FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2000
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the transition period from _____________________ to _____________________
Commission file number
0-19144
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CNL Income Fund VI, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-2922954
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________
<PAGE>
CONTENTS
Page
Part I.
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Part II.
Other Information 14-15
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation $ 13,883,015 $ 15,069,805
Net investment in direct financing leases 3,340,420 3,864,455
Investment in joint ventures 9,275,464 8,377,455
Cash and cash equivalents 1,152,562 2,125,493
Restricted cash 2,062,036 --
Receivables, less allowance for doubtful accounts
of $178,931 and $240,497, respectively 31,402 134,477
Due from related parties 412 19,111
Prepaid expenses 26,334 2,847
Lease costs, less accumulated amortization of
$10,068 and $8,831, respectively 7,632 8,869
Accrued rental income, less allowance for doubtful
accounts of $9,697 and $47,718, respectively 512,907 491,616
Other assets 26,731 26,731
------------------- -------------------
$ 30,318,915 $ 30,120,859
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 43,098 $ 131,093
Escrowed real estate taxes payable 9,627 11,572
Due to related parties 86,684 65,220
Distributions payable 787,500 787,500
Rents paid in advance and deposits 5,000 16,000
------------------- -------------------
Total liabilities 931,909 1,011,385
Minority interest 142,068 153,870
Partners' capital 29,244,938 28,955,604
------------------- -------------------
$ 30,318,915 $ 30,120,859
=================== ===================
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ----------- ------------ -----------
<S> <C>
Revenues:
Rental income from operating leases $ 499,505 $515,427 $1,501,274 $1,714,712
Adjustments to accrued rental income -- (2,925 ) -- (8,774 )
Earned income from direct financing leases 112,883 111,226 327,271 347,767
Contingent rental income 13,129 4,410 55,068 20,892
Interest and other income 18,508 58,431 57,057 97,683
------------ ----------- ------------ -----------
644,025 686,569 1,940,670 2,172,280
------------ ----------- ------------ -----------
Expenses:
General operating and administrative 53,031 30,786 149,150 108,897
Professional services 14,010 7,794 34,962 26,636
State and other taxes 782 -- 18,967 9,713
Depreciation and amortization 93,223 94,768 282,483 317,414
Transaction costs -- 57,931 65,664 168,751
------------ ----------- ------------ -----------
161,046 191,279 551,226 631,411
------------ ----------- ------------ -----------
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 Lease Termination Income 482,979 495,290 1,389,444 1,540,869
Minority Interest in Income of Consolidated Joint
Venture (6,413 ) (9,402 ) (20,278 ) (21,564 )
Equity in Earnings of Unconsolidated Joint Ventures 192,974 119,290 467,862 366,512
Gain on Sale of Land and Buildings 639,806 -- 639,806 848,303
Lease Termination Income 175,000 -- 175,000 --
------------ ----------- ------------ -----------
Net Income $1,484,346 $605,178 $2,651,834 $2,734,120
============ =========== ============ ===========
Allocation of Net Income:
General partners $ 13,073 $ 6,052 $ 24,748 $ 26,145
Limited partners 1,471,273 599,126 2,627,086 2,707,975
------------ ----------- ------------ -----------
$1,484,346 $605,178 $2,651,834 $2,734,120
============ =========== ============ ===========
Net Income Per Limited Partner Unit $ 21.02 $ 8.56 $ 37.53 $ 38.69
============ =========== ============ ===========
Weighted Average Number of Limited Partner
Units Outstanding 70,000 70,000 70,000 70,000
============ =========== ============ ===========
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
-------------------------- ---------------------
General partners:
Beginning balance $ 291,598 $ 257,690
Net income 24,748 33,908
-------------------------- ---------------------
316,346 291,598
-------------------------- ---------------------
Limited partners:
Beginning balance 28,664,006 28,337,440
Net income 2,627,086 3,476,566
Distributions ($33.75 and $45.00 per
limited partner unit, respectively) (2,362,500 ) (3,150,000 )
-------------------------- ---------------------
28,928,592 28,664,006
-------------------------- ---------------------
Total partners' capital $ 29,244,938 $ 28,955,604
========================== =====================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2000 1999
--------------- ---------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $2,523,862 $2,459,240
--------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 2,071,847 4,318,145
Investment in joint ventures (1,112,500 ) (44,121 )
Increase in restricted cash (2,061,560 ) (4,318,145 )
Payment of lease costs -- (3,300 )
--------------- ---------------
Net cash used in investing activities (1,102,213 ) (47,421 )
--------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,362,500 ) (2,432,500 )
Distributions to holder of minority interest (32,080 ) (28,130 )
--------------- ---------------
Net cash used in financing activities (2,394,580 ) (2,460,630 )
--------------- ---------------
Net Decrease in Cash and Cash Equivalents (972,931 ) (48,811 )
Cash and Cash Equivalents at Beginning of Period 2,125,493 1,170,686
--------------- ---------------
Cash and Cash Equivalents at End of Period $1,152,562 $1,121,875
=============== ===============
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 787,500 $ 787,500
=============== ===============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. The financial statements reflect all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods presented. Operating results for the quarter and nine
months ended September 30, 2000 may not be indicative of the results that
may be expected for the year ending December 31, 2000. Amounts as of
December 31, 1999, included in the financial statements, have been derived
from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with the
financial statements and notes thereto included in Form 10-K of CNL Income
Fund VI, Ltd. (the "Partnership") for the year ended December 31, 1999.
