<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund VII, Ltd. at September 30, 1996, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund VII, Ltd. for the nine months
ended September 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,740,816
<SECURITIES> 0
<RECEIVABLES> 207,520
<ALLOWANCES> 185,794
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,387,446
<DEPRECIATION> 1,805,871
<TOTAL-ASSETS> 25,569,648
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,700,957
<TOTAL-LIABILITY-AND-EQUITY> 25,569,648
<SALES> 0
<TOTAL-REVENUES> 2,042,795
<CGS> 0
<TOTAL-COSTS> 393,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,711,050
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,711,050
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,711,050
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund VII, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
-----------------------------------
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
0-19140
----------------------
CNL Income Fund VII, Ltd.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2963871
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------- -------
CONTENTS
--------
Part I Page
----
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-12
Part II
Other Information 13
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $1,805,871
and $1,686,119 $15,581,575 $16,401,919
Net investment in direct financing
leases 4,116,357 4,676,119
Investment in joint ventures 1,795,540 1,823,158
Mortgage notes receivable, less
deferred gain of $127,447 and
$128,065 1,261,581 1,267,849
Cash and cash equivalents 697,908 725,074
Restricted cash 1,042,908 -
Receivables, less allowance for
doubtful accounts of $185,794
and $461,143 21,726 48,191
Prepaid expenses 7,993 5,033
Accrued rental income, less
allowance for doubtful accounts
of $10,315 and $9,155 983,638 907,851
Other assets 60,422 60,422
----------- -----------
$25,569,648 $25,915,616
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 4,160 $ 3,655
Accrued and escrowed real estate
taxes payable 3,294 47,111
Distributions payable 675,000 675,000
Due to related parties 13,205 13,311
Rents paid in advance 24,159 11,983
----------- -----------
Total liabilities 719,818 751,060
Minority interest 148,873 149,649
Partners' capital 24,700,957 25,014,907
----------- -----------
$25,569,648 $25,915,616
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Rental income from
operating leases $ 478,874 $ 467,102 $1,471,463 $1,440,097
Earned income from direct
financing leases 124,752 135,260 380,844 406,748
Contingent rental income 1,361 4,869 2,070 11,376
Interest and other income 65,855 29,548 188,418 45,733
---------- ---------- ---------- ----------
670,842 636,779 2,042,795 1,903,954
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 38,737 40,510 120,734 103,258
Professional services 5,122 5,870 19,094 22,842
Bad debt expense - 1,695 - 1,695
Real estate taxes 9,010 8,112 9,010 42,079
State and other taxes - - 2,449 2,562
Depreciation and amorti-
zation 78,320 81,508 242,408 251,863
---------- ---------- ---------- ----------
131,189 137,695 393,695 424,299
---------- ---------- ---------- ----------
Income Before Minority
Interest in Income of Con-
solidated Joint Venture,
Equity in Earnings of
Unconsolidated Joint
Ventures, Gain on Sale of
Land and Buildings, Loss
on Disposal of Building and
Provision for Loss on Land
and Building 539,653 499,084 1,649,100 1,479,655
Minority Interest in Income of
Consolidated Joint Venture (4,690) (4,692) (14,000) (14,027)
Equity in Earnings of Uncon-
solidated Joint Ventures 38,833 38,815 115,957 116,121
Gain on Sale of Land and
Buildings 195,051 109 195,458 109
Loss on Disposal of Building - - - (174,466)
Provision for Loss on Land
and Building (235,465) - (235,465) -
---------- ---------- ---------- ----------
Net Income $ 533,382 $ 533,316 $1,711,050 $1,407,392
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 5,647 $ 5,333 $ 17,424 $ 14,074
Limited partners 527,735 527,983 1,693,626 1,393,318
---------- ---------- ---------- ----------
$ 533,382 $ 533,316 $1,711,050 $1,407,392
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.02 $ 0.02 $ 0.06 $ 0.05
========== ========== ========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 30,000,000 30,000,000 30,000,000 30,000,000
========== ========== ========== ==========
See accompanying notes to condensed financial statements.
