FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 2000
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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
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CNL Income Fund XVI, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-3198891
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Ave.
Orlando, Florida 32801-3336
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
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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 _________
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CONTENTS
<S><C>
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
Notes to Condensed Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 12
Part II
Other Information 13-15
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
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<CAPTION>
June 30, December 31,
2000 1999
------------------ -------------------
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ASSETS
Land and buildings on operating leases, less
accumulated depreciation and allowance for loss on land and
buildings $ 28,659,072 $ 29,804,331
Net investment in direct financing leases 4,515,597 4,540,067
Investment in joint ventures 2,145,299 1,650,860
Cash and cash equivalents 962,691 1,637,753
Lease costs, less accumulated amortization of $3,276 and
$1,348, respectively 36,647 24,518
Receivables, less allowance for doubtful accounts
of $230,145 and $90,894, respectively 266,366 287,757
Prepaid expenses 13,087 13,121
Accrued rental income, less allowance for doubtful accounts of
$15,138 and $6,098, respectively 1,759,557 1,752,566
------------------ -------------------
$ 38,358,316 $ 39,710,973
================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Construction costs payable $ 150,000 $ 150,000
Accounts payable 31,662 131,113
Accrued and escrowed real estate taxes payable 7,771 5,860
Distributions payable 900,000 900,000
Due to related parties 199,690 73,853
Rents paid in advance and deposits 56,639 43,215
------------------ -------------------
Total liabilities 1,345,762 1,304,041
Partners' capital 37,012,554 38,406,932
------------------ -------------------
$ 38,358,316 $ 39,710,973
================== ===================
See accompanying notes to condensed financial statements
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S><C>
Revenues:
Rental income from operating leases $841,972 $ 806,415 $ 1,618,662 $ 1,604,784
Adjustments to accrued rental income (93,287 ) -- (93,287 ) --
Earned income from direct financing
leases 142,626 134,016 231,790 267,561
Interest and other income 14,341 11,239 56,608 31,192
------------- ------------- ------------- -------------
905,652 951,670 1,813,773 1,903,537
------------- ------------- ------------- -------------
Expenses:
General operating and administrative 61,505 30,838 110,578 78,457
Bad debt expense 32,285 -- 33,532 --
Professional services 21,945 17,733 42,848 27,060
Management fees to related party 9,611 9,112 18,286 18,113
Real estate taxes 22,322 12,867 37,166 30,020
State and other taxes 491 1,191 27,174 24,356
Depreciation and amortization 143,742 148,233 289,871 293,087
Transaction costs 26,632 83,052 69,930 116,210
------------- ------------- ------------- -------------
318,533 303,026 629,385 587,303
------------- ------------- ------------- -------------
Income Before Equity in Earnings of
Joint Ventures and Provision for
Loss on Buildings 587,119 648,644 1,184,388 1,316,234
Equity in Earnings of Joint Ventures 39,281 41,906 78,550 79,712
Provision for Loss on Buildings (456,825 ) (84,478 ) (857,316 ) (84,478 )
------------- ------------- ------------- -------------
Net Income $ 169,575 $ 606,072 $ 405,622 $ 1,311,468
============= ============= ============= =============
Allocation of Net Income:
General partners $ 4,441 $ 6,628 $ 9,276 $ 13,682
Limited partners 165,134 599,444 396,346 1,297,786
------------- ------------- ------------- -------------
$ 169,575 $ 606,072 $ 405,622 $ 1,311,468
============= ============= ============= =============
Net Income Per Limited Partner Unit $ 0.04 $ 0.13 $ 0.09 $ 0.29
============= ============= ============= =============
Weighted Average Number of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============= ============= ============= =============
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
Six Months Ended Year Ended
June 30, December 31,
2000 1999
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<S><C>
General partners:
Beginning balance $ 160,017 $ 131,300
Net income 9,276 28,717
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169,293 160,017
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Limited partners:
Beginning balance 38,246,915 39,060,624
Net income 396,346 2,786,291
Distributions ($0.40 and $0.80 per limited
partner unit, respectively) (1,800,000 ) (3,600,000 )
------------------------- -----------------------
36,843,261 38,246,915
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Total partners' capital $ 37,012,554 $ 38,406,932
========================= =======================
See accompanying notes to condensed to financial statements
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
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Six Months Ended
June 30,
2000 1999
---------------- ---------------
<S><C>
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $ 1,638,995 $ 1,600,589
---------------- ---------------
Cash Flows from Investing Activities:
Investment in joint ventures (500,000 ) (158,512 )
Payment of lease costs (14,057 ) (11,809 )
---------------- ---------------
---------------- ---------------
Net cash used in investing
activities (514,057 ) (170,321 )
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Cash Flows from Financing Activities:
Distributions to limited partners (1,800,000 ) (1,800,000 )
---------------- ---------------
Net cash used in financing activities (1,800,000 ) (1,800,000 )
---------------- ---------------
Net Decrease in Cash and Cash Equivalents (675,062 ) (369,732 )
Cash and Cash Equivalents at Beginning of Period 1,637,753 1,603,589
---------------- ---------------
Cash and Cash Equivalents at End of Period $ 962,691 $ 1,233,857
================ ===============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Construction costs incurred and unpaid at end
of period $ -- $ 15,000
================ ===============
Distributions declared and unpaid at end of
period $ 900,000 $ 900,000
================ ===============
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and six months ended June 30, 2000, may not be indicative
