UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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 0-20017
CNL INCOME FUND IX, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 59-3004138
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
400 East South Street, Suite 500
Orlando, Florida 32801
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS: NAME OF EXCHANGE ON WHICH REGISTERED:
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interest ($10 per Unit)
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF THE
REGISTRANT: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART I
ITEM 1. BUSINESS
CNL Income Fund IX, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on April 16, 1990. The general partners of the Partnership are Robert A.
Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida corporation
(the "General Partners"). Beginning on March 20, 1991, the Partnership offered
for sale up to $35,000,000 in limited partnership interests (the "Units")
(3,500,000 Units each at $10 per Unit) pursuant to a registration statement on
Form S-11 under the Securities Act of 1933, as amended. The offering terminated
on September 6, 1991, at which date the maximum offering proceeds of $35,000,000
had been received from investors who were admitted to the Partnership as limited
partners (the "Limited Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totalled
$30,800,000, and were used to acquire 40 Properties, including 13 Properties
owned by joint ventures in which the Partnership is a co-venturer, and to
establish a working capital reserve for Partnership purposes. Generally, the
Partnership leases the Properties on a triple-net basis with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. In general, the General Partners plan to seek the sale of some of
the Properties commencing seven to 12 years after their acquisition. The
Partnership has no obligation to sell all or any portion of a Property at any
particular time, except as may be required under property purchase options
granted to certain lessees.
LEASES
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
the joint ventures in which the Partnership is a co-venturer, generally provide
for initial terms ranging from of 14 to 20 years (the average being 18 years),
and expire between 2005 and 2011. Generally, the leases are on a triple-net
basis, with the lessee responsible for all repairs and maintenance, property
taxes, insurance and utilities. The leases of the Properties provide for minimum
base annual rental payments (payable in monthly installments) ranging from
approximately $47,100 to $171,400. In addition, generally the leases provide for
percentage rent, based on sales in excess of a specified amount. In addition, a
majority of the leases provide that, commencing in specified lease years
(ranging from the third to the sixth lease year), the annual base rent required
under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to four
five-year renewal options subject to the same terms and conditions as the
initial lease. Certain lessees also have been granted options to purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of certain leases, the option
purchase price may equal the Partnership's original cost to purchase the
Property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Partnership's purchase price,
if that amount is greater than the Property's fair market value at the time the
purchase option is exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
During 1994, a temporary operator assumed operations of the restaurant
business located at the Copley Township, Ohio Property and paid the Partnership
rent on a month-to-month basis. During 1995, a new temporary operator assumed
operations of the restaurant business for this Property and is paying the
Partnership rent on a month-to-month basis. The Partnership is currently seeking
a permanent replacement tenant for this Property.
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During 1996, the Partnership simultaneously exchanged a Burger King
Property in Woodmere, Ohio, for a Burger King Property in Carrboro, North
Carolina. The terms of the Woodmere Property lease facilitated such an exchange
between the Partnership and the lessee. In conjunction therewith, the lease was
amended to allow the Carrboro Property to continue under the terms of the
Woodmere lease; therefore, all terms of the lease remained unchanged.
MAJOR TENANTS
During 1996, four lessees (or group of affiliated lessees) of the
Partnership, (i) Carrols Corporation, (ii) TPI Restaurants, Inc., (iii) Flagstar
Enterprises, Inc. and (iv) Burger King Corporation and BK Acquisition, Inc.
(which are affiliated entities under common control) (hereinafter referred to as
Burger King Corp.), each contributed more than ten percent of the Partnership's
total rental income (including the Partnership's share of rental income from 13
Properties owned by joint ventures). As of December 31, 1996, Carrols
Corporation was the lessee under leases relating to four restaurants, TPI
Restaurants, Inc. was the lessee under leases relating to five restaurants,
Flagstar Enterprises, Inc. was the lessee under leases relating to six
restaurants and Burger King Corp. was the lessee under leases relating to the 13
restaurants owned by joint ventures. It is anticipated that, based on the
minimum rental payments required by the leases, these four lessees or groups of
affiliated lessees each will continue to contribute more than ten percent of the
Partnership's total rental income in 1997 and subsequent years. In addition,
three Restaurant Chains, Burger King, Hardee's and Shoney's, each accounted for
more than ten percent of the Partnership's total rental income during 1996
(including the Partnership's share of rental income from 13 Properties owned by
joint ventures). In subsequent years, it is anticipated that these three
Restaurant Chains each will continue to account for more than ten percent of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income. No single tenant or group of
affiliated tenants lease Properties with an aggregate carrying value, excluding
acquisition fees and certain acquisition expenses, in excess of 20 percent of
the total assets of the Partnership.
JOINT VENTURE ARRANGEMENTS
The Partnership has entered into three separate joint venture
arrangements, CNL Restaurant Investments II, CNL Restaurant Investments III and
Ashland Joint Venture, with affiliates of the General Partners to purchase and
hold 13 Properties.
The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint ventures in accordance with their respective percentage interests in the
joint ventures. The Partnership and its joint venture partners are also jointly
and severally liable for all debts, obligations and other liabilities of the
joint ventures.
CNL Restaurant Investments II's and CNL Restaurant Investments III's
joint venture agreements do not provide a fixed term, but continue in existence
until terminated by any of the joint venturers. Ashland Joint Venture has an
initial term of 30 years and, after the expiration of the initial term,
continues in existence from year to year unless terminated at the option of any
of the joint venturers or by an event of dissolution. Events of dissolution
include the bankruptcy, insolvency or termination of any joint venturer, sale of
the Property owned by the joint venture and mutual agreement of the Partnership
and its joint venture partners to dissolve the joint venture.
The joint venture agreements restrict each venturer's ability to sell,
transfer or assign its joint venture interest without first offering it for sale
to its joint venture partners, either upon such terms and conditions as to which
the venturers may agree or, in the event the venturers cannot agree, on the same
terms and conditions as any offer from a third party to purchase such joint
venture interest.
Net cash flow from operations of CNL Restaurant Investments II, CNL
Restaurant Investments III and Ashland Joint Venture is distributed 45.2%, 50
percent and 27.33%, respectively, to the Partnership and the balance is
distributed to each of the other joint venture partners in accordance with their
respective percentage interest in the joint venture. Any liquidation proceeds,
after paying joint venture debts and liabilities and funding reserves for
contingent liabilities, will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances equal zero, and thereafter in proportion to each joint venture
partner's percentage interest in the joint venture.
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CERTAIN MANAGEMENT SERVICES
CNL Investment Company, an affiliate of the General Partners, provided
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership through December 31,
1994. Under this agreement, CNL Investment Company was responsible for
collecting rental payments, inspecting the Properties and the tenants' books and
records, assisting the Partnership in responding to tenant inquiries and notices
and providing information to the Partnership about the status of the leases and
the Properties. CNL Investment Company also assisted the General Partners in
negotiating the leases. For these services, the Partnership had agreed to pay
CNL Investment Company an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
Under the management agreement, the management fee is subordinated to receipt by
the Limited Partners of an aggregate, ten percent, cumulative, noncompounded
annual return on their adjusted capital contributions (the "10% Preferred
Return"), calculated in accordance with the Partnership's limited partnership
agreement (the "Partnership Agreement").
Effective January 1, 1995, certain officers and employees of CNL
Investment Company became officers and employees of CNL Income Fund Advisors,
Inc., an affiliate of the General Partners, and CNL Investment Company assigned
its rights in, and its obligations under, the management agreement with the
Partnership to CNL Income Fund Advisors, Inc. In addition, effective October 1,
1995, CNL Income Fund Advisors, Inc. assigned its rights in, and its obligations
under, the management agreement with the Partnership to CNL Fund Advisors, Inc.
All of the terms and conditions of the management agreement, including the
payment of fees, as described above, remain unchanged.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
COMPETITION
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.
At the time the Partnership elects to dispose of its Properties, other
than as a result of the exercise of tenant options to purchase Properties, the
Partnership will be in competition with other persons and entities to locate
purchasers for its Properties.
EMPLOYEES
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who may
also perform certain services for the Partnership.
ITEM 2. PROPERTIES
As of December 31, 1996, the Partnership owned, either directly or
through joint venture arrangements, 40 Properties, located in 16 states.
Reference is made to the Schedule of Real Estate and Accumulated Depreciation
filed with this report for a listing of the Properties and their respective
costs, including acquisition fees and certain acquisition expenses.