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
1996 1995
----------------- ------------
General partners:
Beginning balance $ 133,199 $ 112,415
Net income 17,424 20,784
----------- -----------
150,623 133,199
----------- -----------
Limited partners:
Beginning balance 24,881,708 25,620,346
Net income 1,693,626 1,961,364
Distributions ($0.068 and
$0.090 per limited partner
unit, respectively) (2,025,000) (2,700,002)
----------- -----------
24,550,334 24,881,708
----------- -----------
Total partners' capital $24,700,957 $25,014,907
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating Activities $ 2,006,079 $ 1,906,884
----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of land and building 1,044,909 -
Increase in restricted cash (1,044,909) -
Collections on mortgage notes receivable 6,531 977
----------- -----------
Net cash provided by investing
activities 6,531 977
----------- -----------
Cash Flows from Financing Activities:
Distributions to limited partners (2,025,000) (2,085,000)
Distributions to holder of minority
interest (14,776) (12,539)
----------- -----------
Net cash used in financing
activities (2,039,776) (2,097,539)
----------- -----------
Net Decrease in Cash and Cash Equivalents (27,166) (189,678)
Cash and Cash Equivalents at Beginning of
Period 725,074 1,005,053
----------- -----------
Cash and Cash Equivalents at End of Period $ 697,908 $ 815,375
=========== ===========
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Net investment in direct financing lease
reclassified as building under operating
lease as a result of lease amendment $ 507,598 $ -
=========== ===========
Mortgage note accepted in exchange for sale
of land and building $ - $ 1,160,000
=========== ===========
Distributions declared and unpaid at end
of period $ 675,000 $ 675,000
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1996 and 1995
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, 1996, may not be
indicative of the results that may be expected for the year ending
December 31, 1996. Amounts as of December 31, 1995, 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 VII, Ltd. (the "Partnership) for the year ended December 31,
1995.
The Partnership accounts for its 83 percent interest in San Antonio #849
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.
Effective January 1, 1996, the Partnership adopted 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 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. Adoption of this standard had no
material effect on the Partnership's financial position or results of
operations.
2. Land and Buildings on Operating Leases:
--------------------------------------
In July 1996, the Partnership sold its property in Colorado Springs,
Colorado, for $1,075,000 and received net sales proceeds of $1,044,909,
resulting in a gain of approximately $194,840 for financial reporting
purposes. This property was originally acquired by the Partnership in
July 1990 and had a cost of approximately $900,900, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the property for approximately $144,000 in excess of
its original purchase price.
At September 30, 1996, the Partnership established an allowance for loss
on land and building in the amount of $235,465 for financial reporting
purposes for the property in Hartland, Michigan. The allowance
represents the difference between the (i) property's carrying value at
September 30, 1996, and (ii) the net realizable value of the property
based on the net sales proceeds of $617,035 received for this property
in October 1996 (see Note 4).
3. Restricted Cash:
---------------
As of September 30, 1996, sales proceeds of $1,035,899 from the sale of
the property in Colorado Springs, Colorado, plus accrued interest of
$7,009, were being held in an interest-bearing escrow account pending
the release of funds by the escrow agent to acquire an additional
property on behalf of the Partnership.
4. Subsequent Event:
----------------
In October 1996, the Partnership sold its property in Hartland,
Michigan, for $625,000 and received net sales proceeds of $617,035,
resulting in a loss of approximately $235,465 for financial reporting
purposes. The Partnership intends to reinvest the net sales proceeds in
an additional property.
