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): June 5, 1996
CNL AMERICAN PROPERTIES FUND, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Florida 33-78790 59-3239115
---------------- ------------------------ ------------------
(State or other
jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 East South Street, Suite 500
Orlando, Florida 32801
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
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 June 21, 1996, the Company had received aggregate
subscription proceeds of $74,964,637 (7,496,464 Shares) from 4,410
stockholders, including $128,151 (12,815 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 May 22, 1996 through June 21, 1996, the Company
acquired seven Properties. The Properties are two Wendy's Properties (one in
each of Sevierville, Tennessee, and Camarillo, California), two Denny's
Properties (one in each of Hillsboro and McKinney, Texas), two Boston Market
Properties (one in each of Ellisville, Missouri, and Golden Valley, Minnesota)
and one Jack in the Box Property (in Humble, Texas).
The Denny's Property in McKinney, Texas, was acquired from an
Affiliate of the Company. 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 $977,256 from the Affiliate, representing the cost of the Property to the
Affiliate (including carrying costs) due to the fact that these amounts were
less than the Property's appraised value.
In connection with the purchase of the Wendy's Property in
Sevierville, Tennessee, 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 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. The Company has also entered into
a tri-party agreement relating to this Property with the lessee and the owner
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 addition, in connection with this Property, which is to be
constructed, the Company has entered into development and indemnification and
put agreements with the lessee.
In connection with the purchase of each of the remaining six
Properties which consist of 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 seven
Properties acquired by the Company, during the period May 22, 1996 through
June 21, 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 May 22, 1996 through June 21, 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>
DENNY'S $367,672 06/05/96 06/2016; two 10.625% of Total Cost for each lease during the
(the "Hillsboro Property") (excluding five-year (4); increases by 11% year, (i) 5% of eighth,
Restaurant to be constructed closing and renewal options after the fifth lease annual gross tenth, and
development year and after every sales minus twelfth
The Hillsboro Property is costs) (3) five years thereafter (ii) the lease years
located on the south side of during the lease term minimum annual only
Highway 22 in Hillsboro, Hill rent for such
County, Texas, in an area of lease year
mixed retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Hillsboro
Property include a McDonald's,
an Arby's, a Whataburger, a
KFC, a Golden Corral, and a
Grandy's.
DENNY'S $977,256 06/05/96 12/2015; two $104,013; increases by for each lease during the
(the "McKinney Property") (excluding five-year 11% after the fifth year, (i) 5% of eighth,
Existing restaurant closing renewal options lease year and after annual gross tenth, and
costs) every five years sales minus twelfth
The McKinney Property is thereafter during the (ii) the lease years
located at the southwest lease term minimum annual only
quadrant of the intersection rent for such
of White Avenue and U.S. 75 in lease year (5)
McKinney, Collin County,
Texas, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the McKinney
Property include an
Applebee's, an Arby's, a
Boston Market, a Jack in the
Box, a Chili's, a Dairy Queen,
an IHOP, a Golden Corral, a
Pizza Hut, and several local
restaurants.
WENDY'S (8) $586,143 06/05/96 06/2016; two 10.25% of Total Cost; for each lease at any time
(the "Camarillo Property") (excluding five-year increases to 10.76% of year, (i) 6% of after the
Restaurant to be constructed closing and renewal options Total Cost during the annual gross seventh
development fourth through sixth sales minus lease year
The Camarillo Property is costs) (3) lease years, increases (ii) the
located at the southwest to 11.95% of Total Cost minimum annual
quadrant of Las Posas Road and during the seventh rent for such
the Ventura Freeway in through tenth lease lease year
Camarillo, Ventura County, years, increases to
California, in an area of 12.70% of Total Cost
mixed retail, commercial, and during the eleventh
residential development. through fifteenth lease
Other fast-food and family- years and increases to
style restaurants located in 13.97% of Total Cost
proximity to the Camarillo during the sixteenth
Property include an through twentieth lease
Applebee's, a Del Taco, a years (4)
McDonald's, and several local
restaurants.
