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, 1998
-------------------------------------------------------
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 of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 E. South Street
Orlando, Florida 32801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 650-1000
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
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-11
Part II
Other Information 12
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------------- ------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation of $2,397,837
and $2,169,570 $15,154,596 $15,382,863
Net investment in direct financing leases 3,386,764 3,447,152
Investment in joint ventures 3,340,189 3,393,932
Mortgage notes receivable, less deferred gain
of $125,545 and $126,303 1,243,284 1,250,597
Cash and cash equivalents 828,551 761,317
Receivables, less allowance for doubtful
accounts of $28,936 and $32,959 6,576 64,092
Prepaid expenses 7,291 4,755
Accrued rental income, less allowance for
doubtful accounts of $9,845 in 1998 and 1997 1,183,770 1,114,632
Other assets 60,422 60,422
----------------- -----------------
$25,211,443 $25,479,762
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,327 $ 6,131
Escrowed real estate taxes payable 4,727 7,785
Distributions payable 675,000 675,000
Due to related parties 11,443 34,883
Rents paid in advance 44,359 60,671
----------------- -----------------
Total liabilities 737,856 784,470
Minority interest 146,865 147,514
Partners' capital 24,326,722 24,547,778
----------------- -----------------
$25,211,443 $25,479,762
================= =================
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------ ------------- -------------- --------------
<S> <C>
Revenues:
Rental income from operating leases $ 492,759 $ 493,318 $ 1,483,950 $ 1,473,347
Earned income from direct financing
leases 103,164 122,508 311,318 369,268
Contingent rental income 4,829 2,602 17,207 5,685
Interest and other income 42,300 46,474 127,438 131,517
------------ ------------- -------------- --------------
643,052 664,902 1,939,913 1,979,817
------------ ------------- -------------- --------------
Expenses:
General operating and administrative 37,062 31,784 104,724 101,277
Bad debt expense -- -- -- 4,613
Professional services 3,973 4,277 16,567 14,683
Real estate taxes -- -- -- 2,979
State and other taxes -- -- 2,728 4,560
Depreciation and amortization 76,089 76,089 228,267 228,267
------------ ------------- -------------- --------------
117,124 112,150 352,286 356,379
------------ ------------- -------------- --------------
Income Before Minority Interest in Income
of Consolidated Joint Venture, Equity
in Earnings of Unconsolidated Joint
Ventures and Gain (Loss) on Sale of
Land and Buildings 525,928 552,752 1,587,627 1,623,438
Minority Interest in Income of
Consolidated Joint Venture (4,665 ) (4,698 ) (13,921 ) (13,998 )
Equity in Earnings of Unconsolidated
Joint Ventures 78,287 55,939 229,480 151,930
Gain (Loss) on Sale of Land and Buildings 259 234 758 (19,054 )
------------ ------------- -------------- --------------
Net Income $ 599,809 $ 604,227 $ 1,803,944 $ 1,742,316
============ ============= ============== ==============
Allocation of Net Income:
General partners $ 5,998 $ 6,036 $ 18,039 $ 17,495
Limited partners 593,811 598,191 1,785,905 1,724,821
------------ ------------- -------------- --------------
$ 599,809 $ 604,227 $ 1,803,944 $ 1,742,316
============ ============= ============== ==============
Net Income Per Limited Partner Unit $ 0.020 $ 0.020 $ 0.060 $ 0.057
============ ============= ============== ==============
Weighted Average Number of Limited
Partner Units Outstanding 30,000,000 30,000,000 30,000,000 30,000,000
============ ============= ============== ==============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1998 1997
---------------------------- ------------------
<S> <C>
General partners:
Beginning balance $ 181,085 $ 156,785
Net income 18,039 24,300
---------------- ---------------
199,124 181,085
---------------- ---------------
Limited partners:
Beginning balance 24,366,693 24,484,985
Net income 1,785,905 2,581,708
Distributions ($0.068 and
$0.090 per limited partner
unit, respectively) (2,025,000 ) (2,700,000 )
---------------- ---------------
24,127,598 24,366,693
---------------- ---------------
Total partners' capital $24,326,722 $24,547,778
================ ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
--------------- ---------------
<S> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating Activities $ 2,085,545 $ 2,099,452
---------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land -- 223,589
Investment in joint ventures -- (616,245 )
Collections on mortgage note receivable 8,004 7,230
Other 13,255 --
---------------- ---------------
Net cash provided by (used in)
investing activities 21,259 (385,426 )
---------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,025,000 ) (2,025,000 )
Distributions to holder of minority
interest (14,570 ) (14,781 )
---------------- ---------------
Net cash used in financing
activities (2,039,570 ) (2,039,781 )
---------------- ---------------
Net Increase (Decrease) in Cash and Cash
Equivalents 67,234 (325,755 )
Cash and Cash Equivalents at Beginning
of Period 761,317 1,305,429
---------------- ---------------
Cash and Cash Equivalents at End of
Period $ 828,551 $ 979,674
================ ===============
Supplemental Schedule of Non-Cash Financing
Activities
Distributions declared and unpaid at end of
period $ 675,000 $ 675,000
================ ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1998 and 1997
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, 1998, may not be
indicative of the results that may be expected for the year ending
December 31, 1998. Amounts as of December 31, 1997, 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, 1997.
