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): October 16, 1996
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 33-78790 59-3239115
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
- ------
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- ------
The following information is provided voluntarily prior to the date
on which it is required to be reported under this Item 2.
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 January 8, 1997, the Company had received aggregate
subscription proceeds of $140,906,434 (14,090,643 Shares) from 7,294
stockholders, including $591,765 (59,177 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
Between October 4, 1996 and January 8, 1997, the Company acquired 13
Properties, including one Property consisting of building only, two Properties
consisting of land only and ten Properties consisting of land and building.
The Properties are one Wendy's Property (in San Diego, California), four
Golden Corral Properties (one in each of Lufkin, Texas; Columbia, Tennessee;
Moberly, Missouri; and Eastlake, Ohio), one Burger King Property (in
Chattanooga, Tennessee), two Pizza Hut Properties (one in each of Toledo and
Bowling Green, Ohio), two Boston Market Properties (one in each of St. Joseph,
Missouri, and Atlanta, Georgia) and three Jack in the Box Properties (one in
each of Dallas, Texas; Los Angeles, California; and Las Vegas, Nevada).
The Boston Market Property in St. Joseph, Missouri, 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 $249,688, representing the cost of the Property to the Affiliate (including
carrying costs) due to the fact that this amount was less than the Property's
appraised value.
In connection with the purchase of the Wendy's Property in San Diego,
California, which is building only, the Company, as lessor, entered into a
long-term lease agreement with an unaffiliated lessee. The 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. In connection with the purchase of this Property,
which is to be constructed, the Company has entered into development and
indemnification and put agreements with the lessee. In connection with this
acquisition, the Company has also entered into a tri-party agreement with the
lessee and the landlord of the land. The tri-party agreement provides that
the ground lessee is responsible for all obligations under the ground lease
and provides certain rights to the Company relating to the maintenance of its
interest in the building in the event of a default by the lessee under the
terms of the ground lease.
In connection with the purchase of the four Golden Corral Properties,
the Burger King Property, the two Boston Market Properties and the three Jack
in the Box Properties, 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 purchase prices for the Burger King Property in Chattanooga,
Tennessee, and the Golden Corral Property in Columbia, Tennessee, include
Development/Construction Management Fees of $100,000 and $37,850,
respectively, to an Affiliate of the Advisor for services provided in
connection with the development of the Properties. The Company considers
these Development/Construction Management Fees to be Acquisition Fees.
Development/Construction Management Fees must be approved by a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in such transactions, subject to a determination that such
transactions are fair and reasonable to the Company and on terms and
conditions not less favorable to the Company than those available from
unaffiliated third parties and not less favorable than those available from
the Advisor or its Affiliates in transactions with unaffiliated third parties.
In connection with the Two Pizza Hut Properties, which are land only,
the Company acquired the land and is leasing these two parcels to the lessee,
Castle Hill Holdings VII, L.L.C. ("Castle Hill"), pursuant to a master lease
agreement (the "Master Lease Agreement"). Castle Hill has subleased the Two
Pizza Hut Properties to one of its affiliates, Midland Food Services II,
L.L.C., which is the operator of the restaurants. The Master Lease Agreement
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 and sales and use taxes. 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
Two Pizza Hut Properties. In connection with the acquisition of the Two Pizza
Hut Properties, the Company provided mortgage financing of $484,000 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 Two 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 February 1, 1997. The Master Mortgage
Note equals approximately 76 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 Two Pizza Hut Properties and due to other
underwriting criteria, the Company has sufficient collateral for the Master
Mortgage Note.
The following table sets forth the location of the 13 Properties,
including one Property consisting of building only, two Properties consisting
of land only and ten Properties consisting of land and building, acquired by
the Company, from October 4, 1996 through January 8, 1997, a description of
the competition, and a summary of the principal terms of the acquisition and
lease of the Property.
<TABLE>
PROPERTY ACQUISITIONS
From October 4, 1996 through January 8, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
WENDY'S (3) 10/16/96 10/2011; three 13.39% of Total for each lease upon the
(the "San Diego (3) five-year Cost (4); year, (i) 6% of expiration
Property") renewal options increases by 8% annual gross of the
Restaurant to be after the fifth sales times the initial term
constructed lease year and Building of the lease
after every Overage and during
The San Diego Property five years Multiplier (5) any renewal
is located at the thereafter minus (ii) the period
northeast corner of Gill during the minimum annual thereafter
Village Way and Rio San lease term rent for such
Diego Drive, in San lease year
Diego, San Diego County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the San Diego Property
include a Burger King, a
Jack in the Box, and a
McDonald's.
