FILED PURSUANT TO RULE 424(B)(3)
FILE NO. 033-78790
CNL AMERICAN PROPERTIES FUND, INC.
Supplement No. 8, dated January 21, 1997
to Prospectus, dated April 26, 1996
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated April 26, 1996. This Supplement replaces all prior Supplements
to the Prospectus. 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 8, 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 8, 1997, will be reported in a
subsequent Supplement.
THE OFFERING
As of January 8, 1997, the Company had received aggregate subscription
proceeds of $140,906,401 (14,090,640 Shares) from 7,294 stockholders, including
$591,732 (59,173 Shares) issued pursuant to the Reinvestment Plan. As of January
8, 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
$125,079,586. As of January 8, 1997, the Company had invested or committed for
investment approximately $97,400,000 of such net proceeds in 96 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 53 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 $27,700,000 in offering proceeds available for
investment in Properties and Mortgage Loans. As of January 8, 1997, the Company
had incurred $6,340,788 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.
<PAGE>
REDEMPTION OF SHARES
The Company will not redeem any Shares during any period in which the
Company is making a public offering.
BUSINESS
PROPERTY ACQUISITIONS
Between April 10, 1996 and January 8, 1997, the Company acquired 48
Properties, including four Properties consisting of building only, 32 Properties
consisting of land and building and 12 Properties consisting of land only. The
Properties are one TGI Friday's Property (in Hamden, Connecticut), four Wendy's
Properties (one in each of Knoxville and Sevierville, Tennessee, and Camarillo
and San Diego, California), six Golden Corral Properties (one in each of Port
Richey, Florida ; Lufkin, Texas; Columbia, Tennessee; Moberly, Missouri; and
Brooklyn and Eastlake, Ohio), two Denny's Properties (one in each of Hillsboro
and McKinney, Texas), ten Boston Market Properties (one in each of Ellisville ,
Florissant and St. Joseph, Missouri; Upland, La Quinta and Merced, California;
Golden Valley, Minnesota; Corvallis, Oregon; Rockwall, Texas; and Atlanta,
Georgia), six Jack in the Box Properties (one in each of Los Angeles,
California; Las Vegas, Nevada; Humble and Dallas, and two in Houston, Texas),
two Arby's Properties (one in each of Kendallville and Avon, Indiana), two
Applebee's Properties (one in each of Montclair and Salinas, California), one
Ryan's Family Steak House Property (in Spring Hill, Florida), two Burger King
Properties (one in each of Chicago, Illinois, and Chattanooga, Tennessee) and 12
Pizza Hut Properties (one in each of Beaver, Bluefield, Huntington, Hurricane,
Milton, Ronceverte, Beckley, Belle and Cross Lanes, West Virginia, and Marietta,
Toledo and Bowling Green, Ohio) (hereinafter referred to as the "Twelve Pizza
Hut Properties"). For information regarding the 48 Properties acquired by the
Company prior to April 10, 1996, see the Prospectus dated April 26, 1996.
The Denny's Property in McKinney, Texas, and the Boston Market
Properties in Merced, California, and St. Joseph, Missouri, were acquired from
an Affiliate of the Company. The Affiliate had purchased and temporarily held
title to these Properties in order to facilitate the acquisition of the
Properties by the Company. The Properties were acquired by the Company for an
aggregate purchase price of $1,786,626, representing the cost of the Properties
to the Affiliate (including carrying costs) due to the fact that these amounts
were less than the Properties' appraised values.
In connection with the purchase of the TGI Friday's Property in Hamden,
Connecticut, the Wendy's Properties in Sevierville, Tennessee, and San Diego,
California, and the Golden Corral Property in Brooklyn, Ohio, which are building
only, 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 connection with the purchase of the TGI Friday's and the Wendy's
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." In connection with these acquisitions, the Company has also
entered into tri-party agreements with the lessees and the owners of the land.
The tri- party agreements provide that the ground lessees are responsible for
all obligations under the ground leases and provide certain rights to the
Company relating to the maintenance of its interests in the buildings in the
event of a default by the lessees under the terms of the ground leases. In
connection with the purchase of the Golden Corral Property, the Company has
entered into an assignment of an interest in the ground lease with the lessee
and the landlord of the land. The assignment provides that the ground lessee is
responsible for all obligations under the ground lease and provides certain
rights to the Company relating to the maintenance of its interest in the
building in the event of a default by the lessee under the terms of the ground
lease.
- 2 -
<PAGE>
In connection with the purchase of the Wendy's Properties in Knoxville,
Tennessee, and Camarillo, California, the Golden Corral Property in Port Richey,
Florida, the Denny's Properties, the Boston Market Properties, the Jack in the
Box Properties, the Arby's Properties, the Applebee's Properties, the Ryan's
Family Steak House Property and the Burger King Properties, which are land and
building, the Company, as lessor entered into long-term lease agreements with
unaffiliated lessees. The general terms of the lease agreements are described in
the section of the Prospectus entitled "Business - Description of Property
Leases." For the Properties that are to be constructed, 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."
In connection with the acquisition of the Golden Corral Property in
Port Richey, Florida, which was undeveloped land on which a restaurant was
constructed, the Company incurred a Development/Construction Management Fee of
$21,500 payable to an Affiliate of the Company as an Acquisition Fee . See the
sections of the Prospectus entitled "Management Compensation" and "Business -
Site Selection and Acquisition of Properties."
The purchase prices for the Burger King Property in Chattanooga,
Tennessee, and the Golden Corral Property in Columbia, Tennessee, include
Development/Construction Management Fees of $100,000 and $37,850, respectively,
to an Affiliate of the Advisor for services provided in connection with the
development of the Properties. The Company considers these
Development/Construction Management Fees to be Acquisition Fees.
Development/Construction Management Fees must be approved by a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in such transactions, subject to a determination that such
transactions are fair and reasonable to the Company and on terms and conditions
not less favorable to the Company than those available from unaffiliated third
parties and not less favorable than those available from the Advisor or its
Affiliates in transactions with unaffiliated third parties. See the sections of
the Prospectus entitled "Management Compensation" and "Business - Site Selection
and Acquisition of Properties."