The Partnership accounts for its approximate 66 percent interest in the
accounts of Caro Joint Venture using the consolidation method. Minority
interest represents the minority joint venture partner's proportionate
share of the equity in the Partnership's consolidated joint venture. All
significant intercompany accounts and transactions have been eliminated.
2. Land and Building on Operating Leases:
Land and building on operating leases consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------------------- -----------------------
<S> <C>
Land $ 6,719,502 $ 7,094,433
Buildings 10,239,615 11,233,038
--------------------- -----------------------
16,959,117 18,327,471
Less accumulated depreciation (3,076,102 ) (3,257,666 )
===================== =======================
$ 13,883,015 $ 15,069,805
===================== =======================
</TABLE>
In September 2000, the Partnership sold four of its properties, three in
Jacksonville, Florida and one in Tallahassee, Florida, to a third party for
a total of $2,081,848 and received net sales proceeds totaling
approximately $2,071,800 resulting in gains totaling approximately $639,800
for financial reporting purposes. These properties were originally acquired
by the Partnership in 1990 and had costs totaling approximately
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
2. Land and Building on Operating Leases - Continued:
$1,708,900 excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the properties for approximately
$362,900 in excess of their original purchase prices.
3. Investment in Joint Ventures:
In January 2000, the Partnership used the net sales proceeds received from
the 1999 sale of a property in Sevierville, Tennessee, to acquire an
interest in a Baker's Square property in Niles, Illinois, with CNL Income
Fund XIV, Ltd., a Florida limited partnership and an affiliate of the
general partners, as tenants-in-common. The Partnership acquired this
interest from CNL BB Corp., an affiliate of the general partners (see Note
5). In connection therewith, the Partnership and CNL Income Fund XIV, Ltd.
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 accounts for its interest in this
property using the equity method since the Partnership shares control with
an affiliate. As of September 30, 2000, the Partnership owned a 74 percent
interest in this property.
As of September 30, 2000, the lease associated with the property owned by
Melbourne Joint Venture had been amended to provide for rent reductions due
to financial difficulties the tenant was experiencing. As a result,
Melbourne Joint Venture reclassified the building portion of the asset from
net investment in direct financing lease to land and building on operating
leases. In accordance with the Statement of Financial Accounting Standards
#13, "Accounting for Leases," Melbourne Joint Venture recorded the
reclassified asset at the lower of original cost, present fair value, or
present carrying amount. No loss on the reclassification of the direct
financing lease was recorded for financial reporting purposes. As of
September 30, 2000, the joint venture, in which the Partnership has a 50
percent interest, recorded a provision for loss on building totaling
approximately $219,100 for financial reporting purposes, due to the fact
that the operator of this property vacated the property and ceased
operations. The allowance represented the difference between the property's
net carrying value at September 30, 2000 and the current estimate of net
realizable value of the property.
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
3. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information for
the joint ventures and the properties held as tenants-in-common with
affiliates at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------ -------------------
<S> <C>
Land and buildings on operating leases, less
accumulated depreciation and allowance for
loss on building $ 14,237,114 $ 12,510,374
Net investment in direct financing leases 3,281,959 3,938,686
Cash 30,517 83,127
Receivables 9,473 103,745
Accrued rental income 441,200 350,510
Other assets 2,721 2,320
Liabilities 23,907 93,231
Partners' capital 17,979,077 16,895,531
Revenues 1,370,390 1,435,647
Provision for loss on building (219,053 ) --
Net income 907,388 1,258,086
</TABLE>
The Partnership recognized income totaling $467,862 and $366,512 during the
nine months ended September 30, 2000 and 1999, respectively, from these
joint ventures, of which, $192,974 and $119,290 was earned during the
quarters ended September 30, 2000 and 1999, respectively.
