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, 1998
--------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
0-23968
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
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
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
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1998 1997
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $1,795,179
and $1,697,320 $22,690,759 $22,788,618
Net investment in direct financing
leases 7,887,957 7,910,470
Investment in joint ventures 2,459,619 2,457,810
Cash and cash equivalents 1,047,626 907,980
Receivables 8,600 23,946
Prepaid expenses 10,116 10,368
Organization costs, less accumu-
lated amortization of $9,922
and $9,422 78 578
Accrued rental income 1,516,407 1,423,820
----------- -----------
$35,621,162 $35,523,590
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 10,643 $ 7,671
Distributions payable 850,002 850,002
Due to related parties 7,828 6,791
Rents paid in advance 124,983 5,570
----------- -----------
Total liabilities 993,456 870,034
Partners' capital 34,627,706 34,653,556
----------- -----------
$35,621,162 $35,523,590
=========== ===========
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,
1998 1997
---------- ----------
Revenues:
Rental income from operating leases $ 618,515 $ 612,615
Earned income from direct financing
leases 217,035 239,145
Contingent rental income 65,923 47,767
Interest and other income 20,195 13,916
---------- ----------
921,668 913,443
---------- ----------
Expenses:
General operating and administrative 30,094 42,227
Professional services 8,405 7,139
Management fees to related parties 8,953 8,635
State and other taxes 15,953 13,040
Depreciation and amortization 98,418 98,359
---------- ----------
161,823 169,400
---------- ----------
Income Before Equity in Earnings of
Joint Ventures 759,845 744,043
Equity in Earnings of Joint Ventures 64,307 31,014
---------- ----------
Net Income $ 824,152 $ 775,057
========== ==========
Allocation of Net Income:
General partners $ 8,242 $ 7,751
Limited partners 815,910 767,306
---------- ----------
$ 824,152 $ 775,057
========== ==========
Net Income Per Limited Partner Unit $ 0.20 $ 0.19
========== =========
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,
1998 1997
------------- ------------
General partners:
Beginning balance $ 137,207 $ 106,517
Net income 8,242 30,690
----------- -----------
145,449 137,207
----------- -----------
Limited partners:
Beginning balance 34,516,349 34,911,420
Net income 815,910 3,004,937
Distributions ($0.21 and $0.85
per limited partner unit,
respectively) (850,002) (3,400,008)
----------- -----------
34,482,257 34,516,349
----------- -----------
Total partners' capital $34,627,706 $34,653,556
=========== ===========
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,
1998 1997
----------- ----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 989,648 $ 864,598
----------- -----------
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 Increase (Decrease) in Cash and
Cash Equivalents 139,646 (168,805)
Cash and Cash Equivalents at Beginning
of Quarter 907,980 1,103,568
----------- -----------
Cash and Cash Equivalents at End of
Quarter $ 1,047,626 $ 934,763
=========== ===========
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, 1998 and 1997
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter ended March 31, 1998, may not be indicative of the results
that may be expected for the year ending December 31, 1998. Amounts as
of December 31, 1997, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XIII, Ltd. (the "Partnership") for the year ended December
31, 1997.
5
<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, 1998,
the Partnership owned 47 Properties, including two Properties owned by joint
ventures in which the Partnership is a co-venturer and three 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, 1998 and 1997, was cash from operations (which includes cash received
from tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses). Cash from operations was $989,648 and
$864,598 for the quarters ended March 31, 1998 and 1997, respectively. The
increase in cash from operations for the quarter ended March 31, 1998, as
compared to the quarter ended March 31, 1997, is primarily a result of changes
in income and expenses as described in "Results of Operations" below and changes
in the Partnership's working capital.
Currently, cash reserves and rental income from the Part-nership'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, 1998,
the Partnership had $1,047,626 invested in such short-term investments, as
compared to $907,980 at December 31, 1997. The increase in cash and cash
equivalents for the quarter ended March 31, 1998, is primarily attributable to
an increase in rents paid in advance at March 31, 1998, as compared to December
31, 1997. The funds remaining at March 31, 1998, after payment of distributions
and other liabilities, will be used to meet the Partnership's working capital
and other needs.
