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. This Supplement replaces the Supplements
dated April 30, 1996, May 15, 1996, May 24, 1996, June 11, 1996, June 21,
1996, June 25, 1996 and July 16, 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 16, 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 16, 1996, will be reported in a
subsequent Supplement.
THE OFFERING
As of July 16, 1996, the Company had received aggregate subscription
proceeds of $80,598,079 (8,059,808 Shares) from 4,663 stockholders, including
$243,167 (24,317 Shares) issued pursuant to the Reinvestment Plan. As of July
16, 1996, the Company had invested or committed for investment approximately
$66,000,000 of such proceeds in 72 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 33 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
$4,200,000 in offering proceeds available for investment in Properties and
Mortgage Loans. As of July 16, 1996, the Company had incurred $3,626,914 in
Acquisition Fees to the Advisor.
BUSINESS
PROPERTY ACQUISITIONS
Between April 10, 1996 and July 16, 1996, the Company acquired 24
Properties, including two Properties consisting of building only, 12
Properties consisting of land and building and ten Properties consisting of
land only. The Properties are one TGI Friday's Property (in Hamden,
Connecticut), three Wendy's Properties (one in each of Knoxville and
Sevierville, Tennessee, and Camarillo, California), one Golden Corral Property
(in Port Richey, Florida), two Denny's Properties (one in each of Hillsboro
and McKinney, Texas), four Boston Market Properties (one in each of
Ellisville, Missouri; Golden Valley, Minnesota; Corvallis, Oregon; and
Rockwall, Texas), two Jack in the Box Properties (in Humble and Houston,
Texas), one Arby's (in Kendallville, Indiana) and ten Pizza Hut Properties
(one in each of Beaver, Bluefield, Huntington, Hurricane, Milton, Ronceverte,
Beckley, Belle and Cross Lanes, West Virginia, and Marietta, Ohio) (hereinafter
referred to as the "Ten Pizza Hut Properties"). For information regarding the
48 Properties acquired by the Company prior to April 10, 1996, see the
Prospectus dated April 26, 1996.
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 an Affiliate of the Company. The Property was acquired at a
cost equal to 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.
July 22, 1996 Prospectus Dated April 26, 1996
In connection with the purchase of the TGI Friday's and the Wendy's
Properties in Hamden, Connecticut, and Sevierville, Tennessee, respectively,
which are building only, the Company, as lessor, entered into long-term lease
agreements with unaffiliated lessees. The general terms of the lease
agreements are described in the section of the Prospectus entitled "Business -
Description of Property Leases." In connection with the purchase of these
Properties, which are to be constructed, the Company has entered into
development and indemnification and put agreements with the lessees. 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 these acquisitions, the
Company has also entered into tri-party agreements with the lessees and the
owners of the land. The tri-party agreements provide that the ground lessees
are responsible for all obligations under the ground leases and provide
certain rights to the Company relating to the maintenance of its interests in
the buildings in the event of a default by the lessees under the terms of the
ground leases.
In connection with the purchase of the Wendy's Properties in Knoxville,
Tennessee, and Camarillo, California, the Golden Corral Property, the Denny's
Properties, the Boston Market Properties, the Jack in the Box Properties and
the Arby's Property, which are land and building, the Company, as lessor
entered into long-term lease agreements with unaffiliated lessees. The
general terms of the lease agreements are described in the section of the
Prospectus entitled "Business - Description of Property Leases." For the
Properties that are to be constructed, the Company has entered into
development and indemnification and put agreements with the lessees. 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 the Ten Pizza Hut Properties, which are land only,
the Company acquired the land and is leasing these ten parcels to the lessee,
Castle Hill Holdings VI, L.L.C. ("Castle Hill"), pursuant to a master lease
agreement (the "Master Lease Agreement"). Castle Hill has subleased the Ten
Pizza Hut Properties to one of its affiliates, Midland Food Services L.L.C.,
which is the operator of the restaurants. The general terms of the Master
Lease Agreement are similar to those described in the section of the
Prospectus entitled "Business - Description of Property Leases." If the
lessee does not exercise its option to purchase the Properties upon
termination of the Master Lease Agreement, the sublessee and lessee will
surrender possession of the Properties to the Company, together with any
improvements on such Properties. The lessee owns the buildings located on the
Ten Pizza Hut Properties. In connection with the acquisition of the Ten Pizza
Hut Properties, the Company provided mortgage financing of $3,888,000 to the
lessee pursuant to a Mortgage Loan evidenced by a master mortgage note (the
"Master Mortgage Note") which is collateralized by the building improvements
on the Ten Pizza Hut Properties. The Master Mortgage Note bears interest at a
rate of 10.75% per annum and principal and interest are due in equal monthly
installments over 20 years starting July 1, 1996. The Master Mortgage Note
equals approximately 85 percent of the appraised value of the related
buildings. Management believes that, due to the fact that the Company owns
the underlying land relating to the Ten Pizza Hut Properties and due to other
underwriting criteria, the Company has sufficient collateral for the Master
Mortgage Note.
