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
---------------------------------
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 0-19144
CNL INCOME FUND VI, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-2922954
(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 VI, 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 June 8, 1989, the
Partnership offered for sale up to $35,000,000 in limited partnership
interests (the "Units") (70,000 Units at $500 per Unit) pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended, effective December 16, 1988. The offering terminated on January 22,
1990, at which date the maximum offering proceeds of $35,000,000 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 selected 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 $30,975,000, and were used to acquire 42 Properties,
including interests in four Properties owned by joint ventures in which the
Partnership is a co-venturer. During the year ended December 31, 1994, the
Partnership sold its Properties in Batesville and Heber Springs, Arkansas, to
the tenant and reinvested the net sales proceeds in a Jack in the Box Property
in Dallas, Texas, and a Jack in the Box Property in Yuma, Arizona, which is
owned as tenants-in-common with an affiliate of the General Partners. During
the year ended December 31,1995, the Partnership sold its Property in Little
Canada, Minnesota, and reinvested the majority of the net sales proceeds in a
Denny's Property in Broken Arrow, Oklahoma. As a result of the above
transactions, as of December 31, 1995, the Partnership owned 42 Properties,
including interests in four Properties owned by joint ventures in which the
Partnership is a co-venturer and one Property owned with an affiliate as
tenants-in-common. During January 1996, the Partnership reinvested the
remaining net sales proceeds from the sale of the Property in Little Canada,
Minnesota, in a Golden Corral Property located in Clinton, North Carolina,
with affiliates of the General Partners as tenants-in-common. 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 five to 20 years (the average being 18 years), and
expire between 1997 and 2015. 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
$37,900 to $185,700. Generally, the leases provide for percentage rent, based
on sales in excess of a specified amount. In addition, some of the leases
provide that, commencing in the fourth to 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 to five
percent) of the purchase price or gross sales.
Generally, the leases of the Properties provide for two, three or 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 purchase price of the Property, after a specified
portion of the lease term has elapsed.
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 1991, a restaurant on one of the Partnership's Properties,
Captain D's in Chester, Pennsylvania, ceased operations. In September 1992,
the tenant and a franchisee of a regional Restaurant Chain entered into a
sublease agreement for this Property and operations of the restaurant resumed.
During 1994, the franchisee ceased operations of the Property in Chester,
Pennsylvania. The original tenant of the Property will continue to be
responsible for complying with the lease terms. The Partnership has agreed to
accept reduced rent for this Property and the Property leased by the same
tenant in Orlando, Florida. The difference between the rent due on these
Properties under the lease agreements and the rent collected for the period
December 1, 1992 to December 31, 1995, has been deferred and will be payable
at a later date in accordance with the agreement between the Partnership and
the tenant. The Partnership and the tenant of these Properties have agreed to
extend the period during which reduced rents are payable through March 31,
1996, with the deferred amounts payable at a later date. The General Partners
do not expect these temporary rent reductions for these Properties to have a
significant adverse effect on the Partnership's operations.
Effective August 31, 1994, the tenant of the Property in Hermitage,
Tennessee, elected to exercise its option to terminate its lease with the
Partnership. In April 1995, the Partnership entered into a new lease for the
Property in Hermitage, Tennessee, with an independent local operator. The
Partnership incurred $25,646 in renovation costs for this Property. The new
lease is for a term of ten years. The lease provides for lower annual base
rent during the initial term of the lease, but provides for increases in base
rent throughout the lease. No percentage rent is payable under the terms of
this new lease.
In August 1995, the Partnership reinvested the majority of the net sales
proceeds from the sale of the Property in Little Canada, Minnesota, in a
Denny's Property located in Broken Arrow, Oklahoma. The lease terms are
substantially the same as the Partnership's other leases as described in the
first three paragraphs of this section; however, this lease provides that,
commencing in the sixth lease year and every five years thereafter, the annual
base rent required under the terms of the lease will increase. The lease also
provides for annual percentage rent of five percent of gross sales for each
lease year minus the annual base rent for that lease year.
In January 1996, the Partnership reinvested the remaining net sales
proceeds from the sale of the Property in Little Canada, Minnesota, in a
Golden Corral Property located in Clinton, North Carolina, with affiliates of
the General Partners as tenants-in-common. The lease terms for this Property
are substantially the same as the Partnership's other leases as described
above in the first three paragraphs of this section.
Major Tenants
During 1995, three lessees of the Partnership and its consolidated joint
venture, Golden Corral Corporation, Restaurant Management Services, Inc. and
Mid-America Corporation, each contributed more than ten percent of the
Partnership's total rental income (including rental income from the
Partnership's consolidated joint venture in which the Partnership is a co-
venturer and the Partnership's share of the rental income from the three
Properties owned by unconsolidated joint ventures and one Property owned with
an affiliate as tenants-in-common). As of December 31, 1995, Golden Corral
Corporation was the lessee under leases relating to four restaurants,
Restaurant Management Services, Inc. was the lessee under leases relating to
eight restaurants and Mid-America Corporation was the lessee under leases
relating to four restaurants. It is anticipated that, based on the minimum
rental payments required by the leases, Golden Corral Corporation, Restaurant
Management Services, Inc. and Mid-America Corporation each 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, Golden
Corral Family Steakhouse Restaurants, Hardee's and Burger King, each accounted
for more than ten percent of the Partnership's total rental income in 1995
(including the Partnership's consolidated joint venture and the Partnership's
share of the rental income from the three Properties owned by unconsolidated
joint ventures in which the Partnership is a co-venturer and one Property
owned with an affiliate as tenants-in-common). In subsequent years, it is
anticipated that these three Restaurant Chains each will continue to account
for more than ten percent of the Partnership's total rental income to which
the Partnership is entitled under the terms of the leases. Any failure of
these lessees or 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 a joint venture arrangement, Caro Joint
Venture, with an unaffiliated entity to purchase and hold one Property. In
addition, the Partnership has entered into three separate joint venture
arrangements, Auburn Joint Venture, Show Low Joint Venture and Asheville Joint
Venture, with affiliates of the General Partners, to purchase and hold three
Properties through such joint ventures. The joint venture arrangements
provide for the Partnership and its joint venture partners to share in all
costs and benefits associated with the joint venture in accordance with their
respective percentage interests 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 venture.
Each joint venture has an initial term of 20 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 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 Caro Joint Venture and shares
management control equally with affiliates of the General Partners for Auburn
Joint Venture, Show Low Joint Venture and Asheville 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 Auburn Joint Venture, Show Low Joint
Venture, Caro Joint Venture and Asheville Joint Venture is distributed 3.9%,
36.0%, 66.0% and 14.0%, respectively, to the Partnership and the balance is
distributed to each of the other joint venture partners in accordance with its
respective percentage interest in the joint venture. 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.
In addition to the above joint venture agreements, in July 1994, the
Partnership entered into an agreement to hold a Jack in the Box Property as
tenants-in-common with an affiliate of the General Partners. The agreement
provides for the Partnership and the affiliate to share in the profits and
losses of the Property in proportion to each co-venturer's percentage
interest. The Partnership owns a 51.67% interest in this Property.
In addition to the above joint venture agreements and the agreement to
hold the Jack in the Box Property as tenants-in-common, in January 1996, the
Partnership entered into an agreement to hold a Golden Corral Property as
tenants-in-common with affiliates of the General Partners. The agreement
provides for the Partnership and the affiliates to share in the profits and
losses of the Property in proportion to each co-venturer's percentage
interest. The Partnership owns a 17.74% interest in this Property.
