FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2000
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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
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CNL Income Fund XIV, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-3143096
----------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801-3336
----------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________
<PAGE>
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Part II
Other Information 14-15
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------- -------------------
<S> <C>
ASSETS
Land and buildings on operating leases, less
accumulated depreciation and allowance
for loss on building $ 22,679,133 $ 24,579,081
Net investment in direct financing leases 6,694,055 6,779,642
Investment in joint ventures 5,003,868 4,502,838
Cash and cash equivalents 2,762,102 1,543,691
Restricted cash -- 383,368
Receivables, less allowance for doubtful accounts
of $69,004 and $6,703, respectively 72,760 86,811
Due from related parties -- 5,040
Prepaid expenses 29,507 17,393
Lease costs, less accumulated amortization of
$6,023 and $3,548, respectively 26,977 29,452
Accrued rental income, less allowance for doubtful
accounts of $12,622 in 2000 and 1999 2,144,875 2,145,581
------------------- -------------------
$ 39,413,277 $ 40,072,897
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 75,838 $ 137,749
Accrued and escrowed real estate taxes payable 8,393 28,520
Distributions payable 928,130 928,130
Due to related parties 124,686 76,976
Rents paid in advance and deposits 31,925 67,196
------------------- -------------------
Total liabilities 1,168,972 1,238,571
Partners' capital 38,244,305 38,834,326
------------------- -------------------
$ 39,413,277 $ 40,072,897
=================== ===================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ------------- -------------- --------------
Revenues:
Rental income from operating leases $ 699,208 $ 723,070 $ 2,231,356 $ 2,148,545
Earned income from direct financing leases 155,274 210,132 514,189 631,639
Contingent rental income 1,637 3,078 3,055 14,918
Interest and other income 25,089 14,269 90,998 31,749
------------ ------------- -------------- --------------
881,208 950,549 2,839,598 2,826,851
------------ ------------- -------------- --------------
Expenses:
General operating and administrative 52,997 41,897 152,799 123,080
Professional services 13,260 9,611 37,045 27,187
Management fees to related party 9,463 9,958 29,916 29,430
Real estate taxes -- 1,979 2,021 7,310
State and other taxes -- -- 32,170 30,688
Loss on termination of direct financing lease -- 20,119 -- 20,119
Depreciation and amortization 96,564 94,168 291,335 292,440
Transaction costs -- 62,965 77,526 181,178
------------ ------------- -------------- --------------
172,284 240,697 622,812 711,432
------------ ------------- -------------- --------------
Income Before Equity in Earnings of Joint
Ventures, Loss on Sale of Land and Buildings
and Provision for Loss on Building 708,924 709,852 2,216,786 2,115,419
Equity in Earnings of Joint Ventures 85,702 95,979 147,186 284,801
Loss on Sale of Land and Buildings (75,930 ) -- (75,930 ) (60,882 )
Provision for Loss on Building (83,815 ) -- (93,673 ) (121,207 )
------------ ------------- -------------- --------------
Net Income $ 634,881 $ 805,831 $ 2,194,369 $ 2,218,131
============ ============= ============== ==============
Allocation of Net Income:
General partners $ 7,094 $ 8,058 $ 22,738 $ 23,221
Limited partners 627,787 797,773 2,171,631 2,194,910
------------ ------------- -------------- --------------
$ 634,881 $ 805,831 $ 2,194,369 $ 2,218,131
============ ============= ============== ==============
Net Income Per Limited Partner Unit $ 0.14 $ 0.18 $ 0.48 $ 0.49
============ ============= ============== ==============
Weighted Average Number of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============ ============= ============== ==============
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
-------------------------- -----------------------
General partners:
Beginning balance $ 209,255 $ 177,733
Net income 22,738 31,522
-------------------------- -----------------------
231,993 209,255
-------------------------- -----------------------
Limited partners:
Beginning balance 38,625,071 39,297,991
Net income 2,171,631 3,039,600
Distributions ($0.62 and $0.83 per
limited partner unit, respectively) (2,784,390 ) (3,712,520 )
-------------------------- -----------------------
38,012,312 38,625,071
-------------------------- -----------------------
Total partners' capital $ 38,244,305 $ 38,834,326
========================== =======================
See accompanying notes to condensed financial statements.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2000 1999
----------------- ---------------
Increase (Decrease ) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $ 2,714,425 $2,648,649
----------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 1,631,947 696,300
Investment in joint ventures (727,667 ) (44,120 )
Decrease in restricted cash 384,096 --
Payment of lease costs -- (33,000 )
----------------- ---------------
Net cash provided by investing activities 1,288,376 619,180
----------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (2,784,390 ) (2,784,390 )
----------------- ---------------
Net cash used in financing activities (2,784,390 ) (2,784,390 )
----------------- ---------------
Net Increase in Cash and Cash Equivalents 1,218,411 483,439
Cash and Cash Equivalents at Beginning of Period 1,543,691 949,056
----------------- ---------------
Cash and Cash Equivalents at End of Period $ 2,762,102 $1,432,495
================= ===============
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 928,130 $ 928,130
================= ===============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 2000, may not be
indicative of the results that may be expected for the year ending
December 31, 2000. Amounts as of December 31, 1999, included in the
financial statements, have been derived from audited financial
statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XIV, Ltd. (the "Partnership") for the year ended December
31, 1999.