In connection with the Twelve Pizza Hut Properties, which are land
only, the Company acquired the land and is leasing ten of these parcels and two
of these parcels to the lessees, Castle Hill Holdings VI, L.L.C. and Castle Hill
Holdings VII, L.L.C. ("Castle Hill"), respectively, pursuant to two master lease
agreements (the "Master Lease Agreements"). Castle Hill has subleased the Twelve
Pizza Hut Properties to two of its affiliates, ten Properties to Midland Food
Services L.L.C., and two Properties to Midland Food Services II, L.L.C., which
are the operators of the restaurants. The general terms of the Master Lease
Agreements are similar to those described in the section of the Prospectus
entitled "Business - Description of Property Leases." If the lessees do not
exercise their option to purchase the Properties upon termination of the Master
Lease Agreements, the sublessees and lessees will surrender possession of the
Properties to the Company, together with any improvements on such Properties.
The lessees own the buildings located on the Twelve Pizza Hut Properties. In
connection with the acquisition of the Twelve Pizza Hut Properties, the Company
provided mortgage financing of $3,888,000 and $484,000, respectively, to the
lessees pursuant to Mortgage Loans evidenced by master mortgage notes (the
"Master Mortgage Notes") which are collateralized by the building improvements
on the Twelve Pizza Hut Properties. The Master Mortgage Notes bear interest at a
rate of 10.75% per annum and principal and interest are due in equal monthly
installments over 20 years starting July 1, 1996, for ten of the Properties and
starting February 1, 1997, for two of the Properties. The Master Mortgage Notes
equal approximately 85 percent and 76 percent, respectively, of the appraised
value of the related buildings. Management believes that, due to the fact that
the Company owns the underlying land relating to the Twelve Pizza Hut Properties
and due to other underwriting criteria, the Company has sufficient collateral
for the Master Mortgage Notes.
- 3 -
<PAGE>
As of January 8, 1997, the Company had initial commitments to acquire
13 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 13 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.
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent
- -------- --------------- -------------------
<S> <C>
Burger King 20 years; two five-year renewal 11% of Total Cost (1)
Chattanooga, TN (#2) options
Restaurant to be renovated
Golden Corral 15 years; four five-year renewal 10.75% of Total Cost (1)
Winchester, KY options
Restaurant to be constructed
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Hollister, CA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Houston, TX options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
<CAPTION>
Property Percentage Rent Option to Purchase
- -------- --------------- ------------------
<S> <C>
Burger King for each lease year, (i) 8.5% None
Chattanooga, TN (#2) of annual gross sales minus
Restaurant to be renovated (ii) the minimum annual rent
for such lease year
Golden Corral for each lease year, 5% of the during the first through seventh lease
Winchester, KY amount by which annual gross sales years and the tenth through fifteenth
Restaurant to be constructed exceed a to be determined breakpoint lease years only
Jack in the Box for each lease year, (i) 5% at any time
Hollister, CA of annual gross sales minus after the seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Houston, TX of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
- 5 -
<PAGE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent
- -------- --------------- -------------------
<S> <C>
Jack in the Box 18 years; four five-year renewal 10.75% of Total Cost (1);
Humble, TX option increases by 8% after the fifth
Restaurant to be constructed lease year and by 10% after
every five years thereafter
during the lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Kent, WA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
<CAPTION>
Property Percentage Rent Option to Purchase
- -------- --------------- ------------------
<S> <C>
Jack in the Box for each lease year, (i) 5% at any time after the
Humble, TX of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Kent, WA of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
- 6 -
<PAGE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent
- -------- --------------- -------------------
<S> <C>
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Kingsburg, CA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Lewiston, ID options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Moscow, ID options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Murietta, CA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Oxnard, CA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
Jack in the Box 18 years; four five-year renewal 10.25% of Total Cost (1);
Palmdale, CA options increases by 8% after the fifth
Restaurant to be constructed lease year and after every five
years thereafter during the
lease term
<CAPTION>
Property Percentage Rent Option to Purchase
- -------- --------------- ------------------
<S> <C>
Jack in the Box for each lease year, (i) 5% at any time after the
Kingsburg, CA of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Lewiston, ID of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Moscow, ID of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Murietta, CA of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Oxnard, CA of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
Jack in the Box for each lease year, (i) 5% at any time after the
Palmdale, CA of annual gross sales minus seventh lease year (2)
Restaurant to be constructed (ii) the minimum annual rent
for such lease year
- 7 -
<PAGE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent
- -------- --------------- -------------------
<S> <C>
Shoney's 20 years; two five-year renewal 11% of Total Cost (1);
Indian Harbor, FL options increases by 10% after the fifth
Restaurant to be renovated lease year and after every five
years thereafter during the
lease term
<CAPTION>
Property Percentage Rent Option to Purchase
- -------- --------------- ------------------
<S> <C>
Shoney's for each lease year, 6% of at any time after the
Indian Harbor, FL the amount by which annual seventh lease year
Restaurant to be renovated gross sales exceed
$1,500,000 but are less than
$1,750,000, plus 4% of the
amount by which annual
gross sales exceed
$1,750,000
</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.
- 8 -
<PAGE>
The following table sets forth the location of the 48 Properties acquired by the
Company, including the Twelve Pizza Hut Properties in which the Company acquired
the land only, 32 Properties in which the Company acquired the land and building
and the four Properties in which the Company acquired the building only, from
April 10, 1996 through January 8, 1997, a description of the competition, and a
summary of the principal terms of the acquisition and lease of each Property.