GOLDEN CORRAL (11) $1,060,031 11/19/96 10/2011; four 10.75% of Total for each lease during the
(the "Lufkin Property") (excluding five-year Cost (4) year, 5% of the fist through
Restaurant to be closing and renewal options amount by which seventh
constructed development annual gross lease years
costs) (3) sales exceed and the
The Lufkin Property is $2,543,062 tenth
located on the east side through
of South First Street fifteenth
and the west side of lease years
Brentwood Drive, in only
Lufkin, Angelica County,
Texas, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Lufkin Property
include a Burger King, a
Whataburger, an Arby's,
a Long John Silver's, a
Sonic Drive-In, a
McDonald's, and several
local restaurants.
GOLDEN CORRAL $1,306,876 12/03/96 12/2016; two $147,024; for each lease at any time
(the "Columbia (excluding five-year increases by year, (i) 6% of after the
Property") closing renewal options 12% after the annual gross seventh
Existing Restaurant costs) fifth lease sales minus lease year
year and after (ii) the
The Columbia Property is every five minimum annual
located on the southeast years rent for such
corner of South James thereafter lease year
Campbell Boulevard and during the
Hillary Drive, in lease term
Columbia, Maury County,
Tennessee, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Columbia Property
include an Applebee's, a
Checkers, a Krystal's, a
Ponderosa, a Ruby
Tuesday, a Sonic, a
Subway Sandwich Shop, a
Shoney's, an Arby's, a
Burger King, a Waffle
House, a New Orleans
Famous Fried Chicken,
and a Western Sizzling.
BURGER KING $613,608 12/05/96 12/2016; two 11% of Total for each lease None
(the "Chattanooga (excluding five-year Cost (4) year, (i) 8.5%
Property") closing and renewal options of annual gross
Restaurant to be development sales minus
constructed costs) (3) (ii) the
minimum annual
The Chattanooga Property rent for such
is located on the lease year
southwest corner of
Amnicola Highway and
Riverport Road, in
Chattanooga, Hamilton
County, Tennessee, in an
area of mixed commercial
and manufacturing
development. Other
fast-food and family-
style restaurants
located in proximity to
the Chattanooga Property
include a Bo Jangles.
TWO PIZZA HUT PROPERTIES $316,000 12/05/96 12/2016; two $34,760; None at any time
- - Land (excluding ten-year increases by after the
only - (6)(7) located in closing renewal options 10% after the seventh
Toledo, Ohio (the costs) fifth and tenth lease year
"Toledo Property") and lease years and
Bowling Green, Ohio (the 12% after the
"Bowling Green fifteenth lease
Property") year
The Toledo Property is
located on the northwest
corner of the
intersection of Broadway
Avenue and South Avenue,
in Toledo, Lucas County,
Ohio, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Toledo Property
include a Taco Bell, a
McDonald's, a Rally's, a
Subway Sandwich Shop,
and a local restaurant.
The Bowling Green
Property is located on
the southeast corner of
the intersection of East
Wooster Avenue and
Mercer Road, in Bowling
Green, Wood County,
Ohio, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Bowling Green
Property include a Big
Boy, a McDonald's, a
Wendy's, a Taco Bell, a
Chi Chi's, a Burger
King, and a Little
Caesar's.
GOLDEN CORRAL $1,654,144 12/16/96 12/2016; two $186,091; for each lease at any time
(the "Eastlake (excluding five-year increases by year, (i) 5% of after the
Property") closing renewal options 10% after the annual gross seventh
Existing restaurant costs) fifth lease sales minus lease year
year and after (ii) the
The Eastlake Property is every five minimum annual
located within the years rent for such
southwest quadrant of thereafter lease year
the intersection formed during the
by Vine Street and 337th lease term
Street, in Eastlake,
Lake County, Ohio, in an
area of mixed retail and
commercial development.
Other fast-food and
family-style restaurants
located in proximity to
the Eastlake Property
include a Wendy's, a
Little Caesar's, a
Subway Sandwich Shop,
and several local
restaurants.