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.
In May 1998, the Financial Accounting Standards Board reached a
consensus in EITF 98-9, entitled "Accounting for Contingent Rent in the
Interim Financial Periods." Adoption of this consensus did not have a
material effect on the Partnership's financial position or results of
operations.
5
<PAGE>
CNL INCOME FUND VII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1998 and 1997
2. 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 the
unconsolidated joint ventures and the properties held as
tenants-in-common with affiliates) for at least one of the nine month
periods ended September 30:
1998 1997
------------- -------------
Golden Corral Corporation $509,751 $445,267
Restaurant Management
Services, Inc. 327,103 327,855
Waving Leaves, Inc. 225,889 112,948
Flagstar Enterprises, Inc. 113,294 231,196
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees
could significantly impact the results of operations of the
Partnership. However, the general partners believe that the risk of
such a default is reduced due to the essential or important nature of
these properties for the on-going operations of the lessees.
6
<PAGE>
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,
1998, the Partnership owned 40 Properties, which included ten Properties owned
by joint ventures in which the Partnership is a co-venturer and two Properties
owned with affiliates as tenants-in-common.
Liquidity and Capital Resources
The Partnership's primary source of capital for the nine months ended
September 30, 1998 and 1997, 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
$2,085,545 and $2,099,452 for the nine months ended September 30, 1998 and 1997,
respectively. The decrease in cash from operations for the nine months ended
September 30, 1998, as compared to the nine months ended September 30, 1997, is
primarily a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.
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, 1998, the Partnership had
$828,551 invested in such short-term investments, as compared to $761,317 at
December 31, 1997. The funds remaining at September 30, 1998, after payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
Total liabilities of the Partnership, including distributions payable,
decreased to $737,856 at September 30, 1998, from $784,470 at December 31, 1997.
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 $2,025,000 for each of the nine months ended
September 30, 1998 and 1997 ($675,000 for each of the quarters ended September
30, 1998 and 1997). 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, 1998 and 1997. No amounts distributed to the limited
partners for the nine months ended September 30, 1998 and 1997, 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.
7
<PAGE>
Liquidity and Capital Resources - Continued
The general partners have been informed by CNL American Properties
Fund, Inc. ("APF"), an affiliate of the general partners, that it intends to
significantly increase its asset base by proposing to acquire affiliates of the
general partners which have similar restaurant property portfolios, including
the Partnership. APF is a real estate investment trust whose primary business is
the ownership of restaurant properties leased on a long-term, "triple-net" basis
to operators of national and regional restaurant chains. Accordingly, the
general partners anticipate that APF will make an offer to acquire the
Partnership in exchange for securities of APF. The general partners have
recently retained financial and legal advisors to assist them in evaluating and
negotiating any offer that may be proposed by APF. However, at this time, APF
has made no such offer. In the event that an offer is made, the general partners
will evaluate it and if the general partners believe that the offer is worth
pursuing, the general partners will promptly inform the limited partners. Any
agreement to sell the Partnership would be subject to the approval of the
limited partners in accordance with the terms of the partnership agreement.
