<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XV, Ltd. at September 30, 1996, and its statement of
income for the nine months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund XV, Ltd. for the nine months ended
September 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,489,732
<SECURITIES> 0
<RECEIVABLES> 1,458
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,946,739
<DEPRECIATION> 494,647
<TOTAL-ASSETS> 36,869,542
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,998,176
<TOTAL-LIABILITY-AND-EQUITY> 36,869,542
<SALES> 0
<TOTAL-REVENUES> 2,737,404
<CGS> 0
<TOTAL-COSTS> 377,660
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,714,737
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,714,737
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,714,737
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XV, Ltd. has an unclassified
balance sheet; therefore, no values are shown above for current assets and
current liabilities.
</FN>
</TABLE>
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, 1996
------------------------------------
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
0-26216
----------------------
CNL Income Fund XV, Ltd.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3198888
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------- -------
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 4-5
Notes to Condensed Financial Statements 6-8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 9-12
Part II
Other Information 13
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation of $494,647 and
$310,475 $22,452,092 $22,636,264
Net investment in direct
financing leases 9,372,136 9,429,649
Investment in joint ventures 2,654,110 2,347,635
Cash and cash equivalents 1,489,732 1,431,420
Receivables 1,458 88,189
Prepaid expenses 11,214 2,815
Organization costs, less
accumulated amortization
of $5,048 and $3,548 4,952 6,452
Accrued rental income 883,848 560,048
Other assets - 14,260
----------- -----------
$36,869,542 $36,516,732
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,568 $ 3,475
Escrowed real estate taxes
payable 8,064 6,187
Distributions payable 800,000 800,000
Due to related parties 5,543 8,235
Rents paid in advance 55,191 15,396
----------- -----------
Total liabilities 871,366 833,293
Partners' capital 35,998,176 35,683,439
----------- -----------
$36,869,542 $36,516,732
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Rental income from
operating leases $ 631,816 $ 635,384 $1,889,364 $1,870,082
Earned income from
direct financing
leases 267,026 251,636 802,766 685,881
Interest and other
income 17,798 16,668 45,274 78,229
---------- ---------- ---------- ----------
916,640 903,688 2,737,404 2,634,192
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 38,536 36,285 119,144 106,823
Professional services 5,470 8,039 15,183 23,962
Management fees to
related parties 8,772 8,586 26,246 24,601
State and other taxes - 39 30,924 12,520
Depreciation and
amortization 62,070 60,151 186,163 181,379
---------- ---------- ---------- ----------
114,848 113,100 377,660 349,285
---------- ---------- ---------- ----------
Income Before Equity
in Earnings of Joint
Ventures and Loss on
Sale of Land 801,792 790,588 2,359,744 2,284,907
Equity in Earnings of
Joint Ventures 210,454 71,860 354,993 212,684
Loss on Sale of Land - - - (71,023)
---------- ---------- ---------- ----------
Net Income $1,012,246 $ 862,448 $2,714,737 $2,426,568
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 10,122 $ 8,625 $ 27,147 $ 24,266
Limited partners 1,002,124 853,823 2,687,590 2,402,302
---------- ---------- ---------- ----------
$1,012,246 $ 862,448 $2,714,737 $2,426,568
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.25 $ 0.21 $ 0.67 $ 0.60
========== ========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
========== ========== ========== ==========
See accompanying notes to condensed financial statements
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Nine Months Ended Year Ended
September 30, December 31,
1996 1995
----------------- ------------
General partners:
Beginning balance $ 47,211 $ 12,859
Net income 27,147 34,352
----------- -----------
74,358 47,211
----------- -----------
Limited partners:
Beginning balance 35,636,228 35,198,113
Net income 2,687,590 3,338,116
Distributions ($0.60
$0.73 per limited
partner unit,
respectively) (2,400,000) (2,900,001)
----------- -----------
35,923,818 35,636,228
----------- -----------
Total partners' capital $35,998,176 $35,683,439
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents:
Net Cash Provided by
Operating Activities $ 2,580,751 $ 2,401,449
----------- -----------
Cash Flows from Investing
Activities:
Proceeds from sale of land - 811,706
Additions to land and
buildings on operating
leases - (1,889,486)
Investment in direct
financing leases - (2,148,301)
Investment in joint venture (145,526) (720,622)
Return of capital from
joint venture 23,087 -
Other - 25,449
----------- -----------
Net cash used in
investing activities (122,439) (3,921,254)
----------- -----------
Cash Flows from Financing
Activities:
Reimbursement of acquisition
costs paid by related parties
on behalf of the Partnership - (23,278)
Distributions to limited
partners (2,400,000) (1,850,002)
----------- -----------
Net cash used in
financing activities (2,400,000) (1,873,280)
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 58,312 (3,393,085)
Cash and Cash Equivalents at
Beginning of Period 1,431,420 4,787,830
----------- -----------
Cash and Cash Equivalents at
End of Period $ 1,489,732 $ 1,394,745
=========== ===========
Supplemental Schedule of Non-Cash
Investing and Financing
Activities:
Related parties paid certain
acquisition costs on behalf of
the Partnership $ - $ 882
=========== ===========
Land and building costs incurred
and unpaid at end of period $ - $ 4,131
=========== ===========
Construction in progress at
December 31, 1994, transferred
to net investment in direct
financing leases $ - $ 860,990
=========== ===========
Distributions declared and
unpaid at end of period $ 800,000 $ 800,000
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1996 and 1995
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, 1996, may not be
indicative of the results that may be expected for the year ending
December 31, 1996. Amounts as of December 31, 1995, 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 XV, Ltd. (the "Partnership") for the year ended December 31,
1995.
