<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVI, 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 10-Q of CNL Income Fund XVI, 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> 1,495,000
<SECURITIES> 0
<RECEIVABLES> 44,687
<ALLOWANCES> 7,829
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,641,909
<DEPRECIATION> 735,252
<TOTAL-ASSETS> 40,920,690
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,794,323
<TOTAL-LIABILITY-AND-EQUITY> 40,920,690
<SALES> 0
<TOTAL-REVENUES> 3,293,412
<CGS> 0
<TOTAL-COSTS> 619,795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,797,922
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,797,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,797,922
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XVI, 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
0-26218
----------------------
CNL Income Fund XVI, Ltd.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3198891
- ---------------------------- -------------------------------
(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 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-13
Part II
Other Information 14
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $31,906,657 $29,140,773
Net investment in direct financing
leases 6,015,111 7,464,949
Cash and cash equivalents 1,495,000 3,987,786
Restricted cash 785,749 -
Receivables, less allowance for
doubtful accounts of $7,829
and $2,962 36,858 98,673
Prepaid expenses 12,233 660
Organization costs, less accumu-
lated amortization of $4,050
and $2,550 5,950 7,450
Accrued rental income 663,132 316,482
Other assets - 223,727
----------- -----------
$40,920,690 $41,240,500
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs
payable $ 129,600 $ 680,528
Accounts payable 1,441 4,131
Escrowed real estate taxes payable 4,147 957
Distributions payable 900,000 787,500
Due to related parties 7,673 71,689
Rents paid in advance and deposits 83,506 55,543
----------- -----------
Total liabilities 1,126,367 1,600,348
Partners' capital 39,794,323 39,640,152
----------- -----------
$40,920,690 $41,240,500
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, 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 $ 907,162 $ 622,099 $2,673,321 $1,449,245
Earned income from
direct financing
leases 176,736 168,999 549,835 291,476
Interest and other
income 22,363 95,498 70,256 274,168
---------- ---------- ---------- ----------
1,106,261 886,596 3,293,412 2,014,889
---------- ---------- ---------- ----------
Expenses:
General operating
and administrative 43,067 51,328 148,476 100,994
Professional services 6,527 8,400 17,994 17,480
Management fees to
related parties 9,739 7,147 28,880 15,598
State and other taxes - 1,981 12,806 3,141
Depreciation and
amortization 140,808 90,583 411,639 207,812
---------- ---------- ---------- ----------
200,141 159,439 619,795 345,025
---------- ---------- ---------- ----------
Income Before Gain on
Sale of Land and
Building 906,120 727,157 2,673,617 1,669,864
Gain on Sale of Land
and Building - - 124,305 -
---------- ---------- ---------- ----------
Net Income $ 906,120 $ 727,157 $2,797,922 $1,669,864
========== ========== ========== ==========
Allocation of Net
Income:
General partners $ 9,061 $ 7,272 $ 26,736 $ 16,699
Limited partners 897,059 719,885 2,771,186 1,653,165
---------- ---------- ---------- ----------
$ 906,120 $ 727,157 $2,797,922 $1,669,864
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.20 $ 0.16 $ 0.62 $ 0.43
========== ========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 3,872,378
========== ========== ========== ==========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, 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 $ 27,184 $ 2,876
Net income 26,736 24,308
----------- -----------
53,920 27,184
----------- -----------
Limited partners:
Beginning balance 39,612,968 17,471,157
Contributions - 24,825,828
Syndication costs - (2,652,718)
Net income 2,771,186 2,406,533
Distributions ($0.59 and
$0.61 per limited partner
unit, respectively) (2,643,751) (2,437,832)
----------- -----------
39,740,403 39,612,968
----------- -----------
Total partners' capital $39,794,323 $39,640,152
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, 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 $ 2,815,893 $ 1,672,975
------------ ------------
Cash Flows From Investing
Activities:
Proceeds from sale of land
and building 775,000 -
Additions to land and
buildings on operating
leases (2,392,562) (14,604,139)
Investment in direct
financing leases (382,372) (4,547,634)
Increase in restricted cash (775,000) -
Payment of other assets - (259,128)
Other - 20,714
------------ ------------
Net cash used in
investing activities (2,774,934) (19,390,187)
------------ ------------
Cash Flows From Financing
Activities:
Reimbursement of acquisition
and syndication costs paid
by related parties on behalf
of the Partnership, net (2,494) (394,038)
Contributions from limited
partners - 24,825,828
Distributions to limited
partners (2,531,251) (1,118,398)
Payment of syndication costs - (2,450,545)
