UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 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
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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 of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street, Suite 500
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Units of limited partnership interest ($10 per Unit)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is
no market value for such Units. Each Unit was originally sold at $10 per
Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
ITEM 1. BUSINESS
CNL Income Fund XVI, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 2, 1993. The general partners of the Partnership are
Robert A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on September 2, 1994, the
Partnership offered for sale up to $45,000,000 of limited partnership
interests (the "Units") (4,500,000 Units at $10 per Unit) pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended, effective February 23, 1994. The offering terminated on June 12,
1995, at which date the maximum offering proceeds of $45,000,000 had been
received from investors who were admitted to the Partnership as limited
partners (the "Limited Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, 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 "Restaurant Chains"). Net proceeds to the Partnership from its
offering of Units, after deduction of organizational and offering expenses,
totalled $39,600,000. The Partnership acquired its first Property on October
21, 1994, and as of December 31, 1994, had purchased 22 Properties (seven of
which were undeveloped land on which restaurants were being constructed as of
December 31, 1994), including seven Properties consisting of only land, at a
total cost of approximately $16,300,000, including acquisition fees and
certain acquisition expenses. During the year ended December 31, 1995, the
Partnership completed construction of the seven Properties acquired in 1994,
and acquired 19 additional Properties at a cost of approximately $20,900,000,
including acquisition fees and certain acquisition expenses. As of December
31, 1995, the Partnership had paid acquisition fees totalling $2,475,000 to an
affiliate of the General Partners. During the year ended December 31, 1996,
the Partnership used the remaining net offering proceeds to acquire two
additional Properties and to establish a working capital reserve of
approximately $60,000 for Partnership purposes. In addition, during the year
ended December 31, 1996, the Partnership sold a Property in Appleton,
Wisconsin, and used the net sales proceeds to acquire a Boston Market Property
located in Fayetteville, North Carolina, with an affiliate of the General
Partners as tenants-in-common. As a result of the above transactions, as of
December 31, 1996, the Partnership owned 43 Properties, including seven
Properties consisting of land only and one Property owned with an affiliate as
tenants-in-common. The lessee of the seven Properties consisting of only land
owns the buildings currently on the land and has the right, if not in default
under the lease, to remove the buildings from the land at the end of the lease
terms. The Partnership leases the Properties on a triple-net basis with the
lessee responsible for all repairs and maintenance, property taxes, insurance
and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to
sell Properties, the General Partners will consider factors such as potential
capital appreciation, net cash flow and federal income tax considerations.
Certain lessees also have been granted options to purchase Properties,
generally at the Property's then fair market value after a specified portion
of the lease term has elapsed. In general, the General Partners plan to seek
the sale of some of the Properties commencing seven to 12 years after their
acquisition. The Partnership has no obligation to sell all or any portion of
a Property at any particular time, except as may be required under property
purchase options granted to certain lessees.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties provide for initial terms
ranging from 15 to 20 years (the average being 19 years) and expire between
2009 and 2016. All leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The leases of the Properties provide for minimum base annual
rental payments (payable in monthly installments) ranging from approximately
$21,600 to $220,600. All of the leases provide for percentage rent, based on
sales in excess of a
1
specified amount. In addition, the majority of the leases provide that,
commencing in specified lease years (generally the sixth lease year), the
annual base rent required under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to five five-
year renewal options subject to the same terms and conditions as the initial
lease. Certain lessees also have been granted options to purchase Properties
at the Property's then fair market value after a specified portion of the
lease term has elapsed. Under the terms of certain leases, the option
purchase price may equal the Partnership's original cost to purchase the
Property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Partnership's purchase
price, if that amount is greater than the Property's fair market value at the
time the purchase option is exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
Major Tenants
During 1996, three lessees of the Partnership, Golden Corral
Corporation, Foodmaker, Inc., and DenAmerica Corp. each contributed more than
ten percent of the Partnership's total rental income. As of December 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 Corp. was the lessee under leases relating to
eight restaurants. It is anticipated that based on the minimum rental
payments required by the leases, these three leases each will continue to
contribute more than ten percent of the Partnership's total rental income in
1997 and subsequent years. In addition, three Restaurant Chains, Golden Corral
Family Steakhouse Restaurants ("Golden Corral"), Jack in the Box and Denny's,
each accounted for more than ten percent of the Partnership's total rental
income during 1996. In subsequent years, it is anticipated that these three
Restaurant Chains each will continue to contribute more than ten percent of
the Partnership's 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 December 31, 1996, Golden
Corral Corporation and DenAmerica Corp. 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.
Joint Venture Arrangement
In October 1996, the Partnership entered into an agreement to hold a
Boston Market Property as tenants-in-common with an affiliate of the General
Partners. The agreement provides for the Partnership and the affiliate to
share in the profits and losses of the Property and net cash flow from the
Property, in proportion to each co-venturer's percentage interest. The
Partnership owns an 80.27% interest in this Property.
Certain Management Services
CNL Investment Company, an affiliate of the General Partners, provided
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership through December 31,
1994. Under this agreement, CNL Investment Company was responsible for
collecting rental payments, inspecting the Properties and the tenants' books
and records, assisting the Partnership in responding to tenant inquiries and
notices and providing information to the Partnership about the status of the
leases and the Properties. CNL Investment Company also assisted the General
Partners in negotiating the leases. For these services, the Partnership had
agreed to pay CNL Investment Company an annual fee of one percent of the sum
of gross rental revenues from Properties wholly owned by the Partnership plus
the Partnership's allocable share of gross revenues of joint ventures in which
the Partnership is a co-venturer, but not in excess of competitive fees for
comparable services.
Effective January 1, 1995, certain officers and employees of CNL
Investment Company became officers and employees of CNL Income Fund Advisors,
Inc., an affiliate of the General Partners, and CNL Investment Company
assigned its rights in, and its obligations under, the management agreement
with the Partnership to CNL Income Fund Advisors, Inc. In addition, effective
October 1, 1995, CNL Income Fund Advisors, Inc. assigned its rights in, and
2
its obligations under, the management agreement with the Partnership to CNL
Fund Advisors, Inc. All of the terms and conditions of the management
agreement, including the payment of fees, as described above, remain
unchanged.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60
days' prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains and restaurants in other well-known national chains, including
those offering different types of food and service.
At the time the Partnership elects to dispose of its Properties other
than as a result of the exercise of tenant options to purchase Properties, the
Partnership will be in competition with other persons and entities to locate
purchasers for its Properties.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who
may also perform certain services for the Partnership.
ITEM 2. PROPERTIES
As of December 31, 1996, the Partnership owned, either directly or
indirectly through a joint venture arrangement, 43 Properties, located in 17
states and the District of Columbia. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation filed with this report for a listing
of the Properties and their respective costs, including acquisition fees and
certain acquisition expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 16,600
to 104,800 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. However, the
buildings located on the seven Checkers Properties are owned by the tenant
while the land parcels are owned by the Partnership. The buildings generally
are rectangular and are constructed from various combinations of stucco,
steel, wood, brick and tile. The sizes of the buildings owned by the
Partnership range from approximately 2,000 to 11,100 square feet. All
buildings on Properties acquired by the Partnership are freestanding and
surrounded by paved parking areas. Buildings are suitable for conversion to
various uses, although modifications may be required prior to use for other
than restaurant operations.
Generally, a lessee is required, under the terms of its lease agreement,
to make such capital expenditures as may be reasonably necessary to refurbish
buildings, premises, signs and equipment so as to comply with the lessee's
obligations, if applicable, under the franchise agreement to reflect the
current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 1996 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
3
Golden Corral Corporation leases six Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2009 and 2011) and
the average minimum base annual rent is approximately $158,300 (ranging from
approximately $113,300 to $192,900).
Foodmaker, Inc. leases five Jack in the Box restaurants. The initial
term of each lease ranges from 17 to 18 years (expiring between 2011 and 2012)
and the average minimum base annual rent is approximately $96,700 (ranging
from approximately $87,500 to $115,600).
DenAmerica Corp. leases eight Denny's restaurants. The initial term of
each lease is 20 years (expiring in 2015) and the average minimum base annual
rent is approximately $113,000 (ranging from approximately $64,800 to
$220,600).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
ITEM 3. LEGAL PROCEEDINGS
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to,
or subject to, any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of February 28, 1997, there were 3,018 holders of record of the
Units. There is no public trading market for the Units, and it is not
anticipated that a public market for the Units will develop. Limited Partners
who wish to sell their Units may offer the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited
Partners who wish to have their distributions used to acquire additional Units
(to the extent Units are available for purchase) may do so pursuant to such
Plan. The General Partners have the right to prohibit transfers of Units.
Since inception, the price paid for any Unit transferred pursuant to the Plan
has been $9.50 per Unit. The price to be paid for any Unit transferred other
than pursuant to the Plan is subject to negotiation by the purchaser and the
selling Limited Partner. The Partnership will not redeem or repurchase Units.
