SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 1997
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 33-78790 59-3239115
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
- ------
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- ------
The following information is provided voluntarily prior to the date
on which it is required to be reported under this Item 2.
STATUS OF THE OFFERING
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective March 29, 1995, CNL American
Properties Fund, Inc. (the "Company") registered for sale an aggregate of
$165,000,000 of shares of common stock (the "Shares") (16,500,000 Shares at
$10 per Share). The Company completed its offering (the "Initial Offering")
on February 6, 1997, upon receiving aggregate subscription proceeds of
$150,591,765 (15,059,177 Shares) from 7,724 stockholders, including $591,765
(59,177 Shares) issued pursuant to the Company's reinvestment plan. Following
the completion of its Initial Offering, the Company commenced this offering of
up to 27,500,000 Shares. As of March 6, 1997, the Company had received
aggregate subscription proceeds of $14,243,060 (1,424,306 Shares) from 649
stockholders.
As stated in the registration statement of the Company, including the
Prospectus which constitutes a part thereof, as amended, the proceeds of the
offering of Shares are used primarily to acquire properties (the "Properties")
located across the United States to be leased on a long-term, triple-net basis
to creditworthy operators of selected national and regional fast-food, family-
style and casual dining restaurant chains. The Company may also provide
financing (the "Mortgage Loans") for the purchase of buildings, generally by
lessees that lease the underlying land from the Company.
ACQUISITION OF PROPERTIES
Between January 25, 1997 and March 6, 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 (one in each of 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).
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.
In connection with the purchase of these nine Properties, the
Company, as lessor entered into long-term lease agreements with unaffiliated
lessees. The leases are on a triple-net basis, with the lessee responsible
for all repairs and maintenance, property taxes, insurance and utilities. The
lessee also is required to pay for special assessments, sales and use taxes,
and the cost of any renovations permitted under the lease. 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 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
-1-
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.
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 March 6, 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 January 25, 1997 through March 6, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JACK IN THE BOX (7) $952,485 01/31/97 01/2015; four $97,630 (6); for each lease at any time
(the "Murrieta Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing renewal options after the fifth annual gross seventh
costs) lease year and sales minus lease year
The Murrieta Property is (3)(6) after every (ii) the
located within the southeast five years minimum annual
quadrant of Madison Avenue thereafter rent for such
and Kalmia Street, in during the lease year (5)
Murrieta, Riverside County, lease term
California, in an area of
mixed retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located in
proximity to the Murrieta
Property include a KFC and a
McDonald's.
JACK IN THE BOX (7) $296,034 02/03/97 02/2015; four 10.75% of Total for each lease None
(the "Humble Property") (excluding five-year Cost (4); year, (i) 5% of
Restaurant to be constructed closing and renewal options increases by 8% annual gross
development after the fifth sales minus
The Humble Property is costs) (3) lease year and (ii) the
located on the north side of after every minimum annual
Beltway 8 east of Old Humble five years rent for such
Road, in Houston, Harris thereafter lease year (5)
County, Texas, in an area of during the
mixed retail, commercial, and lease term
residential development.
-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
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<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 Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be constructed closing and renewal options amount by which through
development annual gross seventh
The Winchester Property is costs) (3) sales exceed lease years
located on the west side of $2,161,048 (5) and the
the Winchester Bypass, in tenth
Winchester, Clark County, through
Kentucky, in an area of fifteenth
mixed, retail, commercial, lease years
and residential development. only
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,
Existing restaurant closing renewal options after the fifth annual gross ninth,
costs) lease year and sales minus tenth,
The Kent Property is located by 10% after (ii) the eleventh
on the east side of South the tenth lease minimum annual and twelfth
Water Street, in Kent, year and after rent for such lease years
Portage County, Ohio, in an every five lease year only
area of mixed retail, years
commercial, and residential thereafter
development. Other fast-food during the
and family-style restaurants lease term
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.
-4-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<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 Property") (excluding five-year Cost (4) year, (i) 8.5%
Restaurant to be renovated closing and renewal options of annual gross
development sales minus
The Chattanooga Property is costs) (3) (ii) the
located on the southwest minimum annual
corner of Hamilton Place rent for such
Boulevard and Bams Drive, in lease year
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,
Restaurant to be renovated closing renewal options 11% after the annual gross tenth, and
costs) fifth lease sales minus twelfth
The Tampa Property is located (3)(6) year and after (ii) the lease years
at the southeast quadrant of every five minimum annual only
the intersection of U.S. years rent for such
Highway 301 and Interstate 4, thereafter lease year
in Tampa, Hillsborough during the
County, Florida, in an area lease term
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.
-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>
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 Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing renewal options after the fifth annual gross seventh
costs) lease year and sales minus lease year
The Palmdale Property is (3)(6) after every (ii) the
located at the southeast five years minimum annual
corner of Avenue P and thereafter rent for such
Antelope Valley Freeway 14, during the lease year (5)
in Palmdale, Los Angeles lease term
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 Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing renewal options after the fifth annual gross seventh
costs) lease year and sales minus lease year
The Houston #3 Property is (3)(6) after every (ii) the
located on the northwest five years minimum annual
corner of Airport Boulevard thereafter rent for such
and Ruthby Street, in during the lease year (5)
Houston, Harris County, lease term
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 $895,324 02/19/97 09/2016; two $141,912; for each lease at any time
(the "Hopkinsville Property") (excluding five-year increases by year, (i) 6% of after the
Existing restaurant closing renewal options 12% after the annual gross seventh
costs) fifth lease sales minus lease year
The Hopkinsville Property is year and after (ii) the
located on the west side of every five minimum annual
Clinic Drive within the years rent for such
quadrant formed by nearby thereafter lease year
Pennyrile Parkway and U.S. during the
Route 41A, in Hopkinsville, lease term
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.