DESCRIPTION OF PROPERTIES
LAND. The Partnership's Property sites range from approximately 21,400
to 169,800 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
BUILDINGS. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. The buildings
generally are rectangular and are constructed from various combinations of
stucco, steel, wood, brick and tile. Building sizes range from approximately
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2,100 to 10,600 square feet. All buildings on Properties acquired by the
Partnership are freestanding and surrounded by paved parking areas. Buildings
are suitable for conversion to various uses, although modifications may be
required prior to use for other than restaurant operations.
Generally, a lessee is required, under the terms of its lease
agreement, to make such capital expenditures as may be reasonably necessary to
refurbish buildings, premises, signs and equipment so as to comply with the
lessee's obligations, if applicable, under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.
LEASES WITH MAJOR TENANTS. The terms of each of the leases with the
Partnership's major tenants as of December 31, 1996 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Carrols Corporation leases four Burger King restaurants. The initial
term of each lease is 20 years (expiring in 2011) and the average minimum base
annual rent is approximately $105,200 (ranging from approximately $99,500 to
$116,800).
TPI Restaurants, Inc. leases four Shoney's restaurants and one Captain
D's restaurant. The initial term of each lease is 15 years (expiring in 2006)
and the average minimum base annual rent is approximately $102,800 (ranging from
approximately $58,600 to $148,300).
Flagstar Enterprises, Inc. leases six Hardee's restaurants. The
initial term of each lease is 20 years (expiring in 2011) and the average
minimum base annual rent is approximately $68,300 (ranging from approximately
$47,100 to $85,800).
Burger King Corporation leases 13 Burger King restaurants with an
initial term of 14 years (expiring between 2005 and 2006) and the average
minimum base annual rent is approximately $103,700 (ranging from approximately
$73,800 to $134,100).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
ITEM 3. LEGAL PROCEEDINGS
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to, or
subject to, any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of February 28, 1997, there were 3,403 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. Limited Partners
who wish to sell their Units may offer the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wish to have their distributions used to acquire additional Units (to the
extent Units are available for purchase), may do so pursuant to such Plan. The
General Partners have the right to prohibit transfers of Units. Since inception,
the price for any Unit transferred pursuant to the Plan has been $9.50 per Unit.
The price to be paid for any Unit transferred other than pursuant to the Plan is
subject to negotiation by the purchaser and the selling Limited Partner. The
Partnership will not redeem or repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1996 and 1995 other than
pursuant to the Plan, net of commissions (which ranged from zero to 18.21%).
1996 (1) 1995 (1)
----------------------- -----------------------
High Low Average High Low Average
---- --- ------- ---- --- -------
First Quarter $10.00 $9.50 $9.67 $ 9.50 $ 9.50 $ 9.50
Second Quarter 9.50 9.50 9.50 9.50 7.75 9.15
Third Quarter 9.50 6.67 8.82 10.00 7.65 9.16
Fourth Quarter 9.50 9.09 9.36 9.50 8.85 9.42
(1) A total of 29,614 and 26,164 Units were transferred other than pursuant
to the Plan for the years ended December 31, 1996 and 1995,
respectively.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For each of the years ended December 31, 1996 and 1995, the Partnership
declared cash distributions in the aggregate amount of $3,185,004 to the Limited
Partners. During each of the quarters ended December 31, 1996 and 1995, the
Partnership declared a special distribution to the Limited Partners of $35,000
which represented cumulative excess operating reserves. No amounts distributed
to partners for the years ended December 31, 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. No distributions have been made to the General Partners to date.
As indicated in the chart below, these distributions were declared at the close
of each of the Partnership's calendar quarters. These amounts include monthly
distributions made in arrears for the Limited Partners electing to receive such
distributions on this basis.
Quarter Ended 1996 1995
------------- -------- --------
March 31 $787,501 $787,501
June 30 787,501 787,501
September 30 787,501 787,501
December 31 787,501 822,501
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------------- -------------- ------------- ------------- -------------
<S> <C>
Year ended December 31:
Revenues (1) $ 3,404,066 $ 3,428,147 $ 3,362,394 $ 3,504,029 $ 3,419,353
Net income 2,960,299 2,987,971 3,003,583 3,116,862 3,040,398
Cash distributions
declared (2)3,185,004 3,185,004 3,150,002 3,150,000 2,887,503
Net income per Unit (3) 0.84 0.85 0.85 0.88 0.86
Cash distributions
declared per Unit (2)(3) 0.91 0.91 0.90 0.90 0.83
At December 31:
Total assets $31,343,847 $31,517,255 $31,735,391 $31,854,573 $31,198,033
Partners' capital 30,359,596 30,584,301 30,781,334 30,927,753 30,960,891
</TABLE>
(1) Revenues include equity in earnings of joint ventures.
(2) Distributions for the years ended December 31, 1996 and 1995, include a
special distribution to the Limited Partners of $35,000, which
represented cumulative excess operating reserves.
(3) Based on the weighted average number of Limited Partner Units
outstanding during each of the years ended December 31, 1996, 1995,
1994, 1993 and 1992.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership was organized on April 16, 1990, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, to be leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net leases, with the lessee generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 1996, the Partnership owned 40 Properties, either directly or indirectly
through joint venture arrangements.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary source of capital for the years ended
December 31, 1996, 1995 and 1994, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and interest received,
less cash paid for expenses). Cash from operations was $3,356,240, $3,098,276
and $3,214,214 for the years ended December 31, 1996, 1995 and 1994,
respectively. The increase in cash from operations during 1996, as compared to
1995, and the decrease in cash from operations during 1995, as compared to 1994,
are primarily a result of changes in income and expenses as discussed in
"Results of Operations" below and changes in the Partnership's working capital,
during each of the respective years.
None of the Properties owned by the Partnership or the joint ventures
in which the Partnership owns an interest is or may be encumbered. Under its
Partnership Agreement, the Partnership is prohibited from borrowing for any
purpose; provided, however, that the General Partners or their affiliates are
entitled to reimbursement, at cost, for actual expenses incurred by the General
Partners or their affiliates on behalf of the Partnership. Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, rental income from the Partnership's Properties is
investedin 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
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to the partners. At December 31, 1996, the Partnership had $1,288,618 invested
in such short-term investments as compared to $1,117,382 at December 31, 1995.
The funds remaining at December 31, 1996, after the payment of distributions and
other liabilities, will be used to meet the Partnership's working capital and
other needs.
During 1996, 1995 and 1994, affiliates of the General Partners incurred
on behalf of the Partnership $97,032, $88,563 and $85,499, respectively, for
certain operating expenses. As of December 31, 1996 and 1995, the Partnership
owed $1,405 and $6,044, respectively, to affiliates for such amounts and
accounting and administrative services. As of February 28, 1997, the Partnership
had reimbursed the affiliates all such amounts. Other liabilities, including
distributions payable, increased to $982,846 at December 31, 1996, from $926,910
at December 31, 1995, primarily as the result of an increase in rents paid in
advance for the year ended December 31, 1996. The General Partners believe that
the Partnership has sufficient cash on hand to meet its current working capital
needs.
Based on cash from operations, the Partnership declared distributions
to the Limited Partners of $3,185,004 for each of the years ended December 31,
1996 and 1995, and $3,150,002 for the year ended December 31, 1994. This
represents a distribution of $0.91 per Unit for each of the years ended December
31, 1996 and 1995, and $0.90 per Unit for the year ended December 31, 1994. No
amounts distributed or to be distributed to the Limited Partners for the years
ended December 31, 1996, 1995 and 1994, are required to be or have been treated
by the Partnership as a return of capital for purposes of calculating the
Limited Partners' return on their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available for
distribution to the Limited Partners on a quarterly basis.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because all leases of the Partnership's Properties are
on a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purpose, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
RESULTS OF OPERATIONS
During the years ended December 31, 1996, 1995 and 1994, the
Partnership owned and leased 27 wholly-owned Properties. In addition, during
1996, 1995 and 1994, the Partnership was a co-venturer in two separate joint
ventures that each owned and leased six properties and one joint venture that
owned and leased one Property. As of December 31, 1996, the Partnership owned,
either directly or through joint venture arrangements, 40 Properties, which are,
in general, subject to long-term, triple-net leases. The leases of the
Properties provide for minimum base annual rental amounts (payable in monthly
installments) ranging from approximately $47,100 to $171,400. Generally, the
leases provide for percentage rent based on sales in excess of a specified
amount. In addition, a majority of the leases provide that, commencing in
specified lease years (ranging from the third to the sixth lease year), the
annual base rent required under the terms of the lease will increase. For
further description of the Partnership's leases and Properties, see Item 1.
