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 March 31, 1997
--------------------------
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
0-23968
----------------------
CNL Income Fund XIII, Ltd.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3143094
- ----------------------------- -------------------
(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
<PAGE>
CONTENTS
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Part I Page
----
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-9
Part II
Other Information 10
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1997 1996
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $1,403,745
and $1,305,886 $23,514,780 $23,612,639
Net investment in direct financing
leases 8,522,358 8,543,916
Investment in joint ventures 1,522,444 976,531
Cash and cash equivalents 934,763 1,103,568
Restricted cash - 550,770
Receivables, less allowance for
doubtful accounts of $149,457
and $150,734 266,525 100,955
Prepaid expenses 9,927 9,143
Organization costs, less accumu-
lated amortization of $7,922
and $7,422 2,078 2,578
Accrued rental income, less allow-
ance for doubtful accounts
of $75,716 and $72,734 1,139,683 1,044,970
----------- -----------
$35,912,558 $35,945,070
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 7,127 $ 6,340
Accrued and escrowed real estate
taxes payable 14,092 14,092
Distributions payable 850,002 850,002
Due to related parties 11,586 2,594
Rents paid in advance 86,759 54,105
----------- -----------
Total liabilities 969,566 927,133
Commitment (Note 3)
Partners' capital 34,942,992 35,017,937
----------- -----------
$35,912,558 $35,945,070
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1997 1996
---------- ----------
Revenues:
Rental income from operating leases $ 612,615 $ 581,016
Earned income from direct financing
leases 239,145 220,361
Contingent rental income 47,767 43,534
Interest and other income 13,916 13,226
---------- ----------
913,443 858,137
---------- ----------
Expenses:
General operating and administrative 42,227 40,421
Professional services 7,139 5,817
Management fees to related parties 8,635 8,539
State and other taxes 13,040 11,708
Depreciation and amortization 98,359 98,359
---------- ----------
169,400 164,844
---------- ----------
Income Before Equity in Earnings of
Joint Ventures 744,043 693,293
Equity in Earnings of Joint Ventures 31,014 26,387
---------- ----------
Net Income $ 775,057 $ 719,680
========== ==========
Allocation of Net Income:
General partners $ 7,751 $ 7,197
Limited partners 767,306 712,483
---------- ----------
$ 775,057 $ 719,680
========== ==========
Net Income Per Limited Partner Unit $ 0.19 $ 0.18
========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 4,000,000 4,000,000
========== ==========
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 106,517 $ 75,027
Net income 7,751 31,490
----------- -----------
114,268 106,517
----------- -----------
Limited partners:
Beginning balance 34,911,420 35,111,103
Net income 767,306 3,200,325
Distributions ($0.21 and $0.85
per limited partner unit,
respectively) (850,002) (3,400,008)
----------- -----------
34,828,724 34,911,420
----------- -----------
Total partners' capital $34,942,992 $35,017,937
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1997 1996
----------- -------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 864,598 $ 838,816
----------- -----------
Cash Flows from Investing
Activities:
Investment in joint ventures (550,000) -
Decrease in restricted cash 550,000 -
Loan to tenant (183,401) -
----------- ----------
Net cash used in
investing activities (183,401) -
----------- ----------
Cash Flows from Financing
Activities:
Distributions to limited
partners (850,002) (850,002)
----------- ----------
Net cash used in
financing activities (850,002) (850,002)
----------- ----------
Net Decrease in Cash and Cash
Equivalents (168,805) (11,186)
Cash and Cash Equivalents at Beginning
of Quarter 1,103,568 1,135,995
----------- -----------
Cash and Cash Equivalents at End of
Quarter $ 934,763 $ 1,124,809
=========== ===========
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid
at end of quarter $ 850,002 $ 850,002
=========== ===========
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
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 ended March 31, 1997, may not be indicative of the results
that may be expected for the year ending December 31, 1997. Amounts as
of December 31, 1996, 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 XIII, Ltd. (the "Partnership") for the year ended December
31, 1996.
2. Investment in Joint Ventures:
In January 1997, the Partnership acquired an approximate 63 percent
interest in a Burger King property in Akron, Ohio, as tenants-in-common
with an affiliate of the general partners. The Partnership accounts for
its investment in this property using the equity method since the
Partnership shares control with an affiliate, and amounts relating to
its investment are included in investment in joint ventures.
The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures at:
March 31, December 31,
1997 1996
----------- ------------
Land and buildings on
operating leases, less
accumulated depreciation $2,343,904 $1,482,503
Net investment in direct
financing leases 366,909 367,661
Cash 16,958 21,173
Receivables 7,474 6,412
Prepaid expenses 198 255
Accrued rental income 65,108 51,745
Liabilities 32,215 28,121
Partners' capital 2,768,336 1,901,628
Revenues 82,314 216,960
Net income 60,966 145,851
5
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1997 and 1996
2. Investment in Joint Ventures - Continued:
The Partnership recognized income totalling $31,014 and $26,387 for the
quarters ended March 31, 1997 and 1996, respectively, from these joint
ventures.
3. Commitment:
In February 1997, the Partnership entered into a sales contract with an
unrelated third party to sell the Denny's property in Orlando, Florida.
The sale of the property had not closed as of March 31, 1997.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CNL Income Fund XIII, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 25, 1992, 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 generally responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of March 31, 1997,
the Partnership owned 48 Properties, including two Properties owned by joint
ventures in which the Partnership is a co-venturer and two Properties owned with
affiliates as tenants-in-common.
Liquidity and Capital Resources
The Partnership's primary source of capital for the quarters ended
March 31, 1997 and 1996, 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 $864,598 and
$838,816 for the quarters ended March 31, 1997 and 1996, respectively. The
increase in cash from operations for the quarter ended March 31, 1997, as
compared to the quarter ended March 31, 1996, is primarily a result of changes
in income and expenses as discussed in "Results of Operations" below and changes
in the Partnership's working capital.
