<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund V, Ltd. at March 31, 1997, and its statement of income
for the three months then ended and is qualified in its entirety by reference to
the Form 10-Q of CNL Income Fund V, Ltd. for the three months ended March 31,
1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,154,894
<SECURITIES> 0
<RECEIVABLES> 126,768
<ALLOWANCES> 62,793
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,408,523
<DEPRECIATION> 2,262,561
<TOTAL-ASSETS> 19,892,895
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,788,134
<TOTAL-LIABILITY-AND-EQUITY> 19,892,895
<SALES> 0
<TOTAL-REVENUES> 521,768
<CGS> 0
<TOTAL-COSTS> 157,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 380,515
<INCOME-TAX> 0
<INCOME-CONTINUING> 380,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380,515
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund V, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
0-19141
CNL Income Fund V, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-2922869
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-11
Part II
Other Information 12
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1997 1996
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation and allowance for
loss on land and building $14,145,962 $15,190,278
Net investment in direct financing
leases 1,928,894 1,941,406
Investment in joint ventures 463,347 465,808
Mortgage note receivable, less
deferred gain of $324,273
and $324,519 1,761,830 1,772,858
Cash and cash equivalents 1,154,894 362,922
Receivables, less allowance for
doubtful accounts of $62,793
and $37,743 63,975 57,934
Prepaid expenses 4,320 10,416
Accrued rental income 280,487 277,034
Other assets 54,346 54,346
----------- -----------
$19,858,055 $20,133,002
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 15,875 $ 25,366
Accrued and escrowed real estate
taxes payable 91,416 104,764
Distributions payable 575,000 575,000
Due to related parties 86,744 155,964
Rents paid in advance 28,785 11,738
----------- -----------
Total liabilities 797,820 872,832
Minority interest 272,101 277,551
Partners' capital 18,788,134 18,982,619
----------- -----------
$19,858,055 $20,133,002
=========== ===========
See accompanying notes to condensed financial statements.
1
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1997 1996
-------- --------
Revenues:
Rental income from operating leases $370,514 $449,665
Earned income from direct financing
leases 45,472 46,607
Contingent rental income 38,865 37,702
Interest and other income 66,917 35,450
-------- --------
521,768 569,424
-------- --------
Expenses:
General operating and administrative 38,143 51,763
Professional services 5,314 7,937
Real estate taxes 19,211 13,904
State and other taxes 11,729 12,341
Depreciation 83,575 95,221
-------- --------
157,972 181,166
-------- --------
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 363,796 388,258
Minority Interest in Loss of Consolidated
Joint Venture 5,450 6,846
Equity in Earnings of Unconsolidated Joint
Ventures 11,023 10,945
Gain on Sale of Land and Building 246 222
-------- --------
Net Income $380,515 $406,271
======== ========
Allocation of Net Income:
General partners $ 3,805 $ 4,063
Limited partners 376,710 402,208
-------- --------
$380,515 $406,271
======== ========
Net Income Per Limited Partner Unit $ 7.53 $ 8.04
======== ========
Weighted Average Number of Limited
Partner Units Outstanding 50,000 50,000
======== ========
See accompanying notes to condensed financial statements.
2
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 376,173 $ 203,960
Contributions - 159,700
Net income 3,805 12,513
----------- -----------
379,978 376,173
----------- -----------
Limited partners:
Beginning balance 18,606,446 19,490,800
Net income 376,710 1,415,646
Distributions ($11.50 and
$46.00 per limited partner
unit, respectively) (575,000) (2,300,000)
----------- -----------
18,408,156 18,606,446
----------- -----------
Total partners' capital $18,788,134 $18,982,619
=========== ===========
See accompanying notes to condensed financial statements.
3
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1997 1996
---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by Operating
Activities $ 404,443 $ 562,127
---------- ----------
Cash Flows from Investing
Activities:
Proceeds from sale of land and
building 960,741 -
Collections on mortgage note
receivable 1,788 1,614
---------- ----------
Net cash provided by
investing activities 962,529 1,614
---------- ----------
Cash Flows from Financing
Activities:
Contributions from general
partner - 100,000
Distributions to limited
partners (575,000) (575,000)
---------- ----------
Net cash used in
financing activities (575,000) (475,000)
---------- ----------
Net Increase in Cash and Cash
Equivalents 791,972 88,741
Cash and Cash Equivalents at
Beginning of Quarter 362,922 319,052
---------- ----------
Cash and Cash Equivalents at End of
Quarter $1,154,894 $ 407,793
========== ==========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 575,000 $ 575,000
========== ==========
See accompanying notes to condensed financial statements.
4
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter ended March 31, 1997, may not be indicative of the results
that may be expected for the year ending December 31, 1997. Amounts as
of December 31, 1996, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund V, Ltd. (the "Partnership") for the year ended December 31,
1996.
