Rule 424(b)(3)
No. 33-78790
CNL AMERICAN PROPERTIES FUND, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated April 26, 1996 and the Prospectus Supplement dated October
18, 1996. This Supplement replaces the Supplements dated October 23, 1996 and
November 12, 1996. Capitalized terms used in this Supplement have the same
meaning as in the Prospectus unless otherwise stated herein.
Information as to proposed properties for which the Company has received
initial commitments and as to the number and types of Properties acquired by
the Company is presented as of November 20, 1996, and all references to
commitments or Property acquisitions should be read in that context. Proposed
properties for which the Company receives initial commitments, as well as
property acquisitions that occur after November 20, 1996, will be reported in
a subsequent Supplement.
THE OFFERING
As of November 20, 1996, the Company had received aggregate subscription
proceeds of $120,541,401 (12,054,140 Shares) from 6,580 stockholders,
including $391,348 (39,135 Shares) issued pursuant to the Reinvestment Plan.
As of November 20, 1996, the Company had invested or committed for investment
approximately $85,000,000 of such proceeds in 85 Properties (including one
Property through a joint venture arrangement which consists of land and
building, seven Properties which consist of building only, 33 Properties which
consist of land only and 44 Properties which consist of land and building), in
providing mortgage financing to the tenants of the 33 Properties consisting of
land only and to pay Acquisition Fees and Acquisition Expenses, leaving
approximately $21,300,000 in offering proceeds available for investment in
Properties and Mortgage Loans. As of November 20, 1996, the Company had
incurred $5,424,363 in Acquisition Fees to the Advisor.
SUBSEQUENT OFFERING
On November 1, 1996, the Company filed a registration statement with the
Securities and Exchange Commission in connection with the proposed sale by the
Company of up to 27,500,000 shares of common stock in a public offering (the
"Subsequent Offering") expected to commence immediately following the
termination of this offering. Of the 27,500,000 shares of common stock to be
offered, 2,500,000 will be available only to stockholders purchasing through
the Reinvestment Plan. Until such time, if any, as the stockholders approve
an increase in the number of authorized shares of Common Stock of the Company,
the subsequent offering will be limited to 4,800,000 shares. The Board of
Directors expects to submit, for a vote of the stockholders at a meeting
expected to be held in March of 1997, a resolution to increase the number of
authorized shares of Common Stock of the Company from 20,000,000 to
75,000,000. The price per share and the other terms of the Subsequent
Offering, including the percentage of gross proceeds payable to the Managing
Dealer for selling commissions and expenses in connection with the offering,
payable to the Advisor for Acquisition Fees and Acquisition Expenses and
reimbursable to the Advisor for Organizational and Offering Expenses, will be
the same as those for this offering. Net proceeds from the Subsequent
Offering will be invested in additional Properties and Mortgage Loans.
Management believes that the increase in the amount of assets of the Company
that will result from the Subsequent Offering will also increase the
diversification of the Company's assets and the likelihood of Listing,
although there is no assurance that Listing will occur.
REDEMPTION OF SHARES
The Company will not redeem any Shares during any period in which the
Company is making a public offering.
November 26, 1996 Prospectus Dated April 26, 1996
BUSINESS
PROPERTY ACQUISITIONS
Between October 4, 1996 and November 20, 1996, the Company acquired two
Properties, including one Property consisting of building only and one
Property consisting of land and building. The Properties are a Wendy's
Property (in San Diego, California) and a Golden Corral Property (in Lufkin,
Texas). For information regarding the 83 Properties acquired by the Company
prior to October 4, 1996, see the Prospectus dated April 26, 1996, and the
Prospectus Supplement dated October 18, 1996.
In connection with the purchase of the Wendy's Property in San Diego,
California, which is building only, the Company, as lessor, entered into a
long-term lease agreement with an unaffiliated lessee. The general terms of
the lease agreement are described in the section of the Prospectus entitled
"Business - Description of Property Leases." In connection with the purchase
of this Property, which is to be constructed, the Company has entered into
development and indemnification and put agreements with the lessee. The
general terms of these agreements are described in the section of the
Prospectus entitled "Business - Site Selection and Acquisition of Properties -
Construction and Renovation." In connection with this acquisition, the
Company has also entered into a tri-party agreement with the lessee and the
landlord of the land. The tri-party agreement 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 Golden Corral Property, the
Company, as lessor entered into a long-term lease agreement with an
unaffiliated lessee. The general terms of the lease agreement are described
in the section of the Prospectus entitled "Business - Description of Property
Leases." For this Property, which is to be constructed, the Company has
entered into development and indemnification and put agreements with the
lessee. The general terms of these agreements are described in the section of
the Prospectus entitled "Business - Site Selection and Acquisition of
Properties - Construction and Renovation."