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 rental 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 and the Property held as tenants-in-common
with an affiliate, 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, 42 Properties located in 16 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 10,000
to 88,200 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. 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
1,200 to 10,700 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 tenants as of December 31, 1995 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Restaurant Management Services leases five Popeyes restaurants, one
Shoney's restaurant, one Church's Fried Chicken restaurant and one other
restaurant (formerly operated as a Captain D's). The initial term of each
lease is 20 years (expiring between 2009 and 2010) and the average minimum
base annual rent is approximately $61,600 (ranging from approximately $46,000
to $121,300).
Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2004 and 2005) and
the average minimum base annual rent is approximately $169,100 (ranging from
approximately $149,500 to $185,700).
Mid-America Corporation leases four Burger King restaurants. The
initial term of each lease is between 14 and 15 years (expiring between 2004
and 2006) and the average minimum base annual rent is approximately $99,400
(ranging from approximately $97,300 to $100,200).
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 2,995 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 14.8
percent).
1995 (1) 1994 (1)
--------------------- ---------------------
High Low Average High Low Average
------ ----- ------- ------ ----- -------
First Quarter $500 $500 $500 $495 $460 $473
Second Quarter 475 475 475 454 454 454
Third Quarter 485 475 481 460 460 460
Fourth Quarter 475 365 461 475 391 459
(1) A total of 1,203 and 574 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 $3,150,000 to the Limited Partners.
Distributions of $787,500 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>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31:
Revenues (1) $ 3,438,286 $ 3,468,897 $ 3,635,782 $ 3,593,219 $ 3,407,355
Net income (2) 2,861,381 3,095,028 2,955,692 2,886,502 2,701,934
Cash distributions
declared 3,150,000 3,150,000 3,150,000 3,150,000 3,150,000
Net income per
Unit (2) 40.47 43.80 41.80 40.82 38.21
Cash distributions
declared
per Unit 45.00 45.00 45.00 45.00 45.00
At December 31:
Total assets $30,442,314 $30,754,999 $30,837,521 $30,271,003 $30,639,353
Long-term obligations - - - - -
</TABLE>
(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of the consolidated joint venture.
(2) Net income for the years ended December 31, 1995 and 1994, includes
$103,283 and $332,664, respectively, from gains on sale of land and
buildings. In addition, net income for the year ended December 31,
1995, includes $7,370 from a loss 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 42 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 $3,222,430,
$3,253,674 and $3,194,686 for the years ended December 31, 1995, 1994 and
1993, respectively. The decrease in cash from operations during 1995, as
compared to 1994, and the increase during 1994, as compared to 1993, are
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.
Other sources and uses of capital included the following during the
years ended December 31, 1995, 1994 and 1993.
In May 1994, the Partnership sold its Properties in Batesville and
Heber Springs, Arkansas, for a total of $1,432,178 and received net sales
proceeds of $1,429,481, resulting in a gain for financial reporting purposes
of $332,664. These Properties were originally acquired by the Partnership in
November 1989 and February 1990 and had a combined, total cost of
approximately $1,148,100, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Properties for
approximately $281,400 in excess of their original purchase prices. The sale
of these Properties was structured to qualify as like-kind exchange
transactions in accordance with Section 1031 of the Internal Revenue Code. As
a result, no gain or loss was recognized for federal income tax purposes.
Therefore, the Partnership was not required to distribute any of the net sales
proceeds from the sale of these two Properties to the Limited Partners for the
purposes of paying federal and state income taxes.
In June 1994, the Partnership reinvested $846,596 of the net sales
proceeds in a Jack in the Box Property in Dallas, Texas, that was under
construction. Construction was completed in September 1994, and the
Partnership funded additional construction costs of $134,308. In July 1994,
the Partnership reinvested the remaining net sales proceeds in a Jack in the
Box Property in Yuma, Arizona, as tenants-in-common with an affiliate of the
General Partners.
In April 1995, the Partnership entered into a new lease for its
Property in Hermitage, Tennessee. In connection therewith, the Partnership
incurred $25,646 in renovation costs and $16,500 in lease costs.
In June 1995, the Partnership sold its Property in Little Canada,
Minnesota, for $904,000 and received net sales proceeds of $899,503, resulting
in a gain of $103,283 for financial reporting purposes. This Property was
originally acquired by the Partnership in October 1989 and had a cost of
approximately $823,900, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Property for
approximately $75,600 in excess of its original purchase price. In August
1995, the Partnership reinvested $724,612 in a Property in Broken Arrow,
Oklahoma. In addition, in August 1995, the Partnership sold a small parcel of
vacant land adjacent to its Property in Orlando, Florida, for $7,500,
resulting in a loss of $7,370 for financial reporting purposes. In connection
therewith, the Partnership accepted a promissory note for $6,000. The
promissory note is collateralized by a mortgage on the Property, bears
interest at a rate of nine percent per annum and is being collected in six
monthly installments of $1,026 through February 1996. The balance of this
mortgage note receivable was $3,056 at December 31, 1995, including accrued
interest of $23. As of February 29, 1996, the Partnership had collected all
such amounts.
In January 1996, the Partnership reinvested the remaining net sales
proceeds from the sale of the Property in Little Canada, Minnesota, in a
Golden Corral Property located in Clinton, North Carolina, with affiliates of
the General Partners as tenants-in-common. In connection therewith, the
Partnership and its affiliates entered into an agreement whereby each co-
venturer will share in the profits and losses of the Property in proportion to
its applicable percentage interest. The Partnership owns a 17.74% interest in
this 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 December 31, 1995, the Partnership had
$1,120,999 invested in such short-term investments as compared to $926,481 at
December 31, 1994. The increase in cash and cash equivalents during 1995, as
compared to 1994, primarily is the result of a portion of the net sales
proceeds from the sale of the Property in Little Canada, Minnesota, being held
at December 31, 1995, pending the reinvestment of such proceeds in a Property
as tenants-in-common with affiliates in January 1996. The funds remaining at
December 31, 1995, after payment of distributions and other liabilities, will
be used to invest in an additional Property as discussed above and to meet the
Partnership's working capital and other needs.
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 $95,898, $87,733 and $130,172,
respectively, for certain operating expenses. As of December 31, 1995, the
Partnership owed $6,024 to affiliates for such amounts and accounting and
administrative services. As of February 29, 1996, the Partnership had
reimbursed the affiliates all such amounts. Other liabilities of the
Partnership, including distributions payable, decreased to $822,187 at
December 31, 1995, from $845,471 at December 31, 1994, primarily as the result
of a decrease in rents paid in advance during the year ended December 31,
1995. The General Partners believe that the Partnership has sufficient cash
on hand to meet its current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the Limited Partners of $3,150,000 for each of the years ended December 31,
1995, 1994 and 1993. This represents distributions of $45 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 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 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 the 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.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection
with the operations of the Partnership.
