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. This Supplement replaces the Supplements
dated February 7, 1997 and February 18, 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 20, 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 20, 1997, will be reported in
a subsequent Supplement.
THE OFFERING
Following the completion of its Initial Offering on February 6, 1997,
the Company commenced this offering of up to 27,500,000 Shares. As of
February 20, 1997, the Company had received aggregate subscription proceeds of
$6,228,754 (622,875 Shares) from 316 stockholders. Net proceeds to the
Company after deduction of Selling Commissions, Marketing Support and Due
Diligence Expense Reimbursement Fees and Offering Expenses totalled
approximately $5,300,000. As of February 20, 1997, $280,294 of such amount
had been incurred in Acquisition Fees to the Advisor and the balance was
available for investment in Properties and Mortgage Loans.
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. As of February 20,
1997, the Company had invested or committed for investment approximately
$111,200,000 of net proceeds from the Initial Offering in 110 Properties, in
providing mortgage financing to the tenants of the 35 Properties consisting of
land only through Mortgage Loans, and in paying acquisition fees to the
Advisor totalling $6,776,629 and certain acquisition expenses, leaving
approximately $22,900,000 in net offering proceeds from the Initial Offering
available for investment in Properties and Mortgage Loans. The Company
expects to use such amount and Net Offering Proceeds from this offering to
invest in additional Properties and Mortgage Loans.
BUSINESS
PROPERTY ACQUISITIONS
Between January 25, 1997 and February 20, 1997, the Company acquired
nine Properties consisting of land and building. The Properties are four Jack
in the Box Properties (one in each of Humble and Houston, Texas; and Murrieta
and Palmdale, California), two Burger King Properties (in Kent, Ohio; and
Chattanooga, Tennessee), two Golden Corral Properties (one in each of
Winchester and Hopkinsville, Kentucky) and a Denny's Property (in Tampa,
Florida). 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, and the Golden Corral Property
in Hopkinsville, Kentucky, were acquired from Affiliates of the Company. The
Affiliates had purchased and temporarily held title to these Properties in
order to facilitate their acquisition by the Company. The Properties were
acquired by the Company for an aggregate purchase price of $1,768,185,
representing the cost of the Properties to the Affiliates (including carrying
costs) due to the fact that these amounts were less than each Property's
appraised value.
February 26, 1997 Prospectus Dated April 26, 1996
In connection with the purchase of these nine 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 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 prices for the Burger King Property in Chattanooga,
Tennessee, and the Golden Corral Property in Hopkinsville, Kentucky, include
development fees of $100,000 and $29,379, respectively, to an Affiliate of the
Advisor for services provided in connection with the development of the
Properties. 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."
As of February 20, 1997, the Company had initial commitments to acquire
nine 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
nine 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.
- 2 -
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Bennigan's 15 years; three five- 10.375% of the for each lease year, at any time after
Arvada, CO year renewal options Company's total cost (i) 6% of annual lease year five
Existing restaurant to purchase the gross sales minus
property; increases by (ii) the minimum
10% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
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
Golden Corral 15 years; four five-year 10.75% of Total Cost for each lease year, during the first
Jacksonville, FL renewal options (1) 5% of the amount by through seventh
Restaurant to be which annual gross lease years and the
constructed sales exceed a to be tenth through
determined breakpoint fifteenth lease
years only
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Bacliff, TX 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
Enunclaw, WA 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
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
- 3 -
<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 (#4) 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
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.
- 4 -
The following table sets forth the location of the nine Properties
consisting of land and building, acquired by the Company, from January 25,
1997 through February 20, 1997, a description of the competition, and a
summary of the principal terms of the acquisition and lease of each Property.
- 5 -
<TABLE>
PROPERTY ACQUISITIONS
From January 25, 1997 through February 20, 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 (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh lease
Restaurant to be costs) lease year and sales minus year
constructed (3)(6) after every (ii) the
five years minimum annual
The Murrieta Property thereafter rent for such
is located within the during the lease year (5)
southeast quadrant of lease term
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 (excluding five-year Cost (4); year, (i) 5% of
Property") closing and renewal options increases by 8% annual gross
Restaurant to be development after the fifth sales minus
constructed costs) (3) lease year and (ii) the
after every minimum annual
The Humble Property is five years rent for such
located on the north thereafter lease year (5)
side of Beltway 8 east during the
of Old Humble Road, in lease term
Houston, Harris
County, Texas, in an
area of mixed retail,
commercial, and
residential
development.
