SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 1996
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 33-78790 59-3239115
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
- ------
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- ------
STATUS OF THE OFFERING
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective March 29, 1995, CNL American
Properties Fund, Inc. (the "Company") registered for sale an aggregate of
$165,000,000 of shares of common stock (the "Shares") (16,500,000 Shares at
$10 per Share). As of September 19, 1996, the Company had received aggregate
subscription proceeds of $99,751,116 (9,975,112 Shares) from 5,567
stockholders, including $243,167 (24,317 Shares) issued pursuant to the
Company's reinvestment plan.
As stated in the registration statement of the Company, including the
Prospectus which constitutes a part thereof, as amended, the proceeds of the
offering of Shares are used primarily to acquire properties (the "Properties")
located across the United States to be leased on a long-term, triple-net basis
to creditworthy operators of selected national and regional fast-food, family-
style and casual dining restaurant chains. The Company may also provide
financing (the "Mortgage Loans") for the purchase of buildings, generally by
lessees that lease the underlying land from the Company.
ACQUISITION OF PROPERTIES
During the period July 17, 1996 through September 19, 1996, the
Company acquired ten Properties, including one Property consisting of building
only and nine Properties consisting of land and building. The Properties are
four Boston Market Properties (one in each of Upland, La Quinta and Merced,
California, and Florissant, Missouri), one Jack in the Box Property (in
Houston, Texas), two Applebee's Properties (one in each of Montclair and
Salinas, California), one Golden Corral Property (in Brooklyn, Ohio), one
Ryan's Family Steak House Property (in Spring Hill, Florida) and one Arby's
Property (in Avon, Indiana).
The Boston Market Property in Merced, California, was acquired from an
affiliate of the Company (the "Affiliate"). The Affiliate had purchased and
temporarily held title to the Property in order to facilitate the acquisition
of the Property by the Company. The Property was acquired by the Company for
a purchase price of $559,682, representing the cost of the Property to the
Affiliate (including carrying costs) due to the fact that this amount was less
than the Property's appraised value.
In connection with the purchase of the Golden Corral Property in
Brooklyn, Ohio, which is building only, the Company, as lessor, entered into a
long-term lease agreement with an unaffiliated lessee. The lease is on a
triple-net lease basis, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. The lessee is also
required to pay for special assessments, sales and use taxes, and the cost of
any renovations permitted under the lease. In connection with this
acquisition, the Company has also entered into an assignment of an interest in
the ground lease with the lessee and the owner of the land. The assignment
provides that the ground lessee is responsible for all obligations under the
ground lease and provides certain rights to the Company relating to the
maintenance of its interest in the building in the event of a default by the
lessee under the terms of the ground lease.
In connection with the purchase of the Boston Market Properties, the
Jack in the Box Property, the Applebee's Properties, the Ryan's Family Steak
House Property and the Arby's Property, which are land and building, the
Company, as lessor, entered into long-term lease agreements with unaffiliated
lessees. The leases are on a triple-net basis, with the lessee responsible
for all repairs and maintenance, property taxes, insurance and utilities. The
lessee also is required to pay for special assessments, sales and use taxes,
and the cost of any renovations permitted under the lease. For the Properties
that are to be constructed, the Company has entered into development and
indemnification and put agreements with the lessees.
The following table sets forth the location of each of the ten
Properties acquired by the Company, including the nine Properties in which the
Company acquired the land and building and the one Property in which the
Company acquired the building only, during the period July 17, 1996 through
September 19, 1996, a description of the competition, and a summary of the
principal terms of the acquisition and lease of each Property.
<TABLE>
PROPERTY ACQUISITIONS
From July 17, 1996 through September 19, 1996
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BOSTON MARKET (9) $762,737 07/24/96 07/2011; five 10.38% of Total for each lease at any time
(the "Upland Property") (excluding five-year Cost (4); year after the after the fifth
Restaurant to be closing and renewal options increases by 10% fifth lease lease year
constructed development after the fifth year, (i) 4% of
costs) (3) lease year and annual gross
The Upland Property is after every five sales minus (ii)
located at the northeast years thereafter the minimum
quadrant of the during the lease annual rent for
intersection of Mountain term such lease year
Avenue and Foothill
Boulevard, Upland, San
Bernardino County,
California in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Upland Property
include an Burger King,
a Taco Bell, a KFC, two
Del Taco's, a Jack in
the Box, a McDonald's,
an Outback Steakhouse
and several local
restaurants.
