UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 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 0-23974
CNL INCOME FUND XIV, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3143096
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of
the Act:
Units of limited partnership interest ($10 per Unit)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
PART I
Item 1. Business
CNL Income Fund XIV, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 25, 1992. The general partners of the Partnership are
Robert A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on August 27, 1993, the
Partnership offered for sale up to $45,000,000 of limited partnership interests
(the "Units") (4,500,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
March 17, 1993. The offering terminated on February 22, 1994, at which date the
maximum proceeds of $45,000,000 had been received from investors who were
admitted to the Partnership as limited partners ("Limited Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, 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 "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totalled
$39,606,055 and were used to acquire 54 Properties, including 18 Properties
consisting of land only and four Properties owned by joint ventures in which the
Partnership is a co-venturer, to pay acquisition fees totalling $2,475,000 to an
affiliate of the General Partners and to establish a working capital reserve for
Partnership purposes. During the year ended December 31, 1995, the tenant of the
Checkers Property in Knoxville, Tennessee, and the Checkers Property in Dallas,
Texas, exercised its option in accordance with the lease agreements to
substitute two other Properties for the Knoxville, Tennessee and Dallas, Texas
Properties. The Partnership sold the Knoxville and Dallas Properties to the
tenant and used the net sales proceeds to acquire two Checkers Properties in
Coral Springs and St. Petersburg, Florida. In addition, during the year ended
December 31, 1996, Wood-Ridge Real Estate Joint Venture, a joint venture in
which the Partnership is a co-venturer with an affiliate of the General
Partners, sold its two Properties to the tenant. The joint venture reinvested
the majority of the net sales proceeds in four Boston Market Properties (one of
which consisted of only land) and one Golden Corral Property. The building
portion of the Boston Market in Murfreesboro, Tennessee, is owned by the tenant.
In addition, during the year ended December 31, 1997, the Port of Palm Bay took
possession of the Property in Riviera Beach, Florida through a total right of
way taking. In addition, during the year ended December 31, 1997, Wood Ridge
Real Estate Joint Venture reinvested the remaining proceeds from the sales of
the two Properties in 1996, in a Taco Bell Property in Anniston, Alabama. As a
result of the above transactions, as of December 31, 1997, the Partnership
currently owned 58 Properties, including 17 wholly owned Properties consisting
of land only and interests in nine Properties owned by joint ventures in which
the Partnership is a co-venturer. The lessee of the 17 wholly owned Properties
consisting of only land owns the buildings currently on the land and has the
right, if not in default under the lease, to remove the buildings from the land
at the end of the lease terms. In January 1998, the Partnership sold two
Properties, one in Madison, Alabama and one in Richmond, Virginia (Checkers
#458). The Partnership intends to reinvest the net proceeds from each of the
sales in additional Properties. The Properties are leased on a triple-net basis
with the lessees responsible for all repairs and maintenance, property taxes,
insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. In general, the General Partners plan to seek the sale of some of
the Properties commencing seven to 12 years after their acquisition. The
Partnership has no obligation to sell all or any portion of a Property at any
particular time, except as may be required under property purchase options
granted to certain lessees.
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Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. Substantially all of the leases of the Properties owned by
the Partnership and the joint ventures in which the Partnership is a co-venturer
provide for initial terms ranging from 15 to 20 years (the average being
approximately 19 years) and expire between 2007 and 2017. The leases are, in
general, on a triple-net basis, with the lessees responsible for all repairs and
maintenance, property taxes, insurance and utilities. The leases of the
Properties provide for minimum base annual rental payments (payable in monthly
installments) ranging from approximately $18,900 to $203,600. The majority of
the leases provide for percentage rent, based on sales in excess of a specified
amount. In addition, the majority of the leases provide that, commencing in
specified lease years (generally the sixth or ninth lease year), the annual base
rent required under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Certain lessees also have been granted options to purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of certain leases, the option
purchase price may equal the Partnership's original cost to purchase the
Property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Partnership's purchase price,
if that amount is greater than the Property's fair market value at the time the
purchase option is exercised.
The leases for the 17 wholly owned Properties consisting of only land
are substantially the same as those described above except that the leases
relate solely to the land associated with the Property, with the tenant owning
the buildings currently on the land and having the right, if not in default
under the lease, to remove the buildings from the land at the end of the lease
term.
During 1994, a temporary operator assumed operations of the restaurant
business located at the Property in Akron, Ohio Property and paid the
Partnership rent on a month-to-month basis. During 1995, a new temporary
operator assumed operations of the restaurant business for this Property and was
paying the Partnership rent on a month-to-month basis. During 1997, the
Partnership entered into a long-term, triple-net lease with the operator of an
Arlington Big Boy restaurant. The lease terms for this Property are
substantially the same as the Partnership's other leases as described above in
the first two paragraphs of this section.
In January 1997, Wood-Ridge Real Estate Joint Venture reinvested the
majority of the remaining net sales proceeds from the 1996 sale of its two
Properties in a Taco Bell Property located in Anniston, Alabama. The lease terms
for this Property are substantially the same as the Partnership's other leases
as described above in the first two paragraphs of this section.
In September 1997, the Partnership entered into a joint venture
arrangement, CNL Kingston Joint Venture, with an affiliate of the Partnership
which has the same General Partners, to construct and hold one restaurant
Property. As of December 31, 1997, the Partnership and its co-venture partner
had contributed $121,855 and $183,241, respectively, to purchase land and
building relating to the joint venture. The Partnership and its co-venture
partner have agreed to contribute approximately $85,600 and $128,700,
respectively, in additional construction costs to the joint venture. The lease
terms for this Property are substantially the same as the Partnership's other
leases as described above in the first two paragraphs of this section.
Major Tenants
During 1997, five lessees (or group of affiliated lessees) of the
Partnership, (i) Flagstar Enterprises, Inc. and Denny's, Inc. (which are
affiliated entities under common control of Flagstar Corporation) (hereinafter
referred to as Flagstar Corporation), (ii) Foodmaker, Inc., (iii) Long John
Silver's, Inc., (iv) Checkers Drive-In Restaurants, Inc. and (v) Golden Corral
Corporation, each contributed more than ten percent of the Partnership's total
rental income (including the Partnership's share of rental income from nine
Properties owned by joint ventures). As of December 31, 1997, Flagstar
Corporation was the lessee under leases relating to 11 restaurants, Foodmaker,
Inc. was the lessee under leases relating to six restaurants, Long John
Silver's, Inc. was the lessee under leases relating to nine restaurants,
Checkers Drive-In Restaurants, Inc. was the lessee under leases relating to 17
restaurants and Golden
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Corral Corporation was the lessee under leases relating to four restaurants. It
is anticipated that, based on the minimum rental payments required by the
leases, these five lessees (or group of affiliated lessees) each will continue
to contribute more than ten percent of the Partnership's total rental income in
1998 and subsequent years. In addition, six Restaurant Chains, Hardee's,
Denny's, Jack in the Box, Long John Silver's, Checkers and Golden Corral Family
Steakhouse Restaurants ("Golden Corral"), each accounted for more than ten
percent of the Partnership's total rental income during 1997 (including the
Partnership's share of rental income from nine Properties owned by joint
ventures). In subsequent years, it is anticipated that these six Restaurant
Chains each will account for more than ten percent of the total rental income to
which the Partnership is entitled under the terms of the leases. Any failure of
these lessees or Restaurant Chains could materially affect the Partnership's
income. No single tenant or group of affiliated tenants lease Properties with an
aggregate carrying value, excluding acquisition fees and certain acquisition
expenses, in excess of 20 percent of the total assets of the Partnership.
Joint Venture Arrangements
The Partnership has entered into two separate joint venture
arrangements, Attalla Joint Venture and Salem Joint Venture, with affiliates of
the General Partners to purchase and hold two Properties. In August 1994, the
Partnership entered into a joint venture arrangement, Wood-Ridge Real Estate
Joint Venture, with an affiliate of the General Partners to purchase and hold
two Properties. In September 1996, Wood-Ridge Real Estate Joint Venture sold its
two Properties to the tenant and as of December 31, 1997, had reinvested the
majority of the net sales proceeds in six replacement Properties. The joint
venture distributed the remaining net sales proceeds to the Partnership and its
co-venture partner on a pro rata basis during 1997. In addition, in March 1995,
the Partnership entered into a joint venture arrangement, Salem Joint Venture,
with an affiliate of the General Partners to renovate and hold one Property. The
joint venture arrangements provide for the Partnership and its joint venture
partners to share in all costs and benefits associated with the joint ventures
in accordance with their respective percentage interests in the joint ventures.
The Partnership and its joint venture partners are also jointly and severally
liable for all debts, obligations and other liabilities of the joint ventures.
In September 1997, the Partnership entered into a joint venture arrangement, CNL
Kingston Joint Venture, with an affiliate of the Partnership which has the same
General Partners, to construct and hold one restaurant Property.
Wood Ridge Real Estate Joint Venture, Attalla Joint Venture and Salem
Joint Venture each have an initial term of 30 years and CNL Kingston Joint
Venture has an initial term of 20 years and, after the expiration of the initial
term, continues in existence from year to year unless terminated at the option
of either of the joint venturers or by an event of dissolution. Events of
dissolution include the bankruptcy, insolvency or termination of any joint
venturer, sale of the Property owned by the joint venture unless agreed to by
mutual agreement of the Partnership and its joint venture partners to reinvest
the sales proceeds in replacement Properties, and by mutual agreement of the
Partnership and its joint venture partners to dissolve the joint venture.
The Partnership shares management control equally with an affiliate of
the General Partners for Attalla Joint Venture, Wood-Ridge Real Estate Joint
Venture, Salem Joint Venture and CNL Kingston Joint Venture. The joint venture
agreements restrict each venturer's ability to sell, transfer or assign its
joint venture interest without first offering it for sale to its joint venture
partner, either upon such terms and conditions as to which the venturers may
agree or, in the event the venturers cannot agree, on the same terms and
conditions as any offer from a third party to purchase such joint venture
interest.
Net cash flow from operations of Attalla Joint Venture, Wood-Ridge Real
Estate Joint Venture, Salem Joint Venture and CNL Kingston Joint Venture is
distributed 50 percent, 50 percent, 72.2% and 39.94%, respectively, to the
Partnership and the balance is distributed to each of the other joint venture
partners. Any liquidation proceeds, after paying joint venture debts and
liabilities and funding reserves for contingent liabilities, will be distributed
first to the joint venture partners with positive capital account balances in
proportion to such balances until such balances equal zero, and thereafter in
proportion to each joint venture partner's percentage interest in the joint
venture.