of the results that may be expected for the year ending December 31,
2000. Amounts as of December 31, 1999, 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, 1999.
2. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
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<CAPTION>
June 30, December 31, 1999
2000
--------------------- ------------------------
<S><C>
Land $ 15,034,850 $ 15,034,850
Buildings 17,540,422 17,540,422
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32,575,272 32,575,272
Less accumulated depreciation (2,792,627) (2,504,684)
--------------------- ------------------------
29,782,645 30,070,588
Less allowance for loss on land and
buildings (1,123,573) (266,257)
--------------------- ------------------------
--------------------- ------------------------
$ 28,659,072 $ 29,804,331
===================== ========================
</TABLE>
At December 31, 1999, the Partnership had established an allowance for
loss on building of $266,257 relating to its Long John Silver's
property located in Celina, Ohio. The tenant of this property filed for
bankruptcy and discontinued the payment of rents. The allowance
represented the difference between the net carrying value of the
property December 31, 1999 and the estimated of net realizable value of
the property.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
2. Land and Buildings on Operating Leases - Continued:
In addition, during the six months ended June 30, 2000, the Partnership
established an allowance for loss on land and buildings of $400,491
relating to its Boston Market property located in Columbia Heights,
Minnesota and $456,825 relating to its Boston Market property located
in St. Cloud, Minnesota. The tenant for these properties filed for
bankruptcy and discontinued the payment of rents. The allowance
represented the difference between the net carrying value of the
properties at June 30, 2000 and the estimated net realizable value for
the properties.
3. Investment in Joint Ventures:
In June 2000, the Partnership used the majority of the net sales
proceeds received from the 1999 sale of the property in Lawrence,
Kansas, to invest in a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with CNL Income Fund VII, Ltd., CNL Income Fund XV, Ltd., and
CNL Income Fund XVIII, Ltd., each a Florida limited partnership and an
affiliate of the general partners, to purchase and hold one restaurant
property. The Partnership accounts for its investment using the equity
method since the Partnership shares control with affiliates. As of June
30, 2000, the Partnership owned a 19.72% interest in the profits and
losses of the joint venture.
In addition, Columbus Joint Venture, and the Partnership and affiliates
as tenants-in-common in two separate tenancy in common arrangements,
each own and lease one property to an operator of national fast-food or
family-style restaurants. The following presents the combined,
condensed financial information for the joint ventures and the two
properties held as tenants-in-common with affiliates at:
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<CAPTION>
June 30 2000 December 31, 1999
----------------- -------------------
<S><C>
Land and buildings on operating
leases, less accumulated
depreciation $ 5,743,982 $ 3,240,248
Cash 17,872 7,963
Prepaid expenses 359 581
Accrued rental income 121,392 100,220
Liabilities 29,226 20,919
Partners' capital 5,854,379 3,328,093
Revenues 191,442 386,985
Net income 156,371 317,252
</TABLE>
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2000 and 1999
3. Investment in Joint Ventures- Continued:
The Partnership recognized income totaling $78,550 and $79,712 during
the six months ended June 30, 2000 and 1999, respectively, from these
joint ventures and the two properties held as tenants-in-common with
affiliates, of which $39,281 and $41,906 was earned during the quarters
ended June 30, 2000 and 1999, respectively.
4. Termination of Merger:
On March 1, 2000, the general partners and CNL American Properties
Fund, Inc. ("APF") mutually agreed to terminate the Agreement and Plan
of Merger entered into in March 1999. The general partners are
continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the limited partners.