Total liabilities of the Partnership, including distributions payable,
increased to $993,456 at March 31, 1998, from $870,034 at December 31, 1997,
primarily as a result of an increase in rents paid in advance at March 31, 1998.
The general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
6
<PAGE>
Liquidity and Capital Resources - Continued
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $850,002 for each of the quarters ended
March 31, 1998 and 1997. This represents distributions of $0.21 per unit for
each applicable quarter. No distributions were made to the general partners for
the quarters ended March 31, 1998 and 1997. No amounts distributed to the
limited partners for the quarters ended March 31, 1998 and 1997, are required to
be or have been treated by the Partnership as a return of capital for purposes
of calculating the limited partners' return on their adjusted capital
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, 1997, the Partnership owned and
leased 43 wholly owned Properties (including one Property in Orlando, Florida,
which was sold in October 1997) and during the quarter ended March 31, 1998, the
Partnership owned and leased 42 wholly owned Properties to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the quarters ended March 31, 1998 and 1997, the Partnership earned $835,550 and
$851,760, respectively, in rental income from operating leases and earned income
from direct financing leases for these Properties. The decrease during the
quarter ended March 31, 1998, as compared to the quarter ended March 31, 1997,
was primarily attributable to a decrease of approximately $13,800 as a result of
the fact that in February 1997, the Partnership discontinued charging rent to
the former tenant of the Denny's Property in Orlando, Florida, as a result of
the former tenant vacating the Property. The Partnership sold this Property in
October 1997, and in December 1997, reinvested the net sales proceeds in a
Property in Miami, Florida, as tenants-in-common, with affiliates of the general
partners.
During the quarters ended March 31, 1998 and 1997, the Partnership also
earned $65,923 and $47,767, respectively, in contingent rental income. The
increase in contingent rental income during the quarter ended March 31, 1998, is
primarily attributable to the Partnership adjusting estimated contingent rental
amounts accrued at December 31, 1997, to actual amounts during the quarter ended
March 31, 1998.
7
<PAGE>
Results of Operations - Continued
During the quarters ended March 31, 1998 and 1997, the Partnership also
owned and leased two Properties indirectly through joint venture arrangements
and two Properties with affiliates of the general partners as tenants-in-common,
and for the quarter ended March 31, 1998, owned and leased one additional
Property as tenants-in-common with affiliates of the general partners. In
connection therewith, during the quarters ended March 31, 1998 and 1997, the
Partnership earned $64,307 and $31,014, respectively, attributable to the net
income earned by these joint ventures. The increase in net income earned by
these joint ventures during the quarter ended March 31, 1998, as compared to the
quarter ended March 31, 1997, is primarily attributable to the fact that in
December 1997, the Partnership reinvested the net sales proceeds it received
from the sale, in October 1997, of the Property in Orlando, Florida, in a
Property located in Miami, Florida, with affiliates of the general partners as
tenants-in-common.
Operating expenses, including depreciation and amortization expense,
were $161,823 and $169,400 for the quarters ended March 31, 1998 and 1997,
respectively. The decrease in operating expenses during the quarter ended March
31, 1998, is primarily attributable to the fact that during the quarter ended
March 31, 1997, the Partnership incurred certain expenses in connection with a
purchase and sale agreement relating to the Denny's Property in Orlando,
Florida. The Partnership sold the Property in October 1997.
8
<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, 1998.
9
<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 8th day of May, 1998.
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, 1998, and its statement of
income for the three months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL Income Fund XIII, Ltd. for the three months
ended March 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,047,626
<SECURITIES> 0
<RECEIVABLES> 8,600
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 24,485,938
<DEPRECIATION> 1,795,179
<TOTAL-ASSETS> 35,621,162
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 34,627,706
<TOTAL-LIABILITY-AND-EQUITY> 35,621,162
<SALES> 0
<TOTAL-REVENUES> 921,668
<CGS> 0
<TOTAL-COSTS> 161,823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 824,152
<INCOME-TAX> 0
<INCOME-CONTINUING> 824,152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 824,152
<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>