Certain Management Services
CNL Income Fund Advisors, Inc., an affiliate of the General Partners,
provided certain services relating to management of the Partnership and its
Properties pursuant to a management agreement with the Partnership through
September 30, 1995. Under this agreement, CNL Income Fund Advisors, Inc. was
responsible for collecting rental
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payments, inspecting the Properties and the tenants' books and records,
assisting the Partnership in responding to tenant inquiries and notices and
providing information to the Partnership about the status of the leases and the
Properties. CNL Income Fund Advisors, Inc. also assisted the General Partners in
negotiating the leases. For these services, the Partnership had agreed to pay
CNL Income Fund Advisors, Inc. an annual fee of one percent of the sum of gross
rental revenues from Properties wholly owned by the Partnership plus the
Partnership's allocable share of gross revenues of joint ventures in which the
Partnership is a co-venturer, but not in excess of competitive fees for
comparable services.
Effective October 1, 1995, CNL Income Fund Advisors, Inc. assigned its
rights in, and its obligations under, the management agreement with the
Partnership to CNL Fund Advisors, Inc. All of the terms and conditions of the
management agreement, including the payment of fees, as described above, remain
unchanged.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains and restaurants in other well-known national chains, including
those offering different types of food and service.
At the time the Partnership elects to dispose of its Properties, other
than as a result of the exercise of tenant options to purchase Properties, the
Partnership will be in competition with other persons and entities to locate
purchasers for its Properties.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who may
also perform certain services for the Partnership.
Item 2. Properties
As of December 31, 1997, the Partnership owned, either directly or
through joint venture arrangements, 58 Properties, located in 17 states.
Reference is made to the Schedule of Real Estate and Accumulated Depreciation
filed with this report for a listing of the Properties and their respective
costs, including acquisition fees and certain acquisition expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 15,900
to 100,100 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. However, the
buildings located on the 17 Checkers Properties owned by the Partnership and the
Boston Market Property owned by Wood-Ridge Real Estate Joint Venture are owned
by the tenants. The buildings generally are rectangular and are constructed from
various combinations of stucco, steel, wood, brick and tile. The sizes of the
buildings owned by the Partnership range from approximately 2,100 to 11,400
square feet. All buildings on Properties are freestanding and surrounded by
paved parking areas. Buildings are suitable for conversion to various uses,
although modifications may be required prior to use for other than restaurant
operations.
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<PAGE>
Generally, a lessee is required, under the terms of its lease
agreement, to make such capital expenditures as may be reasonably necessary to
refurbish buildings, premises, signs and equipment so as to comply with the
lessee's obligations, if applicable, under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 1997 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Flagstar Corporation leases seven Hardee's restaurants and four Denny's
restaurants. The initial term of each lease is 20 years (expiring in 2013) and
the average minimum base annual rent is approximately $76,500 (ranging from
approximately $59,100 to $100,900).
Foodmaker, Inc. leases six Jack in the Box restaurants. The initial
term of each lease is 18 years (expiring in 2011) and the average minimum base
annual rent is approximately $83,600 (ranging from approximately $62,200 to
$99,900).
Long John Silver's, Inc. leases nine Long John Silver's restaurants.
The initial term of each lease is 20 years (expiring in 2014) and the average
minimum base annual rent is approximately $81,100 (ranging from approximately
$50,500 to $117,500).
Checkers Drive-In Restaurants, Inc. leases 17 Checkers restaurants. The
initial term of each lease is 20 years (expiring between 2014 and 2015) and the
average minimum base annual rent is approximately $34,400 (ranging from
approximately $18,900 to $54,500). The tenant owns the buildings currently on
the land and has the right, if not in default under the leases, to remove the
buildings from the land at the end of the lease term.
In addition, Golden Corral Corporation leases four Golden Corral
restaurants. The initial term of each lease is 15 years (expiring between 2008
and 2011) and the average minimum base annual rent is approximately $143,500
(ranging from approximately $110,200 to $203,600).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
Item 3. Legal Proceedings
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of February 28, 1998, there were 3,030 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. Limited Partners
who wish to sell their Units may offer the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the
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"Plan"), and Limited Partners who wish to have their distributions used to
acquire additional Units (to the extent Units are available for purchase) may do
so pursuant to such Plan. The General Partners have the right to prohibit
transfers of Units. Since inception, the price paid for any Unit transferred
pursuant to the Plan has been $9.50 per Unit. The price to be paid for any Unit
transferred other than pursuant to the Plan is subject to negotiation by the
purchaser and the selling Limited Partner. The Partnership will not redeem or
repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1997 and 1996 other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>
1997 (1) 1996 (1)
--------------------------------- --------------------
<S> <C>
High Low Average High Low Average
First Quarter $ 9.50 $ 8.21 $ 9.19 $ 9.50 $ 7.93 $ 8.91
Second Quarter 8.60 6.90 7.85 9.50 9.50 9.50
Third Quarter 9.50 8.03 8.66 10.00 10.00 10.00
Fourth Quarter 9.50 7.50 8.76 9.20 7.25 8.23
</TABLE>
(1) A total of 39,387 and 13,122 Units were transferred other than pursuant
to the Plan for the years ended December 31, 1997 and 1996,
respectively.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For the years ended December 31, 1997 and 1996, the Partnership
declared cash distributions of $3,712,520 and $3,712,522, respectively, to the
Limited Partners. No amounts distributed to partners for the years ended
December 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 contributions. No distributions have
been made to the General Partners to date. As indicated in the chart below,
these distributions were declared at the close of each of the Partnership's
calendar quarters. These amounts include monthly distributions made in arrears
for the Limited Partners electing to receive such distributions on this basis.
Quarter Ended 1997 1996
------------- ---------- -------
March 31 $928,130 $928,130
June 30 928,130 928,130
September 30 928,130 928,132
December 31 928,130 928,130
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
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Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- ---------------
<S> <C>
Year Ended December 31:
Revenues (1) $4,268,693 $4,503,039 $4,406,707 $3,371,695 $ 285,413
Net income (2) 3,665,940 3,916,329 3,751,237 2,932,075 242,446
Cash distributions declared 3,712,520 3,712,522 3,628,130 2,850,554 232,199
Net income per Unit (2) (3) 0.81 0.86 0.83 0.66 0.15
Cash distributions declared
per Unit (3) 0.83 0.83 0.81 0.65 0.15
At December 31:
Total assets $40,984,624 $41,045,849 $40,838,104 $40,866,591 $26,142,541
Partners' Capital $39,989,157 $40,035,737 $39,831,930 $39,708,823 $25,321,617
</TABLE>
(1) Revenues include equity in earnings of the joint ventures.
(2) Net income for the year ended December 31, 1995, includes $66,518 from
loss on sale of land.
(3) Based on the weighted average number of Limited Partner Units
outstanding during each of the years ended December 31, 1997, 1996,
1995 and 1994, and the period September 13, 1993 through December 31,
1993.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on September 25, 1992, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurant Properties were to be constructed, which are leased primarily to
operators of selected national and regional fast-food and family-style
Restaurant Chains. The leases are triple-net leases, with the lessee generally
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of December 31, 1997, the Partnership owned 58 Properties, either
directly or through joint venture arrangements.
Liquidity and Capital Resources
The Partnership's primary source of capital for the years ended
December 31, 1997, 1996 and 1995, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and interest received,
less cash paid for expenses). Cash from operations was $3,606,190, $3,706,296
and $3,709,844 for the years ended December 31, 1997, 1996 and 1995,
respectively. The decrease in cash from operations during 1997 and 1996, each as
compared to the previous year, 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 during each of the respective years.
Other sources and used of capital included the following during the
years ended December 31, 1997, 1996 and 1995.
The Partnership received notice in January 1995, from the tenant of two
of its Properties located in Knoxville, Tennessee, and Dallas, Texas, of the
tenant's intention to exercise its option, in accordance with its lease
agreement, to substitute other properties for these two Properties. In March
1995, the Partnership sold its two Properties in Knoxville, Tennessee and
Dallas, Texas, to the tenant for their original purchase prices, excluding
acquisition fees and miscellaneous acquisition expenses, and received net sales
proceeds totalling $696,012. The
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Partnership used the net sales proceeds, along with other uninvested offering
proceeds, to acquire two Checkers Properties in Coral Springs and St.
Petersburg, Florida, from the tenant. As a result of these transactions, the
Partnership recognized a loss of $66,518 for financial reporting purposes
primarily due to acquisition fees and miscellaneous acquisition expenses that
the Partnership had allocated to the Knoxville, Tennessee, and Dallas, Texas
Properties, and due to the accrued rental income relating to future scheduled
rent increases that the Partnership had previously recorded and wrote off at the
time of sale.
In September 1996, Wood-Ridge Real Estate Joint Venture, a joint
venture in which the Partnership owns a 50 percent interest, sold its two
Properties to the tenant for $5,020,878 and received net sales proceeds of
$5,001,180, resulting in a gain to the joint venture of approximately $261,100
for financial reporting purposes. These Properties were originally acquired by
Wood-Ridge Real Estate Joint Venture in September 1994 and had a combined, total
cost of approximately $4,302,500, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the joint venture sold these properties for
approximately $698,700 in excess of their original purchase price. In October
1996, Wood-Ridge Real Estate Joint Venture reinvested $4,404,046 of the net
sales proceeds in five Properties. In January 1997, the joint venture reinvested
$502,598 of the remaining net sales proceeds in an additional Property. During
1997, the Partnership and the other joint venture partner each received
approximately $52,000, representing a return of capital, for the remaining
uninvested net sales proceeds.
In September 1997, the Partnership entered into a joint venture
arrangement, CNL Kingston Joint Venture, with an affiliate of the Partnership
which has the same General Partners, to construct and hold one restaurant
Property. As of December 31, 1997, the Partnership and its co-venture partner
had contributed $121,855 and $183,241, respectively, to the joint venture to
fund construction costs relating to the Property owned by the joint venture. The
Partnership and its co-venture partner have agreed to contribute approximately
$85,600 and $128,700, respectively, in additional construction costs to the
joint venture. When construction is completed, the Partnership and its
co-venture partner expect to have an approximate 40 and 60 percent interest,
respectively, in the profits and losses of the joint venture.
During 1997, the Partnership entered into an agreement with the tenant
of the Checkers #486 Property in Richmond, Virginia, to sell the Property. The
General Partners believe that the anticipated sales price exceeds the
Partnership's cost attributable to the Property. As of February 28, 1998, the
sale had not occurred.
During 1997, the Partnership entered into an agreement with a third
party to sell the Property in Marietta, Georgia. The General Partners believe
that the anticipated sales price exceeds the Partnership's cost attributable to
the Property. As of February 28, 1998, the sale had not occurred.