As of July 16, 1996, the Company had initial commitments to acquire 14
properties, including two properties which consist of building only and 12
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 14
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.
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
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Richmond, VA renewal options (1); increases by 10% after the fifth lease the fifth lease
Existing restaurant after the fifth lease year, (i) 5% of year
year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such 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 (#2) 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 (#2) 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
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Upland, 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
</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 antici-
pates 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 24 Properties acquired
by the Company, including the Ten Pizza Hut Properties in which the Company
acquired the land only, 12 Properties in which the Company acquired the land
and building and the two Properties in which the Company acquired the building
only, from April 10, 1996 through July 16, 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 April 10, 1996 through July 16, 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>
TGI FRIDAY'S (3) 04/24/96 09/2008; no 15.043% of Total Cost None at any time
(the "Hamden Property") (3) renewal options (4); increases by 10% after the
Restaurant to be constructed after the fifth lease third lease
year and after every year (5)
The Hamden Property is located five years thereafter
at the southeast quadrant of during the lease term
Skiff Street and Route 10 in
Hamden, New Haven County,
Connecticut, in an area of
mixed retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Hamden
Property include a China
Buffet, a Chili's, a Red
Lobster, a McDonald's, a
Wendy's, and several local
restaurants.
WENDY'S (14) $322,292 05/08/96 05/2016; two 10.25% of Total Cost; for each lease at any time
(the "Knoxville 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 Knoxville Property is costs) (3) lease years, increases (ii) the
located on the north side of to 11.95% of Total Cost minimum annual
Western Avenue in Knoxville, during the seventh rent for such
Knox County, Tennessee, in an through tenth lease lease year
area of mixed retail, years, increases to
commercial, and residential 12.70% of Total Cost
development. Other fast-food during the eleventh
and family-style restaurants through fifteenth lease
located in proximity to the years and increases to
Knoxville Property include a 13.97% of Total Cost
KFC, a McDonald's, a Taco during the sixteenth
Bell, a Kenny Rogers Roasters, through twentieth lease
a Long John Silver's, a years (4)
Krystal, a Hardee's, a
Shoney's, and several local
restaurants.
GOLDEN CORRAL $586,687 05/08/96 10/2011; two 11.25% of Total Cost for each lease during the
(the "Port Richey Property") (excluding five-year (4); increases by 8% year, eighth and
Restaurant to be constructed closing and renewal options after the fifth lease commencing in ninth lease
development year and after every the second years only
The Port Richey Property is costs) (3) five years thereafter lease year (i) (7)
located on the southeast during the lease term 5% of annual
quadrant of the intersection gross sales
of U.S. 19 and Stone Road, minus (ii) the
Port Richey, Pasco County, minimum annual
Florida, in an area of mixed rent for such
retail, commercial, and lease year (6)
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Port Richey
Property include a Boston
Market, a Morrison's, a Burger
King, a Checkers, a Bob Evans,
a Wendy's, a KFC, a Chili's,
and several local restaurants.