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 generally triple-net leases, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of June 30, 2000, the
Partnership owned 44 Properties, which included interests in two Properties
owned through joint venture arrangements in which the Partnership is a
co-venturer and two Properties owned with affiliates of the general partners as
tenants-in-common.
Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 2000 and 1999 was cash from operations (which includes cash received
from tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses). Cash from operations was $1,638,995 and
$1,600,589 for the six months ended June 30, 2000 and 1999, respectively. The
increase in cash from operations for the six months ended June 30, 2000, as
compared to the six months ended June 30, 1999, was primarily a result of
changes in the Partnership's working capital.
Other sources and uses of capital included the following for the
quarter and six months ended June 30, 2000.
In June 2000, the Partnership used the majority of the net sales
proceeds it received from the 1999 sale of the Property in Lawrence, Kansas, to
invest in into a joint venture arrangement, TGIF Pittsburgh Joint Venture, with
CNL Income Fund VII, Ltd., CNL Income Fund XV, Ltd. and CNL Income Fund XVIII,
Ltd., each a Florida limited partnership and an affiliate of the general
partners, to hold one restaurant Property. As of June 30, 2000, the Partnership
had contributed $500,000 for a 19.72% interest in the profits and losses of the
joint venture.
Currently, rental income from the Partnership's Properties are invested
in money market accounts or other short-term, highly liquid investments, such as
demand deposit accounts at commercial banks, certificates of deposit and money
market accounts with less than a 30-day maturity date, pending the Partnership's
use of such funds to pay Partnership expenses or to make distributions to the
partners. At June 30, 2000, the Partnership had $962,691 invested in such
short-term investments, as compared to $1,637,753 at December 31, 1999. Cash and
cash equivalents decreased during the six months ended June 30, 2000, primarily
as a result of the fact that during the six months ended June 30, 2000, the
Partnership invested in a joint venture arrangement, as described above. The
funds remaining at June 30, 2000, will be used to pay distributions and other
liabilities.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
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.
Total liabilities of the Partnership, including distributions payable,
increased to $1,345,762 at June 30, 2000, from $1,304,041 at December 31, 1999.
Total liabilities at June 30, 2000, to the extent they exceed cash and cash
equivalents at June 30, 2000, will be paid from future cash from operations, or
in the event the general partners elect to make capital contributions or loans,
from future general partner contributions or loans.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership. Based on current and
anticipated future cash from operations, the Partnership declared distributions
to limited partners of $1,800,000 for each of the six months ended June 30, 2000
and 1999 ($900,000 for each of the quarters ended June 30, 2000 and 1999). This
represents distributions of $0.40 per unit for each of the six months ended June
30, 2000 and 1999 ($0.20 per unit for each applicable quarter). No distributions
were made to the general partners for the quarters and six months ended June 30,
2000 and 1999. No amounts distributed to the limited partners for the six months
ended June 30, 2000 and 1999 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.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the six months ended June 30, 1999, the Partnership owned and
leased 41 wholly owned Properties (which included one Property which was sold in
November 1999) and during the six months ended June 30, 2000, the Partnership
owned and leased 40 wholly owned Properties to operators of fast-food and
family-style restaurant chains. In connection therewith, during the six months
ended June 30, 2000 and 1999, the Partnership earned $1,757,165 and $1,872,345,
respectively, in rental income from operating leases (net of adjustments to
accrued rental income) and earned income from direct financing leases from these
Properties, $891,311 and $940,431 of which was earned during the quarters ended
June 30, 2000 and 1999, respectively. Rental and earned income decreased
approximately $8,900 and $94,700 during the quarter and six months ended June
30, 2000, respectively, as compared to the quarter and six months ended June 30,
1999, due to the fact that during the quarter and six months ended June 30,
2000, the Partnership established an allowance for doubtful accounts for past
due rental amounts relating to several Denny's Properties in accordance with the
Partnership's policy. The general partners will continue to pursue collection of
past due rental amounts relating to these Properties and will recognize such
amounts as income if collected.