------------ ------------
Net cash provided by
(used in) financing
activities (2,533,745) 20,862,847
------------ ------------
Net Increase (Decrease)in Cash
and Cash Equivalents (2,492,786) 3,145,635
Cash and Cash Equivalents at
Beginning of Period 3,987,786 2,983,496
------------ ------------
Cash and Cash Equivalents at
End of Period $ 1,495,000 $ 6,129,131
============ ============
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain
acquisition and syndication
costs on behalf of the
Partnership as follows:
Acquisition costs $ 10,336 $ 88,467
Syndication costs - 247,303
------------ ------------
$ 10,336 $ 335,770
============ ============
Land, building and other costs
incurred and unpaid at end of
period $ 129,600 $ 819,176
============ ============
Construction in progress at
December 31, 1994, transferred
to net investment in direct
financing leases $ - $ 550,076
============ ============
Net investment in direct
financing lease reclassified
to building on operating lease
as a result of a change in
estimated costs $ 1,015,392 $ -
============ ============
Distributions declared and
unpaid at end of period $ 900,000 $ 680,523
============ ============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, 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 XVI, Ltd. (the "Partnership") for the year ended December
31, 1995.
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. Land and Buildings on Operating Leases:
--------------------------------------
In April 1996, the Partnership sold its property in Appleton, Wisconsin,
and received net sales proceeds of $775,000, resulting in a gain of
$124,305 for financial reporting purposes. This property was originally
acquired by the Partnership in February 1995 and had a cost of
approximately $595,100, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the property for
approximately $179,900 in excess of its original purchase price.
Land and buildings on operating leases consisted of the following at:
September 30, December 31,
1996 1995
------------- ------------
Land $15,804,927 $15,233,066
Buildings 16,836,982 14,232,820
----------- -----------
32,641,909 29,465,886
Less accumulated
depreciation (735,252) (325,113)
----------- -----------
$31,906,657 $29,140,773
=========== ===========
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 nine months ended September 30, 1996 and 1995, the Partnership
recognized $359,846 and $189,326, respectively, of such rental income,
$118,310 and $80,406 of which was recognized during the quarters ended
September 30, 1996 and 1995, respectively.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at September 30, 1996:
1996 $ 792,338
1997 3,170,589
1998 3,181,425
1999 3,231,072
2000 3,369,249
Thereafter 46,227,535
-----------
$59,972,208
===========
3. Net Investment in Direct Financing Leases:
-----------------------------------------
The following lists the components of the net investment in direct
financing leases at:
September 30, December 31,
1996 1995
------------- ------------
Minimum lease
payments receivable $ 14,452,226 $ 19,100,733
Estimated residual
values 1,932,560 2,290,112
Less unearned income (10,369,675) (13,925,896)
------------ ------------
Net investment in
direct financing
leases $ 6,015,111 $ 7,464,949
============ ============
The following is a schedule of future minimum lease payments to be
received on direct financing leases at September 30, 1996:
1996 $ 184,517
1997 740,834
1998 741,451
1999 742,074
2000 755,382
Thereafter 11,287,968
-----------
$14,452,226
===========
4. Restricted Cash:
---------------
As of September 30, 1996, the net sales proceeds of $775,000 from the
sale of the property in Appleton, Wisconsin, plus accrued interest of
$10,749, was being held in an interest-bearing escrow account pending
the release of funds by the escrow agent to acquire an additional
property on behalf of the Partnership.
5. Subsequent Event:
----------------
In October 1996, the Partnership reinvested the net sales proceeds from
the sale in April 1996, of the property in Appleton, Wisconsin, in a
Boston Market property in Fayetteville, North Carolina, as tenants-in-
common with an affiliate of the general partners. In connection
therewith, the Partnership and its affiliate entered into an agreement
whereby each co-venturer will share in the profits and losses of the
property in proportion to each co-venturer's interest. The Partnership
owns an approximate 80 percent interest in the property.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CNL Income Fund XVI, 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 restaurant properties, 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 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 42 Properties.
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1996, the Partnership
invested approximately $2,315,000 in two additional Properties. Upon
completion of the Partnership's acquisitions in March 1996, the remaining net
offering proceeds from the Partnership's offering of units were reserved for
Partnership purposes.