4
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1996 and 1995 other
than pursuant to the Plan, net of commissions (which ranged from zero to
7.4%).
1996 (1) 1995 (1)
----------------------- -----------------------
High Low Average High Low Average
------ ----- ------- ------ ------ -------
First Quarter $10.00 $7.50 $8.75 (2) (2) (2)
Second Quarter 9.50 8.30 8.85 (2) (2) (2)
Third Quarter 10.00 9.50 9.63 $10.00 $10.00 $10.00
Fourth Quarter 10.00 9.50 9.63 9.85 9.85 9.85
(1) A total of 15,283 and 1,124 Units were transferred other than pursuant
to the Plan for the years ended December 31, 1996 and 1995.
(2) No transfer of Units took place during the quarter other than pursuant
to the Plan.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For the years ended December 31, 1996 and 1995, the Partnership declared
cash distributions of $3,543,751 and $2,437,832, respectively, to the Limited
Partners. No amounts distributed to partners for the years ended December 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. No distributions have been made to the
General Partners to date. As indicated in the chart below, these
distributions were declared at the close of the Partnership's calendar
quarter. This amount includes monthly distributions made in arrears for the
Limited Partners electing to receive such distributions on this basis.
Quarter Ended 1996 1995
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March 31 $843,751 $381,897
June 30 900,000 587,912
September 30 900,000 680,523
December 31 900,000 787,500
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
5
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996 1995 1994 1993(1)
----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
Year Ended December 31:
Revenues (2) $ 4,438,218 $ 3,023,641 $ 207,735 $ -
Net income (3) 3,748,198 2,430,841 187,577 -
Cash distributions declared 3,543,751 2,437,832 151,434 -
Net income per Unit (3)(4) 0.82 0.60 0.17 -
Cash distributions declared
per Unit (4) 0.79 0.61 0.14 -
At December 31:
Total assets $40,955,642 $41,240,500 $19,310,413 $1,000
Partners' capital 39,844,599 39,640,152 17,474,033 1,000
</TABLE>
(1) Selected financial data for 1993 represents the period September 2, 1993
(date of inception) through December 31, 1993.
(2) Revenues include equity in earnings of joint venture.
(3) Net income for the year ended December 31, 1996, includes $124,305 from
gain on sale of land and building.
(4) Based on the weighted average number of Limited Partner Units
outstanding during the years ended December 31, 1996 and 1995, and the
period September 23, 1994 through December 31, 1994.
The above selected financial data should be read in conjunction with the
financial statements and related notes contained in Item 8 hereof.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership 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 restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains.
The leases are triple-net leases, with the lessee generally responsible for
all repairs and maintenance, property taxes, insurance and utilities. As of
December 31, 1996, the Partnership owned 43 Properties, either directly or
indirectly through a joint venture arrangement.
Liquidity and Capital Resources
On September 2, 1994, the Partnership commenced an offering to the
public of up to 4,500,000 Units of limited partnership interest. The
Partnership's offering of Units terminated on June 12, 1995, at which time the
maximum proceeds of $45,000,000 (4,500,000 Units) had been received from
investors. The Partnership, therefore, will derive no additional capital
resources from the offering.
Net proceeds to the Partnership from its offering of Units, after
deduction of organizational and offering expenses, totalled $39,600,000. As
of December 31, 1994, approximately $16,300,000 had been used to invest in 22
Properties (seven of which were undeveloped land on which restaurants were
being constructed as of December 31, 1994) and to pay acquisition fees and
certain acquisition expenses. During the year ended December 31, 1995, the
Partnership completed construction of the seven Properties acquired in 1994,
and acquired 19 additional Properties at a cost of approximately $20,900,000
including acquisition fees and miscellaneous acquisition expenses. As a
result of the above transactions, as of December 31, 1995, the Partnership had
acquired 41 Properties and paid acquisition fees totalling $2,475,000 to an
affiliate of the General Partners. During the year ended December 31,
6
1996, the Partnership used its remaining net offering proceeds to acquire two
additional Properties (one of which was undeveloped land on which a restaurant
was constructed), and to establish a working capital reserve of approximately
$60,000 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. In October 1996, the Partnership
reinvested the net sales proceeds 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 80.27% interest in the Property. The sale of the Property
in Appleton, Wisconsin, was structured to qualify as a like-kind exchange
transaction in accordance with Section 1031 of the Internal Revenue Code. As
a result, no gain was recognized for federal income tax purposes. Therefore,
the Partnership was not required to distribute any of the net sales proceeds
from the sale of this Property to Limited Partners for the purpose of paying
federal and state income taxes.
Until Properties were acquired by the Partnership, all Partnership
proceeds were held in short-term, highly liquid investments which the General
Partners believed to have appropriate safety of principal. This investment
strategy provided high liquidity in order to facilitate the Partnership's use
of these funds to acquire Properties at such time as Properties suitable for
acquisition were located.
Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants, distributions from the
joint venture and interest received, less cash paid for expenses). Cash from
operations was $3,753,726, $2,481,395 and $205,148 for the years ended
December 31, 1996, 1995 and 1994, respectively. The increase in cash from
operations during 1996 and 1995, each as compared to the prior year, is
primarily a result of changes in income and expenses as discussed in "Results
of Operations" below.
None of the Properties owned by the Partnership is or may be encumbered.
Subject to certain restrictions on borrowing, however, the Partnership may
borrow funds but will not encumber any of the Properties in connection with
any such borrowing. The Partnership will not borrow for the purpose of
returning capital to the Limited Partners. The Partnership will not borrow
under arrangements that would make the Limited Partners liable to creditors of
the Partnership. The General Partners further have represented that they will
use their reasonable efforts to structure any borrowing so that it will not
constitute "acquisition indebtedness" for federal income tax purposes and also
will limit the Partnership's outstanding indebtedness to three percent of the
aggregate adjusted tax basis of its Properties. In addition, the Partnership
will not borrow unless it first obtains an opinion of counsel that such
borrowing will not constitute acquisition indebtedness. Affiliates of the
General Partners from time to time incur certain operating expenses on behalf
of the Partnership for which the Partnership reimburses the affiliates without
interest.
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 partners. At December 31,
1996, the Partnership had $1,546,203 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 a result of the payment of
costs relating the Properties that were under construction at December 31,
1995, and the acquisition of additional Properties during the year ended
December 31, 1996. The funds remaining at December 31, 1996, after payment of
distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
During 1995 and 1994, affiliates of the General Partners incurred on
behalf of the Partnership $258,466 and $759,326, respectively, for certain
organizational and offering expenses. In addition, during 1996, 1995 and
1994, the affiliates incurred on behalf of the Partnership $9,356, $97,589 and
$137,479, respectively, for certain acquisition expenses and $105,144,
$131,272 and $2,875, respectively, for certain operating expenses. As of
December 31, 1996 and 1995, the Partnership owed $2,292 and $71,689,
respectively, to related parties for such amounts, accounting and
administrative services and management fees. As of February 28, 1997, the
Partnership had reimbursed the
7
affiliates all such amounts. Other liabilities, including distributions
payable, decreased to $1,108,751 at December 31, 1996, from $1,528,659 at
December 31, 1995, primarily as a result of the payment during the year ended
December 31, 1996, of construction costs accrued for certain Properties at
December 31, 1995. The decrease in other liabilities was partially offset by
an increase of $112,500 in distributions payable to Limited Partners at
December 31, 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 $3,543,751, $2,437,832 and $151,434 for the years
ended December 31, 1996, 1995 and 1994, respectively. This represents
distributions of $0.79, $0.61 and $0.14 per Unit for the years ended December
31, 1996, 1995 and 1994, respectively. No amounts distributed or to be
distributed to the Limited Partners for the years ended December 31, 1996,
1995 and 1994, 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 Limited Partners on a
quarterly basis.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance 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.
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.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves
at this time. In addition, because all leases of the Partnership's Properties
are on a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purposes, the
General Partners will contribute to the Partnership an aggregate amount of up
to one percent of the offering proceeds for maintenance and repairs. The
General Partners have the right to cause the Partnership to maintain
additional reserves if, in their discretion, they determine such reserves are
required to meet the Partnership's working capital needs.
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
No significant operations were commenced until the Partnership received
the minimum offering proceeds of $1,500,000 on September 22, 1994.
The Partnership owned and leased 22 wholly owned Properties during 1994,
41 wholly owned Properties during 1995 and 43 wholly owned Properties
(including one Property in Appleton, Wisconsin, which was sold in April 1996)
during 1996. In addition, during 1996, the Partnership owned and leased one
Property with an affiliate, as tenants-in-common. As of December 31, 1996,
the Partnership owned, either directly or through a joint venture arrangement,
43 Properties which are subject to long-term, triple-net leases that provide
for minimum base annual rental amounts (payable in monthly installments)
ranging from approximately $21,600 to $220,600. All of the leases provide for
percentage rent based on sales in excess of a specified amount. In addition,
the majority of the leases provide that, commencing in specified lease years
(generally the sixth lease year), the annual base rent required under the
terms of the lease will increase. For a further description of the
Partnership's leases and Properties, see Item 1. Business - Leases and Item 2.
