<PAGE>
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): January 22, 1997
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
<PAGE>
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 24, 1997, the Company had received aggregate
subscription proceeds of $146,448,520 (14,644,852 Shares) from 7,551
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 January 9, 1997 and January 24, 1997, the Company acquired
five Properties consisting of land and building. The Properties are four Jack
in the Box Properties (one in each of Moscow, Idaho; Kent, Washington; and
Hollister and Kingsburg, California) and a Shoney's Property (in Indian
Harbour Beach, Florida).
In connection with the purchase of these five 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. In addition, in
connection with the purchase of these Properties, which are to be constructed,
the Company has entered into development and indemnification and put
agreements with the lessees.
The following table sets forth the location of the five Properties
consisting of land and building, acquired by the Company, from January 9, 1997
through January 24, 1997, a description of the competition, and a summary of
the principal terms of the acquisition and lease of the Property.
<PAGE>
<TABLE>
PROPERTY ACQUISITIONS
From January 9, 1997 through January 24, 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>
JACK IN THE BOX (7) $910,814 01/22/97 01/2015; four $93,358 (6); for each lease at any time
(the "Moscow Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh
constructed costs) lease year and sales minus lease year
(3)(6) after every five (ii) the
The Moscow Property is years thereafter minimum annual
located on the north during the lease rent for such
side of West Pullman term lease year (5)
Road and the south side
of A Street in Moscow,
Latah County, Idaho, in
an area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Moscow Property
include an Arby's, a
McDonald's, and several
local restaurants.
JACK IN THE BOX (7) $1,259,871 01/22/97 01/2015; four $129,137 (6); for each lease at any time
(the "Kent Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh
constructed costs) lease year and sales minus lease year
(3)(6) after every five (ii) the
The Kent Property is years thereafter minimum annual
located at the southeast during the lease rent for such
corner of the term lease year (5)
intersection of
Southeast 272nd Street
and Southeast 168th
Place, in Kent, King
County, Washington, in
an area of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Kent Property
include a KFC/Taco Bell,
a Dairy Queen, an
Arby's, a Burger King,
and a local restaurant.
</TABLE>
<PAGE>
<TABLE>
<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 (7) $1,061,819 01/22/97 01/2015; four $108,836 (6); for each lease at any time
(the "Hollister (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh
Restaurant to be costs) lease year and sales minus lease year
constructed (3)(6) after every five (ii) the
years thereafter minimum annual
The Hollister Property during the lease rent for such
is located at the term lease year (5)
northeast corner of the
intersection of McCray
Street and Meridian
Street, in Hollister,
San Benito County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Hollister Property
include a Burger King, a
McDonald's, and a local
restaurant.
JACK IN THE BOX (7) $1,001,073 01/22/97 01/2015; four $102,610 (6); for each lease at any time
(the "Kingsburg (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh
Restaurant to be costs) lease year and sales minus lease year
constructed (3)(6) after every five (ii) the
years thereafter minimum annual
The Kingsburg Property during the lease rent for such
is located at the term lease year (5)
southwest quadrant of
the intersection of
Sierra Street and Sixth
Street, in Kingsburg,
Fresno County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Kingsburg Property
include a McDonald's, a
Taco Bell, a Denny's, a
Burger King, a Subway
Sandwich Shop, and
several local
restaurants.
</TABLE>
<PAGE>
<TABLE>
<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>
SHONEY'S $563,040 01/24/97 01/2017; two 11% of Total Cost for each lease at any time
(the "Indian Harbour (excluding five-year (4); increases by year, 6% of the after the
Beach Property") closing and renewal options 10% after the amount by which seventh
Restaurant to be development fifth lease year annual gross lease year
constructed costs) (3) and after every sales exceed
five years $1,500,000, but
The Indian Harbour Beach thereafter during are less than
Property is located the lease term or equal to
within the northeast $1,750,000,
quadrant of South plus 4% of the
Patrick Drive and Eau amount by which
Gallie Boulevard, in annual gross
Indian Harbour Beach, sales exceed
Brevard County, Florida, $1,750,000
in an area of mixed
retail, commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Indian Harbour Beach
Property include a
Wendy's, a Krystal, a
Miami Subs, a
McDonald's, an Italian
Oven, a Friendly's, 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:
<TABLE>
<CAPTION>
Property Federal Tax Basis
-------- -----------------
<S> <C>
Moscow Property $744,000
Kent Property 596,000
Hollister Property 586,000
Kingsburg Property 642,000
Indian Harbour Beach Property 474,000
</TABLE>
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Indian
Harbour Beach 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) 180 days after execution of the lease 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
Indian
<PAGE>
Harbour Beach Property, as described above, the tenant shall pay
monthly "interim rent" equal to 11% per annum of the amount funded by the
Company in connection with the purchase and construction of the Property.
(3) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below. The maximum cost to the Company, (including
the purchase price of the land (if applicable), development costs (if
applicable), and closing and acquisition costs) is not expected to, but
may, exceed the amounts set forth below:
<TABLE>
<CAPTION>
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
<S> <C> <C>
Moscow Property $ 910,814 July 21, 1997
Kent Property 1,259,871 July 21, 1997
Hollister Property 1,061,819 July 21, 1997
Kingsburg Property 1,001,073 July 21, 1997
Indian Harbour
Beach Property 676,041 July 23, 1997
</TABLE>
(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 costs in advance at closing;
therefore, minimum annual rent was determined on the date acquired and
is not expected to change.
(7) The lessee of the Moscow, Kent, Hollister and Kingsburg Properties is
the same unaffiliated lessee.
<PAGE>
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 9, 1997
THROUGH JANUARY 24, 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 January 9, 1997 through January 24, 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.