In October 1996, the Partnership reinvested the net sales proceeds it
received from the sale of the property in Colorado Springs, Colorado,
along with additional funds, in a Boston Market property located in
Marietta, Georgia. The property is subject to a long-term, triple-net
lease with terms substantially the same as the Partnership's other
leases.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund VII, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 18, 1989, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurants, as well as land upon which restaurants were to be
constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The
leases are triple-net leases, with the lessees generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of
September 30, 1996, the Partnership owned 40 Properties, including nine
Properties owned by joint ventures in which the Partnership is a co-venturer
and one Property owned with an affiliate as tenants-in-common.
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of capital for the nine months ended
September 30, 1996 and 1995, 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
$2,006,079 and $1,906,884 for the nine months ended September 30, 1996 and
1995, respectively. The increase in cash from operations is primarily a
result of the changes in income and expenses as discussed in "Results of
Operations" and changes in the Partnership's working capital.
Other sources and uses of capital included the following during the nine
months ended September 30, 1996.
In March 1996, the Partnership entered into an agreement with the tenant
of the Property in Daytona Beach, Florida, for payment of certain rental
payment deferrals the Partnership had granted to the tenant. Under the
agreement, the Partnership agreed to abate approximately $13,200 of the rental
payment deferral amounts. The tenant made the first payment of approximately
$5,700 in April 1996 in accordance with the terms of the agreement, and has
agreed to pay the Partnership the remaining balance due of approximately
$33,700 in six remaining annual installments through 2002.
In July 1996, the Partnership sold its Property in Colorado Springs,
Colorado, for $1,075,000, and received net sales proceeds of $1,044,909,
resulting in a gain of $194,840 for financial reporting purposes. This
Property was originally acquired by the Partnership in July 1990 and had a
cost of approximately $900,900, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Property for
approximately $144,000 in excess of its original purchase price. As of
September 30, 1996, the remaining net sales proceeds of $1,035,899 plus
accrued interest of $7,009, were being held in an interest-bearing escrow
account. In October 1996, the Partnership reinvested the net sales proceeds,
along with additional funds, in a Boston Market Property located in Marietta,
Georgia. The general partners believe that the transaction, or a portion
thereof, relating to the sale of the Property in Colorado Springs, Colorado,
and the reinvestment of the proceeds in a Property in Marietta, Georgia, will
qualify as a like-kind exchange transaction for federal income tax purposes.
However, the Partnership anticipates that it 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.
In October 1996, the Partnership sold its Property in Hartland,
Michigan, for $625,000 and received net sales proceeds of $617,035, resulting
in a loss of approximately $235,465, for financial reporting purposes. During
the nine months ended September 30, 1996, the Partnership established an
allowance for loss on land and building in the amount of $235,465 for
financial reporting purposes. The allowance represents the difference between
the (i) Property's carrying value at September 30, 1996, and (ii) the net
realizable value of the Property based on the net sales proceeds of $617,035
received for this Property in October 1996. The Partnership intends to
reinvest the net sales proceeds in an additional Property.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments
pending the Partnership's use of such funds to pay Partnership expenses or to
make distributions to the partners. At September 30, 1996, the Partnership
had $697,908 invested in such short-term investments as compared to $725,074
at December 31, 1995. The funds remaining at September 30, 1996, will be used
towards the payment of distributions and other liabilities.
Total liabilities of the Partnership, including distributions payable,
decreased to $719,818 at September 30, 1996, from $751,060 at December 31,
1995. Liabilities at September 30, 1996, to the extent they exceed cash and
cash equivalents at September 30, 1996, will be paid from future cash from
operations and, in the event the general partners elect to make additional
capital contributions, from future general partner capital contributions.
Based on current and anticipated future cash from operations, the
Partnership declared distributions to the limited partners of $2,025,000 for
each of the nine months ended September 30, 1996 and 1995 ($675,000 for each
of the quarters ended September 30, 1996 and 1995). This represents
distributions for each applicable nine months of $0.068 per unit ($0.023 per
unit for each applicable quarter). No distributions were made to the general
partners for the quarters and nine months ended September 30, 1996 and 1995.