- 9 -
<PAGE>
PROPERTY ACQUISITIONS
From April 10, 1996 through January 8, 1997
<TABLE>
<CAPTION>
Lease Expira-
Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
TGI Friday's (3) 04/24/96 09/2008; no
(the "Hamden Property") (3) renewal options
Restaurant to be constructed
The Hamden Property is located at the
southeast quadrant of Skiff Street and
Route 10 in Hamden, New Haven
County, Connecticut, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Hamden Property
include a China Buffet, a Chili's, a Red
Lobster, a McDonald's, a Wendy's, and
several local restaurants.
Wendy's (20) $322,292 05/08/96 05/2016; two
(the "Knoxville Property") (excluding five-year renewal
Restaurant to be constructed closing and options
development
The Knoxville Property is located on the costs) (3)
north side of Western Avenue in
Knoxville, Knox County, Tennessee, in
an area of mixed retail, commercial, and
residential development. Other fast-food
and family-style restaurants located in
proximity to the Knoxville Property
include a KFC, a McDonald's, a Taco
Bell, a Kenny Rogers Roasters, a Long
John Silver's, a Krystal, a Hardee's, a
Shoney's, and several local restaurants.
<CAPTION>
Minimum Option
Property Location and Competition Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------------- --------------- -----------
<S> <C>
TGI Friday's 15.043% of Total Cost (4); None at any time
(the "Hamden Property") increases by 10% after the after the
Restaurant to be constructed fifth lease year and after every third lease
five years thereafter during the year (5)
The Hamden Property is located at the lease term
southeast quadrant of Skiff Street and
Route 10 in Hamden, New Haven
County, Connecticut, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Hamden Property
include a China Buffet, a Chili's, a Red
Lobster, a McDonald's, a Wendy's, and
several local restaurants.
Wendy's (20) 10.25% of Total Cost; for each lease at any time
(the "Knoxville Property") increases to 10.76% of Total year, (i) 6% of after the
Restaurant to be constructed Cost during the fourth through annual gross seventh lease
sixth lease years, increases to sales minus (ii) year
The Knoxville Property is located on the 11.95% of Total Cost during the minimum
north side of Western Avenue in the seventh through tenth lease annual rent for
Knoxville, Knox County, Tennessee, in years, increases to 12.70% of such lease year
an area of mixed retail, commercial, and Total Cost during the eleventh
residential development. Other fast-food through fifteenth lease years
and family-style restaurants located in and increases to 13.97% of
proximity to the Knoxville Property Total Cost during the sixteenth
include a KFC, a McDonald's, a Taco through twentieth lease years
Bell, a Kenny Rogers Roasters, a Long (4)
John Silver's, a Krystal, a Hardee's, a
Shoney's, and several local restaurants.
- 10 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
Golden Corral $586,687 05/08/96 10/2011; two
(the "Port Richey Property") (excluding five-year renewal
Restaurant to be constructed closing and options
development
costs)(3)
The Port Richey Property is located on
the southeast quadrant of the
intersection of U.S. 19 and Stone Road,
Port Richey, Pasco County, Florida, in
an area of mixed retail, commercial, and
residential development. Other
fast-food and family-style restaurants
located in proximity to the Port Richey
Property include a Boston Market, a
Morrison's, a Burger King, a Checkers, a Bob
Evans, a Wendy's, a KFC, a Chili's, and
several local restaurants.
Twelve Pizza Hut Properties - Land
only
Ten Properties (8)(9) - located in Beaver, $1,512,000 05/17/96 05/2016; two
West Virginia (the "Beaver Property"), (excluding ten-year renewal
Bluefield, West Virginia (the "Bluefield closing costs) options
Property"), Huntington, West Virginia
(the"Hunting- ton Property"), Hurricane,
West Virginia (the "Hurricane Property"),
Milton, West Virginia (the "Milton Property"),
Ronceverte, West Virginia (the "Ronceverte
Property"), Beckley, West Virginia
(the "Beckley Property"), Belle, West Virginia
(the "Belle Property"), Cross
Lanes, West Virginia (the "Cross Lanes
Property") and Marietta, Ohio (the
"Marietta Property").
<CAPTION>
Minimum Option
Annual Rent (2) Percentage Rent To Purchase
--------------- --------------- -----------
<S> <C>
Golden Corral 11.25% of Total Cost (4); for each lease during the
(the "Port Richey Property") increases by 8% after the fifth year, eighth and
Restaurant to be constructed lease year and after every five commencing in ninth lease
years thereafter during the the second lease years only
lease term year (i) 5% of (7)
annual gross
The Port Richey Property is located on sales minus (ii)
the southeast quadrant of the the minimum
intersection of U.S. 19 and Stone Road, annual rent for
Port Richey, Pasco County, Florida, in such lease year
an area of mixed retail, commercial, and (6)
residential development. Other
fast-food and family-style restaurants
located in proximity to the Port Richey
Property include a Boston Market, a
Morrison's, a Burger King, a Checkers, a Bob
Evans, a Wendy's, a KFC, a Chili's, and
several local restaurants.
Twelve Pizza Hut Properties - Land
only
Ten Properties (8)(9) - located in Beaver, $166,320; increases by 10% None at any time
West Virginia (the "Beaver Property"), after the fifth and tenth after the
Bluefield, West Virginia (the "Bluefield lease years and 12% after the seventh lease
Property"), Huntington, West Virginia fifteenth lease year year
(the"Hunting- ton Property"), Hurricane,
West Virginia (the "Hurricane Property"),
Milton, West Virginia (the "Milton Property"),
Ronceverte, West Virginia (the "Ronceverte
Property"), Beckley, West Virginia
(the "Beckley Property"), Belle, West Virginia
(the "Belle Property"), Cross
Lanes, West Virginia (the "Cross Lanes
Property") and Marietta, Ohio (the
"Marietta Property").
- 11 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
The Beaver Property is located on
the north side of U.S. Route 19 in Beaver,
Raleigh County, West Virginia, in an area
of mixed retail, commercial, and
residential development. Other
fast-food and family-style restaurants
located in proximity to the Beaver
Property include a McDonald's, a Hardee's,
a Wendy's, and a Long John Silver's.