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, 1997, the Partnership and
its consolidated joint venture, San Antonio #849 Joint Venture, owned and leased
31 wholly owned Properties (including one Property in Columbus, Indiana and one
Property in Dunnellon, Florida, which were sold in May and October 1997,
respectively) and during the nine months ended September 30, 1998, the
Partnership and its consolidated joint venture owned and leased 29 wholly owned
Properties, to operators of fast-food and family-style restaurant chains. In
connection therewith, during the nine months ended September 30, 1998 and 1997,
the Partnership and San Antonio #849 Joint Venture earned $1,795,268 and
$1,842,615, respectively, in rental income from operating leases and earned
income from direct financing leases, $595,923 and $615,826 of which was earned
for the quarters ended September 30, 1998 and 1997, respectively. Rental and
earned income decreased during the quarter and nine months ended September 30,
1998, as compared to the quarter and nine months ended September 30, 1997,
primarily as a result of the sales of the Properties in Columbus, Indiana and
Dunnellon, Florida in May and October 1997, respectively. The Partnership
reinvested these net sales proceeds in two Properties, as tenants-in-common,
with affiliates of the general partners as described below.
During the nine months ended September 30, 1997, the Partnership owned
and leased nine Properties indirectly through other joint venture arrangements
and one Property indirectly with an affiliate as tenants-in-common (including
the Property in Yuma, Arizona held as tenants-in-common with an affiliate, which
was sold in October 1997). In addition, during the nine months ended September
30, 1998, the Partnership owned and leased nine Properties indirectly
8
<PAGE>
Results of Operations - Continued
through other joint venture arrangements and two Properties indirectly with
affiliates as tenants-in-common. In connection therewith, during the nine months
ended September 30, 1998 and 1997, the Partnership earned $229,480 and $151,930,
respectively, attributable to net income earned by these unconsolidated joint
ventures, $78,287 and $55,939 of which was earned for the quarters ended
September 30, 1998 and 1997, respectively. The increase in net income earned by
joint ventures during the quarter and nine months ended September 30, 1998, as
compared to the quarter and nine months ended September 30, 1997, is primarily
due to the fact that in December 1997, the Partnership reinvested the net sales
proceeds received from the sale of two Properties in October 1997, in a Property
in Smithfield, North Carolina, and a Property in Miami, Florida, with affiliates
of the general partners as tenants-in-common.
During at least one of the nine months ended September 30, 1998 and
1997, four lessees of the Partnership and its consolidated joint venture, San
Antonio #849 Joint Venture, Golden Corral Corporation, Restaurant Management
Services, Inc., Flagstar Enterprises, Inc. and Waving Leaves, Inc., 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 rental income from Properties owned by unconsolidated
joint ventures and Properties owned with affiliates as tenants-in-common). As of
September 30, 1998, Golden Corral Corporation was the lessee under leases
relating to five restaurants, Restaurant Management Services, Inc. was the
lessee under leases relating to eight restaurants, Flagstar Enterprises, Inc.
was the lessee under leases relating to two restaurants, and Waving Leaves, Inc.
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 Waving Leaves, Inc. each
will continue to contribute more than ten percent of the Partnership's total
rental income during the remainder of 1998 and subsequent years. Any failure of
these lessees could materially affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $352,286 and $356,379 for the nine months ended September 30, 1998 and
1997, respectively, of which $117,124 and $112,150 were incurred for the
quarters ended September 30, 1998 and 1997, respectively.
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 $758 and $685
for the nine months ended September 30, 1998 and 1997, respectively, $259 and
$234 of which was recognized for the quarters ended September 30, 1998 and 1997,
respectively. As a result of the sale of the Property in Columbus, Indiana in
1997, the Partnership recognized a loss for financial reporting purposes of
$19,739 during the nine months ended September 30, 1997. No Properties were sold
during the quarter and nine months ended September 30, 1998.
In May 1998, the Financial Accounting Standards Board reached a
consensus in EITF 98-9, entitled "Accounting for Contingent Rent in the Interim
Financial Periods." Adoption of this consensus did not have a material effect on
the Partnership's financial position or results of operations.