WENDY'S (8) $66,153 06/05/96 05/2015; two 12.204% of Total Cost for each lease upon the
(the "Sevierville Property") (excluding (3) five-year (4); increases by 8% year, (i) 6% of expiration
Restaurant to be constructed closing and renewal options after the fifth lease annual gross of the
development followed by one year and after every sales times the initial
The Sevierville Property is costs) (3) fifteen-year five years thereafter Building term of the
located on the west side of renewal option during the lease term Overage lease and
Highway 441 in Sevierville, Multiplier (6) during any
Sevier County, Tennessee, in minus (ii) the renewal
an area of mixed retail, minimum annual period
commercial, and residential rent for such thereafter
development. Other fast-food lease year (7)
and family-style restaurants
located in proximity to the
Sevierville Property include a
Damon's Ribs, an IHOP, a Ruby
Tuesday's, and several local
restaurants.
BOSTON MARKET (9) $408,879 06/18/96 06/2011; five 10.40% of Total Cost for each lease at any time
(the "Ellisville 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) 5% of year
The Ellisville Property is costs) (3) five years thereafter annual gross
located on the north side of during the lease term sales minus
Manchester Road, in (ii) the
Ellisville, St. Louis County, minimum annual
Missouri, in an area of mixed rent for such
retail, commercial, and lease year
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Ellisville
Property include a KFC, a
Burger King, a Ponderosa, a
Taco Bell, a McDonald's, a
Long John Silver's, a Pizza
Hut, a Hardee's, a Steak and
Shake, a Red Lobster, and
several local restaurants.
BOSTON MARKET (9) $603,386 06/19/96 06/2011; five 10.40% of Total Cost for each lease at any time
(the "Golden Valley 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) 5% of year
The Golden Valley Property is costs) (3) five years thereafter annual gross
located on the north side of during the lease term sales minus
Highway 55 at Rhode Island (ii) the
Avenue in Golden Valley, minimum annual
Hennepin County, Minnesota, in rent for such
an area of mixed retail, lease year
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Golden Valley Property include
a McDonald's, a Perkins, and
several local restaurants.
JACK IN THE BOX $396,646 06/19/96 06/2014; four 10.75% of Total Cost for each lease at any time
(the "Humble #1 Property") (excluding five-year (4); increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing and renewal options after the fifth lease annual gross seventh
development year and by 10% after sales minus lease year
The Humble Property is located costs) (3) every five years (ii) the
at the north side of FM 1960 thereafter during the minimum annual
East in Humble, Harris County, lease term rent for such
Texas, in an area of mixed lease year (5)
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Humble
Property include a KFC, a
McDonald's, a Taco Bell, a
Wendy's, and a Burger King.
</TABLE>
[FN]
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
b u i lding portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set forth
below:
Property Federal Tax Basis
-------- -----------------
Hillsboro Property $742,000
McKinney Property 627,000
Camarillo Property 672,000
Sevierville Property 519,000
Ellisville Property 635,000
Golden Valley Property 529,000
Humble #1 Property 610,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the
Camarillo and Sevierville Properties, minimum annual rent will become
due and payable on (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. For the Hillsboro 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 or (iii) 180 days after
execution of the lease. For the Ellisville and Golden Valley
Properties, minimum annual rent will become due and payable on the
earlier of (i) 180 days after execution of the lease or (ii) the date
the tenant receives from the landlord its final funding of the
construction costs. For the Humble 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 the 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 Camarillo
and Sevierville Properties, as described above, the tenant shall pay
monthly "interim rent" equal to 10.25% 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 rent becomes payable for the Ellisville and
Golden Valley Properties, as described above, the tenant shall pay
monthly "interim rent" equal to 10.40% 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 Humble #1
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 Property.