Business - Leases and Item 2. Properties, respectively.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership earned $2,771,319, $2,807,108 and $2,756,378, respectively, in
rental income from operating leases and earned income from direct financing
leases from the Partnership's wholly owned Properties. The changes in rental and
earned income during 1996 and 1995, each as compared to the previous year, are
primarily the result of the fact that during 1994, the Partnership's former
tenant of the Property in Copley Township, Ohio, ceased operating the restaurant
located on the Property, and subsequently, various temporary operators assumed
the restaurant operations and paid the Partnership rent on a month-to-month
basis. As a result of these
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transactions, during 1994, the Partnership wrote off certain uncollectible
rental amounts due from the former tenant and subsequently recorded monthly
rental amounts as collected from the temporary operators. The Partnership is
currently seeking a permanent replacement tenant for this Property. As a result
of the lease termination with the original tenant, the building portion of this
lease was reclassified from a direct financing lease to an operating lease
during 1995.
In addition, for the years ended December 31, 1996, 1995 and 1994, the
Partnership earned $120,999, $110,036 and $108,318, respectively, in contingent
rental income. The increase in contingent rental income during 1996 and 1995,
each as compared the previous year, is primarily a result of increased gross
sales of certain restaurant Properties requiring the payment of contingent
rental income.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership also earned $460,400, $453,794 and $456,154, respectively, in income
attributable to net income earned by joint ventures in which the Partnership is
a co-venturer.
During the years ended December 31, 1996, 1995 and 1994, four of the
Partnership's lessees (or group of affiliated lessees), (i) Carrols Corporation,
(ii) TPI Restaurants, Inc., (iii) Flagstar Enterprises, Inc. and (iv) Burger
King Corporation and BK Acquisition, Inc. (which are affiliated entities under
common control) (hereinafter referred to as Burger King Corp.), each contributed
more than ten percent of the Partnership's total rental income (including the
Partnership's share of rental income from 13 Properties owned by joint
ventures). As of December 31, 1996, Carrols Corporation was the lessee under
leases relating to four restaurants, TPI Restaurants, Inc. was the lessee under
leases relating to five restaurants, Flagstar Enterprises, Inc. was the lessee
under leases relating to six restaurants and Burger King Corp. was the lessee
under leases relating to the 13 restaurants owned by joint ventures. It is
anticipated that, based on the minimum rental payments required by the leases,
these four lessees or groups of affiliated lessees each will continue to
contribute more than ten percent of the Partnership's total rental income in
1997 and subsequent years. In addition, three Restaurant Chains, Burger King,
Hardee's and Shoney's, each accounted for more than ten percent of the
Partnership's total rental income in 1996, 1995 and 1994 (including the
Partnership's share of the rental income from thirteen Properties owned by joint
ventures). In subsequent years, it is anticipated that these three Restaurant
Chains each will continue to account for more than ten percent of the total
rental income to which the Partnership is entitled under the terms of its
leases. Any failure of these lessees or Restaurant Chains could materially
affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $443,767, $440,176 and $358,811 for the years ended December 31, 1996, 1995
and 1994, respectively. The increase in operating expenses during 1996 and 1995,
each as compared to the previous year, is primarily a result of an increase in
accounting and administrative expenses associated with operating the Partnership
and its Properties and an increase in insurance expense as a result of the
general partners' obtaining contingent liability and property coverage for the
Partnership as discussed above in "Liquidity and Capital Resources." The
increase in operating expenses during 1995, as compared to 1994, is also
partially the result of an increase in depreciation and amortization expense as
a result of the reclassification, during 1995, of the building portion of the
lease relating to the Property in Copley Township, Ohio, from a direct financing
lease to an operating lease.
As a result of the former tenant of the Property in Copley Township,
Ohio, defaulting under the terms of its lease during 1994, the Partnership
incurred real estate taxes relating to this Property during the years ended
December 31, 1996 and 1995. Currently, the Partnership is seeking a permanent
replacement tenant for this Property.
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.
The Partnership's leases as of December 31, 1996, in general, are
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Management expects that increases in restaurant
sales volumes due to inflation and real sales growth should result in an
increase in rental income over time. Continued inflation also may cause capital
appreciation of the Partnership's Properties. Inflation and changing prices,
however, also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
9
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
CONTENTS
--------
Page
----
Report of Independent Accountants 11
Financial Statements:
Balance Sheets 12
Statements of Income 13
Statements of Partners' Capital 14
Statements of Cash Flows 15
Notes to Financial Statements 17
10
<PAGE>
Report of Independent Accountants
---------------------------------
To the Partners
CNL Income Fund IX, Ltd.
We have audited the financial statements and the financial statement schedule of
CNL Income Fund IX, Ltd. (a Florida limited partnership) listed in Item 14(a) of
this Form 10-K. These financial statements and financial statement schedule are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund IX, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Orlando, Florida
February 8, 1997
11
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
--------------
December 31,
ASSETS 1996 1995
------ ----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation $14,797,549 $15,049,032
Net investment in direct
financing leases 7,964,985 8,054,681
Investment in joint ventures 5,708,555 5,851,988
Cash and cash equivalents 1,288,618 1,117,382
Receivables 75,256 163,079
Prepaid expenses 3,845 932
Organization costs, less
accumulated amortization of
$10,000 and $9,444 - 556
Accrued rental income 1,505,039 1,279,605
----------- -----------
$31,343,847 $31,517,255
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable $ 4,987 $ 838
Accrued and escrowed real estate
taxes payable 61,618 53,656
Distributions payable 822,500 822,500
Due to related parties 1,405 6,044
Rents paid in advance and deposits 93,741 49,916
----------- -----------
Total liabilities 984,251 932,954
Partners' capital 30,359,596 30,584,301
----------- -----------
$31,343,847 $31,517,255
=========== ===========
See accompanying notes to financial statements.
12
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
--------------------
Year Ended December 31,
1996 1995 1994
---------- ---------- ----------
Revenues:
Rental income from
operating leases $1,854,245 $1,880,854 $1,729,943
Earned income from direct
financing leases 917,074 926,254 1,026,435
Contingent rental income 120,999 110,036 108,318
Interest and other income 51,348 57,209 41,544
---------- ---------- ----------
2,943,666 2,974,353 2,906,240
---------- ---------- ----------
Expenses:
General operating and
administrative 152,437 130,167 97,473
Professional services 26,610 20,566 20,075
Real estate taxes 9,906 24,837 -
State and other taxes 2,775 11,123 8,267
Depreciation and
amortization 252,039 253,483 232,996
---------- ---------- ----------
443,767 440,176 358,811
---------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures 2,499,899 2,534,177 2,547,429
Equity in Earnings of
Joint Ventures 460,400 453,794 456,154
---------- ---------- ----------
Net Income $2,960,299 $2,987,971 $3,003,583
========== ========== ==========
Allocation of Net Income:
General partners $ 29,603 $ 29,880 $ 30,036
Limited partners 2,930,696 2,958,091 2,973,547
---------- ---------- ----------
$2,960,299 $2,987,971 $3,003,583
========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.84 $ 0.85 $ 0.85
========== ========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 3,500,000 3,500,000 3,500,000
========== ========== ==========
See accompanying notes to financial statements.