Certain items in the prior year's financial statements have been
reclassified to conform to 2000 presentation. These reclassifications
had no effect on partners' capital or net income.
2. Land and Building on Operating Leases:
Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------------------- -------------------
<S> <C>
Land $ 14,591,413 $ 15,289,459
Buildings 10,300,124 11,319,706
-------------------- -------------------
24,891,537 26,609,165
Less accumulated
depreciation (2,091,520 ) (2,002,873 )
-------------------- -------------------
22,800,017 24,606,292
Less allowance for
loss on building (120,884 ) (27,211 )
-------------------- -------------------
$ 22,679,133 $ 24,579,081
==================== ===================
</TABLE>
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
2. Land and Building on Operating Leases - Continued:
At December 31, 1999, the Partnership recorded a provision for loss on
building in the amount of $27,211 for financial reporting purposes
relating to the Long John Silver's property in Laurens, South Carolina.
The tenant of this property filed for bankruptcy and discontinued the
payment of rents. During the nine months ended September 30, 2000, the
Partnership increased the provision for loss on building by $93,673.
The total allowance represented the difference between the carrying
value of the property at September 30, 2000 and the estimated net
realizable value of the property.
In September 2000, the Partnership sold and received net sales proceeds
for its property in Columbus, Ohio for $1,631,946, resulting in a loss
of $75,930 for financial reporting purposes.
3. Investment in Joint Ventures:
In January 2000, the Partnership used the majority of the net sales
proceeds it received from the 1999 sale of a property in Houston,
Texas, to acquire an interest in a Baker's Square property in Niles,
Illinois, with CNL Income Fund VI, Ltd., a Florida limited partnership
and an affiliate of the general partners, as tenants-in-common. In
connection therewith, the Partnership and the affiliate entered into an
agreement whereby each co-venturer will share in the profits and losses
of the property in proportion to its applicable percentage interest.
The Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with an affiliate.
As of September 30, 2000, the Partnership owned a 26 percent interest
in this property.
As of September 30, 2000, the lease associated with the property owned
by Melbourne Joint Venture had been amended to provide for rent
reductions due to financial difficulties the tenant was experiencing.
As a result, Melbourne Joint Venture reclassified the building portion
of the asset from net investment in direct financing lease to land and
building on operating leases. In accordance with the Statement of
Financial Accounting Standards #13, "Accounting for Leases," Melbourne
Joint Venture recorded the reclassified asset at the lower of original
cost, present fair value, or present carrying amount. No loss on the
reclassification of the direct financing lease was recorded for
financial reporting purposes.
As of September 30, 2000, the joint venture, in which the Partnership
has a 50 percent interest, recorded a provision for loss on building
totaling approximately $219,100 for financial reporting purposes due to
the fact that the operator of its property vacated the property and
discontinued operations. The allowance represented the difference
between the property's net carrying value at September 30, 2000 and the
estimated net realizable value of the property.
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
3. Investment in Joint Ventures - Continued:
The following presents the combined, condensed financial information
for the joint ventures and the property held as tenants-in-common with
an affiliate at:
<TABLE>
<CAPTION>
September 30, December 31, 1999
2000
------------------- -------------------
<S> <C>
Land and buildings on operating leases, less accumulated
depreciation and allowance for loss on building $ 11,325,662 $ 8,588,997
Net investment in direct financing leases 352,864 990,480
Cash 231,517 31,188
Receivables 2,579 118,630
Accrued rental income 356,778 309,013
Other assets 19,146 20,817
Liabilities 524,278 82,684
Partners' capital 11,764,268 9,976,441
Revenues 809,104 895,295
Provision for loss on building (219,053) --
Net income 387,284 739,271
</TABLE>
The Partnership recognized income totalling $147,186 and $284,801
during the nine months ended September 30, 2000 and 1999, respectively,
and $85,702 and $95,979 during the quarters ended September 30, 2000
and 1999, respectively.