TEN PIZZA HUT PROPERTIES - $1,512,000 05/17/96 05/2016; two $166,320; increases by None at any time
Land only - (8)(10) located in (excluding ten-year 10% after the fifth and after the
Beaver, West Virginia (the closing renewal options tenth lease years and seventh
"Beaver Property"), Bluefield, costs) 12% after the fifteenth lease year
West Virginia (the "Bluefield lease year (9)
Property"), Huntington, West
Virginia (the"Huntington
Property"), Hurricane, West
Virginia (the "Hurricane
Property"), Milton, West
Virginia (the "Milton
Property"), Ronceverte, West
Virginia (the "Ronceverte
Property"), Beckley, West
Virginia (the "Beckley
Property"), Belle, West
Virginia (the "Belle
Property"), Cross Lanes, West
Virginia (the "Cross Lanes
Property") and Marietta, Ohio
(the "Marietta Property").
The Beaver Property is located
on the north side of U.S.
Route 19 in Beaver, Raleigh
County, West Virginia, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Beaver Property include a
McDonald's, a Hardee's, a
Wendy's, and a Long John
Silver's.
The Bluefield Property is
located on the north side of
Bluefield Avenue in Bluefield,
Mercer County, West Virginia,
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Bluefield Property include a
McDonald's, a Hardee's, a
Captain D's, and a Shoney's.
(11)
The Huntington Property is
located on the south side of
Madison Avenue in Huntington,
Cabell County, West Virginia,
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Huntington Property include an
Arby's, three Burger Kings, a
Chi Chi's, two Dairy Queens, a
Hardee's, a KFC, a Long John
Silver's, two McDonald's, a
Papa John's, a Rax, a Red
Lobster, a Steak & Ale, a Taco
Bell, and several local
restaurants.
The Hurricane Property is
located on the southwest side
of Hurricane Creek Road in
Hurricane, Putnam County, West
Virginia, in an area of mixed
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Hurricane
Property include a McDonald's,
a Subway Sandwich Shop, and
several local restaurants.
(11)
The Milton Property is located
on the northeast corner of
East Main Street and Brickyard
Avenue in Milton, Cabell
County, West Virginia, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Milton Property include a
McDonald's, a Subway Sandwich
Shop, a Dairy Queen, and
several local restaurants.
The Ronceverte Property is
located on the north side of
Seneca Trail in Ronceverte,
Greenbrier County, West
Virginia, in an area of mixed
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Ronceverte
Property include a KFC, a Long
John Silver's, a Subway
Sandwich Shop, and several
local restaurants.
The Beckley Property is
located on the north side of
Harper Road in Beckley,
Raleigh County, West Virginia,
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Beckley Property include a
McDonald's, a Long John
Silver's, a Wendy's, a
Shoney's, a Bob Evans, a
Subway Sandwich Shop, a
Hardee's, and several local
restaurants.
The Belle Property is located
on the southwest side of
Dupont Avenue in Belle,
Kanawha County, West Virginia,
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Belle Property include
several local restaurants.
The Cross Lanes Property is
located on the northwest side
of Goff Mountain Road in Cross
Lanes, Kanawha County, West
Virginia, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Cross Lanes
Property include a Hardee's, a
Papa John's, a Captain D's, a
McDonald's, a Taco Bell, a Bob
Evans, a Wendy's, a Shoney's a
KFC, and several local
restaurants.
The Marietta Property is
located on the east side of
Acme Street in Marietta,
Washington County, Ohio, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Marietta Property include a
Burger King, a Captain D's, a
Dairy Queen, an Elby's Big
Boy, a KFC, a Long John
Silver's, a McDonald's, a Papa
John's, a Subway Sandwich
Shop, a Taco Bell, a Wendy's,
and several local restaurants.
(11)
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 (6)
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 (14) $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 (14) $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 (12) 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 (13)
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 (15) $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 (15) $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 (16) $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 #1 Property is costs) (3) every five years (ii) the
located at the north side of thereafter during the minimum annual
FM 1960 East in Humble, Harris lease term rent for such
County, Texas, in an area of lease year (6)
mixed 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.
BOSTON MARKET $350,358 07/09/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Corvallis 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
costs) (3) five years thereafter annual gross
The Corvallis Property is during the lease term sales minus
located at the southeast (ii) the
quadrant of the intersection minimum annual
of Highway 99 and Northeast rent for such
Circle Boulevard in Corvallis, lease year
Benton County, Oregon, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Corvallis Property include a
KFC, a Wendy's, a Subway
Sandwich Shop, a Sizzler, a
McDonald's, a Burger King, a
Taco Bell, and several local
restaurants.
