage note described above or, in the event the General
Partners elect to make additional capital contributions, from future General
Partner contributions.
Based primarily on current and anticipated future cash from operations,
and to a lesser extent additional capital contributions from the General
Partners, the Partnership declared distributions to the Limited Partners of
$2,300,000 for each of the years ended December 31, 1995, 1994 and 1993. This
represents distributions of $46 per Unit for each of the years ended December
31, 1995, 1994 and 1993. The Partnership intends to continue to make
distributions of cash available for distribution to the Limited Partners on a
quarterly basis.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, during 1995, the General Partners obtained
contingent liability and property coverage for the Partnership. This
insurance policy is intended to reduce the Partnership's exposure in the
unlikely event a tenant's insurance policy lapses or is insufficient to cover
a claim relating to the Property.
The Partnership's investment strategy of acquiring Properties for cash
and generally 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.
Due to low operating expenses and ongoing cash flow, the General
Partners do not believe that working capital reserves are necessary at this
time. In addition, because all leases of the Partnership's Properties are on
a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purposes, the
General Partners will contribute to the Partnership an aggregate amount of up
to one percent of the offering proceeds for maintenance and repairs.
Results of Operations
During 1995, 1994 and 1993, the Partnership owned and leased 27 wholly
owned Properties (including one Property in Myrtle Beach, South Carolina,
which was sold in August 1995). In addition, during 1995, 1994 and 1993, the
Partnership was a co-venturer in three separate joint ventures that each owned
and leased one Property. As of December 31, 1995, the Partnership owned,
either directly or through joint venture arrangements, 29 Properties which
are, in general, subject to long-term, triple-net leases. The leases of the
Properties provide for minimum base annual rental amounts (payable in monthly
installments) ranging from approximately $37,800 to $150,400. Generally, the
leases provide for percentage rent based on sales in excess of a specified
amount to be paid annually. In addition, a majority of the leases provide
that, commencing in the sixth lease year, the percentage rent will be an
amount equal to the greater of the percentage rent calculated under the lease
formula or a specified percentage (ranging from one-fourth to five percent) of
either the purchase price paid by the Partnership for the Property or gross
sales. For further description of the Partnership's leases and Properties,
see Item 1. Business - Leases and Item 2. Properties, respectively.
During the years ended December 31, 1995, 1994 and 1993, the Partnership
and its consolidated joint venture, CNL/Longacre Joint Venture, earned
$2,068,342, $2,174,472 and $2,230,589, respectively, in rental income from
operating leases and earned income from direct financing leases. Rental
income in 1995, as compared to 1994, decreased approximately $51,400 as a
result of the sale of its Property in Myrtle Beach, South Carolina, in August
1995, as described above in "Liquidity and Capital Resources."
In addition, rental and earned income in 1995 and 1994, each as compared
to the prior year, decreased approximately $51,000 and $36,700, respectively,
as a result of the fact that in February 1994, the former tenant of the
Properties in Belding and South Haven, Michigan, defaulted under the terms of
its leases and the Partnership began accepting reduced rent on a month-to-
month basis from a new operator as discussed above in Item 1. Business -
Leases. The new operator ceased operations and rental payments for the
Property in Belding, Michigan, in October 1994. In addition, in October 1995,
the new operator ceased operations of the Property in South Haven, Michigan,
after becoming delinquent with its rental payments. Due to the fact that the
Partnership does not expect to receive any additional amounts from the
original tenant of these Properties, the Partnership reversed all past due
rental and other amounts relating to these two Properties, and the related
allowance for doubtful accounts of approximately $153,800 for the year ended
December 31, 1995. The Partnership currently is not receiving any rental
income relating to these two Properties and the General Partners are seeking
replacement tenants for these Properties.
Rental income in 1994, as compared to 1993, also decreased approximately
$58,800 as a result of the Partnership's consolidated joint venture increasing
its allowance for doubtful accounts for rental amounts unpaid by the tenant of
the Property in Lebanon, New Hampshire. The tenant defaulted under the terms
of the lease and in February 1995, ceased operations of the restaurant on the
Property; therefore, the General Partners are currently seeking a replacement
tenant for this Property. Due to the fact that the joint venture does not
expect to receive any additional amounts relating to this Property from the
former tenant, the joint venture reversed all past due rental and other
amounts relating to this Property, and the related allowance for doubtful
accounts of approximately $275,500 during 1995.
Rental and earned income for 1996 are expected to remain at reduced
amounts until such time as the Partnership executes new leases for its
Properties in Belding and South Haven, Michigan, and Lebanon, New Hampshire.
Rental and earned income also decreased approximately $16,300 during
1994, as compared to 1993, due to the fact that effective January 1994, the
leases relating to the Properties in Daleville and New Castle, Indiana, were
amended to provide for the payment of reduced annual rent with no scheduled
rent increases. However, the lease amendments provide for lower percentage
rent breakpoints, as compared to the original lease agreements, a change that
is designed to result in higher annual percentage rent payments at any time
that percentage rent becomes due. The General Partners anticipate that total
rental payments under the amended leases will be equal to or greater than the
original leases during the terms of the leases. As a result of the lease
amendments, the lease relating to the Property in New Castle, Indiana, was
reclassified from a direct financing lease to an operating lease during 1994.
The decrease in rental and earned income during 1994, was partially
offset by (i) an increase of approximately $18,000 due to the fact that during
1993 the Partnership reversed accrued rental income previously recorded and
associated with the former tenant of the Property in Franklin, Tennessee, and
(ii) an increase of approximately $31,600 due to the fact that the Partnership
entered into a new lease relating to this Property in August 1993, which
resulted in a full year of rental income during 1994.
For the years ended December 31, 1995, 1994 and 1993, the Partnership
earned $104,455, $115,011 and $113,375, respectively, in contingent rental
income. The decrease in contingent rental income during 1995, as compared to
1994, is primarily attributable to a decrease in gross sales of certain
restaurant Properties whose leases require the payment of contingent rental
income. However, contingent rental income increased approximately $7,700 and
$3,900 in 1995 and 1994, respectively, each as compared to the prior year, as
a result of the lower percentage rent breakpoints provided for in the lease
amendments for the Properties in Daleville and New Castle, Indiana, as
described above. The increase in contingent rental income during 1994 was
partially offset by a decrease as a result of (i) decreased gross sales
relating to certain restaurant Properties and (ii) the default of the tenant
of the Properties in Belding and South Haven, Michigan.
During the years ended December 31, 1995, 1994 and 1993, the Partnership
earned $83,180, $11,002 and $14,252 in interest and other income. The
increase in interest and other income during 1995, as compared to 1994, was
primarily attributable to the interest earned on the mortgage note receivable
accepted in connection with the sale of the Property in Myrtle Beach, South
Carolina, in August 1995. Interest and other income also increased during
1995, as compared to 1994, as the result of recognizing storage income from
holding the restaurant equipment of the former tenant of the Property in
Lebanon, New Hampshire, on behalf of the tenant's lender, who repossessed the
restaurant equipment from the tenant.
In addition, for the years ended December 31, 1995, 1994 and 1993, the
Partnership earned $47,018, $47,219 and $45,711, respectively, attributable to
net income earned by unconsolidated joint ventures in which the Partnership is
a co-venturer.
During the years ended December 31, 1995, 1994 and 1993, one lessee of
the Partnership and its consolidated joint venture, Shoney's, Inc.,
contributed more than ten percent of the Partnership's total rental income
(including rental income from the Partnership's consolidated joint venture and
the Partnership's share of the rental income from two Properties owned by
unconsolidated joint ventures). As of December 31, 1995, Shoney's, Inc. was
the lessee under leases relating to four restaurants. It is anticipated that,
based on the minimum rental payments required by the leases, Shoney's, Inc.
will continue to contribute more than ten percent of the Partnership's total
rental income during 1996 and subsequent years. In addition, three
Restaurant Chains, Perkins, Denny's and Wendy's Old Fashioned Hamburger
Restaurants, each accounted for more than ten percent of the Partnership's
total rental income in 1995 (including rental income from the Partnership's
consolidated joint venture and the Partnership's share of the rental income
from two Properties owned by unconsolidated joint ventures). In subsequent
years, it is anticipated that these three Restaurant Chains each will continue
to account for more than ten percent of the total rental income to which the
Partnership is entitled under the terms of the leases. Any failure of
Shoney's, Inc. or these Restaurant Chains could materially affect the
Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $640,922, $611,952 and $626,892 for the years ended December 31, 1995,
1994 and 1993, respectively. Operating expenses increased during 1995
primarily as the result of an increase in (i) accounting and administrative
expenses associated with operating the Partnership and its Properties and (ii)
insurance expense as a result of the General Partners' obtaining contingent
liability and property coverage for the Partnership as discussed above in
"Liquidity and Capital Resources."
