FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
0-26218
----------------------
CNL Income Fund XVI, Ltd.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-3198891
- ----------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
-------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
CONTENTS
--------
Part I Page
----
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4-5
Notes to Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8-10
Part II
Other Information 11
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
ASSETS 1997 1996
----------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $31,080,243 $31,766,349
Net investment in direct financing
leases 5,997,512 6,006,496
Investment in joint venture 773,650 774,389
Cash and cash equivalents 1,651,234 1,546,203
Restricted cash 610,173 -
Receivables, less allowance for
doubtful accounts of $12,358
and $9,875 38,311 76,094
Prepaid expenses 5,547 9,174
Organization costs, less accumu-
lated amortization of $5,050
and $4,550 4,950 5,450
Accrued rental income 860,288 771,487
----------- -----------
$41,021,908 $40,955,642
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs
payable $ 76,778 $ 106,036
Accounts payable 1,645 2,262
Escrowed real estate taxes payable 3,308 3,343
Distributions payable 900,000 900,000
Due to related parties 4,467 2,292
Rents paid in advance and deposits 156,906 97,110
----------- -----------
Total liabilities 1,143,104 1,111,043
Partners' capital 39,878,804 39,844,599
----------- -----------
$41,021,908 $40,955,642
=========== ===========
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
1997 1996
---------- ----------
Revenues:
Rental income from operating leases $ 898,227 $ 848,243
Earned income from direct financing
leases 176,211 191,470
Interest and other income 18,565 29,618
---------- ----------
1,093,003 1,069,331
---------- ----------
Expenses:
General operating and administrative 41,140 52,525
Professional services 5,713 5,889
Management fees to related parties 9,902 9,339
State and other taxes 20,382 12,586
Depreciation and amortization 141,134 130,556
---------- ----------
218,271 210,895
---------- ----------
Income Before Equity in Earnings of
Joint Venture and Gain on Sale of
Land 874,732 858,436
Equity in Earnings of Joint Venture 18,325 -
Gain on Sale of Land 41,148 -
---------- ---------
Net Income $ 934,205 $ 858,436
========== ==========
Allocation of Net Income:
General partners $ 8,930 $ 8,584
Limited partners 925,275 849,852
---------- ----------
$ 934,205 $ 858,436
========== ==========
Net Income Per Limited Partner Unit $ 0.21 $ 0.19
========== ==========
Weighted Average Number of Limited
Partner Units Outstanding 4,500,000 4,500,000
========== ==========
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
1997 1996
------------- ------------
General partners:
Beginning balance $ 63,423 $ 27,184
Net income 8,930 36,239
----------- -----------
72,353 63,423
----------- -----------
Limited partners:
Beginning balance 39,781,176 39,612,968
Net income 925,275 3,711,959
Distributions ($0.20 and $0.79
per limited partner unit,
respectively) (900,000) (3,543,751)
----------- -----------
39,806,451 39,781,176
----------- -----------
Total partners' capital $39,878,804 $39,844,599
=========== ===========
See accompanying notes to condensed financial statements.
3
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
1997 1996
----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents:
Net Cash Provided by Operating
Activities $ 1,034,288 $ 816,815
----------- -----------
Cash Flows From Investing
Activities:
Proceeds from sale of land 610,384 -
Additions to land and
buildings on operating
leases - (2,332,197)
Investment in direct
financing leases (29,257) (306,088)
Increase in restricted cash (610,384) -
Increase in other assets - (2,310)
----------- -----------
Net cash used in
investing activities (29,257) (2,640,595)
----------- -----------
Cash Flows From Financing
Activities:
Collection of overpayment
of acquisition costs paid
by related parties on behalf
of the Partnership - 4,351
Distributions to limited
partners (900,000) (787,500)
----------- -----------
Net cash used in
financing activities (900,000) (783,149)
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 105,031 (2,606,929)
Cash and Cash Equivalents at
Beginning of Quarter 1,546,203 3,987,786
----------- -----------
Cash and Cash Equivalents at End
of Quarter $ 1,651,234 $ 1,380,857
=========== ===========
See accompanying notes to condensed financial statements.
