<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVI, Ltd. at March 31, 1996, and its statement of
income for the three months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund XVI, Ltd. for the three months
ended March 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,380,857
<SECURITIES> 0
<RECEIVABLES> 124,906
<ALLOWANCES> 4,787
<INVENTORY> 0
<CURRENT-ASSETS> 1,505,651
<PP&E> 32,921,229
<DEPRECIATION> 455,169
<TOTAL-ASSETS> 40,844,557
<CURRENT-LIABILITIES> 1,189,720
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,654,837
<TOTAL-LIABILITY-AND-EQUITY> 40,844,557
<SALES> 0
<TOTAL-REVENUES> 1,069,331
<CGS> 0
<TOTAL-COSTS> 210,895
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 858,436
<INCOME-TAX> 0
<INCOME-CONTINUING> 858,436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 858,436
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</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 March 31, 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
March 31, December 31,
ASSETS 1996 1995
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $32,466,060 $29,140,773
Net investment in direct financing
leases 6,361,148 7,464,949
Cash and cash equivalents 1,380,857 3,987,786
Receivables, less allowance for
doubtful accounts of $4,787
and $2,962 120,119 98,673
Prepaid expenses 4,675 660
Organization costs, less accumu-
lated amortization of $3,050
and $2,550 6,950 7,450
Accrued rental income 427,238 316,482
Other assets 77,510 223,727
----------- -----------
$40,844,557 $41,240,500
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs
payable $ 251,352 $ 680,528
Accounts payable 14,629 4,131
Escrowed real estate taxes payable 2,051 957
Distributions payable 843,751 787,500
Due to related parties 13,211 71,689
Rents paid in advance and deposits 64,726 55,543
----------- -----------
Total liabilities 1,189,720 1,600,348
Partners' capital 39,654,837 39,640,152
----------- -----------
$40,844,557 $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
March 31,
1996 1995
---------- ----------
Revenues:
Rental income from operating leases $ 848,243 $ 348,242
Earned income from direct financing
leases 191,470 40,191
Interest and other income 29,618 53,448
---------- ----------
1,069,331 441,881
---------- ----------
Expenses:
General operating and administrative 52,525 16,574
Professional services 5,889 4,270
Management fees to related parties 9,339 3,473
State and other taxes 12,586 1,080
Depreciation and amortization 130,556 43,319
---------- ----------
210,895 68,716
---------- ----------
Net Income $ 858,436 $ 373,165
========== ==========
Allocation of Net Income:
General partners $ 8,584 $ 3,732
Limited partners 849,852 369,433
---------- ----------
$ 858,436 $ 373,165
========== ==========
Net Income Per Limited Partner Unit $ 0.19 $ 0.13
========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 4,500,000 2,777,433
========== ==========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1996 1995
------------- ------------
General partners:
Beginning balance $ 27,184 $ 2,876
Net income 8,584 24,308
----------- -----------
35,768 27,184
----------- -----------
Limited partners:
Beginning balance 39,612,968 17,471,157
Contributions - 24,825,828
Syndication costs - (2,652,718)
Net income 849,852 2,406,533
Distributions ($0.19 and $0.61
per limited partner unit,
respectively) (843,751) (2,437,832)
----------- -----------
39,619,069 39,612,968
----------- -----------
Total partners' capital $39,654,837 $39,640,152
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1996 1995
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 816,815 $ 407,764
----------- -----------
Cash Flows From Investing
Activities:
Additions to land and
buildings on operating
leases (2,332,197) (6,722,293)
Investment in direct
financing leases (306,088) (26,271)
Increase in other assets (2,310) (83,110)
Other - 19,605
----------- -----------
Net cash used in
investing activities (2,640,595) (6,812,069)
----------- -----------
Cash Flows From Financing
Activities:
Collection of overpayment
(reimbursement) of
acquisition and syndica-
tion costs paid by related
parties on behalf of the
Partnership 4,351 (375,156)
Contributions from limited
partners - 16,906,868
Distributions to limited
partners (787,500) (148,589)
Payment of syndication costs - (1,654,564)
----------- -----------
Net cash provided by
(used in) financing
activities (783,149) 14,728,559
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (2,606,929) 8,324,254
Cash and Cash Equivalents at
Beginning of Quarter 3,987,786 2,983,496
----------- -----------
Cash and Cash Equivalents at End
of Quarter $ 1,380,857 $11,307,750
=========== ===========
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 $ 4,747 $ 28,564
