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
--------------------------------------
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 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>
<TABLE>
<CAPTION>
CONTENTS
<S><C>
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 6-9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 9
Part II
Other Information 10-11
</TABLE>
<PAGE>
CNL INCOME FUND XIII, 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 of $2,652,884 and $2,383,986, respectively,
and allowance for loss on building of $297,885 in 1999 $ 21,253,974 $ 22,162,826
Net investment in direct financing leases 7,477,125 7,042,118
Investment in joint ventures 2,431,565 2,445,549
Cash and cash equivalents 742,421 945,802
Receivables, less allowance for doubtful
accounts of $54,479 in 2000 65,575 135,432
Prepaid expenses 30,378 15,963
Lease costs, less accumulated
amortization of $3,142 and $1,789, respectively 32,608 33,961
Accrued rental income 1,689,388 1,555,610
------------------- -------------------
$ 33,723,034 $ 34,337,261
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 33,953 $ 144,227
Accrued construction costs -- 194,743
Accrued and escrowed real estate taxes payable 15,152 2,176
Distributions payable 850,002 850,002
Due to related parties 116,392 69,234
Rents paid in advance and deposits 38,343 46,319
------------------- -------------------
Total liabilities 1,053,842 1,306,701
Partners' capital 32,669,192 33,030,560
------------------- -------------------
$ 33,723,034 $ 34,337,261
=================== ===================
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ -------------
<S><C>
Revenues:
Rental income from operating leases $ 581,533 $ 587,142 $1,765,409 $ 1,783,785
Earned income from direct financing leases 225,200 209,450 624,473 599,396
Contingent rental income 58,077 65,207 161,849 175,450
Interest and other income 19,743 14,860 49,602 27,853
------------ ------------ ------------ -------------
884,553 876,659 2,601,333 2,586,484
------------ ------------ ------------ -------------
Expenses:
General operating and administrative 49,099 31,750 144,896 106,324
Professional services 12,856 13,223 33,254 34,831
Bad debt expense -- -- 2,584 --
Management fees to related party 9,121 8,962 26,916 26,739
Real estate taxes 2,430 -- 7,869 13,319
State and other taxes -- -- 21,730 21,476
Depreciation and amortization 97,368 96,446 288,161 297,117
Transaction costs -- 60,630 70,689 174,513
------------ ------------ ------------ -------------
170,874 211,011 596,099 674,319
------------ ------------ ------------ -------------
Income Before Equity in Earnings of Joint
Ventures, Gain on Sale of Land and Building and
Loss on Demolition of Building 713,679 665,648 2,005,234 1,912,165
Equity in Earnings of Joint Ventures 60,426 60,592 183,404 181,146
Gain on Sale of Land and Building -- 176,159 -- 176,159
Loss on Demolition of Building -- -- -- (352,285 )
------------ ------------ ------------ -------------
Net Income $ 774,105 $ 902,399 2,188,638 $ 1,917,185
============ ============ ============ =============
Allocation of Net Income:
General partners $ 7,741 $ 8,393 $ 21,886 $ 20,421
Limited partners 766,364 894,006 2,166,752 1,896,764
------------ ------------ ------------ -------------
$ 774,105 $ 902,399 $2,188,638 $ 1,917,185
============ ============ ============ =============
Net Income Per Limited Partner Unit $ 0.19 $ 0.22 $ 0.54 $ 0.47
============ ============ ============ =============
Weighted Average Number of Limited Partner
Units Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
============ ============ ============ =============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
------------------------- -----------------------
<S><C>
General partners:
Beginning balance $ 191,934 $ 163,874
Net income 21,886 28,060
------------------------- -----------------------
213,820 191,934
------------------------- -----------------------
Limited partners:
Beginning balance 32,838,626 33,585,529
Net income 2,166,752 2,653,105
Distributions ($0.64 and $0.85 per
limited partner unit, respectively) (2,550,006 ) (3,400,008 )
------------------------- -----------------------
32,455,372 32,838,626
------------------------- -----------------------
Total partners' capital $ 32,669,192 $ 33,030,560
========================= =======================
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---------------- ---------------
<S><C>
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $2,434,222 $2,529,681
---------------- ---------------
Cash Flows from Investing Activities:
Additions to land and building on operating lease (87,597 ) --
Payment of lease costs -- (17,875 )
Proceeds from sale of land and building -- 1,059,498
---------------- ---------------
Net cash provided by (used in) investing
activities (87,597 ) 1,041,623
---------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,550,006 ) (2,550,006 )
---------------- ---------------
Net cash used in financing activities (2,550,006 ) (2,550,006 )
---------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents (203,381 ) 1,021,298
Cash and Cash Equivalents at Beginning of Period 945,802 766,859
---------------- ---------------
Cash and Cash Equivalents at End of Period $ 742,421 $1,788,157
================ ===============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Construction costs incurred and unpaid at
end of period $ -- $ 816,500
================ ===============
Distributions declared and unpaid at end of
period $ 850,002 $ 850,002
================ ===============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIII, 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 XIII, Ltd. (the "Partnership") for the year ended December
31, 1999.