4. Related Party Transactions:
During the nine months ended September 30, 2000, the Partnership
acquired a 26 percent interest in a property from CNL BB Corp., an
affiliate of the general partners, for which the property had a total
purchase price of $1,223,500. The property acquired during 2000 is
being held as tenants-in-common, with CNL Income Fund VI, Ltd. ("CNL
VI"), a Florida limited partnership, an affiliate of the general
partners (see Note 3). CNL BB Corp. had purchased and temporarily held
title to this property in order to facilitate the acquisition of the
property by the Partnership and CNL VI as tenants-in-common. The total
purchase price paid by the Partnership and CNL VI represented the costs
incurred by CNL BB Corp. to acquire and carry the property, including
closing costs. In accordance with the Statement of Policy of Real
Estate programs for the North American Securities
<PAGE>
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
4. Related Party Transactions - Continued:
Administrators Association, Inc., all income, expenses, profits and
losses generated by or associated with the property, or interests
therein, purchased from an affiliate in which the affiliate has acted
as an interim owner, are treated as belonging to the Partnership and
CNL VI, as tenants-in-common. For the nine months ended September 30,
2000, other income includes $2,103 of such amounts.
5. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan
of Merger entered into in March 1999. The general partners are
continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the limited partners.
6. Subsequent Event:
In November 2000, the Partnership acquired a Golden Corral property in
Bristol, Virginia. In connection therewith, the Partnership entered
into a long-term, triple-net lease with terms substantially the same as
its other leases.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XIV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 25, 1992, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurants, as well as land upon which restaurants were to be
constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The leases
generally are triple-net leases, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of September 30, 2000,
the Partnership owned 55 Properties, which included interests in 12 Properties
owned by joint ventures in which the Partnership is a co-venturer and one
Property owned with an affiliate as tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the nine months ended
September 30, 2000 and 1999 was cash from operations (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operations was
$2,714,425 and $2,648,649 for the nine months ended September 30, 2000 and 1999,
respectively. The increase in cash from operations for the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999, was
primarily a result of changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
nine months ended September 30, 2000.
In January 2000, the Partnership reinvested the majority of the net
sales proceeds from the 1999 sale of a Property in Houston, Texas in a Property
in Niles, Illinois, as tenants-in-common with CNL Income Fund VI, Ltd. ("CNL
VI"), an affiliate of the general partners. In connection therewith, the
Partnership and the affiliate entered into an agreement whereby each co-venturer
will share in the profits and losses of the Property in proportion to its
applicable percentage interest. The Partnership and CNL VI acquired this
Property from CNL BB Corp., an affiliate of the general partners. The affiliate
had purchased and temporarily held title to the Property in order to facilitate
the acquisition of the Property by the Partnership and CNL VI. The purchase
price paid by the Partnership represented the costs incurred by the affiliate to
acquire the Property, including closing costs. The transaction, or a portion
thereof, relating to the sale of the Property in Houston, Texas, and the
reinvestment of the net sales proceeds in the Property in Niles, Illinois, as
tenants-in-common, was structured to qualify as a like-kind exchange transaction
for federal income tax purposes. As of September 30, 2000, the Partnership owned
a 26 percent interest in the Property in Niles, Illinois.
In September 2000, the Partnership sold and received net sales proceeds
for its Property in Columbus, Ohio for $1,631,946, resulting in a loss of
$75,930 for financial reporting purposes. In November 2000, the Partnership
reinvested the net sales proceeds in a Golden Corral Property in Bristol,
Virginia. In connection therewith, the Partnership entered into a long-term,
triple-net lease with terms substantially the same as its other leases.
Currently, rental income from the Partnership's Properties and net
sales proceeds from the sale of Properties, pending reinvestment in additional
Properties, are invested in money market accounts or other short-term, highly
liquid investments such as demand deposit accounts at commercial banks, money
market accounts and certificates of deposit with less than a 30-day maturity
date, pending the Partnership's use of such funds to pay Partnership expenses or
to make distributions to the partners. At September 30, 2000, the Partnership
had $2,762,102 invested in such short-term investments, as compared to
$1,543,691 at December 31, 1999. The funds remaining at September 30, 2000 after
payment of distributions and other liabilities will be used to meet the
Partnership's working capital and other needs.
Short Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who 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.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Total liabilities of the Partnership, including distributions payable,
decreased to $1,168,972 at September 30, 2000, from $1,238,571 at December 31,
1999. The decrease in liabilities was a result of a decrease in accounts
payable, accrued and escrowed real estate taxes payable and rents paid in
advance and deposits at September 30, 2000, as compared to December 31, 1999.