GOLDEN CORRAL (11) $363,400 12/17/96 12/2011; four 10.75% of Total for each lease during the
(the "Moberly Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be closing and renewal options amount by which through
constructed development annual gross seventh
costs) (3) sales exceed lease years
The Moberly Property is $2,199,271 (8) and the
located on the northwest tenth
corner of U.S. Highway through
24 East and Silva Lane, fifteenth
in Moberly, Randolph lease years
County, Missouri, in an only
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Moberly Property
include a Pizza Hut, a
Hardee's, a Burger King,
a Taco Bell, a Long John
Silver's, a McDonald's,
a KFC, and several local
restaurants.
BOSTON MARKET $252,130 12/17/96 6/2011; five $82,437; for each lease at any time
(the "St. Joseph (excluding five-year increases by year after the after the
Property") closing renewal options 10% after the fifth lease fifth lease
Existing restaurant costs) (9) fifth lease year, (i) 5% of year
year and after annual gross
The St. Joseph Property every five sales minus
is located in the years (ii) the
Venture/Cub Foods thereafter minimum annual
shopping center on the during the rent for such
east side of North Belt lease term lease year
Highway, in St. Joseph,
Buchanan County,
Missouri, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the St. Joseph Property
include a KFC, two
McDonald's, two Taco
Bell's, a Long John
Silver's, a Hardee's, an
Arby's, a Black-eyed
Pea, two Burger King's,
a Church's Fried
Chicken, two Pizza
Hut's, a Ryan's Family
Steak House, a Sonic,
and a Wendy's.
BOSTON MARKET $550,540 12/17/96 12/2011; five 10.38% of Total for each lease at any time
(the "Atlanta Property") (excluding five-year Cost (4); year after the after the
Restaurant to be closing and renewal options increases by fifth lease fifth lease
constructed development 10% after the year, (i) 5% of year
costs) (3) fifth lease annual gross
The Atlanta Property is year and after sales minus
located on the south every five (ii) the
side of Briarcliff Road years minimum annual
at the junction with thereafter rent for such
North Druid Hills Road, during the lease year
in Atlanta, Dekalb lease term
County, Georgia, in an
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Atlanta Property
include an Arby's, a
Burger King, a Chick-
Fil-A, a Grady's, a
McDonald's, a Taco Bell,
and several local
restaurants.
JACK IN THE BOX (12) $831,459 12/17/96 12/2014; four $85,225 (10); for each lease None
(the "Dallas Property") (excluding five-year increases by 8% year, (i) 5% of
Restaurant to be closing renewal options after the fifth annual gross
constructed costs) lease year and sales minus
(3)(10) after every (ii) the
The Dallas Property is five years minimum annual
located within the thereafter rent for such
southwest portion of the during the lease year (8)
intersection formed by lease term
Interstate Highway 20
and Wheatland Road, in
Dallas, Dallas County,
Texas, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Dallas Property
include an Arby's, a
Wendy's, and a Sonic.
JACK IN THE BOX (12) $1,397,771 01/07/97 01/2015; four $143,272 (10); for each lease None
(the "Los Angeles (excluding five-year increases by 8% year, (i) 5% of
Property") closing renewal options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(10) after every (ii) the
five years minimum annual
The Los Angeles Property thereafter rent for such
is located at the during the lease year (8)
northwest corner of the lease term
intersection of Wilshire
Boulevard and Sycamore
Avenue, in Los Angeles,
Los Angeles County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Los Angeles Property
include several
McDonald's, a KFC,
several Burger Kings, a
Numero Uno Pizza, a
Subway Sandwich Shop, an
El Pollo Loco, a
Denny's, a Pizza Hut, a
Taco Bell, and several
local restaurants.
