Rule 424(b)(3)
No. 333-15411
CNL AMERICAN PROPERTIES FUND, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated April 18, 1997. This Supplement replaces the Supplements
dated April 23, 1997, May 6, 1997, May 13, 1997, May 22, 1997 and June 6,
1997. 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 June 9, 1997, 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 June 9, 1997, will be reported in a subsequent
Supplement.
THE OFFERING
As of the completion of its Initial Offering, the Company had received
subscription proceeds of $150,591,765 (15,059,177 shares), including $591,765
(59,177 shares) issued pursuant to the Reinvestment Plan and after deduction
of selling commissions, marketing support and due diligence expense
reimbursement fees and offering expenses, net proceeds to the Company from its
Initial Offering totalled approximately $134,000,000. Following the
completion of its Initial Offering on February 6, 1997, the Company commenced
an offering of up to 27,500,000 Shares (the "Subsequent Offering"). As of
June 9, 1997, the Company had received subscription proceeds of $60,418,948
(6,041,895 Shares), including $269,438 (26,944 Shares) issued pursuant to the
Reinvestment Plan, from 2,897 stockholders in connection with the Subsequent
Offering. Net Offering Proceeds to the Company after deduction of Selling
Commissions, Marketing Support and Due Diligence Expense Reimbursement Fees
and Offering Expenses totalled approximately $54,303,000. As of June 9, 1997,
the Company had invested or committed for investment approximately
$154,025,000 of aggregate net proceeds from the Initial Offering and the
Subsequent Offering in 151 Properties, in providing mortgage financing to the
tenants of the 44 Properties consisting of land only through Mortgage Loans,
and in paying acquisition fees and certain acquisition expenses, leaving
approximately $34,323,000 in aggregate net offering proceeds available for
investment in Properties and Mortgage Loans. As of June 9, 1997, $2,718,853
of the Net Offering Proceeds from the Subsequent Offering had been incurred as
Acquisition Fees to the Advisor.
BUSINESS
PROPERTY ACQUISITIONS
Between April 3, 1997 and June 9, 1997, the Company acquired 26
Properties, including 24 Properties consisting of land and building, one
Property consisting of building only and one Property consisting of land only,
with the aggregate proceeds of the Initial Offering and the Subsequent
Offering. These Properties are 11 Boston Market Properties (one in each of
Arvada, Colorado; Liberty, Missouri; Indianapolis, Indiana; San Antonio,
Texas; Vacaville, California; Lansing Michigan; and Baltimore, Gambrills,
Jessup, Riverdale, and Waldorf, Maryland), one Black-eyed Pea Property (in
Scottsdale, Arizona), four Jack in the Box Properties (one in each of
Enumclaw, Washington; Fresno, California; and Bacliff and Corinth, Texas), two
Einstein Bros. Bagels Properties (one in each of Dearborn, Michigan, and
Springfield, Virginia), one Shoney's Property (in Guadalupe, Arizona), one
Pizza Hut Property (in Dover, Ohio), three Golden Corral Properties (one in
Corpus Christi, Texas, and two in Jacksonville, Florida), one IHOP Property
(in Leesburg, Virginia), one Popeyes Property (in Starke, Florida) and one
Ruth's Chris Steak House Property (in Tampa, Florida). For information
regarding the Properties acquired by the Company prior to April 3, 1997, see
the Prospectus dated April 18, 1997.
June 12, 1997 Prospectus Dated April 18, 1997
In connection with the purchase of the 11 Boston Market Properties, the
two Einstein Bros. Bagels Properties, the four Jack in the Box Properties, the
Shoney's Property, the three Golden Corral Properties, the IHOP Property, the
Popeyes Property, and the Ruth's Chris Steak House 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 or renovated,
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."
The purchase price for the Shoney's Property in Guadalupe, Arizona,
includes a development fee of $49,500 to an Affiliate of the Advisor for
services provided in connection with the development of the Property. The
Company considers development fees, to the extent that they are paid to
Affiliates, to be Acquisition Fees. Such development 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. See the sections of the Prospectus entitled "Management
Compensation" and "Business - Site Selection and Acquisition of Properties."
In connection with the Black-eyed Pea Property in Scottsdale, Arizona,
which is building only, the Company, as lessor, entered into a long-term lease
agreement with an unaffiliated lessee. The general terms of the lease
agreement are described in the section of the Prospectus entitled "Business -
Description of Property Leases." In addition, the Company has entered into a
landlord estoppel agreement with the landlord of the land and a collateral
assignment of the ground lease with the lessee in order to provide the Company
with certain rights with respect to the land on which the building is located.
In connection with the Pizza Hut Property in Dover, Ohio, which is land
only, the Company acquired the land and is leasing this parcel to the lessee,
Castle Hill Holdings VII, L.L.C. ("Castle Hill"), along with eight Pizza Hut
Properties previously acquired, pursuant to a master lease agreement (the
"Master Lease Agreement"). Castle Hill has subleased the Pizza Hut Property
in Dover, Ohio, along with the eight Pizza Hut Properties previously acquired,
to one of its affiliates, Midland Food Services III, 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 Pizza Hut Property in Dover,
Ohio, along with the eight Pizza Hut Properties previously acquired. In
addition, the Company provided mortgage financing of $4,200,000 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
Pizza Hut Property in Dover, Ohio, the eight Pizza Hut Properties previously
acquired, and two additional Pizza Hut Properties in Wintersville, Ohio, and
Weirton, West Virginia, which will not be owned by the Company. The Master
Mortgage Note bears interest at a rate of 10.50% per annum and principal and
interest are due in equal monthly installments over 20 years starting May 1,
1997. The Master Mortgage Note equals approximately 88 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 Pizza Hut
Property in Dover, Ohio, and the eight Pizza Hut Properties previously
acquired, 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 26 Properties,
including 24 Properties consisting of land and building, one Property
consisting of building only and one Property consisting of land only, acquired
by the Company, from April 3, 1997 through June 9, 1997, a description of the
competition, and a summary of the principal terms of the acquisition and lease
of each Property.
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<TABLE>
PROPERTY ACQUISITIONS
From April 3, 1997 through June 9, 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>
BOSTON MARKET $629,435 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Arvada Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Arvada Property is located fifth lease annual gross
on the northwest quadrant of year and after sales minus
West 55th Avenue and the every five (ii) the
Wadsworth Bypass, in Arvada, years minimum annual
Jefferson County, Colorado, in thereafter rent for such
an area of mixed retail, during the lease year
commercial, and residential lease term
development. Other fast-food
and family-style restaurants
located in proximity to the
Arvada Property include an
Applebee's, a Ruby Tuesday, an
IHOP, a Fazoli's, a McDonald's,
and several local restaurants.