The Partnership accounts for its 66.5% interest in CNL/Longacre Joint
Venture 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.
2. Land and Buildings on Operating Leases:
In January 1997, the Partnership sold its property in Franklin,
Tennessee, for $980,000 and received net sales proceeds of $960,741.
Since the Partnership had previously established an allowance for loss
on land and building relating to this property, no loss was recognized
in January 1997 as a result of the sale.
3. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, 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 quarters ended March 31:
1997 1996
------- -------
Shoney's, Inc. $71,158 $59,196
London Development Corporation 51,603 49,676
Golden Corral Corporation 48,878 48,878
5
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1997 and 1996
3. Concentration of Credit Risk - Continued:
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees
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.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund V, Ltd. (the "Partnership") is a Florida limited
partnership that 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 restaurants were to
be constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains (collectively, the
"Properties"). The leases are generally triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of March 31, 1997, the Partnership owned 27 Properties,
including interests in three Properties owned by joint ventures in which the
Partnership is a co-venturer.
Liquidity and Capital Resources
The Partnership's primary source of capital for the quarters ended March
31, 1997 and 1996, was cash from operations (which includes cash received from
tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses). Cash from operations was $404,443 and
$562,127 for the quarters ended March 31, 1997 and 1996, respectively. The
decrease in cash from operations for the quarter ended March 31, 1997, 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.
Other sources and uses of capital included the following during the
quarters ended March 31, 1997 and 1996.
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 quarter ended March 31,
1996, the Partnership received $100,000 in capital contributions from the
corporate general partner in connection with the operations of the
Partnership. No such contributions were received during the quarter ended
March 31, 1997.
In January 1997, the Partnership sold its Property in Franklin,
Tennessee, for $980,000 and received net sales proceeds of $960,741. Since
the Partnership had previously established an allowance for loss on land and
building relating to this Property, no gain or loss was recognized in January
1997 as a result of the sale. The Partnership distributed $297,700 of the net
sales proceeds to the limited partners and intends to reinvest the remaining
net sales proceeds in an additional Property.
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 March 31, 1997, the Partnership had
$1,154,894 invested in such
7
Liquidity and Capital Resources - Continued
short-term investments as compared to $362,922 at December 31, 1996. The
increase in cash and cash equivalents for the quarter ended March 31, 1997, is
primarily attributable to the receipt of net sales proceeds relating to the
sale of the Property in Franklin, Tennessee, as discussed above. The funds
remaining at March 31, 1997, will be used towards the reinvestment of net
sales proceeds in a replacement property, payment of distributions and other
liabilities.
Total liabilities of the Partnership decreased to $797,820 at March 31,
1997, from $872,832 at December 31, 1996. Liabilities at March 31, 1997, to
the extent they exceed cash and cash equivalents at March 31, 1997, will be
paid from future cash from operations and, in the event the general partners
elect to make additional capital contributions, from future general partner
capital contributions.
Based on current and anticipated future cash from operations and, for
the quarter ended March 31, 1997, a portion of the proceeds received from the
sale of the Property in Franklin, Tennessee, the Partnership declared
distributions to limited partners of $575,000 for each of the quarters ended
March 31, 1997 and 1996. This represents distributions for each applicable
quarter of $11.50 per unit. No distributions were made to the general
partners for the quarters ended March 31, 1997 and 1996. No amounts
distributed or to be distributed to the limited partners for the quarter
ended March 31, 1997 and 1996, are required to be or have been treated by
the Partnership as a return of capital for purposes of calculating the
limited partners' return on their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available for
distribution to the limited partners on a quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will continue to generate cash
flow in excess of operating expenses.
Results of Operations
During the quarter ended March 31, 1996, the Partnership and its
consolidated joint venture, CNL/Longacre Joint Venture, owned and leased 27
wholly owned Properties (including one Property in St. Cloud, Florida, which
was sold in October 1996) and during the quarter ended March 31, 1997, the
Partnership and CNL/Longacre Joint Venture owned and leased 26 wholly owned
Properties (including one Property in Franklin, Tennessee, which was sold in
8
Results of Operations - Continued
January 1997) to operators of fast-food and family-style restaurant chains.
In connection therewith, during the quarters ended March 31, 1997 and 1996,
the Partnership and CNL/Longacre Joint Venture earned $415,986 and $496,272,
respectively, in rental income from operating leases and earned income from
direct financing leases. Rental income decreased approximately $31,000 and
$25,900 during the quarter ended March 31, 1997, as compared to the quarter
ended March 31, 1996, as a result of the sales of the Properties in St. Cloud,
Florida, and Franklin, Tennessee, respectively, in October 1996 and January
1997, respectively.