In January 1997, the Partnership reinvested the net sales proceeds it
received from the sale, in November 1996, of the Property in Richmond, Virginia,
in a Burger King Property located in Akron, Ohio, with 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. As of March 31, 1997, the Partnership owned an approximate
63 percent interest in this Property.
Currently, cash reserves and rental income from the Partnership's
Properties are 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 partners. At March 31, 1997,
the Partnership had $934,763 invested in such short-term investments, as
compared to $1,103,568 at December 31, 1996. The funds remaining at March 31,
1997, after the payment of distributions and other liabilities, will be used to
meet the Partnership's working capital and other needs.
7
<PAGE>
Liquidity and Capital Resources - Continued
Total liabilities of the Partnership, including distributions payable,
increased to $969,566 at March 31, 1997, from $927,133 at December 31, 1996,
primarily as a result of an increase in rents paid in advance during the quarter
ended March 31, 1997. Liabilities at March 31, 1997, to the extent they exceed
cash and cash equivalents at March 31, 1997, will be paid from future cash from
operations.
In February 1997, the Partnership entered into a sales contract with an
unrelated third party to sell the Denny's Property in Orlando, Florida. The sale
of the Property had not closed as of April 30, 1997. The Partnership intends to
reinvest the net sales proceeds in a replacement Property.
Based primarily on current and future anticipated cash from operations,
the Partnership declared distributions to the limited partners of $850,002 for
each of the quarters ended March 31, 1997 and 1996. This represents
distributions of $0.21 per unit for each of the quarters ended March 31, 1997
and 1996. No distributions were made to the general partners for the quarters
ended March 31, 1997 and 1996. No amounts distributed or to be distributed to
the limited partners for the quarters ended March 31, 1997 and 1996, 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 contribution. 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 quarter ended March 31, 1996, the Partnership owned and
leased 44 wholly owned Properties (including one Property in Richmond, Virginia,
which was sold in November 1996) and during the quarter ended March 31, 1997,
the Partnership owned and leased 43 wholly owned Properties to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the quarters ended March 31, 1997 and 1996, the Partnership earned $851,760 and
$801,377, respectively, in rental income from operating leases and earned income
from direct financing leases for these Properties. The increase in rental and
earned income during the quarter ended March 31, 1997, is primarily attributable
to the fact that, during
8
<PAGE>
Results of Operations - Continued
1996, the Partnership established an allowance for doubtful accounts of
approximately $28,500 for past due rental amounts relating to the Denny's
Property in Orlando, Florida in accordance with its collection policy. In
addition, the Partnership established an allowance for doubtful accounts of
approximately $56,000 during the quarter ended March 31, 1996, for accrued
rental income amounts previously recorded (due to the fact that future scheduled
rent increases are recognized on a straight-line basis over the term of the
lease in accordance with generally accepted accounting principles). No such
allowances were established during the quarter ended March 31, 1997. The tenant
of this Property is continuing to operate the restaurant on this Property. The
Partnership intends to continue pursuing collection of past due amounts relating
to this Property and will recognize any such amounts as income if collected. In
February 1997, the Partnership entered into a sales contract to sell the Denny's
Property in Orlando, Florida, as discussed above in "Liquidity and Capital
Resources."
During the quarters ended March 31, 1997 and 1996, the Partnership also
earned $47,767 and $43,534, respectively, in contingent rental income.
For the quarters ended March 31, 1997 and 1996, the Partnership owned
and leased two Properties indirectly through joint venture arrangements and one
Property with an affiliate as tenants-in-common. In addition, in January 1997,
the Partnership entered into an agreement with an affiliate of the general
partners to hold a Property located in Akron, Ohio, as a tenants-in-common, as
discussed above in "Liquidity and Capital Resources." In connection therewith,
during the quarters ended March 31, 1997 and 1996, the Partnership earned
$31,014 and $26,387, respectively, attributable to net income earned by these
joint ventures.
Operating expenses, including depreciation and amortization expense,
were $169,400 and $164,844 for the quarters ended March 31, 1997 and 1996,
respectively. The increase in operating expenses during the quarter ended March
31, 1997, is primarily the result of the Partnership incurring certain expenses
in connection with the purchase and sale agreement relating to the Denny's
Property in Orlando, Florida, as discussed above in "Liquidity and Capital
Resources." The increase in operating expenses during the quarter ended March
31, 1997, as compared to the quarter ended March 31, 1996, is partially offset
by a decrease in accounting and administrative expenses associated with
operating the Partnership and its Properties.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the
quarter ended March 31, 1997.
10
<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 9th day of May, 1997.
CNL INCOME FUND XIII, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the balance sheet of CNL Income Fund XIII, Ltd. at March 31, 1997, and
its statement of income for the three months then ended and is qualified
in its entirety by reference to the Form 10-Q of CNL Income Fund XIII, Ltd.
for the three months ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 934,763
<SECURITIES> 0
<RECEIVABLES> 415,982
<ALLOWANCES> 149,457
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 24,918,525
<DEPRECIATION> 1,403,745
<TOTAL-ASSETS> 35,912,558
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 34,942,992
<TOTAL-LIABILITY-AND-EQUITY> 35,912,558
<SALES> 0
<TOTAL-REVENUES> 913,443
<CGS> 0
<TOTAL-COSTS> 169,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 775,057
<INCOME-TAX> 0
<INCOME-CONTINUING> 775,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 775,057
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XIII, Ltd. has
an unclassified balance sheet; therefore no values are shown above
for current assets and current liabilities.
</FN>
</TABLE>