The Bluefield Property is located on the
north side of Bluefield Avenue in
Bluefield, Mercer County, West Virginia,
in an area of mixed retail, commercial,
and residential development. Other fast-food
and family-style restaurants
located in proximity to the Bluefield Property
include a McDonald's, a Hardee's,
a Captain D's, and a Shoney's. (12)
The Huntington Property is located on the
south side of Madison Avenue in
Huntington, Cabell County, West Virginia,
in an area of mixed retail,
commercial, and residential development.
Other fast-food and family-style
restaurants located in proximity to the
Huntington Property include an Arby's,
three Burger Kings, a Chi Chi's, two
Dairy Queens, a Hardee's, a KFC, a Long
John Silver's, two McDonald's, a Papa
John's, a Rax, a Red Lobster, a Steak &
Ale, a Taco Bell, and several local restaurants.
<PAGE>
<CAPTION>
Minimum Option
Property Location and Competition Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------------- --------------- -----------
<S> <C>
The Beaver Property is located on
the north side of U.S. Route 19 in Beaver,
Raleigh County, West Virginia, in an area
of mixed retail, commercial, and
residential development. Other
fast-food and family-style restaurants
located in proximity to the Beaver
Property include a McDonald's, a Hardee's,
a Wendy's, and a Long John Silver's.
The Bluefield Property is located on the
north side of Bluefield Avenue in
Bluefield, Mercer County, West Virginia,
in an area of mixed retail, commercial,
and residential development. Other fast-food
and family-style restaurants
located in proximity to the Bluefield Property
include a McDonald's, a Hardee's,
a Captain D's, and a Shoney's. (12)
The Huntington Property is located on the
south side of Madison Avenue in
Huntington, Cabell County, West Virginia,
in an area of mixed retail,
commercial, and residential development.
Other fast-food and family-style
restaurants located in proximity to the
Huntington Property include an Arby's,
three Burger Kings, a Chi Chi's, two
Dairy Queens, a Hardee's, a KFC, a Long
John Silver's, two McDonald's, a Papa
John's, a Rax, a Red Lobster, a Steak &
Ale, a Taco Bell, and several local restaurants.
- 12 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
The Hurricane Property is located on
the southwest side of Hurricane Creek Road
in Hurricane, Putnam County, West Virginia,
in an area of mixed retail,
commercial, and residential development.
Other fast-food and family-style
restaurants located in proximity to the
Hurricane Property include a McDonald's,
a Subway Sandwich Shop, and several
local restaurants. (12)
The Milton Property is located on the
northeast corner of East Main Street and
Brickyard Avenue in Milton, Cabell County,
West Virginia, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Milton Property include a
McDonald's, a Subway Sandwich Shop, a
Dairy Queen, and several local
restaurants.
The Ronceverte Property is located on the
north side of Seneca Trail in
Ronceverte, Greenbrier County, West Virginia,
in an area of mixed retail,
commercial, and residential development. Other
fast-food and family-style
restaurants located in proximity to the Ronceverte
Property include a KFC, a
Long John Silver's, a Subway Sandwich Shop, and
several local restaurants.
<CAPTION>
Minimum Option
Property Location and Competition Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------------- --------------- -----------
<S> <C>
The Hurricane Property is located on
the southwest side of Hurricane Creek Road
in Hurricane, Putnam County, West Virginia,
in an area of mixed retail,
commercial, and residential development.
Other fast-food and family-style
restaurants located in proximity to the
Hurricane Property include a McDonald's,
a Subway Sandwich Shop, and several
local restaurants. (12)
The Milton Property is located on the
northeast corner of East Main Street and
Brickyard Avenue in Milton, Cabell County,
West Virginia, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Milton Property include a
McDonald's, a Subway Sandwich Shop, a
Dairy Queen, and several local
restaurants.
The Ronceverte Property is located on the
north side of Seneca Trail in
Ronceverte, Greenbrier County, West Virginia,
in an area of mixed retail,
commercial, and residential development. Other
fast-food and family-style
restaurants located in proximity to the Ronceverte
Property include a KFC, a
Long John Silver's, a Subway Sandwich Shop, and
several local restaurants.
- 13 -
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Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
The Beckley Property is located on the
north side of Harper Road in Beckley,
Raleigh County, West Virginia, in an
area of mixed retail, commercial, and
residential development. Other fast-food
and family-style restaurants located in
proximity to the Beckley Property include
a McDonald's, a Long John Silver's, a
Wendy's, a Shoney's, a Bob Evans, a
Subway Sandwich Shop, a Hardee's, and
several local restaurants.
The Belle Property is located on the southwest
side of Dupont Avenue in Belle,
Kanawha County, West Virginia, in an area of
mixed retail, commercial, and
residential development. Other fast-food and
family-style restaurants located in
proximity to the Belle Property include
several local restaurants.
The Cross Lanes Property is located on the
northwest side of Goff Mountain Road
in Cross Lanes, Kanawha County, West Virginia,
in an area of mixed retail,
commercial, and residential development. Other
fast-food and family-style
restaurants located in proximity to the Cross
Lanes Property include a Hardee's,
a Papa John's, a Captain D's, a McDonald's, a
Taco Bell, a Bob Evans, a Wendy's,
a Shoney's a KFC, and several local restaurants.
<CAPTION>
Minimum Option
Property Location and Competition Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------------- --------------- -----------
<S> <C>
The Beckley Property is located on the
north side of Harper Road in Beckley,
Raleigh County, West Virginia, in an
area of mixed retail, commercial, and
residential development. Other fast-food
and family-style restaurants located in
proximity to the Beckley Property include
a McDonald's, a Long John Silver's, a
Wendy's, a Shoney's, a Bob Evans, a
Subway Sandwich Shop, a Hardee's, and
several local restaurants.
The Belle Property is located on the southwest
side of Dupont Avenue in Belle,
Kanawha County, West Virginia, in an area of
mixed retail, commercial, and
residential development. Other fast-food and
family-style restaurants located in
proximity to the Belle Property include
several local restaurants.