BOSTON MARKET $456,801 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Liberty Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 5% of year
The Liberty Property is located fifth lease annual gross
at the southeast corner of the year and after sales minus
intersection of North Highway every five (ii) the
291 and Landmark Avenue, in years minimum annual
Liberty, Clay County, Missouri, thereafter rent for such
in an area of mixed retail, during the lease year
commercial, and residential lease term
development. Other fast-food
and family-style restaurants
located in proximity to the
Liberty Property include a
Ponderosa, a KFC, a Perkins, and
a Pizza Hut.
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Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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EINSTEIN BROS. BAGELS (10) $422,512 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Dearborn Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Dearborn Property is located fifth lease annual gross
on the southeast corner of year and after sales minus
Telegraph Road and Sheridan every five (ii) the
Road, in Dearborn, Wayne County, years minimum annual
Michigan, in an area of mixed thereafter rent for such
retail, commercial, and during the lease year
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the Dearborn Property include
a Boston Market, a Subway
Sandwich Shop, and several local
restaurants.
JACK IN THE BOX (11) $843,431 04/16/97 04/2015; four $86,452 (6); for each lease at any time
(the "Enumclaw Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be renovated renewal options after the fifth annual gross seventh
lease year and sales minus lease year
The Enumclaw Property is located after every (ii) the
at the northwest corner of the five years minimum annual
intersection of Griffin Avenue thereafter rent for such
and Cedar Street, in Enumclaw, during the lease year (5)
King County, Washington, in an lease term
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Enumclaw Property include a
Subway Sandwich Shop, a Burger
King, a McDonald's, a Pizza Hut,
and a local restaurant.
-4-
<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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SHONEY'S $679,095 04/16/97 04/2017; two 11% of Total for each lease at any time
(the "Guadalupe Property") (excluding five-year Cost (4); year, (i) 6% of after the
Restaurant to be constructed development renewal options increases by annual gross seventh
costs) (3) 10% after the sales minus lease year
The Guadalupe Property is fifth lease (ii) the
located within the southeast year and after minimum annual
quadrant of Interstate 10 and every five rent for such
Baseline Road, in Guadalupe, years lease year
Maricopa County, Arizona, in an thereafter
area of mixed retail, during the
commercial, and residential lease term
development. Other fast-food
and family-style restaurants
located in proximity to the
Guadalupe Property include a
Denny's, a Taco Bell, a KFC, a
Jack in the Box, a Waffle House,
and several local restaurants.
BLACK-EYED PEA (7) $769,863 04/17/97 02/2011 $105,450 (6); None at any time
(the "Scottsdale Property") (3)(6) increases to after the
Restaurant to be renovated $107,511 during fifth lease
the eleventh year
The Scottsdale Property is through
located within the southeast fourteenth
quadrant of Indian Bend Road and lease years
Pima Road, in Scottsdale,
Maricopa County, Arizona, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Scottsdale Property include a
KFC, a Denny's, an Arby's, a
Taco Bell, a McDonald's, and a
local restaurant.
-5-
<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>
PIZZA HUT (8)(9) $224,378 04/17/97 03/2017; two $23,560; None at any time
(the "Dover Property") ten-year increases by after the
Land only renewal options 10% after the seventh
fifth and tenth lease year
The Dover Property is located on lease years and
the west side of Boulevard 12% after the
Street, in Dover, Tuscarawas fifteenth lease
County, Ohio, in an area of year
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Dover Property include a
Taco Bell, a Long John Silver's,
a Friendly's, and several local
restaurants.
JACK IN THE BOX (11) $1,049,420 04/29/97 04/2015; four $107,566 (6); for each lease at any time
(the "Bacliff Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed renewal options after the fifth annual gross seventh
lease year and sales minus lease year
The Bacliff Property is located after every (ii) the
on the southeast corner of Texas five years minimum annual
State Highway 146 and FM 646, in thereafter rent for such
Bacliff, Galveston County, during the lease year (5)
Texas, in an area of mixed lease term
commercial and residential
development.
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<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $860,790 04/29/97 04/2012; five 10.38% of Total for each lease at any time
(the "Indianapolis Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Indianapolis Property is fifth lease annual gross
located on the west side of U.S. year and after sales minus
31 South, in Indianapolis, every five (ii) the
Marion County, Indiana, in an years minimum annual
area of mixed retail, thereafter rent for such
commercial, and residential during the lease year
development. Other fast-food lease term
and family-style restaurants
located in proximity to the
Indianapolis Property include a
McDonald's, a Steak N Shake, a
Wendy's, and several local
restaurants.
BOSTON MARKET $469,369 04/30/97 04/2012; five 10.38% of Total for each lease at any time
(the "San Antonio Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The San Antonio Property is fifth lease annual gross
located at the northwest corner year and after sales minus
of Tezel Road and Camino Rosa, every five (ii) the
in San Antonio, Bexar County, years minimum annual
Texas, in an area of mixed thereafter rent for such
retail, commercial, and during the lease year
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the San Antonio Property
include a Burger King, a Taco
Bell, and several local
restaurants.
-7-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BOSTON MARKET (12) $970,269 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Baltimore Property") (including five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Baltimore Property is fifth lease annual gross
located on the south side of year and after sales minus
Security Boulevard and the north every five (ii) the
side of Whitehead Court, in years minimum annual
Baltimore, Baltimore County, thereafter rent for such
Maryland, in an area of mixed during the lease year
retail, commercial, and lease term
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Baltimore Property
include a Wendy's, a Red
Lobster, a Burger King, two
McDonald's, an IHOP, a
Bennigan's, and several local
restaurants.
BOSTON MARKET (12) $854,895 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Gambrills Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Gambrills Property is fifth lease annual gross
located on the south side of year and after sales minus
Maryland Route 3, south of its every five (ii) the
intersection with Waugh Chapel years minimum annual
Road, in Gambrills, Anne Arundel thereafter rent for such
County, Maryland, in an area of during the lease year
mixed retail, commercial, and lease term
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Gambrills Property
include a Wendy's, a Taco Bell,
a Popeyes, a Pizza Hut, a KFC,
and a McDonald's.
-8-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BOSTON MARKET (12) $909,041 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Jessup Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Jessup Property is located fifth lease annual gross
on the southeast quadrant of year and after sales minus
U.S. Route 1 and Assateague every five (ii) the
Drive, in Jessup, Howard County, years minimum annual
Maryland, in an area of mixed thereafter rent for such
retail, commercial, and during the lease year
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the Jessup Property include a
Burger King, a Subway Sandwich
Shop, and several local
restaurants.
