<PAGE>
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 January 31, 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 February 6, 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 February 6, 1997, will be reported in a
subsequent Supplement.
THE OFFERING
The Company commenced the offering of up to 27,500,000 Shares on
February 6, 1997.
THE INITIAL OFFERING
The Company completed its Initial Offering on February 6, 1997. In
connection with the Initial Offering, the Company received aggregate
subscription proceeds of $150,591,765 (15,059,177 Shares) from 7,724
stockholders, including $591,765 (59,177 Shares) issued pursuant to the
Reinvestment Plan. As of February 6, 1997, net proceeds to the Company from
its offering of shares after deduction of Selling Commissions, Marketing
Support and Due Diligence Expense Reimbursement Fees and Organizational and
Offering Expenses totalled $133,990,121. As of February 6, 1997, the Company
had invested or committed for investment approximately $106,700,000 of such
net proceeds in 105 Properties (including one Property through a joint venture
arrangement which consists of land and building, seven Properties which
consist of building only, 35 Properties which consist of land only and 62
Properties which consist of land and building), in providing mortgage
financing to the tenants of the 35 Properties consisting of land only and to
pay Acquisition Fees and Acquisition Expenses, leaving approximately
$27,400,000 in offering proceeds available for investment in Properties and
Mortgage Loans. As of February 6, 1997, the Company had incurred $6,776,629
in Acquisition Fees to the Advisor.
BUSINESS
PROPERTY ACQUISITIONS
Between January 25, 1997 and February 6, 1997, the Company acquired four
Properties consisting of land and building. The Properties are two Jack in
the Box Properties (one in each of Humble, Texas; and Murrieta, California), a
Burger King Property (in Kent, Ohio) and a Golden Corral Property (in
Winchester, Kentucky). For information regarding the 101 Properties acquired
by the Company prior to January 25, 1997, see the Prospectus dated January 31,
1997.
The Burger King Property in Kent, Ohio, was acquired from an Affiliate
of the Company. The Affiliate had purchased and temporarily held title to the
Property in order to facilitate the acquisition of the Property by the
Company. The Property was acquired by the Company for a purchase price of
$872,861, representing the cost of the Property to the Affiliate (including
carrying costs) due to the fact that this amount was less than the Property's
appraised value.
February 7, 1997 Prospectus Dated April 26, 1996
<PAGE>
In connection with the purchase of these four Properties, the Company,
as lessor entered into long-term lease agreements with unaffiliated lessees.
The general terms of the lease agreements are described in the section of the
Prospectus entitled "Business - Description of Property Leases." For the
Properties that are to be constructed, the Company has entered into
development and indemnification and put agreements with the lessees. The
general terms of these agreements are described in the section of the
Prospectus entitled "Business - Site Selection and Acquisition of Properties -
Construction and Renovation."
As of February 6, 1997, the Company had initial commitments to acquire
11 properties, consisting of land and building. The acquisition of each of
these properties is subject to the fulfillment of certain conditions,
including, but not limited to, a satisfactory environmental survey and
property appraisal. There can be no assurance that any or all of the
conditions will be satisfied or, if satisfied, that one or more of these
properties will be acquired by the Company. If acquired, the leases of all 11
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," except as described below.
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.
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<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Chattanooga, TN renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
renovated (ii) the minimum
annual rent for such
lease year
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Ooltewah, TN renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
constructed (ii) the minimum
annual rent for such
lease year
Denny's 20 years; two five-year 10.625% of Total Cost; for each lease year, during the eighth,
Tampa, FL renewal options increases by 11% after (i) 5% of annual tenth, and twelfth
Restaurant to be the fifth lease year gross sales minus lease years only
renovated and after every five (ii) the minimum
years thereafter annual rent for such
during the lease term lease year
(1)
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Hopkinsville, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Somerset, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Fresno, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX (#1) renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX (#2) renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Oxnard, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Palmdale, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Shoney's 20 years; two five-year 11% of Total Cost; for each lease year, at any time after
Phoenix, AZ renewal options increases by 10% after (i) 6% of annual the seventh lease
Restaurant to be the fifth lease year gross sales minus year
constructed and after every five (ii) the minimum
years thereafter annual rent for such
during the lease term lease year
(1)
</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.