In December 1997, the Port of Palm Bay deposited $660,000 in the
registry of the court on behalf of the Partnership and the tenant in exchange
for taking possession of the Property located in Riviera Beach, Florida, through
a total right of way taking. The Partnership owned the land and the tenant owned
the building relating to this Property. The General Partners of the Partnership
and the tenant are in the process of negotiating the allocation of the $660,000.
The General Partners anticipate that the Partnership will be entitled to receive
at least $330,000, but the General Partners intend to pursue a larger allocation
of this amount. As of December 31, 1997, the Partnership had removed the
carrying value of the land in the amount of $318,592 from its accounts due to
the fact that the Port of Palm Bay had taken possession of this Property, and in
exchange, the Partnership recorded restricted cash in the amount of $318,592.
The General Partners anticipate that the Partnership will recognize a gain as a
result of the taking of this Property and will recognize such gain when the
final proceeds are determined. As of February 28, 1998, the final amount of
proceeds to be received had not been determined.
In January 1998, the Partnership sold its Property in Madison, Alabama,
to a third party for $740,000 and received net sales proceeds of $700,950. Due
to the fact that the Partnership had recognized accrued rental income since the
inception of the lease relating to the straight lining of future scheduled rent
increases in accordance with generally accepted accounting principles, the
Partnership wrote off $13,314 of such accrued rental income at December 31,
1997. Due to the fact that the Partnership recorded the write off at December
31, 1997, no gain or loss will be recorded in 1998 for financial reporting
purposes relating to the sale. The Partnership intends to reinvest the net sales
proceeds in an additional Property. The General Partners believe that the
transaction, or a portion thereof, relating to the sale of this Property and the
reinvestment of the proceeds will be structured to qualify as a like-kind
exchange transaction for federal income tax purposes.
8
<PAGE>
In January 1998, the Partnership sold its Property in Richmond,
Virginia (#548), to a third party for $512,462 and received net sales proceeds
in that amount, resulting in a gain of $70,798 for financial reporting purposes.
The Partnership intends to reinvest the net sales proceeds in an additional
Property. The General Partners believe that the transaction, or a portion
thereof, relating to the sale of this Property and the reinvestment of the
proceeds will be structured to qualify as a like-kind exchange transaction for
federal income tax purposes.
None of the Properties owned by the Partnership or the joint ventures
in which the Partnership owns an interest is or may be encumbered. Subject to
certain restrictions on borrowing, however, the Partnership may borrow funds but
will not encumber any of the Properties in connection with any such borrowing.
The Partnership will not borrow for the purpose of returning capital to the
Limited Partners. The Partnership will not borrow under arrangements that would
make the Limited Partners liable to creditors of the Partnership. The General
Partners further have represented that they will use their reasonable efforts to
structure any borrowing so that it will not constitute "acquisition
indebtedness" for federal income tax purposes and also will limit the
Partnership's outstanding indebtedness to three percent of the aggregate
adjusted tax basis of its Properties. Affiliates of the General Partners from
time to time incur certain operating expenses on behalf of the Partnership for
which the Partnership reimburses the affiliates without interest.
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 make distributions to partners. At December 31, 1997,
the Partnership had $1,285,777 invested in such short-term investments as
compared to $1,462,012 at December 31, 1996. The decrease in cash is primarily
attributable to the Partnership investing in CNL Kingston Joint Venture in
September 1997, as described above. The funds remaining at December 31, 1997,
after the payment of distributions and other liabilities, will be used to meet
the Partnership's working capital and other needs.
During 1997, 1996 and 1995, the affiliates incurred on behalf of the
Partnership $87,695, $94,152 and $104,433, respectively, for certain operating
expenses. In addition, during 1995, affiliates of the General Partners incurred
on behalf of the Partnership $577 for certain acquisition expenses. At December
31, 1997 and 1996, the Partnership owed $7,853 and $1,651, respectively, to
affiliates for such amounts and accounting and administrative services and
management fees. As of February 28, 1998, the Partnership had reimbursed the
affiliates all such amounts. Other liabilities, including distributions payable,
decreased to $987,614 at December 31, 1997, from $1,008,461 at December 31,
1996, primarily as a result of a decrease in rents paid in advance at December
31, 1997. The General Partners believe that the Partnership has sufficient cash
on hand to meet its current working capital needs.
Based primarily on current and future cash from operations, the
Partnership declared distributions to the Limited Partners of $3,712,520,
$3,712,522 and $3,628,130 for the years ended December 31, 1997, 1996 and 1995,
respectively. This represents distributions of $0.83 per Unit for each of the
years ended December 31, 1997 and 1996 and $0.81 per Unit for the year ended
December 31, 1995. No amounts distributed or to be distributed to the Limited
Partners for the years ended 1997, 1996 and 1995 are required to be or have been
treated by the Partnership as a return of capital for purposes of calculating
the Limited Partners' return of their adjusted capital contributions. The
Partnership intends to continue to make distributions of cash available for
distribution to the Limited Partners on a quarterly basis.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally 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.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because leases of the Partnership's Properties are on a
triple-net basis, it is not anticipated that a permanent reserve for maintenance
and repairs will be established at this
9
<PAGE>
time. To the extent, however, that the Partnership has insufficient funds for
such purposes, the General Partners will contribute to the Partnership an
aggregate amount of up to one percent of the offering proceeds for maintenance
and repairs. The General Partners have the right to cause the Partnership to
maintain additional reserves if, in their discretion, they determine such
reserves are required to meet the Partnership's working capital needs.
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
The Partnership owned and leased 52 wholly owned Properties during 1995
(including one Property in Knoxville, Tennessee, and one Property in Dallas,
Texas, which were sold in March 1995) and 50 wholly owned Properties during 1996
and 1997 (including one Property in Riviera Beach, Florida which was condemned
through a total right of way taking in December 1997). In addition, during 1995,
the Partnership was a co-venturer in three separate joint ventures that owned
and leased a total of four Properties, during 1996, the Partnership was a
co-venturer in three joint ventures that owned and leased nine Properties
(including two Properties in Wood-Ridge Real Estate Joint Venture, which were
sold in September 1996), and during 1997, the Partnership was a co-venture in
four separate joint ventures that owned and leased a total of nine Properties.
As of December 31, 1997, the Partnership owned, either directly or through joint
venture arrangements, 58 Properties which are, in general, subject to long-term,
triple-net leases. The leases of the Properties provide for minimum base annual
rental amounts (payable in monthly installments) ranging from approximately
$18,900 to $203,600. All of the leases provide for percentage rent based on
sales in excess of a specified amount. In addition, the majority of the leases
provide that, commencing in specified lease years (generally the sixth or ninth
lease year), the annual base rent required under the terms of the lease will
increase. For further description of the Partnership's leases and Properties,
see Item 1. Business - Leases and Item 2. Properties, respectively.
During the years ended December 31, 1997, 1996 and 1995, the
Partnership earned $3,911,527, $3,987,525 and $4,015,564, respectively, in
rental income from operating leases and earned income from direct financing
leases from Properties wholly owned by the Partnership. The decrease in rental
and earned income during 1996, as compared to 1995, was primarily attributable
to the fact that during 1994, the Partnership's former tenant of the Property in
Akron, Ohio, ceased operating the restaurant located on the Property. The
Partnership subsequently leased this Property to various temporary operators who
assumed the restaurant operations and paid the Partnership rent on a
month-to-month basis. The decrease in rental and earned income during 1997, as
compared to 1996, was primarily attributable to the fact that during May 1997,
the temporary operator of the Property in Akron, Ohio, ceased restaurant
operations and vacated the Property. The Partnership ceased recording rental
income and wrote off the related allowance for doubtful accounts. The
Partnership entered into a long-term, triple-net lease for this Property with
the operator of an Arlington Big Boy in September 1997, and rental income
commenced in December, 1997.
In addition, the decrease in rental and earned income during 1997 as
compared to 1996, was partially due to the fact that the Partnership wrote off
accrued rent relating to the Property in Madison, Alabama to adjust the carrying
value of the asset to the net proceeds received from the sale of this Property
in January 1998.
In addition, for the years ended December 31, 1997, 1996 and 1995, the
Partnership earned $309,879, $459,137 and $338,717, respectively, attributable
to net income earned by joint ventures in which the Partnership is a
co-venturer. The decrease in net income earned by joint ventures during 1997 as
compared to 1996, and the increase during 1996 as compared to 1995, is primarily
attributable to the fact that in September 1996, Wood-Ridge Real Estate Joint
Venture, in which the Partnership owns a 50 percent interest, recognized a gain
of approximately $261,100 for financial reporting purposes as a result of the
sale of its Properties in September 1996, as described above in "Liquidity and
Capital Resources."
During at least one of the years ended December 31, 1997, 1996 and
1995, five lessees (or group of affiliated lessees) of the Partnership, Flagstar
Corporation, Foodmaker, Inc., Long John Silver's, Inc., Checkers Drive-In
Restaurants, Inc. and Golden Corral Corporation, each contributed more than ten
percent of the Partnership's total rental income (including the Partnership's
share of rental income from nine Properties owned by joint ventures). As of
December 31, 1997, Flagstar Corporation was the lessee under leases relating to
11 restaurants, Foodmaker,
10
<PAGE>
Inc. was the lessee under leases relating to six restaurants, Long John
Silver's, Inc. was the lessee under leases relating to nine restaurants,
Checkers Drive-In Restaurants, Inc. was the lessee under leases relating to 17
restaurants and Golden Corral Corporation was the lessee under leases relating
to four restaurants. It is anticipated that based on the minimum rental payments
required by the leases, these five lessees (or group of affiliated lessees) each
will continue to contribute more than ten percent of the Partnership's total
rental income in 1998 and subsequent years. In addition, during at least one of
the years ended December 31, 1997, 1996 or 1995, six Restaurant Chains,
Hardee's, Denny's, Jack in the Box, Long John Silver's, Checkers and Golden
Corral, each accounted for more than ten percent of the Partnership's total
rental income (including the Partnership's share of rental income from nine
Properties owned by joint ventures). In subsequent years, it is anticipated that
these six Restaurant Chains each will account for more than ten percent of the
total rental income to which the Partnership is entitled under the terms of the
leases. Any failure of these lessees or Restaurant Chains could materially
affect the Partnership's income.
Operating expenses, including depreciation and amortization expense,
were $602,753, $586,710 and $588,952 for the years ended December 31, 1997, 1996
and 1995, respectively. The increase in operating expenses during 1997 as
compared to 1996 was primarily attributable to the fact that the Partnership
recorded bad debt expense of $10,500 during 1997 relating to the Property in
Akron, Ohio. Due to the fact that the temporary operator ceased operating the
Property in May, 1997, as described above in "Liquidity and Capital Resources,"
the General Partners ceased further collection efforts of these past due
amounts.