4. Restricted Cash:
As of September 30, 2000, the net sales proceeds of $2,061,560 from the
sales of the four Popeye's properties, plus accrued interest of $476, were
being held in interest-bearing escrow accounts pending the release of funds
by the escrow agent to acquire additional properties on behalf of the
Partnership.
5. Related Party Transactions:
During the nine months ended September 30, 2000, the Partnership and CNL
Income Fund XIV, Ltd., as tenants-in-common, acquired an interest in a
Baker's Square property from CNL BB Corp., an affiliate of the general
partners, for a purchase price of $1,112,500. CNL Income Fund XIV, Ltd., is
a Florida limited partnership and an
<PAGE>
CNL INCOME FUND VI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
5. Related Party Transactions - Continued:
affiliate of the general partners. CNL BB Corp. had purchased and
temporarily held title to this property in order to facilitate the
acquisition of the property by the Partnership. The purchase price paid by
the Partnership represents the costs incurred by CNL BB Corp. to acquire
and carry the property, including closing costs. In accordance with the
Statement of Policy of Real Estate Programs for the North American
Securities Administrators Association, Inc., all income, expenses, profits
and losses generated by or associated with the property, were treated as
belonging to the Partnership. For the nine months ended September 30, 2000,
other income of the tenants-in-common includes $2,103 of such amounts.
6. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties Fund,
Inc. ("APF") mutually agreed to terminate the Agreement and Plan of Merger
entered into in March 1999. The general partners are continuing to evaluate
strategic alternatives for the Partnership, including alternatives to
provide liquidity to the limited partners.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund VI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 17, 1988 to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants were to
be constructed, which are leased primarily to operators of selected national and
regional fast-food and family-style restaurant chains (collectively, the
"Properties"). The leases are generally triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance, and
utilities. As of September 30, 2000, the Partnership owned 38 Properties, which
included interests in six Properties owned by joint ventures in which the
Partnership is a co-venturer and nine Properties owned with affiliates as
tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the nine months ended
September 30, 2000 and 1999 was cash from operations (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operations was
$2,523,862 and $2,459,240 for the nine months ended September 30, 2000 and 1999,
respectively. The increase in cash from operations for the nine months ended
September 30, 2000 was primarily a result of changes in income and expenses as
described in "Results of Operations" below and changes in the Partnership's
working capital.
Other sources and uses of capital included the following during the
nine months ended September 30, 2000.
In January 2000, the Partnership invested a majority of the net sales
proceeds from the sale of the Property in Sevierville, Tennessee, in a Property
in Niles, Illinois, with CNL Income Fund XIV, Ltd., a Florida limited
partnership and affiliate of the general partners, as tenants-in-common. In
connection therewith, the Partnership and the affiliate 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 Property was
acquired from an affiliate of the general partners. The affiliate had purchased
and temporarily held title to the Property in order to facilitate the
acquisition of the Property by the Partnership. The purchase price paid by the
Partnership represented the costs incurred by the affiliate to acquire the
Property, including closing costs. As of September 30, 2000, the Partnership
owned a 74% interest in the Property in Niles, Illinois.
In September 2000, the Partnership sold three Properties in
Jacksonville, Florida and one Property in Tallahassee, Florida, to a third party
for $2,081,848 and received net sales proceeds of approximately $2,071,800
resulting in a gain of approximately $639,800 for financial reporting purposes.
These Properties were originally acquired by the Partnership in 1990 and had a
cost of approximately $1,708,900, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Property for
approximately $362,900 in excess of its original purchase price. The Partnership
intends to reinvest the majority of the net sales proceeds in an additional
Property. The Partnership will distribute amounts sufficient to enable the
limited partners to pay federal and state income taxes, if any (at a level
reasonably assumed by the general partners), resulting from the sale.
Currently, rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties, pending reinvestment in additional
Properties, are invested in money market accounts or other short-term, highly
liquid investments, such as demand deposit accounts at commercial banks and
certificates of deposit with less than a 30-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses, invest in
additional Properties, or to make distributions to the partners. At September
30, 2000, the Partnership had $1,152,562 invested in such short-term investments
as compared to $2,125,493 at December 31, 1999. The decrease in cash and cash
equivalents was primarily due to the fact that during the nine months ended
September 30, 2000, the Partnership invested in a Property with CNL Income Fund
XIV, Ltd., as tenants-in-common, as described above. The funds remaining at
September 30, 2000 after payment of distributions and other liabilities, will be
used to meet the Partnership's working capital and other needs.