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<PAGE>
The following table sets forth the location of the four Properties
consisting of land and building, acquired by the Company, from January 25,
1997 through February 6, 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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<PAGE>
<TABLE>
PROPERTY ACQUISITIONS
From January 25, 1997 through February 6, 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) $952,485 01/31/97 01/2015; four $97,630 (6); for each lease at any time
(the "Murrieta 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 (ii) lease year
(3)(6) after every five the minimum
The Murrieta Property is years thereafter annual rent for
located within the during the lease such lease year
southeast quadrant of term (5)
Madison Avenue and Kalmia
Street, in Murrieta,
Riverside County,
California, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Murrieta
Property include a KFC
and a McDonald's.
JACK IN THE BOX (7) $296,034 02/03/97 02/2015; four 10.75% of Total for each lease None
(the "Humble Property") (excluding five-year Cost (4); increases year, (i) 5% of
Restaurant to be closing and renewal options by 8% after the annual gross
constructed development fifth lease year sales minus (ii)
costs) (3) and after every the minimum
The Humble Property is five years annual rent for
located on the north thereafter during such lease year
side of Beltway 8 east the lease term (5)
of Old Humble Road, in
Houston, Harris County,
Texas, in an area of
mixed retail, commercial,
and residential
development.
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</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>
GOLDEN CORRAL $302,363 02/03/97 02/2012; four 10.75% of Total for each lease during the
(the "Winchester (excluding five-year Cost (4) year, 5% of the first
Property") closing and renewal options amount by which through
Restaurant to be development annual gross seventh
constructed costs) (3) sales exceed lease years
$2,161,048 (5) and the
The Winchester Property tenth
is located on the west through
side of the Winchester fifteenth
Bypass, in Winchester, lease years
Clark County, Kentucky, only
in an area of mixed,
retail, commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Winchester Property
include a Sonic Drive-In,
a Papa John's, and several
local restaurants.
BURGER KING $872,861 02/03/97 02/2017; four $89,688; increases for each lease during the
(the "Kent Property") (excluding five-year by 5% after the year, (i) 6% of eighth,
Existing restaurant closing renewal options fifth lease year annual gross ninth,
costs) and by 10% after sales minus (ii) tenth,
The Kent Property is the tenth lease the minimum eleventh and
located on the east side year and after annual rent for twelfth
of South Water Street, in every five years such lease year lease years
Kent, Portage County, thereafter during only
Ohio, in an area of mixed the lease term
retail, commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Kent Property include
a Wendy's, a Papa John's,
two McDonald's, a Dairy
Queen, and a local
restaurant.
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</TABLE>
<PAGE>
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
-------- -----------------
Murrieta Property $617,000
Humble Property 627,000
Winchester Property 910,000
Kent Property 686,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Humble
Property, minimum annual rent will become due and payable on the earlier
of (i) 180 days after execution of the lease or (ii) the date the
restaurant opens for business to the public. For the Winchester
Property, minimum annual rent will become due and payable on the earlier
of (i) the date the certificate of occupancy for the restaurant is
issued, (ii) the date the restaurant opens for business to the public
or (iii) 180 days after execution of the lease. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Humble Property, as described above,
the tenant shall pay monthly "interim rent" equal to 10.75% per annum of
the amount funded by the Company in connection with the purchase and
construction of the Property. During the period commencing with the
effective date of the lease to the date minimum annual rent becomes
payable for the Winchester Property, as described above, "interim rent"
equal to ten percent per annum of the amount funded by the Company in
connection with the purchase and construction of the Property shall
accrue and shall be payable in a single lump sum on the date minimum
annual rent becomes payable for this 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:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Murrieta Property $ 952,485 July 30, 1997
Humble Property 912,409 August 2, 1997
Winchester Property 1,272,678 August 2, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
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<PAGE>
(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 Murrieta and Humble Properties is the same
unaffiliated lessee.