The decrease in operating expenses during 1994, as compared to 1993, was
partially attributable to the fact that in 1993, CNL/Longacre Joint Venture
incurred taxes relating to the filing of various state tax returns and the
Partnership incurred expenses in locating a new tenant for the Property in
Franklin, Tennessee. In addition, during 1993, the Partnership expensed
approximately $17,700 in unamortized lease costs relating to the lease with
the former tenant of the Property in Franklin, Tennessee. No such amounts
were incurred in 1994 or 1995.
During the year ended December 31, 1994, the Partnership recorded a loss
upon the termination of the leases relating to the Properties in Belding and
South Haven, Michigan. As a result of the lease terminations, the Partnership
reclassified these leases from direct financing leases to operating leases,
whereby the Properties were recorded at cost. Due to the fact that the net
carrying value of the Properties as direct financing leases exceeded the cost
of the Properties, the Partnership recognized a loss during 1994 for financial
reporting purposes only. In addition, the Partnership accrued approximately
$26,500, $38,900 and $22,700 during the years ended December 31, 1995, 1994
and 1993, for real estate taxes relating to these two Properties. The
Partnership expects to continue to incur real estate tax and other expenses
relating to these two Properties until such time as new leases are executed
for such Properties.
Operating expenses during 1995 and 1993 also included approximately
$20,600 and $48,400, respectively, in real estate taxes relating to the
Property in Lebanon, New Hampshire, as to which the tenant defaulted under the
terms of its lease and in February 1995, ceased operations of the restaurant
Property. The tenant was responsible for payment of the taxes; however, the
Partnership accrued amounts in 1993 relating to the current and prior years
due to the fact that the tenant had not paid the taxes. During 1994, the
Partnership collected escrowed real estate taxes from the tenant sufficient to
pay the 1994 taxes; therefore, no expense was recorded for 1994. The
Partnership expects to continue to incur real estate tax and other expenses
relating to the Property in Lebanon, New Hampshire, until such time as a new
lease is executed for such Property.
Depreciation expense decreased during 1995, as compared to 1994, as a
result of the sale of the Property in Myrtle Beach, South Carolina. In
addition, depreciation expense increased during 1994, as compared to 1993, due
to the reclassification of the leases relating to the Properties in New
Castle, Indiana, and Belding and South Haven, Michigan, from direct financing
leases to operating leases during 1994.
In addition, in connection with the sale of its Property in Myrtle
Beach, South Carolina, as described above in "Liquidity and Capital
Resources," for $1,040,000, the Partnership recognized a gain for financial
reporting purposes of $1,571 for the year ended December 31, 1995. In
accordance with Statement of Financial Accounting Standards No. 66,
"Accounting for Sales of Real Estate," the Partnership recorded the sale using
the installment sales method. As such, the gain on sale was deferred and is
being recognized as income proportionately as payments under the mortgage note
are collected. Therefore, the balance of the deferred gain of $141,641 at
December 31, 1995, will be recognized as income in future periods as payments
are collected. For federal income tax purposes, a gain of approximately
$136,900 from the sale of this Property was also deferred and is being
recognized as payments under the mortgage note are collected. In October
1995, the Partnership also sold a portion of the land relating to its Property
in Daleville, Indiana, as the result of a right of way taking and recognized a
gain for financial reporting purposes of $4,353 during the year ended December
31, 1995. No Properties were sold during the years ended December 31, 1994
and 1993.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
Statement, which is effective for fiscal years beginning after December 15,
1995, requires that an entity review long-lived assets and certain
identifiable intangibles, to be held and used, for impairment whenever events
or changes in circumstances indicate that the carrying amount of the asset may
not be recoverable. The Partnership will adopt this standard in 1996. The
General Partners believe that adoption of this standard currently would not
have had a material effect on the Partnership's financial position or results
of operations.
The Partnership's leases as of December 31, 1995, are, in general,
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales
above a specified level and/or automatic increases in base rent at specified
times during the term of the lease. Management expects that increases in
restaurant 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 Partnership's Properties. Inflation and changing
prices, however, also may have an adverse impact on the operating margins of
the restaurants and on potential capital appreciation of the Properties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONTENTS
--------
Page
----
Report of Independent Accountants 13
Financial Statements:
Balance Sheets 14
Statements of Income 15
Statements of Partners' Capital 16
Statements of Cash Flows 17
Notes to Financial Statements 20
Report of Independent Accountants
---------------------------------
To the Partners
CNL Income Fund V, Ltd.
We have audited the financial statements and the financial statement schedules
of CNL Income Fund V, Ltd. (a Florida limited partnership) listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund V, Ltd. as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole, present
fairly, in all material respects, the information required to be included
therein.
/s/Coopers & Lybrand L.L.P.
Orlando, Florida
January 20, 1996
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
--------------
December 31,
ASSETS 1995 1994
----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation $16,640,635 $17,935,158
Net investment in direct financing
leases 1,987,793 2,033,245
Investment in joint ventures 473,138 479,525
Mortgage note receivable, less
deferred gain 895,736 -
Cash and cash equivalents 319,052 425,600
Receivables, less allowance for
doubtful accounts of $4,490
and $430,464 68,204 81,731
Prepaid expenses 11,921 11,387
Accrued rental income 309,357 278,873
Other assets 54,346 54,346
----------- -----------
$20,760,182 $21,299,865
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 13,963 $ 4,562
Accrued and escrowed real estate
taxes payable 84,135 83,806
Distributions payable 575,000 575,000
Due to related parties 61,519 19,934
Rents paid in advance 29,370 19,865
----------- -----------
Total liabilities 763,987 703,167
Minority interest 301,435 313,258
Partners' capital 19,694,760 20,283,440
----------- -----------
$20,760,182 $21,299,865
=========== ===========
See accompanying notes to financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
--------------------
Year Ended December 31,
1995 1994 1993
---------- ---------- ----------
Revenues:
Rental income from operating leases $1,878,584 $1,980,954 $1,858,993
Earned income from direct financing
leases 189,758 193,518 371,596
Contingent rental income 104,455 115,011 113,375
Interest and other income 83,180 11,002 14,252
---------- ---------- ----------
2,255,977 2,300,485 2,358,216
---------- ---------- ----------
Expenses:
General operating and administra-
tive 157,741 94,279 110,863
Professional services 20,741 24,641 37,231
Bad debt expense 1,541 4,788 -
Real estate taxes 47,182 36,926 71,907
State and other taxes 15,982 17,740 44,472
Loss on termination of direct
financing leases - 30,431 -
Depreciation and amortization 397,735 403,147 362,419
---------- ---------- ----------
640,922 611,952 626,892
---------- ---------- ----------
Income Before Minority Interest
in Loss of Consolidated Joint
Venture, Equity in Earnings of
Unconsolidated Joint Ventures
and Gain on Sale of Land and
Building 1,615,055 1,688,533 1,731,324
Minority Interest in Loss of
Consolidated Joint Venture 11,823 7,277 17,859
Equity in Earnings of Unconsoli-
dated Joint Ventures 47,018 47,219 45,711
Gain on Sale of Land and Building 5,924 - -
---------- ---------- ----------
Net Income $1,679,820 $1,743,029 $1,794,894
========== ========== ==========
Allocation of Net Income:
General partners $ 16,754 $ 17,430 $ 17,949
Limited partners 1,663,066 1,725,599 1,776,945
---------- ---------- ----------
$1,679,820 $1,743,029 $1,794,894
========== ========== ==========
Net Income Per Limited Partner Unit $ 33.26 $ 34.51 $ 35.54
========== ========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 50,000 50,000 50,000
========== ========== ==========
See accompanying notes to financial statements.