The Cross Lanes Property is located on the
northwest side of Goff Mountain Road
in Cross Lanes, Kanawha County, West Virginia,
in an area of mixed retail,
commercial, and residential development. Other
fast-food and family-style
restaurants located in proximity to the Cross
Lanes Property include a Hardee's,
a Papa John's, a Captain D's, a McDonald's, a
Taco Bell, a Bob Evans, a Wendy's,
a Shoney's a KFC, and several local restaurants.
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Purchase Date tion and
Property Location and Competition Price (1) Acquired Renewal Options
- --------------------------------- --------- -------- ---------------
<S> <C>
The Marietta Property is located on
the east side of Acme Street in Marietta,
Washington County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and family-
style restaurants located in proximity
to the Marietta Property include a Burger
King, a Captain D's, a Dairy Queen, an
Elby's Big Boy, a KFC, a Long John Silver's,
a McDonald's, a Papa John's, a
Subway Sandwich Shop, a Taco Bell, a Wendy's,
and several local restaurants.
(12)
Two Properties (10)(11) - located in $316,000 12/05/96 12/2016; two
Toledo, Ohio (the "Toledo Property") (excluding ten-year renewal
and Bowling Green, Ohio (the "Bowling closing costs) options
Green Property")
The Toledo Property is located on the
northwest corner of the intersection of
Broadway Avenue and South Avenue, in
Toledo, Lucas County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in proximity
to the Toledo Property include a
Taco Bell, a McDonald's, a Rally's, a Subway
Sandwich Shop, and a local
restaurant.
<CAPTION>
Minimum Option
Property Location and Competition Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------------- --------------- -----------
The Marietta Property is located on
the east side of Acme Street in Marietta,
Washington County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and family-
style restaurants located in proximity
to the Marietta Property include a Burger
King, a Captain D's, a Dairy Queen, an
Elby's Big Boy, a KFC, a Long John Silver's,
a McDonald's, a Papa John's, a
Subway Sandwich Shop, a Taco Bell, a Wendy's,
and several local restaurants.
(12)
Two Properties (10)(11) - located in $34,760; increases by 10% None at any time
Toledo, Ohio (the "Toledo Property") after the fifth and tenth after the
and Bowling Green, Ohio (the "Bowling lease years and 12% after seventh lease
Green Property") the fifteenth lease year year
The Toledo Property is located on the
northwest corner of the intersection of
Broadway Avenue and South Avenue, in
Toledo, Lucas County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in proximity
to the Toledo Property include a
Taco Bell, a McDonald's, a Rally's, a Subway
Sandwich Shop, and a local
restaurant.
</TABLE>
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<TABLE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
<S> <C>
The Bowling Green Property is located
on the southeast corner of the
intersection of East Wooster Avenue
and Mercer Road, in Bowling Green,
Wood County, Ohio, in an area of
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Bowling Green Property
include a Big Boy, a McDonald's,
a Wendy's, a Taco Bell, a Chi
Chi's, a Burger King, and a
Little Caesar's.
Denny's $367,672 06/05/96 06/2016; two 10.625% of Total for each lease during
(23) (excluding five-year renewal Cost (4); increases year, (i) 5% of the eighth,
closing and options by 11% after the fifth annual gross tenth, and
(the "Hillsboro Property") development lease year and after sales minus (ii) twelfth lease
Restaurant to be constructed costs) (3) every five years the minimum years only
thereafter during the annual rent for
The Hillsboro Property is lease term such lease year
located on the south side
of Highway 22 in Hillsboro,
Hill County, Texas, in an
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Hillsboro Property include
a McDonald's, an Arby's, a
Whataburger, a KFC, a Golden
Corral, and a Grandy's.
- 16 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
<S> <C>
Denny's (23) (the "McKinney $977,256 06/05/96 12/2015; two $104,013; increases for each lease during the
Property") (excluding five-year by 11% after the year, (i) 5% of eighth, tenth,
Existing Restaurant closing renewal fifth lease year annual gross and twelfth
costs) options and after every sales minus (ii) lease years
The McKinney Property is located five years thereafter the minimum only
at the southwest quadrant of the during the lease term annual rent for
intersection of White Avenue and such lease year
U.S. 75 in McKinney, Collin County, (6)
Texas, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the McKinney
Property include an Applebee's,
an Arby's, a Boston Market, a Jack
in the Box, a Chili's, a Dairy Queen,
an IHOP, a Golden Corral, a Pizza
Hut, and several local restaurants.
Wendy's (20) $586,143 06/05/96 06/2016; 10.25% of Total for each lease at any time
(the "Camarillo Property") (excluding two five-year Cost; increases year, (i) 6% of after the
Restaurant to be constructed closing and renewal options to 10.76% of Total annual gross seventh lease
development Cost during the sales minus (ii) year
costs) (3) fourth through the minimum annual
The Camarillo Property is located sixth lease years, rent for such
at the southwest quadrant of Las increases to 11.95% lease year
Posas Road and the Ventura Freeway of Total Cost during
in Camarillo, Ventura County, the seventh through
California, in an area of mixed tenth lease years,
retail, commercial, and residential increases to 12.70%
development. Other fast-food and of Total Cost during
family-style restaurants located the eleventh through
in proximity to the Camarillo fifteenth lease years
Property include an Applebee's, and increases to 13.97%
a Del Taco, a McDonald's, and of Total Cost during
several local restaurants. the sixteenth through
twentieth lease years
(4)
- 17 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
<S> <C>
Wendy's (20) $66,153 06/05/96 05/2015; two 12.204% of Total for each lease upon the
(the "Sevierville (excluding (3) five-year renewal Cost (4);increases year, (i) 6% of expiration of
Property") closing and options followed by 8% after the fifth annual gross the initial
Restaurant to be constructed development by one fifteen- lease year and after sales times the term of the
costs) (3) year renewal every five years Building Overage lease and
The Sevierville Property is option thereafter during the Multiplier (13) during any
located on the west side of Highway lease term minus (ii) the renewal
441 in Sevierville, Sevier County, minimum annual period
Tennessee, in an area of mixed rent for such thereafter
retail, commercial, and residential lease year (15)
development. Other fast-food and
family-style restaurants located
in proximity to the Sevierville
Property include a Damon's Ribs, an
IHOP, a Ruby Tuesday's, and several
local restaurants.
