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 and May 13, 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 May 22, 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 May 22, 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 May
22, 1997, the Company had received subscription proceeds of $52,677,522
(5,267,752 Shares), including $269,438 (26,944 Shares) issued pursuant to the
Reinvestment Plan, from 2,518 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 $47,181,000. As of May 22, 1997,
the Company had invested or committed for investment approximately
$148,096,000 of aggregate net proceeds from the Initial Offering and the
Subsequent Offering in 147 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 $33,130,000 in aggregate net offering proceeds available for
investment in Properties and Mortgage Loans. As of May 22, 1997, $2,370,488
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 May 22, 1997, the Company acquired 22
Properties, including 20 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), two Jack in the Box Properties (one in each of Enumclaw,
Washington, and Bacliff, 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), two Golden
Corral Properties (one in each of Jacksonville, Florida, and Corpus Christi,
Texas), one IHOP Property (in Leesburg, Virginia) and one Popeyes Property (in
Starke, Florida). For information regarding the 129 Properties acquired by
the Company prior to April 3, 1997, see the Prospectus dated April 18, 1997.
May 22, 1997 Prospectus Dated April 18, 1997
In connection with the purchase of the 11 Boston Market Properties, the
two Einstein Bros. Bagels Properties, the two Jack in the Box Properties, the
Shoney's Property, the two Golden Corral Properties, the IHOP Property, and
the Popeyes 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 22 Properties,
including 20 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 May 22, 1997, a description of the
competition, and a summary of the principal terms of the acquisition and lease
of each Property.
-2-
<TABLE>
PROPERTY ACQUISITIONS
From April 3, 1997 through May 22, 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
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
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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 fifth lease annual gross
located at the southeast year and after sales minus
corner of the intersection of every five (ii) the
North Highway 291 and Landmark years minimum annual
Avenue, in Liberty, Clay thereafter rent for such
County, Missouri, in an area during the lease year
of mixed retail, commercial, lease term
and residential 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.
-3-
<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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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 fifth lease annual gross
located on the southeast year and after sales minus
corner of Telegraph Road and every five (ii) the
Sheridan Road, in Dearborn, years minimum annual
Wayne County, Michigan, 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
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 after every (ii) the
located at the northwest five years minimum annual
corner of the intersection of thereafter rent for such
Griffin Avenue and Cedar during the lease year (5)
Street, in Enumclaw, King lease term
County, Washington, in an 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-
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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
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
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 thereafter
an 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 lease years
and 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 lease years and
on 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 after every (ii) the
located on the southeast five years minimum annual
corner of Texas State Highway thereafter rent for such
146 and FM 646, in Bacliff, during the lease year (5)
Galveston County, Texas, in an lease term
area of mixed 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
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
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 year and after sales minus
U.S. 31 South, in every five (ii) the
Indianapolis, Marion County, years minimum annual
Indiana, in an area of mixed thereafter rent for such
retail, commercial, and during the lease year
residential development. lease term
Other fast-food 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 year and after sales minus
corner of Tezel Road and every five (ii) the
Camino Rosa, in San Antonio, years minimum annual
Bexar County, Texas, 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
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 every five (ii) the
north side of Whitehead Court, years minimum annual
in Baltimore, Baltimore thereafter rent for such
County, Maryland, in an area during the lease year
of mixed retail, commercial, lease term
and 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 thereafter rent for such
Arundel County, Maryland, in during the lease year
an area of mixed retail, lease term
commercial, and 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 years minimum annual
County, Maryland, in an area thereafter rent for such
of mixed retail, commercial, during the lease year
and residential development. lease term
Other 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 fifth lease annual gross
located on the northeast side year and after sales minus
of Cedar 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 years minimum annual
and Patterson Road, in thereafter rent for such
Riverdale, Prince George's during the lease year
County, Maryland, in an area lease term
of mixed 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 year and after sales minus
corner of Nut Tree Parkway and every five (ii) the
Helen Power Drive, in years minimum annual
Vacaville, Solana County, thereafter rent for such
California, 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 Vacaville
Property include an Applebee's
and several local restaurants.
-10-
<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 fifth lease annual gross
located on the northwest year and after sales minus
corner of Crain Highway and every five (ii) the
Plaza Drive, in Waldorf, years minimum annual
Charles County, Maryland, 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
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.