2. Land and Buildings on Operating Leases:
In May 1999, the Partnership entered into a new lease for the property
in Philadelphia, Pennsylvania, with a new tenant to operate the
property as an Arby's restaurant. In connection therewith, the
Partnership funded a total of approximately $325,900 in renovation
costs, of which approximately $87,600 was incurred during the nine
months ended September 30, 2000. The portion of the lease attributable
to the building portion of the property is classified as a direct
financing lease (see Note 3).
3. Net Investment in Direct Financing Leases:
In connection with the new lease for the property in Philadelphia,
Pennsylvania, and in accordance with the Statement of Financial
Accounting Standards No. 13, "Accounting for Leases," the Partnership
recorded the portion of the lease relating to the building portion of
the property as a direct financing lease (see Note 2).
4. 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 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 generally triple-net leases, with the lessees generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of
September 30, 2000, the Partnership owned 46 Properties, which included
interests in two Properties owned by joint ventures in which the Partnership is
a co-venturer and three Properties owned with affiliates of the general partners
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
$2,434,222 and $2,529,681 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 the Partnership's working capital.
Other sources and uses of capital included the following for the nine
months ended September 30, 2000.
In May 1999, the Partnership entered into a new lease for the Property
in Philadelphia, Pennsylvania with the new tenant to operate the Property as an
Arby's restaurant. In connection with the new lease, the Partnership funded a
total of approximately $325,900 in renovation costs, of which approximately
$87,600 was incurred during the nine months ended September 30, 2000.
Currently, rental income from the Partnership's Properties is invested
in money market accounts or other short-term, highly liquid investments, such as
demand deposit accounts at commercial banks, money market accounts 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
$742,421 invested in such short-term investments, as compared to $945,802 at
December 31, 1999. Cash and cash equivalents decreased during the nine months
ended September 30, 2000, primarily as a result of the fact that the Partnership
paid renovation costs of approximately $87,600 during the nine months ended
September 30, 2000, as described above. The funds remaining at September 30,
2000, will be used to pay distributions and other liabilities.
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, including distributions payable,
decreased to $1,053,842 at September 30, 2000, from $1,306,701 at December 31,
1999. The decrease was primarily a result of the decrease in accounts payable
and the fact that during the nine months ended September 30, 2000, the
Partnership funded amounts previously accrued for construction costs. The
decrease was partially offset by an increase in amounts due to related parties
at September 30, 2000, as compared to December 31, 1999. Liabilities at
September 30, 2000, to the extent they exceed cash and cash equivalents at
September 30, 2000, will be paid from future cash from operations, or in the
event the general partners elect to make capital contributions or loans, from
future general partner contributions or loans.