<TABLE>
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
General Partners Limited Partners
------------------ ----------------------------------------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Earnings butions butions Earnings Costs Total
------- -------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $46,000 $ 74,327 $25,000,000 $ (8,268,240) $ 7,358,430 $(2,865,000) $21,345,517
Distributions to limited
partners ($46 per
limited partner unit) - - - (2,300,000) - - (2,300,000)
Net income - 17,949 - - 1,776,945 - 1,794,894
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1993 46,000 92,276 25,000,000 (10,568,240) 9,135,375 (2,865,000) 20,840,411
Distributions to limited
partners ($46 per
limited partner unit) - - - (2,300,000) - - (2,300,000)
Net income - 17,430 - - 1,725,599 - 1,743,029
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1994 46,000 109,706 25,000,000 (12,868,240) 10,860,974 (2,865,000) 20,283,440
Contributions from general
partner 31,500 - - - - - 31,500
Distributions to limited
partners ($46 per
limited partner unit) - - - (2,300,000) - - (2,300,000)
Net income - 16,754 - - 1,663,066 - 1,679,820
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1995 $77,500 $126,460 $25,000,000 $(15,168,240) $12,524,040 $(2,865,000) $19,694,760
======= ======== =========== ============ =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
Year Ended December 31,
1995 1994 1993
----------- ----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents:
Cash Flows from Operating
Activities:
Cash received from tenants $ 2,216,111 $ 2,272,510 $ 2,349,015
Distributions from uncon-
solidated joint ventures 53,405 52,701 52,571
Cash paid for expenses (173,597) (155,948) (196,578)
Interest received 46,999 7,816 10,650
----------- ----------- -----------
Net cash provided by
operating activities 2,142,918 2,177,079 2,215,658
----------- ----------- -----------
Cash Flows from Investing
Activities:
Proceeds from sale of
portion of land for
right of way purposes 7,625 - -
Collections on mortgage
note receivable 11,409 - -
----------- ----------- -----------
Net cash provided by
investing activities 19,034 - -
----------- ----------- -----------
Cash Flows from Financing
Activities:
Contributions from general
partner 31,500 - -
Distributions to limited
partners (2,300,000) (2,300,000) (1,735,129)
Distributions to holder of
minority interest - - (10,725)
----------- ----------- -----------
Net cash used in
financing activities (2,268,500) (2,300,000) (1,745,854)
----------- ----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents (106,548) (122,921) 469,804
Cash and Cash Equivalents at
Beginning of Year 425,600 548,521 78,717
----------- ----------- -----------
Cash and Cash Equivalents at End
of Year $ 319,052 $ 425,600 $ 548,521
=========== =========== ===========
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 1,679,820 $ 1,743,029 $ 1,794,894
----------- ----------- -----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Loss on termination of
direct financing leases - 30,431 -
Depreciation 397,735 402,980 341,680
Minority interest in loss
of consolidated joint
venture (11,823) (7,277) (17,859)
Amortization - 167 20,739
Equity in earnings of
unconsolidated joint
ventures, net of
distributions 6,387 5,482 6,860
Gain on sale of land
and building (5,924) - -
Increase in accrued
interest on mortgage
note receivable (8,786) - -
Decrease in receivables 13,527 13,656 15,871
Decrease (increase) in
prepaid expenses (534) 1,383 (4,262)
Decrease in net investment
in direct financing
leases 42,180 38,532 24,185
Increase in accrued rental
income (30,484) (64,929) (36,637)
Increase in accounts
payable and accrued
expenses 9,730 3,982 64,276
Increase in due to related
parties 41,585 10,513 5,334
Increase (decrease) in
rents paid in advance 9,505 (870) 577
----------- ----------- -----------
Total adjustments 463,098 434,050 420,764
----------- ----------- -----------
Net Cash Provided by Operating
Activities $ 2,142,918 $ 2,177,079 $ 2,215,658
=========== =========== ===========
Supplemental Schedule of Non-Cash
Investing and Financing
Activities:
Net investment in direct
financing leases reclassi-
fied to land and buildings
on operating leases as a
result of lease amendment
or termination $ - $ 1,987,609 $ -
=========== =========== ===========
Mortgage note accepted
in connection with
sale of land
and building $ 1,040,000 $ - $ -
=========== =========== ===========
Distributions declared and
unpaid at December 31 $ 575,000 $ 575,000 $ 575,000
=========== =========== ===========
See accompanying notes to financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Years Ended December 31, 1995, 1994 and 1993
1. Significant Accounting Policies:
-------------------------------
Organization and Nature of Business - CNL Income Fund V, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A. Bourne.
Mr. Seneff and Mr. Bourne are also 50 percent shareholders of the
Corporate General Partner. The general partners have responsibility for
managing the day-to-day operations of the Partnership.
Land and Buildings on Operating Leases - Generally, land and buildings
on operating leases are stated at cost. Buildings are depreciated using
the straight-line method over their estimated useful lives ranging from
25 to 30 years. When properties are sold, the related cost and
accumulated depreciation are removed from the accounts and gains and
losses from sales are reflected in income in accordance with Statement
of Financial Accounting Standards No. 66, "Accounting for Sales of Real
Estate." For any sales in which the installment sales method applies,
gain resulting from the sale of land and building is deferred and the
gain is recognized proportionately as the sales value is collected. For
any sales in which the full accrual method applies, gain resulting from
the sale of land and building is recognized at the date of sale and is
reflected in income.
The properties will be written down to net realizable value in the event
the general partners believe that the undepreciated cost cannot be
recovered through operations. The general partners determine whether an
impairment in value has occurred by comparing the estimated undiscounted
future cash flows with the carrying cost of the individual properties.
Lease Accounting and Rental Income - Land and buildings are leased to
others on a triple-net lease basis, whereby the tenant is generally
responsible for all operating expenses relating to the property,
including property taxes, insurance, maintenance and repairs.
The leases are accounted for using either the direct financing or the
operating method. Such methods are described below:
Direct financing method - Leases accounted for using the
direct financing method are recorded at their net investment
(Note 4). Unearned income is deferred and amortized to
income over the lease terms so as to produce a constant
periodic rate of return on the Partnership's net investment
in the lease.
Operating method - Generally, land and buildings are
recorded at cost, revenue is recognized as rentals are
earned and depreciation is charged to operations as
incurred. When scheduled rentals vary during the lease
term, income is recognized on a straight-line basis over the
lease term so as to produce a constant periodic rent.
Accrued rental income is the aggregate difference between
the scheduled rents which vary during the lease term and the
income recognized on a straight-line basis.
When the collection of amounts recorded as rental or other income are
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables,
and to decrease rental or other income or increase bad debt expense for
the current period, although the Partnership continues to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.
Investment in Joint Ventures - The Partnership accounts for its 66.5%
interest in CNL/Longacre Joint Venture, a Florida general partnership,
using the consolidation method. Minority interest represents the
minority joint venture partner's proportionate share of the equity in
the Partnership's consolidated joint venture. All significant
intercompany accounts and transactions have been eliminated.
The Partnership's investments in Cocoa Joint Venture and Halls Joint
Venture are accounted for using the equity method since the Partnership
shares control with affiliates which have the same general partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to be
cash equivalents. Cash and cash equivalents consist of demand deposits
at commercial banks, money market funds and overnight repurchase
agreements backed by government securities. Cash equivalents are stated
at cost plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand deposits
at commercial banks and money market funds may exceed federally insured
levels; however, the Partnership has not experienced any losses in such
accounts. The Partnership limits investment of temporary cash
investments to financial institutions with high credit standing;
therefore, the Partnership believes it is not exposed to any significant
credit risk on cash and cash equivalents.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and properties.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to 1995 presentation.
These reclassifications had no effect on partners' capital or net
income.
New Accounting Standard - In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." The Statement, which is effective for
fiscal years beginning after December 15, 1995, requires that an entity
review long-lived assets and certain identifiable intangibles, to be
held and used, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. The Partnership will adopt this standard in 1996. The
general partners believe that adoption of this standard currently would
not have had a material effect on the Partnership's financial position
or results of operations.