JACK IN THE BOX (12) $1,248,333 01/07/97 01/2015; four $127,954 (10); for each lease None
(the "Las Vegas (excluding five-year increases by 8% year, (i) 5% of
Property") closing renewal options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(10) after every (ii) the
five years minimum annual
The Las Vegas Property thereafter rent for such
is located at the during the lease year (8)
northeast corner of the lease term
intersection of Sunset
Road and Pecos Road, in
Las Vegas, Clark County,
Nevada, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Las Vegas Property
include an Arby's, a
Burger King, a KFC, two
Del Tacos, a McDonald's,
a Subway Sandwich Shop,
an Olive Garden, an
Outback Steakhouse, two
Taco Bells, a Wendy's, a
Dairy Queen, and several
local restaurants.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set forth
below:
Federal Federal
Property Tax Basis Property Tax Basis
-------- ---------- -------- ----------
San Diego Property $ 641,000 St. Joseph Property $ 594,000
Lufkin Property 977,000 Atlanta Property 683,000
Columbia Property 880,000 Dallas Property 507,000
Chattanooga Property 706,000 Los Angeles Property 567,000
Eastlake Property 1,250,000 Las Vegas Property 592,000
Moberly Property 863,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the San
Diego Property, minimum annual rent will become due and payable on the
earlier of (i) the date the certificate of occupancy for the restaurant
is issued, (ii) the date the restaurant opens for business to the
public, (iii) 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 Lufkin and Moberly 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) 180 days after execution of the
lease. For the Chattanooga Property, minimum annual rent will become due
and payable on the possession date, which is April 4, 1997 (the
"Possession Date"). For the St. Joseph and Atlanta Properties, minimum
annual rent will become due and payable on the date the tenant receives
from the landlord its final funding of the construction costs. During
the period commencing with the effective date of the lease to the date
minimum annual rent becomes payable for the San Diego, Lufkin, Moberly,
St. Joseph and Atlanta Properties, as described above, the tenant shall
pay monthly "interim rent" equal to a specified rate per annum (ranging
from 10% to 10.75%) of the amount funded by the Company in connection
with the purchase and construction of the Properties.
(3) The Company accepted an assignment of an interest in the ground lease
relating to the San Diego Property effective October 16, 1996, in
consideration of its funding of certain preliminary development costs and
its agreement to fund remaining development costs not in excess of the
amount specified below. The development agreements for the Properties
which are to be constructed, provide that construction must be completed
no later than the dates set forth below. The maximum cost to the
Company, (including the purchase price of the land (if applicable),
development costs (if applicable), and closing and acquisition costs) is
not expected to, but may, exceed the amount set forth below:
Estimated Estimated Final
Property Maximum Cost Completion Date
-------- ------------ ---------------
San Diego Property $ 638,966 Opened for business
December 6, 1996
Lufkin Property 1,454,545 Opened for business
December 27, 1996
Chattanooga Property 1,181,818 April 4, 1997
Moberly Property 1,294,011 June 15, 1997
Atlanta Property 1,216,003 June 15, 1997
Dallas Property (10) June 15, 1997
Los Angeles Property (10) July 6, 1997
Las Vegas Property (10) July 6, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/(purchase price of the building + $685,714)
(6) 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
$484,000 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 February 1997.
(7) The Company entered into a Master Lease Agreement for the Toledo and
Bowling Green Properties.
(8) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(9) The Company has committed to pay $793,326, including development costs.
Of the total committed, $252,130 was paid at closing.
(10) The Company paid for all construction costs in advance at closing;
therefore, minimum annual rent was determined on the date acquired and
is not expected to change.
(11) The lessee of the Lufkin and Moberly Properties is the same unaffiliated
lessee.
(12) The lessee of the Dallas, Los Angeles and Las Vegas Properties is the
same unaffiliated lessee.
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM OCTOBER 4, 1996
THROUGH JANUARY 8, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of
taxable income before dividends paid deduction of each Property acquired by
the Company from October 4, 1996 through January 8, 1997, 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.