-11-
<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 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 Property is sales exceed lease years
located on the southwest $2,893,405 (5) and the
corner of Merrill Road and tenth
Jane Street, in Jacksonville, through
Duval County, Florida, in an fifteenth
area of mixed retail, lease years
commercial, and residential only
development. Other fast-food
and family-style restaurants
located in proximity to the
Jacksonville 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 (excluding five-year Cost (4) year, 5% of the first
Property") closing and renewal options amount by which through
Restaurant to be constructed development annual gross seventh
costs) (3) sales exceed lease years
The Corpus Christi Property is $2,708,230 (5) and the
located on the southwest tenth
corner of South Padre Island through
Drive and Silverberry Drive, fifteenth
in Corpus Christi, Nueces lease years
County, Texas, in an area of only
mixed retail, commercial, and
residential 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 year and after (ii) the end of the
located at the northwest every five minimum annual initial
quadrant of the intersection years rent for such lease term
of Highway 15 Bypass and thereafter lease year
Edwards Ferry Road, in during the
Leesburg, Loudon County, lease term
Virginia, in an area of mixed
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. year and after minimum annual
Highway 301, just south of every five rent for such
Alligator Creek, in Starke, years lease year
Bradford County, Florida, in thereafter
an area of mixed retail, during the
commercial, and residential lease term
development. Other 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-
</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 Property 1,105,000
Corpus Christi Property 984,000
Leesburg Property 579,000
Starke Property 405,000
(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 and Corpus Christi Properties,
minimum annual rent will become due and payable on the earlier 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
-14-
for the Arvada, Liberty, Dearborn, San Antonio, Indianapolis, Baltimore,
Gambrills, Jessup, Lansing, Riverdale, Vacaville, Waldorf, Springfield,
Jacksonville and Corpus Christi 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 Property 1,681,435 November 2, 1997
Corpus Christi Property 1,577,372 November 17, 1997
Starke Property 599,800 September 19, 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).
(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.
-15-
(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 and Bacliff 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 and Corpus Christi Properties is the same
unaffiliated lessee.
-16-
BORROWING AND SECURED EQUIPMENT LEASES
Between April 3, 1997 and May 22, 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 May 22, 1997, the Company had initial commitments to acquire 33
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 33 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."
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.
-17-
<TABLE>
<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 (1); for each lease year at any time after
Austin, TX five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 4% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease year
Boston Market 15 years; five 10.38% of Total Cost (1); for each lease year at any time after
Houston, TX (#1) five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 4% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease year
Boston Market 15 years; five 10.38% of Total Cost (1); for each lease year at any time after
Houston, TX (#2) five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 4% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease year
Boston Market 15 years; five 10.38% of Total Cost (1); for each lease year at any time after
Lawrenceville, GA five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 5% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease year
Boston Market 15 years; five 10.38% of Total Cost (1); for each lease year at any time after
Lewisville, TX five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 4% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease year
Boston Market 15 years; five 10.38% of Total Cost (1); for each lease year at any time after
Sunset Hills, MO five-year renewal increases by 10% after the after the fifth lease the fifth lease
Restaurant to be options fifth lease year and after year, (i) 5% of annual year
constructed every five years gross sales minus (ii)
thereafter during the the minimum annual rent
lease term for such lease 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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
-18-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
-19-
<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
Mobile, AL five-year renewal total cost to purchase the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
-20-
<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
Raleigh, NC (#2) five-year renewal total cost to purchase the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
thereafter during the
lease term
Golden Corral 15 years; four 10.75% of Total Cost (1) for each lease year, 5% during the first
Jacksonville, FL five-year renewal of the amount by which through seventh
Restaurant to be options annual gross sales lease years and
constructed exceed a to be the tenth through
determined breakpoint 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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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>
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4.50% of annual gross
Existing restaurant options property; increases by 10% sales minus (ii) the
after the fifth lease year minimum annual rent for
and after every five years such lease year
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 the 4% of annual gross sales eleventh lease
Existing restaurant options property; increases by 10% minus (ii) the minimum year and at the
after the fifth lease year annual rent for such end of the initial
and after every five years lease year lease term
thereafter during the
lease term
Jack in the Box 18 years; four 10.25% of Total Cost (1); for each lease year, (i) at any time after
Corinth, TX five-year renewal increases by 8% after the 5% of annual gross sales the seventh lease
Restaurant to be options fifth lease year and after minus (ii) the minimum year (2)
constructed every five years annual rent for such
thereafter during the lease year
lease term
Jack in the Box 18 years; four 10.25% of Total Cost (1); for each lease year, (i) at any time after
Fresno, CA five-year renewal increases by 8% after the 5% of annual gross sales the seventh lease
Restaurant to be options fifth lease year and after minus (ii) the minimum year (2)
constructed every five years annual rent for such
thereafter during the lease year
lease term
Jack in the Box 18 years; four 10.25% of Total Cost (1); for each lease year, (i) at any time after
Los Angeles, CA five-year renewal increases by 8% after the 5% of annual gross sales the seventh lease
Restaurant to be options fifth lease year and after minus (ii) the minimum year (2)
constructed every five years annual rent for such
thereafter during the lease year
lease term
Ruth's Chris Steak 15 years; two 8.75% of the Company's for each lease year, 6% None
House five-year renewal total cost to purchase the of annual gross sales in
Tampa, FL options property; increases by excess of $3,400,000 and
Existing restaurant $25,000 after the fifth less than $4,000,000,
lease year and after every plus 8% of annual gross
five years thereafter sales in excess of
during the lease term $4,000,000
-22-
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
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 the 6% of annual gross sales the seventh lease
Restaurant to be options fifth lease year and after minus (ii) the minimum year
constructed every five years annual rent for such
thereafter during the lease year
lease term<PAGE>
</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.