- 6 -
<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 through
Property") closing and renewal options amount by which seventh lease
Restaurant to be development annual gross years and the
constructed costs) (3) sales exceed tenth through
$2,161,048 (5) fifteenth lease
The Winchester years only
Property is located on
the west side of the
Winchester Bypass, in
Winchester, Clark
County, Kentucky, 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; for each lease during the
(the "Kent Property") (excluding five-year increases by 5% year, (i) 6% of eighth, ninth,
Existing restaurant closing renewal options after the fifth annual gross tenth, eleventh
costs) lease year and sales minus and twelfth
The Kent Property is by 10% after (ii) the lease years
located on the east the tenth lease minimum annual only
side of South Water year and after rent for such
Street, in Kent, every five lease year
Portage County, Ohio, years
in an area of mixed thereafter
retail, commercial, during the
and residential lease term
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.
- 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>
BURGER KING $791,984 02/10/97 02/2017; two 11% of Total for each lease None
(the "Chattanooga (excluding five-year Cost (4) year, (i) 8.5%
Property") closing and renewal options of annual gross
Restaurant to be development sales minus
renovated costs) (3) (ii) the
minimum annual
The Chattanooga rent for such
Property is located on lease year
the southwest corner
of Hamilton Place
Boulevard and Bams
Drive, in Chattanooga,
Hamilton County,
Tennessee, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Chattanooga
Property include a
Krystal's, an Arby's,
a Taco Bell, an Olive
Garden, a Wendy's, a
McDonald's, and
several local
restaurants.
DENNY'S $1,038,037 02/11/97 02/2017; two $110,291 (6); for each lease during the
(the "Tampa Property") (excluding five-year increases by year, (i) 5% of eighth, tenth,
Restaurant to be closing renewal options 11% after the annual gross and twelfth
renovated costs) fifth lease sales minus lease years
(3)(6) year and after (ii) the only
The Tampa Property is every five minimum annual
located at the years rent for such
southeast quadrant of thereafter lease year
the intersection of during the
U.S. Highway 301 and lease term
Interstate 4, in
Tampa, Hillsborough
County, Florida, in an
area of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Tampa Property
include a Waffle House
and a Subway Sandwich
Shop.
- 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>
JACK IN THE BOX (7) $1,125,244 02/11/97 02/2015; four $115,337 (6); for each lease at any time
(the "Palmdale (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh lease
Restaurant to be costs) lease year and sales minus year
constructed (3)(6) after every (ii) the
five years minimum annual
The Palmdale Property thereafter rent for such
is located at the during the lease year (5)
southeast corner of lease term
Avenue P and Antelope
Valley Freeway 14, in
Palmdale, Los Angeles
County, California, in
an area of mixed
retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Palmdale
Property include a
McDonald's, a Taco
Bell, an Applebee's, a
Boston Market, a
Chili's, and several
local restaurants.
JACK IN THE BOX (7) $861,735 02/11/97 02/2015; four $88,328 (6); for each lease at any time
(the "Houston #3 (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh lease
Restaurant to be costs) lease year and sales minus year
constructed (3)(6) after every (ii) the
five years minimum annual
The Houston #3 thereafter rent for such
Property is located on during the lease year (5)
the northwest corner lease term
of Airport Boulevard
and Ruthby Street, in
Houston, Harris
County, Texas, in an
area of mixed retail,
commercial, and
residential
development.
- 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
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
GOLDEN CORRAL $895,324 02/19/97 09/2016; two $141,912; for each lease at any time
(the "Hopkinsville (excluding five-year increases by year, (i) 6% of after the
Property") closing renewal options 12% after the annual gross seventh lease
Existing restaurant costs) fifth lease sales minus year
year and after (ii) the
The Hopkinsville every five minimum annual
Property is located on years rent for such
the west side of thereafter lease year
Clinic Drive within during the
the quadrant formed by lease term
nearby Pennyrile
Parkway and U.S. Route
41A, in Hopkinsville,
Christian County,
Kentucky, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Hopkinsville
Property include
several local
restaurants.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Murrieta Property $617,000
Humble Property 627,000
Winchester Property 910,000
Kent Property 686,000
Chattanooga Property 473,000
Tampa Property 695,000
Palmdale Property 559,000
Houston #3 Property 543,000
Hopkinsville Property 880,000
(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
- 10 -
issued, (ii) the date the restaurant opens for business to the public
or (iii) 180 days after execution of the lease. For the Chattanooga
Property, minimum annual rent will become due and payable on the
possession date, which is June 24, 1997 (the "Possession Date"). 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 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
-------- ---------------------- ---------------
Murrieta Property $ 952,485 July 30, 1997
Humble Property 912,409 August 2, 1997
Winchester Property 1,272,678 August 2, 1997
Chattanooga Property 1,202,224 June 24, 1997
Tampa Property 1,038,037 August 10, 1997
Palmdale Property 1,125,244 August 10, 1997
Houston #3 Property 861,735 August 10, 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.
(7) The lessee of the Murrieta, Humble, Palmdale and Houston #3 Properties
is the same unaffiliated lessee.