BOSTON MARKET $451,618 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Lansing Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 5% of year
The Lansing Property is located fifth lease annual gross
on the northeast side of Cedar year and after sales minus
Street, north of the every five (ii) the
intersection of American Road years minimum annual
and Cedar Street, in Lansing, thereafter rent for such
Ingham County, Michigan, in an during the lease year
area of mixed retail, lease term
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Lansing Property include a
Denny's, a KFC, a Long John
Silver's, a Wendy's, a Bob
Evans, and several local
restaurants.
-9-
<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $629,929 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Riverdale Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Riverdale Property is fifth lease annual gross
located within the southeast year and after sales minus
corner of the intersection every five (ii) the
formed by Kenilworth Avenue and years minimum annual
Patterson Road, in Riverdale, thereafter rent for such
Prince George's County, during the lease year
Maryland, in an area of mixed lease term
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Riverdale Property
include a Wendy's, a McDonald's,
and an IHOP.
BOSTON MARKET $711,882 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Vacaville Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Vacaville Property is fifth lease annual gross
located on the southeast corner year and after sales minus
of Nut Tree Parkway and Helen every five (ii) the
Power Drive, in Vacaville, years minimum annual
Solana County, California, in an thereafter rent for such
area of mixed retail, during the lease year
commercial, and residential lease term
development. Other fast-food
and family-style restaurants
located in proximity to the
Vacaville Property include an
Applebee's and several local
restaurants.
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<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $961,255 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Waldorf Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Waldorf Property is located fifth lease annual gross
on the northwest corner of Crain year and after sales minus
Highway and Plaza Drive, in every five (ii) the
Waldorf, Charles County, years minimum annual
Maryland, in an area of mixed thereafter rent for such
retail, commercial, and during the lease year
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the Waldorf Property include
a Shoney's, a Red Lobster, a
McDonald's, a Pizzeria Uno, an
Olive Garden, a Kenny Rogers
Roasters, a Taco Bell, a Burger
King, a Checkers, and several
local restaurants.
EINSTEIN BROS. BAGELS (10) $601,677 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Springfield Property") (excluding five-year Cost (4); year after the after the
Restaurant to be constructed development renewal options increases by fifth lease fifth lease
costs) (3) 10% after the year, (i) 4% of year
The Springfield Property is fifth lease annual gross
located at the southeast year and after sales minus
quadrant of the intersection every five (ii) the
formed by Old Keene Mill Road years minimum annual
and Rolling Road, in thereafter rent for such
Springfield, Fairfax County, during the lease year
Virginia, in an area of mixed lease term
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Springfield Property
include two McDonald's and
several local restaurants.
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<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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GOLDEN CORRAL (13) $561,270 05/06/97 05/2012; four 10.75% of Total for each lease during the
(the "Jacksonville #1 Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be constructed development renewal options amount by which through
costs) (3) annual gross seventh
The Jacksonville #1 Property is sales exceed lease years
located on the southwest corner $2,893,405 (5) and the
of Merrill Road and Jane Street, tenth
in Jacksonville, Duval County, through
Florida, in an area of mixed fifteenth
retail, commercial, and lease years
residential development. Other only
fast-food and family-style
restaurants located in proximity
to the Jacksonville #1 Property
include a Burger King, a
Hardee's, a Ryan's Family Steak
House, and several local
restaurants.
GOLDEN CORRAL (13) $558,820 05/21/97 05/2012; four 10.75% of Total for each lease during the
(the "Corpus Christi Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be constructed closing and renewal options amount by which through
development annual gross seventh
The Corpus Christi Property is costs) (3) sales exceed lease years
located on the southwest corner $2,708,230 (5) and the
of South Padre Island Drive and tenth
Silverberry Drive, in Corpus through
Christi, Nueces County, Texas, fifteenth
in an area of mixed retail, lease years
commercial, and residential only
development. Other fast-food
and family-style restaurants
located in proximity to the
Corpus Christi Property include
a Dairy Queen, a Popeyes Famous
Fried Chicken, a Church's Fried
Chicken, and several local
restaurants.
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<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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
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IHOP $1,181,818 05/21/97 05/2017; three $119,659; for each lease during the
(the "Leesburg Property") five-year increases by year, (i) 4% of eleventh
Existing restaurant renewal options 10% after the annual gross lease year
fifth lease sales minus and at the
The Leesburg Property is located year and after (ii) the end of the
at the northwest quadrant of the every five minimum annual initial
intersection of Highway 15 years rent for such lease term
Bypass and Edwards Ferry Road, thereafter lease year
in Leesburg, Loudon County, during the
Virginia, in an area of mixed lease term
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Leesburg Property include
a Ponderosa Steak House, a
Burger King, a Taco Bell, a
McDonald's, an Applebee's, a
Ruby Tuesday, and a Domino's
Pizza.
POPEYES $199,354 05/22/97 05/2017; two 11.50% of Total for each lease at any time
(the "Starke Property") (excluding five year Cost (4); year, (i) 6% of after the
Restaurant to be constructed development renewal options increases by annual gross seventh
costs) (3) 10% after the sales minus lease year
The Starke Property is located fifth lease (ii) the
on the east side of U.S. Highway year and after minimum annual
301, just south of Alligator every five rent for such
Creek, in Starke, Bradford years lease year
County, Florida, in an area of thereafter
mixed retail, commercial, and during the
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the Starke Property include a
Shoney's, a Taco Bell, a
McDonald's, a Captain D's, a
KFC, a Western Steer, a
Checkers, a Burger King, a
Wendy's, and a local restaurant.
-13-
<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>
JACK IN THE BOX (11) $839,981 05/30/97 05/2015; four $86,098 (6); for each lease at any time
(the "Fresno Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed renewal options after the fifth annual gross seventh
lease year and sales minus lease year
The Fresno Property is located after every (ii) the
within the northwest corner of five years minimum annual
the intersection of Golden State thereafter rent for such
Boulevard and Ashlon Avenue, in during the lease year (5)
Fresno, Fresno County, lease term
California, in an area of mixed
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Fresno Property include a
Dairy Queen and several local
restaurants.
JACK IN THE BOX (11) $955,333 06/05/97 06/2015; four $97,922 (6); for each lease at any time
(the "Corinth Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed renewal options after the fifth annual gross seventh
lease year and sales minus lease year
The Corinth Property is located after every (ii) the
on the northwest corner of five years minimum annual
Interstate Highway 35 and FM thereafter rent for such
2181, in Corinth, Denton County, during the lease year (5)
Texas, in an area of mixed lease term
retail, commercial, and
residential development.