2. Leases:
------
The Partnership leases its land and buildings primarily to operators of
national and regional fast-food and family-style restaurants. The
leases are accounted for under the provisions of Statement of Financial
Accounting Standards No. 13, "Accounting for Leases." The leases
generally are classified as operating leases; however, four leases have
been classified as direct financing leases. Substantially all leases
are for 15 to 20 years and provide for minimum and contingent rentals.
In addition, the tenant generally pays all property taxes and
assessments, fully maintains the interior and exterior of the building
and carries insurance coverage for public liability, property damage,
fire and extended coverage. The lease options generally allow tenants
to renew the leases for two to four successive five-year periods subject
to the same terms and conditions as the initial lease. Most leases also
allow the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
--------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
1995 1994
----------- -----------
Land $ 7,666,704 $ 7,926,931
Buildings 11,102,384 11,881,287
----------- -----------
18,769,088 19,808,218
Less accumulated
depreciation (2,128,453) (1,873,060)
----------- -----------
$16,640,635 $17,935,158
=========== ===========
In August 1995, the Partnership sold its property in Myrtle Beach, South
Carolina, to the tenant for $1,040,000 and accepted the sales proceeds
in the form of a promissory note (Note 6). The total carrying value of
the property was $896,788, including acquisition fees and miscellaneous
acquisition expenses and net of accumulated depreciation. As a result
of this sale being accounted for using the installment sales method for
financial reporting purposes as required by Statement of Financial
Accounting Standards No. 66, "Accounting for Sales of Real Estate," the
Partnership recognized a gain of $1,571 for the year ended December 31,
1995, and had a deferred gain in the amount of $141,641 at December 31,
1995 (Note 6).
Some leases provide for escalating guaranteed minimum rents throughout
the lease terms. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 1995, 1994 and 1993, the Partnership
recognized $30,484, $64,929 and $36,637, respectively, of such rental
income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1995:
1996 $ 1,744,714
1997 1,727,951
1998 1,698,635
1999 1,708,363
2000 1,736,212
Thereafter 13,610,416
-----------
$22,226,291
===========
4. Net Investment in Direct Financing Leases:
-----------------------------------------
The following lists the components of the net investment in direct
financing leases at December 31:
1995 1994
----------- -----------
Minimum lease payments
receivable $ 3,043,263 $ 3,275,201
Estimated residual
values 828,783 832,055
Less unearned income (1,884,253) (2,074,011)
----------- -----------
Net investment in direct
financing leases $ 1,987,793 $ 2,033,245
=========== ===========
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1995:
1996 $ 231,938
1997 231,938
1998 231,938
1999 231,938
2000 231,938
Thereafter 1,883,573
----------
$3,043,263
==========
In October 1995, the Partnership sold a portion of land relating to its
Property in Daleville, Indiana, in connection with a right of way taking
and received sales proceeds of $7,625. In connection therewith, the
Partnership recognized a gain of $4,353 for financial reporting purposes
for the year ended December 31, 1995.
During the year ended December 31, 1994, two of the Partnership's leases
were terminated. As a result of the lease terminations, the Partnership
reclassified these leases from direct financing leases to operating
leases, whereby the properties were recorded at cost. Due to the fact
that the net carrying value of the properties as direct financing leases
exceeded the cost of the properties, the Partnership recognized a loss
of $30,431 for financial reporting purposes for the year ended December
31, 1994.
5. Investment in Joint Ventures:
----------------------------
The Partnership has a 43 percent and a 49 percent interest in the
profits and losses of Cocoa Joint Venture and Halls Joint Venture,
respectively. The remaining interests in these joint ventures are held
by affiliates of the Partnership which have the same general partners.
Cocoa Joint Venture and Halls Joint Venture each own and lease one
property to an operator of national fast-food or family-style
restaurants. The following presents the joint ventures' combined,
condensed financial information at December 31:
1995 1994
---------- ----------
Land and buildings on
operating leases, less
accumulated depreciation $ 967,182 $ 987,958
Cash 112 373
Prepaid expenses 80 -
Accrued rental income 58,970 52,035
Other assets - 11
Liabilities 447 644
Partners' capital 1,025,897 1,039,733
Revenues 124,356 124,058
Net income 100,215 100,632
The Partnership recognized income totalling $47,018, $47,219 and $45,711
for the years ended December 31, 1995, 1994 and 1993, respectively, from
these joint ventures.
6. Mortgage Note Receivable:
------------------------
In connection with the sale of its property in Myrtle Beach, South
Carolina, the Partnership accepted a promissory note in the principal
sum of $1,040,000, collateralized by a mortgage on the property. The
promissory note bears interest at 10.25% per annum and is being
collected in 59 equal monthly installments of $9,319, with a balloon
payment of $1,006,004 due in July 2000.
The mortgage note receivable consisted of the following at December 31,
1995:
Principal balance $1,028,591
Accrued interest receivable 8,786
Less deferred gain on sale
of land and building (141,641)
----------
$ 895,736
==========
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of the year-
end fair value of significant financial instruments. The general
partners believe, based upon the current terms, that the estimated fair
value of the Partnership's mortgage note receivable is $1,037,377. The
difference between the carrying value and the estimated fair value of
the mortgage note receivable represents the deferred gain on the sale
of land and building that is being recognized as income proportionately
as payments under the note are collected.
7. Allocations and Distributions:
-----------------------------
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, cumulative, noncompounded annual return on their adjusted
capital contributions (the "10% Preferred Return").
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 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 each of the years ended December 31, 1995, 1994 and 1993, the
Partnership declared distributions to the limited partners of
$2,300,000. No distributions have been made to the general partners to
date.
8. Income Taxes:
------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
1995 1994 1993
---------- ---------- ----------
Net income for financial
reporting purposes $1,679,820 $1,743,029 $1,794,894
Depreciation for tax
reporting purposes in
excess of depreciation
for financial reporting
purposes (26,980) (31,009) (92,309)
Gain on disposition of
land and building for
financial reporting
purposes in excess of
gain for tax reporting
purposes (69)
-
-
Direct financing leases
recorded as operating
leases for tax reporting
purposes 42,180 38,532 24,185
Loss on termination of
direct financing leases - 30,431 -
Equity in earnings of
unconsolidated joint
ventures for tax
reporting purposes less
than equity in earnings
of unconsolidated joint
ventures for financial
reporting purposes (2,926) (3,954) (2,448)
Allowance for doubtful
accounts (150,480) 35,321 8,239
Accrued rental income (30,484) (64,929) (36,637)
Rents paid in advance 9,505 (870) 577
Minority interest in
timing differences of
consolidated joint
venture (370) (370) 36,952
---------- ---------- ----------
Net income for federal
income tax purposes $1,520,196 $1,746,181 $1,733,453
========== ========== ==========
9. Related Party Transactions:
--------------------------
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of CNL
Investment Company and CNL Fund Advisors, Inc. The other individual
general partner, Robert A. Bourne, is the president of CNL Investment
Company and CNL Fund Advisors, Inc. CNL Income Fund Advisors, Inc. was
a wholly owned subsidiary of CNL Group, Inc. until its merger, effective
January 1, 1996, with CNL Fund Advisors, Inc. During the years ended
December 31, 1995, 1994 and 1993, CNL Investment Company, CNL Income
Fund Advisors, Inc. and CNL Fund Advisors, Inc. (hereinafter referred to
collectively as the "Affiliates") each performed certain services for
the Partnership, as described below.
During the years ended December 31, 1995, 1994 and 1993, certain
Affiliates acted as manager of the Partnership's properties pursuant to
a management agreement with the Partnership. In connection therewith,
the Partnership agreed to pay the Affiliates a management fee of one
percent of the sum of gross revenues from properties wholly owned by the
Partnership and the Partnership's allocable share of gross revenues from
joint ventures, but not in excess of competitive fees for comparable
services. These fees are payable only after the limited partners
receive their 10% Preferred Return. Due to the subordinated nature of
these fees, no management fees have been incurred since inception.
Certain Affiliates are also 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 the sales price if the Affiliates provide
a substantial amount of services in connection with the sale. In
addition, the real estate disposition fee is subordinated to receipt by
the limited partners of their aggregate 10% Preferred Return, plus their
adjusted capital contributions. No deferred, subordinated real estate
disposition fees have been incurred since inception.
