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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
Amendment No. 2
(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, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 0-23974
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)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 650-1000
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
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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 4,500,000 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
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The Form 10-K of CNL Income Fund XIV, Ltd. for the year ended December 31,
1998 is being amended to revise the disclosure under Item 1. Business.
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. 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. In addition, the Partnership
entered into a joint venture arrangement, CNL Kingston Joint Venture, with
affiliates of the General Partners. During the year ended December 31, 1998,
the Partnership sold one Property in Madison, Alabama and two Properties in
Richmond, Virginia, and reinvested these proceeds along with the proceeds from
the right of way taking in December 1997 of the Property in Riviera Beach,
Florida, in a Property in Fayetteville, North Carolina, and in a joint venture
arrangement, Melbourne Joint Venture with an affiliate of the General Partners.
As a result of the above transactions, as of December 31, 1998, the Partnership
owned 57 Properties. The 57 Properties include 15 wholly owned Properties
consisting of land only and interests in ten Properties owned by joint ventures
in which the Partnership is a co-venturer. The lessee of the 15 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. The Properties are leased on a triple-
net basis with the lessees responsible for all repairs and maintenance, property
taxes, insurance and utilities.
On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. APF has agreed to issue shares of its
common stock, par value $0.01 per share (the "APF Shares"), as consideration for
the Merger. At a special meeting of the partners that is expected to be
held in the fourth quarter of 1999, Limited Partners holding in excess of
50% of the Partnership's outstanding limited partnership interests must approve
the Merger prior to consummation of the transaction. If the Limited Partners at
the special meeting approve the Merger, APF will own the Properties and other
assets of the Partnership.
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In the event that the Limited Partners vote against the Merger, 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. 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.
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 2018. 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.
Lessees of 39 of the Partnership's 57 Properties 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. Fair market value will be
determined through an appraisal by an independent appraisal firm. 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 15 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.
In April 1998, the Partnership entered into a joint venture arrangement,
Melbourne Joint Venture, with an affiliate of the General Partners, to construct
and hold one restaurant Property. 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 October 1998, the Partnership reinvested the net sales proceeds from the
sales of several Properties, in a Property located in Fayetteville, North
Carolina. 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.
During June 1998 and in January 1999, three tenants, Long John Silver's,
Inc., Finest Foodservice, L.L.C., and BC Superior, L.L.C., filed for bankruptcy
and rejected the leases relating to six (four Long John Silver's and two Boston
Markets) of their eleven leases (including two Properties held by Woodridge Real
Estate Joint Venture) and ceased making rental payments to the Partnership on
the rejected leases. In December 1998, January and February 1999, the
Partnership entered into new leases for three of the six vacant Properties. In
connection therewith, the tenant for each Property has agreed to pay for all
costs necessary to convert these Properties into different restaurant concepts.
Conversion of these Properties is expected to be completed early in 1999. The
lease terms for each Property are substantially the same as the Partnership's
other leases as described above. The Partnership will not recognize rental and
earned income from the remaining three vacant Properties until new tenants for
these Properties are located or until the Properties are sold and the proceeds
from such sales are reinvested in additional Properties. While the tenants have
not rejected or affirmed the remaining five leases, there can be no assurance
that some or all of these leases will not be rejected in the future. As of
March 11, 1999, the Partnership has continued receiving rental payments relating
to the five leases not rejected by the tenants. The lost revenues resulting
from the three remaining vacant Properties, as
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described above, and the possible rejection of the remaining five leases could
have an adverse effect on the results of operations of the Partnership if the
Partnership is not able to re-lease the Properties in a timely manner. The
General Partners are currently seeking either new tenants or purchasers for the
remaining three Properties.
Major Tenants
During 1998, five lessees of the Partnership, Flagstar Enterprises, Inc.,
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 ten Properties owned by joint ventures). As of December 31, 1998,
Flagstar Enterprises, Inc. was the lessee under leases relating to six
restaurants, Foodmaker, Inc. was the lessee under leases relating to six
restaurants, Long John Silver's, Inc. was the lessee under leases relating to
five restaurants (excluding four restaurants for which this tenant rejected the
leases as a result of filing for bankruptcy, as described above), Checkers
Drive-In Restaurants, Inc. was the lessee under leases relating to 15
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, that Flagstar Enterprises, Inc., Foodmaker,
Inc., Checkers Drive-In Restaurants, Inc., and Golden Corral Corporation each
will continue to contribute more than ten percent of the Partnership's total
rental income in 1999. 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 1998 (including the
Partnership's share of rental income from ten Properties owned by joint
ventures). During 1998, Long John Silver's, Inc. filed for bankruptcy, as
described above. In 1999, it is anticipated that Hardee's, Denny's, Jack in the
Box, Checkers, and Golden Corral 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 if the Partnership is not able to re-lease the
Properties in a timely manner. No single tenant or group of affiliated tenants
lease Properties with an aggregate carrying value in excess of 20 percent of the
total assets of the Partnership.
Joint Venture Arrangements
The Partnership has entered into the following joint venture arrangements:
Attalla Joint Venture and Salem Joint Venture, each with CNL Income Fund XIII,
Ltd., an affiliate of the General Partners, for each joint venture to purchase,
construct, and hold one Property, CNL Kingston Joint Venture with CNL Income
Fund XVII, Ltd., an affiliate of the General Partners, to purchase, construct,
and hold one Property, and Melbourne Joint Venture with CNL Income Fund VI,
Ltd., an affiliate of the General Partners, to construct and hold one restaurant
Property. In addition, the Partnership has entered into a joint venture
arrangement, Wood-Ridge Real Estate Joint Venture, with CNL Income Fund XV,
Ltd., an affiliate of the General Partners, to purchase and hold six Properties.
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 has a 50 percent interest in Attalla Joint Venture, a 72.2%
interest in Salem Joint Venture, a 39.94% interest in CNL Kingston Joint
Venture, a 50 percent interest in Melbourne Joint Venture, and a 50 percent
interest in Wood-Ridge Real Estate Joint Venture. The Partnership and its joint
venture partners are also jointly and severally liable for all debts,
obligations and other liabilities of the joint ventures. The affiliates are
limited partnerships organized pursuant to the laws of the State of Florida.
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, and Melbourne Joint Venture each have 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, CNL Kingston Joint Venture, and Melbourne Joint
Venture. The joint venture agreements restrict each venturer's ability to sell,
transfer or assign its joint venture
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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, CNL Kingston Joint Venture, and
Melbourne Joint Venture is distributed 50 percent, 50 percent, 72.2%, 39.94%,
and 50 percent, 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.
The use of joint venture arrangements allows the Partnership to fully
invest its available funds at times at which it would not have sufficient funds
to purchase an additional property, or at times when a suitable opportunity to
purchase an additional property is not available. The use of joint venture
arrangements also provides the Partnership with increased diversification of its
portfolio among a greater number of properties.
Certain Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental 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 Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership had agreed to pay
CNL 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.
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.
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.
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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 17th day of
December, 1999.
CNL INCOME FUND XIV, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
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ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
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ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
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JAMES M. SENEFF, JR.
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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.
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Signature Title Date
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<S> <C> <C>
/s/ Robert A. Bourne President, Treasurer and Director December 17, 1999
- ------------------------- (Principal Financial and Accounting
Robert A. Bourne Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and December 17, 1999
- ------------------------- Director (Principal Executive
James M. Seneff, Jr. Officer)
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