Results of Operations
During 1993, the Partnership owned and leased 38 wholly owned
Properties, during 1994, the Partnership owned and leased 39 wholly owned
Properties (including two Properties in Batesville and Heber Springs,
Arkansas, which were sold in May 1994), and during 1995, the Partnership owned
and leased 38 wholly owned Properties (including one Property in Little
Canada, Minnesota, which was sold in June 1995). In addition, during 1995,
1994 and 1993, the Partnership was a co-venturer in four separate joint
ventures that each owned and lease one Property, and during 1995 and 1994, the
Partnership owned and leased one Property with an affiliate as tenants-in-
common. As of December 31, 1995, the Partnership owned, either directly, as
tenants-in-common with an affiliate, or through joint venture arrangements, 42
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 $37,900 to
$185,700. Generally, the leases provide for percentage rent based on sales in
excess of a specified amount. In addition, some of the leases provide that,
commencing in the fourth to 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 to five percent) of the
purchase price 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, Caro Joint Venture, earned
$3,207,860, $3,235,244 and $3,415,366, respectively, in rental income from
operating leases and earned income from direct financing leases. Rental and
earned income decreased approximately $83,600 during the year ended December
31, 1995, as compared to 1994, as a result of the sale in June 1995, of the
Property in Little Canada, Minnesota, and the Partnership's writing off as
uncollectible rent receivable amounts relating to this Property. During 1994,
the Partnership had also established an allowance for doubtful accounts of
approximately $8,300 relating to this Property. The decrease during 1995, was
partially offset by an increase of approximately $33,400 in rental income due
to the reinvestment of a portion of the net sales proceeds in a Property in
Broken Arrow, Oklahoma, in August 1995.
In addition, rental and earned income was reduced by approximately
$56,200 and $86,000 for the years ended December 31, 1995 and 1994,
respectively, as a result of the sale of the Properties in Batesville and
Heber Springs, Arkansas, in May 1994. However, the decrease was partially
offset by an increase of approximately $51,800 and $58,100 during the years
ended December 31, 1995 and 1994, respectively, in rental income due to the
reinvestment of a portion of the net sales proceeds in a Property in Dallas,
Texas, in June 1994.
Rental and earned income also decreased in 1995 and 1994, each as
compared to the prior year, approxi-mately $51,700 and $38,600, respectively,
as a result of the fact that the tenant of the Property in Hermitage,
Tennessee, elected to exercise its option to terminate its lease with the
Partnership effective August 31, 1994, and the fact that the Partnership had
established an allowance for doubtful accounts for rent receivable amounts
relating to this Property. This decrease in rental and earned income was
partially offset by an increase of approximately $48,500 during 1995, due to
the fact that in April 1995, the Partnership entered into a new lease for this
Property, for which rent commenced in June 1995.
In addition, rental and earned income during 1995 and 1994, was
affected by the fact that in 1994, the Partnership established an allowance
for doubtful accounts for approximately $90,400 for rent and other amounts
relating to the Properties in Chester, Pennsylvania, and Orlando, Florida.
The Partnership increased the allowance for doubtful accounts by approximately
$57,800 for rent and other amounts relating to these Properties during 1995.
Since December 1992, the Partnership has made certain rent concessions for the
Properties in Chester, Pennsylvania, and Orlando, Florida, whereby the
difference between rent due on these Properties under the lease agreements and
the rent collected for the period December 31, 1992 to December 31, 1995, was
deferred and will be payable at a later date in accordance with the agreement
between the Partnership and the tenant, as described above in Item 1.
Business - Leases. The General Partners do not expect that these reductions
will have a significant adverse effect on Partnership operations and the
tenant remains responsible for the payment of these amounts; however, due to
the current financial difficulties the tenant is experiencing, the General
Partners believe collection of these amounts is doubtful. The Partnership
will continue to pursue the collection of such amounts and will record such
amounts as income if collected.
For the years ended December 31, 1995, 1994 and 1993, the Partnership
also earned $115,946, $150,372 and $170,900, respectively, in contingent
rental income. The decrease in contingent rental income during 1995, as
compared to 1994, is primarily attributable to decreases in gross sales
relating to certain Properties. The decrease in contingent rental income
during 1994, as compared to 1993, is primarily the result of the Partnership's
establishing an allowance for doubtful accounts of $12,800 in 1994 for
contingent rental amounts relating to the Property in Little Canada,
Minnesota. The Partnership wrote-off this amount, as well as current year
amounts, as uncollectible in 1995 as a result of the sale of this Property, as
discussed above. In addition, contingent rental income decreased in 1994, as
compared to 1993, as a result of the Partnership's sale of the Property in
Batesville, Arkansas, and decreases in gross sales relating to certain
Properties.
For the years ended December 31, 1995, 1994 and 1993, the Partnership
earned $83,483, $70,499 and $44,350, respectively, attributable to net income
earned by unconsolidated joint ventures in which the Partnership is a co-
venturer. The increase in net income earned by unconsolidated joint ventures
in 1995 and 1994, as compared to prior years, is primarily attributable to the
acquisition in July 1994 of a Property with an affiliate of the General
Partners as tenants-in-common, which is included in equity in earnings of
unconsolidated joint ventures.
In January 1996, the Partnership reinvested the remaining net sales
proceeds it received from the sale of the Property in Little Canada,
Minnesota, in a Property in Clinton, North Carolina, with affiliates as
tenants-in-common. In connection therewith, the Partnership and its
affiliates will share the profits and losses of the Property in proportion to
each co-venturer's interest. The Partnership has a 17.74% interest in this
Property. Therefore, the General Partners expect net income earned by joint
ventures to increase in 1996 and subsequent years.
During the years ended December 31, 1995, 1994 and 1993, three of the
Partnership's lessees, Golden Corral Corporation, Restaurant Management
Services, Inc. and Mid-America Corporation, each 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 the three Properties owned by unconsolidated joint
ventures in which the Partnership is a co-venturer and one Property owned with
an affiliate as tenants-in-common). As of December 31, 1995, Golden Corral
Corporation was the lessee under leases relating to four restaurants,
Restaurant Management Services, Inc. was the lessee under leases relating to
eight restaurants and Mid-America Corporation was the lessee under leases
relating to four restaurants. It is anticipated that, based on the minimum
annual rental payments required by the leases, Golden Corral Corporation,
Restaurant Management Services, Inc. and Mid-America Corporation each 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, Golden Corral Family Steakhouse Restaurants, Hardee's and Burger King,
each accounted for more than ten percent of the Partnership's total rental
income in 1995, 1994 and 1993 (including the Partnership's consolidated joint
venture and the Partnership's share of the rental income from the three
Properties owned by unconsolidated joint ventures in which the Partnership is
a co-venturer and one Property owned with an affiliate as tenants-in-common).
In subsequent years, it is anticipated that these three Restaurant Chains each
will continue to account for more than ten percent of the Partnership's total
rental income to which the Partnership is entitled under the terms of the
leases. Any failure of these lessees or Restaurant Chains could materially
affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $672,818, $706,533 and $680,090 for the years ended December 31, 1995,
1994 and 1993, respectively. The decrease in operating expenses in 1995, and
the increase in 1994, each as compared to the prior year, is primarily
attributable to the Partnership's establishing an allowance for doubtful
accounts of approximately $43,400 for amounts previously recorded as income
relating to the Properties in Chester, Pennsylvania, and Little Canada,
Minnesota, during the year ended December 31, 1994.
In addition, operating expenses were affected during 1994, as a result
of the fact that the tenant of the Property in Hermitage, Tennessee, elected
to exercise its option to terminate its lease with the Partnership, effective
August 31, 1994. In connection therewith, the Partnership expensed
approximately $9,600 in unamortized lease costs relating to this lease and
incurred certain expenses relating to this Property, such as real estate
taxes, during the year ended December 31, 1994. In April 1995, the
Partnership entered into a new lease for this Property, as discussed in
Item 1. Business - Leases.