During the years ended December 31, 1995, 1994 and 1993, the Affiliates
provided accounting and administrative services to the Partnership on a
day-to-day basis. The Partnership incurred $83,882, $47,314 and $42,252
for the years ended December 31, 1995, 1994 and 1993, respectively, for
such services.
The due to related parties at December 31, 1995 and 1994 of $61,519 and
$19,934, respectively, represents amounts due to Affiliates for
accounting and administrative services and for expenditures incurred on
behalf of the Partnership.
10. Concentration of Credit Risk:
----------------------------
For the years ended December 31, 1995, 1994 and 1993, total rental and
earned income from Shoney's, Inc. was $247,353, $248,176 and $253,355,
respectively, each representing more than ten percent of the
Partnership's total rental and earned income (including the
Partnership's share of total rental and earned income from joint
ventures).
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from joint ventures) for at least one of the years ended December 31:
1995 1994 1993
-------- -------- --------
Denny's $314,057 $307,596 $321,062
Wendy's Old Fashioned
Hamburger Restaurant 278,127 280,075 293,096
Perkins 226,898 278,754 283,595
Hardees 183,123 237,671 273,317
Although the Partnership's properties are geographically diverse and the
Partnership's lessees operate a variety of restaurant concepts, failure
of any one of these lessees or restaurant chains, could significantly
impact the results of operations of the Partnership. However, the
general partners believe that the risk of such a default is reduced due
to the essential or important nature of these properties for the on-
going operations of the lessees.
11. Subsequent Event:
----------------
In January 1996, the corporate general partner contributed capital of
$100,000 in connection with the operations of the Partnership.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Investment Company, CNL Fund Advisors, Inc.,
and CNL Group, Inc. and its affiliates, all of which are affiliates of the
General Partners. In addition, during 1995, the Partnership had available to
it the services, personnel and experience of CNL Income Fund Advisors, Inc.,
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996.
James M. Seneff, Jr., age 49, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors and Chief Executive Officer since its formation in 1973.
CNL Group, Inc. is the parent company of CNL Securities Corp., CNL Investment
Company, CNL Fund Advisors, Inc., and prior to its merger with CNL Fund
Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc. Mr.
Seneff has been a director and registered principal of CNL Securities Corp.,
which served as the managing dealer in the Partnership's offering of Units,
since its formation in 1979. Mr. Seneff also has held the position of
President and a director of CNL Management Company, a registered investment
advisor, since its formation in 1976, has served as Chairman of the Board and
Chief Executive Officer of CNL Investment Company and Chief Executive Officer
and Chairman of the Board of Commercial Net Lease Realty, Inc. since 1992, has
served as Chairman of the Board and Chief Executive Officer of CNL Realty
Advisors, Inc. since its inception in 1991, served as Chairman of the Board
and Chief Executive Officer of CNL Income Fund Advisors, Inc. since its
inception in 1994 through December 31, 1995, has served as Chairman of the
Board and Chief Executive Officer of CNL Fund Advisors, Inc. since its
inception in 1994, and has held the position of Chief Executive Officer and a
director of CNL Institutional Advisors, Inc., a registered investment advisor,
since its inception in 1990. Mr. Seneff previously served on the Florida
State Commission on Ethics and is a former member and past Chairman of the
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $40 billion of
retirement funds. Since 1971, Mr. Seneff has been active in the acquisition,
development and management of real estate projects and, directly or through an
affiliated entity, has served as a general partner or joint venturer in
approximately 100 real estate ventures involved in the financing, acquisition,
construction and rental of office buildings, apartment complexes, restaurants,
hotels and other real estate. Included in these 100 real estate ventures are
approximately 57 privately offered real estate limited partnerships in which
Mr. Seneff, directly or through an affiliated entity, serves or has served as
a general partner. Also included are 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 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.
and CNL Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public
real estate limited partnerships with investment objectives similar to those
of the Partnership, in which Mr. Seneff serves as a general partner. Mr.
Seneff received his degree in Business Administration from Florida State
University in 1968.
Robert A. Bourne, age 48, is President and Treasurer of CNL Group, Inc.,
President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, CNL Fund Advisors, Inc.,
and prior to its merger with CNL Fund Advisors, Inc., effective January 1,
1996, CNL Income Fund Advisors, Inc., and President, Chief Investment Officer
and a director of CNL Institutional Advisors, Inc., a registered investment
advisor. Mr. Bourne also has served as a director since 1992, as President
from July 1992 to February 1996, as Vice Chairman of the Board of Directors,
Secretary and Treasurer and since February 1996, of Commercial Net Lease
Realty, Inc. In addition, Mr. Bourne has served as a director since its
inception in 1991, as President from 1991 to February 1996, and as Secretary
and Treasurer since February 1996, of CNL Realty Advisors, Inc. Upon
graduation from Florida State University in 1970, where he received a B.A. in
Accounting, with honors, Mr. Bourne worked as a certified public accountant
and, from September 1971 through December 1978, was employed by Coopers &
Lybrand, Certified Public Accountants, where he held the position of tax
manager beginning in 1975. From January 1979 until June 1982, Mr. Bourne was
a partner in the accounting firm of Cross & Bourne and from July 1982 through
January 1987, he was a partner in the accounting firm of Bourne & Rose, P. A.,
Certified Public Accountants. Mr. Bourne, who joined CNL Securities Corp. in
1979, has participated as a general partner or joint venturer in
approximately 100 real estate ventures involved in the financing, acquisition,
construction and rental of office buildings, apartment complexes, restaurants,
hotels and other real estate. Included in these 100 real estate ventures are
approximately 57 privately offered real estate limited partnerships in which
Mr. Bourne, directly or through an affiliated entity, serves or has served as
a general partner. Also included are the CNL Income Fund Partnerships, public
real estate limited partnerships with investment objectives similar to those
of the Partnership, in which Mr. Bourne serves as a general partner.
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders
are James M. Seneff, Jr. and Robert A. Bourne, the individual General
Partners. CNL Realty Corporation was organized to serve as the corporate
general partner of real estate limited partnerships, such as the Partnership,
organized by one or both of the individual General Partners. CNL Realty
Corporation currently serves as the corporate general partner of the CNL
Income Fund Partnerships.
CNL Investment Company, which through December 31, 1994, provided
certain management services in connection with the Partnership and its
Properties, is a corporation organized in 1990 under the laws of the State of
Florida. Its principal office is located at 400 East South Street, Suite 500,
Orlando, Florida 32801. CNL Investment Company is a wholly owned subsidiary
of CNL Group, Inc., a diversified real estate company, and was organized to
perform property acquisition, property management and other services.
CNL Income Fund Advisors, Inc., for the period January 1, 1995 through
September 30, 1995, provided certain management services in connection with
the Partnership and its Properties following the assignment by CNL Investment
Company of its rights and obligations under the management agreement. CNL
Income Fund Advisors, Inc. was a corporation organized in 1994 under the laws
of the State of Florida, and its principal office was located at 400 East
South Street, Suite 500, Orlando, Florida 32801. CNL Income Fund Advisors,
Inc. was a wholly owned subsidiary of CNL Group, Inc., a diversified real
estate company, and was organized to perform property acquisition, property
management and other services. CNL Income Fund Advisors, Inc. merged with CNL
Fund Advisors, Inc. effective January 1, 1996.
CNL Fund Advisors, Inc., effective October 1, 1995, began providing
certain management services in connection with the Partnership and its
Properties following the assignment by CNL Income Fund Advisors, Inc. of its
rights and obligations under the management agreement. CNL Fund Advisors,
Inc. is a corporation organized in 1994 under the laws of the State of
Florida, and its principal office located at 400 East South Street, Suite
500, Orlando, Florida 32801. CNL Fund Advisors, Inc. is a wholly owned
subsidiary of CNL Group, Inc., a diversified real estate company, and was
organized to perform property acquisition, property management and other
services.