13
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
General Partners Limited Partners
----------------------- ----------------------------------------------------------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Earnings butions butions Earnings Costs Total
------- -------- ----------- ------------ ----------- ----------- -----------
<S> <C>
Balance, December 31, 1993 $1,000 $ 72,873 $35,000,000 $ (7,170,573) $ 7,214,453 $(4,190,000) $30,927,753
Distributions to limited
partners ($0.90 per
limited partner unit) - - - (3,150,002) - - (3,150,002)
Net income - 30,036 - - 2,973,547 - 3,003,583
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1994 1,000 102,909 35,000,000 (10,320,575) 10,188,000 (4,190,000) 30,781,334
Distributions to limited
partners ($0.91 per
limited partner unit) - - - (3,185,004) - - (3,185,004)
Net income - 29,880 - - 2,958,091 - 2,987,971
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1995 1,000 132,789 35,000,000 (13,505,579) 13,146,091 (4,190,000) 30,584,301
Distributions to limited
partners ($0.91 per
limited partner unit) - - - (3,185,004) - - (3,185,004)
Net income - 29,603 - - 2,930,696 - 2,960,299
------ -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1996 $1,000 $162,392 $35,000,000 $(16,690,583) $16,076,787 $(4,190,000) $30,359,596
====== ======== =========== ============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
Year Ended December 31,
1996 1995 1994
----------- ----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents:
Cash Flows From Operating
Activities:
Cash received from
tenants $ 2,900,048 $ 2,608,733 $ 2,707,589
Distributions from
joint ventures 603,833 602,845 609,391
Cash paid for expenses (186,126) (157,127) (129,724)
Interest received 38,485 43,825 26,958
----------- ----------- -----------
Net cash provided
by operating
activities 3,356,240 3,098,276 3,214,214
----------- ----------- -----------
Cash Flows From Financing
Activities:
Distributions to
limited partners (3,185,004) (3,150,004) (3,150,002)
----------- ----------- -----------
Net cash used in
financing
activities (3,185,004) (3,150,004) (3,150,002)
----------- ----------- -----------
Net Increase (Decrease) in
Cash and Cash Equivalents 171,236 (51,728) 64,212
Cash and Cash Equivalents at
Beginning of Year 1,117,382 1,169,110 1,104,898
----------- ----------- -----------
Cash and Cash Equivalents at
End of Year $ 1,288,618 $ 1,117,382 $ 1,169,110
=========== =========== ===========
See accompanying notes to financial statements.
15
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended December 31,
1996 1995 1994
----------- ----------- -----------
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 2,960,299 $ 2,987,971 $ 3,003,583
----------- ----------- -----------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 251,483 251,483 230,996
Amortization 556 2,000 2,000
Equity in earnings of
joint ventures, net of
distributions 143,433 149,051 153,237
Decrease (increase) in
receivables 87,823 (21,714) (54,776)
Decrease (increase) in
prepaid expenses (2,913) (932) 6,792
Decrease in net investment
in direct financing
leases 89,696 73,784 69,083
Increase in accrued rental
income (225,434) (287,264) (223,938)
Increase (decrease) in
accounts payable and
accrued expenses 12,111 32,889 (8,462)
Increase (decrease) in
due to related parties (4,639) 6,044 -
Increase (decrease) in
rents paid in advance
and deposits 43,825 (95,036) 35,699
----------- ----------- -----------
Total adjustments 395,941 110,305 210,631
----------- ----------- -----------
Net Cash Provided by Operating
Activities $ 3,356,240 $ 3,098,276 $ 3,214,214
=========== =========== ===========
Supplemental Schedule of
Non-Cash Investing and
Financing Activities:
Land and building under
operating lease simultane-
ously exchanged for land
and building under
operating lease $ 406,768 $ - $ -
=========== =========== ==========
Distributions declared and
unpaid at December 31 $ 822,500 $ 822,500 $ 787,500
=========== =========== ===========
See accompanying notes to financial statements.
16
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund IX, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
the Corporate General Partner. The general partners have
responsibility for managing the day-to-day operations of the
Partnership.
Real Estate and Lease Accounting - The Partner-ship records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating method. Such methods
are described below:
DIRECT FINANCING METHOD - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's
investment in the leases.
OPERATING METHOD - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce
a constant periodic rent over the lease term commencing on the
date the Property is placed in service.
17
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies - Continued:
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, will be removed from
the accounts and gains or losses from sales will be reflected in
income. The general partners of the Partnership review the properties
for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable through
operations. The general partners determine whether an impairment in
value has occurred by comparing the estimated future undiscounted cash
flows, including the residual value of the property, with the carrying
cost of the individual property. If an impairment is indicated, a loss
will be recorded for the amount by which the carrying value of the
asset exceeds its fair market value.
Investment in Joint Ventures - The Partnership is a partner in three
joint ventures and accounts for its investment using the equity method
since the Partnership shares control with affiliates which have the
same general partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts. The Partnership limits investment of
temporary cash investments to financial institutions with high credit
standing; therefore, the Partnership believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs were amortized over five years
using the straight-line method.
18
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies - Continued:
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. The more significant areas requiring
the use of management estimates relate to the allowance for doubtful
accounts and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
New Accounting Standard - 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. Leases:
The Partnership leases its land and buildings to operators of national
and regional fast-food and family-style restaurants. The leases are
accounted for under the provisions of Statement of Financial Accounting
Standards No. 13, "Accounting for Leases." Thirteen of the leases have
been classified as operating leases and 14 of the leases have been
classified as direct financing leases. For the leases classified as
direct financing leases, the building portions of the property leases
19
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
2. Leases - Continued:
are accounted for as direct financing leases while the land portion of
eight of these leases are operating leases. Substantially all leases
are for 15 to 20 years and provide for minimum and contingent rentals.
In addition, the tenant pays all property taxes and assessments, fully
maintains the interior and exterior of the building and carries
insurance coverage for public liability, property damage, fire and
extended coverage. The lease options generally allow tenants to renew
the leases for two to four successive five-year periods subject to the
same terms and conditions as the initial lease. Most leases also allow
the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1996 1995
----------- -----------
Land $ 8,590,894 $ 8,590,894
Buildings 7,452,942 7,452,942
----------- -----------
16,043,836 16,043,836
Less accumulated
depreciation (1,246,287) (994,804)
----------- -----------
$14,797,549 $15,049,032
=========== ===========
In December 1996, the tenant of the property in Woodmere, Ohio,
exercised its option under the terms of its lease agreement, to
substitute the existing property for a replacement property. In
conjunction therewith, the Partnership simultaneously exchanged the
Burger King property in Woodmere, Ohio, with a Burger King property in
Carrboro, North Carolina. The lease for the property in Woodmere, Ohio,
was amended to allow the property in Carrboro, North Carolina, to
continue under the terms of the original lease. All closing costs were
paid by the tenant. The Partnership accounted for this as a
non-monetary exchange of similar assets and recorded the acquisition of
the property in Carrboro, North Carolina, at the net book value of the
property in Woodmere, Ohio. No gain or loss was recognized due to this
being accounted for as a non-monetary exchange of similar assets.
20
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
3. Land and Buildings - Continued:
Some leases provide for escalating guaranteed minimum rents throughout
the lease term. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 1996, 1995 and 1994, the Partnership
recognized $225,434, $287,264 and $223,938, respectively, of such
rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1996:
1997 $ 1,719,199
1998 1,719,199
1999 1,719,199
2000 1,719,199
2001 1,755,736
Thereafter 14,623,315
-----------
$23,255,847
===========
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1996 1995
------------ ------------
Minimum lease payments
receivable $ 15,621,897 $ 16,628,667
Estimated residual
values 2,590,434 2,590,434
Less unearned income (10,247,346) (11,164,420)
------------ ------------
Net investment in
direct financing
leases $ 7,964,985 $ 8,054,681
============ ============
21
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
4. Net Investment in Direct Financing Leases - Continued:
The following is a schedule of future minimum lease payments to be
received on the direct financing leases at December 31, 1996:
1997 $ 1,028,485
1998 1,028,485
1999 1,028,485
2000 1,028,485
2001 1,036,023
Thereafter 10,471,934
-----------
$15,621,897
===========
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).
During the year ended December 31, 1995, one of the Partnership's
leases was terminated. As a result of the lease termination, the
Partnership reclassified this lease from a direct financing lease to an
operating lease, whereby the property was recorded at its net carrying
value of $552,301. Due to the fact that the net carrying value was less
than the cost of the property, no loss was recorded for financial
reporting purposes.
5. Investment in Joint Ventures:
The Partnership has a 45.2%, a 50 percent and a 27.33% interest in the
profits and losses of CNL Restaurant Investments II, CNL Restaurant
Investments III and Ashland Joint Venture, respectively. The remaining
interests in these joint ventures are held by affiliates of the
Partnership which have the same general partners.
CNL Restaurant Investments II and CNL Restaurant Investments III each
own and lease six properties to an operator of national fast-food
restaurants, and Ashland Joint Venture owns and leases one property to
an operator of national fast-food
22
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
5. Investment in Joint Ventures - Continued:
restaurants. The following presents the joint ventures' combined,
condensed financial information at December 31:
1996 1995
----------- -----------
Land and buildings on
operating leases,
less accumulated
depreciation $12,359,586 $12,689,009
Cash 1,497 938
Receivables 13,840 -
Prepaid expenses 22,543 22,428
Liabilities 1,198 824
Partners' capital 12,396,268 12,711,551
Revenues 1,362,027 1,348,187
Net income 1,000,884 986,462
The Partnership recognized income totalling $460,400, $453,794 and
$456,154 for the years ended December 31, 1996, 1995 and 1994,
respectively, from these joint ventures.