JACK IN THE BOX $387,621 08/05/96 07/2014; four 10.75% of Total for each lease at any time
(the "Houston #2 (excluding five-year Cost (4); year, (i) 5% of after the
Property") closing and renewal options increases by 8% annual gross seventh lease
Restaurant to be development after the fifth sales minus (ii) year
constructed costs (3) lease year and by the minimum
10% after every annual rent for
The Houston #2 Property five years such lease year
is located on the south thereafter during (5)
side of Interstate 45 the lease term
and U.S. Highway 90A in
Houston, Harris County,
Texas, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Houston #2 Property
include two
Whataburger's, a Taco
Bell, a Wendy's, a Pizza
Hut, a Little Caesar's,
a McDonald's, and a
local restaurant.
APPLEBEE'S $879,753 08/23/96 08/2016; two 11% of Total Cost for each lease at any time
(the "Montclair (excluding five-year (4); increases by year, (i) 5% of after the fifth
Property") closing and renewal options 10% after the annual gross lease year (6)
Restaurant to be development fifth lease year sales minus (ii)
constructed costs) (3) and after every the minimum
five years annual rent for
The Montclair Property thereafter during such lease year
is located on a pad site the lease term
within the Montclair
Plaza Regional Mall, on
the east side of
Montevista Avenue, north
of I-10, in Montclair,
San Bernardino County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Montclair Property
include an Olive Garden,
a Tony Roma's, a Red
Lobster, and a local
restaurant.
GOLDEN CORRAL $997,296 08/23/96 05/2010; three $142,823; for each lease upon the
(the "Brooklyn (excluding (8) five-year increases by 10% year, (i) 4% of expiration of
Property") closing renewal options after the fifth annual gross the lease (7)
Existing restaurant costs) lease year and sales minus (ii)
after every five the minimum
The Brooklyn Property is years thereafter annual rent for
located at Northcliff during the lease such lease year
Avenue and Ridge Road in term
Brooklyn, Cuyahoga
County, Ohio, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Brooklyn Property
include an Applebee's, a
McDonald's, a Dunkin
Donuts, a Boston Market,
and several local
restaurants.
BOSTON MARKET (9) $664,898 09/06/96 09/2011; five 10.38% of Total for each lease at any time
(the "La Quinta (excluding five-year Cost (4); year after the after the fifth
Property") closing and renewal options increases by 10% fifth lease lease year
Restaurant to be development after the fifth year, (i) 4% of
constructed costs) (3) lease year and annual gross
after every five sales minus (ii)
The La Quinta Property years thereafter the minimum
is located on a pad site during the lease annual rent for
within the term such lease year
Albertson's/Walmart
Shopping Center, at the
northeast quadrant of
State Highway 111 and
Simon Drive, in La
Quinta, Riverside
County, California, in
an area of mixed retail,
commercial, residential,
and recreational
development. Other
fast-food and family-
style restaurants
located in proximity to
the La Quinta Property
include a Taco Bell, a
McDonald's, and several
local restaurants.
BOSTON MARKET (9) $559,682 09/17/96 07/2011; five 10.38% of Total for each lease at any time
(the "Merced Property") (excluding five-year Cost (4); year after the after the fifth
Restaurant to be closing and renewal options increases by 10% fifth lease year lease year
constructed development after the fifth (i) 4% of annual
costs) (3) lease year and gross sales
The Merced Property is after every five minus (ii) the
located at the northwest years thereafter minimum annual
corner of the during the lease rent for such
intersection of "M" term lease year
Street and Olive Avenue
in Merced, Merced
County, California, in
an area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Merced Property
include a Burger King,
an IHOP, a Jack in the
Box, a McDonald's, a
Pizza Hut, a Red
Lobster, and several
local restaurants.
RYAN'S FAMILY STEAK $654,588 09/18/96 09/2016; two 10.875% of Total for each lease at any time
HOUSE (excluding five-year Cost (4); year, (i) 5% of after the tenth
(the "Spring Hill closing and renewal options increases by 12% annual gross lease year
Property") development after the fifth sales minus (ii)
Restaurant to be costs) (3) lease year and the minimum
constructed after every five annual rent for
years thereafter such lease year
The Spring Hill Property during the lease
is located at the term
northwest corner of
Cortez Boulevard and
Chambord Street in
Spring Hill, Hernando
County, Florida, in an
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Spring Hill Property
include an Arby's, a
McDonald's, a Subway
Sandwich Shop, a
Wendy's, and a local
restaurant.