Properties, respectively.
During the years ended December 31, 1996, 1995 and 1994, the Partnership
earned $4,297,558, $2,698,956 and $130,721, respectively, in rental income
from operating leases and earned income from direct financing leases from
Properties wholly owned by the Partnership. The increase in rental and earned
income during 1996, as compared to 1995, is primarily attributable to the
acquisition of additional Properties in 1995, and the fact that, with the
exception of one Property sold in April 1996, the Properties owned at December
31, 1995, were operational for
8
a full year in 1996, as compared to a partial year in 1995. The increase in
rental and earned income during 1995, as compared to 1994, is primarily
attributable to the acquisition of additional Properties in 1995, and the fact
that Properties acquired during 1994, were operational for a full year in
1995, as compared to a partial year in 1994.
During the year ended December 31, 1996, the Partnership earned $37,600
in contingent rental income as a result of the sales of one restaurant
Property meeting the threshold under the terms of its lease requiring payment
of contingent rental income.
In addition, for the year ended December 31, 1996, the Partnership
earned $19,668 attributable to net income earned by a joint venture as a
result of the Partnership reinvesting the net sales proceeds it received from
the sale of the Property in Appleton, Wisconsin, in a Property in
Fayetteville, North Carolina, in October 1996, with an affiliate, as tenants-
in-common. Net income earned by this joint venture is expected to increase
in 1997 as the Property owned with an affiliate, as tenants-in-common, will
have been operational for a full year in 1997.
During 1996, three lessees of the Partnership, Golden Corral
Corporation, Foodmaker, Inc., and DenAmerica Corp. each contributed more than
ten percent of the Partnership's total rental income. As of December 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 Corp. was the lessee under leases relating to
eight restaurants. It is anticipated that, based on the minimum rental
payments required by the leases, these three lessees each will continue to
contribute more than ten percent of the Partnership's total rental income in
1997 and subsequent years. In addition, three Restaurant Chains, Golden
Corral, Jack in the Box and Denny's each accounted for more than ten percent
of the Partnership's total rental income during 1996. In subsequent years, it
is anticipated that these three 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.
During the years ended December 31, 1996, 1995 and 1994, the Partnership
also earned $75,160, $321,137 and $21,478, respectively, in interest income
from investments in money market accounts or other short-term, highly liquid
investments. The decrease in interest income during 1996, as compared to
1995, is primarily attributable to the decrease in the amount of funds
invested in short-term liquid investments as a result of the acquisition of
additional Properties during 1995 and the payment during 1996 of construction
costs accrued for certain Properties at December 31, 1995. The increase in
interest during 1995, as compared to 1994, is primarily attributable to the
increase in the amount of funds invested in short-term liquid investments as a
result of additional Limited Partner contributions during 1995.
In addition, during the year ended December 31, 1994, the Partnership
earned $55,536 in other income as the result of net income recognized by the
Partnership in accordance with the Statement of Policy of Real Estate Programs
for the North American Securities Administrators Association, Inc. for certain
Properties temporarily owned by affiliates of the General Partners and
subsequently purchased by the Partnership.
Operating expenses, including depreciation and amortization expense,
were $814,325, $592,800 and $20,158 for the years ended December 31, 1996,
1995 and 1994, respectively. The increase in operating expenses during 1996
and 1995, each as compared to the previous year, is partially attributable to
an increase in depreciation expense as the result of the acquisition of
additional Properties during 1995, and the fact that the Properties acquired
during 1995 and 1994 were operational for a full year in 1996 and 1995,
respectively, as compared to a partial year in 1995 and 1994, respectively.
Operating expenses also increased during 1996 and 1995, each as compared to
the previous year, 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 1995, and (iv) insurance expense as a result of the general
partners obtaining contingent liability and property coverage for the
Partnership as discussed above in "Liquidity and Capital Resources."
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 for the year ended December
31, 1996. No Properties were sold during 1995 and 1994.
9
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.
The Partnership's leases as of December 31, 1996, are triple-net leases
and contain provisions that the General Partners believe mitigate the adverse
effect of inflation. Such provisions include clauses requiring the payment of
percentage rent based on certain restaurant sales above a specified level
and/or automatic increases in base rent at specified times during the term of
the lease. Management expects that increases in restaurant sales volumes due
to inflation and real sales growth should result in an increase in rental
income over time. Continued inflation also may cause capital appreciation of
the Partnership's Properties. Inflation and changing prices, however, also
may have an adverse impact on the sales of the restaurants and on potential
capital appreciation of the Properties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
10
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Accountants 12
Financial Statements:
Balance Sheets 13
Statements of Income 14
Statements of Partners' Capital 15
Statements of Cash Flows 16
Notes to Financial Statements 19
11
Report of Independent Accountants
To the Partners
CNL Income Fund XVI, Ltd.
We have audited the financial statements and the financial statement schedule
of CNL Income Fund XVI, Ltd. (a Florida limited partnership) listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund XVI, Ltd. as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information required to be included
therein.
/s/Coopers & Lybrand L.L.P.
Orlando, Florida
January 20, 1997
12
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
---------------
December 31,
ASSETS 1996 1995
----------- -----------
Land and buildings on operating
leases, less accumulated
depreciation $31,766,349 $29,140,773
Net investment in direct financing
leases 6,006,496 7,464,949
Investment in joint venture 774,389 -
Cash and cash equivalents 1,546,203 3,987,786
Receivables, less allowance for
doubtful accounts of $9,875
and $2,962 76,094 98,673
Prepaid expenses 9,174 660
Organization costs, less
accumulated amortization of
$4,550 and $2,550 5,450 7,450
Accrued rental income 771,487 316,482
Other assets - 223,727
----------- -----------
$40,955,642 $41,240,500
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs
payable $ 106,036 $ 680,528
Accounts payable 2,262 4,131
Escrowed real estate taxes payable 3,343 957
Distributions payable 900,000 787,500
Due to related parties 2,292 71,689
Rents paid in advance and deposits 97,110 55,543
----------- -----------
Total liabilities 1,111,043 1,600,348
Partners' capital 39,844,599 39,640,152
----------- -----------
$40,955,642 $41,240,500
=========== ===========
See accompanying notes to financial statements.
13
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
--------------------
Year Ended December 31,
1996 1995 1994
---------- ---------- ----------
Revenues:
Rental income from operating
leases $3,571,244 $2,209,434 $ 123,180
Earned income from direct
financing leases 726,314 489,522 7,541
Contingent rental income 37,600 - -
Interest 75,160 321,137 21,478
Other income 8,232 3,548 55,536
---------- ---------- ---------
4,418,550 3,023,641 207,735
---------- ---------- ---------
Expenses:
General operating and
administrative 183,734 187,800 9,448
Professional services 26,569 59,526 116
Management fees to related
parties 39,206 24,128 1,136
State and other taxes 12,369 3,141 -
Depreciation and amortization 552,447 318,205 9,458
---------- ---------- ---------
814,325 592,800 20,158
---------- ---------- ---------
Income Before Equity in
Earnings of Joint Venture
and Gain on Sale of Land
and Building 3,604,225 2,430,841 187,577
Equity in Earnings of Joint
Venture 19,668 - -
Gain on Sale of Land and
Building 124,305 - -
---------- ---------- ----------
Net Income $3,748,198 $2,430,841 $ 187,577
========== ========== ==========
Allocation of Net Income:
General partners $ 36,239 $ 24,308 $ 1,876
Limited partners 3,711,959 2,406,533 185,701
---------- ---------- ----------
$3,748,198 $2,430,841 $ 187,577
========== ========== ==========
Net Income Per Limited Partner
Unit $ 0.82 $ 0.60 $ 0.17
========== ========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 4,500,000 4,010,281 1,120,498
========== ========== ==========
See accompanying notes to financial statements.
14
<TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
--------------------------------
Years Ended December 31, 1996, 1995 and 1994
<CAPTION>
General Partners Limited Partners
----------------- ------------------------------------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Earnings butions butions Earnings Costs Total
------- -------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $1,000 $ - $ - $ - $ - $ - $ 1,000
Contributions from
limited partners - - 20,174,172 - - - 20,174,172
Distributions to limited
partners ($0.14 per
limited partner unit) - - - (151,434) - - (151,434)
Syndication costs - - - - - (2,737,282) (2,737,282)
Net income - 1,876 - - 185,701 - 187,577
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1994 1,000 1,876 20,174,172 (151,434) 185,701 (2,737,282) 17,474,033
Contributions from
limited partners - - 24,825,828 - - - 24,825,828
Distributions to limited
partners ($0.61 per
limited partner unit) - - - (2,437,832) - - (2,437,832)
Syndication costs - - - - - (2,652,718) (2,652,718)
Net income - 24,308 - - 2,406,533 - 2,430,841
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1995 1,000 26,184 45,000,000 (2,589,266) 2,592,234 (5,390,000) 39,640,152
Distributions to limited
partners ($0.79 per
limited partner unit) - - - (3,543,751) - - (3,543,751)
Net income - 36,239 - - 3,711,959 - 3,748,198
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1996 $1,000 $62,423 $45,000,000 $(6,133,017) $6,304,193 $(5,390,000)$39,844,599
====== ======= =========== =========== ========== =========== ===========
See accompanying notes to financial statements.