Rental and earned income also decreased during the quarter ended March
31, 1997, as a result of the Partnership increasing its allowance for doubtful
accounts by approximately $22,000 for rental amounts relating to the Hardee's
Properties located in Connorsville and Richmond, Indiana, which are leased by
the same tenant, due to financial difficulties the tenant is experiencing.
The Partnership is negotiating an agreement with the tenant for the collection
of past due amounts and will recognize such amounts as income if collected.
The Partnership is also in the process of negotiating the sale of the Property
in Richmond, Indiana, with the current tenant of the Property.
Rental and earned income during the quarters ended March 31, 1997 and
1996, continued to remain at reduced amounts due to the fact that the
Partnership is not receiving any rental income relating to the Properties in
Belding and South Haven, Michigan, and Lebanon, New Hampshire. The
Partnership is currently seeking replacement tenants for these Properties.
For the quarters ended March 31, 1997 and 1996, the Partnership also
earned $38,865 and $37,702, respectively, in contingent rental income.
In addition, for the quarters ended March 31, 1997 and 1996, the
Partnership also owned and leased two Properties indirectly through other
joint venture arrangements. In connection therewith, the Partnership earned
$11,023 and $10,945, respectively, attributable to net income earned by
unconsolidated joint ventures in which the Partnership is a co-venturer.
Interest and other income was $66,917 and $35,450 for the quarters ended
March 31, 1997 and 1996, respectively. The increase in interest and other
income during the quarter ended March 31, 1997, as compared to the quarter
ended March 31, 1996, is primarily attributable to the interest earned on the
mortgage note receivable accepted in connection with the sale of the Property
in St. Cloud, Florida, in October 1996.
During the quarter ended March 31, 1997, three lessees of the
Partnership and its consolidated joint venture, Shoney's, Inc., Golden Corral
Corporation and London Development Corporation each contributed more than ten
percent of the Partnership's total rental income (including rental income from
the Partnership's consolidated
9
Results of Operations - Continued
joint venture and the Partnership's share of the rental income from two
Properties owned by unconsolidated joint ventures). As of March 31, 1997,
Shoney's, Inc. was the lessee under leases relating to four restaurants,
Golden Corral Corporation was the lessee under leases relating to two
restaurants and London Development Corporation was the lessee under the
lease relating to one restaurant. It is anticipated that, based on the
minimum rental payments required by the leases, these lessees will continue
to contribute more than ten percent of the Partnership's total rental income
during the remainder of 1997 and subsequent years. Any failure of these
lessees could materially affect the Partnership's income.
Operating expenses, including depreciation expense, were $157,972 and
$181,166 for the quarters ended March 31, 1997 and 1996, respectively. The
decrease in operating expenses during the quarter ended March 31, 1997, as
compared to the quarter ended March 31, 1996, is partially due to a decrease
in depreciation expense due to the sales of the Properties in St. Cloud,
Florida, and Franklin, Tennessee, in October 1996 and January 1997,
respectively.
The decrease in operating expenses during the quarter ended March 31,
1997, is also attributable to a decrease in accounting and administrative
expenses associated with operating the Partnership and its Properties and a
decrease in professional services as a result of the Partnership incurring the
cost of the 1996 appraisal updates obtained to prepare an annual statement of
unit valuation to qualified plans in accordance with the partnership agreement
during the quarter ended December 31, 1996. The Partnership incurred the cost
of the 1995 appraisal updates during the quarter ended March 31, 1996.
Due to the tenants defaulting under the terms of their lease agreements
for the Properties in Belding and South Haven, Michigan, and the Property in
Lebanon, New Hampshire, the Partnership and CNL/Longacre Joint Venture expect
to continue to incur operating expenses relating to such Properties until such
time as a new lease is executed for each Property.
The decrease in operating expenses during the quarter ended March 31,
1997, as compared to the quarter ended March 31, 1996, was partially offset by
an increase in real estate taxes of approximately $8,100 accrued by the
Partnership for real estate taxes relating to the Hardee's Properties located
in Connorsville and Richmond, Indiana, which are leased to the same tenant.
Payment of these taxes remains the responsibility of the tenant of these
Properties; however, because of the current financial difficulties the tenant
is experiencing, the general partners believe the tenant's ability to pay
these expenses is doubtful. The Partnership intends to pursue collection from
the tenant of any such amounts paid by the Partnership and recognize such
amounts as income if collected.
10
Results of Operations - Continued
As a result of the sale of the Property in Myrtle Beach, South Carolina,
in August 1995, and recording the gain using the installment method, the
Partnership recognized a gain for financial reporting purposes of $246 and
$222 during the quarters ended March 31, 1997 and 1996, respectively.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 14th day of May, 1997.
CNL INCOME FUND V, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