(3) The Company accepted an assignment of an interest in the ground lease
relating to the Sevierville Property effective June 5, 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
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
-------- ---------------------- ----------------
Hillsboro Property $1,119,248 December 2, 1996
Camarillo Property 1,264,789 October 3, 1996
Sevierville Property 517,571 October 3, 1996
Ellisville Property 1,026,746 December 15, 1996
Golden Valley Property 1,128,899 December 16, 1996
Humble #1 Property 949,413 December 16, 1996
(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, and in the case of the
Hillsboro Property, (iv) "construction financing costs" during the
development period.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(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)]
(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 lessee of the Camarillo, and Sevierville Properties is the same
unaffiliated lessee.
(9) The lessee of the Ellisville and Golden Valley 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 MAY 22, 1996
THROUGH JUNE 21, 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 May 22, 1996 through June 21, 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>
Denny's Denny's Wendy's Wendy's
Hillsboro, TX (5) McKinney, TX Camarillo, CA (5)(6) Sevierville, TN (5)(6)
----------------- ------------ -------------------- ----------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 114,346 $ 104,013 $ 124,655 $ 60,735
Asset Management Fees (2) (6,319) (5,874) (7,224) (2,956)
General and Administrative
Expenses (3) (7,089) (6,449) (7,729) (3,766)
---------- ---------- ---------- ----------
Estimated Cash Available
from Operations 100,938 91,690 109,702 54,013
Depreciation Expense (4) (19,022) (16,066) (17,220) (13,308)
---------- ---------- ---------- ----------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction of the Company $ 81,916 $ 75,624 $ 92,482 $ 40,705
========== ========== ========== ==========
See Footnotes
Boston Market Boston Market Jack in the Box
Ellisville, MO (5)(7) Golden Valley, MN (5)(7) Humble, TX (#1) (5) Total
--------------------- ------------------------ ------------------- -----------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 102,675 $ 112,890 $ 100,061 $ 719,375
Asset Management Fees (2) (5,864) (6,448) (5,603) (40,288)
General and
Administrative Expenses (3) (6,366) (6,999) (6,204) (44,602)
---------- ---------- ---------- ----------
Estimated Cash Available
from Operations 90,445 99,443 88,254 634,485
Depreciation Expense (4) (16,272) (13,561) (15,646) (111,095)
---------- ---------- ---------- ----------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid Deduction
of the Company $ 74,173 $ 85,882 $ 72,608 $ 523,390
========== ========== ========== ==========
</TABLE>
[FN]
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 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 Properties has been depreciated on the straight-line
method over 39 years.
(5) The Company accepted an assignment of an interest in the ground lease
relating to the Sevierville Property effective June 5, 1996, in
consideration of its funding of certain preliminary development costs
and its agreement to fund remaining development. 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
-------- -------------------------------
Hillsboro Property December 2, 1996
Camarillo Property October 3, 1996
Sevierville Property October 3, 1996
Ellisville Property December 15, 1996
Golden Valley Propety December 16, 1996
Humble #1 Property December 16, 1996
(6) The lessee of the Camarillo, and Sevierville Properties is the same
unaffiliated lessee.