No amounts distributed to the limited partners for the nine months ended
September 30, 1996 and 1995, are required to be or have been treated by the
Partnership as a return of capital for purposes of calculating the limited
partners' return on their adjusted capital contributions. The Partnership
intends to continue to make distributions of cash available for distribution
to the limited partners on a quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will continue to generate cash
flow in excess of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection
with the operations of the Partnership.
Results of Operations
- ---------------------
During the nine months ended September 30, 1995, the Partnership and its
consolidated joint venture, San Antonio #849 Joint Venture, owned and leased
34 wholly owned Properties (including two Properties in Florence, South
Carolina, and Jacksonville, Florida, which were sold in August and December
1995, respectively), and during the nine months ended September 30, 1996, the
Partnership and its consolidated joint venture owned and leased 32 wholly
owned Properties (including one Property in Colorado Springs, Colorado, that
was sold in July 1996), to operators of fast-food and family-style restaurant
chains. In connection therewith, during the nine months ended September 30,
1996 and 1995, the Partnership and San Antonio #849 Joint Venture earned
$1,852,307 and $1,846,845, respectively, in rental income from operating
leases and earned income from direct financing leases for these Properties,
$603,626 and $602,362 of which was earned during the quarters ended September
30, 1996 and 1995, respectively. Rental and earned income increased during
the quarter and nine months ended September 30, 1996, by approximately $23,600
and $63,500, respectively, due to the fact that in January 1996, the
Partnership negotiated an assignment and amendment of the lease for its
Property in Pueblo, Colorado, and started receiving rental payments relating
to this Property. In addition, during the nine months ended September 30,
1996, the Partnership wrote off amounts due from the former tenant totalling
approximately $119,100, approximately $110,600 of which had been previously
reserved as uncollectible by the Partnership. During the quarter and nine
months ended September 30, 1995, the Partnership did not recognize any rental
income due to the fact that the former tenant defaulted under the terms of its
lease and the Partnership established an allowance for doubtful accounts, as
described above.
In addition, rental and earned income increased during the nine months
ended September 30, 1996, by approximately $22,300 due to the fact that in
January 1996, the Partnership agreed to accept reduced monthly rents from the
tenant of the Property in Colorado Springs, Colorado, beginning January 29,
1996, for a six month period. During the nine months ended September 30,
1995, the Partnership did not recognize any income from this Property as a
result of establishing an allowance for doubtful accounts for rent receivable
amounts. In July 1996, the Partnership sold this Property as described above
in "Liquidity and Capital Resources."
Rental and earned income also increased during the quarter and nine
months ended September 30, 1996, due to the fact that the Partnership
increased its allowance for doubtful accounts relating to its Property in
Hartland, Michigan, during the quarter and nine months ended September 30,
1995, and no such adjustments were made during the quarter and nine months
ended September 30, 1996. This increase was partially offset by a decrease
during the quarter and nine months ended September 30, 1996, as a result of
the Partnership amending the lease for this Property to provide for reduced
base rental payments for a one-year period, beginning in January 1996. During
the nine months ended September 30, 1996, the building portion of the lease
was reclassified from a direct financing lease to an operating lease as a
result of the lease amendment. In October 1996, the Partnership sold this
Property as described above in "Liquidity and Capital Resources."
The increase in rental and earned income during the quarter and nine
months ended September 30, 1996, was partially offset by a decrease of
approximately $21,700 and $104,300, respectively, as a result of the sale of
the Partnership Properties in Florence, South Carolina, and Jacksonville,
Florida, in August and December 1995, respectively. However, as a result of
the Partnership accepting mortgage notes for the sale of these Properties,
interest income increased during the quarter and nine months ended
September 30, 1996, as discussed below.
During the nine months ended September 30, 1996 and 1995, the
Partnership also owned and leased eight Properties indirectly through other
joint venture arrangements and one Property indirectly with an affiliate as
tenants-in-common. In connection therewith, during the nine months ended
September 30, 1996 and 1995, the Partnership earned $115,957 and $116,121,
respectively, attributable to net income earned by these unconsolidated joint
ventures, $38,833 and $38,815 of which was earned during the quarters ended
September 30, 1996 and 1995, respectively.