4
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
Quarter Ended
March 31,
1997 1996
----------- -----------
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain
acquisition costs on behalf
of the Partnership $ - $ 4,747
=========== ===========
Distributions declared and
unpaid at end of quarter $ 900,000 $ 843,751
=========== ===========
See accompanying notes to condensed financial statements.
5
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 1997 and 1996
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter ended March 31, 1997, may not be indicative of the results
that may be expected for the year ending December 31, 1997. Amounts as
of December 31, 1996, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XVI, Ltd. (the "Partnership") for the year ended December
31, 1996.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
March 31, December 31,
1997 1996
--------- ------------
Land $15,259,455 $15,804,927
Buildings 16,836,982 16,836,982
----------- -----------
32,096,437 32,641,909
Less accumulated
depreciation (1,016,194) (875,560)
----------- -----------
$31,080,243 $31,766,349
=========== ===========
In March 1997, the Partnership sold its property in Oviedo, Florida,
for $620,000 and received net sales proceeds of $610,384, resulting in
a gain of $41,148 for financial reporting purposes. This property was
originally acquired by the Partnership in November 1994 and had a cost
of approximately $509,700, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the property for
approximately $100,700 in excess of its original purchase price.
6
<PAGE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
Quarters Ended March 31, 1997 and 1996
2. Land and Buildings in Operating Leases - Continued:
Generally, the leases provide for escalating guaranteed minimum rents
throughout the lease term. Income from these scheduled rent increases
is recognized on a straight-line basis over the terms of the leases.
For the quarters ended March 31, 1997 and 1996, the Partnership
recognized $112,565 and $110,756, respectively, of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at March 31, 1997:
1997 $ 2,156,280
1998 3,128,262
1999 3,177,377
2000 3,309,707
2001 3,378,687
Thereafter 41,912,321
-----------
$57,062,634
===========
3. Restricted Cash:
As of March 31, 1997, net sales proceeds of $610,384 from the sale of
the property in Oviedo, Florida, less escrow fees (net of accrued
interest) of $211, were being held in an interest-bearing escrow
account pending the release of funds by the escrow agent to acquire an
additional property on behalf of the Partnership.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CNL Income Fund XVI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 2, 1993, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants were to
be constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The leases
are triple-net leases, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of March 31, 1997, the
Partnership owned 42 Properties, including one Property owned with an affiliate
as tenants-in-common.
Liquidity and Capital Resources
The Partnership's primary source of capital for the quarters ended
March 31, 1997 and 1996, was cash from operations (which includes cash received
from tenants, distributions from the joint venture, and interest and other
income received, less cash paid for expenses). Cash from operations was
$1,034,288 and $816,815 for the quarters ended March 31, 1997 and 1996,
respectively. The increase in cash from operations for the quarter ended March
31, 1997, as compared to the quarter ended March 31, 1996, is primarily a result
of changes in income and expenses as discussed in "Results of Operations" and
changes in the Partnership's working capital.
Other sources and uses of capital included the following during the
quarter ended March 31, 1997.
In March 1997, the Partnership sold its Property in Oviedo, Florida,
for $620,000 and received net sales proceeds of $610,384, resulting in a gain of
$41,148 for financial reporting purposes. This Property was originally acquired
by the Partnership in November 1994 and had a cost of approximately $509,700,
excluding acquisition fees and miscellaneous acquisition expenses; therefore,
the Partnership sold the Property for approximately $100,700 in excess of its
original purchase price. As of March 31, 1997, the net sales proceeds of
$610,384 less escrow fees (net of accrued interest) of $211, were being held in
an interest-bearing escrow account pending the release of funds by the escrow
agent to acquire an additional Property. The Partnership will distribute amounts
sufficient to enable the limited partners to pay federal and state (at a level
reasonably assumed by the general partners) income taxes, if any, resulting from
the sale.