As a result of the former tenant of the Property in Akron, Ohio,
defaulting under the terms of its lease during 1994 and the Partnership leasing
the Property to temporary operators who subsequently ceased operating the
Property, the Partnership incurred real estate taxes during the years ended
December 31, 1997, 1996 and 1995. The Partnership entered into a long-term,
triple-net lease for this Property with the operator of an Arlington Big Boy in
September 1997, and rental income commenced in December 1997. The new tenant is
responsible for real estate taxes; therefore, the General Partners do not
anticipate the Partnership will incur these expenses in the future.
As a result of the 1995 sales of the Properties in Knoxville,
Tennessee, and Dallas, Texas, as described above in "Liquidity and Capital
Resources," the Partnership recognized a loss for financial reporting purposes
of $66,518 for the year ended December 31, 1995. The loss was primarily due to
acquisition fees and miscellaneous acquisition expenses the Partnership had
allocated to these Properties and due to accrued rental income relating to
straight lining future scheduled rent increases that the Partnership had
recorded and wrote off at the time of the sale.
No Properties were sold during 1996 and 1997.
The General Partners of the Partnership are in the process of assessing
and addressing the impact of the year 2000 on its computer package software. The
hardware and built-in software are believed to be year 2000 compliant.
Accordingly, the General Partners do not expect this matter to materially impact
how the Partnership conducts business nor its current and future results of
operations or financial position.
The Partnership's leases as of December 31, 1997, are, in general,
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Management expects that increases in restaurant
sales volumes due to inflation and real sales growth should result in an
increase in rental income over time. Continued inflation also may cause capital
appreciation of the Partnership's Properties. Inflation and changing prices,
however, also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.
Item 8. Financial Statements and Supplementary Data
11
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Accountants 13
Financial Statements:
Balance Sheets 14
Statements of Income 15
Statements of Partners' Capital 16
Statements of Cash Flows 17
Notes to Financial Statements 19
12
<PAGE>
Report of Independent Accountants
To the Partners
CNL Income Fund XIV, Ltd.
We have audited the financial statements and the financial statement schedule of
CNL Income Fund XIV, Ltd. (a Florida limited partnership) listed in Item 14(a)
of this Form 10-K. These financial statements and financial statement schedule
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund XIV, Ltd. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
/S/ Coopers & Lybrand L.L.P.
- --------------------------------
Orlando, Florida
January 20, 1998
13
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS 1997 1996
------ ----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $25,217,725 $25,852,484
Net investment in direct
financing leases 9,041,485 9,125,272
Investment in joint ventures 3,271,739 3,201,156
Cash and cash equivalents 1,285,777 1,462,012
Restricted cash 318,592 -
Receivables, less allowance for
doubtful accounts of $22,970
in 1996 19,912 23,477
Prepaid expenses 7,915 8,243
Organization costs, less
accumulated amortization of
$8,599 and $6,599 1,401 3,401
Accrued rental income 1,820,078 1,369,804
----------- -----------
$40,984,624 $41,045,849
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 10,258 $ 5,447
Accrued and escrowed real estate
taxes payable 19,570 12,364
Distributions payable 928,130 928,130
Due to related parties 7,853 1,651
Rents paid in advance 29,656 62,520
----------- -----------
Total liabilities 995,467 1,010,112
Commitments (Note 11)
Partners' capital 39,989,157 40,035,737
----------- -----------
$40,984,624 $41,045,849
=========== ===========
See accompanying notes to financial statements.
14
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---------- ---------- -------
<S> <C>
Revenues:
Rental income from
operating leases $2,893,900 $2,960,909 $2,980,928
Earned income from direct
financing leases 1,017,627 1,026,616 1,034,636
Interest and other income 47,287 56,377 52,426
---------- ---------- ----------
3,958,814 4,043,902 4,067,990
---------- ---------- ----------
Expenses:
General operating and
administrative 154,654 162,163 143,138
Professional services 29,746 24,138 31,270
Bad debt expense 10,500 - 12,619
Management fees to
related parties 38,626 38,785 38,832
Real estate taxes 7,192 3,426 8,116
State and other taxes 21,874 18,109 14,865
Depreciation and
amortization 340,161 340,089 340,112
---------- ---------- ----------
602,753 586,710 588,952
---------- ---------- ----------
Income Before Equity in
Earnings of Joint
Ventures and Loss on
Sale of Land 3,356,061 3,457,192 3,479,038
Equity in Earnings of Joint
Ventures 309,879 459,137 338,717
Loss on Sale of Land - - (66,518)
---------- ---------- ----------
Net Income $3,665,940 $3,916,329 $3,751,237
========== ========== ==========
Allocation of Net Income:
General partners $ 36,659 $ 39,163 $ 38,073
Limited partners 3,629,281 3,877,166 3,713,164
---------- ---------- ----------
$3,665,940 $3,916,329 $3,751,237
========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.81 $ 0.86 $ 0.83
========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Partners Limited Partners
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Earnings butions butions Earnings Costs Total
------- --------- ----------- ------------ ----------- ----------- ----------
<S> <C>
Balance, December 31, 1994 $ 1,000 $ 31,745 $45,000,000 $ (3,082,753) $ 3,142,776 $(5,383,945) $39,708,823
Distributions to limited
partners ($0.81 per limited
partner unit) - - - (3,628,130) - - (3,628,130)
Net income - 38,073 - 3,713,164 - 3,751,237
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1995 1,000 69,818 45,000,000 (6,710,883) 6,855,940 (5,383,945) 39,831,930
Distributions to limited
partners ($0.83 per limited
partner unit) - - - (3,712,522) - - (3,712,522)
Net income - 39,163 - - 3,877,166 - 3,916,329
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1996 1,000 108,981 45,000,000 (10,423,405) 10,733,106 (5,383,945) 40,035,737
Distributions to limited
partners ($0.83 per limited
partner unit) - - - (3,712,520) - - (3,712,520)
Net income - 36,659 - - 3,629,281 - 3,665,940
------- -------- ----------- ------------ ----------- ----------- -----------
Balance, December 31, 1997 $ 1,000 $145,640 $45,000,000 $(14,135,925) $14,362,387 $(5,383,945) $39,989,157
======= ======== =========== ============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------ ------------ --------
<S> <C>
Increase (Decrease) in Cash and
Cash Equivalents:
Cash Flows From Operating
Activities:
Cash received from tenants $ 3,501,064 $ 3,572,793 $ 3,626,651
Distributions from joint
ventures 308,220 340,299 270,406
Cash paid for expenses (243,326) (250,885) (237,937)
Interest received 40,232 44,089 50,724
----------- ------------ ------------
Net cash provided by
operating activities 3,606,190 3,706,296 3,709,844
----------- ------------ ------------
Cash Flows From Investing
Activities:
Proceeds from sale of land - - 696,012
Proceeds received from
right of way taking 318,592 - -
Additions to land and
buildings on
operating leases - - (964,073)
Investment in direct
financing leases - - (75,352)
Investment in joint
ventures (121,855) (7,500) (1,087,218)
Return of capital from
joint venture 51,950 - -
Increase in restricted
cash (318,592) - -
Other - - 5,530
------------ ------------ ------------
Net cash used in
investing activities (69,905) (7,500) (1,425,101)
------------ ------------ ------------
Cash Flows From Financing
Activities:
Reimbursement of acqui-
sition costs paid by
related parties on
behalf of the
Partnership - - (577)
Distributions to
limited partners (3,712,520) (3,712,522) (3,543,751)
------------ ------------ ------------
Net cash used in
financing activities (3,712,520) (3,712,522) (3,544,328)
------------ ------------ ------------
Net Decrease in Cash and Cash
Equivalents (176,235) (13,726) (1,259,585)
Cash and Cash Equivalents at
Beginning of Year 1,462,012 1,475,738 2,735,323
------------ ------------ ------------
Cash and Cash Equivalents at
End of Year $ 1,285,777 $ 1,462,012 $ 1,475,738
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------ ------------ --------
<S> <C>
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 3,665,940 $ 3,916,329 $ 3,751,237
------------ ------------ ------------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 337,180 337,181 337,393
Amortization 2,981 2,908 2,719
Equity in earnings of
joint ventures, net of
distributions (1,659) (118,889) (68,311)
Loss on sale of land - - 66,518
Decrease (increase) in
receivables 3,565 (13,946) 36,872
Decrease (increase) in
prepaid expenses 328 (4,802) (3,441)
Decrease in net investment
in direct financing
leases 83,787 74,798 66,778
Increase in accrued
rental income (471,287) (491,221) (497,969)
Decrease in other assets - - 3,315
Increase (decrease) in
accounts payable 12,017 (8,408) 22,223
Increase (decrease) in
due to related parties,
excluding reimbursement
of acquisition costs
paid on behalf of the
Partnership 6,202 (5,218) 6,869
Increase (decrease) in
rents paid in advance (32,864) 17,564 (14,359)
------------ ------------ ------------
Total adjustments (59,750) (210,033) (41,393)
------------ ------------ ------------
Net Cash Provided by Operating
Activities $ 3,606,190 $ 3,706,296 $ 3,709,844
============ ============ ============
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and
unpaid at December 31 $ 928,130 $ 928,130 $ 928,130
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund XIV, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains. Under the terms
of a registration statement filed with the Securities and Exchange
Commission, the Partnership was authorized to sell a maximum of
4,500,000 units ($45,000,000) of limited partnership interest. A total
of 4,500,000 units ($45,000,000) of limited partnership interest were
sold.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
the Corporate General Partner. The general partners have responsibility
for managing the day-to-day operations of the Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (Note 4). Unearned income is deferred and
amortized to income over the lease terms so as to produce a
constant periodic rate of return on the Partnership's net
investment in the leases.
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals
19
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
vary during the lease term, income is recognized on a
straight-line basis so as to produce a constant periodic rent
over the lease term commencing on the date the property is
placed in service.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the Partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including
the residual value of the property, with the carrying cost of the
individual property. If an impairment is indicated, the assets are
adjusted to their fair value.
When the collection of amounts recorded as rental or other income is
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables,
and to decrease rental or other income or increase bad debt expense for
the current period, although the Partnership continues to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.
Investment in Joint Ventures - The Partnership accounts for its
interests in Attalla Joint Venture, Wood-Ridge Real Estate Joint
Venture, Salem Joint Venture and CNL Kingston Joint Venture using the
equity method since the Partnership shares control with affiliates
which have the same general partners.
20
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts. The Partnership limits investment of
temporary cash investments to financial institution with high credit
standing; therefore, the Partnership believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs are amortized over five years
using the straight-line method.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. The more significant areas requiring
the use of management estimates relate to the allowance for doubtful
accounts and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
21
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
2. Leases:
The Partnership leases its land or land and buildings primarily to
operators of national and regional fast-food and family-style
restaurants. The leases are accounted for under the provisions of
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases." Some of the leases are classified as operating leases and some
of the leases have been classified as direct financing leases. For the
leases classified as direct financing leases, the building portions of
the property leases are accounted for as direct financing leases while
the land portions of the majority of the leases are operating leases.