ARBY'S $790,676 09/18/96 09/2016; two $81,044; increases for each lease during the
(the "Avon Property") (excluding five-year by 4.14% after the year, (i) 4% of seventh and
Existing restaurant closing renewal options third lease year annual gross tenth lease
costs) and after every sales minus (ii) years only
The Avon Property is three years the minimum
located on the southwest thereafter during annual rent for
corner of Avon Crossing the lease term such lease year<PAGE>
Drive and Merchants
Drive in the Avon
Crossing Shopping
Center, in Avon,
Hendricks County,
Indiana, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Avon Property
include a Burger King, a
McDonald's, a Noble
Roman's Pizza, a Taco
Bell, a Wendy's, and
several local
restaurants.
BOSTON MARKET (9) $697,652 09/19/96 09/2011; five 10.38% of Total for each lease at any time
(the "Florissant (excluding five-year Cost (4); year after the after the fifth
Property") closing and renewal options increases by 10% fifth lease year lease year
Restaurant to be development after the fifth (i) 5% of annual
constructed costs) (3) lease year and gross sales
after every five minus (ii) the
The Florissant Property years thereafter minimum annual
is located on the north during the lease rent for such
side of U.S. Highway 67 term lease year
North, northeast of the
intersection of North
Waterford Road and U.S.
Highway 67, in
Florissant, St. Louis
County, Missouri, in an
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Florissant Property
include an Applebee's, a
Burger King, a Church's
Fried Chicken, a Dairy
Queen, a Denny's, a
Domino's, a KFC, a
McDonald's, a Ponderosa,
a Rally's, a Shoney's, a
Subway Sandwich Shop,
two Taco Bell's, a
Wendy's, a White Castle,
and several local
restaurants.
APPLEBEE'S $732,477 09/19/96 09/2016; two 10.87% of Total for each lease at any time
(the "Salinas Property") (excluding five-year Cost (4); year, (i) 5% of after the
Restaurant to be closing and renewal options increases by 10% annual gross seventh lease
constructed development after the fifth sales minus (ii) year
costs) (3) lease year and the minimum
The Salinas Property is after every five annual rent for
located on the west side years thereafter such lease year
of North Davis Road in during the lease
the Westridge Shopping term
Center, in Salinas,
Monterey County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Salinas Property
include an IHOP, and
several local
restaurants.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set forth
below:
Property Federal Tax Basis Property Federal Tax Basis
-------- ----------------- -------- -----------------
Upland Property $ 433,000 Merced Property $ 401,000
Houston #2 Property 595,000 Spring Hill Property 1,363,000
Montclair Property 825,000 Avon Property 484,000
Brooklyn Property 1,040,000 Florissant Property 618,000
La Quinta Property 485,000 Salinas Property 648,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Upland,
La Quinta, Merced and Florissant Properties, minimum annual rent will
become due and payable on the date the tenant receives from the landlord
its final funding of the construction costs. For the Houston #2
Property, minimum annual rent will become due and payable on the earlier
of (i) the date the restaurant opens for business to the public or
(ii) 180 days after execution of the lease. For the Montclair Property,
minimum annual rent will become due and payable on the earlier of (i)
the date the certificate of occupancy for the restaurant is issued,
(ii) the date the restaurant opens for business to the public, (iii)
180 days after execution of the lease or (iv) the date the tenant
receives from the landlord its final funding of the construction costs.