15
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
-------------------------
Year Ended December 31,
1996 1995 1994
------------ ------------ ------------
Increase (Decrease) in Cash and
Cash Equivalents:
Cash Flows From Operating
Activities:
Cash received from tenants $ 4,007,432 $ 2,353,106 $ 195,437
Distributions from joint
venture 20,279 - -
Cash paid for expenses (349,145) (194,749) (9,866)
Interest received 75,160 323,038 19,577
------------ ------------ ------------
Net cash provided by
operating activities 3,753,726 2,481,395 205,148
------------ ------------ ------------
Cash Flows From Investing
Activities:
Proceeds from sale of land
and building 775,000 - -
Additions to land and
buildings on operating
leases (2,355,627) (16,012,458) (13,170,132)
Investment in direct
financing leases (405,937) (5,595,236) (975,853)
Investment in joint
venture (775,000) - -
Increase in other assets - (58,720) (443,625)
Other - 20,714 (20,714)
------------ ------------ ------------
Net cash used in
investing activities (2,761,564) (21,645,700) (14,610,324)
------------ ------------ ------------
Cash Flows From Financing
Activities:
Reimbursement of acqui-
sition, organization and
syndication costs paid
by related parties on
behalf of the Partner-
ship (2,494) (405,569) (854,154)
Contributions from limited
partners - 24,825,828 20,174,172
Distributions to limited
partners (3,431,251) (1,798,921) (2,845)
Payment of syndication
costs - (2,452,743) (1,929,465)
------------ ------------ ------------
Net cash provided by
(used in) financing
activities (3,433,745) 20,168,595 17,387,708
------------ ------------ ------------
Net Increase (Decrease) in Cash
and Cash Equivalents (2,441,583) 1,004,290 2,982,532
Cash and Cash Equivalents at
Beginning of Year 3,987,786 2,983,496 964
------------ ------------ ------------
Cash and Cash Equivalents at
End of Year $ 1,546,203 $ 3,987,786 $ 2,983,496
============ ============ ============
See accompanying notes to financial statements.
16
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
-------------------------------------
Year Ended December 31,
1996 1995 1994
------------ ------------ ------------
Reconciliation of Net Income to
Net Cash Provided by Operating
Activities:
Net income $ 3,748,198 $ 2,430,841 $ 187,577
------------ ------------ ------------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 550,447 316,205 8,908
Amortization 2,000 2,000 550
Equity in earnings of
joint venture, net of
distributions 611 - -
Gain on sale of land and
building (124,305) - -
Decrease (increase) in
receivables 58,396 (83,993) (13,860)
Decrease in net investment
in direct financing
leases 29,269 16,003 236
Decrease (increase) in
prepaid expenses (8,514) (660) 36
Increase in accrued rental
income (468,201) (299,090) (17,392)
Increase in accounts
payable and accrued
expenses 517 4,036 1,052
Increase (decrease) in due
to related parties,
excluding reimbursement
of acquisition, organi-
zation and syndication
costs paid on behalf of
the Partnership (76,259) 76,682 1,869
Increase in rents paid in
advance and deposits 41,567 19,371 36,172
------------ ------------ ------------
Total adjustments 5,528 50,554 17,571
------------ ------------ ------------
Net Cash Provided by Operating
Activities $ 3,753,726 $ 2,481,395 $ 205,148
============ ============ ============
See accompanying notes to financial statements.
16
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
------------------------------------
Year Ended December 31,
1996 1995 1994
------------ ------------ ------------
Supplemental Schedule of Non-Cash
Investing and Financing
Activities:
Related parties paid certain
acquisition, organization
and syndication costs on
behalf of the Partnership
as follows:
Acquisition costs $ 9,356 $ 97,589 $ 137,479
Organization costs - - 10,000
Syndication costs - 258,466 749,326
------------ ------------ ------------
$ 9,356 $ 356,055 $ 896,805
============ ============ ============
Distributions declared and
unpaid at December 31 $ 900,000 $ 787,500 $ 148,589
============ ============ ============
See accompanying notes to financial statements.
18
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund XVI, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains. Under the terms
of a registration statement filed with the Securities and Exchange
Commission, the Partnership is authorized to sell a maximum of 4,500,000
units ($45,000,000) of limited partnership interest. A total of
4,500,000 units ($45,000,000) of limited partnership interest was sold.
The Partnership was a development stage enterprise from September 2,
1993 through September 22, 1994. Since operations had not begun,
activities through September 22, 1994, were devoted to organization of
the Partnership.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A. Bourne.
Mr. Seneff and Mr. Bourne are also 50 percent shareholders of the
Corporate General Partner. The general partners have responsibility for
managing the day-to-day operations of the Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents
the cost of the asset) (Note 4). Unearned income is
deferred and amortized to income over the lease terms so as
to produce a constant periodic rate of return on the
Partnership's net investment in the leases.
19
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to
produce a constant periodic rent over the lease term
commencing on the date the property is placed in service.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including the
residual value of the property, with the carrying cost of the individual
property. If an impairment is indicated, a loss will be recorded for
the amount by which the carrying value of the asset exceeds its fair
market value.
When the collection of amounts recorded as rental or other income is
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables,
and to decrease rental or other income or increase bad debt expense for
the current period, although the Partnership continues to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.
20
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
Investment in Joint Venture - The Partnership accounts for its interest
in a property in Fayetteville, North Carolina, held as tenants-in-common
with an affiliate, using the equity method since the Partnership shares
control with an affiliate which has the same general partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to be
cash equivalents. Cash and cash equivalents consist of demand deposits
at commercial banks, certificates of deposit and money market funds
(some of which are backed by government securities). Cash equivalents
are stated at cost plus accrued interest, which approximates market
value.
Cash accounts maintained on behalf of the Partnership in demand deposits
at commercial banks, certificates of deposit and money market funds may
exceed federally insured levels; however, the Partnership has not
experienced any losses in such accounts. The Partnership limits
investment of temporary cash investments to financial institutions with
high credit standing; therefore, the Partnership believes it is not
exposed to any significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs are amortized over five years
using the straight-line method.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication
21
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
1. Significant Accounting Policies:
costs are netted against partners' capital and represent a reduction of
Partnership equity and a reduction in the basis of each partner's
investment (Note 6).
Weighted Average Number of Limited Partner Units Outstanding -Net income
and distributions per limited partner unit are calculated based upon the
weighted average number of units of limited partnership interest
outstanding during the period the Partnership was operational.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Reclassification - Certain items in the prior year's financial
statements have been reclassified to conform to 1996 presentation.
These reclassifications had no effect on partners' capital or net
income.
New Accounting Standard - 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. Leases:
The Partnership leases its land or land and buildings primarily to
operators of national and regional fast-food and family-style restau-
rants. The leases are accounted for under the provisions of Statement
of Financial Accounting Standards No. 13, "Accounting for Leases."
Thirty-two of the leases are classified as operating leases and ten of
the leases have been classified as direct financing leases. For the
leases classified as direct financing leases, the building portions of
the property leases are accounted for as direct financing
22
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
2. Leases - Continued:
leases while the land portion of six of the leases are operating leases.
All leases are for 15 to 20 years and provide for minimum and contingent
rentals. In addition, the tenant pays all property taxes and
assessments, fully maintains the interior and exterior of the building
and carries insurance coverage for public liability, property damage,
fire and extended coverage. The lease options generally allow tenants
to renew the leases for two to five successive five-year periods subject
to the same terms and conditions as the initial lease. Most leases also
allow the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
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 (875,560) (325,113)
----------- -----------
$31,766,349 $29,140,773
=========== ===========
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.
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 years ended December 31, 1996, 1995 and 1994, the Partnership
recognized $468,201, $299,090 and $17,392, respectively, of such rental
income.
23
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
3. Land and Buildings on Operating Leases - Continued:
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1996:
1997 $ 3,170,589
1998 3,181,425
1999 3,231,072
2000 3,369,249
2001 3,438,230
Thereafter 42,789,305
-----------
$59,179,870
===========
Since lease renewal periods are exercisable at the option of the tenant,
the above table only presents future minimum lease payments due during
the initial lease terms. In addition, this table does not include any
amounts for future contingent rentals which may be received on the
leases based on a percentage of the tenant's gross sales.