Substantially all leases are for 15 to 20 years and provide for minimum
and contingent rentals. In addition, the tenant pays all property taxes
and assessments, fully maintains the interior and exterior of the
building and carries insurance coverage for public liability, property
damage, fire and extended coverage. The lease options generally allow
tenants to renew the leases for two to five successive five-year
periods subject to the same terms and conditions as the initial lease.
Most leases also allow the tenant to purchase the property at fair
market value after a specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1997 1996
----------- -----------
Land $16,425,914 $16,723,493
Buildings 10,087,524 10,087,524
----------- -----------
26,513,438 26,811,017
Less accumulated
depreciation (1,295,713) (958,533)
----------- -----------
$25,217,725 $25,852,484
=========== ===========
In December, 1997, the Port of Palm Bay deposited $660,000 in the
registry of the court on behalf of the Partnership and the tenant in
exchange for taking possession of the property located in Riviera
Beach, Florida through a total right of way taking. The Partnership
owned the land and the tenant owned the building relating to this
property. The general partners of the Partnership and the tenant are in
the process of negotiating the allocation of the $660,000. The general
partners anticipate that the Partnership will be entitled to
22
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
3. Land and Buildings on Operating Leases - Continued:
receive at least $330,000 but the general partners intend to pursue a
larger allocation of this amount. As of December 31, 1997, the
Partnership had removed the carrying value of the land in the amount of
$318,592 from its accounts due to the fact that the Port of Palm Bay
had taken possession of the property, and in exchange, the Partnership
recorded restricted cash in the amount of $318,592 (See Note 6). The
general partners anticipate that the Partnership will recognize a gain
as a result of the taking of this property and will recognize such gain
when the final proceeds are determined. As of January 20, 1998, the
final amount of proceeds to be received had not been determined.
Generally, the leases provide for escalating guaranteed minimum rents
throughout the lease term. Income from these scheduled rent increases
is recognized on a straight-line basis over the terms of the leases.
For the years ended December 31, 1997, 1996 and 1995, the Partnership
recognized $471,287, $491,221 and $497,969, respectively, of such
rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1997:
1998 $ 2,398,237
1999 2,560,989
2000 2,630,941
2001 2,650,138
2002 2,707,496
Thereafter 31,197,883
-----------
$44,145,684
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.
23
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1997 1996
------------ ------------
Minimum lease payments
receivable $ 18,621,827 $ 19,723,241
Estimated residual
values 2,842,002 2,842,002
Less unearned income (12,422,344) (13,439,971)
------------ ------------
Net investment in
direct financing
leases $ 9,041,485 $ 9,125,272
============ ============
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1997:
1998 $ 1,104,743
1999 1,122,218
2000 1,129,246
2001 1,132,069
2002 1,140,538
Thereafter 12,993,013
-----------
$18,621,827
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).
5. Investment in Joint Ventures:
The Partnership owns a 50 percent, a 72.2% and a 50% interest in the
profits and losses of Attalla Joint Venture, Salem Joint Venture and
Wood-Ridge Real Estate Joint Venture, respectively. The remaining
interests in these joint ventures are held by affiliates of the
Partnership which have the same general partners.
24
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
5. Investment in Joint Ventures - Continued:
In September 1996, Wood-Ridge Real Estate Joint Venture sold its two
properties to the tenant of these properties for $5,020,878 and
received net sales proceeds of $5,001,180, resulting in a gain to the
joint venture of approximately $261,100 for financial reporting
purposes. These properties were originally acquired by Wood-Ridge Real
Estate Joint Venture in September 1994 and had a combined, total cost
of approximately $4,302,500, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the joint venture sold
these properties for approximately $698,700 in excess of their original
purchase price.
In October 1996, Wood-Ridge Real Estate Joint Venture reinvested
$4,404,046 of the net sales proceeds in five properties. In January
1997, Wood-Ridge Real Estate Joint Venture reinvested $502,598 of the
remaining net sales proceeds in a Taco Bell property in Anniston,
Alabama. As of December 31, 1997, the Partnership and the other joint
venture partner had each received approximately $52,000, representing a
return of capital, for the remaining uninvested net sales proceeds.
In September 1997, the Partnership entered into a joint venture
arrangement, CNL Kingston Joint Venture, with an affiliate of the
Partnership which has the same general partners, to construct and hold
one restaurant property. As of December 31, 1997, the Partnership and
its co-venture partner had contributed $121,855 and $183,241,
respectively, to CNL Kingston Joint Venture to fund construction costs
relating to the property owned by the joint venture. The Partnership
and its co-venture partner have agreed to contribute approximately
$85,600 and $128,700, respectively, in additional construction costs to
the joint venture. When construction is completed, the Partnership and
its co-venture partner expect to have an approximate 40 and 60 percent
interest, respectively, in the profits and losses of the joint venture.
As of December 31, 1997, the Partnership owned a 39.94% interest in the
profits and losses of the joint venture. The Partnership accounts for
its investment in this joint venture under the equity method since the
Partnership shares control with an affiliate.
25
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
5. Investment in Joint Ventures - Continued:
As of December 31, 1997, Attalla Joint Venture, Salem Joint Venture and
Kingston Joint Venture each owned and leased one property, and
Wood-Ridge Real Estate Joint Venture owned and leased six properties,
to operators of fast-food or family-style restaurants. The following
presents the joint ventures' condensed financial information at
December 31:
1997 1996
---------- ----------
Land and buildings on
operating leases,
less accumulated
depreciation $6,008,240 $5,102,901
Net investment in direct
financing lease 364,479 367,661
Cash 13,842 818
Restricted cash - 595,426
Receivables 2,571 7,037
Accrued rental income 150,621 62,163
Other assets 1,257 15,390
Liabilities 231,061 33,565
Partners' capital 6,309,949 6,117,831
Revenues 712,004 690,225
Gain on sale of land and
buildings - 261,106
Net income 588,835 887,177
The Partnership recognized income totalling $309,879, $459,137 and
$338,717 for the years ended December 31, 1997, 1996 and 1995,
respectively, from these joint ventures.
6. Restricted Cash:
In December 1997, the Port of Palm Bay deposited $660,000 in the
registry of the court on behalf of the Partnership in exchange for
taking possession of the property (see Note 3).
26
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
7. Allocations and Distributions:
Generally, all net income and net losses of the Partnership, excluding
gains and losses from the sale of properties, are allocated 99 percent
to the limited partners and one percent to the general partners.
Distributions of net cash flow are made 99 percent to the limited
partners and one percent to the general partners; provided, however,
that the one percent of net cash flow to be distributed to the general
partners is subordinated to receipt by the limited partners of an
aggregate, ten percent, cumulative, noncompounded annual return on
their invested capital contributions (the "Limited Partners' 10%
Return").
Generally, net sales proceeds from the sale of properties, to the
extent distributed, will be distributed first to the limited partners
in an amount sufficient to provide them with their Limited Partners'
10% Return, plus the return of their adjusted capital contributions.
The general partners will then receive, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds will be distributed 95
percent to the limited partners and five percent to the general
partners. Any gain from the sale of a property is, in general,
allocated in the same manner as net sales proceeds are distributable.
Any loss from the sale of a property is, in general, allocated first,
on a pro rata basis, to partners with positive balances in their
capital accounts, and thereafter, 95 percent to the limited partners
and five percent to the general partners.
During the years ended December 31, 1997, 1996 and 1995, the
Partnership declared distributions to the limited partners of
$3,712,520, $3,712,522 and $3,628,130, respectively. No distributions
have been made to the general partners to date.
27
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
8. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C>
Net income for financial
reporting purposes $3,665,940 $3,916,329 $3,751,237
Depreciation for tax
reporting purposes
in excess of depreci-
ation for financial
reporting purposes (130,766) (130,766) (130,551)
Direct financing leases
recorded as operating
leases for tax
reporting purposes 83,787 74,798 66,778
Loss on sale of land for
financial reporting
purposes in excess of
loss for tax
reporting purposes - - 66,518
Equity in earnings of joint
ventures for financial
reporting purposes in
excess of equity in
earnings of joint ventures
for tax reporting purposes 3,109 (174,253) (80,207)
Accrued rental income (471,287) (491,221) (497,969)
Rents paid in advance (32,864) 17,564 (14,359)
Other (21,988) 23,878 718
---------- ---------- ----------
Net income for federal
income tax purposes $3,095,931 $3,236,329 $3,162,165
========== ========== ==========
</TABLE>
28
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
9. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of
CNL Fund Advisors, Inc. The other individual general partner, Robert A.
Bourne, served as president of CNL Fund Advisors, Inc. through October
1997. CNL Income Fund Advisors, Inc. was a wholly owned subsidiary of
CNL Group, Inc. until its merger, effective January 1, 1996, with CNL
Fund Advisors, Inc. During the years ended December 31, 1997, 1996 and
1995, CNL Income Fund Advisors, Inc. and CNL Fund Advisors, Inc.
(hereinafter referred to collectively as the "Affiliates") each
performed certain services for the Partnership, as described below.
During the years ended December 31, 1997, 1996 and 1995, certain
Affiliates acted as manager of the Partnership's properties pursuant to
a management agreement with the Partnership. In connection therewith,
the Partnership agreed to pay Affiliates a management fee of one
percent of the sum of gross revenues from properties wholly owned by
the Partnership and the Partnership's allocable share of gross revenues
from joint ventures. The management fee, which will not exceed fees
which are competitive for similar services in the same geographic area,
may or may not be taken, in whole or in part as to any year, in the
sole discretion of the Affiliates. All or any portion of the management
fee not taken as to any fiscal year shall be deferred without interest
and may be taken in such other fiscal year as the Affiliates shall
determine. The Partnership incurred management fees of $38,626, $38,785
and $38,832 for the years ended December 31, 1997, 1996 and 1995,
respectively.
Certain Affiliates are also entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties, based on the lesser of one-half of a competitive
real estate commission or three percent of the sales price if
Affiliates provide a substantial amount of services in connection with
the sale. However, if the net sales proceeds are reinvested in a
replacement property, no such real estate disposition fees will be
incurred until such replacement property is sold and the net sales
proceeds are distributed. The payment of the real estate disposition
fee is subordinated to receipt by the limited partners of their
aggregate Limited Partners' 10% Return plus their invested capital
contributions. No deferred, subordinated real estate disposition fees
have been incurred since inception.