The decrease in operating expenses for the year ended December 31,
1995, as compared to 1994, was partially offset by an increase in (i)
accounting and administrative expenses associated with operating the
Partnership and its Properties and (ii) insurance expenses 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
increase in operating expenses in 1994, as compared to 1993, was partially
offset by a decrease in administrative expenses associated with both the
processing services provided for investors and a decrease in mailings to
investors during 1994.
As a result of the sale of the Property in Little Canada, Minnesota, as
described above in "Liquidity and Capital Resources," the Partnership
recognized a gain of $103,283, and as a result of the sale of a portion of the
land of the Property in Orlando, Florida, the Partnership recognized a loss of
$7,370, for the year ended December 31, 1995. In addition, as a result of the
sale of the Properties in Batesville and Heber Springs, Arkansas, the
Partnership recognized a gain of $332,664 for the year ended December 31,
1994. No Properties were sold during the year ended December 31, 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 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 VI, 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 VI, Ltd.
We have audited the financial statements and the financial statement schedules
of CNL Income Fund VI, 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 VI, 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 VI, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
--------------
December 31,
ASSETS 1995 1994
----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation $22,610,686 $23,884,110
Net investment in direct financing
leases 4,727,201 4,056,533
Investment in joint ventures 867,708 880,156
Mortgage note receivable 3,056 -
Cash and cash equivalents 1,120,999 926,481
Receivables, less allowance for
doubtful accounts of $194,409
and $178,255 85,339 129,458
Prepaid expenses 5,250 3,208
Lease costs, less accumulated
amortization of $1,801 and
$895 15,899 305
Accrued rental income, less
allowance for doubtful accounts
of $9,160 and $8,087 979,445 848,017
Other assets 26,731 26,731
----------- -----------
$30,442,314 $30,754,999
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 19,846 $ 5,655
Accrued and escrowed real
estate taxes payable 10,424 11,200
Due to related parties 6,024 115
Distributions payable 787,500 787,500
Rents paid in advance 4,417 41,116
----------- -----------
Total liabilities 828,211 845,586
Minority interest 153,337 160,028
Partners' capital 29,460,766 29,749,385
----------- -----------
$30,442,314 $30,754,999
=========== ===========
See accompanying notes to financial statements.
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
--------------------
Year Ended December 31,
1995 1994 1993
---------- ---------- ----------
Revenues:
Rental income from operating
leases $2,738,218 $2,800,034 $2,923,762
Earned income from direct
financing leases 469,642 435,210 491,604
Contingent rental income 115,946 150,372 170,900
Interest and other income 51,130 33,574 25,011
---------- ---------- ----------
3,374,936 3,419,190 3,611,277
---------- ---------- ----------
Expenses:
General operating and
administrative 147,902 107,152 118,538
Professional services 27,741 28,774 33,783
Real estate taxes - 3,359 268
Bad debt expense - 45,040 -
State and other taxes 6,789 11,962 10,784
Depreciation and amortization 490,386 510,246 516,717
---------- ---------- ----------
672,818 706,533 680,090
---------- ---------- ----------
Income Before Minority Interest
in Income of Consolidated
Joint Venture, Equity in
Earnings of Unconsolidated
Joint Ventures, Gain on
Sale of Land and Buildings
and Loss on Sale of Land 2,702,118 2,712,657 2,931,187
Minority Interest in Income of
Consolidated Joint Venture (20,133) (20,792) (19,845)
Equity in Earnings of Uncon-
solidated Joint Ventures 83,483 70,499 44,350
Gain on Sale of Land and Buildings 103,283 332,664 -
Loss on Sale of Land (7,370) - -
---------- ---------- ----------
Net Income $2,861,381 $3,095,028 $2,955,692
========== ========== ==========
Allocation of Net Income:
General partners $ 28,411 $ 28,936 $ 29,557
Limited partners 2,832,970 3,066,092 2,926,135
---------- ---------- ----------
$2,861,381 $3,095,028 $2,955,692
========== ========== ==========
Net Income Per Limited Partner
Unit $ 40.47 $ 43.80 $ 41.80
========== ========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 70,000 70,000 70,000
========== ========== ==========
See accompanying notes to financial statements.
<TABLE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
General Partners LimitedPartners
------------------ ----------------------------------------------------
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 $1,000 $ 87,769 $35,000,000 $ (9,764,226) $ 8,689,122 $(4,015,000) $29,998,665
Distributions to limited
partners ($45.00 per
limited partner unit) - - - (3,150,000) - - (3,150,000)
Net income - 29,557 - - 2,926,135 - 2,955,692
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1993 1,000 117,326 35,000,000 (12,914,226) 11,615,257 (4,015,000) 29,804,357
Distributions to limited
partners ($45.00 per
limited partner unit) - - - (3,150,000) - - (3,150,000)
Net income - 28,936 - - 3,066,092 - 3,095,028
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1994 1,000 146,262 35,000,000 (16,064,226) 14,681,349 (4,015,000) 29,749,385
Distributions to limited
partners ($45.00 per
limited partner unit) - - - (3,150,000) - - (3,150,000)
Net income - 28,411 - - 2,832,970 - 2,861,381
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1995 $1,000 $174,673 $35,000,000 $(19,214,226) $17,514,319 $(4,015,000) $29,460,766
====== ======== =========== ============ =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
CNL INCOME FUND VI, 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 $ 3,264,527 $ 3,297,916 $ 3,303,648
Distributions from
unconsolidated joint
ventures 95,931 80,796 50,382
Cash paid for expenses (181,153) (149,971) (174,648)
Interest received 43,125 24,933 15,304
----------- ----------- -----------
Net cash provided by
operating activities 3,222,430 3,253,674 3,194,686
----------- ----------- -----------
Cash Flows from Investing
Activities:
Proceeds from sale of
land and buildings 899,503 1,429,481 -
Additions to land and
buildings on operating
leases (25,646) (980,904) -
Investment in direct
financing leases (723,237) - -
Investment in joint
ventures - (455,146) -
Collections on mortgage
note receivable 2,967 - -
Payment of lease costs (3,300) (1,500) (3,600)
----------- ----------- -----------
Net cash provided
by (used in)
investing activities 150,287 (8,069) (3,600)
----------- ----------- -----------
Cash Flows from Financing
Activities:
Reimbursement of acquisi-
tion costs paid by
related parties on
behalf of the Part-
nership (1,375) - -
Distributions to limited
partners (3,150,000) (3,150,000) (2,382,184)
Distributions to holder
of minority interest (26,824) (22,077) (23,821)
----------- ----------- -----------
Net cash used in
financing activities (3,178,199) (3,172,077) (2,406,005)
----------- ----------- -----------
Net Increase in Cash and Cash
Equivalents 194,518 73,528 785,081
Cash and Cash Equivalents at
Beginning of Year 926,481 852,953 67,872
----------- ----------- -----------
Cash and Cash Equivalents at
End of Year $ 1,120,999 $ 926,481 $ 852,953
=========== =========== ===========
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 2,861,381 $ 3,095,028 $ 2,955,692
----------- ----------- -----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 489,480 496,384 509,937
Amortization 906 13,862 6,780
Minority interest in income
of consolidated joint
venture 20,133 20,792 19,845
Equity in earnings of
unconsolidated joint
ventures, net of
distributions 12,448 10,297 6,032
Gain on sale of land and
buildings (103,283) (332,664) -
Loss on sale of land 7,370 - -
Decrease (increase) in
receivables 44,096 73,209 (167,050)
Decrease (increase) in
prepaid expenses (2,042) 262 (3,470)
Decrease in net investment
in direct financing leases 53,944 48,202 42,891
Increase in accrued rental
income (131,428) (169,433) (176,557)
Increase (decrease) in
accounts payable and
accrued expenses 215 3,426 (9,448)
Increase (decrease) in
due to related parties 5,909 - (76)
Increase (decrease) in
rents paid in advance
and deposits (36,699) (5,691) 10,110
----------- ----------- -----------
Total adjustments 361,049 158,646 238,994
----------- ----------- -----------
Net Cash Provided by Operating
Activities $ 3,222,430 $ 3,253,674 $ 3,194,686
=========== =========== ===========
Supplemental Schedule of Non-Cash
Investing and Financing
Activities:
Acquisition costs paid by
affiliates on behalf of
the Partnership $ 1,375 $ - $ -
=========== =========== ===========
Mortgage note accepted in
connection with sale of
land $ 6,000 $ - $ -
=========== =========== ===========
Lease costs payable reversed
due to lease termination $ - $ 24,000 $ -
=========== =========== ===========
Lease costs incurred and
unpaid at December 31 $ 13,200 $ - $ -
=========== =========== ===========
Distributions declared and
unpaid at December 31 $ 787,500 $ 787,500 $ 787,500
=========== =========== ===========
See accompanying notes to financial statements.