Syndication costs - 303,151
----------- -----------
$ 4,747 $ 331,715
=========== ===========
Land, building and other costs
incurred and unpaid at end
of quarter $ 251,352 $ 2,099,000
=========== ===========
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 $ -
=========== ===========
Commissions incurred and unpaid
at end of quarter $ - $ 40,787
=========== ===========
Distributions declared and
unpaid at end of quarter $ 843,751 $ 381,897
=========== ===========
See accompanying notes to condensed financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 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 ended March 31, 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:
--------------------------------------
Land and buildings on operating leases consisted of the following at:
March 31, December 31,
1996 1995
------------ ------------
Land $16,106,948 $15,233,066
Buildings 16,814,281 14,232,820
----------- -----------
32,921,229 29,465,886
Less accumulated
depreciation (455,169) (325,113)
----------- -----------
$32,466,060 $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 quarters ended March 31, 1996 and 1995, the Partnership recog-
nized $110,756 and $42,372, respectively, of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at March 31, 1996:
1996 $ 2,380,511
1997 3,178,367
1998 3,189,203
1999 3,238,850
2000 3,384,033
Thereafter 46,603,486
-----------
$61,974,450
===========
3. Net Investment in Direct Financing Leases:
-----------------------------------------
The following lists the components of the net investment in direct
financing leases at:
March 31, December 31,
1996 1995
------------ ------------
Minimum lease payments
receivable $ 15,987,511 $ 19,100,733
Estimated residual
values 2,015,389 2,290,112
Less unearned income (11,641,752) (13,925,896)
------------ ------------
Net investment in
direct financing
leases $ 6,361,148 $ 7,464,949
============ ============
The following is a schedule of future minimum lease payments to be
received on direct financing leases at March 31, 1996:
1996 $ 601,444
1997 802,488
1998 803,106
1999 803,729
2000 817,037
Thereafter 12,159,707
-----------
$15,987,511
===========
4. Concentration of Credit Risk:
----------------------------
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing
more than ten percent of the Partnership's total rental and earned
income for at least one of the quarters ended March 31:
1996 1995
-------- --------
DenAmerica Corporation and
Great Midwestern Restau-
rants, Inc. $255,354 $ -
Golden Corral Corporation 204,356 100,507
Foodmaker, Inc. 139,152 137,294
Checkers Drive-In Restaurants,
Inc. 72,510 72,510
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income for at
least one of the quarters ended March 31:
1996 1995
-------- --------
Denny's $283,485 $ 14,445
Golden Corral Family
Steakhouse Restaurants 204,356 100,507
Jack in the Box 139,152 137,294
Long John Silver's 123,116 46,550
Checkers Drive-In Restaurants 72,510 72,510
Although the Partnership's properties are geographically diverse and the
Partnership's lessees operate a variety of restaurant concepts, failure
of any one of these lessees or restaurant chains could significantly
impact the results of operations of the Partnership. However, the
general partners believe that the risk of such a default is reduced due
to the essential or important nature of these properties for the on-
going operations of the lessees.
5. Subsequent Event:
----------------
In April 1996, the Partnership sold its property in Appleton, Wisconsin,
for $775,000, resulting in a gain of approximately $124,300 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. The Partnership
intends to reinvest the proceeds in an additional 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 March
31, 1996, the Partnership owned 43 Properties.
Liquidity and Capital Resources
- - -------------------------------
During the quarter ended March 31, 1996, the Partnership invested or
committed for investment approximately $2,287,000 in two additional
Properties. Upon completion of the Partnership's acquisitions in March 1996,
the remaining net offering proceeds of approximately $60,000 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 approximately $124,300. 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. The
Partnership intends to reinvest the proceeds in an additional 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
$816,815 and $407,764 for the quarters ended March 31, 1996 and 1995,
respectively. The increase in cash from operations for the quarter ended
March 31, 1996, as compared to the quarter ended March 31, 1995, is primarily
a result of changes in income and expenses as discussed in "Results of
Operations" below.