6. Allocations and Distributions:
Generally, all net income and net losses of the Partnership, excluding
gains and losses from the sale of properties, are allocated 99 percent
to the limited partners and one percent to the general partners.
Distributions of net cash flow are made 99 percent to the limited
partners and one percent to the general partners; provided, however,
that the one percent of net cash flow to be distributed to the general
partners is subordinated to receipt by the limited partners of an
aggregate, ten percent, cumulative, noncompounded annual return on
their adjusted capital contributions (the "10% Preferred Return").
Generally, net sales proceeds from the sale of properties, to the
extent distributed, will be distributed first to the limited partners
in an amount sufficient to provide them with their 10% Preferred
Return, plus the return of their adjusted capital contributions. The
general partners will then receive, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds will be distributed 95
percent to the limited partners and five percent to the general
partners. Any gain from the sale of a property is, in general,
allocated
23
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
6. Allocations and Distributions - Continued:
in the same manner as net sales proceeds are distributable. Any loss
from the sale of a property is, allocated first, on a pro rata basis,
to partners with positive balances in their capital accounts; and
thereafter, 95 percent to the limited partners and five percent to the
general partners.
During the years ended December 31, 1996, 1995 and 1994, the
Partnership declared distributions to the limited partners of
$3,185,004, $3,185,004 and $3,150,002, respectively. No distributions
have been made to the general partners to date.
7. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
1996 1995 1994
---------- ---------- ----------
Net income for financial
reporting purposes $2,960,299 $2,987,971 $3,003,583
Depreciation for tax
reporting purposes
in excess of depreci-
ation for financial
reporting purposes (123,734) (123,820) (144,307)
Direct financing leases
recorded as operating
leases for tax
reporting purposes 89,696 73,784 69,083
Equity in earnings of
joint ventures for
tax reporting purposes
in excess of equity in
earnings of joint
ventures for financial
reporting purposes 37,469 37,469 37,469
Accrued rental income (225,434) (287,264) (223,938)
Rents paid in advance 43,825 (95,036) 50,700
Other 14,221 (11,173) 25,935
---------- ---------- ----------
Net income for federal
income tax purposes $2,796,342 $2,581,931 $2,818,525
========== ========== ==========
24
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
8. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of
CNL Investment Company and CNL Fund Advisors, Inc. The other individual
general partner, Robert A. Bourne, is the president of CNL Investment
Company and CNL Fund Advisors, Inc. CNL Income Fund Advisors, Inc. was
a wholly owned subsidiary of CNL Group, Inc. until its merger,
effective January 1, 1996, with CNL Fund Advisors, Inc. During the
years ended December 31, 1996, 1995 and 1994, CNL Investment Company,
CNL Income Fund Advisors, Inc. and CNL Fund Advisors, Inc. (hereinafter
referred to collectively as the "Affiliates") each performed certain
services for the Partnership, as described below.
During the years ended December 31, 1996, 1995 and 1994, certain
Affiliates acted as manager of the Partnership's properties pursuant to
a management agreement with the Partnership. In connection therewith,
the Partnership agreed to pay the Affiliates an annual, non-cumulative,
subordinated management fee of one percent of the sum of gross revenues
from properties wholly owned by the Partnership and the Partnership's
allocable share of gross revenues from joint ventures, but not in
excess of competitive fees for comparable services. These fees will be
incurred and will be payable only after the limited partners receive
their 10% Preferred Return. Due to the fact that these fees are
non-cumulative, if the limited partners do not receive their 10%
Preferred Return in any particular year, no management fees will be due
or payable for such year. As a result of such threshold, no management
fees were incurred during the years ended December 31, 1996, 1995 and
1994.
Certain Affiliates are also entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties based on the lesser of one-half of a competitive
real estate commission or three percent of the sales price if the
Affiliates provide a substantial amount of services in connection with
the sale. However, if the net sales proceeds are reinvested in a
replacement property, no such real estate disposition fees will be
incurred until such replacement property is sold and the net sales
proceeds are distributed. The payment of the real estate disposition
fee is subordinated to receipt by the limited partners of their
aggregate 10% Preferred Return, plus their adjusted capital
contributions. No deferred, subordinated real estate disposition fees
have been incurred since inception.
25
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
8. Related Party Transactions - Continued:
During the years ended December 31, 1996, 1995 and 1994, the Affiliates
provided accounting and administrative services to the Partnership on a
day-to-day basis. The Partnership incurred $82,487, $64,398 and $36,622
for the years ended December 31, 1996, 1995 and 1994, respectively, for
such services.
The due to related parties at December 31, 1996 and 1995, totalled
$1,405 and $6,044, respectively.
9. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, each representing more than ten percent of the
Partnership's total rental and earned income (including the
Partnership's share of total rental and earned income from joint
ventures), for the years ended December 31:
1996 1995 1994
-------- -------- ------
Burger King
Corporation and
BK Acquisition,
Inc. $623,949 $617,694 $617,694
TPI Restaurants, Inc. 565,351 562,259 557,000
Flagstar Enter-
prises, Inc. 460,762 486,188 490,866
Carrols Corporation 442,286 444,866 446,895
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from joint ventures), for the years ended December 31:
1996 1995 1994
---------- ---------- -------
Burger King $1,310,994 $1,293,094 $1,283,213
Shoney's 889,148 904,534 682,306
Hardees 460,762 486,188 490,866
26
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
9. Concentration of Credit Risk - Continued:
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership. However, the general partners believe that the risk
of such a default is reduced due to the essential or important nature
of these properties for the on-going operations of the lessees.
27
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
JAMES M. SENEFF, JR., age 50, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation in
1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc.
Mr. Seneff is Chief Executive Officer, and has been a director and registered
principal of CNL Securities Corp., which served as the managing dealer in the
Partnership's offering of Units, since its formation in 1979. Mr. Seneff also
has held the position of President and a director of CNL Management Company, a
registered investment advisor, since its formation in 1976, has served as Chief
Executive Officer and Chairman of the Board of CNL Investment Company, and Chief
Executive Officer and Chairman of the Board of Commercial Net Lease Realty, Inc.
since 1992, has served as the Chairman of the Board and the Chief Executive
Officer of CNL Realty Advisors, Inc. since its inception in 1991, served as
Chairman of the Board and Chief Executive Officer of CNL Income Fund Advisors,
Inc. since its inception in 1994 through December 31, 1995, has served as
Chairman of the Board and Chief Executive Officer of CNL Fund Advisors, Inc.
since its inception in 1994, and has held the position of Chief Executive
Officer and a director of CNL Institutional Advisors, Inc., a registered
investment advisor, since its inception in 1990. In addition, Mr. Seneff has
served as Chairman of the Board and Chief Executive Officer of CNL American
Properties Fund, Inc. since 1994, and has served as Chairman of the Board and
Chief Executive Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors, Inc. since January 1997. Mr. Seneff previously served on
the Florida State Commission on Ethics and is a former member and past Chairman
of the State of Florida Investment Advisory Council, which recommends to the
Florida Board of Administration investments for various Florida employee
retirement funds. The Florida Board of Administration, Florida's principal
investment advisory and money management agency, oversees the investment of more
than $40 billion of retirement funds. Since 1971, Mr. Seneff has been active in
the acquisition, development and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
joint venturer in over 100 real estate ventures involved in the financing,
acquisition, construction and rental of office buildings, apartment complexes,
restaurants, hotels and other real estate. Included in these real estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr. Seneff, directly or through an affiliated entity, serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income
Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income
Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL
Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd. and
CNL Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public real
estate limited partnerships with investment objectives similar to those of the
Partnership, in which Mr. Seneff serves as a general partner. Mr. Seneff
received his degree in Business Administration from Florida State University in
1968.
ROBERT A. BOURNE, age 49, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, CNL Fund Advisors, Inc., and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc., and President, Chief Investment Officer and a
director of CNL Institutional Advisors, Inc., a registered investment advisor.
Mr.