In addition, the decrease in rental and earned income during the
quarter and six months ended June 30, 2000, was partially attributable to the
fact that in October 1998, the tenant of three Boston Market Properties filed
for bankruptcy and in June 2000, rejected the lease of one of its Properties,
vacated the Property, and discontinued making rental payments to the
Partnership. In connection therewith, the Partnership reversed approximately
$57,100 of accrued rental income during the quarter and six months ended June
30, 2000, relating to the Property whose lease was rejected. The accrued rental
income was the accumulated amount of non-cash accounting adjustments previously
recorded in order to recognize future scheduled rent increases as income evenly
over the term of the lease. Rental and earned income have continued to remain at
reduced amounts during the quarters and six months ended June 30, 2000 and 1999,
due to the fact that in November 1998, the tenant had vacated one additional
Property and discontinued making rental payments. The general partners are
currently seeking either new tenants or purchasers for these two Properties. The
Partnership will not recognize any rental or earned income from these two
Properties until new tenants are located or until the Properties are sold and
the proceeds are reinvested in additional Properties. The lost revenues
resulting from these two Properties could have an adverse effect on the results
of operations of the Partnership if the Partnership is not able to re-lease the
Properties in a timely manner. In June 2000, the tenant assumed and affirmed its
one remaining lease and the Partnership has continued to receive rental payments
relating to this lease.
Rental and earned income also decreased during the quarter and six
months ended June 30, 2000, as compared to the quarter and six months ended June
30, 1999, due to the fact that during the quarter and six months ended June 30,
2000, the Partnership reversed accrued rental income of approximately $36,200
relating to the Property in Mesquite, Texas, to adjust the carrying value of the
Property to the estimated net realizable value of the Property. In addition, the
decrease in rental, earned and contingent rental income was partially
attributable to a decrease in contingent rental income of approximately $15,100
due to the fact that during the six months ended June 30, 2000, the Partnership
adjusted estimated contingent rental amounts accrued at December 31, 1999, to
actual amounts due and received.
In February 1999, the Partnership entered into a new lease with a new
tenant for its Property had in Las Vegas, Nevada. In July 1998, the former
tenant of this Property had vacated the Property and discontinued making rental
payments. No income was recognized relating to this Property until rental
payments commenced in August 1999 under the new lease. Rental income increased
during the quarter and six months ended June 30, 2000, by approximately $27,900
and $55,700, respectively, as a result of the new lease. However, the increase
was partially offset by a decrease in rental and earned income due to the fact
that during the quarter and six months ended June 30, 2000, the Partnership
established an allowance for doubtful accounts of approximately $5,600 and
$9,100, respectively, relating to the new tenant because collection of such
amounts was questionable.
In addition, the decrease in rental and earned income during the six
months ended June 30, 2000 was partially offset by an increase in rental and
earned income of approximately $34,100 due to the fact that during the six
months ended June 30, 2000, the Partnership collected and recognized as income
past due rental amounts received from Long John Silver's, Inc., which filed for
bankruptcy during 1998 and rejected the leases relating to two of the three
Properties it leased. As of June 30, 2000, the Partnership had entered into new
leases, each with a new tenant, for the two Properties whose leases had been
rejected. As a result, rental and earned income increased by approximately
$16,500 and $26,700 during the quarter and six months ended June 30, 2000,
respectively. In 1999, Long John Silver's, Inc. assumed and affirmed its one
remaining lease, and the Partnership has continued to receive rental payments
relating to this lease.
During the six months ended June 30, 2000 and 1999, the Partnership
owned and leased two Properties with affiliates of the general partners as
tenants-in-common and one Property indirectly through a joint venture
arrangement. During the six months ended June 30, 2000, the Partnership owned
and leased one additional Property indirectly through another joint venture
arrangement. In connection therewith, during the six months ended June 30, 2000
and 1999, the Partnership earned $78,550 and $79,712, respectively, attributable
to net income earned by these joint ventures, $39,281 and $41,906 of which was
earned during the quarters ended June 30, 2000 and 1999, respectively.
Operating expenses, including depreciation and amortization expense,
were $629,385 and $587,303 during the six months ended June 30, 2000 and 1999,
respectively, $318,533 and $303,026 of which were incurred during the quarters
ended June 30, 2000 and 1999, respectively. The increase in operating expenses
was partially attributable to the fact that during the quarter and six months
ended June 30, 2000, the Partnership recorded a bad debt expense of
approximately $33,500 relating to the Property in Las Vegas, Nevada, in
accordance with the Partnership's policy. Operating expenses also increased
during the quarter and six months ended June 30, 2000 due to an increase in
administrative expenses for servicing the Partnership and its Properties.
However, the increase in operating expenses during the quarter and six months
ended June 30, 2000, was partially offset by a decrease due to the fact that the
Partnership incurred less transaction costs related to the general partners
retaining financial and legal advisors to assist them in evaluating and
negotiating the proposed merger with CNL American Properties Fund, Inc. ("APF"),
due to the termination of the proposed merger, as described below in
"Termination of Merger."