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1996 1995
------------ ------------
Minimum lease payments
receivable $ 14,267,132 $ 19,100,733
Estimated residual
values 1,932,560 2,290,112
Less unearned income (10,193,196) (13,925,896)
------------ ------------
Net investment in
direct financing
leases $ 6,006,496 $ 7,464,949
============ ============
24
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
4. Net Investment in Direct Financing Leases - Continued:
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1996:
1997 $ 740,834
1998 741,451
1999 742,074
2000 755,382
2001 759,526
Thereafter 10,527,865
-----------
$14,267,132
===========
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due in
future periods (see Note 3).
5. Investment in Joint Venture:
In October 1996, the Partnership acquired a property in Fayetteville,
North Carolina, with an affiliate of the Partnership that has the same
general partners, as tenants-in-common. In connection therewith, the
Partnership contributed $775,000 for a 80.27% interest in such property.
The Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with an affiliate.
Amounts relating to this investment are presented as an investment in
joint venture.
The Partnership and an affiliate, as tenants-in-common, own and lease
one Boston Market property. The following presents the combined,
condensed financial information for the property held as tenants-in-
common with an affiliate at December 31:
1996 1995
--------- ---------
Land and building on
operating lease,
less accumulated
depreciation $960,732 $ -
Cash 100 -
Accrued rental income 3,929 -
Liabilities 23 -
Partners' capital 964,738 -
Revenues 29,293 -
Net income 24,502 -
25
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
5. Investment in Joint Venture - Continued:
The Partnership recognized income totalling $19,668 for the year ended
December 31, 1996, from this property held as tenants-in-common with an
affiliate.
6. Syndication Costs:
Syndication costs consisting of legal fees, commissions, the marketing
support and due diligence expense reimbursement fee, printing and other
expenses incurred in connection with the offering totalled $5,390,000.
These offering expenses were charged to the limited partners' capital
accounts to reflect the net capital proceeds of the offering.
7. Allocations and Distributions:
Generally, net income and losses of the Partnership, excluding gains and
losses from the sale of properties, are allocated 99 percent to the
limited partners and one percent to the general partners. Distributions
of net cash flow are made 99 percent to the limited partners and one
percent to the general partners; provided, however, that the one percent
of net cash flow to be distributed to the general partners shall be
subordinated to receipt by the limited partners of an aggregate, eight
percent, cumulative, noncompounded annual return on their invested
capital contributions (the "Limited Partners' 8% Return").
Generally, net sales proceeds from the sale of properties, to the extent
distributed, will be distributed first to the limited partners in an
amount sufficient to provide them with their Limited Partners' 8%
Return, plus the return of their adjusted capital contributions. The
general partners will then receive, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds will be distributed 95
percent to the limited partners and five percent to the general
partners. Any gain from the sale of a property is, in general,
allocated in the same manner as net sales proceeds are distributable.
Any loss from the sale of a property is, in general, allocated
26
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
7. Allocations and Distributions - Continued:
first, on a pro rata basis, to partners with positive balances in their
capital accounts; and thereafter, 95 percent to the limited partners and
five percent to the general partners.
During the years ended December 31, 1996, 1995 and 1994, the Partnership
declared distributions to the limited partners of $3,543,751, $2,437,832
and $151,434, respectively. No distributions have been made to the
general partners to date.
8. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
1996 1995 1994
---------- ---------- ----------
Net income for financial
reporting purposes $3,748,198 $2,430,841 $ 187,577
Depreciation for tax
reporting purposes in
excess of depre-
ciation for financial
reporting purposes (1,943) (13,929) (2,229)
Direct financing leases
recorded as operating
leases for tax
reporting purposes 29,269 16,003 236
Equity in earnings of joint
venture for financial
reporting purposes in
excess of equity in
earnings of joint venture
for tax reporting purposes (1,330) - -
Gain on sale of land and
building for financial
reporting purposes in
excess of gain for tax
reporting purposes (124,305) - -
Allowance for doubtful
accounts 6,913 2,962 -
Accrued rental income (468,201) (299,090) (17,392)
Rents paid in advance 47,221 2,595 21,672
Other 4,008 - -
---------- ---------- ----------
Net income for federal
income tax purposes $3,239,830 $2,139,382 $ 189,864
========== ========== ==========
27
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
9. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of CNL
Securities, Corp., CNL Investment Company and CNL Fund Advisors, Inc.
The other individual general partner, Robert A. Bourne, is the president
of CNL Securities Corp., CNL Investment Company and CNL Fund Advisors,
Inc. CNL Income Fund Advisors, Inc. was a wholly owned subsidiary of
CNL Group, Inc. until its merger, effective January 1, 1996, with CNL
Fund Advisors, Inc. During the years ended December 31, 1996, 1995 and
1994, CNL Investment Company, CNL Income Fund Advisors, Inc. and CNL
Fund Advisors, Inc. (hereinafter referred to collectively as the
"Affiliates") and CNL Securities Corp. each performed certain services
for the Partnership, as described below.
For the years ended December 31, 1995 and 1994, the Partnership incurred
$2,110,195 and $1,714,805, respectively, in syndication costs due to
CNL Securities Corp. for services in connection with selling limited
partnership interests. A substantial portion of these amounts
($3,607,653) was paid as commissions to other broker-dealers.
In addition, for the years ended December 31, 1995 and 1994, the
Partnership incurred $124,129 and $100,871, respectively, as a marketing
support and due diligence expense reimbursement fee due to CNL
Securities Corp. This fee equals 0.5% of the limited partner
contributions of $45,000,000. A portion of this fee has been reallowed
to other broker-dealers and all due diligence expenses were paid from
such fee.
Additionally, the Partnership incurred $1,365,421 and $1,109,579 for the
years ended December 31, 1995 and 1994, respectively, in acquisition
fees due to the Affiliates for services in finding, negotiating and
acquiring properties on behalf of the Partnership. These fees represent
5.5% of the limited partner capital contributions of $45,000,000.
During the years ended December 31, 1996, 1995 and 1994, certain
Affiliates acted as manager of the Partnership's properties pursuant to
a management agreement with the Partnership. In connection therewith,
the Partnership agreed to pay the Affiliates an annual, non-cumulative,
subordinated management fee of one percent of the sum of gross revenues
from properties wholly owned by the Partnership and the Partnership's
allocable share of gross revenues from joint
28
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
9 Related Party Transactions - Continued:
ventures. The management fee, which will not exceed fees which are
competitive for similar services in the same geo-graphic area, may or
may not be taken, in whole or in part as to any year, in the sole
discretion of the Affiliates. All or any portion of the management fee
not taken as to any fiscal year shall be deferred without interest and
may be taken in such other fiscal year as the Affiliates shall
determine. The Partnership incurred management fees of $39,206, $24,128
and $1,136 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Certain Affiliates are also entitled to receive a deferred, subordinated
real estate disposition fee, payable upon the sale of one or more
properties, based on the lesser of one-half of a competitive real estate
commission or three percent of the sales price if the Affiliates provide
a substantial amount of services in connection with the sale. However,
if the net sales proceeds are reinvested in a replacement property, no
such real estate disposition fees will be incurred until such
replacement property is sold and the net sales proceeds are distributed.
The payment of the real estate disposition fee is subordinated to
receipt by the limited partners of their aggregate Limited Partners' 8%
Return, plus their invested capital contributions. No deferred,
subordinated real estate disposition fees have been incurred since
inception.
During the years ended December 31, 1996, 1995 and 1994, Affiliates
provided accounting and administrative services to the Partnership
(including accounting and administrative services in connection with the
offering of units) on a day-to-day basis. The expenses incurred for
these services were classified as follows:
1996 1995 1994
-------- -------- --------
Syndication costs $ - $159,928 $172,280
General operating
and administrative
expenses 118,677 114,317 5,887
-------- -------- --------
$118,677 $274,245 $178,167
======== ======== ========
29
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
9. Related Party Transactions - Continued:
During 1994, the Partnership acquired five properties for an aggregate
purchase price of $4,094,992 from affiliates of the general partners.
In addition, during 1996, the Partnership acquired one property from an
affiliate of the general partners, for a purchase price of $775,000.
The property acquired during 1996 is being held as tenants-in-common,
with another affiliate of the general partners. The affiliates had
purchased and temporarily held title to these properties in order to
facilitate the acquisition of the properties by the Partnership. The
purchase prices paid by the Partnership represented the costs incurred
by the affiliates to acquire the properties, including closing costs.
In accordance with the Statement of Policy of Real Estate Programs for
the North American Securities Administrators Association, Inc., all
income, expenses, profits and losses generated by or associated with the
properties, or interests therein, purchased from an affiliate in which
the affiliate has acted as an interim owner, are treated as belonging to
the Partnership. For the year ended December 31, 1994, other income
includes $55,536 of such amounts.