28
<PAGE>
Bourne also has served as a director since 1992, as President from July 1992 to
February 1996, and since February 1996, as Vice Chairman of the Board of
Directors, Secretary and Treasurer of Commercial Net Lease Realty, Inc. In
addition, Mr. Bourne has served as a director since its inception in 1991, as
President from 1991 to February 1996, as Secretary from February 1996 to July
1996, and since February 1996, as Treasurer and Vice Chairman of CNL Realty
Advisors, Inc. In addition, Mr. Bourne has served as President and a director of
CNL American Properties Fund, Inc. since 1994, and has served as President and a
director of CNL American Realty Fund, Inc. since 1996 and of CNL Real Estate
Advisors, Inc since January 1997. Upon graduation from Florida State University
in 1970, where he received a B.A. in Accounting, with honors, Mr. Bourne worked
as a certified public accountant and, from September 1971 through December 1978,
was employed by Coopers & Lybrand, Certified Public Accountants, where he held
the position of tax manager beginning in 1975. From January 1979 until June
1982, Mr. Bourne was a partner in the accounting firm of Cross & Bourne and from
July 1982 through January 1987, he was a partner in the accounting firm of
Bourne & Rose, P.A., Certified Public Accountants. Mr. Bourne, who joined CNL
Securities Corp. in 1979, has participated as a general partner or joint
venturer in over 100 real estate ventures involved in the financing,
acquisition, construction and rental of office buildings, apartment complexes,
restaurants, hotels and other real estate. Included in these real estate
ventures are approximately 64 privately offered real estate limited partnerships
in which Mr. Bourne, directly or through an affiliated entity, serves or has
served as a general partner. Also included are the CNL Income Fund Partnerships,
public real estate limited partnerships with investment objectives similar to
those of the Partnership, in which Mr. Bourne serves as a general partner.
CNL REALTY CORPORATION is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.
CNL FUND ADVISORS, INC., provides certain management services in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation organized in 1995 under the laws of the State of Florida, and its
principal office is located at 400 East South Street, Suite 500, Orlando,
Florida 32801. CNL Fund Advisors, Inc. is a wholly owned subsidiary of CNL
Group, Inc., a diversified real estate company, and was organized to perform
property acquisition, property management and other services.
CNL GROUP, INC., which is the parent company of CNL Fund Advisors,
Inc., is a diversified real estate corporation organized in 1980 under the laws
of the State of Florida. Other subsidiaries and affiliates of CNL Group, Inc.
include a property development and management company, two investment advisory
companies, and seven corporations organized as strategic business units. James
M. Seneff, Jr., an individual General Partner of the Partnership, is the
Chairman of the Board, Chief Executive Officer, and a director of CNL Group,
Inc. Mr. Seneff and his wife own all of the outstanding shares of CNL Group,
Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as members
of the Boards of Directors of those entities. The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.
JOHN T. WALKER, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc. From May 1992 to May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable television
network which was subsequently acquired by Gaylord Entertainment, where he was
responsible for overall financial and administrative management and planning.
From January 1990 through April 1992, Mr. Walker was Chief Financial Officer of
the First Baptist Church in Orlando, Florida. From April 1984 through December
1989, he was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge of audit and consulting services, and
from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior at Price
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with a
B.S. in Accountancy and is a certified public accountant.
LYNN E. ROSE, age 48, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993. In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities
29
<PAGE>
Corp. since July 1994. She has served as Chief Operating Officer, Vice
President and Secretary of CNL Corporate Services, Inc. since November 1994. Ms.
Rose also has served as Chief Financial Officer and Secretary of CNL
Institutional Advisors, Inc. since its inception in 1990, a director of CNL
Realty Advisors, Inc. since its inception in 1991, Secretary of CNL Realty
Advisors, Inc. since its inception in 1991 (excluding February 1996 to July
1996), Treasurer of CNL Realty Advisors, Inc. from 1991 to February 1996,
Secretary and Treasurer of Commercial Net Lease Realty, Inc. from 1992 to
February 1996, Secretary of CNL Income Fund Advisors, Inc. since its inception
in 1994 to December 1995, and a director, Secretary and Treasurer of CNL Fund
Advisors, Inc. since 1994 and has served as a director, Secretary and Treasurer
of CNL Real Estate Advisors, Inc. since January 1997. Ms. Rose also has served
as Secretary and Treasurer of CNL American Properties Fund, Inc. since 1994, and
has served as Secretary and Treasurer of CNL American Realty Fund, Inc. since
1996. Ms. Rose also currently serves as Secretary for approximately 50
additional corporations. Ms. Rose oversees the management information services,
administration, legal compliance, accounting, tenant compliance, and reporting
for over 250 corporations, partnerships, and joint ventures. Prior to joining
CNL, Ms. Rose was a partner with Robert A. Bourne in the accounting firm of
Bourne & Rose, P.A., Certified Public Accountants. Ms. Rose holds a B.A. in
Sociology from the University of Central Florida and is a registered financial
and operations principal of CNL Securities Corp. She was licensed as a certified
public accountant in 1979.
JEANNE A. WALL, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior Vice President of CNL Securities Corp. In
this capacity, Ms. Wall serves as national marketing and sales director and
oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees the partnership administration and investor services
for programs offered through participating brokers. Ms. Wall also has served as
Senior Vice President of CNL Institutional Advisors, Inc., a registered
investment advisor, from 1990 to 1993, as Vice President of CNL Realty Advisors,
Inc. since its inception in 1991, as Vice President of Commercial Net Lease
Realty, Inc. since 1992, as Executive Vice President of CNL Income Fund
Advisors, Inc. from its inception in 1994 to December 1995, as Executive Vice
President of CNL Fund Advisors, Inc. since 1994, and as Executive Vice President
of CNL American Properties Fund, Inc. since 1994. In addition, Ms. Wall has
served as Executive Vice President of CNL Real Estate Advisors, Inc. since
January 1997 and as Executive Vice President of CNL American Realty Fund, Inc.
since 1996. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct Participation Program committee for the National Association
of Securities Dealers (NASD).
STEVEN D. SHACKELFORD, age 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial Officer
of CNL American Properties Fund, Inc. From March 1995 to July 1996, he was a
senior manager in the national office of Price Waterhouse where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he served as a
manager in the Price Waterhouse, Paris, France office serving several
multinational clients. Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the Orlando, Florida office of Price Waterhouse. Mr Shackelford
received a B.A. in Accounting, with honors, and a Masters of Business
Administration from Florida State University and is a certified public
accountant.
ITEM 11. EXECUTIVE COMPENSATION
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 28, 1997, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
30
<PAGE>
The following table sets forth, as of February 28, 1997, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
====
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 1996, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- ------------------------------- ------------------------------------ -----------------------
<S> <C>
Reimbursement to affiliates for Operating expenses are Operating expenses incurred
operating expenses reimbursed at the lower of cost or on behalf of the Partnership:
90 percent of the prevailing rate at $97,032
which comparable services could
have been obtained in the same Accounting and administrative
geographic area. Affiliates of the services: $82,487
General Partners from time to time
incur certain operating expenses
on behalf of the Partnership for
which the Partnership reimburses the
affiliates without interest.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- ------------------------------- ------------------------------------ -----------------------
<S> <C>
Annual, subordinated manage- One percent of the sum of gross $ - 0 -
ment fee to affiliates operating revenues from Properties
wholly owned by the Partnership
plus the Partnership's allocable
share of gross revenues of joint
ventures in which the Partnership
is a co-venturer, subordinated to
certain minimum returns to the
Limited Partners. The
management fee will not exceed
competitive fees for comparable
services. Due to the fact that these
fees are non-cumulative, if the
Limited Partners do not receive
their 10% Preferred Return in any
particular year, no management
fees will be due or payable for
such year.
Deferred, subordinated real A deferred, subordinated real $ - 0 -
estate disposition fee estate disposition fee, payable
payable to affiliates upon sale of one or more
Properties, in an amount equal to
the lesser of (i) one-half of a
competitive real estate
commission, or (ii) three percent of
the sales price of such Property or
Properties. Payment of such fee
shall be made only if affiliates of
the General Partners provide a
substantial amount of services in
connection with the sale of a
Property or Properties and shall be
subordinated to certain minimum
returns to the Limited Partners.
However, if the net sales proceeds
are reinvested in a replacement
property, no such real estate
disposition fee will be incurred
until such replacement property is
sold and the net sales proceeds are
distributed.