During the quarter ended March 31, 2000, the Partnership recorded an
allowance for loss on land and building of $400,491 for financial reporting
purposes relating to a Property in Columbia Heights, Minnesota and during the
quarter ended June 30, 2000, the Partnership recorded an allowance for loss on
land and building of $456,825 on a Property in St. Cloud Minnesota. The tenant
of these Properties filed for bankruptcy in October 1998, discontinued payment
of rents and vacated the Properties. The allowance represented the difference
between the carrying value of the Properties at June 30, 2000 and the estimated
net realizable value of the Properties at June 30, 2000. During the quarter and
six months ended June 30, 1999, the Partnership recorded a provision for loss on
building in the amount of $84,478 for financial reporting purposes relating to a
Property in Lawrence, Kansas, the lease for which was rejected by the tenant.
The tenant of this Property filed for bankruptcy and discontinued the payments
of rents to the Partnership. The allowance represented the difference between
the carrying value of the Property at June 30, 1999 and the estimated net
realizable value for the Property.
Termination of Merger:
On March 1, 2000, the general partners and APF mutually agreed to
terminate the Agreement and Plan of Merger (the "Merger") entered into in March
1999. The general partners are continuing to evaluate strategic alternatives for
the Partnership, including alternatives to provide liquidity to the limited
partners.
Dismissal of Legal Action
As described in greater detail in Part II, Item 1. "Legal Proceedings,"
in 1999, two groups of limited partners in several CNL Income Funds filed
purported class action suits against the general partners and APF alleging,
among other things, that the general partners had breached their fiduciary
duties in connection with the proposed merger. These actions were later
consolidated into one action. On April 25, 2000, the judge in the consolidated
action issued an order dismissing the action without prejudice, with each party
to bear its own costs and attorneys' fees.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On May 11, 1999, four limited partners in several CNL Income
Funds served a derivative and purported class action lawsuit
filed April 22, 1999 against the general partners and APF in
the Circuit Court of the Ninth Judicial Circuit of Orange
County, Florida, alleging that the general partners breached
their fiduciary duties and violated provisions of certain of
the CNL Income Fund partnership agreements in connection with
the proposed merger. The plaintiffs sought unspecified damages
and equitable relief. On July 8, 1999, the plaintiffs filed an
amended complaint which, in addition to naming three
additional plaintiffs, included allegations of aiding and
abetting and conspiring to breach fiduciary duties, negligence
and breach of duty of good faith against certain of the
defendants and sought additional equitable relief. As amended,
the caption of the case was Jon Hale, Mary J. Hewitt, Charles
A. Hewitt, Gretchen M. Hewitt, Bernard J. Schulte, Edward M.
and Margaret Berol Trust, and Vicky Berol v. James M. Seneff,
Jr., Robert A. Bourne, CNL Realty Corporation, and CNL
American Properties Fund, Inc., Case No. CIO-99-0003561.
On June 22, 1999, a limited partner of several CNL Income
Funds served a purported class action lawsuit filed April 29,
1999 against the general partners and APF, Ira Gaines,
individually and on behalf of a class of persons similarly
situated, v. CNL American Properties Fund, Inc., James M.
Seneff, Jr., Robert A. Bourne, CNL Realty Corporation, CNL
Fund Advisors, Inc., CNL Financial Corporation a/k/a CNL
Financial Corp., CNL Financial Services, Inc. and CNL Group,
Inc., Case NO. CIO-99-3796, in the Circuit Court of the Ninth
Judicial Circuit of Orange County, Florida, alleging that the
general partners breached their fiduciary duties and that APF
aided and abetted their breach of fiduciary duties in
connection with the proposed merger.
The plaintiff sought unspecified damages and equitable relief.
On September 23, 1999, Judge Lawrence Kirkwood entered an
order consolidating the two cases under the caption In re: CNL
Income Funds Litigation, Case No. 99-3561. Pursuant to this
order, the plaintiffs in these cases filed a consolidated and
amended complaint on November 8, 1999. On December 22, 1999,
the general partners and CNL Group, Inc. filed motions to
dismiss and motions to strike. On December 28, 1999, APF and
CNL Fund Advisors, Inc. filed motions to dismiss. On March 6,
2000, all of the defendants filed a Joint Notice of Filing
Form 8-K Reports and Suggestion of Mootness.
On April 25, 2000, Judge Kirkwood issued a Stipulated Final
Order of Dismissal of Consolidated Action, dismissing the
action without prejudice, with each party to bear its own
costs and attorneys' fees.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default 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
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.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 2000.
<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 11th day of August, 2000.
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)