JACK IN THE BOX (16) $343,160 07/09/96 07/2014; four 10.75% of Total Cost for each lease at any time
(the "Houston #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 Houston #1 Property is costs) (3) every five years (ii) the
located on the east side of thereafter during the minimum annual
Veterans Memorial Drive with lease term rent for such
an access easement on Beltway lease year (6)
8 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 #1
Property include a
Whataburger, an Arby's, a KFC,
a Burger King, and several
local restaurants.
ARBY'S $739,628 07/10/96 07/2016; two $75,812; increases by for each lease during the
(the "Kendallville Property") (excluding five-year 4.14% after the third year, (i) 4% of seventh and
Existing restaurant closing renewal options lease year and after annual gross tenth lease
costs) every three years sales minus years only
The Kendallville Property is thereafter during the (ii) the
located on the north side of lease term minimum annual
West North Street in rent for such
Kendallville, Noble County, lease year
Indiana, in an area of mixed
retail, commercial and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Kendallville
Property include a KFC, a
McDonald's, a Wendy's, a Pizza
Hut, a Subway Sandwich Shop,
and several local restaurants
BOSTON MARKET $499,820 07/15/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Rockwall 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 year, fifth lease
development year and after every (i) 4% of annual year
The Rockwall Property is costs) (3) five years thereafter gross sales
located on the northeast during the lease term minus (ii) the
corner of FM 740 and the to minimum annual
be constructed Steger Town rent for such
Drive in Rockwall, Rockwall lease year
County, Texas, in an area
of mixed retail, commercial,
and residential development.
Other fast-food and family-
style restaurants located in
proximity to the Rockwall
Property include an Arby's,
a Jack in the Box, a Dairy
Queen, a KFC, a McDonald's,
a Pizza Hut, a Sonic Drive-
In, a Whataburger, a Wendy's,
a Chili's, a Taco Bell, and
several local restaurants.
</TABLE>
[FN]
- ----------------------------------------------
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
-------- -----------------
Hamden Property $1,195,000
Knoxville Property 510,000
Port Richey Property 1,208,000
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
Corvallis Property 624,000
Houston #1 Property 620,000
Kendallville Property 304,000
Rockwall Property 422,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Hamden
and Port Richey Properties, 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) 150 days after execution of the lease.
For the Knoxville, 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 Corvallis, Ellisville, Golden Valley
and Rockwall Properties, minimum annual rent will become due and payable
on the earlier of (i) 180 days after execution of thelease or (ii) the
date the tenant receives from the landlord its final funding of the
construction costs. For the Humble #1 and Houston #1 Properties,
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 Knoxville, 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 Corvallis and Rockwall 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 Properties. 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 and Houston #1 Properties, 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.
(3) The Company accepted an assignment of an interest in the ground lease
relating to the Hamden and Sevierville Properties effective April 24,
1996 and June 5, 1996, respectively, in consideration of its funding of
certain preliminary development costs and its agreement to fund
remaining development costs not in excess of the amounts 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
-------- ---------------------- ----------------
Hamden Property $1,200,972 September 21, 1996
Knoxville Property 830,966 September 5, 1996
Port Richey Property 1,675,000 October 5, 1996
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
Corvallis Property 952,684 January 5, 1997
Houston #1 Property 926,397 January 5, 1997
Rockwall Property 795,087 January 11, 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, and in the case of the Hamden,
Port Richey and Hillsboro Properties, (iv) "construction financing
costs" during the development period.
(5) If the lessee exercises its purchase option after the third lease year
and before the eleventh lease year, the purchase price to be paid by the
lessee shall be equal to the net present value of the monthly lease
rental payments for the remainder of the lease term (including previous
and scheduled rent increases) discounted at the lesser of (i) 11% per
annum, or (ii) the then-current annual yield on 7-year Treasury
securities plus 4.5%, plus the full amount of any late fees, default
interest, enforcement costs or other sums otherwise due or payable by
the lessee under the lease. If the lessee exercises its option after
the tenth lease year, the purchase price to be paid by the lessee shall
be equal to the net present value of the monthly lease payments for the
remainder of the leaseterm (based, however, for purposes hereof on the
initial monthly installment amount of annual rental and not including
previous and scheduled increases) discounted at 11% per annum, plus the
full amount of any late fees, default interest, enforcement costs or
other sums otherwise due or payable by the lessee under the lease.
