<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XI, Ltd. at September 30, 1996, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund XI, Ltd. for the nine months ended
September 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,227,874
<SECURITIES> 0
<RECEIVABLES> 45,709
<ALLOWANCES> 15,232
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 26,955,605
<DEPRECIATION> 1,964,218
<TOTAL-ASSETS> 35,794,696
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 34,343,530
<TOTAL-LIABILITY-AND-EQUITY> 35,794,696
<SALES> 0
<TOTAL-REVENUES> 2,910,031
<CGS> 0
<TOTAL-COSTS> 565,263
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,380,052
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,380,052
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,380,052
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XI, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
-----------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission file number
0-21560
----------------------
CNL Income Fund XI, Ltd.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3078854
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------- -------
CONTENTS
--------
Part I Page
----
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 6-8
Part II
Other Information 9
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $1,964,218 and
$1,604,799 $24,991,387 $25,350,806
Net investment in direct financing
leases 6,702,682 6,748,733
Investment in joint ventures 1,543,909 1,567,594
Cash and cash equivalents 1,227,874 1,222,888
Receivables, less allowance for
doubtful accounts of $15,232 and
$22,860 30,477 121,473
Prepaid expenses 15,545 13,378
Organization costs, less
accumulated amortization of
$8,911 and $7,411 1,089 2,589
Accrued rental income 1,159,709 937,198
Other assets 122,024 122,024
----------- -----------
$35,794,696 $36,086,683
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 1,005 $ 3,472
Escrowed real estate taxes payable 27,696 16,023
Distributions payable 875,006 915,006
Due to related parties 6,767 6,507
Rents paid in advance and deposits 55,684 80,807
----------- -----------
Total liabilities 966,158 1,021,815
Minority interests 485,008 476,372
Partners' capital 34,343,530 34,588,496
----------- -----------
$35,794,696 $36,086,683
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Rental income from
operating leases $ 691,100 $ 693,020 $2,082,082 $2,080,757
Earned income from
direct financing
leases 215,739 202,444 638,362 628,251
Contingent rental
income 59,465 42,386 133,843 99,957
Interest and other
income 14,196 15,850 55,744 48,602
---------- ---------- ---------- ----------
980,500 953,700 2,910,031 2,857,567
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 40,236 32,757 129,720 92,737
Professional services 5,948 5,919 21,149 17,460
Management fees to
related parties 9,318 9,211 27,502 27,305
State and other taxes - 1,300 25,973 40,296
Depreciation and amorti-
zation 120,306 120,306 360,919 360,919
---------- ---------- ---------- ----------
175,808 169,493 565,263 538,717
---------- ---------- ---------- ----------
Income Before Minority
Interests in Income of
Consolidated Joint
Ventures and Equity in
Earnings of Unconsoli-
dated Joint Ventures 804,692 784,207 2,344,768 2,318,850
Minority Interests in
Income of Consolidated
Joint Ventures (17,654) (17,618) (52,091) (52,209)
Equity in Earnings of
Unconsolidated Joint
Ventures 30,777 30,684 87,375 87,560
---------- ---------- ---------- ----------
Net Income $ 817,815 $ 797,273 $2,380,052 $2,354,201
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 8,178 $ 7,973 $ 23,801 $ 23,542
Limited partners 809,637 789,300 2,356,251 2,330,659
---------- ---------- ---------- ----------
$ 817,815 $ 797,273 $2,380,052 $2,354,201
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.20 $ 0.20 $ 0.59 $ 0.58
========== ========== ========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
========== ========== ========== ==========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
1996 1995
----------------- ------------
General partners:
Beginning balance $ 109,925 $ 77,904
Net income 23,801 32,021
----------- -----------
133,726 109,925
----------- -----------
Limited partners:
Beginning balance 34,478,571 34,848,439
Net income 2,356,251 3,170,155
Distributions ($0.66 and
$0.89 per limited partner
unit, respectively) (2,625,018) (3,540,023)
----------- -----------
34,209,804 34,478,571
----------- -----------
Total partners' capital $34,343,530 $34,588,496
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by Operating
Activities $ 2,713,459 $ 2,777,317
----------- -----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (2,665,018) (2,625,018)
Distributions to holders
of minority interests (43,455) (37,549)
----------- -----------
Net cash used in
financing activities (2,708,473) (2,662,567)
----------- -----------
Net Increase in Cash and Cash
Equivalents 4,986 114,750
Cash and Cash Equivalents at
Beginning of Period 1,222,888 1,124,953
----------- -----------
Cash and Cash Equivalents at
End of Period $ 1,227,874 $ 1,239,703
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at end of period $ 875,006 $ 875,006
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1996 and 1995
1. Basis of Presentation:
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 1996, may not be
indicative of the results that may be expected for the year ending
December 31, 1996. Amounts as of December 31, 1995, included in the
financial statements, have been derived from audited financial
statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XI, Ltd. (the "Partnership") for the year ended December 31,
1995.
The Partnership accounts for its 85 percent interest in Denver Joint
Venture and its 77.33% interest in CNL/Airport Joint Venture using the
consolidation method. Minority interests represent the minority joint
venture partners' proportionate share of equity in the Partnership's
consolidated joint ventures. All significant intercompany accounts and
transactions have been eliminated.
Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
Statement requires that an entity review long-lived assets and certain
identifiable intangibles, to be held and used, for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. Adoption of this standard had no
material effect on the Partnership's financial position or results of
operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS<PAGE>
CNL Income Fund XI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 20, 1991, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurants, 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
leases are triple-net leases, with the lessees responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of September 30,
1996, the Partnership owned 39 Properties, including interests in four
Properties owned by joint ventures in which the Partnership is a co-venturer.
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of capital for the nine months ended
September 30, 1996 and 1995, was cash from operations (which includes cash
received from tenants, distributions from joint ventures, and interest and
other income received, less cash paid for expenses). Cash from operations was
$2,713,459 and $2,777,317 for the nine months ended September 30, 1996 and
1995, respectively. The decrease in cash from operations for the nine months
ended September 30, 1996, is primarily a result of changes in the
Partnership's working capital.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments
pending the Partnership's use of such funds to pay Partnership expenses or to
make distributions to the partners. At September 30, 1996, the Partnership had
$1,227,874 invested in such short-term investments as compared to $1,222,888
at December 31, 1995. The funds remaining at September 30, 1996, after
payment of distributions and other liabilities, will be used to meet the
Partnership's working capital and other needs.
Total liabilities of the Partnership, including distributions payable,
decreased to $966,158 at September 30, 1996, from $1,021,815 at December 31,
1995, primarily as the result of the Partnership's accruing a special
distribution payable to the limited partners of $40,000 at December 31, 1995,
which was paid in January 1996. The general partners believe that the
Partnership has sufficient cash on hand to meet its current working capital
needs.
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $2,625,018 for each of the nine
months ended September 30, 1996 and 1995 ($875,006 for each of the quarters
ended September 30, 1996 and 1995). This represents distributions of $.66 per
unit for each of the nine months ended September 30, 1996 and 1995 ($.22 per
unit for each of the quarters ended September 30, 1996 and 1995). No
distributions were made to the general partners for the quarters and nine
months ended September 30, 1996 and 1995. No amounts distributed or to be
distributed to the limited partners for the nine months ended September 30,
1996 and 1995, are required to be or have been treated by the Partnership as a
return of capital for purposes of calculating the limited partners' return on
their adjusted capital contributions. The Partnership intends to continue to
make distributions of cash available for distribution to the limited partners
on a quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who meet specified
financial standards minimizes the Partnership's operating expenses. The
general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection
with the operations of the Partnership.
Results of Operations
- ---------------------
During the nine months ended September 30, 1996 and 1995, the
Partnership and its consolidated joint ventures, Denver Joint Venture and
CNL/Airport Joint Venture, owned and leased 37 wholly owned Properties to
operators of fast-food and family-style restaurant chains. In connection
therewith, during the nine months ended September 30, 1996 and 1995, the
Partnership, Denver Joint Venture and CNL/Airport Joint Venture earned
$2,720,444 and $2,709,008, respectively, in rental income from operating
leases and earned income from direct financing leases, $906,839 and $895,464
of which was earned during the quarters ended September 30, 1996 and 1995,
respectively.
In addition, during the nine months ended September 30, 1996 and 1995,
the Partnership earned $133,843 and $99,957, respectively, in contingent
rental income, $59,465 and $42,386 of which was earned during the quarters
ended September 30, 1996 and 1995, respectively. The increase in contingent
rental income during the quarter and nine months ended September 30, 1996, as
compared to the quarter and nine months ended September 30, 1995, is primarily
the result of increases in gross sales relating to certain restaurant
Properties.
In addition, for the nine months ended September 30, 1996 and 1995, the
Partnership owned and leased two Properties indirectly through other joint
venture arrangements. In connection therewith, during the nine months ended
September 30, 1996 and 1995, the Partnership earned $87,375 and $87,560,
respectively, attributable to net income earned by unconsolidated joint
ventures, $30,777 and $30,684 of which was earned during the quarters ended
September 30, 1996 and 1995, respectively.
Operating expenses, including depreciation and amortization expense,
were $565,263 and $538,717 for the nine months ended September 30, 1996 and
1995, respectively, of which $175,808 and $169,493 were incurred for the
quarters ended September 30, 1996 and 1995, respectively. The increase in
operating expenses during the nine months ended September 30, 1996, as
compared to the nine months ended September 30, 1995, is primarily the result
of an increase in (i) accounting and administrative expenses associated with
operating the Partnership and its Properties, (ii) professional services as a
result of appraisal updates obtained to prepare an annual statement of unit
valuation to qualified plans in accordance with the Partnership's partnership
agreement and (iii) insurance expense as a result of the general partners'
obtaining contingent liability and property coverage for the Partnership,
effective May 1995. This insurance policy is intended to reduce the
Partnership's exposure in the unlikely event a tenant's insurance policy
lapses or is insufficient to cover a claim relating to the Property.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
-----------------
Item 2. Changes in Securities. Inapplicable.
---------------------
Item 3. Defaults upon Senior Securities. Inapplicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable.
Item 5. Other Information. Inapplicable.
-----------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 28th day of October, 1996.
CNL INCOME FUND XI, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
-----------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