CNL Group, Inc., which is the parent company of CNL Investment Company
and CNL Fund Advisors, Inc., is a diversified real estate corporation
organized in 1980 under the laws of the State of Florida. Other subsidiaries
and affiliates of CNL Group, Inc. include a property development and
management company, two investment advisory companies, and six corporations
organized as strategic business units. James M. Seneff, Jr., an individual
General Partner of the Partnership, is the Chairman of the Board, Chief
Executive Officer, and a director of CNL Group, Inc. Mr. Seneff and his wife
own all of the outstanding shares of CNL Group, Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as
members of the Boards of Directors of those entities. The Boards of Directors
have the responsibility for creating and implementing the policies of
CNL Group, Inc. and its affiliated companies.
John T. Walker, age 37, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. From May 1992 to May
1994, he was Executive Vice President for Finance and Administration and Chief
Financial Officer of Z Music, Inc., a television network which was
subsequently acquired by Gaylord Entertainment, where he was responsible for
overall financial and administrative management and planning. From January
1990 through April 1992, Mr. Walker was Chief Financial Officer of the First
Baptist Church in Orlando, Florida. From April 1984 through December 1989, he
was a partner in the accounting firm of Chastang, Ferrell & Walker, P.A.,
where he was the partner in charge of audit and consulting services, and from
1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior at Price
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with
a B.S. in Accountancy and is a Certified Public Accountant.
Lynn E. Rose, age 47, a certified public accountant, has served as Chief
Financial Officer and Secretary of CNL Group, Inc. since December 1993, and
served as Controller and Secretary of CNL Group, Inc. from 1987 until December
1993. She has served as Chief Operating Officer of CNL Corporate Services,
Inc. since November 1994. Ms. Rose also has served as Chief Financial Officer
of CNL Institutional Advisors, Inc. since its inception in 1990, a director of
CNL Realty Advisors, Inc. since its inception in 1991, Secretary and Treasurer
of CNL Realty Advisors, Inc. from 1991 to February 1996, Secretary and
Treasurer of Commercial Net Lease Realty, Inc. from 1992 to February 1996,
Secretary of CNL Income Fund Advisors, Inc. since its inception in 1994 to
December 1995, and Secretary and Treasurer of CNL Fund Advisors, Inc. since
its inception in 1994. Ms. Rose also has served as Chief Financial Officer,
Secretary and Treasurer of CNL American Properties Fund, Inc. since its
inception in 1994. In addition, Ms. Rose oversees the management information
services, administration, legal compliance, accounting, tenant compliance, and
reporting for over 200 corporations, partnerships, and joint ventures. Prior
to joining CNL, Ms. Rose was a partner with Robert A. Bourne in the accounting
firm of Bourne & Rose, P.A., Certified Public Accountants. Ms. Rose holds a
B.A. in Sociology from the University of Central Florida and is a registered
financial and operations principal of CNL Securities Corp. She was licensed as
a Certified Public Accountant in 1979.
Jeanne A. Wall, age 37, has served as Chief Operating Officer of
CNL Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities
Corp. and, in 1987, she became a Senior Vice President of CNL Securities Corp.
In this capacity, Ms. Wall serves as national marketing director and oversees
the national marketing plan for the CNL investment programs. In addition, Ms.
Wall oversees the partnership administration and investor services for
programs offered through participating brokers. Ms. Wall also has served as
Senior Vice President of CNL Institutional Advisors, Inc., a registered
investment advisor, from 1990 to 1993, as Vice President of CNL Realty
Advisors, Inc. since its inception in 1991, as Vice President of Commercial
Net Lease Realty, Inc. since 1992, as Executive Vice President of CNL Income
Fund Advisors, Inc. from its inception in 1994 to December 1995, as Executive
Vice President of CNL Fund Advisors, Inc. since its inception in 1994, and as
Executive Vice President of CNL American Properties, Inc. since its inception
in 1994. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program
Association and on the Direct Participation Program committee for the National
Association of Securities Dealers (NASD).
ITEM 11. EXECUTIVE COMPENSATION
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or
any of their affiliates. There are no compensatory plans or arrangements
regarding termination of employment or change of control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 29, 1996, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of February 29, 1996, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
====
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the
Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The table below summarizes the types, recipients, methods of computation
and amounts of compensation, fees and distributions paid or payable by the
Partnership to the General Partners and their affiliates for the year ended
December 31, 1995, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1995
- --------------------- --------------------- -----------------------
Reimbursement to Operating expenses are Operating expenses
affiliates for reimbursed at the lower incurred on behalf of
operating expenses of cost or 90 percent of the Partnership:
the prevailing rate at $114,204
which comparable
services could have been Accounting and
obtained in the same administrative services:
geographic area. $83,882
Affiliates of the
General Partners from
time to time incur
certain operating
expenses on behalf of
the Partnership for
which the Partnership
reimburses the
affiliates without
interest.
Annual, subordinated One percent of the sum $ - 0 -
management fee to of gross operating
affiliates revenues from Properties
wholly owned by the
Partnership plus the
Partnership's allocable
share of gross revenues
of joint ventures in
which the Partnership is
a co-venturer,
subordinated to certain
minimum returns to the
Limited Partners. The
management fee will not
exceed competitive fees
for comparable services.
Deferred, subordinated A deferred, subordinated $ - 0 -
real estate real estate disposition
disposition fee fee, payable upon sale
payable to affiliates of one or more
Properties, in an amount
equal to the lesser of
(i) one-half of a
competitive real estate
commission, or (ii)
three percent of the
sales price of such
Property or Properties.
Payment of such fee
shall be made only if
affiliates of the
General Partners provide
a substantial amount of
services in connection
with the sale of a
Property or Properties
and shall be
subordinated to certain
minimum returns to the
Limited Partners.
General Partners' A deferred, subordinated $ - 0 -
deferred, sub- share equal to one
ordinated share of percent of Partnership
Partnership net cash distributions of net
flow cash flow, subordinated
to certain minimum
returns to the Limited
Partners.
General Partners' A deferred, subordinated $ - 0 -
deferred, sub- share equal to five
ordinated share of percent of Partnership
Partnership net sales distributions of such
proceeds from a sale net sales proceeds,
or sales subordinated to certain
minimum returns to the
Limited Partners.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1995 and 1994
Statements of Income for the years ended December 31, 1995, 1994
and 1993
Statements of Partners' Capital for the years ended December 31,
1995, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 1995, 1994 and 1993
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1995
Notes to Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1995
Schedule IV - Mortgage Loan on Real Estate at December 31, 1995
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or notes
thereto.
3. Exhibits
3.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 3.1 to
Form 10-K filed with the Securities and Exchange Commission on
March 31, 1994, and incorporated herein by reference.)
4.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 3.1
and incorporated herein by reference.)
4.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange Commission on
March 31, 1994, and incorporated herein by reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to Form 10-K filed
with the Securities and Exchange Commission on March 31, 1994, and
incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL Investment Company to
CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to Form
10-K filed with the Securities and Exchange Commission on March
30, 1995, and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income Fund Advisors,
Inc. to CNL Fund Advisors, Inc. (Filed herewith.)
(b) The Registrant filed no reports on Form 8-K during the period from
October 1, 1995 through December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 28th day
of March, 1996.
CNL INCOME FUND V, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert A. Bourne President, Treasurer and March 28, 1996
- ------------------------ Director (Principal
Robert A. Bourne Financial and
Accounting Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer March 28, 1996
- ------------------------ and Director (Principal
James M. Seneff, Jr. Executive Officer)
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
Years Ended December 31, 1995, 1994 and 1993
Additions
-----------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Year Description of Year Expenses Accounts Deductions of Year
- ---- ----------- ---------- ---------- ----------- ----------- --------
1993 Allowance for
doubtful
accounts (a) $111,410 $19,210 $144,872(b) $ - $275,492
======== ======= ======== ======== ========
1994 Allowance for
doubtful
accounts (a) $275,492 $ 4,788 $150,184(b) $ - $430,464
======== ======= ======== ======== ========
1995 Allowance for
doubtful
accounts (a) $430,464 $ - $ 19,561(b) $445,535(c) $ 4,490
======== ======= ======== ======== ========
(a) Deducted from receivables on the balance sheet.
(b) Reduction of rental and other income.