The due to related parties consisted of the following at December 31:
1996 1995
-------- --------
Due to Affiliates:
Expenditures incurred on
behalf of the Partnership $ 31 $ 53,014
Accounting and administra-
tive services 1,674 17,293
Management fees 587 1,382
-------- --------
$ 2,292 $ 71,689
======== ========
30
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1996, 1995 and 1994
10. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, each representing more than ten percent of the
Partnership's total rental and earned income for at least one of the
years ended December 31:
1996 1995 1994
---------- ---------- ----------
DenAmerica
Corp. $1,051,328 $ 361,810 $ -
Golden Corral
Corporation 954,476 663,648 1,020
Foodmaker, Inc. 556,610 557,877 93,271
Checkers Drive-
In Restaurants,
Inc. 290,041 290,041 23,244
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 years ended December 31:
1996 1995 1994
---------- ---------- ----------
Denny's $1,163,621 $ 461,380 $ -
Golden Corral
Family Steak-
house Restau-
rants 954,476 663,648 1,020
Jack in the Box 556,610 557,877 93,271
Long John
Silver's 432,495 331,094 8,761
Checkers Drive-In
Restaurants 290,041 290,041 23,244
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by 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.
31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 50, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation
in 1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc.
Mr. Seneff is Chief Executive Officer, and has been a director and registered
principal of CNL Securities Corp., which served as the managing dealer in the
Partnership's offering of Units, since its formation in 1979. Mr. Seneff also
has held the position of President and a director of CNL Management Company, a
registered investment advisor, since its formation in 1976, has served as
Chief Executive Officer and Chairman of the Board of CNL Investment Company,
and Chief Executive Officer and Chairman of the Board of Commercial Net Lease
Realty, Inc. since 1992, has served as the Chairman of the Board and the Chief
Executive Officer of CNL Realty Advisors, Inc. since its inception in 1991,
served as Chairman of the Board and Chief Executive Officer of CNL Income Fund
Advisors, Inc. since its inception in 1994 through December 31, 1995, has
served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors, Inc. since its inception in 1994, and has held the position of Chief
Executive Officer and a director of CNL Institutional Advisors, Inc., a
registered investment advisor, since its inception in 1990. In addition, Mr.
Seneff has served as Chairman of the Board and Chief Executive Officer of CNL
American Properties Fund, Inc. since 1994, and has served as Chairman of the
Board and Chief Executive Officer of CNL American Realty Fund, Inc. since 1996
and of CNL Real Estate Advisors, Inc. since January 1997. Mr. Seneff
previously served on the Florida State Commission on Ethics and is a former
member and past Chairman of the State of Florida Investment Advisory Council,
which recommends to the Florida Board of Administration investments for
various Florida employee retirement funds. The Florida Board of
Administration, Florida's principal investment advisory and money management
agency, oversees the investment of more than $40 billion of retirement funds.
Since 1971, Mr. Seneff has been active in the acquisition, development and
management of real estate projects and, directly or through an affiliated
entity, has served as a general partner or joint venturer in over 100 real
estate ventures involved in the financing, acquisition, construction and
rental of office buildings, apartment complexes, restaurants, hotels and other
real estate. Included in these real estate ventures are approximately 65
privately offered real estate limited partnerships in which Mr. Seneff,
directly or through an affiliated entity, serves or has served as a general
partner. Also included are CNL Income Fund, Ltd., CNL Income Fund II, Ltd.,
CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund V, Ltd.,
CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII,
Ltd., CNL Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII,
Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund
XV, Ltd., CNL Income Fund XVII, Ltd. and CNL Income Fund XVIII, Ltd. (the
``CNL Income Fund Partnerships''), public real estate limited partnerships
with investment objectives similar to those of the Partnership, in which Mr.
Seneff serves as a general partner. Mr. Seneff received his degree in
Business Administration from Florida State University in 1968.
Robert A. Bourne, age 49, is President and Treasurer of CNL Group, Inc.,
President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, CNL Fund Advisors, Inc.,
and prior to its merger with CNL Fund Advisors, Inc., effective January 1,
1996, CNL Income Fund
32
Advisors, Inc., and President, Chief Investment Officer and a director of CNL
Institutional Advisors, Inc., a registered investment advisor. Mr. Bourne
also has served as a director since 1992, as President from July 1992 to
February 1996, and since February 1996, as Vice Chairman of the Board of
Directors, Secretary and Treasurer of Commercial Net Lease Realty, Inc. In
addition, Mr. Bourne has served as a director since its inception in 1991, as
President from 1991 to February 1996, as Secretary from February 1996 to July
1996, and since February 1996, as Treasurer and Vice Chairman of CNL Realty
Advisors, Inc. In addition, Mr. Bourne has served as President and a director
of CNL American Properties Fund, Inc. since 1994, and has served as President
and a director of CNL American Realty Fund, Inc. since 1996 and of CNL Real
Estate Advisors, Inc. since January 1997. Upon graduation from Florida State
University in 1970, where he received a B.A. in Accounting, with honors, Mr.
Bourne worked as a certified public accountant and, from September 1971
through December 1978, was employed by Coopers & Lybrand, Certified Public
Accountants, where he held the position of tax manager beginning in 1975.
From January 1979 until June 1982, Mr. Bourne was a partner in the accounting
firm of Cross & Bourne and from July 1982 through January 1987, he was a
partner in the accounting firm of Bourne & Rose, P.A., Certified Public
Accountants. Mr. Bourne, who joined CNL Securities Corp. in 1979, has
participated as a general partner or joint venturer in over 100 real estate
ventures involved in the financing, acquisition, construction and rental of
office buildings, apartment complexes, restaurants, hotels and other real
estate. Included in these real estate ventures are approximately 64 privately
offered real estate limited partnerships in which Mr. Bourne, directly or
through an affiliated entity, serves or has served as a general partner.
Also included are the CNL Income Fund Partnerships, public real estate limited
partnerships with investment objectives similar to those of the Partnership,
in which Mr. Bourne serves as a general partner.
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders
are James M. Seneff, Jr. and Robert A. Bourne, the individual General
Partners. CNL Realty Corporation was organized to serve as the corporate
general partner of real estate limited partnerships, such as the Partnership,
organized by one or both of the individual General Partners. CNL Realty
Corporation currently serves as the corporate general partner of the CNL
Income Fund Partnerships.
CNL Fund Advisors, Inc., provides certain management services in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc.
is a corporation organized in 1994 under the laws of the State of Florida, and
its principal office is located at 400 East South Street, Suite 500, Orlando,
Florida 32801. CNL Fund Advisors, Inc. is a wholly owned subsidiary of CNL
Group, Inc., a diversified real estate company, and was organized to perform
property acquisition, property management and other services.
CNL Group, Inc., which is the parent company of CNL Fund Advisors, Inc.,
is a diversified real estate corporation organized in 1980 under the laws of
the State of Florida. Other subsidiaries and affiliates of CNL Group, Inc.
include a property development and management company, two investment advisory
companies, and seven corporations organized as strategic business units.
James M. Seneff, Jr., an individual General Partner of the Partnership, is the
Chairman of the Board, Chief Executive Officer, and a director of CNL Group,
Inc. Mr. Seneff and his wife own all of the outstanding shares of CNL Group,
Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as
members of the Boards of Directors of those entities. The Boards of Directors
have the responsibility for creating and implementing the policies of
CNL Group, Inc. and its affiliated companies.
John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc. From May 1992 to May 1994, he was Executive Vice President for Finance
and Administration and Chief Financial Officer of Z Music, Inc., a cable
television network which was subsequently acquired by Gaylord Entertainment,
where he was responsible for overall financial and administrative management
and planning. From January 1990 through April 1992, Mr. Walker was Chief
Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price
33
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with
a B.S. in Accountancy and is a certified public accountant.
Lynn E. Rose, age 48, a certified public accountant, has served as Chief
Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL
Group, Inc. from 1987 until December 1993. In addition, Ms. Rose has served
as Chief Financial Officer and Secretary of CNL Securities Corp. since July
1994. She has served as Chief Operating Officer, Vice President and Secretary
of CNL Corporate Services, Inc. since November 1994. Ms. Rose also has served
as Chief Financial Officer and Secretary of CNL Institutional Advisors, Inc.
since its inception in 1990, a director of CNL Realty Advisors, Inc. since its
inception in 1991, Secretary of CNL Realty Advisors, Inc. since its inception
in 1991 (excluding February 1996 to July 1996), Treasurer of CNL Realty
Advisors, Inc. from 1991 to February 1996, Secretary and Treasurer of
Commercial Net Lease Realty, Inc. from 1992 to February 1996, Secretary of CNL
Income Fund Advisors, Inc. since its inception in 1994 to December 1995, and a
director, Secretary and Treasurer of CNL Fund Advisors, Inc. since 1994 and
has served as a director, Secretary and Treasurer of CNL Real Estate Advisors,
Inc. since January 1997. Ms. Rose also has served as Secretary and Treasurer
of CNL American Properties Fund, Inc. since 1994, and has served as Secretary
and Treasurer of CNL American Realty Fund, Inc. since 1996. Ms. Rose also
currently serves as Secretary for approximately 50 additional corporations.