(6) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(7) If the Property is not producing percentage rent and the lessee
determines, in good faith, that the restaurant has become uneconomic and
unsuitable the lessee may elect, during the first through seventh and
again during the tenth through 15th lease years:
(i) to purchase the Property for a purchase price, net of closing
costs, equal to the greater of (a) the then fair-market value of the
Property as determined by an independent appraisal, or (b) 100% of the
Company's original cost for the Property if the Company is successful in
effectuating the lessee's purchase through a tax-free ``like-kind''
exchange, or 120% of the Company's original cost for the Property if a
tax-free, ``like-kind'' exchange is not effectuated; or
(ii) to sublet the Property as described in the section of the
Prospectus entitled ``Description of Property Leases - Assignment and
Sublease;'' or
(iii) to substitute the Property for another Golden Corral restaurant
property on terms similar to those described in the section of the
Prospectus entitled ``Description of Property Leases - Substitution of
Properties.''
(8) The lease relating to this Property is a land lease only. The Company
entered into a Mortgage Loan evidenced by a Master Mortgage Note for
$3,888,000 collateralized by building improvements. The Master Mortgage
Note bears interest at a rate of 10.75% per annum and principal and
interest will be collected in equal monthly installments over 20 years
beginning in July 1996.
(9) 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.
(10) The Company entered into a Master Lease Agreement for the Beaver,
Bluefield, Huntington, Hurricane, Milton, Ronceverte, Beckley, Belle,
Cross Lanes and Marietta Properties.
(11) The Company and the lessee entered into remediation and indemnity
agreements on May 17, 1996, with the seller of the land and an adjacent
site owner/operator (the "Indemnitors") due to Phase I and Phase II
environmental testing results indicating that there were action levels
of environmental contamination on the Bluefield, Hurricane and Marrieta
Properties relating to underground gasoline storage tanks from one
property adjacent to the Hurricane Property and past use of the other
two Properties. Under the remediation and indemnity agreements, the
Indemnitors have agreed to notify all applicable federal, state, or
local government agencies or authorities of the environmental
contamination, to undertake all remediation work on these sites at no
expense to the Company or lessee, and to indemnify, defend and hold
harmless the Company, the lessee and investors from losses arising out
of or related to any claim, action, proceeding, lawsuit, notice of
violation or demand by any (i) governmental authority in connection with
the presence of any environmental contamination, (ii) failure of the
Indemnitors to notify any applicable governmental authorities, (iii)
remediation work, and (iv) claim, action, proceeding, lawsuit, or demand
by third parties who are not the successors in interest of the
indemnified parties and are not affiliated with the indemnified parties.
If as to any of the affected sites, the remediation work is not
satisfactorily completed within two years after the effective date, such
that the Company is willing, in its discretion, to remain the owner of a
particular affected site, the Company may "put" the particular affected
site back to the seller, and the seller will purchase the Company's
ownership interest in the affected site.
(12) 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)]
(13) 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.
(14) The lessee of the Knoxville, Camarillo, and Sevierville Properties is
the same unaffiliated lessee.
(15) The lessee of the Ellisville and Golden Valley Properties is the same
unaffiliated lessee.
(16) The lessee of the Humble #1 and Houston #1 Properties is the same
unaffiliated lessee.
BORROWING AND SECURED EQUIPMENT LEASES
Between April 10, 1996 and July 16, 1996, the Company obtained three
advances totaling $1,642,788 under its $15,000,000 Loan. The advances are
fully amortizing term loans repayable over six years and bear interest at a
rate per annum equal to 215 basis points above the Reserve Adjusted LIBOR Rate
(as defined in the Loan). The proceeds of the advances were used to acquire
Equipment for three restaurant properties at a cost of approximately $1,609,000
and to pay Secured Equipment Lease Servicing Fees of $32,175 to the Advisor.
