Rule 424(b)(3)
No. 33-78790
CNL AMERICAN PROPERTIES FUND, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated April 26, 1996 and the Prospectus Supplement dated January
21, 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 January 24, 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 January 24, 1997, will be reported in a
subsequent Supplement.
THE OFFERING
As of January 24, 1997, the Company had received aggregate subscription
proceeds of $146,448,520 (14,644,852 Shares) from 7,551 stockholders,
including $591,765 (59,177 Shares) issued pursuant to the Reinvestment Plan.
As of January 24, 1997, net proceeds to the Company from its offering of
shares after deduction of Selling Commissions, Marketing Support and Due
Diligence Expense Reimbursement Fees and Organizational and Offering Expenses
totalled $130,178,335. As of January 24, 1997, the Company had invested or
committed for investment approximately $102,500,000 of such net proceeds in
101 Properties (including one Property through a joint venture arrangement
which consists of land and building, seven Properties which consist of
building only, 35 Properties which consist of land only and 58 Properties
which consist of land and building), in providing mortgage financing to the
tenants of the 35 Properties consisting of land only and to pay Acquisition
Fees and Acquisition Expenses, leaving approximately $27,600,000 in offering
proceeds available for investment in Properties and Mortgage Loans. As of
January 24, 1997, the Company had incurred $6,590,183 in Acquisition Fees to
the Advisor.
SUBSEQUENT OFFERING
On November 1, 1996, the Company filed a registration statement with the
Securities and Exchange Commission in connection with the proposed sale by the
Company of up to 27,500,000 shares of common stock in a public offering (the
"Subsequent Offering") expected to commence immediately following the
termination of this offering. Of the 27,500,000 shares of common stock to be
offered, 2,500,000 will be available only to stockholders purchasing through
the Reinvestment Plan. Until such time, if any, as the stockholders approve
an increase in the number of authorized shares of Common Stock of the Company,
the subsequent offering will be limited to 4,800,000 shares. The Board of
Directors expects to submit, for a vote of the stockholders at a meeting
expected to be held in April of 1997, a resolution to increase the number of
authorized shares of Common Stock of the Company from 20,000,000 to
75,000,000. The price per share and the other terms of the Subsequent
Offering, including the percentage of gross proceeds payable to the Managing
Dealer for selling commissions and expenses in connection with the offering,
payable to the Advisor for Acquisition Fees and Acquisition Expenses and
reimbursable to the Advisor for Organizational and Offering Expenses, will be
the same as those for this offering. Net proceeds from the Subsequent
Offering will be invested in additional Properties and Mortgage Loans.
Management believes that the increase in the amount of assets of the Company
that will result from the Subsequent Offering will also increase the
diversification of the Company's assets and the likelihood of Listing,
although there is no assurance that Listing will occur.
REDEMPTION OF SHARES
The Company will not redeem any Shares during any period in which the
Company is making a public offering.
January 29, 1997 Prospectus Dated April 26, 1996
BUSINESS
PROPERTY ACQUISITIONS
Between January 9, 1997 and January 24, 1997, the Company acquired five
Properties consisting of land and building. The Properties are four Jack in
the Box Properties (one in each of Moscow, Idaho; Kent, Washington; and
Hollister and Kingsburg, California) and a Shoney's Property (in Indian
Harbour Beach, Florida). For information regarding the 96 Properties acquired
by the Company prior to January 9, 1997, see the Prospectus dated April 26,
1996, and the Prospectus Supplement dated January 21, 1997.
In connection with the purchase of these five 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." In addition,
in connection with the purchase of these Properties, which are to be
constructed, the Company has entered into development and indemnification and
put agreements with the lessees. The general terms of these agreements are
described in the section of the Prospectus entitled "Business - Site Selection
and Acquisition of Properties - Construction and Renovation."
As of January 24, 1997, the Company had initial commitments to acquire
12 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 12
of these properties are expected to be entered into on substantially the same
terms described in the section of the Prospectus entitled "Business -
Description of Property Leases," except as described below.
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Chattanooga, TN renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
renovated (ii) the minimum
annual rent for such
lease year
Burger King 20 years; four five-year 10.25% of the for each lease year, during the eighth,
Kent, OH renewal options Company's total cost (i) 6% of annual ninth, tenth,
Existing restaurant to purchase the gross sales minus eleventh and
property; increases by (ii) the minimum twelfth lease years
5% after the fifth annual rent for such only
lease year and by 10% lease year
after the tenth lease
year and after every
five years thereafter
during the lease term
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Hopkinsville, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Somerset, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Golden Corral 15 years; four five-year 10.75% of Total Cost for each lease year, during the first
Winchester, KY 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
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
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX (#1) renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX (#2) renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.75% of Total Cost for each lease year, at any time after
Humble, 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
constructed year and by 10% after (ii) the minimum
every five years annual rent for such
thereafter during the lease year
lease term
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Murietta, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Oxnard, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Palmdale, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
</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.
