FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2000
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the transition period from _____________________ to _____________________
Commission file number
0-21558
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CNL Income Fund XII, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-3078856
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
----------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________
<PAGE>
CONTENTS
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 5-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Part II
Other Information 14-15
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation $ 21,340,033 $ 20,780,828
Net investment in direct financing leases 9,790,673 11,441,924
Investment in joint ventures 4,666,305 3,415,888
Mortgage note receivable 47,819 51,301
Cash and cash equivalents 1,586,937 1,870,366
Receivables, less allowance for doubtful accounts
of $86,898 and $14,491, respectively 96,365 80,791
Due from related parties -- 5,222
Prepaid expenses 31,163 13,552
Lease costs, less accumulated amortization
of $10,152 and $6,142, respectively 52,271 56,281
Accrued rental income, less allowance for doubtful
accounts of $8,717 and $6,323, respectively 2,752,435 2,724,774
------------------- -------------------
$ 40,364,001 $ 40,440,927
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 34,985 $ 136,006
Accrued and escrowed real estate taxes payable 19,627 11,897
Distributions payable 956,252 956,252
Due to related parties 125,641 74,909
Rents paid in advance and deposits 11,974 50,987
------------------- -------------------
Total liabilities 1,148,479 1,230,051
Partners' capital 39,215,522 39,210,876
------------------- -------------------
$ 40,364,001 $ 40,440,927
=================== ===================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Revenues:
Rental income from operating leases $ 642,373 $ 611,730 $2,026,840 $1,846,362
Earned income from direct financing leases 259,613 370,818 880,353 1,119,392
Contingent rental income 2,495 1,712 4,209 6,394
Interest and other income 30,026 27,282 91,907 72,217
------------ ------------ ------------ ------------
934,507 1,011,542 3,003,309 3,044,365
------------ ------------ ------------ ------------
Expenses:
General operating and administrative 53,484 40,451 162,684 119,332
Professional services 17,471 8,345 37,441 30,921
Management fees to related party 11,589 10,568 33,165 32,023
Real estate taxes -- 603 -- 4,099
State and other taxes -- -- 20,834 20,764
Depreciation and amortization 102,205 84,031 300,861 252,808
Transaction costs -- 69,671 77,277 197,353
------------ ------------ ------------ ------------
184,749 213,669 632,262 657,300
------------ ------------ ------------ ------------
Income Before Equity in Earnings of Joint
Ventures and Gain on Sale of Land and
Building 749,758 797,873 2,371,047 2,387,065
Equity in Earnings of Joint Ventures 87,691 76,127 247,950 266,333
Gain on Sale of Land and Building 106,772 -- 254,405 74,714
------------ ------------ ------------ ------------
Net Income $ 944,221 $ 874,000 $2,873,402 $2,728,112
============ ============ ============ ============
Allocation of Net Income:
General partners $ 8,375 $ 8,739 $ 26,190 $ 26,634
Limited partners 935,846 865,261 2,847,212 2,701,478
------------ ------------ ------------ ------------
$ 944,221 $ 874,000 $2,873,402 $2,728,112
============ ============ ============ ============
Net Income Per Limited Partner Unit $ 0.21 $ 0.19 $ 0.63 $ 0.60
============ ============ ============ ============
Weighted Average Number of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============ ============ ============ ============
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
------------------------- ---------------------
General partners:
Beginning balance $ 259,109 $ 223,305
Net income 26,190 35,804
------------------------- ---------------------
285,299 259,109
------------------------- ---------------------
Limited partners:
Beginning balance 38,951,767 39,167,536
Net income 2,847,212 3,609,239
Distributions ($0.64 and $0.85 per
limited partner unit, respectively) (2,868,756 ) (3,825,008 )
------------------------- ---------------------
38,930,223 38,951,767
------------------------- ---------------------
Total partners' capital $ 39,215,522 $ 39,210,876
========================= =====================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2000 1999
---------------- ---------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $2,837,999 $2,952,968
---------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land and building 2,019,357 467,300
Additions to land and buildings (1,009,067 ) --
Investment in joint ventures (1,267,513 ) (135,825 )
Collections on mortgage note receivable 4,551 2,134
Payment of lease costs -- (16,435 )
---------------- ---------------
Net cash provided by (used in) investing
activities (252,672 ) 317,174
---------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,868,756 ) (3,003,756 )