For the Spring Hill Property, minimum annual rent will become due and
payable on the earlier of (i) the date the certificate of occupancy for
the restaurant is issued, (ii) the date the restaurant opens for
business to the public, (iii) 150 days after execution of the lease or
(iv) the date the tenant receives from the landlord its final funding of
the construction costs. For the Salinas Property, minimum annual rent
will become due and payable on the earlier of (i) the date the
certificate of occupancy for the restaurant is issued, (ii) the date the
restaurant opens for business to the public, (iii) 140 days after
execution of the lease or (iv) the date the tenant receives from the
landlord its final funding of the construction costs. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Upland, La Quinta, Merced and
Florissant Properties, as described above, the tenant shall pay monthly
"interim rent" equal to 10.38% per annum of the amount funded by the
Company in connection with the purchase and construction of the
Property. During the period commencing with the effective date of the
lease to the date minimum annual rent becomes payable for the Houston #2
Property, as described above, the tenant shall pay monthly "interim
rent" equal to 10.75% per annum of the amount funded by the Company in
connection with the purchase and construction of the Properties. During
the period commencing with the effective date of the lease to the date
minimum annual rent becomes payable for the Montclair Property, as
described above, the tenant shall pay monthly "interim rent" equal to 11
percent per annum of the amount funded by the Company in connection with
the purchase and construction of the Property. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Spring Hill Property, as described
above, the tenant shall pay monthly "interim rent" equal to 10.875% per
annum of the amount funded by the Company in connection with the
purchase and construction of the Property. During the period commencing
with the effective date of the lease to the date minimum annual rent
becomes payable for the Salinas Property, as described above, the tenant
shall pay monthly "interim rent" equal to 10.87% per annum of the amount
funded by the Company in connection with the purchase and construction
of the Property.
(3) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below. The maximum cost to the Company, (including
the purchase price of the land (if applicable), development costs (if
applicable), and closing and acquisition costs) is not expected to, but
may, exceed the amounts set forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Upland Property $ 977,643 January 20, 1997
Houston #2 Property 926,235 February 1, 1997
Montclair Property 1,654,545 February 19, 1997
La Quinta Property 951,872 March 5, 1997
Merced Property 930,834 March 16, 1997
Spring Hill Property 1,881,818 February 15, 1997
Florissant Property 1,264,986 March 18, 1997
Salinas Property 1,339,000 February 6, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The lessee also has the option to purchase the Property after the lessee
operates at least five Applebee's restaurants.
(7) In the event that the aggregate amount of percentage rent paid by the
lessee to the Company over the term of the lease shall equal or exceed
15% of the purchase price paid by the Company, then the option purchase
price shall equal one dollar. In the event that the aggregate
percentage rent paid shall be less than 15% of the purchase price paid
by the Company, then the option purchase price shall equal the
difference of 15% of the purchase price, less the aggregate percentage
rent paid to the landlord by the lessee under the lease.
(8) The Company accepted an assignment of an interest in the ground lease
relating to the Brooklyn Property effective August 23, 1996.
(9) The lessee of the Upland, La Quinta, Merced and Florissant Properties is
the same unaffiliated lessee.
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JULY 17, 1996
THROUGH SEPTEMBER 19, 1996
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of taxable income before dividends
paid deduction of each Property acquired by the Company from July 17, 1996 through September 19, 1996, for
the 12-month period commencing on the date of the inception of the respective lease on such Property. The
schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations of the Company for any period
in the future. These estimates were prepared on the basis described in the accompanying notes which should
be read in conjunction herewith. No single lessee or group of affiliated lessees lease Properties or has
borrowed funds from the Company with an aggregate purchase price in excess of 20% of the expected total net
offering proceeds of the Company.
<CAPTION>
Boston Market Jack in the Box Applebee's Golden Corral
Upland, CA (5)(7) Houston, TX (5) Montclair, CA (5) Brooklyn, OH (6)
----------------- ------------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 101,479 $ 97,618 $176,084 $142,823
Asset Management Fees (2) (5,819) (5,467) (9,563) (5,921)
General and Administrative
Expenses (3) (6,292) (6,052) (10,917) (8,855)
---------- -------- -------- --------
Estimated Cash Available from
Operations 89,368 86,099 155,604 128,047
Depreciation and Amortization
Expense (4) (11,115) (15,257) (21,142) (26,658)
---------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 78,253 $ 70,842 $134,462 $ 101,389
========== ======== ======== =========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Ryan's Family
Boston Market Boston Market Steak House Arby's
La Quinta, CA (5)(7) Merced, CA (5)(7) Spring Hill, FL (5) Avon, IN
-------------------- ----------------- ------------------- ----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 98,804 $96,704 $204,392 $ 81,044
Asset Management Fees (2) (5,660) (5,540) (11,112) (4,738)
General and Administrative
Expenses (3) (6,126) (5,996) (12,672) (5,025)
-------- -------- -------- --------
Estimated Cash Available
from Operations 87,018 85,168 180,608 71,281
Depreciation and Amortization
Expense (4) (12,439) (10,283) (34,952) (12,415)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 74,579 $ 74,885 $145,656 $ 58,866
======== ======== ======== ========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Boston Market Applebee's
Florissant, MO (5)(7) Salinas, CA (5) Total
--------------------- --------------- ----------
<S> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $131,306 $145,549 $1,275,803
Asset Management Fees (2) (7,523) (7,950) (69,293)
General and Administrative
Expenses (3) (8,141) (9,024) (79,100)
-------- -------- ----------
Estimated Cash Available
from Operations 115,642 128,575 1,127,410
Depreciation and Amortization
Expense (4) (15,852) (16,617) (176,730)
-------- -------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 99,790 $111,958 $ 950,680
======== ======== ==========
</TABLE>
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the Company.