CNL INCOME FUND VI, 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 VI, 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 - Land and buildings on operating
leases are stated at cost. Buildings are depreciated using the
straight-line method over their estimated useful lives of 30 years.
When properties are sold, the related cost and accumulated depreciation
are removed from the accounts and gains or losses from sales are
reflected in income in accordance with Statement of Financial Accounting
Standards No. 66, "Accounting for Sales of Real Estate." 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 - 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 is
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables and
accrued rental income, 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
percent interest in Caro Joint Venture, a Florida general partnership,
using the consolidation method. Minority interest represents the
minority joint venture partner's proportionate share of equity in the
Partnership's consolidated joint venture. All significant intercompany
accounts and transactions have been eliminated.
The Partnership's investments in Auburn Joint Venture, Show Low Joint
Venture, Asheville Joint Venture and a property in Yuma, Arizona, held
as tenants-in-common with an affiliate 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 Part-nership believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Lease Costs - Brokerage fees and lease incentive costs incurred in
finding new tenants and negotiating new leases for the Partnership's
properties are amortized over the terms of the new leases using the
straight-line method.
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 property.
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, nine leases have
been classified as direct financing leases. For the leases classified
as direct financing leases, the building portions of the property leases
are accounted for as direct financing leases while the land portions of
four of these leases are operating leases. Substantially all leases are
for 15 to 20 years and provide for minimum and contingent rentals. In
addition, the tenant 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 $10,880,540 $11,344,080
Buildings 14,447,892 14,847,755
----------- -----------
25,328,432 26,191,835
Less accumulated
depreciation (2,717,746) (2,307,725)
----------- -----------
$22,610,686 $23,884,110
=========== ===========
In May 1994, the Partnership sold its properties in Batesville and Heber
Springs, Arkansas, for a total of $1,432,178 and received net sales
proceeds of $1,429,481, resulting in a gain of $332,664 for financial
reporting purposes. These properties were originally acquired by the
Partnership in November 1989 and February 1990 and had a combined, total
cost of approximately $1,148,100, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold the
properties for approximately $281,400 in excess of their original
purchase price. The Partnership reinvested $980,904 of the net sales
proceeds in a property in Dallas, Texas.
In June 1995, the Partnership sold its property in Little Canada,
Minnesota, for $904,000 and received net sales proceeds of $899,503,
resulting in a gain of $103,283 for financial reporting purposes. This
property was originally acquired by the Partnership in October 1989 and
had a cost of approximately $823,900, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold the
property for approximately $75,600 in excess of its original purchase
price. In August 1995, the Partnership reinvested $724,612 of the net
sales proceeds in a property in Broken Arrow, Oklahoma. Also, in August
1995, the Partnership sold a small parcel of vacant land adjacent to its
property in Orlando, Florida, for $7,500, resulting in a loss of $7,370
for financial reporting purposes. In connection therewith, the
Partnership accepted a promissory note for $6,000 (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 $131,428, $169,433 and $176,557, 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 $ 2,620,254
1997 2,625,687
1998 2,580,226
1999 2,583,081
2000 2,708,570
Thereafter 19,133,695
-----------
$32,251,513
===========
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 $ 9,577,697 $ 8,303,682
Estimated residual
values 1,704,299 1,399,666
Less unearned income (6,554,795) (5,646,815)
----------- -----------
Net investment in direct
financing leases $ 4,727,201 $ 4,056,533
=========== ===========
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1995:
1996 $ 622,269
1997 622,269
1998 622,269
1999 622,269
2000 624,409
Thereafter 6,464,212
----------
$9,577,697
==========
5. Investment in Joint Ventures:
----------------------------
The Partnership has a 3.9%, a 36 percent and a 14 percent interest in
the profits and losses of Auburn Joint Venture, Show Low Joint Venture
and Asheville Joint Venture, respectively. The remaining interests in
these joint ventures are held by affiliates of the Partnership which
have the same general partners.
In July 1994, the Partnership acquired a property in Yuma, Arizona, with
an affiliate of the Partnership that has the same general partners, as
tenants-in-common. The total cost of the property was $881,033, of
which the Partnership contributed $455,146, or 51.67%. The Partnership
accounts for its investment in this property using the equity method
since the Partnership shares control with an affiliate. Amounts
relating to its investment are included in investment in joint ventures.
Auburn Joint Venture, Show Low Joint Venture, Asheville Joint Venture,
and the Partnership and an affiliate as tenants-in-common, each own and
lease one property to an operator of national fast-food and family-style
restaurants. The following presents the combined, condensed financial
information for the joint ventures and the property held as tenants-in-
common with an affiliate at December 31:
1995 1994
---------- ----------
Land and buildings on
operating leases,
less accumulated
depreciation $2,726,011 $2,782,732
Net investment in direct
financing lease 408,936 415,189
Cash 1,950 2,228
Receivables 18,298 17,996
Accrued rental income 170,695 140,203
Other assets 47,283 50,383
Liabilities 2,208 9,280
Partners' capital 3,370,965 3,399,451
Revenues 432,218 394,156
Net income 363,865 339,911
The Partnership recognized income totalling $83,483, $70,499 and $44,350
for the years ended December 31, 1995, 1994 and 1993, respectively, from
these joint ventures and the property held as tenants-in-common with an
affiliate.
6. Mortgage Note Receivable:
------------------------
In connection with the sale of a small parcel of vacant land adjacent to
the property in Orlando, Florida, the Partnership accepted a promissory
note, collateralized by a mortgage on the Property, for $6,000. The
promissory note bears interest at a rate of nine percent per annum and
is being collected in six monthly installments of $1,026 through
February 1996. Mortgage note receivable includes $3,056 of such
amounts, including accrued interest of $23 at December 31, 1995.