---------------- ---------------
Net cash used in financing activities (2,868,756 ) (3,003,756 )
---------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents (283,429 ) 266,386
Cash and Cash Equivalents at Beginning of Period 1,870,366 2,362,980
---------------- ---------------
Cash and Cash Equivalents at End of Period $1,586,937 $2,629,366
================ ===============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Mortgage note accepted in exchange for sale of
land and building $ -- $ 55,000
================ ===============
Construction costs incurred and unpaid at end
of period $ -- $ 30,000
================ ===============
Distributions declared and unpaid at end of
period $ 956,252 $ 956,252
================ ===============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 2000, may not be
indicative of the results that may be expected for the year ending
December 31, 2000. Amounts as of December 31, 1999, included in the
financial statements, have been derived from audited financial
statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XII, Ltd. (the "Partnership") for the year ended December
31, 1999.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
Land $ 12,216,812 $ 12,262,712
Buildings 11,547,811 10,645,853
------------------- -------------------
23,764,623 22,908,565
Less accumulated depreciation (2,424,590 ) (2,127,737 )
------------------- -------------------
$ 21,340,033 $ 20,780,828
=================== ===================
</TABLE>
Effective January 1, 2000, the Partnership amended the lease relating
to its property in St. Ann, Missouri, to allow for a rent reduction. As
a result, the Partnership reclassified the building portion of this
asset from net investment in direct financing lease to building on
operating lease. In accordance with statement of Financial Accounting
Standards No. 13, "Accounting for Leases," the Partnership recorded the
reclassified asset at the lower of
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
2. Land and Buildings on Operating Leases - Continued:
original cost, present fair value, or present carrying value. No loss
was recorded on the reclassification.
In April 2000, the Partnership reinvested the net sales proceeds it
received from the sale of the property in Cleveland, Tennessee, along
with additional funds, in a Krystal property located in Pooler, Georgia
(see Note 3). In connection therewith, the Partnership entered into a
long term, triple-net lease with terms substantially the same as its
other leases.
In July 2000, the Partnership sold its property in Bradenton, Florida
to an unrelated third party for approximately $1,227,900, resulting in
a gain of approximately $106,800 for financial reporting purposes. This
property was originally acquired by the Partnership in 1992 and had
costs totaling approximately $1,000,000, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold
this property for approximately $227,900 in excess of its original
purchase price. The Partnership used the net sales proceeds to acquire
an interest in an additional property, with an affiliate, as
tenants-in-common. ( See Note 4).
3. Net Investment in Direct Financing Leases:
In March 2000, the Partnership sold its property in Cleveland,
Tennessee, for which the land and building had been classified as a
direct financing lease, for $806,460 and received net sales proceeds of
approximately $791,500, resulting in a gain of approximately $147,600
for financial reporting purposes. In connection therewith, the gross
investment (minimum lease payments receivable and the estimated
residual value) and unearned income relating to the land and building
were removed from the accounts. This property was originally acquired
by the Partnership in December 1992 and had a cost of approximately
$622,800, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the property for
approximately $168,700 in excess of its original purchase price. In
April 2000, the Partnership reinvested the net sales proceeds, along
with additional funds, in a Krystal property located in Pooler, Georgia
(see Note 2).
4. Investment in Joint Ventures:
In July 2000, the Partnership sold its property in Bradenton, Florida
to an unrelated third party for approximately $1,227,900. (See Note 2).
The Partnership reinvested the net
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
4. Investment in Joint Ventures - Continued:
sales proceeds to acquire an interest in a Bennigan's Property in
Colorado Springs, Colorado with CNL Income Fund VII, Ltd. ("CNL VII"),
a Florida limited partnership and an affiliate of the general partners,
as tenants-in-common. In connection therewith, the Partnership and the
affiliate entered into an agreement whereby each co-venturer will share
in the profits and losses of the property in proportion to its
applicable percentage interest. The Partnership will account for its
investment in this property using the equity method since the
Partnership will share control with the affiliate. As of September 30,
2000, the Partnership owned a 57 percent interest in this property.