Amount does not include soliciting dealer servicing fee due to the fact
that such fee will not be incurred until December 31 of the year
following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of the Properties has been depreciated on the straight-line
method over 39 years.
(5) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Upland Property January 20, 1997
Houston #2 Property February 1, 1997
Montclair Property February 19, 1997
La Quinta Property March 5, 1997
Merced Property March 16, 1997
Spring Hill Property February 15, 1997
Florissant Property March 18, 1997
Salinas Property February 6, 1997
(6) The Company accepted an assignment of an interest in a ground lease
relating to the Brooklyn Property effective August 23, 1996.
(7) The lessee of the Upland, La Quinta, Merced and Florissant Properties is
the same unaffiliated lessee.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
- ------
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
- -------
Not applicable.
ITEM 5. OTHER EVENTS.
- -------
Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
- -------
Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
- -------
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of June 30, 1996 17
Pro Forma Consolidated Statement of Earnings for the
six months ended June 30, 1996 18
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1995 19
Notes to Pro Forma Consolidated Financial Statements
for the six months ended June 30, 1996 and the
year ended December 31, 1995 20
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Pro Forma Consolidated Balance Sheet of the Company gives
effect to (i) property acquisition transactions from inception through June
30, 1996, including the receipt of $76,816,648 in gross offering proceeds from
the sale of 7,681,665 shares of common stock pursuant to a Form S-11 under the
Securities Act of 1933, as amended, effective March 29, 1995, and the
application of such proceeds to purchase 68 properties (including 29
properties which consist of land and building, one property through a joint
venture arrangement which consists of land and building, five properties which
consist of building only and 33 properties consisting of land only), 14 of
which were under construction at June 30, 1996, to provide mortgage financing
to the lessees of the 33 properties consisting of land only, and to pay
organizational and offering expenses, acquisition fees and miscellaneous
acquisition expenses, (ii) the receipt of $22,934,468 in gross offering
proceeds from the sale of 2,293,447 additional shares of common stock during
the period July 1, 1996 through September 19, 1996, and (iii) the application
of such funds and $3,689,194 of cash and cash equivalents at June 30, 1996, to
purchase 14 additional properties acquired during the period July 1, 1996
through September 19, 1996 (11 of which are under construction and consist of
land and building, two properties which consist of land and building and one
property which consists of building only), to pay additional costs for the 14
properties under construction at June 30, 1996, and to pay offering expenses,
acquisition fees and miscellaneous acquisition expenses, all as reflected in
the pro forma adjustments described in the related notes. The Pro Forma
Consolidated Balance Sheet as of June 30, 1996, includes the transactions
described in (i) above from its historical consolidated balance sheet,
adjusted to give effect to the transactions in (ii) and (iii) above, as if
they had occurred on June 30, 1996.