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<PAGE>
BORROWING AND SECURED EQUIPMENT LEASE
Between January 25, 1997 and February 6, 1997, the Company obtained two
advances totalling $379,410 under its $15,000,000 Loan. The proceeds of these
advances were used to acquire Equipment for two restaurant properties in
Warner Robins, Georgia (the "Warner Robins #1 Secured Equipment Lease" and the
"Warner Robins #2 Secured Equipment Lease"), at a cost of $379,410, including
Secured Equipment Lease Servicing Fees of $7,412 to the Advisor. The Warner
Robins #1 Secured Equipment Lease and Warner Robins #2 Secured Equipment Lease
are fully amortizing term loans repayable over five years. The advances bear
interest at a rate per annum equal to 215 basis points above the Reserve
Adjusted LIBOR Rate (as defined in the Loan).
The following table sets forth a summary of the principal terms of the
acquisition and lease of the Equipment.
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<PAGE>
<TABLE>
SECURED EQUIPMENT LEASE
From January 25, 1997 through February 6, 1997
<CAPTION>
Purchase Lease Option
Description Price (1) Date Acquired Expiration Annual Rent (2) To Purchase
- ----------- --------- ------------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR FAZOLI'S $178,307 01/28/97 01/2002 $3,924 (3)
RESTAURANT IN WARNER (excluding
ROBINS, GEORGIA closing costs
(the "Warner Robins #1 and Secured
Secured Equipment Lease") Equipment
Lease
Servicing
Fee)
EQUIPMENT FOR POPEYE'S $192,311 01/28/97 01/2002 $4,231 (3)
RESTAURANT IN WARNER (excluding
ROBINS, GEORGIA closing costs
(the "Warner Robins #2 and Secured
Secured Equipment Lease") Equipment
Lease
Servicing
Fee)
</TABLE>
FOOTNOTES:
(1) The Secured Equipment Lease is expected to be treated as a loan secured
by personal property for federal income tax purposes.
(2) Rental payments due under the Secured Equipment Lease are payable
monthly, commencing on the effective date of the lease.
(3) Lessee may purchase the Equipment prior to the expiration of Secured
Equipment Lease, at the then present value of the remaining rental
payments, discounted at a rate of 10% per annum.
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<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 25, 1997
THROUGH FEBRUARY 6, 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 25, 1997 through February 6, 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 Golden Corral Burger King
Murrieta, CA (6) Humble, TX (6) Winchester, KY Kent, OH
---------------- --------------- -------------- -----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 97,630 $ 94,696 $126,063 $ 89,688
Asset Management Fees (2) (5,709) (5,294) (6,904) (5,237)
General and Administrative
Expenses (3) (6,053) (5,871) (7,816) (5,561)
-------- -------- -------- --------
Estimated Cash Available from
Operations 85,868 83,531 111,343 78,890
Depreciation and Amortization
Expense (4) (15,822) (16,083) (23,332) (17,602)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 70,046 $ 67,448 $ 88,011 $ 61,288
======== ======== ======== ========
See Footnotes
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total
--------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $408,077
Asset Management Fees (2) (23,144)
General and Administrative
Expenses (3) (25,301)
--------
Estimated Cash Available from
Operations 359,632
Depreciation and Amortization
Expense (4) (72,839)
--------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $286,793
========
</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 the Properties has been depreciated on the straight-line
method over 39 years.
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<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:
Property Estimated Final Completion Date
-------- -------------------------------
Murrieta Property July 30, 1997
Humble Property August 2, 1997
Winchester Property August 2, 1997
(6) The lessee of the Murrieta and Humble Properties is the same
unaffiliated lessee.
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