-14-
<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>
RUTH'S CHRIS STEAK HOUSE $2,000,000 06/05/97 08/2011; two $175,000; for each lease None
(the "Tampa Property") (excluding five-year increases by year, 6% of
Existing restaurant closing renewal options $25,000 after annual gross
costs) the fifth lease sales in excess
The Tampa Property is located at year and after of $3,400,000,
the southwest corner of Union every five but less than
Street and North West Shore years $4,000,000,
Boulevard in Tampa, Hillsborough thereafter plus 8% of
County, Florida, in an area of during the annual gross
mixed retail, commercial, and lease term sales in excess
residential development. Other of $4,000,000
fast-food and family-style
restaurants located in proximity
to the Tampa Property include a
Steak and Ale and a local
restaurant.
GOLDEN CORRAL (13) $527,801 06/06/97 06/2012; four 10.75% of Total for each lease during the
(the "Jacksonville #2 Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be constructed closing and renewal options amount by which through
development annual gross seventh
The Jacksonville #2 Property is costs) (3) sales exceed lease years
located at the northwest $2,920,205 (5) and the
quadrant of the intersection of tenth
Southside Boulevard and Touchton through
Road, in Jacksonville, Duval fifteenth
County, Florida, in an area of lease years
mixed retail, commercial, and only
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Jacksonville #2 Property
include a Burger King.
-15-
</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:
Property Federal Tax Basis
-------- -----------------
Arvada Property $ 667,000
Liberty Property 357,000
Dearborn Property 266,000
Enumclaw Property 764,000
Guadalupe Property 905,000
Scottsdale Property 810,000
Bacliff Property 691,000
Indianapolis Property 883,000
San Antonio Property 336,000
Baltimore Property 471,000
Gambrills Property 471,000
Jessup Property 435,000
Lansing Property 651,000
Riverdale Property 474,000
Vacaville Property 805,000
Waldorf Property 455,000
Springfield Property 34,000
Jacksonville #1 Property 1,105,000
Corpus Christi Property 984,000
Leesburg Property 579,000
Starke Property 405,000
Fresno Property 601,000
Corinth Property 615,000
Tampa Property 1,058,000
Jacksonville #2 Property 1,124,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the
Liberty, Dearborn, San Antonio, Indianapolis, Baltimore, Gambrills,
Jessup, Lansing, Riverdale, Vacaville, Waldorf and Springfield
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. For the Arvada Property, minimum annual rent for
the remainder of 1997 and 1998 shall be prepaid on the date the tenant
receives from the landlord its final funding of the construction costs.
For the Guadalupe Property, minimum annual rent will become due and
payable on the earlier of (i) 210 days after execution of the lease,
(ii) the date the certificate of occupancy for the restaurant is issued,
(iii) the date the restaurant opens for business to the public, or (iv)
the date the tenant receives from the landlord its final funding of the
construction costs. For the Jacksonville #1, Corpus Christi and
Jacksonville #2 Properties, minimum annual rent will become due and
payable on the earlier
-16-
of (i) 180 days after execution of the lease, (ii) the date the
certificate of occupancy for the restaurant is issued, or (iii) the date
the restaurant opens for business to the public. For the Starke
Property, minimum annual rent will become due and payable on the earlier
of (i) 120 days after execution of the lease, (ii) the date the
certificate of occupancy for the restaurant is issued, (iii) the date
the restaurant opens for business to the public, or (iv) 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 Arvada,
Liberty, Dearborn, San Antonio, Indianapolis, Baltimore, Gambrills,
Jessup, Lansing, Riverdale, Vacaville, Waldorf, Springfield,
Jacksonville #1, Corpus Christi and Jacksonville #2 Properties, as
described above, interim rent equal to a specified rate per annum
(ranging from 10% to 10.38%) of the amount funded by the Company in
connection with the purchase and construction of the Properties shall
accrue and be payable in a single lump sum at the time of 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 Guadalupe and Starke Properties, as described above, the
tenant shall pay monthly "interim rent" equal to a specified rate per
annum (ranging from 11% to 11.50%) of the amount funded by the Company
in connection with the purchase and construction of the Properties.
(3) The development agreements for the Properties which are to be
constructed or renovated, provide that construction or renovation 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
-------- ---------------------- ---------------
Arvada Property $1,152,262 October 13, 1997
Liberty Property 764,164 October 13, 1997
Dearborn Property 667,305 October 13, 1997
Enumclaw Property 843,431 October 13, 1997
Guadalupe Property 1,452,517 November 12, 1997
Scottsdale Property 769,863 September 14, 1997
Bacliff Property 1,049,420 October 26, 1997
Indianapolis Property 1,663,194 October 26, 1997
San Antonio Property 757,069 October 27, 1997
Baltimore Property 1,378,051 November 2, 1997
Gambrills Property 1,264,241 November 2, 1997
Jessup Property 1,285,243 November 2, 1997
Lansing Property 1,033,941 November 2, 1997
Riverdale Property 1,041,107 November 2, 1997
Vacaville Property 1,437,474 November 2, 1997
Waldorf Property 1,357,356 November 2, 1997
Springfield Property 633,101 November 2, 1997
Jacksonville #1 Property 1,681,435 November 2, 1997
Corpus Christi Property 1,577,372 November 17, 1997
Starke Property 599,800 September 19, 1997
Fresno Property 839,981 November 26, 1997
Corinth Property 955,333 December 2, 1997
Jacksonville #2 Property 1,696,394 December 3, 1997
-17-
(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) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The Company paid for all construction or renovation costs in advance at
closing; therefore, minimum annual rent was determined on the date
acquired and is not expected to change.
(7) The Company owns the building only for this Property. The Company does
not own the underlying land; although, the Company entered into a
landlord estoppel agreement with the landlord of the land and a
collateral assignment of the ground lease with the lessee in order to
provide the Company with certain rights with respect to the land on
which the building is located.
(8) The lease relating to this Property is a land lease only.
(9) The Company entered into a Master Lease Agreement for the Dover Property
and eight Pizza Hut Properties previously acquired.
(10) The lessee of the Dearborn and Springfield Properties is the same
unaffiliated lessee.
(11) The lessee of the Enumclaw, Bacliff, Fresno and Corinth Properties is
the same unaffiliated lessee.
(12) The lessee of the Indianapolis, Baltimore, Gambrills, Jessup, Riverdale
and Waldorf Properties is the same unaffiliated lessee.
(13) The lessee of the Jacksonville #1, Corpus Christi and Jacksonville #2
Properties is the same unaffiliated lessee.
-18-
BORROWING AND SECURED EQUIPMENT LEASES
Between April 3, 1997 and June 9, 1997, the Company obtained two
advances totalling $527,224 under its $15,000,000 Loan. One advance was used
to acquire Equipment for the restaurant property in El Cajon, California (the
"El Cajon Secured Equipment Lease") and the other advance was the final
advance relating to the acquisition of Equipment for the restaurant property
in Indian Harbour Beach, Florida (the "Indian Harbour Beach Secured Equipment
Lease").