Certain items in the prior years' financial statements have been
reclassified to conform to 1996 presentation. These reclassifications
had no effect on partners' capital or net income.
Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
Statement requires that an entity review long-lived assets and certain
identifiable intangibles, to be held and used, for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. Adoption of this standard had no
material effect on the Partnership's financial position or results of
operations.
2. Investment in Joint Ventures:
----------------------------
In January 1996, the Partnership acquired an approximate 15 percent
interest in a Golden Corral property in Clinton, North Carolina, with
affiliates of the general partners as tenants-in-common. The
Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with affiliates and
amounts relating to its investment are included in investment in joint
ventures. In August 1996, the Partnership received approximately
$23,100, representing a return of capital, for excess construction
costs funded as part of the initial investment in January 1996. As of
September 30, 1996, the Partnership owned an approximate 15 percent
interest in this property.
In September 1996, Wood-Ridge Real Estate Joint Venture, in which the
Partnership owns a 50% interest, 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
$4,427,203 of the net sales proceeds it received from the sale of its
properties in September 1996. The remaining net sales proceeds of
$573,977 are expected to be reinvested by December 1996.
The following presents the combined, condensed financial information for
all of the Partnership's investments in joint ventures at:
September 30, December 31,
1996 1995
------------- ------------
Land and buildings on
operating leases,
less accumulated
depreciation $ 799,440 $3,149,552
Net investment in
direct financing
lease - 1,421,802
Cash 24,342 302
Restricted cash 5,017,023 -
Receivables - 1,526
Prepaid expenses 268 -
Accrued rental income - 123,000
Liabilities 362 270
Partners' capital 5,840,711 4,695,912
Revenues 504,173 590,537
Gain on sale 261,106 -
Net income 745,157 561,212
The Partnership recognized income totalling $354,993 and $212,684 for
the nine months ended September 30, 1996 and 1995, respectively, from
these joint ventures, $210,454 and $71,860 of which was earned during
the quarters ended September 30, 1996 and 1995, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund XV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 2, 1993, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurants, as well as properties upon which restaurants were to
be constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The
leases are triple-net leases with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of September 30,
1996, the Partnership owned 43 Properties, including an interest in one
Property owned with affiliates as tenants-in-common.
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of capital for the nine months ended
September 30, 1996 and 1995, 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
$2,580,751 and $2,401,449 for the nine months ended September 30, 1996 and
1995, respectively. The increase in cash from operations for the nine months
ended September 30, 1996, as compared to the nine months ended September 30,
1995, 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.
Other sources and uses of capital included the following during the nine
months ended September 30, 1996.
In January 1996, the Partnership invested approximately $145,500 in a
Golden Corral Property located in Clinton, North Carolina, with affiliates of
the general partners as tenants-in-common. In connection therewith, the
Partnership and its affiliates 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. Upon completion of the Partnership's
acquisitions in January 1996, the remaining net offering proceeds of
approximately $220,000 were reserved for Partnership purposes. In August
1996, the Partnership received approximately $23,100, representing a return of
capital, for excess construction costs funded as part of the initial
investment in January 1996, in the Golden Corral Property held with affiliates
of the general partners as tenants-in-common. The Partnership intends to use
these funds for other Partnership purposes. As of September 30, 1996, the
Partnership owned an approximate 15 percent interest in this Property.
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 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 $4,427,203 of the net sales proceeds it received from the
sale of its Properties in September 1996. The remaining net sales proceeds of
$573,977 are expected to be reinvested by December 1996. The lease agreements
for the Properties are substantially the same as the leases relating to the
Partnership's other properties.
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 to make distributions to the partners. At September
30, 1996, the Partnership had $1,489,732 invested in such short-term
investments as compared to $1,431,420 at December 31, 1995. The funds
remaining at September 30, 1996, after payment of distributions and other
liabilities, will be used to meet the Partnership's working capital and other
needs.