The Pro Forma Consolidated Statements of Earnings for the six months
ended June 30, 1996 and the year ended December 31, 1995, include the
historical operating results of the properties described in (i) above from the
dates of their acquisitions plus operating results for the seven of the 82
properties that were owned by the Company as of September 19, 1996, and had a
previous rental history prior to the Company's acquisition of such properties,
from (A) the later of (1) the date the property became operational as a rental
property by the previous owner or (2) June 2, 1995 (the date the Company
became operational), to (B) the earlier of (1) the date the property was
acquired by the Company or (2) the end of the pro forma period presented. No
pro forma adjustments have been made to the Pro Forma Consolidated Statements
of Earnings for the remaining 75 properties owned by the Company as of
September 19, 1996, due to the fact that these properties did not have a
previous rental history.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and
transactions reflected therein had occurred on the dates, or been in effect
during the periods, indicated. This pro forma consolidated financial
information should not be viewed as predictive of the Company's financial
results or conditions in the future.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
----------- --------------- -----------
Land and buildings on operating
leases, less accumulated
depreciation $39,754,572 $14,281,144 (a) $54,035,716
Net investment in direct
financing leases (b) 3,071,035 7,484,840 (a) 10,555,875
Cash and cash equivalents 13,369,577 (3,689,194)(a) 9,680,383
Receivables 114,842 114,842
Mortgage notes receivable 12,432,362 12,432,362
Prepaid expenses 31,396 31,396
Organization costs, less accumulated
amortization 15,682 15,682
Loan costs, less accumulated
amortization 44,871 44,871
Accrued rental income 215,222 215,222
Other assets 1,548,050 (74,694)(a) 1,473,356
----------- ----------- -----------
$70,597,609 $18,002,096 $88,599,705
=========== ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 603,745 $ 603,745
Accrued interest payable 2,462 2,462
Accrued construction costs
payable 3,097,615 $(3,097,615)(a) -
Accounts payable and accrued
expenses 74,460 74,460
Escrowed real estate taxes
payable 9,696 9,696
Due to related parties 206,702 206,702
Deferred financing income 42,518 42,518
Rents paid in advance 22,277 22,277
----------- ----------- -----------
Total liabilities 4,059,475 (3,097,615) 961,860
----------- ----------- -----------
Minority interest 297,808 - 297,808
----------- ----------- -----------
Stockholders' equity:
Preferred stock, without par
value. Authorized and
unissued 3,000,000 shares - -
Excess shares, $.01 par value
per share. Authorized and
unissued 23,000,000 shares - -
Common stock, $.01 par value
per share. Authorized
20,000,000 shares; issued
and outstanding 7,701,665
shares; issued and
outstanding, as adjusted,
9,995,112 shares 77,017 22,934 (a) 99,951
Capital in excess of par value 66,612,593 21,076,777 (a) 87,689,370
Accumulated distributions in
excess of net earnings (449,284) (449,284)
----------- ----------- -----------
66,240,326 21,099,711 87,340,037
----------- ----------- -----------
$70,597,609 $18,002,096 $88,599,705
=========== ============ ===========
See accompanying notes to unaudited pro forma
consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SIX MONTHS ENDED JUNE 30, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $1,618,001 $ 43,538 (1) $1,661,539
Earned income from
direct financing leases (2) 86,184 34,282 (1) 120,466
Interest income from
mortgage notes receivable 465,498 465,498
Other interest and income 211,789 (16,508)(3) 195,281
---------- ---------- ----------
2,381,472 61,312 2,442,784
---------- ---------- ----------
Expenses:
General operating and
administrative 269,319 269,319
Professional services 48,391 48,391
Asset and mortgage management
fees to related party 97,673 4,352 (4) 102,025
State and other taxes 12,384 1,129 (5) 13,513
Interest expense 3,578 3,578
Depreciation and amortization 238,762 3,300 (6) 242,062
---------- ---------- ----------
670,107 8,781 678,888
---------- ---------- ----------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 1,711,365 52,531 1,763,896
Minority Interest in Earnings of
Consolidated Joint Venture (22,323) (22,323)
---------- ---------- ----------
Net Earnings $1,689,042 $ 52,531 $1,741,573
========== ========== ==========
Earnings Per Share of
Common Stock $ .30 $ .31
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding 5,649,041 5,649,041
========== ==========
See accompanying notes to unaudited pro forma
consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $ 498,817 $ 96,945 (1) $ 595,762
Earned income from direct
financing leases (2) 28,935 28,935
Contingent rental income 12,024 12,024
Interest income 119,355 (29,664)(3) 89,691