29
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
9. Related Party Transactions - Continued:
During the years ended December 31, 1997, 1996 and 1995, Affiliates
provided accounting and administrative services to the Partnership on a
day-to-day basis. The Partnership incurred $89,910, $96,082 and $75,263
for the years ended December 31, 1997, 1996 and 1995, respectively, for
such services.
The due to related parties at December 31, 1997 and 1996, totalled
$7,853 and $1,651, respectively.
10. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing
more than ten percent of the Partnership's total rental and earned
income (including the Partnership's share of total rental and earned
income from joint ventures) for at least one of the years ended
December 31:
1997 1996 1995
-------- -------- ---------
Flagstar Enterprises,
Inc. and Denny's,
Inc. $863,373 $879,594 $882,060
Long John Silver's,
Inc. 850,159 853,992 860,391
Checkers Drive-In
Restaurants, Inc. 724,612 732,941 732,196
Foodmaker, Inc. 562,725 556,100 551,800
Golden Corral
Corporation 520,911 476,350 466,737
30
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
10. Concentration of Credit Risk - Continued:
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from joint ventures) for at least one of the years ended December 31:
1997 1996 1995
-------- -------- ---------
Long John Silver's $850,159 $853,992 $860,391
Checkers Drive-in
Restaurants 724,612 732,941 732,196
Denny's 618,154 615,021 592,660
Jack in the Box 562,725 556,100 551,800
Golden Corral
Family Steakhouse
Restaurants 520,911 476,350 466,737
Hardee's 483,606 498,655 500,235
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any lessee or restaurant
chain contributing more than ten percent of the Partnership's revenues
could significantly impact the results of operations of the
Partnership. However, the general partners believe that the risk of
such a default is reduced due to the essential or important nature of
these properties for the on-going operations of the lessees.
11. Commitments:
During 1997, the Partnership entered into an agreement with the tenant
of the Checkers #486 property in Richmond, Virginia, to sell the
property. The general partners believe that the anticipated sales price
exceeds the Partnership's cost attributable to the property. As of
January 20, 1998, the sale had not occurred.
31
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997, 1996 and 1995
11. Commitments - Continued:
During 1997, the Partnership entered into an agreement with a third
party to sell the property in Marietta, Georgia. The general partners
believe that the anticipated sales price exceeds the Partnership's cost
attributable to the property. As of January 20, 1998, the sale had not
occurred.
12. Subsequent Events:
In January 1998, the Partnership sold its property in Madison, Alabama,
to a third party for $740,000 and received net sales proceeds of
$700,950. Due to the fact that the Partnership had recognized accrued
rental income since the inception of the lease relating to the
straight-lining of future scheduled rent increases in accordance with
generally accepted accounting principles, the Partnership wrote-off
$13,314 of such accrued rental income during 1997. The Partnership
intends to reinvest the net sales proceeds in an additional property.
During 1997, the Partnership entered into a contract to sell the
property in Richmond, Virginia (#548) to a third party. In January
1998, the Partnership sold this property for $512,462 and received net
sales proceeds in that amount, resulting in a gain of $70,798 for
financial reporting purposes. The Partnership intends to reinvest the
net sales proceeds in an additional property.
32
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 51, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation in
1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., CNL Real Estate Advisors, Inc. and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc. Mr. Seneff is Chief Executive Officer, and has been a
director and registered principal of CNL Securities Corp., which served as the
managing dealer in the Partnership's offering of Units, since its formation in
1979. Mr. Seneff also has held the position of President and a director of CNL
Management Company, a registered investment advisor, since its formation in
1976, has served as Chief Executive Officer and Chairman of the Board of CNL
Investment Company, and Chief Executive Officer and Chairman of the Board of
Commercial Net Lease Realty, Inc. since 1992, has served as the Chairman of the
Board and the Chief Executive Officer of CNL Realty Advisors, Inc. since its
inception in 1991 through December 31, 1997, at which time CNL Realty Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., served as Chairman of the
Board and Chief Executive Officer of CNL Income Fund Advisors, Inc. since its
inception in 1994 through December 31, 1995, has served as a director, Chairman
of the Board and Chief Executive Officer of CNL Fund Advisors, Inc. since its
inception in 1994, and has held the position of Chief Executive Officer and a
director of CNL Institutional Advisors, Inc., a registered investment advisor,
since its inception in 1990. In addition, Mr. Seneff has served as a director,
Chairman of the Board and Chief Executive Officer of CNL American Properties
Fund, Inc. since 1994, and has served as a director, Chairman of the Board and
Chief Executive Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors, Inc. since January 1997. Mr. Seneff previously served on
the Florida State Commission on Ethics and is a former member and past Chairman
of the State of Florida Investment Advisory Council, which recommends to the
Florida Board of Administration investments for various Florida employee
retirement funds. The Florida Board of Administration, Florida's principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds. Since 1971, Mr. Seneff has been active in
the acquisition, development and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
joint venturer in over 100 real estate ventures involved in the financing,
acquisition, construction and rental of office buildings, apartment complexes,
restaurants, hotels and other real estate. Included in these real estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr. Seneff, directly or through an affiliated entity, serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income
Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income
Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income
Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd. and CNL
Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public real estate
limited partnerships with investment objectives similar to those of the
Partnership, in which Mr. Seneff serves as a general partner. Mr. Seneff
received his degree in Business Administration from Florida State University in
1968.
33
<PAGE>
Robert A. Bourne, age 50, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, and prior to its merger with
CNL Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors,
Inc., and Chief Investment Officer, Vice Chairman of the Board of Directors, a
director and Treasurer of CNL Institutional Advisors, Inc., a registered
investment advisor. Mr. Bourne served as President of CNL Institutional
Advisors, Inc. from the date of its inception through June 30, 1997 and served
as President of CNL Fund Advisors, Inc. from the date of its inception through
October 1997. Mr. Bourne also has served as a director since 1992, as President
from July 1992 to February 1996, as Secretary and Treasurer from February 1996
through December 1997, and since February 1996, served as Vice Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc. In addition, Mr. Bourne
has served as a director since its inception in 1991, as President from 1991 to
February 1996, as Secretary from February 1996 to July 1996, and since February
1996, served as Treasurer and Vice Chairman of CNL Realty Advisors, Inc. through
December 31, 1997, at which time CNL Realty Advisors, Inc. merged with
Commercial Net Lease Realty, Inc. In addition, Mr. Bourne has served as
President and a director of CNL American Properties Fund, Inc. since 1994, and
has served as President and a director of CNL American Realty Fund, Inc. since
1996 and of CNL Real Estate Advisors, Inc. since January 1997. Upon graduation
from Florida State University in 1970, where he received a B.A. in Accounting,
with honors, Mr. Bourne worked as a certified public accountant and, from
September 1971 through December 1978, was employed by Coopers & Lybrand,
Certified Public Accountants, where he held the position of tax manager
beginning in 1975. From January 1979 until June 1982, Mr. Bourne was a partner
in the accounting firm of Cross & Bourne and from July 1982 through January
1987, he was a partner in the accounting firm of Bourne & Rose, P.A., Certified
Public Accountants. Mr. Bourne, who joined CNL Securities Corp. in 1979, has
participated as a general partner or joint venturer in over 100 real estate
ventures involved in the financing, acquisition, construction and rental of
office buildings, apartment complexes, restaurants, hotels and other real
estate. Included in these real estate ventures are approximately 64 privately
offered real estate limited partnerships in which Mr. Bourne, directly or
through an affiliated entity, serves or has served as a general partner. Also
included are the CNL Income Fund Partnerships, public real estate limited
partnerships with investment objectives similar to those of the Partnership, in
which Mr. Bourne serves as a general partner.
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.
CNL Fund Advisors, Inc. provides certain management services in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation organized in 1994 under the laws of the State of Florida, and its
principal office is located at 400 East South Street, Orlando, Florida 32801.
CNL Fund Advisors, Inc. is a wholly owned subsidiary of CNL Group, Inc., a
diversified real estate company, and was organized to perform property
acquisition, property management and other services.
CNL Group, Inc., which is the parent company of CNL Fund Advisors,
Inc., was organized in 1980 under the laws of the State of Florida. CNL Group,
Inc. is a diversified real estate company which provides a wide range of real
estate, development and financial services to companies in the United States
through the activities of its subsidiaries. These activities are primarily
focused on the franchised restaurant and hospitality industries. James M.
Seneff, Jr., an individual General Partner of the Partnership, is the Chairman
of the Board, Chief Executive Officer, and a director of CNL Group, Inc. Mr.
Seneff and his wife own all of the outstanding shares of CNL Group, Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as members
of the Boards of Directors of those entities. The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.
34
<PAGE>
Curtis B. McWilliams, age 42, joined CNL Fund Advisors, Inc. in April
1997 and currently serves as President of CNL Fund Advisors, Inc. and as
Executive Vice President of CNL American Properties Fund, Inc. In addition, Mr.
McWilliams serves as Executive Vice President of CNL Group, Inc. and as
President of CNL Financial Services, Inc. and certain other subsidiaries of CNL
Group, Inc. From September 1983 through March 1997, Mr. McWilliams was employed
by Merrill Lynch. From January 1991 to August 1996, Mr. McWilliams was a
managing director in the corporate banking group of Merrill Lynch's investment
banking division. During this time, he was a senior relationship manager with
Merrill Lynch and as such was responsible for a number of the firm's larger
clients. From February 1990 to February 1993, he also served as co-head of one
of the Industrial Banking Groups within Merrill Lynch's investment banking
division and had administrative responsibility for a group of bankers and client
relationships, including the firm's transportation group. From September 1996 to
March 1997, Mr. McWilliams served as Chairman of Merrill Lynch's Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton University in 1977 and a Masters of Business Administration with a
concentration in finance from the University of Chicago in 1983.
John T. Walker, age 39, is the Chief Operating Officer and Executive
Vice President of CNL Fund Advisors, Inc. and CNL American Properties Fund, Inc.
and serves as Executive Vice President of CNL American Realty Fund, Inc. and CNL
Real Estate Advisors, Inc. From May 1992 to May 1994, he was Executive Vice
President for Finance and Administration and Chief Financial Officer of Z Music,
Inc., a cable television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management and planning. From January 1990 through April 1992, Mr. Walker was
Chief Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a Cum Laude graduate
of Wake Forest University with a B.S. in Accountancy and is a certified public
accountant.