<TABLE>
<CAPTION>
Wendy's Golden Corral Golden Corral Burger King
San Diego, CA (7) Lufkin, TX (7)(8) Columbia, TN Chattanooga, TN (7)
----------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 82,267 $ 148,984 $ 147,024 $ 127,536
Interest Income (2) - - - -
---------- ---------- ---------- ----------
Total Revenues 82,267 148,984 147,024 127,536
---------- ---------- ---------- ----------
Asset Management Fees (3) (3,649) (8,191) (7,765) (6,933)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (5,101) (9,237) (9,115) (7,907)
---------- ---------- ---------- ----------
Total Operating Expenses (8,750) (17,428) (16,880) (14,840)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 73,517 131,556 130,144 112,696
Depreciation and Amortization
Expense (6) (16,430) (25,044) (22,551) (18,107)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 57,087 $ 106,512 $ 107,593 $ 94,589
========== ========== ========== ==========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Two Pizza Hut Golden Corral Golden Corral Boston Market
Properties Eastlake, OH Moberly, MO (7)(8) St. Joseph, MO
------------- ------------- ------------------ --------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 34,760 $ 186,091 $ 128,356 $ 82,437
Interest Income (2) 51,678 - - -
---------- ---------- ---------- ----------
Total Revenues 86,438 186,091 128,356 82,437
---------- ---------- ---------- ----------
Asset Management Fees (3) (1,896) (9,823) (7,033) (4,718)
Mortgage Management Fee (4) (2,904) - - -
General and Administrative
Expenses (5) (5,359) (11,538) (7,958) (5,111)
---------- ---------- ---------- ----------
Total Operating Expenses (10,159) (21,361) (14,991) (9,829)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 76,279 164,730 113,365 72,608
Depreciation and Amortization
Expense (6) (1,307) (32,063) (22,117) (15,246)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 74,972 $ 132,667 $ 91,248 $ 57,362
========== ========== ========== ==========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Boston Market Jack in the Box Jack in the Box
Atlanta, GA (7) Dallas, TX (7)(9) Los Angeles, CA (7)(9)
--------------- ----------------- ----------------------
<S> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 121,366 $ 85,225 $ 143,272
Interest Income (2) - - -
---------- ---------- ----------
Total Revenues 121,366 85,225 143,272
---------- ---------- ----------
Asset Management Fees (3) (6,954) (4,983) (8,381)
Mortgage Management Fee (4) - - -
General and Administrative
Expenses (5) (7,525) (5,284) (8,883)
---------- ---------- ----------
Total Operating Expenses (14,479) (10,267) (17,264)
---------- ---------- ----------
Estimated Cash Available from
Operations 106,887 74,958 126,008
Depreciation and Amortization
Expense (6) (17,504) (13,004) (14,548)
---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 89,383 $ 61,954 $ 111,460
========== ========== ==========
See Footnotes
</TABLE>
Jack in the Box
Las Vegas, NV (7)(9) Total
-------------------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 127,954 $1,415,272
Interest Income (2) - 51,678
---------- ----------
Total Revenues 127,954 1,466,950
---------- ----------
Asset Management Fees (3) (7,484) (77,810)
Mortgage Management Fee (4) - (2,904)
General and Administrative
Expenses (5) (7,933) (90,951)
---------- ----------
Total Operating Expenses (15,417) (171,665)
---------- ----------
Estimated Cash Available from
Operations 112,537 1,295,285
Depreciation and Amortization
Expense (6) (15,187) (213,108)
---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 97,350 $1,082,177
========== ==========
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 $484,000,
collateralized by building improvements located on the Two 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 February 1997. Amount does not
include $2,420 of loan commitment fees and $2,420 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.
(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.
(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 Two 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 development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the date set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
San Diego Property Opened for business December 6, 1996
Lufkin Property Opened for business December 27, 1996
Chattanooga Property April 4, 1997
Moberly Property June 15, 1997
Atlanta Property June 15, 1997
Dallas Property June 15, 1997
Los Angeles Property July 6, 1997
Las Vegas Property July 6, 1997
(8) The lessee of the Lufkin and Moberly Properties is the same unaffiliated
lessee.
(9) The lessee of the Dallas, Los Angeles and Las Vegas Properties is the
same unaffiliated lessee.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
- ------
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
- ------
Not applicable.
ITEM 5. OTHER EVENTS.
- ------
Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
- ------
Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
- ------ EXHIBITS.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of September 30, 1996 20
Pro Forma Consolidated Statement of Earnings for the
nine months ended September 30, 1996 21
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1995 22
Notes to Pro Forma Consolidated Financial Statements
for the nine months ended September 30, 1996 and the
year ended December 31, 1995 23
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
September 30, 1996, including the receipt of $102,960,893 in gross offering
proceeds from the sale of 10,296,089 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 82 properties (including 42
properties which consist of land and building, one property through a joint
venture arrangement which consists of land and building, six properties which
consist of building only and 33 properties consisting of land only), 10 of
which were under construction at September 30, 1996, to provide mortgage
financing to the lessees of the 33 properties consisting of land only, and to
pay organizational and offering expenses, acquisition fees and miscellaneous
acquisition expenses, (ii) the receipt of $37,945,508 in gross offering
proceeds from the sale of 3,794,551 additional shares of common stock during
the period October 1, 1996 through January 8, 1997, and (iii) the application
of such funds to purchase 14 additional properties acquired during the period
October 1, 1996 through January 8, 1997 (nine of which are under construction
and consist of land and building, one which is under construction and consists
of building only, two properties which consist of land and building and two
properties which consist of land only), to pay additional costs for the 10
properties under construction at September 30, 1996, and to pay offering
expenses, acquisition fees and miscellaneous acquisition expenses, all as
reflected in the pro forma adjustments described in the related notes. The
Pro Forma Consolidated Balance Sheet as of September 30, 1996, includes the
transactions described in (i) above from its historical consolidated balance
sheet, adjusted to give effect to the transactions in (ii) and (iii) above, as
if they had occurred on September 30, 1996.