PENDING INVESTMENTS
As of June 9, 1997, the Company had initial commitments to acquire 40
properties, including 39 properties consisting of land and building and one
property consisting of building only. The acquisition of each of these
properties is subject to the fulfillment of certain conditions, including, but
not limited to, a satisfactory environmental survey and property appraisal.
There can be no assurance that any or all of the conditions will be satisfied
or, if satisfied, that one or more of these properties will be acquired by the
Company. If acquired, the leases of all 40 of these properties are expected
to be entered into on substantially the same terms described in the section of
the Prospectus entitled "Business -Description of Property Leases."
In connection with the On The Border property in San Antonio, Texas, the
Company anticipates owning only the building and not the underlying land.
However, the Company anticipates entering into a tri-party agreement with the
lessee and the landlord of the land in order to provide the Company with
certain rights with respect to the land on which the building is located.
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.
-19-
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Arby's 20 years; two 10.25% of the Company's for each lease year, (i) during the seventh
Greensboro, NC five-year renewal total cost to purchase 4% of annual gross sales and tenth lease
Existing restaurant options the property; increases minus (ii) the minimum years only
by 4.14% after the third annual rent for such lease
lease year and after year
every three years
thereafter during the
lease term
Arby's 20 years; two 10.25% of the Company's for each lease year, (i) during the seventh
Greenville, NC five-year renewal total cost to purchase 4% of annual gross sales and tenth lease
Existing restaurant options the property; increases minus (ii) the minimum years only
by 4.14% after the third annual rent for such lease
lease year and after year
every three years
thereafter during the
lease term
Arby's 20 years; two 10.25% of the Company's for each lease year, (i) during the seventh
Jonesville, NC five-year renewal total cost to purchase 4% of annual gross sales and tenth lease
Existing restaurant options the property; increases minus (ii) the minimum years only
by 4.14% after the third annual rent for such lease
lease year and after year
every three years
thereafter during the
lease term
Arby's 20 years; two 10.25% of the Company's for each lease year, (i) during the seventh
Kernersville, NC five-year renewal total cost to purchase 4% of annual gross sales and tenth lease
Existing restaurant options the property; increases minus (ii) the minimum years only
by 4.14% after the third annual rent for such lease
lease year and after year
every three years
thereafter during the
lease term
Arby's 20 years; two 10.25% of the Company's for each lease year, (i) during the seventh
Kinston, NC five-year renewal total cost to purchase 4% of annual gross sales and tenth lease
Existing restaurant options the property; increases minus (ii) the minimum years only
by 4.14% after the third annual rent for such lease
lease year and after year
every three years
thereafter during the
lease term
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Austin, TX five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 4% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
-20-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Houston, TX (#1) five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 4% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Houston, TX (#2) five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 4% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Lawrenceville, GA five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 5% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Lewisville, TX five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 4% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
Boston Market 15 years; five 10.38% of Total Cost for each lease year after at any time after
Sunset Hills, MO five-year renewal (1); increases by 10% the fifth lease year, (i) the fifth lease
Restaurant to be options after the fifth lease 5% of annual gross sales year
constructed year and after every minus (ii) the minimum
five years thereafter annual rent for such lease
during the lease term year
Charley's Place 20 years; two 10.50% of the Company's for each lease year (i) None
King of Prussia, PA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Charley's Place 20 years; two 10.50% of the Company's for each lease year (i) None
McLean, VA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
-21-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Evansville, IN five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Hampton, VA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Huntsville, AL five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Knoxville, TN five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Louisville, KY five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Mobile, AL five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
-22-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Montgomery, AL five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Nashville, TN five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Orlando, FL five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Pensacola, FL five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Raleigh, NC (#1) five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Raleigh, NC (#2) five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
-23-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Richmond, VA (#1) five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Richmond, VA (#2) five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Darryl's 20 years; two 10.50% of the Company's for each lease year (i) None
Winston-Salem, NC five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Golden Corral 15 years; four 10.75% of Total Cost (1) for each lease year, 5% of during the first
Enid, OK five-year renewal the amount by which annual through seventh
Restaurant to be options gross sales exceed a to be lease years and
constructed determined breakpoint the tenth through
fifteenth lease
years only
Golden Corral 15 years; four 10.75% of Total Cost (1) for each lease year, 5% of during the first
Liberty, MO five-year renewal the amount by which annual through seventh
Restaurant to be options gross sales exceed a to be lease years and
constructed determined breakpoint the tenth through
fifteenth lease
years only
Houlihan's 20 years; two 10.50% of the Company's for each lease year (i) None
Bethel Park, PA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
-24-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
Houlihan's 20 years; two 10.50% of the Company's for each lease year (i) None
Langhorne, PA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
Houlihan's 20 years; two 10.50% of the Company's for each lease year (i) None
Plymouth Meeting, PA five-year renewal total cost to purchase 4.50% of annual gross
Existing restaurant options the property; increases sales minus (ii) the
by 10% after the fifth minimum annual rent for
lease year and after such lease year
every five years
thereafter during the
lease term
IHOP 20 years; three 10.125% of the Company's for each lease year, (i) during the
Fairfax, VA five-year renewal total cost to purchase 4% of annual gross sales eleventh lease
Existing restaurant options the property; increases minus (ii) the minimum year and at the
by 10% after the fifth annual rent for such lease end of the initial
lease year and after year lease term
every five years
thereafter during the
lease term
Jack in the Box 18 years; four 10.25% of Total Cost for each lease year, (i) at any time after
Channelview, TX five-year renewal (1); increases by 8% 5% of annual gross sales the seventh lease
Restaurant to be options after the fifth lease minus (ii) the minimum year (2)
constructed year and after every annual rent for such lease
five years thereafter year
during the lease term
Jack in the Box 18 years; four 10.25% of Total Cost for each lease year, (i) at any time after
Garland, TX five-year renewal (1); increases by 8% 5% of annual gross sales the seventh lease
Restaurant to be options after the fifth lease minus (ii) the minimum year (2)
constructed year and after every annual rent for such lease
five years thereafter year
during the lease term
Jack in the Box 18 years; four 10.25% of Total Cost for each lease year, (i) at any time after
Los Angeles, CA five-year renewal (1); increases by 8% 5% of annual gross sales the seventh lease
Restaurant to be options after the fifth lease minus (ii) the minimum year (2)
constructed year and after every annual rent for such lease
five years thereafter year
during the lease term
KFC 25 years; four 11.25% of the Company's None None
Putnam, CT five-year renewal total cost to purchase
Existing restaurant options the property; increases
by 10% after the fifth
lease year and after
every five years
thereafter during the
lease term
-25-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ----------------- ------------------------ -------------------------- ------------------
<S> <C> <C> <C> <C>
On The Border (3) (4); three five- 13.64% of Total Cost for each lease year, (i) at any time after
San Antonio, TX year renewal (1); (5) 4% of annual gross sales the tenth lease
Restaurant to be options minus (ii) the minimum year
constructed annual rent for such lease
year
Shoney's 20 years; two 11% of Total Cost (1); for each lease year, (i) at any time after
Las Vegas, NV five-year renewal increases by 10% after 6% of annual gross sales the seventh lease
Restaurant to be options the fifth lease year and minus (ii) the minimum year
constructed after every five years annual rent for such lease
thereafter during the year
lease term
</TABLE>
FOOTNOTES:
(1) The "Total Cost" is equal to the sum of (i) the purchase price of the
property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(2) In the event the Company purchases the property directly from the
lessee, the lessee will have no option to purchase the property.