Lynn E. Rose, age 49, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993. In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She has
served as Chief Operating Officer, Vice President and Secretary of CNL Corporate
Services, Inc. since November 1994. Ms. Rose also has served as Chief Financial
Officer and Secretary of CNL Institutional Advisors, Inc. since its inception in
1990, served as a director and Secretary of CNL Realty Advisors, Inc. since its
inception in 1991 through December 31, 1997, at which time CNL Realty Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., Treasurer of CNL Realty
Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of Commercial
Net Lease Realty, Inc. from 1992 to February 1996, Secretary of CNL Income Fund
Advisors, Inc. since its inception in 1994 to December 1995, and a director,
Secretary and Treasurer of CNL Fund Advisors, Inc. since 1994 and has served as
a director, Secretary and Treasurer of CNL Real Estate Advisors, Inc. since
January 1997. Ms. Rose also has served as Secretary and Treasurer of CNL
American Properties Fund, Inc. since 1994, and has served as Secretary and
Treasurer of CNL American Realty Fund, Inc. since 1996. Ms. Rose also currently
serves as Secretary for approximately 50 additional corporations. Ms. Rose
oversees the management information services, administration, legal compliance,
accounting, tenant compliance, and reporting for over 300 corporations,
partnerships, and joint ventures. Prior to joining CNL, Ms. Rose was a partner
with Robert A. Bourne in the accounting firm of Bourne & Rose, P.A., Certified
Public Accountants. Ms. Rose holds a B.A. in Sociology from the University of
Central Florida. She was licensed as a certified public accountant in 1979.
35
<PAGE>
Jeanne A. Wall, age 39, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and has
served as Executive Vice President of CNL Investment Company since January 1991.
In 1984, Ms. Wall joined CNL Securities Corp. In 1985, Ms. Wall became Vice
President of CNL Securities Corp., in 1987, she became Senior Vice President and
in July 1997, she became Executive Vice President of CNL Securities Corp. In
this capacity, Ms. Wall serves as national marketing and sales director and
oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees product development, partnership administration and
investor services for programs offered through participating brokers, and
corporate communications for CNL Group, Inc. and Affiliates. Ms. Wall also has
served as Senior Vice President of CNL Institutional Advisors, Inc., a
registered investment advisor, from 1990 to 1993, as Vice President of CNL
Realty Advisors, Inc. since its inception in 1991 through 1997, as Vice
President of Commercial Net Lease Realty, Inc. from 1992 through 1997, as
Executive Vice President of CNL Fund Advisors, Inc. since 1994, and as Executive
Vice President of CNL American Properties Fund, Inc. since 1994. In addition,
Ms. Wall has served as Executive Vice President of CNL Real Estate Advisors,
Inc. since January 1997 and as Executive Vice President of CNL American Realty
Fund, Inc. since 1996. Ms. Wall holds a B.A. in Business Administration from
Linfield College and is a registered principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct Participation Program committee for the National Association
of Securities Dealers (NASD).
Steven D. Shackelford, age 34, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996 and as Chief Financial Officer of
CNL American Properties Fund, Inc. since January 1997. From March 1995 to July
1996, he was a senior manager in the national office of Price Waterhouse where
he was responsible for advising foreign clients seeking to raise capital and a
public listing in the United States. From August 1992 to March 1995, he served
as a manager in the Price Waterhouse, Paris, France office serving several
multinational clients. Mr. Shackelford was an audit staff and audit senior from
1986 to 1992 in the Orlando, Florida office of Price Waterhouse. Mr. Shackelford
received a B.A. in Accounting, with honors, and a Masters of Business
Administration from Florida State University and is a certified public
accountant.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of February 28, 1997, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of February 28, 1997, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>
Title of Class Name of Partner Percent of Class
<S> <C>
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
</TABLE>
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the Registrant.
36
<PAGE>
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 1997, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1997
----------------------- --------------------- -----------------------
<S> <C>
Reimbursement to affiliates for Operating expenses are reimbursed Operating
expenses incurred operating expenses at the lower of cost or 90 percent on
behalf of the Partnership:
of the prevailing rate at which $87,695
comparable services could have
been obtained in the same Accounting and administra-
geographic area. Affiliates of the tive services: $89,910
General Partners from time to
time incur certain operating
expenses on behalf of the
Partnership for which the
Partnership reimburses the
affiliates without interest.
Annual management fee to One percent of the sum of gross $38,626
affiliates operating revenues from
Properties wholly owned by the
Partnership plus the Partner-ship's
allocable share of gross revenues of
joint ventures in which the Partnership
is a co-venturer. The management fee,
which will not exceed competi-tive fees
for comparable services in the same
geographic area, may or may not be
taken, in whole or in part as to any
year, in the sole discretion of
affiliates of the General Partners. All
or any portion of the management fee
not taken as to any fiscal year shall
be deferred without interest and may be
taken in such other fiscal year as the
affiliates shall determine.
==========================================================================================================================
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1997
----------------------- --------------------- -----------------------
<S> <C>
Deferred, subordinated real estate A deferred, subordinated real $ -0-
disposition fee payable to estate disposition fee, payable
affiliates upon sale of one or more
Properties, in an amount equal to the
lesser of (i) one-half of a competitive
real estate commission, or (ii) three
percent of the sales price of such
Property or Properties. Payment of such
fee shall be made only if affiliates of
the General Partners provide a
substantial amount of services in
connection with the sale of a Property
or Properties and shall be subordinated
to certain minimum returns to the
Limited Partners. However, if the net
sales proceeds are reinvested in a
replacement Property, no such real
estate disposition fee will be recorded
until such replacement Property is sold
and the net sales proceeds are
distributed.
General Partners' deferred, sub- A deferred, subordinated share $ -0-
ordinated share of Partnership net equal to one percent of
cash flow Partnership distributions of net
cash flow, subordinated to certain
minimum returns to the Limited
Partners.
General Partners' deferred, sub- A deferred, subordinated share $ -0-
ordinated share of Partnership net equal to five percent of
sales proceeds from a sale or Partnership distributions of such
sales net sales proceeds, subordinated to
certain minimum returns to the
Limited Partners.
==========================================================================================================================
</TABLE>
38
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1997 and 1996
Statements of Income for the years ended December 31, 1997,
1996 and 1995
Statements of Partners' Capital for the years ended December
31, 1997, 1996 and 1995
Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1997
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1997
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIV, 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 XIV, Ltd. (Included as 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 XIV, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on April 13, 1994, and incorporated herein
by reference.)
10.1 Management Agreement between CNL Income Fund XIV,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on April 13, 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.)
39
<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) The Registrant filed no reports on Form 8-K during the period
October 1, 1997 through December 31, 1997.
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 13th day of
March, 1998.
CNL INCOME FUND XIV, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
------------------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
------------------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
-------------------------------
JAMES M. SENEFF, JR.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
==========================================================================================================================
Signature Title Date
<S> <C>
/s/ Robert A. Bourne President, Treasurer and Director March 13, 1998
- ---------------------------------------- (Principal Financial and
Robert A. Bourne Accounting Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and March 13, 1998
- ---------------------------------------- Director (Principal Executive
James M. Seneff, Jr. Officer)
==========================================================================================================================
</TABLE>
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurant:
Alliance, Ohio - $ 210,290 $ - $ - $ -
Checkers Drive-In Restaurants:
Boynton Beach, Florida - 501,606 - - -
Chamblee, Georgia - 332,737 - - -
Delray Beach, Florida - 193,110 - - -
Foley, Alabama - 197,821 - - -
Houston, Texas - 335,232 - - -
Huntsville, Alabama - 362,907 - - -
Kansas City, Missouri - 225,071 - - -
Marietta, Georgia - 332,418 - - -
Merriam, Kansas - 305,896 - - -
Norcross, Georgia - 474,262 - - -
Orlando, Florida - 559,646 - - -
Pensacola, Florida - 296,726 - - -
Richmond, Virginia - 411,521 - - -
Richmond, Virginia - 378,735 - - -
Suwannee, Georgia - 269,643 - - -
St. Petersburg, Florida - 338,396 - - -
Coral Springs, Florida - 421,221 - - -
Denny's Restaurants:
Albemarle, North Carolina - 202,363 447,278 - -
Bullhead City, Arizona - 282,086 623,778 152,416 -
Topeka, Kansas - 420,446 - - -
Tempe, Arizona - 881,047 - - -
East Side Mario's Restaurant:
Columbus, Ohio - 698,046 - 1,019,581 -
Golden Corral Family
Steakhouse Restaurants:
Burlington, North Carolina - 931,962 - 975,218 -
Wilson, North Carolina - 415,390 - 833,156 -
Greeley, Colorado - 303,170 - 965,024 -
Hardee's Restaurants:
Franklin, Tennessee - 201,441 423,569 - -
Nashville, Tennessee - 315,087 - - -
Nashville, Tennessee - 296,341 485,974 - -
Batesville, Mississippi - 186,404 453,720 - -
Jacksonville, Florida - 385,903 409,773 - -
Madison, Alabama - 192,522 - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (c) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
$ 210,290 (g) $ 210,290 (e) 1994 07/94 (e)
501,606 - 501,606 (d) - 03/94 (d)
332,737 - 332,737 (d) - 03/94 (d)
193,110 - 193,110 (d) - 03/94 (d)
197,821 - 197,821 (d) - 03/94 (d)
335,232 - 335,232 (d) - 03/94 (d)
362,907 - 362,907 (d) - 03/94 (d)
225,071 - 225,071 (d) - 03/94 (d)
332,418 - 332,418 (d) - 03/94 (d)
305,896 - 305,896 (d) - 03/94 (d)