Boston Market (21) $408,879 06/18/96 06/2011; five 10.40% of Total Cost for each lease at any time
(the "Ellisville Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year, fifth lease
development year and after every (i) 5% of annual year
The Ellisville Property is costs) (3) five years thereafter gross sales minus
located on the north side of during the lease term (ii) the minimum
Manchester Road, in Ellisville, annual rent for
St. Louis County, Missouri, in an such lease year
area of mixed retail, commercial,
and residential development. Other
fast-food and family-style
restaurants located in proximity
to the Ellisville Property
include a KFC, a Burger King, a
Ponderosa, a Taco Bell, a McDonald's,
a Long John Silver's, a Pizza Hut, a
Hardee's, a Steak and Shake, a Red
Lobster, and several local restaurants.
- 18 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston Market (21) $603,386 06/19/96 06/2011; 10.40% of Total Cost for each lease at any time
(the "Golden Valley Property") (excluding five five-year (4); increases by 10% year after the after the
closing and renewal options after the fifth lease fifth lease year, fifth lease
Restaurant to be constructed development year and after every (i) 5% of annual year
costs) (3) five years thereafter gross sales minus
The Golden Valley Property is during the lease term (ii) the minimum
located on the north side of annual rent for
Highway 55 at Rhode Island such lease year
Avenue in Golden Valley,
Hennepin County, Minnesota,
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Golden Valley Property include
a McDonald's, a Perkins, and
several local restaurants.
Jack in the Box (22) $396,646 06/19/96 06/2014; 10.75% of Total for each lease at any time
(the "Humble #1 Property") (excluding four five-year Cost (4); increases year, (i) 5% of after the
Restaurant to be constructed closing and renewal options by 8% after the fifth annual gross seventh
development lease year and by 10% sales minus (ii) lease year
The Humble #1 Property is costs) (3) after every five years the minimum
located at the north side thereafter during the annual rent
of FM 1960 East in Humble, lease term for such lease
Harris County, Texas, in an year (6)
area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Humble Property include a KFC,
a McDonald's, a Taco Bell,
a Wendy's, and a Burger King.
- 19 -
<PAGE>
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Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston Market $350,358 07/09/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Corvallis Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year, fifth lease
development year and after every (i) 5% of annual year
The Corvallis Property is costs) (3) five years thereafter gross sales minus
located at the southeast quadrant during the lease term (ii) the minimum
of the intersection of Highway annual rent for
99 and Northeast Circle Boulevard such lease year
in Corvallis, Benton County,
Oregon, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Corvallis
Property include a KFC, a Wendy's,
a Subway Sandwich Shop, a Sizzler,
a McDonald's, a Burger King, a
Taco Bell, and several local
restaurants.
Jack in the Box (22) $343,160 07/09/96 07/2014; four 10.75% of Total Cost for each lease at any time
(the "Houston #1 Property") (excluding five-year (4); increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing and renewal options after the fifth lease annual gross seventh
development year and by 10% after sales minus (ii) lease year
The Houston #1 Property is costs) (3) every five years the minimum
located on the east side of thereafter during the annual rent for
Veterans Memorial Drive with an lease term such lease year
access easement on Beltway 8 in (6)
Houston, Harris County, Texas, in
an area of mixed retail, commercial,
and residential development. Other
fast-food and family-style
restaurants located in proximity
to the Houston #1 Property
include a Whataburger, an Arby's,
a KFC, a Burger King, and several
local restaurants.
- 20 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Arby's (24) $739,628 07/10/96 07/2016; two $75,812; increases by for each lease during the
(the "Kendallville Property") (excluding five-year 4.14% after the third year, (i) 4% of seventh and
Existing restaurant closing renewal options lease year and after annual gross tenth lease
costs) every three years sales minus (ii) years only
The Kendallville Property is thereafter during the the minimum
located on the north side of lease term annual rent for
West North Street in Kendallville, such lease year
Noble County, Indiana, in an area
of mixed retail, commercial and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Kendallville Property
include a KFC, a McDonald's, a
Wendy's, a Pizza Hut, a Subway
Sandwich Shop, and several local
restaurants
Boston Market $499,820 07/15/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Rockwall Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year, fifth lease
development year and after every (i) 4% of annual year
The Rockwall Property is located costs) (3) five years thereafter gross sales minus
on the northeast corner of FM 740 during the lease term (ii) the minimum
and the to be constructed Steger annual rent for
Town Drive in Rockwall, Rockwall such lease year
County, Texas, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Rockwall Property
include an Arby's, a Jack in the
Box, a Dairy Queen, a KFC, a
McDonald's, a Pizza Hut, a Sonic
Drive-In, a Whataburger, a Wendy's,
a Chili's, a Taco Bell, and several
local restaurants.
- 21 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston Market (25) $762,737 07/24/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Upland Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year, fifth lease
development year and after every (i) 4% of annual year
The Upland Property is located costs) (3) five years thereafter gross sales minus
at the northeast quadrant of the during the lease term (ii) the minimum
intersection of Mountain Avenue annual rent for
and Foothill Boulevard, Upland, such lease year
San Bernardino County, California
in an area of mixed retail,
commercial, and residential
development. Other fast-food
and family-style restaurants
located in proximity to the
Upland Property include an
Burger King, a Taco Bell, a KFC,
two Del Taco's, a Jack in the Box,
a McDonald's, an Outback Steakhouse
and several local restaurants.