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 March 31, 1996, the Partnership had
$1,380,857 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 quarter ended March 31, 1996. The
funds remaining at March 31, 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 $1,189,720 at March 31, 1996, from $1,600,348 at December 31,
1995, primarily as a result of the payment during the quarter ended March 31,
1996, of construction costs accrued for certain Properties at December 31,
1995. 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 $843,751 and $381,897 for the
quarters ended March 31, 1996 and 1995, respectively. This represents
distributions of $0.19 and $0.14 per unit for the quarters ended March 31,
1996 and 1995, respectively. No distributions were made to the general
partners for the quarters ended March 31, 1996 and 1995. No amounts
distributed or to be distributed to the limited partners for the quarters
ended March 31, 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 quarter ended March 31, 1995, the Partnership owned and
leased 28 wholly owned Properties and during the quarter ended March 31, 1996,
the Partnership owned and leased 43 wholly owned Properties, to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the quarters ended March 31, 1996 and 1995, the Partnership earned $1,039,713
and $388,433, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties. The increase in
rental and earned income during the quarter ended March 31, 1996, as compared
to the quarter ended March 31, 1995, is primarily attributable to the
acquisition of additional Properties subsequent to March 31, 1995, and the
fact that Properties acquired during the quarter ended March 31, 1995, were
operational for the full quarter ended March 31, 1996, as compared to a
partial quarter ended March 31, 1995.
During the quarter ended March 31, 1996, three lessees (or group of
affiliated lessees) of the Partnership, (i) Golden Corral Corporation, (ii)
Foodmaker, Inc. and (iii) DenAmerica Corporation and Great Midwestern
Restaurants, Inc., which are affiliated entities (hereinafter referred to as
DenAmerica Corporation), each contributed more than ten percent of the
Partnership's total rental income. As of March 31, 1996, Golden Corral
Corporation was the lessee under leases relating to six restaurants,
Foodmaker, Inc. was the lessee under leases relating to five restaurants and
DenAmerica Corporation was the lessee under leases relating to eight
restaurants. It is anticipated that, based on the minimum rental payments
required by the leases, Golden Corral Corporation, Foodmaker, Inc. and
DenAmerica Corporation each will continue to contribute more than ten percent
of the Partnership's total rental income during the remainder of 1996 and
subsequent years. During the quarter ended March 31, 1996, four restaurant
chains, Golden Corral Family Steakhouse Restaurants, Jack in the Box, Denny's
and Long John Silver's, each accounted for more than ten percent of the
Partnership's total rental income. During the remainder of 1996 and
subsequent years, it is anticipated that these four restaurant chains each
will continue to 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. As of March 31, 1996, Golden Corral Corporation and
DenAmerica Corporation each leased Properties with an aggregate carrying
value, excluding acquisition fees and certain acquisition expenses, in excess
of 20 percent of the total assets of the Partnership.
During the quarters ended March 31, 1996 and 1995, the Partnership also
earned $29,618 and $53,448, respectively, in interest and other income. The
decrease in interest and other income during the quarter ended March 31, 1996,
as compared to the quarter ended March 31, 1995, 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 quarter
ended March 31, 1996.
Operating expenses, including depreciation and amortization expense,
were $210,895 and $68,716 for the quarters ended March 31, 1996 and 1995,
respectively. The increase in operating expenses during the quarter ended
March 31, 1996, as compared to the quarter ended March 31, 1995, is primarily
attributable to an increase in depreciation expense as the result of the
acquisition of additional Properties subsequent to March 31, 1995, and the
fact that Properties acquired during the quarter ended March 31, 1995, were
operational for the full quarter ended March 31, 1996, as compared to a
partial quarter ended March 31, 1995. Operating expenses also increased
during the quarter ended March 31, 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) 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.
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
March 31, 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 10th day of May, 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)