474,262 - 474,262 (d) - 03/94 (d)
559,646 - 559,646 (d) - 03/94 (d)
296,726 - 296,726 (d) - 03/94 (d)
411,521 - 411,521 (d) - 03/94 (d)
378,735 - 378,735 (d) - 03/94 (d)
269,643 - 269,643 (d) - 03/94 (d)
338,396 - 338,396 (d) - 03/95 (d)
421,221 - 421,221 (d) - 03/95 (d)
202,363 $ 447,278 649,641 $ 63,528 1992 09/93 (b)
282,086 776,194 1,058,280 104,695 1988 09/93 (b)
420,446 (g) 420,446 (e) 1994 10/93 (e)
881,047 (g) 881,047 (e) 1994 11/93 (e)
698,046 1,019,581 1,717,627 106,746 1994 06/94 (b)
931,962 975,218 1,907,180 130,118 1993 10/93 (b)
415,390 833,156 1,248,546 116,781 1993 10/93 (b)
303,170 965,024 1,268,194 98,177 1994 08/94 (b)
201,441 423,569 625,010 58,504 1993 11/93 (b)
315,087 (g) 315,087 (e) 1993 11/93 (e)
296,341 485,974 782,315 67,122 1993 11/93 (b)
186,404 453,720 640,124 61,242 1993 12/93 (b)
385,903 409,773 795,676 55,310 1993 12/93 (b)
192,522 (g) 192,522 (e) 1993 12/93 (e)
</TABLE>
F-2
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Jack in the Box Restaurants:
Mesquite, Texas - 449,442 528,882 - -
Plano, Texas - 423,092 467,253 - -
Farmers Branch, Texas - 465,235 525,470 - -
Fort Worth, Texas - 297,688 551,394 - -
Fort Worth, Texas - 257,393 419,245 - -
Long John Silver's Restaurants:
Apopka, Florida - 320,435 - - -
Houston, Texas - 411,403 - - -
Stockbridge, Georgia - 295,839 - - -
Albemarle, North Carolina - 214,623 - - -
Houston, Texas - 342,971 - - -
Marion, Ohio - 321,032 - - -
Las Vegas, Nevada - 520,884 - - -
Shoney's Restaurant:
Akron, Ohio (h) - 246,431 805,793 - -
----------- ---------- ---------- -------
$16,425,914 $6,142,129 $3,945,395 $ -
=========== ========== ========== =======
Property of Joint Venture
in Which the Partnership
has a 50% Interest and has
Invested in Under an
Operating Lease:
Hardee's Restaurant:
Attalla, Alabama - $ 196,274 $ 434,428 $ - $ -
=========== ========== ========== =======
Properties of Joint Venture
in Which the Partnership
has a 50% Interest and has
Invested in Under Operating
Leases:
Boston Market Restaurants:
Murfreesboro, Tennessee - $ 398,313 $ - $ - $ -
Matthews, North Carolina - 409,942 737,391 - -
Raleigh, North Carolina - 518,507 542,919 - -
Blaine, Minnesota - 253,934 531,509 - -
Golden Corral Family
Steakhouse Restaurant:
Paris, Texas - 303,420 708,112 - -
Taco Bell Restaurants:
Anniston, Alabama - 173,395 329,202 - -
----------- ---------- ---------- -------
$ 2,057,511 $2,849,133 $ - $ -
=========== ========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (c) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
449,442 528,882 978,324 73,049 1992 11/93 (b)
423,092 467,253 890,345 63,598 1992 11/93 (b)
465,235 525,470 990,705 71,502 1988 12/93 (b)
297,688 551,394 849,082 74,073 1992 12/93 (b)
257,393 419,245 676,638 57,048 1983 12/93 (b)
320,435 (g) 320,435 (e) 1994 03/94 (e)
411,403 (g) 411,403 (e) 1993 03/94 (e)
295,839 (g) 295,839 (e) 1993 03/94 (e)
214,623 (g) 214,623 (e) 1994 04/94 (e)
342,971 (g) 342,971 (e) 1994 04/94 (e)
321,032 (g) 321,032 (e) 1994 06/94 (e)
520,884 (g) 520,884 (e) 1994 07/94 (e)
246,431 805,793 1,052,224 94,220 1993 10/93 (b)
----------- ----------- ----------- ----------
$16,425,914 $10,087,524 $26,513,438 $1,295,713
=========== =========== =========== ==========
$ 196,274 $ 434,428 $ 630,702 $ 58,638 1993 11/93 (b)
=========== =========== =========== ========
$ 398,313 $ - $ 398,313 (d) 1996 10/96 (d)
409,942 737,391 1,147,333 $ 30,225 1994 10/96 (b)
518,507 542,919 1,061,426 22,254 1994 10/96 (b)
253,934 531,509 785,443 21,786 1996 10/96 (b)
303,420 708,112 1,011,532 29,186 1996 10/96 (b)
173,395 329,202 502,597 10,720 1993 01/97 (b)
----------- ----------- ----------- --------
$ 2,057,511 $ 2,849,133 $ 4,906,644 $114,171
=========== =========== =========== ========
</TABLE>
F-3
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Property of Joint Venture
in Which the Partnership
has a 72.2% Interest and has
Invested in Under Operating
Lease:
Denny's Restaurant:
Salem, Ohio - $ 131,762 $ - $ - $ -
=========== ========== ========== =======
Property of Joint Venture
in Which the Partnership
has a 39.94% Interest and has
Invested in Under Operating
Lease:
Taco Bell Restaurants:
Kingston, Tennessee - $ 180,555 $ 332,370 $ - $ -
=========== ========== ========== =======
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Burger King Restaurant:
Alliance, Ohio - $ - $ 535,949 $ - $ -
Denny's Restaurants:
Winslow, Arizona - 199,767 788,202 - -
Topeka, Kansas - - - 489,014 -
Tempe, Arizona - - - 585,382 -
Hardee's Restaurants:
Nashville, Tennessee - - 553,400 - -
Madison, Alabama - - 516,061 - -
Jack in the Box Restaurant:
Shreveport, Louisiana - 240,811 848,338 - -
Long John Silver's Restaurants:
Apopka, Florida - - 506,493 - -
Houston, Texas - - 449,633 - -
Laurens, South Carolina - 96,752 386,284 - -
Stockbridge, Georgia - - 499,428 - -
Albemarle, North Carolina - - - 384,045 -
Houston, Texas - - 508,497 - -
Marion, Ohio - - 463,504 - -
Shelby, North Carolina - 147,087 508,674 - -
Las Vegas, Nevada - - 607,433 - -
----------- ---------- ---------- -------
$ 684,417 $7,171,896 $1,458,441 $ -
=========== ========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (c) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
$ 131,762 (g) $ 131,762 (e) 1991 03/95 (e)
=========== ===========
$ 180,555 $ 332,370 $ 512,925 $ 984 1997 11/97 (b)
=========== =========== =========== ========
- (g) (g) (e) 1994 07/94 (e)
(g) (g) (g) (f) 1993 09/93 (f)
- (g) (g) (e) 1994 10/93 (e)
- (g) (g) (e) 1994 11/93 (e)
- (g) (g) (e) 1993 11/93 (e)
- (g) (g) (e) 1993 12/93 (e)
(g) (g) (g) (f) 1993 11/93 (f)
- (g) (g) (e) 1994 03/94 (e)
- (g) (g) (e) 1993 03/94 (e)
(g) (g) (g) (f) 1994 03/94 (f)
- (g) (g) (e) 1993 03/94 (e)
- (g) (g) (e) 1994 04/94 (e)
- (g) (g) (e) 1994 04/94 (e)
- (g) (g) (e) 1994 06/94 (e)
(g) (g) (g) (f) 1994 06/94 (f)
- (g) (g) (e) 1994 07/94 (e)
</TABLE>
F-4
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Property of Joint Venture
in Which the Partnership
has a 72.2% Interest and has
Invested in Under a Direct
Financing Lease:
Denny's Restaurant:
Salem, Ohio - $ - $ - $ 371,836 $ -
=========== ========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (c) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
- (g) (g) (e) 1991 03/95 (e)
</TABLE>
F-4
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
(a) Transactions in real estate and accumulated depreciation during 1997,
1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Balance, December 31, 1994 $26,816,293 $ 283,959
Acquisitions 743,861 -
Dispositions (749,137 ) -
Depreciation expense - 337,393
----------- ----------
Balance, December 31, 1995 26,811,017 621,352
Depreciation expense - 337,181
----------- ----------
Balance, December 31, 1996 $26,811,017 $ 958,533
Depreciation expense - 337,180
Dispositions (297,579 ) -
----------- ---------
Balance, December 31, 1997 $26,513,438 $1,295,713
=========== ==========
Property of Joint Venture in
Which the Partnership has a 50%
Interest and has Invested in
Under an Operating Lease:
Balance, December 31, 1994 $ 630,702 $ 15,195
Depreciation expense - 14,480
----------- ----------
Balance, December 31, 1995 630,702 29,675
Depreciation expense - 14,482
----------- ----------
Balance, December 31, 1996 $ 630,702 $ 44,157
Depreciation expense - 14,481
----------- ----------
Balance, December 31, 1997 $ 630,702 $ 58,638
=========== ==========
</TABLE>
F-5
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1997
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
<S> <C>
Properties of Joint Venture in
Which the Partnership has a
50% Interest and has Invested
in Under Operating Leases:
Balance, December 31, 1994 $ 3,988,577 $ 1,596
Acquisitions 295,307 -
Reclassified to direct
financing lease (1,108,290) -
Depreciation expense - 24,446
----------- --------
Balance, December 31, 1995 3,175,594 26,042
Dispositions (3,175,594) (43,711)
Acquisitions 4,404,047 -
Depreciation expense - 37,122
----------- --------
Balance, December 31, 1996 $ 4,404,047 $ 19,453
Acquisitions 502,597 -
Depreciation expense - 94,718
----------- --------
Balance, December 31, 1997 $ 4,906,644 $114,171
=========== ========
Property of Joint Venture in
Which the Partnership has a
72.2% Interest and has Invested
in Under an Operating Lease:
Balance, December 31, 1994 $ - $ -
Acquisition 131,762 -
Depreciation expense (e) - -
----------- -------
Balance, December 31, 1995 131,762 -
Depreciation expense (e) - -
----------- -------
Balance, December 31, 1996 131,762 -
Depreciation expense (e) - -
----------- -------
Balance, December 31, 1997 $ 131,762 $ -
=========== =======
Property of Joint Venture in Which
the Partnership has a 39.94%
Interest and Invested in Under
an Operating Lease:
Balance, December 31, 1996 $ - $ -
Acquisition 512,925 -
Depreciation expense - 984
----------- --------
Balance, December 31, 1997 $ 512,925 $ 984
=========== ========
</TABLE>
F-6
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1997
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years. All of the leases are treated as
operating leases for federal income tax purposes.
(c) As of December 31, 1997, the aggregate cost of the Properties owned
by the Partnership and joint ventures for federal income tax purposes
was $35,881,317 and $6,203,624, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
(d) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(e) For financial reporting purposes, the portion of the lease relating
to the building has been recorded as a direct financing lease. The
cost of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(f) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land
and building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(g) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(h) Effective August 1994, the lease for this Property was terminated,
resulting in the lease being reclassified as an operating lease. The
Partnership does not believe this in indicative of an impairment in
the carrying value of the Property.
F-7
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XIV, 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 XIV, Ltd. (Included as 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 XIV, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on April 13,
1994, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XIV, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on April 13,
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.)
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.)
i
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XIV, Ltd. at December 31, 1997, and its statement of
income for the year then ended and is qualified in its entirety by reference to
the Form 10-K of CNL Income Fund XIV, Ltd. for the year ended December 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,604,369<F2>
<SECURITIES> 0
<RECEIVABLES> 19,912
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 26,513,438
<DEPRECIATION> 1,295,713
<TOTAL-ASSETS> 40,984,624
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,989,157
<TOTAL-LIABILITY-AND-EQUITY> 40,984,624
<SALES> 0
<TOTAL-REVENUES> 3,958,814
<CGS> 0
<TOTAL-COSTS> 592,253
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,500
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,665,940
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,665,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,665,940
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F2>Cash balance includes $318,592 in restricted cash.
<F1>Due to the nature of its industry, CNL Income Fund XIV, Ltd, has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
