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 June 30, 1997
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 juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
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 __
<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 4-5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7-9
Part II
Other Information 10
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
----------- --------
Land and buildings on operating
leases, less accumulated
depreciation $30,939,827 $31,766,349
Net investment in direct financing
leases 5,988,251 6,006,496
Investment in joint venture 772,890 774,389
Cash and cash equivalents 2,215,485 1,546,203
Receivables, less allowance for
doubtful accounts of $14,530
and $9,875 65,896 76,094
Prepaid expenses 13,182 9,174
Organization costs, less accumu-
lated amortization of $5,550
and $4,550 4,450 5,450
Accrued rental income 971,136 771,487
----------- -----------
$40,971,117 $40,955,642
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs
payable $ 76,778 $ 106,036
Accounts payable 972 2,262
Escrowed real estate taxes payable 5,088 3,343
Distributions payable 900,000 900,000
Due to related parties 3,166 2,292
Rents paid in advance and deposits 99,864 97,110
----------- -----------
Total liabilities 1,085,868 1,111,043
Partners' capital 39,885,249 39,844,599
----------- -----------
$40,971,117 $40,955,642
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C>
Revenues:
Rental income from
operating leases $ 890,377 $ 917,916 $1,788,604 $1,766,159
Earned income from direct
financing leases 175,935 181,629 352,146 373,099
Interest and other income 20,264 18,275 38,829 47,893
---------- ---------- ---------- ----------
1,086,576 1,117,820 2,179,579 2,187,151
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 39,919 52,884 81,059 105,409
Professional services 7,599 5,578 13,312 11,467
Management fees to
related parties 9,840 9,802 19,742 19,141
State and other taxes 152 220 20,534 12,806
Depreciation and
amortization 140,916 140,275 282,050 270,831
---------- ---------- ---------- ----------
198,426 208,759 416,697 419,654
---------- ---------- ---------- ----------
Income Before Equity in
Earnings of Joint Venture
and Gain on Sale of Land 888,150 909,061 1,762,882 1,767,497
Equity in Earnings of Joint
Venture 18,295 - 36,620 -
Gain on Sale of Land - 124,305 41,148 124,305
---------- ---------- ---------- ----------
Net Income $ 906,445 $1,033,366 $1,840,650 $1,891,802
========== ========== ========== ==========
Allocation of Net Income:
General partners $ 9,065 $ 9,091 $ 17,995 $ 17,675
Limited partners 897,380 1,024,275 1,822,655 1,874,127
---------- ---------- ---------- ----------
$ 906,445 $1,033,366 $1,840,650 $1,891,802
========== ========== ========== ==========
Net Income Per Limited
Partner Unit $ 0.20 $ 0.23 $ 0.41 $ 0.42
========== ========== ========== ==========
Weighted Average Number
of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
1997 1996
---------------- ------------
General partners:
Beginning balance $ 63,423 $ 27,184
Net income 17,995 36,239
----------- -----------
81,418 63,423
----------- -----------
Limited partners:
Beginning balance 39,781,176 39,612,968
Net income 1,822,655 3,711,959
Distributions ($0.40 and $0.79
per limited partner unit,
respectively) (1,800,000) (3,543,751)
----------- -----------
39,803,831 39,781,176
----------- -----------
Total partners' capital $39,885,249 $39,844,599
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1997 1996
----------- ----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 1,888,155 $ 1,861,696
----------- -----------
Cash Flows From Investing
Activities:
Proceeds from sale of land 610,384 775,000
Additions to land and
buildings on operating
leases - (2,392,562)
Investment in direct
financing leases (29,257) (382,372)
Increase in restricted cash - (775,000)
----------- ----------
Net cash provided by
(used in) investing
activities 581,127 (2,774,934)
----------- -----------
Cash Flows From Financing
Activities:
Collection of overpayment
of acquisition costs paid
by related parties on behalf
of the Partnership - 1,204
Distributions to limited
partners (1,800,000) (1,631,251)
----------- -----------
Net cash used in
financing activities (1,800,000) (1,630,047)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 669,282 (2,543,285)
Cash and Cash Equivalents at
Beginning of Period 1,546,203 3,987,786
----------- -----------
Cash and Cash Equivalents at End
of Period $ 2,215,485 $ 1,444,501
=========== ===========
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
Six Months Ended
June 30,
1997 1996
----------- ----------
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain
acquisition costs on behalf
of the Partnership $ - $ 9,356
=========== ===========
Distributions declared and
unpaid at end of period $ 900,000 $ 900,000
=========== ===========
See accompanying notes to condensed financial statements.
5
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 1997 and 1996
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 six months ended June 30, 1997, may not be indicative
of the results that may be expected for the year ending December 31,
1997. Amounts as of December 31, 1996, 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, 1996.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
June 30, December 31,
1997 1996
----------- -----------
Land $15,259,455 $15,804,927
Buildings 16,836,982 16,836,982
----------- -----------
32,096,437 32,641,909
Less accumulated
depreciation (1,156,610) (875,560)
----------- -----------
$30,939,827 $31,766,349
=========== ===========
In March 1997, the Partnership sold its property in Oviedo, Florida,
for $620,000 and received net sales proceeds of $610,384, resulting in
a gain of $41,148 for financial reporting purposes. This property was
originally acquired by the Partnership in November 1994 and had a cost
of approximately $509,700, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the property for
approximately $100,700 in excess of its original purchase price.
6
<PAGE>
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 June 30, 1997, the
Partnership owned 42 Properties, including one Property owned with an affiliate
as tenants-in-common.