As of September 30, 2000, the net sales proceeds of $2,061,560 from the
sales of the four Popeye's Properties, plus accrued interest of $476, were being
held in interest-bearing escrow accounts pending the release of funds by the
escrow agent to acquire additional Properties on behalf of the Partnership.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
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.
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.
Total liabilities of the Partnership, including distributions payable,
decreased to $931,909 at September 30, 2000, from $1,011,385 at December 31,
1999, primarily as the result of a decrease in accounts payable and rents paid
in advance and deposits at September 30, 2000, as compared to December 31, 1999.
The general partners believe the Partnership has sufficient cash on hand to meet
the Partnership's current working capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on cash from operations, the Partnership declared distributions to the
limited partners of $2,362,500 for each of the nine months ended September 30,
2000 and 1999 ($787,500 for each of the quarters ended September 30, 2000 and
1999). This represents distributions for each applicable nine months of $33.75
per unit ($11.25 per unit for each applicable quarter). No distributions were
made to the general partners for the quarters and nine months ended September
30, 2000 and 1999. No amounts distributed to the limited partners for the nine
months ended September 30, 2000 and 1999, are required to be or have been
treated by the Partnership as a return of capital for purposes of calculating
the limited partners' return on their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available to the
limited partners on a quarterly basis.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the nine months ended September 30, 1999, the Partnership and
its consolidated joint venture, Caro Joint Venture, owned and leased 32 wholly
owned Properties (which included four Properties sold during 1999). During the
nine months ended September 30, 2000, the Partnership and Caro Joint Venture
owned and leased 28 wholly owned Properties (which included four Properties sold
during 2000) to operators of fast-food and family-style restaurant chains. In
connection therewith, the Partnership and Caro Joint Venture earned $1,828,545
and $2,053,705 during the nine months ended September 30, 2000 and 1999,
respectively, in rental income from operating leases and earned income from
direct financing leases from these Properties, $612,388 and $623,728 of which
was earned during the quarters ended September 30, 2000 and 1999, respectively.
Rental and earned income decreased by approximately $9,400 and $197,200 during
the quarter and nine months ended September 30, 2000, as compared to the quarter
and nine months ended September 30, 1999, primarily as a result of the 1999
sales of four Burger King Properties and the 2000 sales of four Popeye's
Properties. Rental and earned income are expected to remain at reduced amounts
while equity in earnings of joint ventures is expected to remain at increased
amounts, as described below, due to the fact that the Partnership reinvested
these net sales proceeds in joint ventures or in Properties with affiliates of
the general partners, as tenants-in-common.
Rental and earned income also decreased during the quarter and nine
months ended September 30, 2000, by approximately $13,400 and $20,100,
respectively, due to the fact that the Partnership established an allowance for
doubtful accounts for past due rental amounts relating to the Property in Broken
Arrow, Oklahoma, in accordance with the Partnership's policy. The general
partners will continue to pursue collection of past due rental amounts and will
recognize such amounts as income if collected.
In addition, rental and earned income for the quarter and nine months
ended September 30, 2000 was lower due to the fact that during the quarter and
nine months ended September 30, 1999, the Partnership collected and recognized
as income approximately $9,400 and $28,302, respectively, in past due rental
amounts owed by the former tenant of the Property located in Melbourne, Florida,
for which the Partnership had previously established an allowance for doubtful
accounts. The former tenant vacated this Property in October 1997 and the
Partnership sold this Property in February 1998.
The decrease in rental and earned income during the quarter and nine
months ended September 30, 2000, was partially offset by an increase to rental
and earned income during the quarter and nine months ended September 30, 2000
due to the fact that the Partnership collected and recognized as income past due
rental amounts for which the Partnership had previously established an allowance
for doubtful accounts, relating to its Properties in Chester, Pennsylvania and
Orlando, Florida.
During the nine months ended September 30, 2000 and 1999, the
Partnership also earned $55,068 and $20,892, respectively, in contingent rental
income, $13,129 and $4,410 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively. The increase in contingent rental
income during the nine months ended September 30, 2000, was primarily
attributable to the fact that during the nine months ended September 30, 2000,
the Partnership collected and recognized as income past due contingent rental
amounts for which the Partnership had previously established an allowance for
doubtful accounts relating to the Partnership's Property in Orlando, Florida.