As of November 20, 1996, the Company had initial commitments to acquire
nine properties, including seven properties which consist of land and building
and two properties which consist of land only. The acquisition of each of
these properties is subject to the fulfillment of certain conditions,
including, but not limited to, a satisfactory environmental survey and
property appraisal. There can be no assurance that any or all of the
conditions will be satisfied or, if satisfied, that one or more of these
properties will be acquired by the Company. If acquired, the leases of all
nine of these properties are expected to be entered into on substantially the
same terms described in the section of the Prospectus entitled "Business -
Description of Property Leases," except as described below.
In connection with the two Pizza Hut properties, the Company anticipates
acquiring the land and leasing it to the tenant, Castle Hill Holdings VII,
L.L.C. ("Castle Hill"), pursuant to a master lease agreement for these two
properties. The tenant is expected to own the buildings for these two Pizza
Hut properties. In connection therewith, the Company anticipates providing
mortgage financing to the tenant pursuant to a master mortgage note which will
be collateralized by the building improvements on both of the properties. If
the mortgage note is executed, it is expected to be executed under
substantially the same terms described in the section of the Prospectus
entitled "Business - Mortgage Loans."
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Atlanta, GA renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 5% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such lease year
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Chattanooga, TN (#1) renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
constructed (ii) the minimum
annual rent for such
lease year
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Chattanooga, TN (#2) renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
renovated (ii) the minimum
annual rent for such
lease year
Golden Corral 20 years; two five-year 11.25% of the for each lease year, at any time after
Columbia, TN renewal options Company's total cost (i) 6% of annual the seventh lease
Existing restaurant to purchase the gross sales minus year
property; increases by (ii) the minimum
12% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
East Lake, OH renewal options (1); increases by 10% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.75% of Total Cost for each lease year, at any time after
Humble, TX renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and by 10% after (ii) the minimum
every five years annual rent for such
thereafter during the lease year
lease term
Pizza Hut (2)(3) 20 years; two ten-year 11% of the Company's None at any time after
Bowling Green, OH renewal options total cost to purchase the seventh year
Land only the land; increases by
10% after the fifth
and tenth lease years
and 12% after the
fifteenth lease year
(4)
Pizza Hut (2)(3) 20 years; two ten-year 11% of the Company's None at any time after
Toledo, OH renewal options total cost to purchase the seventh year
Land only the land; increases by
10% after the fifth
and tenth lease years
and 12% after the
fifteenth lease year
(4)
Shoney's 20 years; two five-year 11.75% of Total Cost for each lease year, at any time after
Fort Myers, FL renewal options (1); increases by 10% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
</TABLE>
FOOTNOTES:
(1) 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.
(2) The lease relating to this property is a land lease only. The Company
anticipates entering into a master mortgage note receivable
collateralized by the Bowling Green and Toledo, Ohio building
improvements.
(3) The Company anticipates entering into a master lease agreement for the
Bowling Green and Toledo, Ohio properties.
(4) If the lessee exercises one or both of its renewal options, minimum
annual rent will increase by 12% after the expiration of the original
lease term and after five years thereafter during any subsequent lease
term.
The following table sets forth the location of the two Properties,
including one Property consisting of building only and one Property consisting
of land and building, acquired by the Company, from October 4, 1996 through
November 20, 1996, a description of the competition, and a summary of the
principal terms of the acquisition and lease of the Property.
<TABLE>
PROPERTY ACQUISITIONS
From October 4, 1996 through November 20, 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>
WENDY'S (3) 10/16/96 10/2011; three 13.39% of Total for each lease upon the
(the "San Diego (3) five-year Cost (4); increases year, (i) 6% of expiration of
Property") renewal options by 8% after the annual gross the initial
Restaurant to be fifth lease year sales times the term of the
constructed and after every Building lease and
five years Overage during any
The San Diego Property is thereafter during Multiplier (5) renewal
located at the northeast the lease term minus (ii) the period
corner of Gill Village minimum annual thereafter
Way and Rio San Diego rent for such
Drive, San Diego, San lease year
Diego County, California,
in an area of mixed
retail, commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the San Diego Property
include a Burger King, a
Jack in the Box, and a
McDonald's.