The decrease was partially offset by an increase in amounts due to related
parties at September 30, 2000, as compared to December 31, 1999. The general
partners believe the Partnership has sufficient cash on hand to meet its current
working capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and anticipated future cash from operations, the Partnership
declared distributions to the limited partners of $2,784,390 for each of the
nine months ended September 30, 2000 and 1999 ($928,130 for each of the quarters
ended September 30, 2000 and 1999). This represents distributions for each
applicable nine months of $0.62 per unit ($0.21 per unit for each applicable
quarter). No distributions were made to the general partners for the quarters
and nine months ended September 30, 2000 and 1999. No amounts distributed to the
limited partners for the nine months ended September 30, 2000 and 1999 are
required to be or have been treated by the Partnership as a return of capital
for purposes of calculating the limited partners' return on their adjusted
capital contribution. The Partnership intends to continue to make distributions
of cash available for distribution to the limited partners on a quarterly basis.
Long Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
<PAGE>
Results of Operations
During the nine months ended September 30, 1999, the Partnership owned
and leased 47 wholly owned Properties (which included one Property which was
sold during 1999) and during the nine months ended September 30, 2000, the
Partnership owned and leased 43 wholly owned Properties (which included one
Property which was sold during 2000) to operators of fast food and family style
restaurant chains. In connection therewith, during the nine months ended
September 30, 2000 and 1999, the Partnership earned $2,745,545 and $2,780,184,
respectively, in rental income from operating leases and earned income from
direct financing leases from these Properties, $854,482 and $933,202 of which
was earned during the quarter ended September 30, 2000 and 1999, respectively.
The decrease in rental and earned income during the quarter and nine months
ended September 30, 2000, as compared to September 30, 1999, was partially
attributable to a decrease in rental and earned income of approximately $19,500
and $52,300, during the quarter and nine months ended September 30, 2000,
respectively, due to the fact that the Partnership sold two Properties during
1999. The proceeds from these sales were subsequently reinvested in Duluth Joint
Venture in December 1999 and in a Property held as tenants-in-common in January
2000, as described above in "Capital Resources."
Rental and earned income decreased by approximately $44,200 and $58,600
during the quarter and nine months ended September 30, 2000, respectively, due
to the fact that during the quarter and nine months ended September 30, 2000,
the Partnership established an allowance for doubtful accounts for past due
rental amounts relating to its Properties in Tempe, Arizona and Las Vegas,
Nevada, in accordance with Partnership policy. The general partners will
continue to pursue collection of past due rental amounts relating to these
Properties and will recognize such amounts as income if collected.
Rental and earned income also decreased by approximately $2,500 and
$14,900 during the quarter and nine months ended September 30, 2000,
respectively, due to the fact that the Partnership amended the lease relating to
the Property in Houston, Texas, to provide for rent reductions to the tenant.
The Partnership does not anticipate that the rent reductions will have an
adverse material effect on the financial position of the Partnership.
The decrease in rental and earned income during the nine months ended
September 30, 2000 was partially offset by an increase in rental and earned
income due to the fact that during the nine months ended September 30, 2000, the
Partnership collected and recognized as income approximately $100,900 in past
due rental amounts relating to Long John Silver's, Inc., which filed for
bankruptcy during 1998 and rejected the leases relating to five Properties. As
of September 30, 2000, the Partnership had entered into new leases, each with a
new tenant, for two of the five Properties, had sold two of the Properties and
had one Property that remained vacant. In August 1999, Long John Silver's Inc.
assumed and affirmed its four remaining leases, and the Partnership has
continued receiving rental payments relating to these four leases. The
Partnership will not recognize any rental and earned income from this remaining
vacant Property until a replacement tenant is located, or until the Property is
sold and the proceeds from the sale are reinvested in an additional Property.
In addition, during the nine months ended September 30, 2000 and 1999,
the Partnership earned $90,998 and $31,749, respectively, in interest and other
income, $25,089 and $14,269 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively. Interest and other income were higher
during the quarter and nine months ended September 30, 2000 than that earned
during the quarter and nine months ended September 30, 1999, primarily due to
the fact that during the quarter and nine months ended September 30, 2000, the
Partnership earned interest on the net sales proceeds relating to the sale of
several Properties during 1999, pending reinvestment in additional Properties.
As of September 30, 2000, these net sales proceeds had been reinvested, as
described above.