Ms. Rose oversees the management information services, administration, legal
compliance, accounting, tenant compliance, and reporting for over 250
corporations, partnerships, and joint ventures. Prior to joining CNL, Ms. Rose
was a partner with Robert A. Bourne in the accounting firm of Bourne & Rose,
P.A., Certified Public Accountants. Ms. Rose holds a B.A. in Sociology from
the University of Central Florida and is a registered financial and operations
principal of CNL Securities Corp. She was licensed as a certified public
accountant in 1979.
Jeanne A. Wall, age 38, has served as Chief Operating Officer of
CNL Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities
Corp. and, in 1987, she became a Senior Vice President of CNL Securities Corp.
In this capacity, Ms. Wall serves as national marketing and sales director and
oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees the partnership administration and investor
services for programs offered through participating brokers. Ms. Wall also
has served as Senior Vice President of CNL Institutional Advisors, Inc., a
registered investment advisor, from 1990 to 1993, as Vice President of CNL
Realty Advisors, Inc. since its inception in 1991, as Vice President of
Commercial Net Lease Realty, Inc. since 1992, as Executive Vice President of
CNL Income Fund Advisors, Inc. from its inception in 1994 to December 1995, as
Executive Vice President of CNL Fund Advisors, Inc. since 1994, and as
Executive Vice President of CNL American Properties Fund, Inc. since 1994. In
addition, Ms. Wall has served as Executive Vice President of CNL Real Estate
Advisors, Inc. since January 1997 and as Executive Vice President of CNL
American Realty Fund, Inc. since 1996. Ms. Wall holds a B.A. in Business
Administration from Linfield College and is a registered principal of CNL
Securities Corp. Ms. Wall currently serves as a trustee on the board of the
Investment Program Association and on the Direct Participation Program
committee for the National Association of Securities Dealers (NASD).
Steven D. Shackelford, age 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL
Group, Inc. in September 1996. He also currently serves as the Chief
Financial Officer of CNL American Properties Fund, Inc. From March 1995 to
July 1996, he was a senior manager in the national office of Price Waterhouse
where he was responsible for advising foreign clients seeking to raise capital
and a public listing in the United States. From August 1992 to March 1995, he
served as a manager in the Price Waterhouse, Paris, France office serving
several multinational clients. Mr. Shackelford was an audit staff and senior
from 1986 to 1992 in the Orlando, Florida office of Price Waterhouse. Mr
Shackelford received a B.A. in Accounting, with honors, and a Masters of
Business Administration from Florida State University and is a certified
public accountant.
34
ITEM 11. EXECUTIVE COMPENSATION
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or
any of their affiliates. There are no compensatory plans or arrangements
regarding termination of employment or change of control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 28, 1997, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of February 28, 1997, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
====
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the
Registrant.
35
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The table below summarizes the types, recipients, methods of computation
and amounts of compensation, fees and distributions paid or payable by the
Partnership to the General Partners and their affiliates for the year ended
December 31, 1996, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31,1996
-------------------- --------------------- ----------------------
Acquisition fees and Fees equal to 5.5% of Acquisition fees: $ -0-
expenses to affiliates gross offering proceeds
to affiliates plus Acquisition expenses:
reimbursement to the $9,356
General Partners and
their affiliates for
expenses actually
incurred.
Reimbursement to Operating expenses are Operating expenses in-
affiliates for operating reimbursed at the lower curred on behalf of the
expenses of cost or 90 percent of Partnership: $105,144
the prevailing rate at
which comparable Accounting and admini-
services could have been strative services:
obtained in the same $118,677
geographic area.
Affiliates of the
General Partners from
time to time incur
certain operating
expenses on behalf of
the Partnership for
which the Partnership
reimburses the
affiliates without
interest.
Annual management fee to One percent of the sum $39,206
affiliates of gross revenues from
Properties wholly owned
by the Partnership plus
the Partnership's
allocable share of gross
revenues of joint
ventures in which the
Partnership is a co-
venturer. The manage-
ment fee, which will not
exceed competitive fees
for comparable services
in the same geographic
area, may or may not be
taken, in whole or in
part as to any year, in
the sole discretion of
affiliates. All or any
portion of the
management fee not taken
as to any fiscal year
shall be deferred
without interest and may
be taken in such other
fiscal year as the
affiliates shall
determine.
36
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31,1996
-------------------- --------------------- ----------------------
Deferred, subordinated A deferred, subordinated $ -0-
real estate disposition real estate disposition
fee payable to fee, payable upon sale
affiliates of one or more
Properties, in an amount
equal to the lesser of
(i) one-half of a
competitive real estate
commission, or (ii)
three percent of the
sales price of such
Property or Properties.
Payment of such fee
shall be made only if
affiliates of the
General Partners provide
a substantial amount of
services in connection
with the sale of a
Property or Properties
and shall be
subordinated to certain
minimum returns to the
Limited Partners.
However, if the net
sales proceeds are
reinvested in a
replacement property, no
such real estate
disposition fee will be
incurred until such
replacement property is
sold and the net sales
proceeds are
distributed.
General Partners' A deferred, subordinated $ -0-
deferred, subordinated share equal to one
share of Partnership net percent of Partnership
cash flow distributions of net
cash flow, subordinated
to certain minimum
returns to the Limited
Partners.
General Partners' A deferred, subordinated $ -0-
deferred, subordinated share equal to five
share of Partnership percent of Partnership
net sales proceeds from distributions of such net
a sale or sales sales proceeds, subordi-
nated to certain minimum
returns to the Limited
Partners.
37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1996 and 1995
Statements of Income for the years ended December 31, 1996, 1995
and 1994
Statements of Partners' Capital for the years ended December 31,
1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996
Notes to Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1996
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or notes
thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2 to Form
10-K filed with the Securities and Exchange Commission on
March 30, 1995, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XVI, Ltd. and
CNL Investment Company (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
March 30, 1995, and incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
Exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated
herein by reference.)
38
10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated
herein by reference.)
27 Financial Data Schedule (Filed herewith.)
(b) The Registrant filed no reports on Form 8-K during the period
October 1, 1996 through December 31, 1996.
(c) Not applicable.
(d) Other Financial Information
The Partnership is required to file audited financial information
of two of its tenants (DenAmerica Corp. and Golden Corral
Corporation) as a result of these two tenants each leasing more
than 20 percent of the Partnership's total assets for the year
ended December 31, 1996. DenAmerica Corp. is a public company and
as of the date hereof, had not filed their Form 10-K; therefore,
the financial statements are not available to the Partnership to
include in this filing. The Partnership will file this financial
information under cover of a Form 10-K/A as soon as it is
available. Golden Corral Corporation is a privately-held company
and its financial information is not publicly available.
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 26th day
of March, 1997.