--------- --------- ---------
659,131 67,281 726,412
--------- --------- ---------
Expenses:
General operating and
administrative 134,759 134,759
Professional services 8,119 8,119
Asset management fee to
related party 23,078 4,368 (4) 27,446
State taxes 20,189 1,769 (5) 21,958
Depreciation and amortization 104,131 14,700 (6) 118,831
--------- --------- ---------
290,276 20,837 311,113
--------- --------- ---------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 368,855 46,444 415,299
Minority Interest in Earnings
of Consolidated Joint Venture (76) (76)
--------- --------- ---------
Net Earnings $ 368,779 $ 46,444 $ 415,223
========= ========== =========
Earnings Per Share of
Common Stock (7) $ .19 $ .22
========= =========
Weighted Average Number
of Shares of Common Stock
Outstanding (7) 1,898,350 1,905,970
========= =========
See accompanying notes to unaudited pro forma
consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Balance Sheet:
- ------------------------------------
(a) Represents gross proceeds of $22,934,468 from the issuance of 2,293,447
shares of common stock during the period July 1, 1996 through September
19, 1996 and $3,689,194 of cash and cash equivalents at June 30, 1996,
used (i) to acquire 14 properties for $14,846,047 (of which one property
consists of building only and 13 properties consist of land and
building), (ii) to fund estimated construction costs of $8,910,807
($3,097,615 of which was accrued as construction costs payable at June
30, 1996) relating to 14 wholly-owned properties under construction at
June 30, 1996, (iii) to pay acquisition fees of $1,032,051 and
reclassify from other assets $74,694 of acquisition fees previously
incurred relating to the acquired properties and to pay selling
commissions and offering expenses (stock issuance costs) of $1,834,757,
which have been netted against capital in excess of par value.
The pro forma adjustments to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
transactions were as follows:
Estimated
purchase price
(including con-
struction and Acquisition
closing costs) fees
and additional allocated
construction costs to property Total
------------------ ------------ -----------
Boston Market in
Corvallis, OR $ 906,684 $ 48,573 $ 955,257
Jack in the Box
in Houston, TX 893,681 47,876 941,557
Arby's in
Kendallville, IN 738,326 39,553 777,879
Boston Market in
Rockwall, TX 758,432 40,630 799,062
Boston Market in
Upland, CA 969,780 51,953 1,021,733
Jack in the Box in
Houston, TX 911,104 48,809 959,913
Applebee's in
Montclair, CA 1,593,906 85,388 1,679,294
Golden Corral in
Brooklyn, OH 986,780 52,863 1,039,643
Boston Market in
La Quinta, CA 943,388 50,539 993,927
Boston Market in
Merced, CA 923,356 49,465 972,821
Arby's in Avon, IN 789,676 42,304 831,980
Ryan's in Spring
Hill, FL 1,852,027 99,215 1,951,242
Applebee's in
Salinas, CA 1,325,026 70,983 1,396,009
Boston Market in
Florissant, MO 1,253,881 67,172 1,321,053
Fourteen wholly owned
properties under
construction at
June 30, 1996 5,813,192 311,422 6,124,614
----------- ---------- -----------
$20,659,239 $ 1,106,745 $21,765,984
=========== =========== ===========
Adjustment classified
as follows:
Land and buildings on
operating leases $14,281,144
Net investment in
direct financing
leases 7,484,840
-----------
$21,765,984
===========
(b) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated as
direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
The building portions of ten of the properties have been classified as
direct financing leases.
Pro Forma Consolidated Statements of Earnings:
- ---------------------------------------------
(1) Represents rental income from operating leases and earned income from
direct financing leases for the seven of the 82 properties acquired
during the period June 2, 1995 (the date the Company began operations)
through September 19, 1996 which had a previous rental history prior to
the acquisition of the property by the Company (the "Pro Forma
Properties"), for the period commencing (A) the later of (i) the date
the Pro Forma Property became operational as a rental property by the
previous owner or (ii) June 2, 1995 (the date the Company became
operational), to (B) the earlier of (i) the date the Pro Forma Property
was acquired by the Company or (ii) the end of the pro forma period
presented. Each of the seven Pro Forma Properties was acquired from an
affiliate who had purchased and temporarily held title to the property.
The noncancellable leases for the Pro Forma Properties in place during
the period the affiliate owned the properties were assigned to the
Company at the time the Company acquired the properties. The following
presents the actual date the Pro Forma Properties were acquired by the
Company as compared to the date the Pro Forma Properties were treated as
becoming operational as a rental property for purposes of the Pro Forma
Consolidated Statements of Earnings.