During the nine months ended September 30, 1999, the Partnership owned
and leased ten Properties indirectly through joint venture arrangements. During
the nine months ended September 30, 2000, the Partnership owned two additional
Properties indirectly through joint venture agreements and one Property with an
affiliate as tenants-in-common. In connection therewith, during the nine months
ended September 30, 2000 and 1999, the Partnership earned $147,186 and $284,801,
respectively, $85,702 and $95,979 of which were earned during the quarters ended
September 30, 2000 and 1999, respectively. The decrease in net income earned by
joint ventures during the quarter and nine months ended September 30, 2000, as
compared to the quarter and nine months ended September 30, 1999, was primarily
due to the fact that the lease relating to the Property held by Melbourne Joint
Venture, in which the Partnership owns a 50 percent interest, was amended to
provide for rent reductions starting in February 2000. In June 2000, the
operator of this Property vacated the Property and discontinued operations. As a
result, during the nine months ended September 30, 2000, the joint venture
established an allowance for doubtful accounts for past due rental amounts. The
joint venture will continue to pursue collection of past due rental amounts and
will recognize such amounts as income if collected. The joint venture will not
recognize any rental income relating to this Property until such time as a new
lease is executed or until the Property is sold and the proceeds from such sale
are reinvested in an additional Property. The joint venture is currently seeking
a new tenant or purchaser for this Property. In addition, the joint venture
established an allowance for loss on building for this Property of approximately
$219,100. The allowance represented the difference between the Property's net
carrying value at September 30, 2000, and the current estimated net realizable
value of the Property. The decrease in net income earned by joint ventures was
partially offset by an increase in net income earned by joint ventures due to
the Partnership investing in two joint venture arrangements and one Property, as
tenants-in-common subsequent to September 30, 1999, as described above.
Operating expenses, including depreciation and amortization expense,
were $622,812 and $711,432 during the nine months ended September 30, 2000 and
1999, respectively, of which $172,284 and $240,697 were incurred during the
quarters ended September 30, 2000 and 1999, respectively. The decrease in
operating expenses during the quarter and nine months ended September 30, 2000,
as compared to the quarter and nine months ended September 30, 1999, was
primarily attributable to the fact that the Partnership incurred less
transaction costs related to the general partners retaining financial and legal
advisors to assist them in evaluating and negotiating the proposed merger with
CNL American Properties Fund, Inc. ("APF") due to the termination of the
proposed merger, as described below in "Termination of Merger". Operating
expenses were also lower during the quarter and nine months ended September 30,
2000 due to the fact that during the quarter and nine months ended September 30,
1999, as a result of Long John Silver's, Inc. rejecting a lease during 1999, the
Partnership reclassified the asset from net investment in direct financing
leases to land and buildings on operating leases. In conjunction therewith, the
Partnership recorded a loss on termination of direct financing lease of $20,119
during the quarter and nine months ended September 30, 1999. No such loss was
recorded during the quarter and nine months ended September 30, 2000. The
decrease in operating expenses during the quarter and nine months ended
September 30, 2000, was partially offset by an increase in administrative
expenses for servicing the Partnership and its Properties.
As a result of the sale of the Property in Columbus, Ohio as described
above in "Capital Resources," the Partnership recognized a loss of $75,930 for
financial reporting purposes during the quarter and nine months ended September
30, 2000.
During the nine months ended September 30, 2000, the Partnership had
previously recorded a provision for loss on building of $9,858 for financial
reporting purposes relating to the Long John Silver's Property in Laurens, South
Carolina, the lease for which was rejected by the tenant. During the quarter and
nine months ended September 30, 2000, the Partnership recorded an additional
provision for loss on building of $83,815 for financial reporting purposes
relating to this Property. The allowance represented the difference between the
carrying value of the Property at September 30, 2000 and the estimated net
realizable value of the Property. In addition, during the nine months ended
September 30, 1999, the Partnership recorded a provision for loss on building of
$121,207 for financial reporting purposes relating to a Long John Silver's
Property in Shelby, North Carolina, the lease for which was rejected by the
tenant. The allowance represented the difference between the carrying value of
the Property at September 30, 1999 and the estimated realizable value of the
Property. The tenant of these Properties filed for bankruptcy during 1998 and
discontinued payment of rents under the terms of its lease agreements.
Termination of Merger
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger entered into in March 1999. The
general partners are continuing to evaluate strategic alternatives for the
Partnership, including alternatives to provide liquidity to the limited
partners.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Affidavit and Certificate of Limited Partnership
of CNL Income Fund 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, 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.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 9thday of November, 2000
CNL INCOME FUND XIV, LTD.
By: CNL REALTY CORPORATION
General Partner
By:/s/JAMES M. SENEFF, JR.
----------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By:/s/ROBERT A. BOURNE
----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