Currently, cash reserves and rental income from the Partnership's
Properties are invested in money market accounts or other short-term, highly
liquid investments pending the use of such funds to pay Partnership expenses or
to make distributions to partners. At March 31, 1997, the Partnership had
$1,651,234 invested in such short-term investments, as compared to $1,546,203
8
<PAGE>
Liquidity and Capital Resources - Continued
at December 31, 1996. The funds remaining at March 31, 1997, after the payment
of distributions and other liabilities, will be used to meet the Partnership's
working capital and other needs.
Total liabilities of the Partnership, including distributions payable,
increased to $1,143,104 at March 31, 1997, from $1,111,043 at December 31, 1996.
The general partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
Based primarily on cash from operations, the Partnership declared
distributions to the limited partners of $900,000 and $843,751 for the quarters
ended March 31, 1997 and 1996, respectively. This represents distributions of
$0.20 and $0.19 per unit for the quarters ended March 31, 1997 and 1996,
respectively. No distributions were made to the general partners for the
quarters ended March 31, 1997 and 1996. No amounts distributed or to be
distributed to the limited partners for the quarters ended March 31, 1997 and
1996, are required to be or have been treated by the Partnership as a return of
capital for purposes of calculating the limited partners' return on their
adjusted capital contributions. The Partnership intends to continue to make
distributions of cash available for distribution to the limited partners on a
quarterly basis.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Results of Operations
During the quarter ended March 31, 1996, the Partnership owned and
leased 43 wholly owned Properties (including one Property in Appleton,
Wisconsin, which was sold in April 1996) and during the quarter ended March 31,
1997, the Partnership owned and leased 42 wholly owned Properties (including one
Property in Oviedo, Florida, which was sold in March 1997), to operators of
fast-food and family-style restaurant chains. In connection therewith, during
the quarters ended March 31, 1997 and 1996, the Partnership earned $1,074,438
and $1,039,713, respectively, in rental income from operating leases and earned
income from direct financing leases from these Properties.
9
<PAGE>
Results of Operations - Continued
During the quarter ended March 31, 1997, the Partnership also owned and
leased one Property as tenants-in-common with an affiliate of the general
partners. In connection therewith, during the quarter ended March 31, 1997, the
Partnership earned $18,325 attributable to net income earned by this joint
venture in which the Partnership acquired an interest with an affiliate as
tenants-in-common in October 1996.
Operating expenses, including depreciation and amortization expense,
were $218,271 and $210,895 for the quarters ended March 31, 1997 and 1996,
respectively. The increase in operating expenses during the quarter ended March
31, 1997, as compared to the quarter ended March 31, 1996, is primarily
attributable to an increase in depreciation expense as the result of the fact
that Properties acquired during the quarter ended March 31, 1996, were
operational for the full quarter ended March 31, 1997, as compared to a partial
quarter ended March 31, 1996. The increase in operating expenses during the
quarter ended March 31, 1997, as compared to the quarter ended March 31, 1996,
is partially offset by a decrease in accounting and administrative expenses
associated with operating the Partnership and its Properties.
As a result of the sale of the Property in Oviedo, Florida, as
described above in "Liquidity and Capital Resources," the Partnership recognized
a gain for financial reporting purposes of $41,148 during the quarter ended
March 31, 1997. No Properties were sold during the quarter ended March 31, 1996.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the
quarter ended March 31, 1997.
11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 9th day of May, 1997.
CNL INCOME FUND XVI, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the balance sheet of CNL Income Fund XVI, Ltd. at March 31, 1997, and
its statement of income for the three months then ended and is qualified
in its entirety by reference to the Form 10-Q of CNL Income Fund XVI, Ltd.
for the three months ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,261,407
<SECURITIES> 0
<RECEIVABLES> 50,669
<ALLOWANCES> 12,358
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,096,437
<DEPRECIATION> 1,016,194
<TOTAL-ASSETS> 41,021,908
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,878,804
<TOTAL-LIABILITY-AND-EQUITY> 41,021,908
<SALES> 0
<TOTAL-REVENUES> 1,093,003
<CGS> 0
<TOTAL-COSTS> 218,271
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 934,205
<INCOME-TAX> 0
<INCOME-CONTINUING> 934,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 934,205
<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>