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
$3,150,000. 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 $2,861,381 $3,095,028 $2,955,692
Depreciation for tax
reporting purposes
in excess of depreci-
ation for financial
reporting purposes (94,987) (92,651) (94,046)
Direct financing leases
recorded as operating
leases for tax
reporting purposes 53,944 48,202 42,891
Gain and loss on sale of
land and buildings for
financial reporting
purposes in excess of
gain and loss on sale
for tax reporting
purposes (2,914) (332,664) -
Equity in earnings of
unconsolidated joint
ventures for tax
reporting purposes
less than equity in
earnings of uncon-
solidated joint
ventures for finan-
cial reporting
purposes (5,299) (3,031) (4,032)
Allowance for doubtful
accounts 16,154 178,255 -
Accrued rental income (131,428) (169,433) (176,557)
Rents paid in advance (36,699) 1,309 8,915
Minority interest in
timing differences
of consolidated
joint venture (200) (200) (200)
---------- ---------- ----------
Net income for federal
income tax purposes $2,659,952 $2,724,815 $2,732,663
========== ========== ==========
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 and the property held as tenants-in-common with an
affiliate, 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, Affiliates
provided accounting and administrative services to the Partnership on a
day-to-day basis. The Partnership incurred $81,847, $49,761 and $40,130
for the years ended December 31, 1995, 1994 and 1993, respectively, for
such services.
During 1994, the Partnership and an affiliate of the general partners
acquired a property as tenants-in-common for a purchase price of
$881,033 (of which the Partnership contributed $455,146 or 51.67%) from
CNL South Corp., an affiliate of the general partners. CNL South Corp.
had purchased and temporarily held title to this property in order to
facilitate the acquisition of the property by the Partnership and the
affiliate. The purchase price paid by the Partnership and the affiliate
represented the costs incurred by CNL South Corp. to acquire and carry
the property, including closing costs.
The due to related parties consisted of the following at December 31:
1995 1994
------ ------
Due to Affiliates:
Expenditures incurred on
behalf of the Partnership $2,129 $ -
Accounting and administrative
services 3,895 115
------ ------
$6,024 $ 115
====== ======
10. 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 and the property held as tenants-in-common with an affiliate),
for the years ended December 31:
1995 1994 1993
-------- -------- --------
Golden Corral
Corporation $725,908 $747,050 $769,429
Restaurant Manage-
ment Services, Inc. 440,987 401,460 489,245
Mid-America
Corporation 439,519 439,519 439,519
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 and the property held as tenants-in-common with an
affiliate), for the years ended December 31:
1995 1994 1993
-------- -------- --------
Golden Corral
Family Steakhouse
Restaurants $725,908 $747,050 $769,429
Burger King 455,820 455,820 455,820
Hardee's 431,465 576,633 697,717
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.
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
V, 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, and as Vice Chairman of the Board of
Directors, Secretary and Treasurer 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 is 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 the Partnership: $95,898
of the prevailing rate
at which comparable Accounting and
services could have administrative services:
been obtained in the $81,847
same geographic area.
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 and the
Property owned with an
affiliate as tenants-
in-common, subordinated
to certain minimum
returns to the Limited
Partners. The
management fee will not
exceed competitive fees
for comparable
services.
Deferred, A deferred, $ - 0 -
subordinated real subordinated real
estate disposition estate disposition fee,
fee payable to payable upon sale of
affiliates 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, $ - 0 -
deferred, sub- subordinated share
ordinated share of equal to one percent of
Partnership net cash Partnership
flow distributions of net
cash flow, subordinated
to certain minimum
returns to the Limited
Partners.
General Partners' A deferred, $ - 0 -
deferred, sub- subordinated share
ordinated share of equal to five percent
Partnership net sales of Partnership
proceeds from a sale distributions of such
or sales net sales proceeds,
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 Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
(Included as Exhibit 3.3 to Registration Statement No. 33-23892 on
Form S-11 and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
(Included as Exhibit 4.2 to Registration Statement No. 33-23892 on
Form S-11 and incorporated herein by reference.)
4.2 Agreement and Certificate of Limited Partnership of CNL Income
Fund VI, Ltd. (Included as Exhibit 4.3 to Form 10-K filed with the
Securities and Exchange Commission on April 9, 1991, and incorpor-
ated 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 VI, 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)
<TABLE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
Additions Deductions
----------------------- ---------------------
Balance at Charged to Charged to Deemed Balance
Beginning Costs and Other Uncollec- at End
Year Description of Year Expenses Accounts tible Collected of Year
- ---- ----------- ---------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 Allowance for
doubtful
accounts (a) $ - $ - $ - $ - $ - $ -
======== ======= ======== ======== ======== ========
1994 Allowance for
doubtful
accounts (a) $ - $44,440 $141,902(b) $ - $ - $186,342
======== ======= ======== ======== ======== ========
1995 Allowance for
doubtful
accounts (a) $186,342 $ - $ 75,202(b) $ 49,672 $ 8,303 $203,569
======== ======= ======== ======== ======== ========
</TABLE>
(a) Deducted from receivables and accrued rental income on the balance
sheet.
(b) Reduction of rental and other income.
CNL INCOME FUND VI, 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 Restaurants:
Sevierville, TN - $ 352,845 $ 609,006 $ - $ -
Walker Springs, TN - 370,839 563,193 - -
Knoxville, TN - 421,258 539,964 - -
Greeneville, TN - 318,817 642,538 - -
Church's Fried Chicken
Restaurant:
Orlando, FL - 177,440 270,985 - -
Denny's Restaurant:
Deland, FL - 448,435 - 600,394 -
Golden Corral Family
Steakhouse Restaurants:
Albuquerque, NM - 717,708 1,018,823 - -
Amarillo, TX - 773,627 908,171 - -
Lawton, OK - 559,095 838,642 - -
El Paso, TX - 670,916 - 837,317 -
Hardee's Restaurants:
Greensburg, IN - 222,559 - 515,529 -
Bellevue, NE - 397,402 - - -
Springfield, TN - 203,159 413,221 - -
Jack in the Box Restaurant:
San Antonio, TX - 272,300 - - -
Dallas, TX - 516,265 330,331 134,308 -
KFC Restaurants:
Whitehall, MI - 230,867 553,862 74,156 -
Caro, MI - 150,804 - 373,558 -
Gainesville, FL - 321,789 287,429 - -
Perkins Restaurants:
Melbourne, FL - 428,901 - - -
Naples, FL - 809,340 - - -
Popeyes Famous Fried
Chicken Restaurants:
Jacksonville, FL - 121,901 190,505 123,663 -
Jacksonville, FL - 141,356 185,933 132,144 -