(3) The Company anticipates owning the building only for this property. The
Company will not own the underlying land; although, the Company
anticipates entering into a tri-party agreement with the lessee and the
landlord of the land in order to provide the Company with certain rights
with respect to the land on which the building is located.
(4) The lease term shall expire upon the earlier of (i) the date 15 years
from the date of closing, (ii) the expiration of the original term of
the ground lease, or (iii) the earlier termination of the ground lease.
(5) Base rent shall increase after every five years during the lease term by
the lesser of (i) 10% of the minimum base rent during the preceding year
or (ii) 150% of the change in the Consumer Price Index.
-26-
SALE OF PROPERTIES AND SECURED EQUIPMENT LEASES
In May 1997, the Company sold its Properties in Orange and Hamden,
Connecticut, and Marlboro and Hazlet, New Jersey, to the tenant for a total of
$5,266,327. The Company intends to reinvest the net sales proceeds from the
sale of Properties in additional properties.
In February 1997 and April 1997, the Company sold the Equipment relating
to two Secured Equipment Leases for the Properties in Spring Hill, Florida,
and High Ridge, Missouri, respectively, to the tenant and used the proceeds
therefrom to repay amounts previously advanced under its Loan. In addition,
in May 1997, the Company sold the Equipment relating to two Secured Equipment
Leases for the Properties in Marlboro and Hazlet, New Jersey, to the tenant
and used the proceeds therefrom to repay amounts previously advanced under its
Loan.
-27-
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 3, 1997
THROUGH JUNE 9, 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 April 3, 1997 through June 9, 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>
Boston Market Boston Market Einsten Bros. Bagels Jack in the Box
Arvada, CO (5) Liberty, MO (5) Dearborn, MI (5)(6) Enumclaw, WA (5)(7)
-------------- --------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $119,605 $ 79,320 $ 69,266 $ 86,452
Asset Management Fees (2) (6,844) (4,535) (3,959) (5,055)
General and Administrative
Expenses (3) (7,415) (4,918) (4,295) (5,360)
-------- -------- -------- --------
Estimated Cash Available from
Operations 105,346 69,867 61,012 76,037
Depreciation and Amortization
Expense (4) (17,094) (9,142) (6,820) (19,584)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 88,252 $ 60,725 $ 54,192 $ 56,453
======== ======== ======== ========
See Footnotes
-28-
<CAPTION>
Shoney's Black-eyed Pea Pizza Hut Jack in the Box
Guadalupe, AZ (5) Scottsdale, AZ (5) Dover, OH Bacliff, TX (5)(7)
----------------- ------------------ --------- ------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $159,777 $105,450 $ 23,560 $107,566
Asset Management Fees (2) (8,673) (4,610) (1,346) (6,291)
General and Administrative
Expenses (3) (9,906) (6,538) (1,461) (6,669)
-------- -------- -------- --------
Estimated Cash Available from
Operations 141,198 94,302 20,753 94,606
Depreciation and Amortization
Expense (4) (23,195) (20,757) - (17,716)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $118,003 $ 73,545 $ 20,753 $ 76,890
======== ======== ======== ========
See Footnotes
-29-
<CAPTION>
Boston Market Boston Market Boston Market Boston Market
Indianapolis, IN San Antonio, TX Baltimore, MD Gambrills, MD
(5)(8) (5) (5)(8) (5)(8)
---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $172,640 $ 78,584 $143,042 $131,228
Asset Management Fees (2) (9,894) (4,497) (8,197) (7,519)
General and Administrative
Expenses (3) (10,704) (4,872) (8,869) (8,136)
-------- -------- -------- --------
Estimated Cash Available from
Operations 152,042 69,215 125,976 115,573
Depreciation and Amortization
Expense (4) (22,648) (8,626) (12,066) (12,086)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $129,394 $ 60,589 $113,910 $103,487
======== ======== ======== ========
See Footnotes
-30-
<CAPTION>
Boston Market Boston Market Boston Market Boston Market
Jessup, MD (5)(8) Lansing, MI (5) Riverdale, MD (5)(8) Vacaville, CA (5)
----------------- --------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $133,408 $107,323 $108,067 $149,210
Asset Management Fees (2) (7,644) (6,146) (6,190) (8,550)
General and Administrative
Expenses (3) (8,271) (6,654) (6,700) (9,251)
-------- -------- -------- --------
Estimated Cash Available from
Operations 117,493 94,523 95,177 131,409
Depreciation and Amortization
Expense (4) (11,155) (16,685) (12,141) (20,630)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $106,338 $ 77,838 $ 83,036 $110,779
======== ======== ======== ========
See Footnotes
-31-
<CAPTION>
Boston Market Einstein Bros. Bagels Golden Corral
Waldorf, MD (5)(8) Springfield, VA (5)(6) Jacksonville #1, FL (5)(9)
------------------ ---------------------- --------------------------
<S> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $140,894 $ 65,716 $170,004
Asset Management Fees (2) (8,073) (3,759) (9,489)
General and Administrative
Expenses (3) (8,735) (4,074) (10,540)
-------- -------- --------
Estimated Cash Available from
Operations 124,086 57,883 149,975
Depreciation and Amortization
Expense (4) (11,666) (876) (28,346)
-------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $112,420 $ 57,007 $121,629
======== ======== ========
See Footnotes
-32-
<CAPTION>
Golden Corral IHOP Popeyes Jack in the Box
Corpus Christi, TX (5)(9) Leesburg, VA Starke, FL (5) Fresno, CA (5)(7)
------------------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $158,817 $119,659 $ 66,324 $ 86,098
Asset Management Fees (2) (8,870) (7,068) (3,434) (5,034)
General and Administrative
Expenses (3) (9,847) (7,419) (4,112) (5,338)
-------- -------- -------- --------
Estimated Cash Available from
Operations 140,100 105,172 58,778 75,726
Depreciation and Amortization
Expense (4) (25,236) (14,835) (10,374) (15,406)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $114,864 $ 90,337 $ 48,404 $ 60,320
======== ======== ======== ========
See Footnotes
-33-
<CAPTION>
Ruth s Chris
Jack in the Box Steak House Golden Corral
Corinth, TX (5)(7) Tampa, FL Jacksonville #2, FL (5)(9) Total
------------------ ------------ -------------------------- -----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 97,922 $175,000 $171,612 $3,026,544
Asset Management Fees (2) (5,726) (12,127) (9,471) (173,001)
General and Administrative
Expenses (3) (6,071) (10,850) (10,640) (187,645)
-------- -------- -------- ----------
Estimated Cash Available from
Operations 86,125 152,023 151,501 2,665,898
Depreciation and Amortization
Expense (4) (15,771) (27,123) (28,822) (408,800)
-------- -------- -------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 70,354 $124,900 $122,679 $2,257,098
======== ======== ======== ==========
See Footnotes
-34-
</TABLE>
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
See "Management Compensation."