-23-
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. In addition, 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. The Company intends to reinvest the net
sales proceeds from the sale of Properties in additional properties.
In addition, 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.
-24-
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 MAY 22, 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 May 22, 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>
Einstein
Boston Market Boston Market 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
-25-
<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
-26-
<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
-27-
<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
-28-
<CAPTION>
Boston Market Einstein Bros. Bagels Golden Corral
Waldorf, MD (5)(8) Springfield, VA (5)(6) Jacksonville, 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
-29-
<CAPTION>
Golden Corral IHOP Popeyes
Corpus Christi, TX (5)(9) Leesburg, VA Starke, FL (5) Total
------------------------- ------------ -------------- ----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $158,817 $119,659 $ 66,324 $2,495,912
Asset Management Fees (2) (8,870) (7,068) (3,434) (140,643)
General and Administrative
Expenses (3) (9,847) (7,419) (4,112) (154,746)
-------- -------- -------- ----------
Estimated Cash Available from
Operations 140,100 105,172 58,778 2,200,523
Depreciation and Amortization
Expense (4) (25,236) (14,835) (10,374) 321,678
-------- -------- -------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $114,864 $ 90,337 $ 48,404 $1,878,845
======== ======== ======== ==========
See Footnotes
-30-
</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 Property November 2, 1997
Corpus Christi Property November 17, 1997
Starke Property September 19, 1997
-31-
(6) The lessee of the Dearborn and Springfield Properties is the same
unaffiliated lessee.
(7) The lessee of the Enumclaw and Bacliff 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 and Corpus Christi Properties is the same
unaffiliated lessee.
-32-
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
December 31, 1996 35
Pro Forma Consolidated Statement of Earnings
for the year ended December 31, 1996 36
Notes to Pro Forma Consolidated Financial Statements
for the years ended December 31, 1996 37
-33-
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
December 31, 1996, including the receipt of $139,247,149 in gross offering
proceeds from the sale of 13,924,715 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 94 properties (including 51
properties which consist of land and building, one property through a joint
venture arrangement which consists of land and building, seven properties
which consist of building only and 35 properties consisting of land only),
nine of which were under construction at December 31, 1996, to provide
mortgage financing to the lessees of the 35 properties consisting of land
only, and to pay organizational and offering expenses, acquisition fees and
miscellaneous acquisition expenses, (ii) the receipt of $55,437,676 in gross
offering proceeds from the sale of 5,543,768 additional shares of common stock
during the period January 1, 1997 through May 7, 1997, and (iii) the
application of such funds and $16,304,845 of cash and cash equivalents at
December 31, 1996, to purchase 54 additional properties acquired during the
period January 1, 1997 through May 7, 1997 (37 of which are under construction
and consist of land and building, three properties which consist of land and
building, nine properties which consist of land only and five properties which
consist of building only), to provide mortgage financing to the lessee of the
nine properties consisting of land only, to pay additional costs for the nine
properties under construction at December 31, 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 December 31, 1996, includes the
transactions described in (i) above from its historical consolidated balance
sheet, adjusted to give effect to the transactions in (ii) and (iii) above, as
if they had occurred on December 31, 1996.
The Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1996, includes the historical operating results of the properties
described in (i) above from the dates of their acquisitions plus operating
results for the four 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.