GOLDEN CORRAL $1,060,031 11/19/96 10/2011; four 10.75% of Total for each lease during the
(the "Lufkin Property") (excluding five-year Cost (1) year, 5% of the fist through
Restaurant to be closing renewal options amount by which seventh lease
constructed costs) (3) annual gross years and the
sales exceed tenth through
The Lufkin Property is $2,543,062 fifteenth
located on the east side lease years
of South First Street and only
the west side of
Brentwood Drive in
Lufkin, Angelica County,
Texas, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Lufkin
Property include a Burger
King, a Whataburger, an
Arby's, a Long John
Silver's, a Sonic Drive-
In, a McDonald's, 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 once the buildings
are constructed, is set forth below:
Property Federal Tax Basis
-------- -----------------
San Diego Property $641,000
Lufkin Property 977,000
(2) Minimum annual rent for the San Diego Property 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) 120 days after execution of the lease or
(iv) the date the tenant receives from the landlord its final funding of
the construction costs. Minimum annual rent for the Lufkin Property
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 or (iii) 180 days after
execution of the lease. During the period commencing with the effective
date of the lease to the date minimum annual rent becomes payable for
the San Diego and Lufkin Properties, as described above, the tenant
shall pay monthly "interim rent" equal to 10.25% and 10.75% per annum,
respectively, of the amount funded by the Company in connection with the
purchase and construction of the Properties.
(3) The Company accepted an assignment of an interest in the ground lease
relating to the San Diego Property effective October 16, 1996, in
consideration of its funding of certain preliminary development costs
and its agreement to fund remaining development costs not in excess of
the amount specified below. The development agreements for the San
Diego and Lufkin 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 amount set
forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
San Diego Property $ 638,966 February 13, 1997
Lufkin Property 1,454,545 May 18, 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) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/(purchase price of the building + $685,714)
BORROWING AND SECURED EQUIPMENT LEASE
Between October 4, 1996 and November 20, 1996, the Company obtained one
advance of $153,676 under its $15,000,000 Loan. The proceeds of the advance
were used to acquire Equipment for one restaurant property in Hopkinsville,
Kentucky (the "Hopkinsville Secured Equipment Lease"), at a cost of $153,676,
including a Secured Equipment Lease Servicing Fee of $3,000 to the Advisor.
This advance is considered to be an interest only loan for the first two
months and upon obtaining an additional advance prior to the third month
(February 1997) will become a fully amortizing term loan repayable over six
years. The advance will bear interest at a rate per annum equal to 215 basis
points above the Reserve Adjusted LIBOR Rate (as defined in the Loan).
The following table sets forth a summary of the principal terms of the
acquisition and lease of the Equipment.
<TABLE>
SECURED EQUIPMENT LEASE
From October 4, 1996 through November 20, 1996
<CAPTION>
Purchase Option
Description Price (1) Date Acquired Lease Expiration Annual Rent To Purchase
- ----------- --------- ------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR GOLDEN CORRAL $150,000 (3) (4) (4) (5)
RESTAURANT IN HOPKINSVILLE, (excluding
KENTUCKY closing
(The "Hopkinsville Secured costs and
Equipment Lease") Secured
Equipment
Lease
Servicing
Fee)
</TABLE>
FOOTNOTES:
(1) The Secured Equipment Lease is expected to be treated as a loan secured
by personal property for federal income tax purposes.
(2) Rental payments due under the Secured Equipment Lease are payable
monthly, commencing on the effective date of the lease.
(3) On November 20, 1996, the Company obtained an advance of $153,676 for
partial funding of the Equipment for a restaurant property in
Hopkinsville, Kentucky. The Company anticipates obtaining another
advance of $261,916 to fund the balance of the acquisition price of the
Equipment within three months of obtaining the initial advance of
$153,676 described above.
(4) The temporary Secured Equipment Lease entered into on November 20, 1996,
has a term of three months and requires the payment of monthly rent of
$1,281. Upon funding the balance of the Equipment purchase price, which
is expected to occur in the third month following the initial Equipment
funding, the Company will enter into a final Secured Equipment Lease.
The final Secured Equipment Lease is expected to have a term of
approximately seven years and provide for the payment of rent (payable
monthly) in an amount equal to the total purchase price of the Equipment
plus interest at a rate of ten percent per annum.
(5) Lessee may purchase the Equipment prior to the expiration of the final
Secured Equipment Lease, at the then present value of the remaining
rental payments, discounted at a rate of ten percent per annum.
<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 OCTOBER 4, 1996
THROUGH NOVEMBER 20, 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 October 4, 1996 through November 20, 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>
Wendy's Golden Corral
San Diego, CA (5) Lufkin, TX (5) Total
----------------- -------------- ---------
<S> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 82,267 $148,984 $231,251
Asset Management Fees (2) (3,649) (8,191) (11,840)
General and Administrative
Expenses (3) (5,101) (9,237) (14,338)
-------- -------- --------
Estimated Cash Available from
Operations 73,517 131,556 205,073
Depreciation and Amortization
Expense (4) (16,430) (25,044) (41,474)
-------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 57,087 $106,512 $163,599
======== ======== ========
See Footnotes
</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.
See "Management Compensation."
(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 date set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
San Diego Property February 13, 1997
Lufkin Property May 18, 1997