During the nine months ended September 30, 2000 and 1999, the
Partnership earned $57,057 and $97,683, respectively, in interest and other
income, $18,508 and $58,431 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively. Interest and other income was lower
during the quarter and nine months ended September 30, 2000, primarily due to
the fact that during the quarter and nine months ended September 30, 1999, the
Partnership earned interest on the net sales proceeds relating to the 1999 sale
of four of the Partnership's Burger King Properties. The Partnership reinvested
the majority of the net sales proceeds subsequent to September 30, 2000.
During the nine months ended September 30, 1999, the Partnership owned and
leased five Properties indirectly through joint venture arrangements and five
Properties as tenants-in-common with affiliates of the general partners. In
addition, during the nine months ended September 30, 2000, the Partnership owned
and leased four additional Properties as tenants-in-common with affiliates of
the general partners. In connection therewith, during the nine months ended
September 30, 2000 and 1999, the Partnership earned $467,862 and $366,512,
respectively, $192,974 and $119,290 of which was earned during the quarters
ended September 30, 2000 and 1999, respectively. The increase in net income
earned by joint ventures during the quarter and nine months ended September 30,
2000, was primarily due to the fact that in 1999, the Partnership reinvested the
net sales proceeds it received from the 1999 sales of four Burger King
Properties in four Properties with affiliates of the general partners as
tenants-in-common. The increase in net income earned by joint ventures for the
quarter and nine months ended September 30, 2000, was partially offset by the
fact that during the nine months ended September 30, 2000, the lease relating to
the Property owned by Melbourne Joint Venture, in which the Partnership owns a
50 percent interest, was amended to provide for rent reductions starting in
February 2000. In June 2000, the operator of this Property discontinued
operations. As a result, during the nine months ended September 30, 2000, the
joint venture established an allowance for doubtful accounts for past due rental
amounts. The joint venture will continue to pursue collection of past due rental
amounts and will recognize such amounts as income if collected. The joint
venture will not recognize any rental income relating to this Property until
such time as the joint venture executes a new lease or until the Property is
sold and the proceeds from such sale are reinvested in an additional Property.
The joint venture is currently seeking a new tenant or purchaser for this
Property. In addition, the joint venture established an allowance for loss on
building for this Property of approximately $219,100. The allowance represented
the difference between the Property's net carrying value at September 30, 2000,
and the current estimated net realizable value of the Property.
Operating expenses, including depreciation and amortization expense,
were $551,226 and $631,411 for the nine months ended September 30, 2000 and
1999, respectively, of which $161,046 and $191,279 were incurred during the
quarters ended September 30, 2000 and 1999, respectively. The decrease in
operating expenses during the quarter and nine months ended September 30, 2000
was primarily attributable to the fact that the Partnership incurred less
transaction costs during the quarter and nine months ended September 30, 2000,
relating to the general partners retaining financial and legal advisors to
assist them in evaluating and negotiating the proposed merger with CNL American
Properties Fund, Inc. ("APF"), due to the termination of the proposed merger, as
described below in "Termination of Merger." In addition, the decrease in
operating expenses during the quarter and nine months ended September 30, 2000
was partially due to a decrease in depreciation expense due to the sales of four
Burger King Properties in June 1999 and the sales of four Popeye's Properties in
September 2000. The decrease in operating expenses during the quarter and nine
months ended September 30, 2000 was partially offset by an increase in
administrative expenses for servicing the Partnership and its Properties.
As a result of the sale of four Properties during the quarter and nine
months ended September 30, 2000, as described above in "Capital Resources," the
Partnership recorded gains totaling approximately $639,800 for financial
reporting purposes. As a result of the sales of four Properties during the nine
months ended September 30, 1999, the Partnership recognized gains totaling
approximately $848,300 during the nine months ended September 30, 1999.
During the quarter and nine months ended September 30, 2000, the tenant
in Chester, Pennsylvania discontinued making rental payments. The Partnership
released the tenant from its obligation under the terms of its lease in exchange
for a termination fee from the tenant. In connection with the lease termination,
the Partnership received $175,000 as lease termination income from the tenant as
consideration of the Partnership releasing the tenant from its obligation under
the terms of its lease. No rental income will be recognized relating to this
Property until such time as the Partnership executes a new lease or until the
Property is sold and the proceeds from such sale are reinvested in an additional
Property.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger entered into in March 1999. The
general partners are continuing to evaluate strategic alternatives for the
Partnership, including alternatives to provide liquidity to the limited
partners.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
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 1, 1996, 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.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 10th day of November, 2000.
CNL INCOME FUND VI, LTD.
By: CNL REALTY CORPORATION
General Partner
By:/s/ James M. Seneff, Jr.
---------------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Robert A. Bourne
---------------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