- 11 -
BORROWING AND SECURED EQUIPMENT LEASE
Between January 25, 1997 and February 20, 1997, the Company obtained
three advances totalling $533,068 under its $15,000,000 Loan. The proceeds of
these advances were used to acquire Equipment for three restaurant properties,
two in Warner Robins, Georgia (the "Warner Robins #1 Secured Equipment Lease"
and the "Warner Robins #2 Secured Equipment Lease") and one in El Cajon,
California (the "El Cajon Secured Equipment Lease"), at a cost of $533,068,
including Secured Equipment Lease Servicing Fees of $10,412 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 El Cajon Secured Equipment Lease is considered to be an interest only loan
for the first two months and upon obtaining an additional advance prior to May
1997 will become a fully amortizing term loan repayable over six 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.
- 12 -
<TABLE>
SECURED EQUIPMENT LEASE
From January 25, 1997 through February 20, 1997
<CAPTION>
Purchase Date Lease Annual Option
Description Price (1) Acquired Expiration Rent (2) To Purchase
- ----------- --------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR FAZOLI'S $178,307 01/28/97 01/2002 $3,924 (5)
RESTAURANT IN WARNER ROBINS, (excluding
GEORGIA closing costs
(the "Warner Robins #1 Secured and Secured
Equipment Lease") Equipment Lease
Servicing Fee)
EQUIPMENT FOR POPEYE'S $192,311 01/28/97 01/2002 $4,231 (5)
RESTAURANT IN WARNER ROBINS, (excluding
GEORGIA closing costs
(the "Warner Robins #2 Secured and Secured
Equipment Lease") Equipment Lease
Servicing Fee)
EQUIPMENT FOR GOLDEN CORRAL $150,000 (3) (4) (4) (5)
RESTAURANT IN EL CAJON, (excluding
CALIFORNIA closing costs
(the "El Cajon Secured and 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) On February 10, 1997, the Company obtained an advance of $153,658 for
partial funding of the Equipment for a restaurant property in El Cajon,
California. The Company anticipates obtaining another advance of
$323,376 to fund the balance of the acquisition price of the Equipment
within three months of obtaining the initial advance of $153,658
described above.
(4) The temporary Secured Equipment Lease entered into on February 10, 1997,
has a term of three months and requires the payment of monthly rent of
$1,320. Upon funding the balance of the Equipment purchase price, which
is expected to occur in the third month following the initial Equipment
funding, the Company will enter into a final Secured Equipment Lease.
The final Secured Equipment Lease is expected to have a term of
approximately six years and provide for the payment of rent (payable
monthly) in an amount equal to the total purchase price of the Equipment
plus interest at a rate of approximately 10.50% per annum.
- 13 -
(5) 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.
- 14 -
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 20, 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 20, 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>
Jack in the Box Jack in the Box Golden Corral Burger King
Murrieta, CA (5)(6) Humble, TX (5)(6) Winchester, KY (5) 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
- 15 -
<CAPTION>
Burger King Denny's Jack in the Box Jack in the Box
Chattanooga, TN (5) Tampa, FL (5) Palmdale, CA (5)(6) Houston #3, TX (5)(6)
------------------- ------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction:
Base Rent (1) $127,158 $110,291 $115,338 $ 88,328
Asset Management Fees (2) (6,662) (6,203) (6,745) (5,164)
General and Administrative
Expenses (3) (7,884) (6,838) (7,151) (5,476)
-------- -------- -------- --------
Estimated Cash Available
from Operations 112,612 97,250 101,442 77,688
Depreciation and Amortization
Expense (4) (12,122) (17,818) (14,329) (13,923)
-------- -------- -------- --------
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction of the Company $100,490 $ 79,432 $ 87,113 $ 63,765
======== ======== ======== ========
See Footnotes
- 16 -
<CAPTION>
Golden Corral
Hopkinsville, KY Total
---------------- ---------
<S> <C> <C>
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction:
Base Rent (1) $141,912 $ 991,104
Asset Management Fees (2) (7,518) (55,436)
General and Administrative
Expenses (3) (8,799) (61,449)
-------- ---------
Estimated Cash Available
from Operations 125,595 874,219
Depreciation and Amortization
Expense (4) (22,573) (153,604)
-------- ---------
Pro Forma Estimate
of Taxable Income
Before Dividends Paid
Deduction of the Company $103,022 $ 720,615
======== =========
</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.
- 17 -
(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
-------- -------------------------------
Murrieta Property July 30, 1997
Humble Property August 2, 1997
Winchester Property August 2, 1997
Chattanooga Property June 24, 1997
Tampa Property August 10, 1997
Palmdale Property August 10, 1997
Houston #3 Property August 10, 1997
(6) The lessee of the Murrieta, Humble, Palmdale and Houston #3 Properties
is the same unaffiliated lessee.
- 18 -