The following table sets forth the location of the five Properties
consisting of land and building, acquired by the Company, from January 9, 1997
through January 24, 1997, a description of the competition, and a summary of
the principal terms of the acquisition and lease of each Property.
<TABLE>
PROPERTY ACQUISITIONS
From January 9, 1997 through January 24, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JACK IN THE BOX (7) $910,814 01/22/97 01/2015; four $93,358 (6); for each lease at any time
(the "Moscow Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh lease
constructed costs) lease year and after sales minus (ii) year
(3)(6) every five years the minimum
The Moscow Property is thereafter during annual rent for
located on the north the lease term such lease year
side of West Pullman (5)
Road and the south side
of A Street in Moscow,
Latah County, Idaho, in
an area of mixed
retail, commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Moscow Property
include an Arby's, a
McDonald's, and several
local restaurants.
JACK IN THE BOX (7) $1,259,871 01/22/97 01/2015; four $129,137 (6); for each lease at any time
(the "Kent Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh lease
constructed costs) lease year and after sales minus (ii) year
(3)(6) every five years the minimum
The Kent Property is thereafter during annual rent for
located at the the lease term such lease year
southeast corner of the (5)
intersection of
Southeast 272nd Street
and Southeast 168th
Place, in Kent, King
County, Washington, in
an area of mixed
retail, commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Kent Property
include a KFC/Taco
Bell, a Dairy Queen, an
Arby's, a Burger King,
and a local restaurant.
JACK IN THE BOX (7) $1,061,819 01/22/97 01/2015; four $108,836 (6); for each lease at any time
(the "Hollister (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh lease
Restaurant to be costs) lease year and after sales minus (ii) year
constructed (3)(6) every five years the minimum
thereafter during annual rent for
The Hollister Property the lease term such lease year
is located at the (5)
northeast corner of the
intersection of McCray
Street and Meridian
Street, in Hollister,
San Benito County,
California, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Hollister Property
include a Burger King,
a McDonald's, and a
local restaurant.
JACK IN THE BOX (7) $1,001,073 01/22/97 01/2015; four $102,610 (6); for each lease at any time
(the "Kingsburg (excluding five-year increases by 8% year, (i) 5% of after the
Property") closing renewal options after the fifth annual gross seventh lease
Restaurant to be costs) lease year and after sales minus (ii) year
constructed (3)(6) every five years the minimum
thereafter during annual rent for
The Kingsburg Property the lease term such lease year
is located at the (5)
southwest quadrant of
the intersection of
Sierra Street and Sixth
Street, in Kingsburg,
Fresno County,
California, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Kingsburg Property
include a McDonald's, a
Taco Bell, a Denny's, a
Burger King, a Subway
Sandwich Shop, and
several local
restaurants.
SHONEY'S $563,040 01/24/97 01/2017; two 11% of Total Cost for each lease at any time
(the "Indian Harbour (excluding five-year (4); increases by year, 6% of the after the
Beach Property") closing and renewal options 10% after the fifth amount by which seventh lease
Restaurant to be development lease year and after annual gross year
constructed costs) (3) every five years sales exceed
thereafter during $1,500,000, but
The Indian Harbour the lease term are less than or
Beach Property is equal to
located within the $1,750,000, plus
northeast quadrant of 4% of the amount
South Patrick Drive and by which annual
Eau Gallie Boulevard, gross sales
in Indian Harbour exceed $1,750,000
Beach, Brevard County,
Florida, in an area of
mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Indian Harbour
Beach Property include
a Wendy's, a Krystal, a
Miami Subs, a
McDonald's, an Italian
Oven, a Friendly's, and
several local
restaurants.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Moscow Property $744,000
Kent Property 596,000
Hollister Property 586,000
Kingsburg Property 642,000
Indian Harbour Beach Property 474,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Indian
Harbour Beach Property, minimum annual rent will become due and payable
on the earlier of (i) the date the certificate of occupancy for the
restaurant is issued, (ii) the date the restaurant opens for business to
the public, (iii) 180 days after execution of the lease or (iv) the date
the tenant receives from the landlord its final funding of the
construction costs. During the period commencing with the effective
date of the lease to the date minimum annual rent becomes payable for
the Indian Harbour Beach Property, as described above, the tenant shall
pay monthly "interim rent" equal to 11% per annum of the amount funded
by the Company in connection with the purchase and construction of the
Property.