As a result of the Partnership's tenant selling its restaurant business
located on the Partnership's Property in Appleton, Wisconsin, in April 1996,
the Partnership sold its Property for $775,000, resulting in a gain for
financial reporting purposes of $124,305. This Property was originally
acquired by the Partnership in February 1995 and had a cost of approximately
$595,100, excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold the Property for approximately $179,900 in
excess of its original purchase price. As of September 30, 1996, the net
sales proceeds of $775,000, plus accrued interest of $10,749, were being held
in an interest-bearing escrow account. In October 1996, the Partnership
reinvested the net sales proceeds from the sale in April 1996, of the Property
in Appleton, Wisconsin, in a Boston Market Property in Fayetteville, North
Carolina, as a tenants-in-common with an affiliate of the general partners.
In connection therewith, the Partnership and its affiliate entered into an
agreement whereby each co-venturer will share in the profits and losses of the
Property in proportion to each co-venturer's interest. The Partnership owns
an approximate 80 percent interest in the Property.
Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants and interest and other
income received, less cash paid for expenses). Cash from operations was
$2,815,893 and $1,672,975 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
below in "Results of Operations" and changes in the Partnership's working
capital.
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 use of such funds to pay Partnership expenses
or to make distributions to partners. At September 30, 1996, the Partnership
had $1,495,000 invested in such short-term investments, as compared to
$3,987,786 at December 31, 1995. The decrease in the amount invested in
short-term investments is primarily attributable to the acquisition of
additional Properties, as described above, during the nine months ended
September 30, 1996. The funds remaining at September 30, 1996, after the
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,
decreased to $1,126,367 at September 30, 1996, from $1,600,348 at December
31, 1995, primarily as a result of the payment during the nine months ended
September 30, 1996, of construction costs accrued for certain Properties at
December 31, 1995. The decrease in total liabilities at September 30, 1996,
as compared to December 31, 1995, was partially offset by an increase in
distributions payable at September 30, 1996. The general partners believe
that the Partnership has sufficient cash on hand to meet its current working
capital needs.
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $2,643,751 and $1,650,332 for the
nine months ended September 30, 1996 and 1995, respectively ($900,000 and
$680,523 for the quarters ended September 30, 1996 and 1995, respectively).
This represents distributions of $0.59 and $0.43 per unit for the nine months
ended September 30, 1996 and 1995, respectively ($0.20 and $0.15 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 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.
Results of Operations
- ---------------------
During the nine months ended September 30, 1995, the Partnership owned
and leased 39 wholly owned Properties and during the nine months ended
September 30, 1996, the Partnership owned and leased 43 wholly owned
Properties (including one Property in Appleton, Wisconsin, which was sold in
April 1996), 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 $3,223,156 and $1,740,721, respectively, in
rental income from operating leases and earned income from direct
financing leases from these Properties, $1,083,898 and $791,098 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
acquisition of additional Properties subsequent to September 30, 1995, and the
fact that, with the exception of the one Property sold in April 1996,
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 also earned $70,256 and $274,168, respectively, in interest and
other income, $22,363 and $95,498 of which was earned during the quarters
ended September 30, 1996 and 1995, respectively. The decrease in interest and
other income 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 $619,795 and $345,025 for the nine months ended September 30, 1996 and
1995, respectively, of which $200,141 and $159,439 were incurred for the
quarters ended September 30, 1996 and 1995, respectively. The increase in
operating expenses during the quarter and nine months ended September 30,
1996, is partially attributable to an increase in depreciation expense as the
result of the acquisition of additional Properties subsequent to September 30,
1995, and the fact that 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. Operating expenses also increased during the
nine months ended September 30, 1996, as a result of an increase in (i)
accounting and administrative expenses associated with operating the
Partnership and its Properties, (ii) management fees as a result of the
increase in rental revenues, as described above, (iii) state taxes as a result
of the Partnership incurring additional taxes relating to the filing of
various state tax returns during 1996, and (iv) 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 Property in Appleton, Wisconsin, as
described in "Liquidity and Capital Resources", the Partnership recognized a
gain for financial reporting purposes of $124,305 during the nine months ended
September 30, 1996. No Properties were sold during the nine months ended
September 30, 1995.
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 4th day of November, 1996.
CNL INCOME FUND XVI, 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)