In connection with the acquisition of the Equipment for one restaurant
property, the Company, as lessor, entered into a Secured Equipment Lease with
an unaffiliated lessee that leases the restaurant property from an Affiliate
of the Advisor. The following table sets forth a summary of the principal
terms of the acquisition and lease of the Equipment.
<TABLE>
SECURED EQUIPMENT LEASES
From April 10, 1996 through July 16, 1996
<CAPTION>
Option
Description Purchase Price (1) Date Acquired Lease Expiration Annual Rent (2) To Purchase
- ----------- ------------------ ------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR GOLDEN $538,790 06/14/96 06/2003 $109,617 (3)
CORRAL RESTAURANT IN (excluding
MIDDLEBURG HEIGHTS, closing costs
OHIO (5) and Secured
(the "Middleburg Heights Equipment
Secured Equipment Lease") Lease
Servicing Fee)
EQUIPMENT FOR GOLDEN $560,411 07/02/96 07/2003 $113,994 (3)
CORRAL RESTAURANT IN (excluding
BROOKLYN, OHIO (5) closing costs
(The "Brooklyn Secured and Secured
Equipment Lease") Equipment
Lease
Servicing Fee)
EQUIPMENT FOR TGI $509,573 07/15/96 07/2001 $132,664 (4)
FRIDAY'S RESTAURANT IN (excluding
HAZLET, NEW JERSEY closing costs
(the "Hazlet Secured and Secured
Equipment Lease") Equipment
Lease
Servicing Fee)
</TABLE>
[FN]
(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) At the end of the lease term, if no event of default has occurred under
the terms of the Secured Equipment Lease, the lessee will have the option
to purchase the Equipment for $1.
(4) Lessee may purchase the Equipment prior to the expiration of the Secured
Equipment Lease, at the then present value of the remaining rental
payments, discounted at a rate of ten percent per annum.
(5) The lessee of the Middleburg Heights and Brooklyn Secured Equipment Leases
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 APRIL 10, 1996
THROUGH JULY 16, 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 April 10, 1996 through July 16, 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>
TGI Friday's Wendy's Golden Corral Ten Pizza
Hamden, CT (7) Knoxville, TN (7)(8) Port Richey, FL (7) Hut Properties
-------------- -------------------- ------------------- --------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 173,714 $ 81,898 $ 196,972 $ 166,320
Interest Income (2) - - - 415,686
---------- ---------- ---------- ----------
Total Revenues 173,714 81,898 196,972 582,006
---------- ---------- ---------- ----------
Asset Management Fees (3) (6,808) (4,746) (10,233) (8,922)
Mortgage Management Fee (4) - - - (23,167)
General and Administrative
Expenses (5) (10,770) (5,078) (12,212) (36,084)
---------- ---------- ---------- ----------
Total Operating Expenses (17,578) (9,824) (22,445) (68,173)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 156,136 72,074 174,527 513,833
Depreciation and Amortization
Expense (6) (30,652) (13,081) (30,970) (10,498)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 125,484 $ 58,993 $ 143,557 $ 503,335
========== ========== ========== ==========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Denny's Denny's Wendy's Wendy's
Hillsboro, TX (7) McKinney, TX Camarillo, CA (7)(8) Sevierville, TN(7)(8)
----------------- ------------- -------------------- ---------------------
<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
Interest Income (2) - - - -
---------- ---------- ---------- -----------
Total Revenues 114,346 104,013 124,655 60,735
---------- ---------- ---------- -----------
Asset Management Fees (3) (6,319) (5,874) (7,224) (2,956)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (7,089) (6,449) (7,729) (3,766)
---------- ---------- ---------- -----------
Total Operating Expenses (13,408) (12,323) (14,953) (6,722)
---------- ---------- ---------- -----------
Estimated Cash Available from
Operations 100,938 91,690 109,702 54,013
Depreciation and Amortization
Expense (6) (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
</TABLE>
<TABLE>
<CAPTION>
Boston Market Boston Market Jack in the Box Boston Market
Ellisville, MO (7)(9) Golden Valley, MN (7)(9) Humble #1, TX (7)(10) Corvallis, OR (7)
--------------------- ------------------------ --------------------- -----------------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable
Income Before
Dividends
Paid Deduction:
Base Rent (1) $ 102,675 $ 112,890 $ 100,061 $ 95,085
Interest Income (2) - - - -
---------- ---------- ---------- ----------
Total Revenues 102,675 112,890 100,061 95,085
---------- ---------- ---------- ----------
Asset Management Fees (3) (5,864) (6,448) (5,603) (5,440)
