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 July 26,
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 July 25, 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 July 25, 1996, will be reported in a
subsequent Supplement.
THE OFFERING
As of July 25, 1996, the Company had received aggregate subscription
proceeds of $83,241,519 (8,324,152 Shares) from 4,778 stockholders, including
$243,167 (24,317 Shares) issued pursuant to the Reinvestment Plan. As of July
25, 1996, the Company had invested or committed for investment approximately
$66,900,000 of such proceeds in 73 Properties (including one Property through
a joint venture arrangement which consists of land and building, five
Properties which consist of building only, 33 Properties which consist of land
only and 34 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
$5,500,000 in offering proceeds available for investment in Properties and
Mortgage Loans. As of July 25, 1996, the Company had incurred $3,745,868 in
Acquisition Fees to the Advisor.
BUSINESS
PROPERTY ACQUISITIONS
Between July 17, 1996 and July 25, 1996, the Company acquired one
Property. The Property is a Boston Market Property (in Upland, California).
For information regarding the 72 Properties acquired by the Company prior to
July 17, 1996, see the Prospectus Supplement dated July 26, 1996.
In connection with the purchase of the Boston Market Property, which is
to be constructed, the Company, as lessor, entered into a long-term lease
agreement with an unaffiliated lessee. The general terms of the lease
agreement is described in the section of the Prospectus entitled "Business -
Description of Property Leases." In connection therewith, 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 July 25, 1996, the Company had initial commitments to acquire 12
properties, including two properties which consist of building only and ten
properties which consist of land and building. 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 12
of these properties are expected to be entered into on substantially the same
terms described in the Prospectus in the section entitled "Business -
Description of Property Leases," except as described below.
July 31, 1996 Prospectus Dated April 26, 1996
In connection with the Golden Corral and the Wendy's properties in
Brooklyn, Ohio, and San Diego, California, respectively, the Company
anticipates owning only the buildings and not the underlying land. However,
the Company anticipates entering into tri-party agreements with the lessees
and the landlords of the land in order to provide the Company with certain
rights with respect to the land on which the buildings are located.
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>
Golden Corral (2) 14 years; no renewal 14.214% of the for each lease year, upon the expiration
Brooklyn, OH options Company's total cost (i) 4% of annual of the lease (4)
Existing restaurant to purchase the gross sales minus
building; increases by (ii) the minimum
10% after the fifth annual rent for such
lease year and after lease year (3)
every five years
thereafter during the
lease term
Applebee's 20 years; two five-year 11% of Total Cost (1); for each lease year, at any time after
Montclair, CA renewal options increases by 10% after (i) 5% of annual the fifth lease
Restaurant to be the fifth lease year gross sales minus year (5)
constructed and after every five (ii) the minimum
years thereafter annual rent for such
during the lease term lease year
Ryan's Family Steak 20 years; two five-year 10.875% of Total Cost for each lease year, at any time after
House renewal options (1); increases by 12% (i) 5% of annual the tenth lease
Spring Hill, FL after the fifth lease gross sales minus year
Restaurant to be year and after every (ii) the minimum
constructed five years thereafter annual rent for such
during the lease term lease year
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
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Merced, CA renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year (i) 5% of annual year
constructed year and after every gross sales minus
five years thereafter (ii) the minimum
during the lease term annual rent for such
lease year
Jack in the Box 18 years; four five-year 10.75% of Total Cost for each lease year, at any time after
Houston, 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
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
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
Wendy's 20 years; two five-year 10.25% of Total Cost for each lease year, at any time after
Madisonville, TN renewal options (1); increases to (i) 6% of annual the seventh lease
Restaurant to be 10.76% of Total Cost gross sales minus year
constructed during the fourth (ii) the minimum
through sixth lease annual rent for such
years, 11.95% of Total lease year
Cost during the
seventh through tenth
lease years, 12.70% of
Total Cost during the
eleventh through
fifteenth lease years,
and 13.97% of Total
Cost during the
sixteenth through
twentieth lease years
Wendy's (2) 15 years; three five- 13.26% of Total Cost for each lease year, upon the expiration
San Diego, CA year renewal options (1); increases by 8% (i) 6% of annual of the initial term
Restaurant to be after the fifth lease gross sales times the of the lease and
constructed year and after every Building Overage during any renewal
five years thereafter Multiplier (6) minus period thereafter
during the lease term (ii) the minimum (4)
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 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
Chicago, IL renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
constructed (ii) the minimum
annual rent for such
lease year
</TABLE>
[FN]
- -------------------------------------------------------
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 Company anticipates owning the building only for this property. The
Company will not own the underlying land; although, the Company
anticipates entering into a tri-party agreement with the lessee and the
landlord of the land in order to provide the Company with certain rights
with respect to the land on which the building is located.
(3) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(4) 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.
(5) The lessee also has the option to purchase the property after the
seller/lessee operates at least five Applebee's restaurants owned by the
Company.
(6) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/[purchase price of the building + (annual rent due under
the land lease/land lease cap rate)]
The following table sets forth the location of the one Property acquired
by the Company, from July 17, 1996 through July 25, 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 July 17, 1996 through July 25, 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 $762,737 07/24/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Upland Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease fifth lease
development year and after every year, (i) 4% of year
The Upland Property is located costs) (3) five years thereafter annual gross
at the northeast quadrant of during the lease term sales minus
the intersection of Mountain (ii) the
Avenue and Foothill Boulevard, minimum annual
Upland, San Bernardino County, rent for such
California in an area of mixed lease year
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.
</TABLE>
[FN]
- ---------------------------------------------------
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of the construction Property acquired, once the
building is constructed, is set forth below:
Property Federal Tax Basis
--------- -----------------
Upland Property $ 433,000
(2) Minimum annual rent for the Upland Property will become due and payable
on 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 Property, 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.
(3) The development agreement for the Upland Property which is to be
constructed, provides that construction must be completed no later than
the date 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
(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.
<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 JULY 25, 1996
FOR A 12-MONTH PERIOD (UNAUDITED)
<CAPTION>
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 July 25, 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.
Boston Market
Upland, CA (5)
---------------
<S> <C>
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction:
Base Rent (1) $ 101,479
Asset Management Fees (2) (5,819)
General and Administrative
Expenses (3) (6,292)
----------
Estimated Cash Available
from Operations 89,368
Depreciation and
Amortization Expense (4) (11,115)
----------
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction of the Company $ 78,253
==========
See Footnotes
</TABLE>
[FN]
- -------------------------------------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Property 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 and interest 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 Property has been depreciated on the straight-line
method over 39 years.
(5) The development agreement for the Upland Property which is to be
constructed, provides that construction must be completed no later than
the date set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Upland Property January 20, 1997<PAGE>