General Partners' deferred, A deferred, subordinated share $ - 0 -
subordinated share of Partner- equal to one percent of Partnership
ship net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
- ------------------------------- ------------------------------------ -----------------------
<S> <C>
General Partners' deferred, A deferred, subordinated share $ - 0 -
subordinated share of equal to five percent of Partnership
Partnership net sales distributions of such net sales
proceeds from a sale or sales proceeds, subordinated to certain
minimum returns to the Limited
Partners.
</TABLE>
33
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1996 and 1995
Statements of Income for the years ended December 31, 1996,
1995 and 1994
Statements of Partners' Capital for the years ended December
31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1996
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund IX, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund IX, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund IX, Ltd. (Included as Exhibit 4.6
to Post-Effective Amendment No. 1 to Registration
Statement No. 33-35049 on Form S-11 and incorporated
herein by reference.)
10.1 Management Agreement between CNL Income Fund IX, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on April 7, 1992, 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.)
34
<PAGE>
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.)
(b) The Registrant files no reports on Form 8-K during the period
October 1, 1996 through December 31, 1996.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 21st day of
March, 1997.
CNL INCOME FUND IX, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
-----------------------
JAMES M. SENEFF, JR.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert A. Bourne President, Treasurer and Director March 21, 1997
- -------------------- (Principal Financial and Accounting
Robert A. Bourne Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 21, 1997
- ------------------------ (Principal Executive Officer)
James M. Seneff, Jr.
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
--------------------------------------------------------
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
-------------------------- ---------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurants:
Shelby, North Carolina - $ 289,663 $ - $ - $ -
Maple Heights, Ohio - 430,563 454,823 - -
Suwanee, Georgia - 437,658 - - -
Watertown, New York - 360,181 529,594 - -
Alpharetta, Georgia - 382,955 - - -
Carrboro, North Carolina - 406,768 - - -
Denny's Restaurants:
Grand Prairie, Texas - 240,876 96,580 161,889 -
North Baltimore, Ohio - 133,187 361,010 - -
Golden Corral Family
Steakhouse Restaurants:
Brownsville, Texas - 518,605 988,611 - -
Tyler, Texas - 652,103 982,353 - -
Hardee's Restaurants:
Farragut, Tennessee - 308,269 455,341 - -
Greenville, South Carolina - 310,545 511,438 - -
Perkins Restaurants:
Williamsville, New York - 349,299 - - -
Rochester, New York - 503,527 - - -
Shoney's Restaurants:
Windcrest, Texas - 445,983 670,370 - -
Wildwood, Florida - 420,416 - - -
Bedford, Indiana - 262,103 - - -
Grenada, Mississippi - 335,001 454,723 - -
Huntsville, Alabama (g) - 638,400 717,302 - -
Corpus Christi, Texas - 803,380 516,607 - -
Copley Township, Ohio - 361,412 552,301 - -
---------- ---------- -------- -------
$8,590,894 $7,291,053 $161,889 $ -
========== ========== ======== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
----------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---- ------------ ----------- ------------ -------- -------- -------------
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurants:
Shelby, North Carolina $ 289,663 (f) $ 289,663 (d) 1985 05/91 (d)
Maple Heights, Ohio 430,563 $ 454,823 885,386 $ 84,568 1980 06/91 (b)
Suwanee, Georgia 437,658 (f) 437,658 (d) 1991 11/91 (d)
Watertown, New York 360,181 529,594 889,775 90,684 1986 11/91 (b)
Alpharetta, Georgia 382,955 (f) 382,955 (d) 1991 12/91 (d)
Carrboro, North Carolina 406,768 (f) 406,768 (d) 1983 12/96(j) (d)
Denny's Restaurants:
Grand Prairie, Texas 240,876 258,469 499,345 44,669 1991 08/91 (b)
North Baltimore, Ohio 133,187 361,010 494,197 38,832 1986 11/91 (h)
Golden Corral Family
Steakhouse Restaurants:
Brownsville, Texas 518,605 988,611 1,507,216 182,555 1990 06/91 (b)
Tyler, Texas 652,103 982,353 1,634,456 181,399 1990 06/91 (b)
Hardee's Restaurants:
Farragut, Tennessee 308,269 455,341 763,610 79,383 1991 10/91 (b)
Greenville, South Carolina 310,545 511,438 821,983 88,603 1991 10/91 (b)
Perkins Restaurants:
Williamsville, New York 349,299 (f) 349,299 (d) 1986 12/91 (d)
Rochester, New York 503,527 (f) 503,527 (d) 1988 12/91 (d)
Shoney's Restaurants:
Windcrest, Texas 445,983 670,370 1,116,353 120,422 1991 08/91 (b)
Wildwood, Florida 420,416 (f) 420,416 (d) 1991 08/91 (d)
Bedford, Indiana 262,103 (f) 262,103 (d) 1991 08/91 (d)
Grenada, Mississippi 335,001 454,723 789,724 79,649 1991 09/91 (b)
Huntsville, Alabama (g) 638,400 717,302 1,355,702 125,381 1989 10/91 (b)
Corpus Christi, Texas 803,380 516,607 1,319,987 89,168 1991 10/91 (b)
Copley Township, Ohio 361,412 552,301 913,713 40,974 1991 12/91 (i)
---------- ---------- ----------- ----------
$8,590,894 $7,452,942 $16,043,836 $1,246,287
========== ========== =========== ==========
</TABLE>
F-1
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
-------------------------- ---------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Properties of Joint Venture
in Which the Partnership
has a 45.2% Interest and has
Invested in Under
Operating Leases:
Burger King Restaurants:
Columbus, Ohio - $ 345,696 $ 651,985 $ - $ -
San Antonio, Texas - 350,479 623,615 - -
Pontiac, Michigan - 277,192 982,200 - -
Raceland, Louisiana - 174,019 986,879 - -
New Castle, Indiana - 264,239 662,265 - -
Hastings, Minnesota - 155,553 657,159 - -
---------- ---------- -------- -------
$1,567,178 $4,564,103 $ - $ -
========== ========== ======== =======
Properties of Joint Venture
in Which the Partnership
has a 50% Interest and has
Invested in Under
Operating Leases:
Burger King Restaurants:
Greensboro, North Carolina - $ 338,800 $ 650,109 $ - $ -
Metairie, Louisiana - 429,883 342,455 - -
Lafayette, Louisiana - 350,932 773,129 - -
Nashua, New Hampshire - 514,815 838,536 - -
Pontiac, Illinois - 203,095 719,226 - -
Dover, New Hampshire - 406,259 998,023 - -
---------- ---------- -------- -------
$2,243,784 $4,321,478 $ - $ -
========== ========== ======== =======
Property of Joint Venture in
Which the Partnership has a
27.33% Interest and has Invested
in Under Operating Lease:
Burger King Restaurant:
Ashland, New Hampshire - $ 293,478 $ 997,104 $ - $ -
========== ========== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (c) Depreciation
----------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---- ------------ ------------ ------------ -------- -------- --------------
<S> <C>
Properties of Joint Venture
in Which the Partnership
has a 45.2% Interest and has
Invested in Under
Operating Leases:
Burger King Restaurants:
Columbus, Ohio $ 345,696 $ 651,985 $ 997,681 $ 114,380 1986 09/91 (b)
San Antonio, Texas 350,479 623,615 974,094 109,403 1986 09/91 (b)
Pontiac, Michigan 277,192 982,200 1,259,392 172,311 1987 09/91 (b)
Raceland, Louisiana 174,019 986,879 1,160,898 173,132 1988 09/91 (b)
New Castle, Indiana 264,239 662,265 926,504 116,184 1988 09/91 (b)
Hastings, Minnesota 155,553 657,159 812,712 115,288 1990 09/91 (b)
---------- ---------- ----------- ----------
$1,567,178 $4,564,103 $ 6,131,281 $ 800,698
========== ========== =========== ==========
Properties of Joint Venture
in Which the Partnership
has a 50% Interest and has
Invested in Under
Operating Leases:
Burger King Restaurants:
Greensboro, North Carolina $ 338,800 $ 650,109 $ 988,909 $ 103,127 1990 03/92 (b)
Metairie, Louisiana 429,883 342,455 772,338 54,324 1990 03/92 (b)
Lafayette, Louisiana 350,932 773,129 1,124,061 122,642 1989 03/92 (b)
Nashua, New Hampshire 514,815 838,536 1,353,351 133,017 1987 03/92 (b)
Pontiac, Illinois 203,095 719,226 922,321 114,091 1988 03/92 (b)
Dover, New Hampshire 406,259 998,023 1,404,282 158,315 1987 03/92 (b)
---------- ---------- ----------- ----------
$2,243,784 $4,321,478 $ 6,565,262 $ 685,516
========== ========== =========== ==========
Property of Joint Venture in
Which the Partnership has a
27.33% Interest and has Investe
in Under Operating Lease:
Burger King Restaurant:
Ashland, New Hampshire $ 293,478 $ 997,104 $ 1,290,582 $ 141,325 1987 10/92 (b)
========== ========== =========== ==========
</TABLE>
F-2
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent Gross Amount at Which Carried
Initial Cost To Acquisition at Close of Period (c)
--------------------- --------------------- ----------------------------------
Buildings Buildings
Encum- and Improve- Carrying and
brances Land Improvements ments Costs Land Improvements Total
------- ---- ------------ -------- -------- ---------- ----------- ------
<S> <C>
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Burger King Restaurants:
Shelby, North Carolina - $ - $ 622,661 $ - $ - - (f) (f)
Suwanee, Georgia - - 330,541 - - - (f) (f)
Alpharetta, Georgia - - 380,218 - - - (f) (f)
Carrboro, North Carolina - - 587,775 - - - (f) (f)
Denny's Restaurants:
Alliance, Ohio - 92,120 - 490,706 - (f) (f) (f)
Bluffton, Ohio - 150,380 538,173 - - (f) (f) (f)
Hardee's Restaurants:
Millbrook, Alabama - 125,703 541,865 - - (f) (f) (f)
Greeneville, Tennessee - 127,449 402,926 - - (f) (f) (f)
Wooster, Ohio - 137,427 537,227 - - (f) (f) (f)
Auburn, Alabama - 85,890 364,269 - - (f) (f) (f)
Perkins Restaurants:
Williamsville, New York - - 712,723 - - - (f) (f)
Rochester, New York - - 648,182 - - - (f) (f)
Shoney's Restaurants:
Wildwood, Florida - - 846,903 - - - (f) (f)
Bedford, Indiana - - 540,603 - - - (f) (f)
---------- ---------- -------- -------
$ 718,969 $7,054,066 $490,706 $ -
========== ========== ======== =======
</TABLE>
Life
on Which
Depreciation
in Latest
Date Income
Accumulated of Con- Date Statement is
Depreciation struction Acquired Computed
------------ --------- -------- -------------
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Burger King Restaurants:
Shelby, North Carolina (d) 1985 05/91 (d)
Suwanee, Georgia (d) 1991 11/91 (d)
Alpharetta, Georgia (d) 1991 12/91 (d)
Carrboro, North Carolina (d) 1983 12/96(j) (d)
Denny's Restaurants:
Alliance, Ohio (e) 1992 10/91 (e)
Bluffton, Ohio (e) 1986 10/91 (e)
Hardee's Restaurants:
Millbrook, Alabama (e) 1991 10/91 (e)
Greeneville, Tennessee (e) 1991 10/91 (e)
Wooster, Ohio (e) 1991 10/91 (e)
Auburn, Alabama (e) 1991 10/91 (e)
Perkins Restaurants:
Williamsville, New York (d) 1986 12/91 (d)
Rochester, New York (d) 1988 12/91 (d)
Shoney's Restaurants:
Wildwood, Florida (d) 1991 08/91 (d)
Bedford, Indiana (d) 1991 08/91 (d)
F-3
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------------------------------
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996,
1995 and 1994 are summarized as follows:
Accumulated
Cost Depreciation
----------- ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Balance, December 31, 1993 $15,130,525 $ 512,325
Reclassified to operating
lease 361,010 -
Depreciation expense - 230,996
----------- ----------
Balance, December 31, 1994 15,491,535 743,321
Reclassified to operating
lease 552,301 -
Depreciation expense - 251,483
----------- ----------
Balance, December 31, 1995 16,043,836 994,804
Disposition (406,768) -
Acquisition 406,768 -
Depreciation expense - 251,483
----------- ----------
Balance, December 31, 1996 $16,043,836 $1,246,287
=========== ==========
Properties of Joint Venture in
Which the Partnership has a
45.2% Interest and has
Invested in Under
Operating Leases:
Balance, December 31, 1993 $ 6,131,281 $ 344,288
Depreciation expense - 152,136
----------- ----------
Balance, December 31, 1994 6,131,281 496,424
Depreciation expense - 152,137
----------- ----------
Balance, December 31, 1995 6,131,281 648,561
Depreciation expense - 152,137
----------- ----------
Balance, December 31, 1996 $ 6,131,281 $ 800,698
=========== ==========
F-4
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
---------------------------------------------------
DEPRECIATION - CONTINUED
------------------------
December 31, 1996
Accumulated
Cost Depreciation
----------- ------------
Properties of Joint Venture in
Which the Partnership has
a 50% Interest and has
Invested in Under
Operating Leases:
Balance, December 31, 1993 $ 6,565,262 $ 253,368
Depreciation expense - 144,049
----------- ----------
Balance, December 31, 1994 6,565,262 397,417
Depreciation expense - 144,050
----------- ----------
Balance, December 31, 1995 6,565,262 541,467
Depreciation expense - 144,049
----------- ----------
Balance, December 31, 1996 $ 6,565,262 $ 685,516
=========== ==========
Property of Joint Venture in
Which the Partnership has
a 27.33% Interest and has
Invested in Under
Operating Lease:
Balance, December 31, 1993 $ 1,290,582 $ 41,614
Depreciation expense - 33,237
----------- ----------
Balance, December 31, 1994 1,290,582 74,851
Depreciation expense - 33,237
----------- ----------
Balance, December 31, 1995 1,290,582 108,088
Depreciation expense - 33,237
----------- ----------
Balance, December 31, 1996 $ 1,290,582 $ 141,325
=========== ==========
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 1996, the aggregate cost of the Properties owned
by the Partnership and joint ventures for federal income tax purposes
was $24,239,928 and $13,987,125, respectively. All of the leases are
treated as operating leases for federal income tax purposes
(d) For financial reporting purposes, the portion of the lease relating
to the building has been recorded as a direct financing lease. The
cost of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(e) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land
and building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
F-5
<PAGE>
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
---------------------------------------------------
DEPRECIATION - CONTINUED
------------------------
December 31, 1996
(f) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(g) The Huntsville property contains a Shoney's restaurant and a Captain
D's restaurant, both of which are operated by the same lessee
pursuant to one lease agreement.
(h) Effective January 1, 1994, the lease for this property was amended,
resulting in the reclassification of the building portion of the
lease to an operating lease. The building was recorded at net book
value as of January 1, 1994, and depreciated over its remaining
estimated life of approximately 28 years.
(i) Effective January 1, 1995, the lease for this property was
terminated, resulting in the reclassification of the building portion
of the lease to an operating lease. The building was recorded at net
book value as of January 1, 1995, and depreciated over its remaining
estimated life of approximately 27 years.
(j) This property was simultaneously exchanged for a Burger King
previously owned and located in Woodmere, Ohio, during 1996.
F-6
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
<S> <C>
3.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund IX, Ltd.
(Included as Exhibit 3.1 to Registration Statement No. 33-35049 on Form S-11
and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income Fund IX, Ltd.
(Included as Exhibit 3.1 to Registration Statement No. 33-35049 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL Income
Fund IX, Ltd. (Included as Exhibit 4.6 to Post-Effective Amendment No. 1 to
Registration Statement No. 33-35049 on Form S-11 and incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund IX, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K filed with the
Securities and Exchange Commission on April 7, 1992, 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.)
</TABLE>
i
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet of CNL Fund IX, Ltd. at December 31, 1996, and its statement
of income for the year then ended and is qualified in its entirety by
reference to the Form 10-K405 of CNL Income Fund IX, Ltd. for the year
ended December 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,288,618
<SECURITIES> 0
<RECEIVABLES> 104,239
<ALLOWANCES> 28,983
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,043,836
<DEPRECIATION> 1,246,287
<TOTAL-ASSETS> 31,343,847
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 30,359,596
<TOTAL-LIABILITY-AND-EQUITY> 31,343,847
<SALES> 0
<TOTAL-REVENUES> 2,943,666
<CGS> 0
<TOTAL-COSTS> 443,767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,960,299
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,960,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,960,299
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund IX, Ltd. has
an unclassified balance sheet; therefore, no values are shown above
for current assets and current liabilities.
</FN>
</TABLE>