The following presents the joint ventures' combined, condensed
financial information at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------ ------------------
<S> <C>
Land and buildings on operating leases, less
accumulated depreciation and allowance for
loss on land $ 6,189,126 $ 4,030,064
Net investment in direct financing leases,
less allowance for impairment in
carrying value 1,933,751 1,953,200
Cash 39,562 40,636
Receivables 193 34,276
Accrued rental income 271,647 219,436
Other assets 960 732
Liabilities 31,679 40,517
Partners' capital 8,403,560 6,237,827
Revenues 522,727 645,168
Net income 439,099 568,191
</TABLE>
The Partnership recognized income totaling $247,950, and $266,333
during the nine months ended September 30, 2000 and 1999, respectively,
from these joint ventures, of which $87,691 and $76,127 was earned
during the quarters ended September 30, 2000 and 1999, respectively.
<PAGE>
CNL INCOME FUND XII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
5. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan
of Merger entered into in March 1999. The general partners are
continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the limited partners.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XII, 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 generally triple-net leases, with the lessees responsible for all repairs
and maintenance, Property taxes, insurance and utilities. As of September 30,
2000, the Partnership owned 48 Properties, which included interests in six
Properties owned by joint ventures in which the Partnership is a co-venturer,
and one Property owned as tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the nine months ended
September 30, 2000 and 1999 was cash from operations (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operations was
$2,837,999 and $2,952,968 for the nine months ended September 30, 2000 and 1999,
respectively. The decrease in cash from operations for the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999, was
primarily a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
nine months ended September 30, 2000.
During the nine months ended September 30, 2000, the Partnership sold
its Property in Cleveland, Tennessee, to a third party, for $806,460 and
received net sales proceeds of approximately $791,500, resulting in a total gain
of approximately $147,600 for financial reporting purposes. This Property was
originally acquired by the Partnership in December 1992, and had a cost of
approximately $622,800, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately
$168,700 in excess of its original purchase price. In April 2000, the
Partnership reinvested the net sales proceeds, along with additional funds, in a
Property in Pooler, Georgia. The transaction relating to the sale of the
Property in Cleveland, Tennessee and the reinvestment of the net sales proceeds
was structured to qualify as a like-kind exchange transaction for federal income
tax purposes. However, the Partnership will distribute amounts sufficient to
enable the limited partners to pay federal and state income taxes, if any (at a
level reasonably assumed by the general partners), resulting from the sale.
In July 2000, the Partnership sold its Property in Bradenton, Florida
to an unrelated third party for approximately $1,227,900, resulting in a gain of
approximately $106,800 for financial reporting purposes. This Property was
originally acquired by the Partnership in 1992 and had costs totaling
approximately $1,000,000, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold this Property for
approximately $227,900 in excess of its original purchase price. The Partnership
used the net sales proceeds to acquire an interest in an additional Property as
tenants-in-common, with an affiliate, as described below. The transaction
relating to the sale of the Property in Bradenton, Florida and the reinvestment
of the net sales proceeds was structured to qualify as a like-kind exchange
transaction for federal income tax purposes. However, the Partnership will
distribute amounts sufficient to enable the limited partners to pay federal and
state income taxes, if any (at a level reasonably assumed by the general
partners), resulting from the sale.
The Partnership reinvested the net sales proceeds from the sale
described above in a Bennigan's Property in Colorado Springs, Colorado with CNL
Income Fund VII, Ltd. ("CNL VII"), a Florida limited partnership and an
affiliate of the general partners, as tenants-in-common. In connection
therewith, the Partnership and the affiliate entered into an agreement where by
each co-venturer will share in the profits and losses of the property in
proportion to its applicable percentage interest. The Partnership will account
for its investment in this property using the equity method since the
Partnership will share control with the affiliate. As of September 30, 2000, the
Partnership owned a 57 percent interest in this property.