-7-
For the Winchester Property, minimum annual rent will become due and
payable on the earlier of (i) the date the certificate of occupancy for
the restaurant is issued, (ii) the date the restaurant opens for
business to the public or (iii) 180 days after execution of the lease.
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.
-8-
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 25, 1997
THROUGH MARCH 6, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of taxable income before dividends
paid deduction of each Property acquired by the Company from January 25, 1997 through March 6, 1997, for the
12-month period commencing on the date of the inception of the respective lease on such Property. The
schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations of the Company for any period
in the future. These estimates were prepared on the basis described in the accompanying notes which should
be read in conjunction herewith. No single lessee or group of affiliated lessees lease Properties or has
borrowed funds from the Company with an aggregate purchase price in excess of 20% of the expected total net
offering proceeds of the Company.
<CAPTION>
Jack in the Box Jack in the Box Golden Corral Burger King
Murrieta, CA (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
-9-
<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
======== ======== ======== ======== <PAGE>
See Footnotes
-10-
<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.
(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.
-11-
(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.
-12-
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
- ------
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
- ------
Not applicable.
ITEM 5. OTHER EVENTS.
- ------
Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
- ------
Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
- ------ EXHIBITS.
-13-
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 16
Pro Forma Consolidated Statement of Earnings for the
year ended December 31, 1996 17
Notes to Pro Forma Consolidated Financial Statements
for the years ended December 31, 1996 18
-14-
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 $139,247,150 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 $25,587,675 in gross
offering proceeds from the sale of 2,558,768 additional shares of common stock
during the period January 1, 1997 through March 6, 1997, and (iii) the
application of such funds and $4,926,309 of cash and cash equivalents at
December 31, 1996, to purchase 16 additional properties acquired during the
period January 1, 1997 through March 6, 1997 (14 of which are under
construction and consist of land and building and two properties which consist
of land and building), 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 March 6, 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 March 6, 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.
-15-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
Land and buildings on operating
leases, less accumulated
depreciation $ 60,243,146 $ 16,513,997 (a) $ 76,757,143
Net investment in direct
financing leases (b) 15,186,686 5,331,775 (a) 20,518,461
Cash and cash equivalents 42,450,088 (4,926,309)(a) 37,523,779
Receivables 160,675 160,675
Mortgage notes receivable 13,389,607 13,389,607
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 40,643 (a)
(466,405)(b) 2,500,827
------------ ------------ ------------
$134,825,048 $ 16,493,701 $151,318,749
============ ============ ============
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,
16,503,483 shares 139,447 25,588 (a) 165,035
Capital in excess of par value 123,687,929 23,515,073 (a)
(466,405)(b) 146,736,597
Accumulated distributions in
excess of net earnings (959,949) (959,949)
------------ ------------ ------------
122,867,427 23,074,256 145,941,683
------------ ------------ ------------
$134,825,048 $ 16,493,701 $151,318,749
============ ============ ============
See accompanying notes to unaudited pro forma
consolidated financial statements.
-16-
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.
-17-
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 $25,587,675 from the issuance of 2,558,768
shares of common stock during the period January 1, 1997 through March
6, 1997, the receipt of $7,018 of rental income during construction
(capitalized as deferred rental income) and $4,926,309 of cash and cash
equivalents used (i) to acquire 16 properties for $16,755,931, of which
the 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 $1,151,445 ($1,110,802 of which was allocated
to properties and $40,643 of which was classified as other assets and
will be allocated to future properties) and to pay selling commissions
and offering expenses (stock issuance costs) of $2,047,014, which have
been netted against capital in excess of par value.
The pro forma adjustments to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
transactions were as follows:
Estimated
purchase price
(including con-
struction and Acquisition
closing costs) fees
and additional allocated
construction costs to property Total
------------------ ----------- -----------
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
Nine wholly owned
properties under
construction at
December 31, 1996 3,979,039 213,163 4,192,202
----------- ----------- -----------
$20,734,970 $ 1,110,802 $21,845,772
=========== =========== ===========
Adjustment classified
as follows:
Land and buildings on
operating leases $16,513,997
Net investment in
direct financing
leases 5,331,775
-----------
$21,845,772
===========
(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.
-18-
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:
- ------------------------------------------------
(c) 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 March 6, 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 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.
-19-
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:
- --------------------------------------------------------
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 (c) 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.
-20-
ITEM 8. CHANGE IN FISCAL YEAR.
- ------
Not applicable.
EXHIBITS
None.
-21-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf
by the undersigned thereunto duly authorized.
CNL AMERICAN PROPERTIES FUND, INC.
Dated: March 14, 1997 By: /s/ Robert A. Bourne
------------------------------------
ROBERT A. BOURNE, President