Mortgage Management Fee (4) - - -
General and Administrative
Expenses (5) (6,366) (6,999) (6,204) (5,895)
---------- ---------- ---------- ----------
Total Operating
Expenses (12,230) (13,447) (11,807) (11,335)
---------- ---------- ---------- ----------
Estimated Cash Available
from Operations 90,445 99,443 88,254 83,750
Depreciation and
Amortization Expense (6) (16,272) (13,561) (15,646) (16,006)
---------- ---------- ---------- ----------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid Deduction
of the Company $ 74,173 $ 85,882 $ 72,608 $ 67,744
========== ========== ========== ==========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Jack in the Box Arby's Boston Market
Houston #1, TX (7) (10) Kendallville, IN Rockwall, TX (7) Total
----------------------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable
Income Before Dividends
Paid Deduction:
Base Rent (1) $ 95,757 $ 75,812 $ 79,356 $1,684,289
Interest Income (2) - - - 415,686
---------- ---------- ---------- ----------
Total Revenues 95,757 75,812 79,356 2,099,975
---------- ---------- ---------- ----------
Asset Management Fees (3) (5,362) (4,430) (4,551) (90,780)
Mortgage Management Fee (4) - - - (23,167)
General and Administrative
Expenses (5) (5,937) (4,700) (4,920) (130,198)
---------- ---------- ---------- ----------
Total Operating Expenses (11,299) (9,130) (9,471) (244,145)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 84,458 66,682 69,885 1,855,830
Depreciation and Amortization
Expense (6) (15,890) (7,794) (10,183) (246,799)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 68,568 $ 58,888 $ 59,072 $1,609,031
========== ========== ========== ==========
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 Company entered into a Master Mortgage Note agreement for
$3,888,000, collateralized by building improvements located on the Ten
Pizza Hut Properties. The Master Mortgage Note bears interest at a rate
of 10.75% per annum and principal and interest will be collected in
equal monthly installments over 20 years beginning in July 1996. Amount
does not include $19,440 of loan commitment fees and $19,440 in loan
origination fees collected by the Company at closing from the borrower.
(3) 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."
(4) For managing the Mortgage Loans, the Advisor will be entitled to receive
a monthly mortgage management fee of one-twelfth of .60% of the total
principal amount of the Mortgage Loans as of the end of the preceding
month. See "Management Compensation."
(5) 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.
(6) 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. In connection with the Ten Pizza Hut Properties,
acquisition fees allocated to the Master Mortgage Note have been
amortized on a straight-line basis over the life of the agreement (20
years).
(7) The Company accepted an assignment of an interest in the ground lease
relating to the Hamden and Sevierville Properties effective April 24,
1996 and June 5, 1996, respectively, 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
-------- -------------------------------
Hamden Property September 21, 1996
Knoxville Property September 5, 1996
Port Richey Property October 5, 1996
Hillsboro Property December 2, 1996
Camarillo Property October 3, 1996
Sevierville Property October 3, 1996
Ellisville Property December 15, 1996
Golden Valley Property December 16, 1996
Humble #1 Property December 16, 1996
Corvallis Property January 5, 1997
Houston #1 Property January 5, 1997
Rockwall Property January 11, 1997
(8) The lessee of the Knoxville, Camarillo, and Sevierville Properties is
the same unaffiliated lessee.
(9) The lessee of the Ellisville and Golden Valley Properties is the same
unaffiliated lessee.
(10) The lessee of the Humble #1 and Houston #1 Properties is the same
unaffiliated lessee.
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 32
Pro Forma Consolidated Statement of Earnings for the
quarter ended March 31, 1996 33
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1995 34
Notes to Pro Forma Consolidated Financial Statements for
the quarter ended March 31, 1996 and the year ended
December 31, 1995 35
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
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
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
agreement 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
South 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
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 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.