Jack in the Box (22) $387,621 08/05/96 07/2014; four 10.75% of Total Cost for each lease at any time
(the "Houston #2 Property") (excluding five-year (4); increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing and renewal options after the fifth lease annual gross seventh
development year and by 10% after sales minus (ii) lease year
The Houston #2 Property is costs (3) every five years the minimum
located on the south side of thereafter during the annual rent for
Interstate 45 and U.S. Highway lease term such lease year
90A in Houston, Harris County, (6)
Texas, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Houston #2
Property include two Whataburger's,
a Taco Bell, a Wendy's, a Pizza Hut,
a Little Caesar's, a McDonald's, and
a local restaurant.
- 22 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Applebee's $879,753 08/23/96 08/2016; two 11% of Total Cost for each lease at any time
(the "Montclair Property") (excluding five-year (4); increases by year, (i) 5% of after the
Restaurant to be constructed closing and renewal options 10% after the fifth annual gross fifth lease
development lease year and after sales minus (ii) year (17)
The Montclair Property is located costs) (3) every five years the minimum
on a pad site within the Montclair thereafter during annual rent for
Plaza Regional Mall, on the east the lease term such lease year
side of Montevista Avenue, north
of I-10, in Montclair, San
Bernardino County, California,
in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Montclair
Property include an Olive Garden,
a Tony Roma's, a Red Lobster, and
a local restaurant.
Golden Corral $997,296 08/23/96 05/2010; three $142,823; increases for each lease upon the
(the "Brooklyn Property") (excluding (18) five-year by 10% after the fifth year, (i) 4% of expiration
Existing restaurant closing renewal options lease year and after annual gross of the lease
costs) every five years sales minus (ii) (15)
The Brooklyn Property is located thereafter during the the minimum annual
at Northcliff Avenue and Ridge lease term rent for such lease
Road in Brooklyn, Cuyahoga County, year
Ohio, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located in
proximity to the Brooklyn Property
include an Applebee's, a McDonald's,
a Dunkin Donuts, a Boston Market,
and several local restaurants.
- 23 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston $664,898 09/06/96 09/2011; five 10.38% of Total Cost for each lease at any time
Market (25) (excluding five-year (4); increases by 10% year after the after the
closing and renewal options after the fifth lease fifth lease year, fifth
(the "La Quinta development year and after every (i) 4% of annual lease year
Property") costs) (3) five years thereafter gross sales minus
Restaurant to be constructed during the lease term (ii) the minimum
annual rent for
The La Quinta Property is such lease year
located on a pad site within the
Albertson's/Walmart Shopping Center,
at the northeast quadrant of State
Highway 111 and Simon Drive, in La
Quinta, Riverside County, California,
in an area of mixed retail,
commercial, residential, and
recreational development. Other
fast-food and family-style
restaurants located in proximity to
the La Quinta Property include a
Taco Bell, a McDonald's, and several
local restaurants.
Boston Market $559,682 09/17/96 07/2011; five 10.38% of Total Cost for each lease at any time
(the "Merced Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year fifth
development year and after every (i) 4% of annual lease year
The Merced Property is located costs) (3) five years thereafter gross sales minus
at the northwest corner of the during the lease term (ii) the minimum
intersection of "M" Street and annual rent for
Olive Avenue in Merced, Merced such lease year
County, California, in an area
of mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Merced Property include a
Burger King, an IHOP, a Jack in
the Box, a McDonald's, a Pizza
Hut, a Red Lobster, and several
local restaurants.
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<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Ryan's Family $654,588 09/18/96 09/2016; two 10.875% of Total Cost for each lease at any time
Steak House (excluding five-year (4); increases by 12% year, (i) 5% of after the
closing and renewal options after the fifth lease annual gross tenth
(the "Spring Hill development year and after every sales minus (ii) lease year
Property") costs) (3) five years thereafter the minimum
Restaurant to be constructed during the lease term annual rent for
such lease year
The Spring Hill Property is
located at the northwest corner
of Cortez Boulevard and Chambord
Street in Spring Hill, Hernando
County, Florida, in an area of
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Spring Hill Property
include an Arby's, a McDonald's,
a Subway Sandwich Shop, a Wendy's,
and a local restaurant.
Arby's (24) $790,676 09/18/96 09/2016; two $81,044; increases by for each lease during the
(the "Avon Property") (excluding five-year 4.14% after the third year, (i) 4% of seventh and
Existing restaurant closing renewal options lease year and after annual gross tenth lease
costs) every three years sales minus (ii) years only
The Avon Property is located on thereafter during the the minimum
the southwest corner of Avon lease term annual rent for
Crossing Drive and Merchants such lease year
Drive in the Avon Crossing Shopping
Center, in Avon, Hendricks County,
Indiana, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Avon Property
include a Burger King, a McDonald's,
a Noble Roman's Pizza, a Taco Bell,
a Wendy's, and several local
restaurants.
- 25 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston Market (21) $697,652 09/19/96 09/2011; five 10.38% of Total Cost for each lease at any time
(the "Florissant Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year fifth
development year and after every (i) 5% of annual lease year
The Florissant Property is costs) (3) five years thereafter gross sales minus
located on the north side of U.S. during the lease term (ii) the minimum
Highway 67 North, northeast of the annual rent for
intersection of North Waterford such lease year
Road and U.S. Highway 67, in
Florissant, St. Louis County,
Missouri, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Florissant
Property include an Applebee's, a
Burger King, a Church's Fried
Chicken, a Dairy Queen, a Denny's, a
Domino's, a KFC, a McDonald's, a
Ponderosa, a Rally's, a Shoney's,
a Subway Sandwich Shop, two Taco
Bell's, a Wendy's, a White Castle,
and several local restaurants.
Applebee's $732,477 09/19/96 09/2016; two 10.87% of Total Cost for each lease at any time
(the "Salinas Property") (excluding five-year (4); increases by 10% year, (i) 5% of after the
Restaurant to be constructed closing and renewal options after the fifth lease annual gross seventh
development year and after every sales minus (ii) lease year
The Salinas Property is located costs) (3) five years thereafter the minimum
on the west side of North Davis during the lease term annual rent for
Road in the Westridge Shopping such lease year
Center, in Salinas, Monterey County,
California, in an area of mixed
retail, commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Salinas Property
include an IHOP, and several local
restaurants.