Gainesville, FL - 83,542 208,564 192,227 -
Jacksonville, FL - 93,914 158,543 163,399 -
Tallahassee, FL - 116,019 233,858 177,915 -
Shoney's Restaurants:
Venice, FL - 471,467 - 608,671 -
Nashville, TN - 320,540 531,507 - -
Taco Bell Restaurant:
Detroit, MI - 171,240 - 385,709 -
Waffle House Restaurants:
Clearwater, FL - 130,499 268,580 - -
Roanoke, VA - 119,533 236,219 - -
Atlantic Beach, FL - 141,627 263,021 - -
Wendy's Old Fashioned
Hamburger Restaurant:
Liverpool, NY - 213,380 155,981 - -
Other:
Hermitage, TN - 391,156 - 720,026 -
----------- ---------- ---------- --------
$10,880,540 $9,408,876 $5,039,016 $ -
=========== ========== ========== ========
Property of Joint Venture
in Which the Partnership
has a 36% Interest and has
Invested in Under an
Operating Lease:
Denny's Restaurant:
Show Low, AZ - $ 96,501 $ 189,000 $ 436,392 $ -
=========== ========== ========== ========
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and has
Invested in Under an
Operating Lease:
KFC Restaurant:
Auburn, MA - $ 484,362 $ - $ - $ -
=========== ========== ========== ========
Property of Joint Venture
in Which the Partnership
has a 14% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Asheville, NC - $ 438,695 $ 450,432 $ - $ -
=========== ========== ========== ========
Property in Which the Partner-
ship has a 51.67% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Jack in the Box
Restaurant:
Yuma, AZ - $ 255,235 $ 625,798 $ - $ -
=========== ========== ========== ========
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Denny's Restaurant:
Cheyenne, WY - $ 162,209 $ 648,839 $ - $ -
Broken Arrow, OK - 164,640 559,972 - -
Hardee's Restaurants:
Bellevue, NE - - 556,737 - -
Plattsmouth, NE - 93,448 517,080 - -
Waynesburg, OH - 136,242 441,299 - -
Jack in the Box
Restaurant:
San Antonio, TX - - 420,568 - -
Perkins Restaurants:
Melbourne, FL - - - 305,120 -
Naples, FL - - 365,831 - -
Other:
Chester, PA (g) - 98,009 - 495,472 -
----------- ---------- --------- ---------
- $ 654,548 $3,510,326 $ 800,592 $ -
=========== ========== ========= =========
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and
has Invested in Under
a Direct Financing Lease:
KFC Restaurant:
Auburn, MA - $ - $ - $ 434,947 $ -
=========== ========== ========= =========
CNL INCOME FUND VI, 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 Restau-
rants:
Sevierville, TN $ 352,845 $ 609,006 $ 961,851 $ 121,579
Walker Springs, TN 370,839 563,193 934,032 112,176
Knoxville, TN 421,258 539,964 961,222 107,796
Greeneville, TN 318,817 642,538 961,355 128,273
Church's Fried Chicken
Restaurant:
Orlando, FL 177,440 270,985 448,425 51,277
Denny's Restaurant:
Deland, FL 448,435 600,394 1,048,829 115,692
Golden Corral Family
Steakhouse Restau-
rants:
Albuquerque, NM 717,708 1,018,823 1,736,531 204,329
Amarillo, TX 773,627 908,171 1,681,798 182,132
Lawton, OK 559,095 838,642 1,397,737 168,188
El Paso, TX 670,916 837,317 1,508,233 151,252
Hardee's Restaurants:
Greensburg, IN 222,559 515,529 738,088 105,263
Bellevue, NE 397,402 (f) 397,402 -
Springfield, TN 203,159 413,221 616,380 70,455
Jack in the Box
Restaurant:
San Antonio, TX 272,300 (f) 272,300 -
Dallas, TX 516,265 464,639 980,904 19,742
KFC Restaurants:
Whitehall, MI 230,867 628,018 858,885 120,479
Caro, MI 150,804 373,558 524,362 71,599
Gainesville, FL 321,789 287,429 609,218 49,506
Perkins Restaurants:
Melbourne, FL 428,901 (f) 428,901 -
Naples, FL 809,340 (f) 809,340 -
Popeyes Famous Fried
Chicken Restaurants:
Jacksonville, FL 121,901 314,168 436,069 57,611
Jacksonville, FL 141,356 318,077 459,433 58,506
Gainesville, FL 83,542 400,791 484,333 70,535
Jacksonville, FL 93,914 321,942 415,856 56,958
Tallahassee, FL 116,019 411,773 527,792 73,292
Shoney's Restaurants:
Venice, FL 471,467 608,671 1,080,138 122,579
Nashville, TN 320,540 531,507 852,047 111,472
Taco Bell Restaurant:
Detroit, MI 171,240 385,709 556,949 76,261
Waffle House Restaurants:
Clearwater, FL 130,499 268,580 399,079 53,446
Roanoke, VA 119,533 236,219 355,752 47,006
Atlantic Beach, FL 141,627 263,021 404,648 52,052
Wendy's Old Fashioned
Hamburger Restaurant:
Liverpool, NY 213,380 155,981 369,361 31,413
Other:
Hermitage, TN 391,156 720,026 1,111,182 126,877
----------- ----------- ----------- ----------
$10,880,540 $14,447,892 $25,328,432 $2,717,746
=========== =========== =========== ==========
Property of Joint Venture
in Which the Partnership
has a 36% Interest and has
Invested in Under an
Operating Lease:
Denny's Restaurant:
Show Low, AZ $ 96,501 $ 625,392 $ 721,893 $ 147,919
=========== =========== =========== ==========
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and has
Invested in Under an
Operating Lease:
KFC Restaurant:
Auburn, MA $ 484,362 (f) $ 484,362 $ -
=========== =========== ==========
Property of Joint Venture
in Which the Partnership
has a 14% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Asheville, NC $ 438,695 $ 450,432 $ 889,127 $ 71,905
=========== =========== =========== ==========
Property in Which the Partner-
ship has a 51.67% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Jack in the Box Restaurant:
Yuma, AZ $ 255,235 $ 625,798 $ 881,033 $ 30,580
=========== =========== =========== ==========
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Denny's Restaurant:
Cheyenne, WY (f) (f) (f) (e)
Broken Arrow, OK (f) (f) (f) (e)
Hardee's Restaurants:
Bellevue, NE - (f) (f) (d)
Plattsmouth, NE (f) (f) (f) (e)
Waynesburg, OH (f) (f) (f) (e)
Jack in the Box Restaurant:
San Antonio, TX - (f) (f) (d)
Perkins Restaurants:
Melbourne, FL - (f) (f) (d)
Naples, FL - (f) (f) (d)
Other:
Chester, PA (g) (f) (f) (f) (e)
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and
has Invested in Under
a Direct Financing Lease:
KFC Restaurant:
Auburn, MA - (f) (f) (d)
CNL INCOME FUND VI, 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 Restaurants:
Sevierville, TN 1986 01/90 (b)
Walker Springs, TN 1986 01/90 (b)
Knoxville, TN 1985 01/90 (b)
Greeneville, TN 1988 01/90 (b)
Church's Fried Chicken
Restaurant:
Orlando, FL 1985 04/90 (b)
Denny's Restaurant:
Deland, FL 1990 10/89 (b)
Golden Corral Family
Steakhouse Restaurants:
Albuquerque, NM 1989 12/89 (b)
Amarillo, TX 1989 12/89 (b)
Lawton, OK 1989 12/89 (b)
El Paso, TX 1990 04/90 (b)
Hardee's Restaurants:
Greensburg, IN 1989 07/89 (b)
Bellevue, NE 1990 12/89 (d)
Springfield, TN 1990 11/90 (b)
Jack in the Box Restaurant:
San Antonio, TX 1990 08/90 (d)
Dallas, TX 1994 09/94 (b)
KFC Restaurants:
Whitehall, MI 1989 02/90 (b)
Caro, MI 1990 03/90 (b)
Gainesville, FL 1985 11/90 (b)
Perkins Restaurants:
Melbourne, FL 1990 11/89 (d)
Naples, FL 1978 12/89 (d)
Popeyes Famous Fried
Chicken Restaurants:
Jacksonville, FL 1985 04/90 (b)
Jacksonville, FL 1985 04/90 (b)
Gainesville, FL 1990 04/90 (b)
Jacksonville, FL 1985 04/90 (b)
Tallahassee, FL 1985 04/90 (b)
Shoney's Restaurants:
Venice, FL 1989 08/89 (b)
Nashville, TN 1988 09/89 (b)
Taco Bell Restaurant:
Detroit, MI 1990 11/89 (b)
Waffle House Restaurants:
Clearwater, FL 1988 01/90 (b)
Roanoke, VA 1987 01/90 (b)
Atlantic Beach, FL 1986 01/90 (b)
Wendy's Old Fashioned
Hamburger Restaurant:
Liverpool, NY 1977 12/89 (b)
Other:
Hermitage, TN 1990 02/90 (b)
Property of Joint Venture