In addition, during the nine months ended September 30, 1996 and 1995,
the Partnership earned $188,418 and $45,733, respectively, in interest and
other income, $65,855 and $29,548 of which was earned during the quarters
ended September 30, 1996 and 1995, respectively. The increase in interest and
other income during the quarter and nine months ended September 30, 1996, was
primarily attributable to an increase of approximately $18,400 and $88,800,
respectively, relating to interest earned on the mortgage notes receivable
accepted in connection with the sales of the Properties in Florence, South
Carolina, and Jacksonville, Florida, in August and December 1995,
respectively. In addition, the increase in interest and other income during
the nine months ended September 30, 1996, was attributable to the Partnership
recognizing approximately $46,600 in other income due to the fact that the
corporate franchisor of the Properties in Pueblo and Colorado Springs,
Colorado, paid past due real estate taxes relating to the Properties and the
Partnership reversed such amounts during the nine months ended September 30,
1996 that it had previously accrued as payable during the quarter and nine
months ended September 30, 1995.
Operating expenses, including depreciation and amortization expense,
were $393,695 and $424,299 for the nine months ended September 30, 1996 and
1995, respectively, of which $131,189 and $137,695 were incurred for the
quarters ended September 30, 1996 and 1995, respectively. The decrease in
operating expenses during the nine months ended September 30, 1996, is
primarily due to the fact that the Partnership accrued real estate taxes for
the Properties in Pueblo and Colorado Springs, Colorado, during the nine
months ended September 30, 1995, as discussed above. During the nine months
ended September 30, 1996, no real estate taxes were recorded for the Property
in Pueblo, Colorado, due to the fact that the new tenant of this Property is
responsible for the real estate taxes under the terms of the assigned lease.
The Partnership sold the Property in Colorado Springs, Colorado, in July 1996,
as discussed above in "Liquidity and Capital Resources", and in connection
therewith, paid approximately $9,000 in 1996 real estate taxes which were due
upon the sale of the Property.
Operating expenses also decreased during the nine months ended September
30, 1996, as a result of a decrease in depreciation expense due to the sales
of the Properties in Florence, South Carolina, and Jacksonville, Florida, in
August and December 1995, respectively.
The decrease in operating expenses during the nine months ended
September 30, 1996, was partially offset by an increase in accounting and
administrative expenses associated with operating the Partnership and its
Properties and insurance expense as a result of the general partners'
obtaining contingent liability and property coverage for the Partnership,
effective May 1995. 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.
As a result of the sale of the Property in Florence, South Carolina, in
August 1995, and recording the gain using the installment method, the
Partnership recognized a gain for financial reporting purposes of $211 and
$618 during the quarter and nine months ended September 30, 1996, and as a
result of the sale of the Property in Colorado Springs, Colorado, in July
1996, the Partnership recognized a gain of $194,840 for the quarter and nine
months ended September 30, 1996. In addition, during the nine months ended
September 30, 1995, the building located on the Partnership's Property in
Daytona Beach, Florida, was demolished in accordance with a condemnation
agreement. As a result, the undepreciated cost of the building of $174,466
was charged to income for financial reporting purposes during the nine months
ended September 30, 1995.
In addition, during the nine months ended September 30, 1996, the
Partnership recorded an allowance for loss on land and building of $235,465,
for financial reporting purposes, relating to the Property in Hartland,
Michigan, as discussed above in "Liquidity and Capital Resources."
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
-----------------
Item 2. Changes in Securities. Inapplicable.
---------------------
Item 3. Defaults upon Senior Securities. Inapplicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable.
Item 5. Other Information. Inapplicable.
-----------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
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 11th day of November, 1996.
CNL INCOME FUND VII, 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)