(c) Amounts written off as uncollectible.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
December 31, 1995
(A) (B) (C) (D) (E)
Costs Capitalized
Subsequent
Initial Cost To Acquisition
----------------------- -------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---------- ------------ ---------- --------
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurant:
Lawrenceville, GA - $ 482,070 $ - $ 368,416 $ -
Captain D's Restaurant:
Belleville, IL - 186,050 383,781 - -
Denny's Restaurant:
New Castle, Indiana - 117,394 471,340 - -
Port Orange, FL - 530,689 506,630 53,247 -
Golden Corral Family
Steakhouse Restaurants:
Livingston, TX - 156,382 429,107 - -
Victoria, TX - 504,787 742,216 - -
Hardee's Restaurants:
Richmond, IN - 267,763 - 474,121 -
Belding, MI - 113,884 564,805 - -
Connorsville, IN - 279,665 - 466,137 -
South Haven, MI - 120,847 599,339 - -
KFC Restaurant:
Salem, NH - 654,024 - 511,053 -
Perkins Restaurants:
Port St. Lucie, FL - 586,159 - 674,446 -
Pizza Hut Restaurant:
Mexia, TX - 237,944 200,501 - -
Ponderosa Steakhouse
Restaurant:
St. Cloud, FL - 382,634 - 670,476 -
Shoney's Restaurant:
Tyler, TX - 312,404 533,990 - -
Taco Bell Restaurants:
Bountiful, UT - 330,164 - 319,511 -
Centralia, WA - 215,302 - 378,836 -
Wendy's Old Fashioned
Hamburger Restaurants:
Tampa, FL - 336,218 462,400 - -
Tampa, FL - 290,479 430,134 - -
Endicott, NY - 277,965 243,839 - -
Ithaca, NY - 310,462 208,618 - -
Other:
Lebanon, NH (e) - 448,724 - 696,741 -
Franklin, TN (f) - 524,694 - 712,700 -
---------- ---------- ---------- --------
$7,666,704 $5,776,700 $5,325,684 $ -
========== ========== ========== ========
Property of Joint Venture
in Which the Partnership
has a 43% Interest and has
Invested in Under an
Operating Lease:
Waffle House Restaurant:
Cocoa, FL - $ 183,229 $ 192,857 $ - $ -
========== ========== ========== ========
Property of Joint Venture
in Which the Partnership
has a 49% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Knoxville, TN - $ 283,961 $ 430,406 $ - $ -
========== ========== ========== ========
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Captain D's Restaurant:
Zanesville, OH - $ 99,651 $ 390,518 $ - $ -
Denny's Restaurants:
Dalesville, IN - 125,562 458,914 - -
Huron, OH - 27,418 456,139 - -
Shoney's Restaurant:
Smyrna, TN - 129,757 480,003 - -
---------- ---------- --------- --------
$ 382,388 $1,785,574 $ - $ -
========== ========== ========= ========
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1995
(F) (G) (H) (I)
Gross Amount at Which Carried
at Close of Period (c)
-------------------------------------
Buildings
and Accumulated
Land Improvements Total Depreciation
---------- ------------ ----------- ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurant:
Lawrenceville, GA $ 482,070 $ 368,416 $ 850,486 $ 79,824
Captain D's Restaurant:
Belleville, IL 186,050 383,781 569,831 86,884
Denny's Restaurant:
New Castle, IN 117,394 471,340 588,734 37,569
Port Orange, FL 530,689 559,877 1,090,566 119,212
Golden Corral Family
Steakhouse Restaurants:
Livingston, TX 156,382 429,107 585,489 90,587
Victoria, TX 504,787 742,216 1,247,003 149,295
Hardee's Restaurants:
Richmond, IN 267,763 474,121 741,884 106,019
Belding, MI 113,884 564,805 678,689 43,129
Connorsville, IN 279,665 466,137 745,802 99,763
South Haven, MI 120,847 599,339 720,186 45,766
KFC Restaurant:
Salem, NH 654,024 511,053 1,165,077 100,792
Perkins Restaurants:
Port St. Lucie, FL 586,159 674,446 1,260,605 130,205
Pizza Hut Restaurant:
Mexia, TX 237,944 200,501 438,445 45,113
Ponderosa Steakhouse
Restaurant:
St. Cloud, FL 382,634 670,476 1,053,110 140,614
Shoney's Restaurant:
Tyler, TX 312,404 533,990 846,394 120,148
Taco Bell Restaurants:
Bountiful, UT 330,164 319,511 649,675 67,896
Centralia, WA 215,302 378,836 594,138 76,819
Wendy's Old Fashioned
Hamburger Restaurants:
Tampa, FL 336,218 462,400 798,618 105,325
Tampa, FL 290,479 430,134 720,613 98,572
Endicott, NY 277,965 243,839 521,804 49,444
Ithaca, NY 310,462 208,618 519,080 42,302
Other:
Lebanon, NH (e) 448,724 696,741 1,145,465 149,993
Franklin, TN (f) 524,694 712,700 1,237,394 143,182
---------- ----------- ----------- ----------
$7,666,704 $11,102,384 $18,769,088 $2,128,453
========== =========== =========== ==========
Property of Joint Venture
in Which the Partnership
has a 43% Interest and has
Invested in Under an
Operating Lease:
Waffle House Restaurant:
Cocoa, FL $ 183,229 $ 192,857 $ 376,086 $ 38,624
========== =========== =========== ==========
Property of Joint Venture
in Which the Partnership
has a 49% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Knoxville, TN $ 283,961 $ 430,406 $ 714,367 $ 84,647
========== =========== =========== ==========
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Captain D's Restaurant:
Zanesville, OH (d) (d) (d) (d)
Denny's Restaurants:
Dalesville, IN (d) (d) (d) (d)
Huron, OH (d) (d) (d) (d)
Shoney's Restaurant:
Smyrna, TN (d) (d) (d) (d)
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1995
(J) (K) (L)
Life
on Which
Depreciation
in Latest
Date Income
of Con- Date Statement is
struction Acquired Computed
--------- -------- ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurant:
Lawrenceville, GA 1989 04/89 (b)
Captain D's Restaurant:
Belleville, IL 1988 03/89 (b)
Denny's Restaurant:
New Castle, IN 1989 02/89 (g)
Port Orange, FL 1989 07/89 (b)
Golden Corral Family
Steakhouse Restaurants:
Livingston, TX 1986 09/89 (b)
Victoria, TX 1989 12/89 (b)
Hardee's Restaurants:
Richmond, IN 1989 02/89 (b)
Belding, MI 1989 03/89 (h)
Connorsville, IN 1989 03/89 (b)
South Haven, MI 1989 03/89 (h)
KFC Restaurant:
Salem, NH 1990 05/89 (b)
Perkins Restaurants:
Port St. Lucie, FL 1990 11/89 (b)
Pizza Hut Restaurant:
Mexia, TX 1985 03/89 (b)
Ponderosa Steakhouse
Restaurant:
St. Cloud, FL 1989 06/89 (b)
Shoney's Restaurant:
Tyler, TX 1988 03/89 (b)
Taco Bell Restaurants:
Bountiful, UT 1989 05/89 (b)
Centralia, WA 1989 08/89 (b)
Wendy's Old Fashioned
Hamburger Restaurants:
Tampa, FL 1987 02/89 (b)
Tampa, FL 1980 02/89 (b)
Endicott, NY 1976 12/89 (b)
Ithaca, NY 1977 12/89 (b)
Other:
Lebanon, NH (e) 1989 03/89 (b)
Franklin, TN (f) 1989 06/89 (b)
Property of Joint Venture
in Which the Partnership
has a 43% Interest and has
Invested in Under an
Operating Lease:
Waffle House Restaurant:
Cocoa, FL 1986 12/89 (b)
Property of Joint Venture
in Which the Partnership
has a 49% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Knoxville, TN 1985 01/90 (b)
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Captain D's Restaurant:
Zanesville, OH 1988 03/89 (d)
Denny's Restaurants:
Dalesville, IN 1974 02/89 (d)
Huron, OH 1971 05/89 (d)
Shoney's Restaurant:
Smyrna, TN 1988 03/89 (d)
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------------------------------
December 31, 1995
(a) Transactions in real estate and accumulated depreciation during 1994,
1993 and 1992, are summarized as follows:
Accumulated
Cost Depreciation
----------- ------------
Properties the Partnership has
Invested in Under Operating
Leases:
Balance, December 31, 1992 $17,820,609 $1,128,400
Depreciation expense - 341,680
----------- ----------
Balance, December 31, 1993 17,820,609 1,470,080
Reclassified from direct
financing leases 1,987,609 -
Depreciation expense - 402,980
----------- ----------
Balance, December 31, 1994 19,808,218 1,873,060
Depreciation expense - 397,735
Dispositions (1,039,130) (142,342)
----------- ----------
Balance, December 31, 1995 $18,769,088 $2,128,453
=========== ==========
Property of Joint Venture in
Which the Partnership has a
43% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1992 $ 376,086 $ 19,338
Depreciation expense - 6,429
----------- ----------
Balance, December 31, 1993 376,086 25,767
Depreciation expense - 6,428
----------- ----------
Balance, December 31, 1994 376,086 32,195
Depreciation expense - 6,429
----------- ----------
Balance, December 31, 1995 $ 376,086 $ 38,624
=========== ==========
Property of Joint Venture in
Which the Partnership has a
49% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1992 $ 714,367 $ 41,606
Depreciation expense - 14,347
----------- ----------
Balance, December 31, 1993 714,367 55,953
Depreciation expense - 14,347
----------- ----------
Balance, December 31, 1994 714,367 70,300
Depreciation expense - 14,347
----------- ----------
Balance, December 31, 1995 $ 714,367 $ 84,647
=========== ==========
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 1995, the aggregate cost of the Properties owned by
the Partnership and its consolidated joint venture, and the
unconsolidated joint ventures for federal income tax purposes was
$20,939,126 and $1,090,453, respectively. All of the leases are treated
as operating leases for federal income tax purposes.