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
Jack in the Box in
Los Angeles, CA June 1995 June 1995
Kenny Rogers Roasters in
Grand Rapids, MI August 1995 June 1995
Kenny Rogers Roasters in
Franklin, TN August 1995 June 1995
Denny's in Pasadena, TX September 1995 August 1995
Denny's in Shawnee, OK September 1995 August 1995
Denny's in Grand Rapids, MI March 1996 September 1995
Denny's in McKinney, TX June 1996 December 1995
In accordance with generally accepted accounting principles, lease
revenue from leases accounted for under the operating method is
recognized over the terms of the leases. For operating leases providing
escalating guaranteed minimum rents, income is reported on a straight-
line basis over the terms of the leases. For leases accounted for as
direct financing leases, future minimum lease payments are recorded as a
receivable. The difference between the receivable and the estimated
residual values less the cost of the properties is recorded as unearned
income. The unearned income is amortized over the lease terms to
provide a constant rate of return. Accordingly, pro forma rental income
from operating leases and earned income from direct financing leases
does not necessarily represent rental payments that would have been
received if the properties had been operational for the full pro forma
period.
Generally, the leases provide for the payment of percentage rent in
addition to base rental income. However, due to the fact that no
percentage rent was due under the leases for the Pro Forma Properties
during the portion of 1996 and 1995 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the six months ended June 30, 1996 and the year ended
December 31, 1995.
(2) See Note (b) under "Pro Forma Consolidated Balance Sheet" above for a
description of direct financing leases.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the previous
owners or (ii) June 2, 1995 (the date the Company became operational),
through (B) the earlier of (i) the actual dates of acquisition by the
Company or the end of the pro forma period presented, as described in
Note (1) above. The estimated pro forma adjustment is based upon the
fact that interest income on interest bearing accounts was earned at a
rate of approximately four percent per annum by the Company during the
six months ended June 30, 1996 and the year ended December 31, 1995.
(4) Represents incremental increase in asset management fees relating to the
Pro Forma Properties for the period commencing (A) on the later of (i)
the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) June 2, 1995 (the date the
Company became operational), through (B) the earlier of (i) the date the
Pro Forma Properties were acquired by the Company or (ii) the end of the
pro forma period presented, as described in Note (1) above. Asset
management fees are equal to 0.60% of the Company's Real Estate Asset
Value (estimated to be approximately $6,219,000 and $5,241,000 for the
Pro Forma Properties for the six months ended June 30, 1996 and the year
ended December 31, 1995, respectively), as defined in the Company's
prospectus.
(5) Represents adjustment to state tax expense due to the incremental
increase in rental revenues of Pro Forma Properties. Estimated pro
forma state tax expense was calculated based on an analysis of state
laws of the various states in which the Company has acquired the Pro
Forma Properties. The estimated pro forma state taxes consist primarily
of income and franchise taxes ranging from zero to approximately five
percent of the Company's pro forma rental income of each Pro Forma
Property. Due to the fact that the Company's leases are triple net, the
Company has not included any amounts for real estate taxes in the pro
forma statement of earnings.
(6) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the six
months ended June 30, 1996, and during the period the Company was
operational, June 2, 1995 (the date following when the Company received
the minimum offering proceeds and funds were released from escrow)
through December 31, 1995.
As a result of three of the six Pro Forma Properties being treated in
the Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1995, as placed in service on June 2, 1995 (the date the
Company became operational), the Company assumed approximately 347,100
shares of common stock were sold, and the net offering proceeds were
available for investment, on June 2, 1996. Due to the fact that
approximately 184,800 of these shares of common stock were actually sold
subsequently, during the period June 3, 1995 through June 20, 1995, the
weighted average number of shares outstanding for the pro forma period
was adjusted. Pro forma earnings per share were calculated based upon
the weighted average number of shares of common stock outstanding, as
adjusted, during the period the Company was operational, June 2, 1995
through December 31, 1995.
ITEM 8. CHANGE IN FISCAL YEAR.
- -------
Not applicable.
EXHIBITS
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf
by the undersigned thereunto duly authorized.
CNL AMERICAN PROPERTIES FUND, INC.
Dated: October 2, 1996 By: /s/ Robert A. Bourne
------------------------------
ROBERT A. BOURNE, President