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the Company.
Amount does not include soliciting dealer servicing fee due to the fact
that such fee will not be incurred until December 31 of the year
following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of each Property has been depreciated on the straight-line
method over 39 years.
(5) The development agreements for the Properties which are to be
constructed or renovated, provide that construction or renovation must
be completed no later than the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Arvada Property October 13, 1997
Liberty Property October 13, 1997
Dearborn Property October 13, 1997
Enumclaw Property October 13, 1997
Guadalupe Property November 12, 1997
Scottsdale Property September 14, 1997
Bacliff Property October 26, 1997
Indianapolis Property October 26, 1997
San Antonio Property October 27, 1997
Baltimore Property November 2, 1997
Gambrills Property November 2, 1997
Jessup Property November 2, 1997
Lansing Property November 2, 1997
Riverdale Property November 2, 1997
Vacaville Property November 2, 1997
Waldorf Property November 2, 1997
Springfield Property November 2, 1997
Jacksonville #1 Property November 2, 1997
Corpus Christi Property November 17, 1997
-35-
Property Estimated Final Completion Date
-------- -------------------------------
Starke Property September 19, 1997
Fresno Property November 26, 1997
Corinth Property December 2, 1997
Jacksonville #2 Property December 3, 1997
(6) The lessee of the Dearborn and Springfield Properties is the same
unaffiliated lessee.
(7) The lessee of the Enumclaw, Bacliff, Fresno and Corinth Properties is
the same unaffiliated lessee.
(8) The lessee of the Indianapolis, Baltimore, Gambrills, Jessup, Riverdale
and Waldorf Properties is the same unaffiliated lessee.
(9) The lessee of the Jacksonville #1, Corpus Christi and Jacksonville #2
Properties is the same unaffiliated lessee.
-36-
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, 1997 39
Pro Forma Consolidated Statement of Earnings for the
quarter ended March 31, 1997 40
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1996 41
Notes to Pro Forma Consolidated Financial Statements
for the quarter ended March 31, 1997 and the year
ended December 31, 1996 42
-37-
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, 1997, including the receipt of $177,015,590 in gross offering proceeds
from the sale of 17,701,559 shares of common stock and the application of such
proceeds to purchase 123 properties (including 68 properties which consist of
land and building, one property through a joint venture arrangement which
consists of land and building, 11 properties which consist of building only
and 43 properties consisting of land only), 17 of which were under
construction at March 31, 1997, to provide mortgage financing to the lessees
of the 43 properties consisting of land only, and to pay organizational and
offering expenses, acquisition fees and miscellaneous acquisition expenses,
(ii) the receipt of $17,669,235 in gross offering proceeds from the sale of
1,766,924 additional shares of common stock during the period April 1, 1997
through May 7, 1997, and (iii) the application of such funds and $19,201,056
of cash and cash equivalents at March 31, 1997, to purchase 25 additional
properties acquired during the period April 1, 1997 through May 7, 1997 (22 of
which are under construction and consist of land and building, one property
which consists of land and building, one property which consists of land only
and one property which consists of building only), to pay additional costs for
the 17 properties under construction at March 31, 1997, 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, 1997, 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, 1997.
The Pro Forma Consolidated Statements of Earnings for the quarter ended
March 31, 1997 and the year ended December 31, 1996, include the historical
operating results of the properties described in (i) above from the dates of
their acquisitions plus operating results for six of the properties that were
acquired by the Company during the period January 1, 1996 through May 7, 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) January 1, 1996, 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 Statement of Earnings for the remaining
properties acquired by the Company during the period January 1, 1996 through
May 7, 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.
-38-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $ 82,040,349 $ 25,614,903 (a) $107,655,252
Net investment in direct
financing leases (b) 19,816,023 6,202,556 (a) 26,018,579
Cash and cash equivalents 44,132,920 (19,201,056)(a) 24,931,864
Restricted cash 231,787 231,787
Receivables 334,698 334,698
Mortgage notes receivable 17,803,151 17,803,151
Organization costs, less
accumulated amortization 12,682 12,682
Loan costs, less accumulated
amortization 25,599 25,599
Accrued rental income 606,879 606,879
Other assets 2,718,273 (822,569)(a) 1,895,704
------------ ------------ ------------
$167,722,361 $ 11,793,834 $179,516,195
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 5,469,649 $ 5,469,649
Accrued interest payable 13,936 13,936
Accrued construction costs
payable 4,409,764 $ (4,409,764)(a) -
Accounts payable and other
accrued expenses 83,986 83,986
Due to related parties 733,581 733,581
Rents paid in advance 227,391 227,391
Deferred rental income 592,125 26,353 (a) 618,478
Other payables 13,495 13,495
------------ ------------ ------------
Total liabilities 11,543,927 (4,383,411) 7,160,516
------------ ------------ ------------
Minority interest 287,647 287,647
------------ ------------ ------------
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
17,721,559 shares; issued and
outstanding, as adjusted,
19,488,483 shares 177,215 17,669 (a) 194,884
Capital in excess of par value 157,115,036 16,159,576 (a) 173,274,612
Accumulated distributions in
excess of net earnings (1,401,464) (1,401,464)
------------ ------------ ------------
155,890,787 16,177,245 172,068,032
------------ ------------ ------------
$167,722,361 $ 11,793,834 $179,516,195
============ ============ ============
See accompanying notes to unaudited pro forma
consolidated financial statements.