Currently, rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties, pending reinvestment in additional
Properties, are invested in money market accounts or other short-term, highly
liquid investments, such as demand deposit accounts at commercial banks and
certificates of deposit with less than a 30-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses or to make
distributions to the partners. At September 30, 2000, the Partnership had
$1,586,937 invested in such short-term investments, as compared to $1,870,366 at
December 31, 1999. The funds remaining at September 30, 2000, after payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who meet specified
financial standards minimizes the Partnership's operating expenses. The general
partners believe that the leases will continue to generate cash flow in excess
of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Total liabilities of the Partnership decreased to $1,148,479 at
September 30, 2000, from $1,230,051 at December 31, 1999, primarily as a result
of a decrease in accounts payable and rents paid in advance and deposits at
September 30, 2000, as compared to December 31, 1999. The decrease in
liabilities at September 30, 2000 was partially offset by an increase in due to
related parties at September 30, 2000, as compared to December 31, 1999. The
general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and, for the nine months ended September 30, 2000, anticipated
future cash from operations, the Partnership declared distributions to the
limited partners of $2,868,756 for each of the nine months ended September 30,
2000 and 1999 ($956,252 for each of the quarters ended September 30, 2000 and
1999). This represents distributions for each applicable nine months of $0.64
per unit ($0.21 per unit for each applicable quarter). No distributions were
made to the general partners for the quarters and nine months ended September
30, 2000 and 1999. No amounts distributed to the limited partners for the nine
months ended September 30, 2000 and 1999 are required to be or have been treated
by the Partnership as a return of capital for purposes of calculating the
limited partners' return on their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available for
distribution to the limited partners on a quarterly basis.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the nine months ended September 30, 1999, the Partnership owned
and leased 44 wholly owned Properties (which included one Property sold in
December 1998) and during the nine months ended September 30, 2000, the
Partnership owned and leased 43 wholly owned Properties (which included two
Properties sold during 2000), to operators of fast-food and family-style
restaurant chains. In connection therewith, during the nine months ended
September 30, 2000 and 1999, the Partnership earned $2,907,193 and $2,965,754,
respectively, in rental income from operating leases and earned income from
direct financing leases from these Properties, $901,986 and $982,548 of which
was earned during the quarters ended September 30, 2000 and 1999, respectively.
The decrease in rental and earned income during the quarter and nine months
ended September 30, 2000 was also partially due to a decrease of approximately
$46,900 and $71,600 during the quarter and nine months ended September 30, 2000,
respectively, as a result of the sale of the Property in Cleveland, Tennessee in
March 2000, and the Property in Bradenton, Florida in July 2000, as described in
"Capital Resources." This decrease was partially offset by an increase in rental
and earned income of approximately $28,800 and $54,400 during the quarter and
nine months ended September 30, 2000, respectively, due to the reinvestment of
the net sales proceeds in a Property in Pooler, Georgia in April 2000, as
described in "Capital Resources."
The decrease in rental and earned income was partially due to a
decrease of approximately $49,000 and $68,700 during the quarter and nine months
ended September 30, 2000, respectively, due to the fact that during the quarter
and nine months ended September 30, 2000, the Partnership established an
allowance for doubtful accounts for past due rental amounts relating to three
Properties in accordance with the Partnership's policy. No such allowance was
recorded during the quarter and nine months ended September 30, 1999. The
general partners will continue to pursue collection of past due rental amounts
relating to these Properties and will recognize such amounts as income if
collected.
The decrease in rental and earned income during the quarter and nine
months ended September 30, 2000 was also due to a decrease in rental and earned
income of approximately $5,400 and $19,200, respectively, due to the fact that
the lease relating to the Property in St. Ann, Missouri was amended to provide
for rent reductions from January 2000 through the end of the lease term. The
Partnership does not believe that the rent reductions will have a material
adverse effect on the results of operations of the Partnership.