<CAPTION>
Jack in the Box Jack in the Box Jack in the Box Jack in the Box
Moscow, ID (5)(6) Kent, WA (5)(6) Hollister, CA (5)(6) Kingsburg, CA (5)(6)
----------------- --------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable Income
Before Dividends
Paid Deduction:
Base Rent (1) $ 93,358 $129,137 $108,836 $102,610
Asset Management Fees (2) (5,459) (7,553) (6,365) (6,000)
General and Admini-
strative Expenses (3) (5,788) (8,006) (6,748) (6,362)
-------- -------- -------- --------
Estimated Cash
Available from
Operations 82,111 113,578 95,723 90,248
Depreciation and
Amortization
Expense (4) (19,077) (15,280) (15,019) (16,464)
-------- -------- -------- --------
Pro Forma Estimate
of Taxable Income
Before Dividends
Paid Deduction
of the Company $ 63,034 $ 98,298 $ 80,704 $ 73,784
======== ======== ======== ========
See Footnotes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shoney's
Indian Harbour Beach, FL (5) Total
---------------------------- --------
<S> <C> <C>
Pro Forma Estimate
of Taxable Income
Before Dividends
Paid Deduction:
Base Rent (1) $ 71,504 $504,445
Asset Management Fees (2) (3,857) (29,234)
General and Admini-
strative Expenses (3) (4,433) (31,337)
-------- --------
Estimated Cash
Available from
Operations 63,214 444,874
Depreciation and
Amortization
Expense (4) (12,156) (77,996)
-------- --------
Pro Forma Estimate
of Taxable Income
Before Dividends
Paid Deduction
of the Company $ 51,058 $366,878
======== ========
</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.
(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 the Properties has been depreciated on the straight-line
method over 39 years.
<PAGE>
(5) 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:
<TABLE>
<CAPTION>
Property Estimated Final Completion Date
-------- -------------------------------
<S> <C>
Moscow Property July 21, 1997
Kent Property July 21, 1997
Hollister Property July 21, 1997
Kingsburg Property July 21, 1997
Indian Harbour Beach Property July 23, 1997
</TABLE>
(6) The lessee of the Moscow, Kent, Hollister and Kingsburg Properties is
the same unaffiliated lessee.
<PAGE>
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.
<PAGE>
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 12
Pro Forma Consolidated Statement of Earnings for the
nine months ended September 30, 1996 13
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1995 14
Notes to Pro Forma Consolidated Financial Statements
for the nine months ended September 30, 1996 and
the year ended December 31, 1995 15
<PAGE>
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 $43,487,627 in gross offering
proceeds from the sale of 4,348,763 additional shares of common stock during
the period October 1, 1996 through January 24, 1997, and (iii) the application
of such funds to purchase 19 additional properties acquired during the period
October 1, 1996 through January 24, 1997 (14 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 101
properties that were owned by the Company as of January 24, 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 94 properties owned by the Company as of January
24, 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.
<PAGE>
<TABLE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
<S> <C> <C> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 50,053,887 $ 19,318,318 (a) $ 69,372,205
Net investment in direct
financing leases (b) 10,840,639 6,309,280 (a) 17,149,919
Cash and cash equivalents 22,256,995 8,839,573 (a) 31,096,568
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 1,984,383 653,844 (a) 2,638,227
------------ ------------ ------------
$ 97,998,150 $ 35,121,015 $133,119,165
============ ============ ============
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 out-
standing, as adjusted,
14,664,852 shares 103,161 43,488 (a) 146,649
Capital in excess of par
value 90,340,860 39,965,129 (a) 130,305,989
Accumulated distributions in
excess of net earnings (915,507) (915,507)
------------ ------------ ------------
89,528,514 40,008,617 129,537,131
------------ ------------ ------------
$ 97,998,150 $ 35,121,015 $133,119,165
============ ============ ============
See accompanying notes to unaudited pro forma
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
<S> <C> <C> <C>
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.
</TABLE>
<PAGE>
<TABLE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ------------- ---------
<S> <C> <C> <C>
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.
</TABLE>
<PAGE>
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 $43,487,627 from the issuance of 4,348,763
shares of common stock during the period October 1, 1996 through January
24, 1997, used (i) to acquire 19 properties for $19,417,935 (of which
one property consists of building only, two properties consist of land
only and 16 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 $1,956,943 ($1,303,099 of which was
allocated to properties and $653,844 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 $3,479,010,
which have been netted against capital in excess of par value, leaving
$8,839,573 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:
<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>
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
Jack in the Box in
Moscow, ID 909,814 48,740 958,554
Jack in the Box in
Kent, WA 1,258,871 67,439 1,326,310
Jack in the Box in
Hollister, CA 1,060,819 56,830 1,117,649
Jack in the Box in
Kingsburg, CA 1,000,073 53,575 1,053,648
Shoney's in Indian
Harbour Beach, FL 642,870 34,440 677,310
Ten wholly owned
properties under
construction at
September 30, 1996 4,906,564 262,851 5,169,415
----------- ----------- -----------
$24,324,499 $ 1,303,099 $25,627,598
=========== =========== ===========
Adjustment classified
as follows:
Land and buildings
on operating leases $19,318,318
Net investment in
direct financing
leases 6,309,280
-----------
$25,627,598
===========
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
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.
Fifteen 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 101 properties acquired
during the period June 2, 1995 (the date the Company began operations)
through January 24, 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.
<TABLE>
<CAPTION>
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
<S> <C> <C>
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
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Statements of Earnings - Continued:
- ---------------------------------------------------------
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.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Statements of Earnings - Continued:
- ---------------------------------------------------------
(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.
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR.
- ------
Not applicable.
EXHIBITS
None.
<PAGE>
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 29, 1997 By: /s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