Total liabilities of the Partnership, including distributions payable,
increased to $871,366 at September 30, 1996, from $833,293 at December 31,
1995, primarily as a result of an increase in rents paid in advance during the
nine months ended September 30, 1996. The general partners believe that the
Partnership has sufficient cash on hand to meet its current working capital
needs.
Based on cash from operations, the Partnership declared distributions to
the limited partners of $2,400,000 and $2,100,000 for the nine months ended
September 30, 1996 and 1995, respectively, ($800,000 for each of the quarters
ended September 30, 1996 and 1995, respectively). This represents
distributions of $0.60 and $0.53 per unit for the nine months ended September
30, 1996 and 1995, respectively, ($0.20 per unit for the quarters ended
September 30, 1996 and 1995, respectively). No distributions were made to the
general partners for the quarters and nine months ended September 30, 1996 and
1995. No amounts distributed or to be distributed to the limited partners for
the nine months ended September 30, 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 on their adjusted capital
contributions. The Partnership intends to continue to make distributions of
cash available for distribution to the limited partners on a quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who meet specified
financial standards minimizes the Partnership's operating expenses. The
general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection
with the operations of the Partnership.
Results of Operations
- ---------------------
During the nine months ended September 30, 1995, the Partnership owned
and leased 45 wholly owned Properties (including two Properties in Knoxville,
Tennessee, and one Property in Leavenworth, Kansas, which were sold in March
1995) and during the nine months ended September 30, 1996, the Partnership
owned and leased 42 wholly owned Properties to operators of fast-food and
family-style restaurant chains. In connection therewith, during the nine
months ended September 30, 1996 and 1995, the Partnership earned $2,692,130
and $2,555,963, respectively, in rental income from operating leases and
earned income from direct financing leases from these Properties, $898,842 and
$887,020 of which was earned during the quarters ended September 30, 1996 and
1995, respectively. The increase in rental and earned income is primarily
attributable to the fact that the Properties acquired during the quarter and
nine months ended September 30, 1995, were operational for the full quarter
and nine months ended September 30, 1996, as compared to a partial quarter and
nine months ended September 30, 1995.
During the nine months ended September 30, 1996 and 1995, the
Partnership owned and leased two Properties indirectly through a joint venture
arrangement, (which include the two Properties sold in September 1996 by Wood-
Ridge Real Estate Joint Venture as discussed above in "Liquidity and Capital
Resources"). In addition, during the nine months ended September 30, 1996,
the Partnership owned one Property indirectly with affiliates of the general
partners as tenants-in-common. In connection therewith, during the nine
months ended September 30, 1996 and 1995, the Partnership earned $354,993 and
$212,684, respectively, attributable to net income earned by these joint
ventures, $210,454 and $71,860 of which was earned during the quarters ended
September 30, 1996 and 1995, respectively. The increase in net income earned
by joint ventures 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." Due to the
fact that the joint venture reinvested the majority of the net sales proceeds
in five Properties in October 1996, the Partnership does not anticipate that
the sale of the two Properties will have a material adverse effect on
operations.
During the nine months ended September 30, 1996 and 1995, the
Partnership also earned $45,274 and $78,229, respectively, in interest and
other income, $17,798 and $16,668 of which was earned during the quarters
ended September 30, 1996 and 1995, respectively. The decrease in interest and
other income during the nine months ended September 30, 1996, is primarily
attributable to the decrease in the amount of funds invested in short-term,
liquid investments due to the acquisition of additional Properties during 1995
and the nine months ended September 30, 1996.
Operating expenses, including depreciation and amortization expense,
were $377,660 and $349,285 for the nine months ended September 30, 1996 and
1995, respectively, of which $114,848 and $113,100 were incurred during the
quarters ended September 30, 1996 and 1995. The increase in operating
expenses during the nine months ended September 30, 1996, is primarily
attributable to (i) an increase in accounting and administrative expenses
associated with operating the Partnership and its Properties (ii) the
Partnership's incurring additional taxes relating to the filing of various
state tax returns during 1996, and (iii) an increase in insurance expense as a
result of the general partners' obtaining contingent liability and property
coverage for the Partnership, effective May 1995. This insurance policy 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.
As a result of the sale of the two Properties in Knoxville, Tennessee,
and one Property in Leavenworth, Kansas, the Partnership recognized a loss for
financial reporting purposes of $71,023 during the nine months ended September
30, 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 future scheduled rent increases that the
Partnership had recorded and reversed at the time of the sale. No wholly
owned Properties were sold by the Partnership during the nine months ended
September 30, 1996.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
-----------------
Item 2. Changes in Securities. Inapplicable.
---------------------
Item 3. Defaults upon Senior Securities. Inapplicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable.
Item 5. Other Information. Inapplicable.
-----------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
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 5th day of November, 1996.
CNL INCOME FUND XV, 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)