(d) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land and
building has been included in net investment in direct financing leases,
therefore, the cost is not shown. Depreciation is not applicable.
(e) The restaurant on the property in Lebanon, New Hampshire, was converted
from a Ponderosa Steakhouse restaurant to a local, independent
restaurant in 1992.
(f) The restaurant on the property in Franklin, Tennessee, was converted
from a Po Folks restaurant to a local bank in 1993.
(g) Effective January 1, 1994, the lease for this property was amended,
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value as
of January 1, 1994, and depreciated over its remaining estimated life of
approximately 25 years.
(h) Effective February 1, 1994, the lease for this property was terminated,
resulting in the lease's reclassification as an operating lease.
<TABLE>
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
SCHEDULE IV - MORTGAGE LOAN ON REAL ESTATE
------------------------------------------
December 31, 1995
<CAPTION>
Principal
Amount
of Loan
Carrying Subject to
Final Periodic Face Amount of Delinquent
Interest Maturity Payment Prior Amount of Mortgage Principal
Description Rate Date Terms Liens Mortgage (1) or Interest
- -------------------------- -------- --------- -------- ----- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Perkins - Myrtle Beach, FL
First Mortgage 10.25% July 2000 (2) $ - $1,040,000 $895,736 $ -
----- ---------- -------- -----------
Total $ - $1,040,000 $895,736(3) $ -
===== ========== ======== ===========
</TABLE>
(1) The tax carrying value of the note is $901,994, which is net of a
deferred gain of $135,383.
(2) Monthly payments of principal and interest at an annual rate of 10.25%,
with a balloon payment at maturity of $1,006,004.
(3) The changes in the carrying amounts are summarized as follows:
1995 1994 1993
---------- ---------- ----------
Balance at beginning of
period $ - $ - $ -
New mortgage loan 1,040,000 - -
Accrued interest 8,786 - -
Collections of principal (11,409) - -
Deferred gain on sale of land
and building (141,641) - -
---------- ---------- ----------
Balance at end of period $ 895,736 $ - $ -
========== ========== ==========
EXHIBITS
EXHIBIT INDEX
Exhibit Number
- --------------
3.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 3.1 to
Form 10-K filed with the Securities and Exchange Commission on
March 31, 1994, and incorporated herein by reference.)
4.1 Amended and Restated Affidavit and Certificate of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 3.1
and incorporated herein by reference.)
4.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund V, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange Commission on
March 31, 1994, and incorporated herein by reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to Form 10-K filed
with the Securities and Exchange Commission on March 31, 1994, and
incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL Investment Company to
CNL Income Fund Advisors, Inc. (Included as Exhibit 10.2 to Form
10-K filed with the Securities and Exchange Commission on March
30, 1995, and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income Fund Advisors,
Inc. to CNL Fund Advisors, Inc. (Filed herewith.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund V, Ltd. at December 31, 1995, and its statement of
income for the year then ended and is qualified in its entirety by reference to
the Form 10-K of CNL Income Fund V, Ltd. for the year ended December 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 319,052
<SECURITIES> 0
<RECEIVABLES> 72,694
<ALLOWANCES> 4,490
<INVENTORY> 0
<CURRENT-ASSETS> 399,177
<PP&E> 18,769,088
<DEPRECIATION> 2,128,453
<TOTAL-ASSETS> 20,760,182
<CURRENT-LIABILITIES> 763,987
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,694,760
<TOTAL-LIABILITY-AND-EQUITY> 20,760,182
<SALES> 0
<TOTAL-REVENUES> 2,255,977
<CGS> 0
<TOTAL-COSTS> 639,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,541
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,679,820
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,679,820
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,679,820
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
ASSIGNMENT
THIS ASSIGNMENT made this 1st day of October, 1995 by and between CNL
INCOME FUND ADVISORS, INC., a Florida corporation ("Assignor") and CNL FUND
ADVISORS, INC., a Florida corporation ("Assignee").
WITNESSETH:
WHEREAS, the CNL Investment Company entered into that certain Management
Agreement, dated December 9, 1988 with CNL Income Fund V, Ltd. ("Agreement");
and
WHEREAS, CNL Investment Company assigned its rights, duties and
obligations under the Agreement to Assignor by Assignment dated January 1,
1995; and
WHEREAS, the Assignor desires to assign its rights, duties and
obligations under the Agreement to Assignee, and Assignee desires to accept
such assignment and assume Assignors duties and obligations under the
Agreement, as assigned.
NOW, THEREFORE, the parties agree as follows:
1. ASSIGNMENT. Assignor hereby assigns and transfers to Assignee, all
of Assignor's rights, title and interest in, to, and under the Agreement as
assigned. Any funds or property of CNL Income Fund V, Ltd. in Assignor's
possession shall be, or have been, delivered to Assignee upon the full
execution of this Assignment.
2. ACCEPTANCE AND ASSUMPTION. Assignee hereby accepts the
foregoing assignment and further hereby assumes and agrees to perform, from
and after October 1, 1995, all duties, obligations and responsibilities of the
property manager arising under the Agreement.
3. REPRESENTATIONS.
(a) Assignor hereby represents and warrants to Assignee:
(i) that the Agreement is in full force and effect;
(ii) that Assignor has fully performed all of its duties
under the Agreement through the date of this
Assignment;
(iii) that Assignor has no notice or knowledge of any claim,
cost, or liability (other than as specifically
contemplated under the Agreement, all of which have
been satisfied or discharged) which arose under the
Agreement or which may arise after the date hereof;
and
(iv) that this Assignment has been duly authorized by all
requisite corporate action and has been properly
executed by duly authorized officers of Assignor.
(b) CNL Income Fund V, Ltd. hereby represents and warrants to
Assignee that the Agreement is in full force and effect, and that
no defaults or violations of such Agreement exist as of the date
of this Assignment.
IN WITNESS WHEREOF, this Assignment is executed the date above first
written.
ASSIGNOR:
CNL INCOME FUND ADVISORS, INC.,
a Florida corporation
By: /s/Robert A. Bourne
-----------------------------
Robert A. Bourne, President
ASSIGNEE:
CNL FUND ADVISORS, INC.,
a Florida corporation
By: /s/Robert A. Bourne
-----------------------------
Robert A. Bourne, President
CONSENT AND JOINDER
CNL Income Fund V, Ltd. hereby consents to the foregoing Assignment and
joins in such agreement for the purpose of making the representations set
forth in subparagraph 3(b) thereof.
CNL INCOME FUND V, LTD., a Florida
limited partnership
By: /s/Robert A. Bourne
-----------------------------
Robert A. Bourne, General Partner