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 future anticipated cash from operations, the Partnership
declared distributions to the limited partners of $2,550,006 for each of the
nine months ended September 30, 2000 and 1999 ($850,002 for each applicable
quarter). This represents distributions of $0.64 per unit for each applicable
nine months ($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
quarters and 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 42 wholly owned Properties (which included one Property in Houston,
Texas which was sold in July 1999) and during the nine months ended September
30, 2000, the Partnership owned and leased 41 wholly owned Properties 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 $2,389,882 and $2,383,181, respectively, in rental income
from operating leases and earned income from direct financing leases from these
Properties, $806,733 and $796,592 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively. The increase in rental and earned
income during the quarter and nine months ended September 30, 2000 was primarily
attributable to an increase in rental and earned income during the quarter and
nine months ended September 30, 2000 of approximately $32,700 and $119,000 as a
result of the Partnership re-leasing several Properties affected by the
bankruptcy of Long John Silver's Inc. that occurred during 1998. In 1998, Long
John Silver's, Inc. filed for bankruptcy, rejected the leases relating to three
of the eight Properties leased by it and discontinued making rental payments on
the three rejected leases. During 1998, the Partnership re-leased two of the
Properties to new tenants, for one of which rent commenced in 1998 and for one
of which rent commenced in June 1999. In addition, in May 1999, the Partnership
re-leased the remaining vacant Property to a new tenant and renovated the
Property into an Arby's restaurant. In August 1999, Long John Silver's, Inc.
assumed and affirmed its five remaining leases with the Partnership, and the
Partnership has continued to receive rental payments relating to these five
leases. Rental and earned income also increased during the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999, by
approximately $7,500 due to the Partnership receiving bankruptcy proceeds
relating to the three Properties whose leases were rejected, as described above.
The increase to rental and earned income during the quarter and nine
months ended September 30, 2000 was partially offset by a decrease in rental and
earned income of approximately $4,200 and $53,300, respectively, as a result of
the sale of the Property in Houston, Texas, in July 1999.
The increase in rental and earned income during the quarter and nine
months ended September 30, 2000 was partially offset by a decrease in rental and
earned income during the quarter and nine months ended September 30, 2000, due
to the fact that the Partnership established an allowance for doubtful accounts
for past due rental amounts relating to its Properties in Mesa and Peoria,
Arizona, in accordance with 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.
During the nine months ended September 30, 2000 and 1999, the
Partnership also owned and leased two Properties indirectly through joint
venture arrangements and three Properties with affiliates of the general
partners as tenants-in-common. In connection therewith, during the nine months
ended September 30, 2000 and 1999, the Partnership earned $183,404 and $181,146,
respectively, attributable to the net income earned by these joint ventures,
$60,426 and $60,592 of which was earned during the quarters ended September 30,
2000 and 1999, respectively.
Operating expenses, including depreciation and amortization expense,
were $596,099 and $674,319 for the nine months ended September 30, 2000 and
1999, respectively, of which $170,874 and $211,011 were incurred for 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 attributable to the fact that the Partnership incurred less
transaction costs related 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 during the quarter and nine months ended September 30, 2000,
as compared to the quarter and nine months ended September 30, 1999, was
partially offset by an increase in administrative expenses for servicing the
Partnership and its Properties.
During the nine months ended September 30, 1999, the Partnership
entered into a new lease for its Property in Tampa, Florida, with a
Steak-n-Shake operator. In connection with the new lease, the Partnership agreed
to renovate the Property; therefore, the old building located on the Property
was removed. As a result, the Partnership removed the remaining undepreciated
cost of the building from its accounts resulting in a loss of $352,285 for
financial reporting purposes.
During the quarter and nine months ended September 30, 1999, the
Partnership recognized a gain of $176,159 for financial reporting purposes as a
result of the sale of the Property in Houston, Texas. No Properties were sold
during the quarter and nine months ended September 30, 2000.
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.
Not applicable.
<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 XIII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-53672-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XIII, Ltd. (Includedas Exhibit 3.2 to
Registration Statement No. 33-53672-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XIII, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XIII, Ltd.
and CNL Investment Company (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, 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.)
<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.)
27 Financial Data schedule (Filed herewith.)
(b) Reports of 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 XIII, 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)