(7) The lessee of the Ellisville and Golden Valley 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. F I N ANCIAL 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
March 31, 1996 14
Pro Forma Consolidated Statement of Earnings
for the quarter ended March 31, 1996 15
Pro Forma Consolidated Statement of Earnings for
the year ended December 31, 1995 16
Notes to Pro Forma Consolidated Financial Statements
for the quarter ended March 31, 1996 and the
year ended December 31, 1995 17
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 March
31, 1996, including the receipt of $55,041,881 in gross offering proceeds from
the sale of 5,504,188 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 43 properties (including 19
properties which consist of land and building, one property through a joint
venture arrangement which consists of land and building, three properties
which consist of building only and 20 properties consisting of land only) four
of which were under construction at March 31, 1996, to provide mortgage
financing to the lessee of the 20 properties consisting of land only, and to
pay organizational and offering expenses, acquisition fees and miscellaneous
acquisition expenses, (ii) the receipt of $19,922,756 in gross offering
proceeds from the sale of 1,992,276 additional shares of common stock during
the period April 1, 1996 through June 21, 1996, and (iii) the application of
such funds and $5,529,447 of cash and cash equivalents at March 31, 1996, to
purchase 25 additional properties acquired during the period April 1, 1996
through June 21, 1996 (two of which are under construction and consist of
building only, nine of which are under construction and consist of land and
building, 13 properties which consist of land only and one property which
consists of land and building), to pay additional costs for the four
properties under construction at March 31, 1996, to provide mortgage financing
to the lessee of ten properties consisting of land only, 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 March 31, 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 March 31, 1996.
The Pro Forma Consolidated Statements of Earnings for the quarter ended
March 31, 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 68 properties
that were owned by the Company as of June 21, 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 61 properties owned by the Company as of June 21,
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
C o m pany'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
MARCH 31, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- --------------- -----------
Land and buildings on
operating leases, less
accumulated depreciation $28,313,474 $12,585,696 (a) $40,899,170
Net investment in direct
financing leases (c) 1,360,414 6,264,957 (a) 7,625,371
Cash and cash equivalents 8,775,306 (5,340,035)(a)
(189,412)(b) 3,245,859
Receivables 462,110 462,110
Mortgage note receivable 8,540,712 3,888,000 (a) 12,428,712
Prepaid expenses 37,275 37,275
Organization costs, less
accumulated amortization 16,682 16,682
Loan costs, less accumulated
amortization 51,559 51,559
Accrued rental income 152,047 152,047
Other assets 1,199,916 (61,987)(a) 1,137,929
----------- ----------- -----------
$48,909,495 $17,147,219 $66,056,714
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 53,659 $ 53,659
Accrued construction
costs payable 1,197,682 $(1,005,913)(a)
(191,769)(b) $ -
Accounts payable and accrued
expenses 106,333 106,333
Escrowed real estate taxes
payable 9,696 9,696
Due to related parties 415,418 415,418
Deferred financing income 29,366 13,608 (a) 42,974
Rents paid in advance 58,268 58,268
----------- ----------- -----------
Total liabilities 1,870,422 (1,184,074) 686,348
----------- ----------- -----------
Minority interest 293,329 2,357 (b) 295,686
----------- ----------- -----------
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 5,524,188
shares; issued and
outstanding, as adjusted,
7,516,464 shares 55,242 19,923 (a) 75,165
Capital in excess of
par value 46,983,886 18,309,013 (a) 65,292,899
Accumulated distributions
in excess of net
earnings (293,384) (293,384)
----------- ----------- -----------
46,745,744 18,328,936 65,074,680
----------- ----------- -----------
$48,909,495 $17,147,219 $66,056,714
=========== =========== ===========
See accompanying notes to unaudited pro forma
consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
QUARTER ENDED MARCH 31, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- ------------- ----------
Revenues:
Rental income from
operating leases $ 763,155 $ 41,157 (1) $ 804,312
Earned income from
direct financing lease (2) 35,926 35,926
Interest and other income 260,798 (12,544)(3) 248,254
---------- ---------- ----------
1,059,879 28,613 1,088,492
---------- ---------- ----------
Expenses:
General operating and