Liquidity and Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 1997 and 1996, was cash from operations (which includes cash received
from tenants, distributions from the joint venture, and interest and other
income received, less cash paid for expenses). Cash from operations was
$1,888,155 and $1,861,696 for the six months ended June 30, 1997 and 1996,
respectively. The increase in cash from operations for the six months ended June
30, 1997, as compared to the six months ended June 30, 1996, is primarily a
result of changes in the Partnership's working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 1997.
In March 1997, the Partnership sold its Property in Oviedo, Florida,
for $620,000 and received net sales proceeds of $610,384, resulting in a gain of
$41,148 for financial reporting purposes. This Property was originally acquired
by the Partnership in November 1994 and had a cost of approximately $509,700,
excluding acquisition fees and miscellaneous acquisition expenses; therefore,
the Partnership sold the Property for approximately $100,700 in excess of its
original purchase price. The Partnership anticipates that it will distribute
amounts sufficient to enable the limited partners to pay federal and state
income taxes, if any (at a level reasonably assumed by the general partners),
resulting from the sale. The Partnership intends to reinvest the net sales
proceeds in an additional Property.
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 June 30, 1997, the Partnership had
$2,215,485 invested in such short-term investments, as compared to $1,546,203 at
December 31, 1996. The increase in cash and cash equivalents for the six months
ended June 30, 1997, is primarily attributable to the receipt of net sales
proceeds relating to the sale of the Property in Oviedo, Florida, as discussed
above. The funds remaining at June 30, 1997, after the payment of distributions
and
7
<PAGE>
Liquidity and Capital Resources - Continued
other liabilities, will be used to meet the Partnership's working capital and
other needs and, as discussed above, are expected to be invested in an
additional Property.
Total liabilities of the Partnership, including distributions payable,
decreased to $1,085,868 at June 30, 1997, from $1,111,043 at December 31, 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 $1,800,000 and $1,743,751 for the six
months ended June 30, 1997 and 1996, respectively ($900,000 for each of the
quarters ended June 30, 1997 and 1996). This represents distributions of $0.40
and $0.39 per unit for the six months ended June 30, 1997 and 1996, respectively
($0.20 for each of the quarters ended June 30, 1997 and 1996). No distributions
were made to the general partners for the quarters and six months ended June 30,
1997 and 1996. No amounts distributed or to be distributed to the limited
partners for the six months ended June 30, 1997 and 1996, 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 six months ended June 30, 1996, the Partnership owned and
leased 43 wholly owned Properties (including one Property in Appleton,
Wisconsin, which was sold in April 1996) and during the six months ended June
30, 1997, the Partnership owned and leased 42 wholly owned Properties (including
one Property in Oviedo, Florida, which was sold in March 1997), to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the six months ended June 30, 1997 and 1996, the Partnership earned $2,140,750
and $2,139,258, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties, $1,066,312 and
$1,099,545 of which was earned during the quarters ended June 30, 1997, and
1996, respectively. The increase in rental and earned income during the six
months ended June 30, 1997, as compared to the six
8
<PAGE>
Results of Operations - Continued
months ended June 30, 1996, is primarily attributable to the fact that several
Properties were operational for the full six months ended June 30, 1997, as
compared to a partial six months ended June 30, 1996. The increase during the
six months ended June 30, 1997, as compared to the six months ended June 30,
1996, was partially offset by, and the decrease during the quarter ended June
30, 1997, as compared to the quarter ended June 30, 1996, was primarily the
result of the sales of the Properties in Appleton, Wisconsin, and Oviedo,
Florida, in April 1996 and March 1997, respectively.
During the quarter and six months ended June 30, 1997, the Partnership
also owned and leased one Property as tenants-in-common with an affiliate of the
general partners. In connection therewith, during the quarter and six months
ended June 30, 1997, the Partnership earned $18,295 and $36,620, respectively,
attributable to net income earned by this joint venture in which the Partnership
acquired an interest with an affiliate as tenants-in-common in October 1996.
Operating expenses, including depreciation and amortization expense,
were $416,697 and $419,654 for the six months ended June 30, 1997 and 1996,
respectively, of which $198,426 and $208,759 were incurred for the quarters
ended June 30, 1997 and 1996, respectively. The decrease in operating expenses
during the quarter and six months ended June 30, 1997, as compared to the
quarter and six months ended June 30, 1996, is primarily attributable to a
decrease in accounting and administrative expenses associated with operating the
Partnership and its Properties. The decrease in operating expenses during the
six months ended June 30, 1997, as compared to the six months ended June 30,
1996, is partially offset by an increase in depreciation expense as the result
of the fact that Properties acquired during the six months ended June 30, 1996,
were operational for the full six months ended June 30, 1997, as compared to a
partial six months ended June 30, 1996.
As a result of the sale of the Property in Oviedo, Florida, as
described above in "Liquidity and Capital Resources," the Partnership recognized
a gain for financial reporting purposes of $41,148 during the six months ended
June 30, 1997. The Partnership also recognized a gain for financial reporting
purposes of $124,305, during the six months ended June 30, 1996, as a result of
the sale of the Property in Appleton, Wisconsin, in April 1996.
9
<PAGE>
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 June 30, 1997.
10
<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 8th day of August, 1997.
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)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVI, Ltd. at June 30, 1997, and its statement of
income for the six months then ended and is qualified in its entirety by
reference to the Form 10Q of CNL Income Fund XVI, Ltd. for the six months ended
June 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,215,485
<SECURITIES> 0
<RECEIVABLES> 80,426
<ALLOWANCES> 14,530
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 32,096,437
<DEPRECIATION> 1,156,610
<TOTAL-ASSETS> 40,971,117
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,885,249
<TOTAL-LIABILITY-AND-EQUITY> 40,971,117
<SALES> 0
<TOTAL-REVENUES> 2,179,579
<CGS> 0
<TOTAL-COSTS> 416,697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,840,650
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,840,650
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,840,650
<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>