The Pro Forma Consolidated Statements of Earnings for the nine months
ended September 30, 1996 and the year ended December 31, 1995, include the
historical operating results of the properties described in (i) above from the
dates of their acquisitions plus operating results for the seven of the 96
properties that were owned by the Company as of January 8, 1997, 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 89 properties owned by the Company as of January
8, 1997, 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
SEPTEMBER 30, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $ 50,053,887 $ 15,143,401 (a) $ 65,197,288
Net investment in direct
financing leases (b) 10,840,639 5,350,726 (a) 16,191,365
Cash and cash equivalents 22,256,995 8,862,665 (a) 31,119,660
Receivables 153,642 153,642
Mortgage notes receivable 12,311,892 12,311,892
Prepaid expenses 29,283 29,283
Organization costs, less
accumulated amortization 14,682 14,682
Loan costs, less accumulated
amortization 38,183 38,183
Accrued rental income 314,564 314,564
Other assets 1,984,383 665,473 (a) 2,649,856
------------ ------------ ------------
$ 97,998,150 $ 30,022,265 $128,020,415
============ ============= ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 2,376,235 $ 2,376,235
Accrued interest payable 11,238 11,238
Accrued construction costs
payable 4,887,602 $ (4,887,602)(a) -
Accounts payable and accrued
expenses 38,363 38,363
Escrowed real estate taxes
payable 9,696 9,696
Due to related parties 390,489 390,489
Deferred financing income 41,973 41,973
Rents paid in advance 425,584 425,584
------------ ------------ ------------
Total liabilities 8,181,180 (4,887,602) 3,293,578
------------ ------------ ------------
Minority interest 288,456 - 288,456
------------ ------------ ------------
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 10,316,089
shares; issued and
outstanding, as adjusted,
14,110,640 shares 103,161 37,946 (a) 141,107
Capital in excess of par
value 90,340,860 34,871,921 (a) 125,212,781
Accumulated distributions in
excess of net earnings (915,507) (915,507)
------------ ------------ ------------
89,528,514 34,909,867 124,438,381
------------ ------------ ------------
$ 97,998,150 $ 30,022,265 $128,020,415
============ ============= ============
See accompanying notes to unaudited pro forma consolidated
financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $2,342,959 $ 43,538 (1) $2,386,497
Earned income from
direct financing leases (2) 324,907 34,282 (1) 359,189
Interest income from
mortgage notes receivable 796,378 796,378
Other interest and income 419,470 (16,508)(3) 402,962
---------- ---------- ----------
3,883,714 61,312 3,945,026
---------- ---------- ----------
Expenses:
General operating and
administrative 402,046 402,046
Professional services 50,101 50,101
Asset and mortgage management
fees to related party 175,773 4,352 (4) 180,125
State and other taxes 40,366 1,129 (5) 41,495
Interest expense 47,269 47,269
Depreciation and amortization 388,813 3,300 (6) 392,113
---------- ---------- ----------
1,104,368 8,781 1,113,149
---------- ---------- ----------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 2,779,346 52,531 2,831,877
Minority Interest in Earnings of
Consolidated Joint Venture (21,587) (21,587)
---------- ---------- ----------
Net Earnings $2,757,759 $ 52,531 $2,810,290
========== ========== ==========
Earnings Per Share of
Common Stock $ .41 $ .42
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding 6,771,120 6,771,120
========== ==========
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 NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Balance Sheet:
- ------------------------------------
(a) Represents gross proceeds of $37,945,508 from the issuance of 3,794,551
shares of common stock during the period October 1, 1996 through January
8, 1997, used (i) to acquire 14 properties for $14,545,488 (of which one
property consists of building only, two properties consist of land only
and 11 properties consist of land and building), (ii) to fund estimated
construction costs of $9,794,166 ($4,887,602 of which was accrued as
construction costs payable at September 30, 1996) relating to 10 wholly-
owned properties under construction at September 30, 1996, (iii) to pay
acquisition fees of $1,707,548 ($1,042,075 of which was allocated to
properties and $665,473 of which was classified as other assets and will
be allocated to future properties) and to pay selling commissions and
offering expenses (stock issuance costs) of $3,035,641, which have been
netted against capital in excess of par value, leaving $8,862,665 in
cash and cash equivalents available for future investment.