9
<PAGE>
Results of Operations - Continued
The Year 2000 problem is the result of information technology systems
and embedded systems (products which are made with microprocessor (computer)
chips such as HVAC systems, physical security systems and elevators) using a
two-digit format, as opposed to four digits, to indicate the year. Such
information technology and embedded systems may be unable to properly recognize
and process date-sensitive information beginning January 1, 2000.
The Partnership does not have any information technology systems.
Affiliates of the general partners provide all services requiring the use of
information technology systems pursuant to a management agreement with the
Partnership. The maintenance of embedded systems, if any, at the Partnership's
properties is the responsibility of the tenants of the properties in accordance
with the terms of the Partnership's leases. The general partners and affiliates
have established a team dedicated to reviewing the internal information
technology systems used in the operation of the Partnership, and the information
technology and embedded systems and the Year 2000 compliance plans of the
Partnership's tenants, significant suppliers, financial institutions and
transfer agent.
The information technology infrastructure of the affiliates of the
general partners consists of a network of personal computers and servers that
were obtained from major suppliers. The affiliates utilize various
administrative and financial software applications on that infrastructure to
perform the business functions of the Partnership. The inability of the general
partners and affiliates to identify and timely correct material Year 2000
deficiencies in the software and/or infrastructure could result in an
interruption in, or failure of, certain of the Partnership's business activities
or operations. Accordingly, the general partners and affiliates have requested
and are evaluating documentation from the suppliers of the affiliates regarding
the Year 2000 compliance of their products that are used in the business
activities or operations of the Partnership. The costs expected to be incurred
by the general partners and affiliates to become Year 2000 compliant will be
incurred by the general partners and affiliates; therefore, these costs will
have no impact on the Partnership's financial position or results of operations.
The Partnership has material third party relationships with its
tenants, financial institutions and transfer agent. The Partnership depends on
its tenants for rents and cash flows, its financial institutions for
availability of cash and its transfer agent to maintain and track investor
information. If any of these third parties are unable to meet their obligations
to the Partnership because of the Year 2000 deficiencies, such a failure may
have a material impact on the Partnership. Accordingly, the general partners
have requested and are evaluating documentation from the Partnership's tenants,
financial institutions, and transfer agent relating to their Year 2000
compliance plans. At this time, the general partners have not yet received
sufficient certifications to be assured that the tenants, financial
institutions, and transfer agent have fully considered and mitigated any
potential material impact of the Year 2000 deficiencies. Therefore, the general
partners do not, at this time, know of the potential costs to the Partnership of
any adverse impact or effect of any Year 2000 deficiencies by these third
parties.
10
<PAGE>
Results of Operations - Continued
The general partners currently expect that all year 2000 compliance
testing and any necessary remedial measures on the information technology
systems used in the business activities and operations of the Partnership will
be completed prior to June 30, 1999. Based on the progress the general partners
and affiliates have made in identifying and addressing the Partnership's Year
2000 issues and the plan and timeline to complete the compliance program, the
general partners do not foresee significant risks associated with the
Partnership's Year 2000 compliance at this time. Because the general partners
and affiliates are still evaluating the status of the systems used in business
activities and operations of the Partnership and the systems of the third
parties with which the Partnership conducts its business, the general partners
have not yet developed a comprehensive contingency plan and are unable to
identify "the most reasonably likely worst case scenario" at this time. As the
general partners identify significant risks related to the Partnership's Year
2000 compliance or if the Partnership's Year 2000 compliance program's progress
deviates substantially from the anticipated timeline, the general partners will
develop appropriate contingency plans.
11
<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 - None.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1998.
12
<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, 1998.
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)
<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, 1998, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL Income Fund VII, Ltd. for the nine months ended
September 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 828,551
<SECURITIES> 0
<RECEIVABLES> 35,512
<ALLOWANCES> 28,936
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,552,433
<DEPRECIATION> 2,397,837
<TOTAL-ASSETS> 25,211,443
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,326,722
<TOTAL-LIABILITY-AND-EQUITY> 25,211,443
<SALES> 0
<TOTAL-REVENUES> 1,939,913
<CGS> 0
<TOTAL-COSTS> 352,286
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,803,944
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,803,944
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,803,944
<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>