(3) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below. The maximum cost to the Company, (including
the purchase price of the land (if applicable), development costs (if
applicable), and closing and acquisition costs) is not expected to, but
may, exceed the amounts set forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Moscow Property $ 910,814 July 21, 1997
Kent Property 1,259,871 July 21, 1997
Hollister Property 1,061,819 July 21, 1997
Kingsburg Property 1,001,073 July 21, 1997
Indian Harbour Beach
Property 676,041 July 23, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The Company paid for all construction costs in advance at closing;
therefore, minimum annual rent was determined on the date acquired and
is not expected to change.
(7) The lessee of the Moscow, Kent, Hollister and Kingsburg Properties is
the same unaffiliated lessee.
BORROWING AND SECURED EQUIPMENT LEASE
Between January 9, 1997 and January 24, 1997, the Company obtained one
advance totalling $234,553 under its $15,000,000 Loan. This advance was the
final advance relating to the acquisition of Equipment for the restaurant
property in Winnemucca, Nevada (the "Winnemucca Secured Equipment Lease"), at
a cost of $234,553, including a Secured Equipment Lease Servicing Fee of
$4,138 to the Advisor. The Winnemucca Secured Equipment Lease was considered
to be an interest only loan for the first three months until obtaining the
final advance on January 10, 1997, at which time it became a fully amortizing
term loan repayable over six years. The advance bears 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.
<TABLE>
SECURED EQUIPMENT LEASE
From January 9, 1997 through January 24, 1997
<CAPTION>
Purchase Date Lease Annual Option
Description Price (1) Acquired Expiration Rent (2) To Purchase
- ----------- --------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR DENNY'S $230,195 (3) (3) (4) (4) (5)
RESTAURANT IN WINNEMUCCA, (excluding closing
NEVADA costs and Secured
(The "Winnemucca 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 August 28, 1996, the Company obtained an advance of $102,570 for
partial funding of the Equipment for the restaurant property in
Winnemucca, Nevada. On September 30, 1996, the Company obtained another
advance of $44,157 for additional funding of the Equipment for the
restaurant property. On January 10, 1997, the Company obtained another
advance under its Loan totalling $234,553 to fund the balance of the
acquisition price of the Equipment.
(4) The temporary Secured Equipment Lease entered into on August 28, 1996,
had a term of four months and required the payment of monthly rent of
$913. On September 30, 1996, the temporary Secured Equipment Lease was
amended to have a term of three months and requires the payment of
monthly rent of $1,306. Upon funding the balance of the Equipment
purchase price, the Company entered into a final Secured Equipment
Lease. The final Secured Equipment Lease has a term of seven years and
provides for the payment of rent (payable monthly) in the amount of
$6,464.
(5) Lessee may purchase the Equipment prior to the expiration of the final
Secured Equipment Lease, at the then present value of the remaining
rental payments, discounted at a rate of 10% per annum.
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 9, 1997
THROUGH JANUARY 24, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of
taxable income before dividends paid deduction of each Property acquired by
the Company from January 9, 1997 through January 24, 1997, for the 12-month
period commencing on the date of the inception of the respective lease on such
Property. The schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties or has borrowed funds from the Company with an aggregate purchase
price in excess of 20% of the expected total net offering proceeds of the
Company.
<TABLE>
<CAPTION>
Jack in the Box Jack in the Box Jack in the Box Jack in the Box
Moscow, ID (5)(6) Kent, WA (5)(6) Hollister, CA (5)(6) Kingsburg, CA (5)(6)
----------------- --------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 93,358 $129,137 $108,836 $102,610
Asset Management Fees (2) (5,459) (7,553) (6,365) (6,000)
General and Administra-
tive Expenses (3) (5,788) (8,006) (6,748) (6,362)
-------- -------- -------- --------
Estimated Cash Available
from Operations 82,111 113,578 95,723 90,248
Depreciation and
Amortization Expense (4) (19,077) (15,280) (15,019) (16,464)
-------- -------- -------- --------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction of the
Company $ 63,034 $ 98,298 $ 80,704 $ 73,784
======== ======== ======== ========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Shoney's
Indian Harbour Beach, FL (5) Total
---------------------------- --------
<S> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 71,504 $504,445
Asset Management Fees (2) (3,857) (29,234)
General and Administra-
tive Expenses (3) (4,433) (31,337)
-------- --------
Estimated Cash Available
from Operations 63,214 444,874
Depreciation and
Amortization Expense (4) (12,156) (77,996)
-------- --------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction of the
Company $ 51,058 $366,878
======== ========
</TABLE>
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
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.
(5) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Moscow Property July 21, 1997
Kent Property July 21, 1997
Hollister Property July 21, 1997
Kingsburg Property July 21, 1997
Indian Harbour Beach Property July 23, 1997
(6) The lessee of the Moscow, Kent, Hollister and Kingsburg Properties is
the same unaffiliated lessee.