in Which the Partnership
has a 36% Interest and has
Invested in Under an
Operating Lease:
Denny's Restaurant:
Show Low, AZ 1987 06/90 (b)
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and has
Invested in Under an
Operating Lease:
KFC Restaurant:
Auburn, MA 1989 01/90 (d)
Property of Joint Venture
in Which the Partnership
has a 14% Interest and
has Invested in Under
an Operating Lease:
Burger King Restaurant:
Asheville, NC 1986 03/91 (b)
Property in Which the Partner-
ship has a 51.67% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Jack in the Box Restaurant:
Yuma, AZ 1992 07/94 (b)
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Denny's Restaurant:
Cheyenne, WY 1980 12/89 (e)
Broken Arrow, OK 1982 08/95 (e)
Hardee's Restaurants:
Bellevue, NE 1990 12/89 (d)
Plattsmouth, NE 1989 01/90 (e)
Waynesburg, OH 1990 11/90 (e)
Jack in the Box Restaurant:
San Antonio, TX 1990 08/90 (d)
Perkins Restaurants:
Melbourne, FL 1990 11/89 (d)
Naples, FL 1978 12/89 (d)
Other:
Chester, PA (g) 1991 12/89 (e)
Property of Joint Venture
in Which the Partnership
has a 3.9% Interest and
has Invested in Under
a Direct Financing Lease:
KFC Restaurant:
Auburn, MA 1989 01/90 (d)
CNL INCOME FUND VI, 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 1995,
1994 and 1993, are summarized as follows:
Accumulated
Cost Depreciation
----------- ------------
Properties the Partnership
has Invested In Under
Operating Leases:
Balance, December 31, 1992 $26,439,040 $1,432,696
Depreciation expense - 509,937
----------- ----------
Balance, December 31, 1993 26,439,040 1,942,633
Dispositions (1,228,109) (131,292)
Acquisitions 980,904 -
Depreciation expense - 496,384
----------- ----------
Balance, December 31, 1994 26,191,835 2,307,725
Dispositions (889,049) (79,459)
Additional costs capitalized 25,646 -
Depreciation expense - 489,480
----------- ----------
Balance, December 31, 1995 $25,328,432 $2,717,746
=========== ==========
Property of Joint Venture in
Which the Partnership has a
36% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1992 $ 721,893 $ 85,380
Depreciation expense - 20,846
----------- ----------
Balance, December 31, 1993 721,893 106,226
Depreciation expense - 20,846
----------- ----------
Balance, December 31, 1994 721,893 127,072
Depreciation expense - 20,847
----------- ----------
Balance, December 31, 1995 $ 721,893 $ 147,919
=========== ==========
Property of Joint Venture in
Which the Partnership has a
3.9% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1992 $ 484,362 $ -
Depreciation expense (d) - -
----------- ----------
Balance, December 31, 1993 484,362 -
Depreciation expense (d) - -
----------- ----------
Balance, December 31, 1994 484,362 -
Depreciation expense (d) - -
----------- ----------
Balance, December 31, 1995 $ 484,362 $ -
=========== ==========
Property of Joint Venture in
Which the Partnership has a
14% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1992 $ 889,127 $ 26,861
Depreciation expense - 15,015
----------- ----------
Balance, December 31, 1993 889,127 41,876
Depreciation expense - 15,015
----------- ----------
Balance, December 31, 1994 889,127 56,891
Depreciation expense - 15,014
----------- ----------
Balance, December 31, 1995 $ 889,127 $ 71,905
=========== ==========
Property in Which the Partnership
has a 51.67% Interest as Tenants-
in-Common and has Invested
in Under an Operating Lease:
Balance, December 31, 1993 $ - $ -
Acquisitions 881,033 -
Depreciation expense - 9,720
----------- ----------
Balance, December 31, 1994 881,033 9,720
Depreciation expense - 20,860
----------- ----------
Balance, December 31, 1995 $ 881,033 $ 30,580
=========== ==========
(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 (including the Property held as tenants-
in-common) for federal income tax purposes was $30,071,890 and
$3,276,825, respectively. All of the leases are treated as operating
leases for federal income tax purposes.
(d) For financial reporting purposes, the portion of the lease relating to
the building has been recorded as a direct financing lease. The cost
of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(e) 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, depreciation is not applicable.
(f) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct financing
lease. Accordingly, costs relating to these components of this lease
are not shown.
(g) The tenant of this property, Restaurant Management Services, Inc.
subleased this property to a franchisee of a regional restaurant
chain. The franchisee vacated the property; however, Restaurant
Management Services, Inc. continues to be responsible for complying
with all of the terms of the lease agreement and is continuing to pay
rent on this property, subject to certain rent concessions, to the
Partnership.
<TABLE>
CNL INCOME FUND VI, 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>
Church's - Orlando, FL
First Mortgage 9.00% February (2) $ - $6,000 $3,056 $ -
1996 ----- ------ ------ -----------
Total $ - $6,000 $3,056 $ -
===== ====== ====== ===========
</TABLE>
(1) The tax carrying value of the note is $3,056.
(2) Monthly payments of principal and interest of $1,026 at an annual rate
of 9.00%.
(3) The changes in the carrying amounts are summarized as follows:
1995 1994 1993
------- ------- -------
Balance at beginning of
period $ - $ - $ -
New mortgage loan 6,000 - -
Accrued interest 23 - -
Collections of principal (2,967) - -
------- ------- -------
Balance at end of period $ 3,056 $ - $ -
======= ======= =======
EXHIBITS
EXHIBIT INDEX
Exhibit Number
- --------------
3.1 Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
(Included as Exhibit 3.3 to Registration Statement No. 33-23892 on
Form S-11 and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund VI, Ltd.
(Included as Exhibit 4.2 to Registration Statement No. 33-23892 on
Form S-11 and incorporated herein by reference.)
4.2 Agreement and Certificate of Limited Partnership of CNL Income
Fund VI, Ltd. (Included as Exhibit 4.2 to Form 10-K filed with the
Securities and Exchange Commission on April 9, 1991, 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 VI, 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 VI, 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> 1,120,999
<SECURITIES> 0
<RECEIVABLES> 279,748
<ALLOWANCES> 194,409
<INVENTORY> 0
<CURRENT-ASSETS> 1,214,644
<PP&E> 25,328,432
<DEPRECIATION> 2,717,746
<TOTAL-ASSETS> 30,442,314
<CURRENT-LIABILITIES> 828,211
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,460,766
<TOTAL-LIABILITY-AND-EQUITY> 30,442,314
<SALES> 0
<TOTAL-REVENUES> 3,374,936
<CGS> 0
<TOTAL-COSTS> 672,818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,861,381
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,861,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,861,381
<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 VI, 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 VI, 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 VI, 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 VI, 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 VI, LTD., a Florida
limited partnership
By: /s/Robert A. Bourne
-----------------------------
Robert A. Bourne, General Partner