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
------------------ ----------- -----------
Burger King in
Chicago, IL $ 1,577,172 $ 84,491 $ 1,661,663
Wendy's in San
Diego, CA 608,189 32,582 640,771
Golden Corral
in Lufkin, TX 1,365,226 73,137 1,438,363
Golden Corral in
Columbia, TN 1,294,199 69,332 1,363,531
Two Pizza Huts
in Ohio 316,000 16,929 332,929
Burger King in
Chattanooga, TN 1,155,455 61,900 1,217,355
Golden Corral in
Eastlake, OH 1,637,199 87,707 1,724,906
Golden Corral in
Moberly, MO 1,172,196 62,796 1,234,992
Boston Market in
St. Joseph, MO 786,262 42,121 828,383
Boston Market in
Atlanta, GA 1,159,027 62,091 1,221,118
Jack in the Box
in Dallas, TX 830,459 44,489 874,948
Jack in the Box
in Las Vegas, NV 1,247,333 66,822 1,314,155
Jack in the Box
in Los Angeles, CA 1,396,771 74,827 1,471,598
Ten wholly owned
properties under
construction at
September 30, 1996 4,906,564 262,851 5,169,415
----------- ----------- -----------
$19,452,052 $ 1,042,075 $20,494,127
=========== =========== ============
Adjustment classified
as follows:
Land and buildings on
operating leases $15,143,401
Net investment in
direct financing
leases 5,350,726
-----------
$20,494,127
===========
(b) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated as
direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
Fourteen properties have been classified as direct financing leases.
For the leases classified as direct financing leases, the building
portions of six of the properties have been classified as direct
financing leases while the land portions of these leases are operating
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 96 properties acquired
during the period June 2, 1995 (the date the Company began operations)
through January 8, 1997, 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 nine months ended September 30, 1996 and the year ended
December 31, 1995.
(2) See Note (b) under "Pro Forma Consolidated Balance Sheet" above for a
description of direct financing leases.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the previous
owners or (ii) June 2, 1995 (the date the Company became operational),
through (B) the earlier of (i) the actual dates of acquisition by the
Company or the end of the pro forma period presented, as described in
Note (1) above. The estimated pro forma adjustment is based upon the
fact that interest income on interest bearing accounts was earned at a
rate of approximately four percent per annum by the Company during the
nine months ended September 30, 1996 and the year ended December 31,
1995.
(4) Represents incremental increase in asset management fees relating to the
Pro Forma Properties for the period commencing (A) on the later of (i)
the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) June 2, 1995 (the date the
Company became operational), through (B) the earlier of (i) the date the
Pro Forma Properties were acquired by the Company or (ii) the end of the
pro forma period presented, as described in Note (1) above. Asset
management fees are equal to 0.60% of the Company's Real Estate Asset
Value (estimated to be approximately $6,219,000 and $5,241,000 for the
Pro Forma Properties for the nine months ended September 30, 1996 and
the year ended December 31, 1995, respectively), as defined in the
Company's prospectus.
(5) Represents adjustment to state tax expense due to the incremental
increase in rental revenues of Pro Forma Properties. Estimated pro
forma state tax expense was calculated based on an analysis of state
laws of the various states in which the Company has acquired the Pro
Forma Properties. The estimated pro forma state taxes consist primarily
of income and franchise taxes ranging from zero to approximately five
percent of the Company's pro forma rental income of each Pro Forma
Property. Due to the fact that the Company's leases are triple net, the
Company has not included any amounts for real estate taxes in the pro
forma statement of earnings.
(6) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the nine
months ended September 30, 1996, and during the period the Company was
operational, June 2, 1995 (the date following when the Company received
the minimum offering proceeds and funds were released from escrow)
through December 31, 1995.
As a result of three of the six Pro Forma Properties being treated in
the Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1995, as placed in service on June 2, 1995 (the date the
Company became operational), the Company assumed approximately 347,100
shares of common stock were sold, and the net offering proceeds were
available for investment, on June 2, 1995. 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: January 17, 1997 By: /s/ Robert A. Bourne
------------------------------
ROBERT A. BOURNE, President