-39-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
QUARTER ENDED MARCH 31, 1997
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $1,643,074 $ 8,188 (1) $1,651,262
Earned income from
direct financing leases (2) 446,711 446,711
Interest income from
mortgage notes receivable 375,357 375,357
Other interest and income 474,416 (8,185)(3) 466,231
---------- ---------- ----------
2,939,558 3 2,939,561
---------- ---------- ----------
Expenses:
General operating and
administrative 255,456 255,456
Professional services 38,463 38,463
Asset and mortgage management
fees to related party 110,516 2,126 (4) 112,642
State and other taxes 35,350 35,350
Depreciation and amortization 240,038 2,142 (6) 242,180
---------- ---------- ----------
679,823 4,268 684,091
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 2,259,735 (4,265) 2,255,470
Minority Interest in Income of
Consolidated Joint Venture (7,893) (7,893)
---------- ---------- ----------
Net Earnings $2,251,842 $ (4,265) $2,247,577
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.14 $ 0.14
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 15,630,532 15,630,532
========== ==========
See accompanying notes to unaudited pro forma
consolidated financial statements.
-40-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $3,717,886 $ 62,167 (1) $3,780,053
Earned income from
direct financing leases (2) 625,492 34,282 (1) 659,774
Contingent rental income 13,920 13,920
Interest income from
mortgage notes receivable 1,069,349 1,069,349
Other interest and income 780,037 (33,667)(3) 746,370
---------- ---------- ----------
6,206,684 62,782 6,269,466
---------- ---------- ----------
Expenses:
General operating and
administrative 542,564 542,564
Professional services 58,976 58,976
Asset and mortgage management
fees to related party 251,200 7,945 (4) 259,145
State and other taxes 56,184 1,218 (5) 57,402
Depreciation and amortization 521,871 6,852 (6) 528,723
---------- ---------- ----------
1,430,795 16,015 1,446,810
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 4,775,889 46,767 4,822,656
Minority Interest in Income of
Consolidated Joint Venture (29,927) (29,927)
---------- ---------- ----------
Net Earnings $4,745,962 $ 46,767 $4,792,729
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.59 $ 0.59
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 8,071,670 8,071,670
========== ==========
See accompanying notes to unaudited pro forma
consolidated financial statements.
-41-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $17,669,235 from the issuance of 1,766,924
shares of common stock during the period April 1, 1997 through May 7,
1997, the receipt of $26,353 of rental income during construction
(capitalized as deferred rental income), and $19,201,056 of cash and
cash equivalents used (i) to acquire 25 properties for $27,467,979 of
which one property consists of building only, one property consists of
land only and 23 properties consist of land and building, (ii) to fund
estimated construction costs of $7,141,559 ($4,409,764 of which was
accrued as construction costs payable at March 31, 1997) relating to 17
wholly-owned properties under construction at March 31, 1997, (iii) to
pay acquisition fees of $795,116 and reclassify from other assets
$822,569 of acquisition fees previously incurred relating to the
acquired properties and (iv) to pay selling commissions and offering
expenses (stock issuance costs) of $1,491,990, which have been netted
against capital in excess of par value.
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:
<TABLE>
<CAPTION>
Estimated
purchase price
(including con-
struction and Acquisition
closing costs) fees
and additional allocated
construction costs to property Total
------------------ ----------- -----------
<S> <C> <C> <C>
Jack in the Box in Oxnard, CA $ 1,244,340 $ 66,661 $ 1,311,001
Bennigan's in Arvada, CO 1,907,025 102,162 2,009,187
Boston Market in Cedar Park, TX 820,389 43,949 864,338
Boston Market in Collinsville, IL 786,924 42,157 829,081
Boston Market in Taylorsville, UT 1,296,749 69,469 1,366,218
Burger King in Ooltewah, TN 1,200,786 64,328 1,265,114
Boston Market in Arvada, CO 1,140,718 61,110 1,201,828
Boston Market in Liberty, MO 755,854 40,492 796,346
Einstein Bros. Bagels in Dearborn, MI 659,867 35,350 695,217
Jack in the Box in Enumclaw, WA 842,431 45,130 887,561
Shoney's in Guadalupe, AZ 1,445,517 77,438 1,522,955
Black-eyed Pea in Scottsdale, AZ 768,363 41,162 809,525
Pizza Hut in Dover, OH 224,378 12,020 236,398
Jack in the Box in Bacliff, TX 1,048,420 56,165 1,104,585
Boston Market in Indianapolis, IN 1,648,988 88,339 1,737,327
Boston Market in San Antonio, TX 749,581 40,156 789,737
Boston Market in Baltimore, MD 1,366,123 73,185 1,439,308
Boston Market in Gambrills, MD 1,253,116 67,131 1,320,247
Boston Market in Jessup, MD 1,273,959 68,248 1,342,207
Boston Market in Lansing, MI 1,024,386 54,878 1,079,264
Boston Market in Riverdale, MD 1,031,598 55,264 1,086,862
Boston Market in Vacaville, CA 1,424,970 76,338 1,501,308
Boston Market in Waldorf, MD 1,345,516 72,081 1,417,597
Einstein Bros. Bagels in Springfield, VA 626,546 33,565 660,111
Golden Corral in Jacksonville, FL 1,581,435 84,721 1,666,156
17 wholly owned properties under
construction at March 31, 1997 2,731,795 146,186 2,877,981
----------- ----------- -----------
$30,199,774 $ 1,617,685 $31,817,459
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $25,614,903
Net investment in direct financing leases 6,202,556
-----------
$31,817,459
===========
</TABLE>
-42-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
(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.
Pro Forma Consolidated Statement of Earnings:
(1) Represents rental income from operating leases and earned income from
direct financing leases for six of the properties acquired during the
period January 1, 1996 through May 7, 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) January 1, 1996, 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 six 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 or placed in service 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 Statement of Earnings.
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
Mr. Fable's in Grand
Rapids, MI March 1996 January 1996
Denny's in McKinney, TX June 1996 January 1996
Boston Market in Merced, CA October 1996 July 1996
Boston Market in
St. Joseph, MO December 1996 June 1996
Burger King in Kent, OH February 1997 December 1996
Golden Corral in
Hopkinsville, KY February 1997 October 1996
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.
-43-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Statement of Earnings - Continued:
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 1997 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the quarter ended March 31, 1997 and the year ended
December 31, 1996.
(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) January 1, 1996, 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, 1997 and the
year ended December 31, 1996.
(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) January 1, 1996 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
$2,126,000 and $4,762,000 for the Pro Forma Properties for the quarter
ended March 31, 1997 and the year ended December 31, 1996,
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 two
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, 1997 and the year ended December 31, 1996.
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