CNL INCOME FUND XVI, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
--------------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
---------------------------
JAMES M. SENEFF, JR.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
---------- ------ -----
/s/ Robert A. Bourne President, Treasurer and March 26, 1997
- ----------------------- Director (Principal
Robert A. Bourne Financial and Accounting
Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer March 26, 1997
- ----------------------- and Director (Principal
James M. Seneff, Jr. Executive Officer)
<TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
-------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
-------- ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Arby's Restaurant:
Indianapolis, Indiana - $ 315,276 $ 591,993 $ - $ -
Boston Market Restaurants:
St. Cloud, Minnesota - 502,786 645,127 - -
Columbia Heights, Minnesota - 277,576 725,953 - -
Checkers Drive-In Restaurants:
Oviedo, Florida - 545,472 - - -
Conyers, Georgia - 363,553 - - -
Lake Worth, Florida - 325,302 - - -
Ocala, Florida - 289,578 - - -
Pompano Beach, Florida - 373,491 - - -
Tampa, Florida - 372,177 - - -
Tampa, Florida - 221,715 - - -
Denny's Restaurants:
Tucson, Arizona - 218,353 - - -
Idaho Falls, Idaho - 552,186 - 692,274 -
Branson, Missouri - 1,160,979 - 1,010,688 -
Dover, Ohio - 266,829 - - -
Salina, Kansas - 260,711 - - -
Moab, Utah - 432,825 - - -
Mesquite, Texas - 403,548 650,659 - -
Temple, Texas - 306,866 677,659 - -
Golden Corral Family
Steakhouse Restaurants:
Fort Collins, Colorado - 566,943 - 1,122,500 -
Hickory, North Carolina - 761,108 - 1,001,893 -
Independence, Missouri - 781,761 - 1,147,538 -
Baytown, Texas - 446,240 - 971,766 -
Rosenburg, Texas - 320,133 - 804,428 -
Farmington, New Mexico - 517,495 - 1,037,873 -
IHOP Restaurant:
Ft. Worth, Texas - 364,634 554,302 - -
Jack in the Box Restaurants:
Brownsville, Texas - 553,671 - 658,282 -
Grand Prairie, Texas - 439,950 - 636,524 -
Rancho Cordova, California - 401,302 595,722 - -
Temple City, California - 744,493 225,404 - -
Texas City, Texas - 403,476 568,053 - -
KFC Restaurant:
Concordia, Missouri - 188,759 - 434,369 -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (g) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------ ----------- ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
$ 315,276 $ 591,993 $ 907,269 $ 27,045 1978 08/95 (c)
502,786 645,127 1,147,913 27,823 1995 09/95 (c)
277,576 725,953 1,003,529 25,193 1995 12/95 (c)
545,472 - 545,472 (b) - 11/94 (b)
363,553 - 363,553 (b) - 12/94 (b)
325,302 - 325,302 (b) - 12/94 (b)
289,578 - 289,578 (b) - 12/94 (b)
373,491 - 373,491 (b) - 12/94 (b)
372,177 - 372,177 (b) - 12/94 (b)
221,715 - 221,715 (b) - 12/94 (b)
218,353 (d) 218,353 (e) 1995 10/94 (e)
552,186 692,274 1,244,460 35,059 1995 01/95 (c)
1,160,979 1,010,688 2,171,667 33,905 1995 03/95 (c)
266,829 (d) 266,829 (e) 1971 03/95 (e)
260,711 (d) 260,711 (e) 1995 04/95 (e)
432,825 (d) 432,825 (e) 1995 06/95 (e)
403,548 650,659 1,054,207 28,953 1995 08/95 (c)
306,866 677,659 984,525 30,154 1975 08/95 (c)
566,943 1,122,500 1,689,443 67,427 1995 10/94 (c)
761,108 1,001,893 1,763,001 66,884 1994 11/94 (c)
781,761 1,147,538 1,929,299 76,607 1994 11/94 (c)
446,240 971,766 1,418,006 56,372 1995 01/95 (c)
320,133 804,428 1,124,561 38,281 1995 05/95 (c)
517,495 1,037,873 1,555,368 27,558 1996 01/96 (c)
364,634 554,302 918,936 15,224 1994 03/96 (c)
553,671 658,282 1,211,953 43,209 1995 10/94 (c)
439,950 636,524 1,076,474 37,770 1995 10/94 (c)
401,302 595,722 997,024 43,088 1985 10/94 (c)
744,493 225,404 969,897 16,303 1984 10/94 (c)
403,476 568,053 971,529 41,087 1991 10/94 (c)
188,759 434,369 623,128 16,502 1995 09/95 (c)
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
-------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
-------- ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Kenny Rogers Roasters
Restaurant:
Madison, Tennessee - 343,367 484,422 - -
Long John Silver's Restaurants:
Charlotte, North Carolina - 313,200 - 415,695 -
Copperas Cove, Texas - 162,000 - - -
Kansas City, Missouri - 370,204 - 433,058 -
Silver City, New Mexico - 116,767 183,174 - -
Shoney's Restaurant:
Las Vegas, Nevada - 426,238 - - -
Wendy's Old Fashioned Hamburgers
Restaurant:
Washington, District of
Columbia - 393,963 567,626 - -
----------- ---------- ----------- ------
$15,804,927 $6,470,094 $10,366,888 $ -
=========== ========== =========== ======
Property of Joint Venture in
Which the Partnership has an
80.27% Interest and has Invested
in Under an Operating Lease:
Boston Market Restaurant:
Fayetteville, North Carolina - $ 377,800 $ 587,700 $ - $ -
=========== ========== =========== ======
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Denny's Restaurants:
Tucson, Arizona - $ - $ - $ 539,769 $ -
Bucyrus, Ohio - 139,003 155,194 273,858 -
Dover, Ohio - - 200,612 236,270 -
Salina, Kansas - - - 693,781 -
Moab, Utah - - - 727,211 -
Kenny Rogers Roasters
Restaurant:
Chattanooga, Tennessee - 184,014 577,320 - -
Long John Silver's Restaurants:
Celina, Ohio - 109,129 - 425,145 -
Clovis, New Mexico - 127,607 425,282 - -
Copperas Cove, Texas - - 424,319 - -
Shoney's Restaurant:
Las Vegas, Nevada - - 812,466 - -
----------- ---------- ---------- ------
$ 559,753 $2,595,193 $2,896,034 $ -
=========== ========== ========== ======
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (g) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------ ----------- ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
343,367 484,422 827,789 26,743 1995 05/95 (c)
313,200 415,695 728,895 23,442 1995 12/94 (c)
162,000 (d) 162,000 (e) 1994 12/94 (e)
370,204 433,058 803,262 25,736 1995 12/94 (c)
116,767 183,174 299,941 6,524 1982 12/95 (c)
426,238 (d) 426,238 (e) 1992 05/95 (e)
393,963 567,626 961,589 38,671 1983 12/94 (c)
----------- ----------- ----------- --------
$15,804,927 $16,836,982 $32,641,909 $875,560
=========== =========== =========== ========
$ 377,800 $ 587,700 $ 965,500 $ 4,768 1996 10/96 (c)
=========== ============ =========== ========
(d) (d) (d) (e) 1995 10/94 (e)
(d) (d) (d) (f) 1973 03/95 (f)
(d) (d) (d) (e) 1971 03/95 (e)
(d) (d) (d) (e) 1995 04/95 (e)
(d) (d) (d) (e) 1995 06/94 (e)
(d) (d) (d) (f) 1995 05/95 (f)
(d) (d) (d) (f) 1995 10/94 (f)
(d) (d) (d) (f) 1976 12/94 (f)
(d) (d) (d) (e) 1994 12/94 (e)
(d) (d) (d) (e) 1992 05/95 (e)
F-3
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------------------------------
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996,
1995 and 1994 are summarized as follows:
Accumulated
Cost Depreciation
----------- ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Balance, December 31, 1993 $ - $ -
Acquisitions 14,697,306 -
Depreciation expense - 8,908
----------- --------
Balance, December 31, 1994 14,697,306 8,908
Acquisitions 15,418,316 -
Reclassified to net invest-
ment in direct financing
lease (649,736) -
Depreciation expense - 316,205
----------- --------
Balance, December 31, 1995 29,465,886 325,113
Acquisitions 3,488,522 -
Dispositions (312,499) -
Depreciation expense - 550,447
----------- --------
Balance, December 31, 1996 $32,641,909 $875,560
=========== ========
Property of Joint Venture in
Which the Partnership has an
80.27% Interest and has Invested
in Under and Operating Lease:
Balance, December 31, 1995 $ - $ -
Acquisition 965,500 -
Depreciation expense - 4,768
----------- --------
Balance, December 31, 1996 $ 965,500 $ 4,768
=========== ========
(b) The building portion of this property is owned by the tenant; therefore,
depreciation is not applicable.
(c) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(d) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct financing
lease. Accordingly, costs relating to these components of this lease
are not shown.
(e) For financial reporting purposes, the portion of the lease relating to
the building has been recorded as a direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
F-4
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1996
(f) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land and
building has been included in net investment in direct financing leases;
therefore, depreciation is not applicable.
(g) As of December 31, 1996, the aggregate cost of the Properties owned by
the Partnership and the joint venture for federal income tax purposes
was $38,696,890 and $965,499, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
(h) During the years ended December 31, 1996 and 1994, the Partnership
purchased land and buildings from affiliates of the General Partners for
an aggregate cost of $775,000 and $4,094,922, respectively, and during
the year ended December 31, 1994, the Partnership incurred acquisition
fees totalling $1,109,579, paid to CNL Investment Company. Such amounts
are included in land and buildings on operating leases, net investment
in direct financing leases and investment in joint venture at December
31, 1996, and 1995.
F-5
EXHIBITS
EXHIBIT INDEX
Exhibit Number Page
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2 to Form
10-K filed with the Securities and Exchange Commission on
March 30, 1995, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XVI, Ltd. and
CNL Investment Company (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
March 30, 1995, and incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
Exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated
herein by reference.)
10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated
herein by reference.)
27 Financial Data Schedule (Filed herewith.)
i
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVI, Ltd. at December 31, 1996, and its statement of
income for the year then ended and is qualified in its entirety by reference to
the Form 10-K of CNL Income Fund XVI, Ltd. for the year ended December 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,546,203
<SECURITIES> 0
<RECEIVABLES> 85,969
<ALLOWANCES> 9,875
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,641,909
<DEPRECIATION> 875,560
<TOTAL-ASSETS> 40,955,642
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,844,599
<TOTAL-LIABILITY-AND-EQUITY> 40,955,642
<SALES> 0
<TOTAL-REVENUES> 4,418,550
<CGS> 0
<TOTAL-COSTS> 814,325
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,748,198
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,748,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,748,198
<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>