The decrease in rental and earned income during the nine months ended
September 30, 2000 was partially offset by an increase in rental and earned
income due to the fact that during the nine months ended September 30, 2000, the
Partnership collected and recognized as income approximately $38,200 in past due
rental amounts relating to Long John Silver's, Inc. which filed for bankruptcy
during 1998 and rejected the leases relating to three of the eight Properties it
leased. As of September 30, 2000, the Partnership had sold two of the Properties
for which the leases had been rejected and had entered into a lease with a new
tenant for the remaining Property for which the lease had been rejected. As a
result of entering into a new lease with a new tenant, rental and earned income
increased by approximately $7,200 and $50,800 during the quarter and nine months
ended September 30, 2000, respectively, due to the Partnership recognizing
rental income on this re-leased Property. During 1999, Long John Silver's, Inc.
assumed and affirmed its five remaining leases and the Partnership has continued
receiving rental payments relating to these leases. However, the increase in
rental and earned income was partially offset by a decrease of $8,000 and
$23,900 for the quarter and nine months ended September 30, 2000, respectively,
due to the Partnership granting Long John Silver's, Inc. rent concessions on
three of the affirmed leases.
In addition, during the nine months ended September 30, 2000 and 1999,
the Partnership owned and leased seven and five Properties, respectively,
indirectly through joint venture arrangements or as tenants-in-common. In
connection therewith, during the nine months ended September 30, 2000 and 1999,
the Partnership earned $247,950 and $266,333, respectively, $87,691 and $76,127
of which was earned during the quarters ended September 30, 2000 and 1999,
respectively. The decrease in net income earned by joint ventures was partially
due to the fact that during the quarter and nine months ended September 30,
1999, Middleburg Joint Venture, in which the Partnership owns an 87.54%
interest, collected and recognized as income past due rental amounts for which
the joint venture had previously established an allowance for doubtful accounts.
The decrease in net income earned by joint ventures during the quarter and nine
months ended September 30, 2000 was partially offset by an increase due to the
fact that subsequent to September 30, 1999, the Partnership invested in Bossier
City Joint Venture and acquired an interest in a Property in Colorado Springs,
as tenants-in-common, with an affiliate, as described in "Capital Resources".
Operating expenses, including depreciation and amortization expense,
were $632,262 and $657,300 during the nine months ended September 30, 2000 and
1999, respectively, $184,749 and $213,669 of which were incurred during the
quarters ended September 30, 2000 and 1999, respectively. The decrease in
operating expenses during the quarter and nine months ended September 30, 2000,
as compared to the quarter and nine months ended September 30, 1999, was
partially due to the fact that the Partnership incurred less transaction costs
relating to the general partners retaining financial and legal advisors to
assist them in evaluating and negotiating the proposed merger with CNL American
Properties Fund, Inc. ("APF") due to the termination of the proposed merger, as
described below in "Termination of Merger."
The decrease in operating expenses was partially offset by an increase
in administrative expenses for servicing the Partnership and its Properties. In
addition, the decrease in operating expenses was partially offset by an increase
in depreciation expense relating to the fact that subsequent to September 30,
1999, the Partnership reclassified the leases for its Properties in Asheville,
North Carolina and Clarksville, Tennessee from direct financing leases to
operating leases due to lease amendments.
As a result of the sale of the Property in Bradenton, Florida, during
the quarter and nine months ended September 30, 2000, and the sale of the
Property in Cleveland, Tennessee, during the nine months ended September 30,
2000, as described above in "Capital Resources," the Partnership recorded gains
of $106,772 and of $254,405 for financial reporting purposes during the quarter
and nine months ended September 30, 2000, respectively. As a result of the sale
of the Property in Morganton, North Carolina in May 1999, the Partnership
recorded a gain of $74,714 for financial reporting purposes during the nine
months ended September 30, 1999.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger entered into in March 1999. The
general partners are continuing to evaluate strategic alternatives for the
Partnership, including alternatives to provide liquidity to the limited
partners.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material changes in the Partnership's market risk occurred from
December 31, 1999 through September 30, 2000. Information regarding the
Partnership's market risk at December 31, 1999 is included in its Annual Report
on Form 10-K for the year ended December 31, 1999.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11
and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278-01 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XII, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, and incorporated herein
by reference.)
10.1 Management Agreement between CNL Income Fund XII,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on April 15, 1993, 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 31, 1995,
and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 10th day of November, 2000.
By: CNL INCOME FUND XII, LTD.
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)