administrative 128,948 128,948
Professional services 29,692 29,692
Asset and mortgage
management fees to
related party 40,370 2,714 (4) 43,084
State and other taxes 2,898 1,129 (5) 4,027
Interest expense 159 159
Depreciation and
amortization 98,472 3,300 (6) 101,772
---------- ---------- ----------
300,539 7,143 307,682
---------- ---------- ----------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 759,340 21,470 780,810
Minority Interest in
Earnings of Consolidated
Joint Venture (14,752) (14,752)
---------- ---------- ----------
Net Earnings $ 744,588 $ 21,470 $ 766,058
========== ========== ==========
Earnings Per Share of
Common Stock $ .16 $ .16
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding 4,649,040 4,649,040
========== ==========
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 QUARTER ENDED MARCH 31, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Balance Sheet:
- -------------------------------------
(a) Represents gross proceeds of $19,922,756 from the issuance of 1,992,276
shares of common stock during the period April 1, 1996 through June 21,
1996, proceeds of $13,608 of deferred financing income (loan origination
and commitment fees, net of legal fees) from the $3,888,000 mortgage
financing described below, and $5,340,035 of cash and cash equivalents
at March 31, 1996, used (i) to acquire 25 properties for $14,807,008 (of
which 13 properties consist of land only, two properties consist of
building only and ten properties consist of land and building), (ii) to
fund estimated construction costs of $4,091,047 ($1,005,913 of which was
accrued as construction costs payable at March 31, 1996) relating to
four wholly-owned properties under construction at March 31, 1996, (iii)
to pay acquisition fees of $896,524 and reclassify from other assets
$61,987 of acquisition fees previously incurred relating to the acquired
properties, (iv) to pay selling commissions and offering expenses (stock
issuance costs) of $1,593,820, which have been netted against capital in
excess of par value and (v) to provide mortgage financing in the amount
of $3,888,000 to the lessee of ten properties consisting of land only.
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
------------------ ----------- -----------
Three Pizza Huts
(land only)
in Ohio $ 489,117 $ 26,203 $ 515,320
Burger King in
Indian Head
Park, IL 1,272,725 68,182 1,340,907
Burger King in
Highland, IN 1,212,558 64,958 1,277,516
TGI Friday's in
Hamden, CT 1,134,628 60,784 1,195,412
Wendy's in
Knoxville, TN 790,984 42,375 833,359
Golden Corral in
Port Richey, FL 1,705,448 91,364 1,796,812
Ten Pizza Huts
(land only)
in West Virginia
and Ohio 1,487,000 79,661 1,566,661
Denny's in
Hillsboro, TX 1,053,088 56,416 1,109,504
Denny's in
McKinney, TX 978,944 52,443 1,031,387
Wendy's in
Camarillo, CA 1,204,026 64,502 1,268,528
Wendy's in
Sevierville, TN 492,636 26,391 519,027
Boston Market in
Ellisville, MO 977,279 52,354 1,029,633
Boston Market in
Golden Valley, MN 1,074,707 57,574 1,132,281
Jack in the Box in
Humble, TX 933,868 50,029 983,897
Four wholly owned
properties under
construction at
March 31, 1996 3,085,134 165,275 3,250,409
----------- ----------- -----------
$17,892,142 $ 958,511 $18,850,653
=========== =========== ============
Adjustment classified
as follows:
Land and buildings on
operating leases $12,585,696
Net investment in
direct financing
leases 6,264,957
-----------
$18,850,653
===========
(b) Represents the use of $189,412 of the Company's net offering proceeds
and the assumed receipt of $2,357 in capital contributions from the
Company's co-venture partner in accordance with the joint venture
a g reement of CNL/Corral South Joint Venture, to fund estimated
construction costs of $191,769 accrued as construction costs payable at
March 31, 1996, relating to the one property of the joint venture. The
Company accounts for its 84.69% interest in the accounts of CNL/Corral
S o uth Joint Venture under the full consolidation method. All
significant intercompany accounts and transactions have been eliminated.
(c) 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 eight 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 68 properties acquired
during the period June 2, 1995 (the date the Company began operations)
through June 21, 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
p u r c h ased 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 quarter ended March 31, 1996 and the year ended
December 31, 1995.
(2) See Note (c) 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
quarter ended March 31, 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 quarter ended March 31, 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 quarter
ended March 31, 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: July 3, 1996
By: /s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