-34-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
<S> <C> <C> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 60,243,146 $ 47,026,684 (a) $107,269,830
Net investment in direct
financing leases (d) 15,186,686 8,978,557 (a) 24,165,243
Cash and cash equivalents 42,450,088 (16,304,845)(a) 26,145,243
Receivables 160,675 160,675
Mortgage notes receivable 13,389,607 4,200,000 (a)
(19,400)(a)
226,800 (c) 17,797,007
Organization costs, less
accumulated amortization 13,682 13,682
Loan costs, less accumulated
amortization 32,499 32,499
Accrued rental income 422,076 422,076
Other assets 2,926,589 (353,029)(a)
(466,405)(b)
(226,800)(c) 1,880,355
------------ ------------ ------------
$134,825,048 $ 43,061,562 $177,886,610
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 3,521,816 $ 3,521,816
Accrued interest payable 13,164 13,164
Accrued construction costs payable 6,587,573 $ (6,587,573)(a) -
Accounts payable and other accrued
expenses 79,817 79,817
Due to related parties 997,084 997,084
Rents paid in advance 118,900 118,900
Deferred rental income 335,849 7,018 (a) 342,867
Other payables 15,117 15,117
------------ ------------ ------------
Total liabilities 11,669,320 (6,580,555) 5,088,765
------------ ------------ ------------
Minority interest 288,301 288,301
------------ ------------ ------------
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
13,944,715 shares; issued and
outstanding, as adjusted,
19,488,483 shares 139,447 55,438 (a) 194,885
Capital in excess of par value 123,687,929 50,053,084 (a)
(466,405)(b) 173,274,608
Accumulated distributions in
excess of net earnings (959,949) (959,949)
------------ ------------ ------------
122,867,427 49,642,117 172,509,544
------------ ------------ ------------
$134,825,048 $ 43,061,562 $177,886,610
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
-35-
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 $ 60,938 (1) $3,778,824
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 (24,348)(3) 755,689
---------- ---------- ----------
6,206,684 70,872 6,277,556
---------- ---------- ----------
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 5,444 (4) 256,644
State and other taxes 56,184 1,218 (5) 57,402
Depreciation and amortization 521,871 6,537 (6) 528,408
---------- ---------- ----------
1,430,795 13,199 1,443,994
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 4,775,889 57,673 4,833,562
Minority Interest in Income of
Consolidated Joint Venture (29,927) (29,927)
---------- ---------- ----------
Net Earnings $4,745,962 $ 57,673 $4,803,635
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ .59 $ 0.60
========== ==========
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.
-36-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $55,437,676 from the issuance of 5,543,768
shares of common stock during the period January 1, 1997 through May 7,
1997, the receipt of $7,018 of rental income during construction
(capitalized as deferred rental income), the receipt of $19,400 of
deferred financing income (loan origination and commitment fees, net of
legal fees) from the $4,200,000 mortgage financing described below, and
$16,304,845 of cash and cash equivalents used (i) to acquire 54
properties for $49,178,478, of which five properties consist of building
only, nine properties consist of land only and 40 properties consist of
land and building, (ii) to fund estimated construction costs of
$10,566,612 ($6,587,573 of which was accrued as construction costs
payable at December 31, 1996) relating to nine wholly-owned properties
under construction at December 31, 1996, (iii) to pay acquisition fees
of $2,494,695 and reclassify from other assets $353,029 of acquisition
fees previously incurred relating to the acquired properties, (iv) to
pay selling commissions and offering expenses (stock issuance costs) of
$5,329,154, which have been netted against capital in excess of par
value and (v) to provide mortgage financing in the amount of $4,200,000
to the lessee of the nine properties consisting of land only.
-37-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
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 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
Jack in the Box in Murietta, CA 951,485 50,973 1,002,458
Jack in the Box in Humble, TX 882,362 47,270 929,632
Golden Corral in Winchester, KY 1,150,645 61,640 1,212,285
Burger King in Kent, OH 872,861 46,761 919,622
Burger King in Chattanooga, TN 1,110,330 59,482 1,169,812
Denny's in Tampa, FL 1,033,787 55,381 1,089,168
Jack in the Box in Palmdale, CA 1,124,244 60,228 1,184,472
Jack in the Box in Houston, TX 860,735 46,110 906,845
Golden Corral in Hopkinsville, KY 1,252,931 67,121 1,320,052
Jack in the Box in Houston, TX 904,945 48,479 953,424
Black-eyed Pea in Bedford, TX 619,336 33,179 652,515
Black-eyed Pea in Dallas, TX 619,320 33,178 652,498
Black-eyed Pea in Ft. Worth, TX 619,323 33,178 652,501
Black-eyed Pea in Oklahoma City, OK 616,022 33,001 649,023
Eight Pizza Huts (land only) in Ohio
and West Virginia 1,575,622 84,408 1,660,030
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
Nine wholly owned properties under
construction at December 31, 1996 3,979,039 213,163 4,192,202
----------- ----------- -----------
$53,157,517 $ 2,847,724 $56,005,241
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $47,026,684
Net investment in direct financing leases 8,978,557
-----------
$56,005,241
===========
</TABLE>
-38-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
(b) Represents reclassification of deferred stock issuance costs totalling
$466,405 at December 31, 1996, to stock issuance costs which have been
netted against capital in excess of par value.
(c) Represents reclassification of acquisition fees totalling $226,800 from
other assets to mortgage notes receivable relating to the $4,200,000
mortgage financing transaction described in (a) above.
(d) 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 four 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 four 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
-------------- ---------------
Denny'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
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
-39-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Statement of Earnings - Continued:
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 that the previous owners held the properties,
no pro forma adjustment was made for percentage rental income for the
year ended December 31, 1996.
(2) See Note (d) 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 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
$2,723,000 for the Pro Forma Properties for the year ended December 31,
1996), 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 year
ended December 31, 1996.
-40-