- 26 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Burger King (27) $940,934 10/02/96 12/2016; two 11% of Total Cost (4) for each lease None
(the "Chicago Property") (excluding five-year year, (i) 8.5% of
Restaurant to be constructed closing and renewal options annual gross
development sales minus (ii)
The Chicago Property is located costs)(3) the minimum
on the southwest corner of 40th annual rent for
Street and Pulaski Road, in such lease year
Chicago, Cook County, Illinois,
in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Chicago
Property include an Arby's, a Long
John Silver's, and a local restaurant.
Wendy's (3) 10/16/96 10/2011; three 13.39% of Total Cost for each lease upon the
(the "San Diego Property") (3) five-year (4); increases by 8% year, (i) 6% of expiration
Restaurant to be constructed renewal options after the fifth lease annual gross of the
year and after every sales times the initial
The San Diego Property is located five years thereafter Building Overage term of
at the northeast corner of Gill during the lease term Multiplier (14) the lease
Village Way and Rio San Diego minus (ii) the and during
Drive, in San Diego, San Diego minimum annual any renewal
County, California, in an area rent for such period
of mixed retail, commercial, and lease year thereafter
residential development. Other
fast-food and family-style
restaurants located in proximity
to the San Diego Property include
a Burger King, a Jack in the Box,
and a McDonald's.
- 27 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Golden Corral (26) $1,060,031 11/19/96 10/2011; four 10.75% of Total Cost for each lease during the
(the "Lufkin Property") (excluding five-year (4) year, 5% of the first through
Restaurant to be constructed closing and renewal options amount by which seventh lease
development annual gross years and the
The Lufkin Property is located costs) (3) sales exceed tenth through
on the east side of South First $2,543,062 fifteenth lease
Street and the west side of years only
Brentwood Drive, in Lufkin,
Angelica County, Texas, in an area
of mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Lufkin Property include a
Burger King, a Whataburger, an
Arby's, a Long John Silver's, a
Sonic Drive-In, a McDonald's, and
several local restaurants.
Golden Corral $1,306,876 12/03/96 12/2016; two $147,024; increases for each lease at any
(the "Columbia Property") (excluding five-year by 12% after the year, (i) 6% of time after
Existing Restaurant closing renewal options fifth lease year and annual gross the seventh
costs) after every five sales minus (ii) lease year
The Columbia Property is located years thereafter the minimum
on the southeast corner of South during the lease term annual rent for
James Campbell Boulevard and such lease year
Hillary Drive, in Columbia, Maury
County, Tennessee, in an area of
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Columbia Property include
an Applebee's, a Checkers, a
Krystal's, a Ponderosa, a Ruby
Tuesday, a Sonic, a Subway Sandwich
Shop, a Shoney's, an Arby's, a
Burger King, a Waffle House, a
New Orleans Famous Fried Chicken,
and a Western Sizzling.
- 28 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Burger King (27) $613,608 12/05/96 12/2016; two 11% of Total Cost for each lease None
(the "Chattanooga Property") (excluding five-year (4) year, (i) 8.5% of
Restaurant to be constructed closing and renewal options annual gross
development sales minus (ii)
The Chattanooga Property is costs) (3) the minimum
located on the southwest corner annual rent for
of Amnicola Highway and Riverport such lease year
Road, in Chattanooga, Hamilton
County, Tennessee, in an area of
mixed commercial and manufacturing
development. Other fast-food and
family-style restaurants located
in proximity to the Chattanooga
Property include a Bo Jangles.
Golden Corral $1,654,144 12/16/96 12/2016; two $186,091; increases for each lease at any time
(the "Eastlake Property") (excluding five-year by 10% after the fifth year, (i) 5% of after the
Existing restaurant closing renewal options lease year and after annual gross seventh
costs) every five years sales minus (ii) lease year
The Eastlake Property is located thereafter during the minimum
within the southwest quadrant of the lease term annual rent for
the intersection formed by Vine such lease year
Street and 337th Street, in
Eastlake, Lake County, Ohio, in
an area of mixed retail and
commercial development. Other
fast-food and family-style
restaurants located in proximity
to the Eastlake Property include
a Wendy's, a Little Caesar's, a
Subway Sandwich Shop, and several
local restaurants.
- 29 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Golden Corral (26) $363,400 12/17/96 12/2011; four 10.75% of Total Cost for each lease during the
(the "Moberly Property") (excluding five-year (4) year, 5% of the first
Restaurant to be constructed closing and renewal options amount by which through
development annual gross seventh
The Moberly Property is located costs) (3) sales exceed lease years
on the northwest corner of U.S. $2,199,271 (6) and the
Highway 24 East and Silva Lane, tenth
in Moberly, Randolph County, through
Missouri, in an area of mixed fifteenth
retail, commercial, and lease
residential development. Other years only
fast-food and family-style
restaurants located in proximity
to the Moberly Property include
a Pizza Hut, a Hardee's, a Burger
King, a Taco Bell, a Long John
Silver's, a McDonald's, a KFC, and
several local restaurants.
Boston Market (21) $252,130 12/17/96 6/2011; five $82,437; increases for each lease at any time
(the "St. Joseph Property") (excluding five-year by 10% after the year after the after the
Existing restaurant closing renewal fifth lease year fifth lease year, fifth
costs) (16) options and after every (i) 5% of annual lease year
The St. Joseph Property is five years gross sales minus
located in the Venture/Cub Foods thereafter during (ii) the minimum
shopping center on the east side the lease term annual rent for
of North Belt Highway, in St. such lease year
Joseph, Buchanan County, Missouri,
in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the St. Joseph
Property include a KFC, two
McDonald's, two Taco Bell's, a
Long John Silver's, a Hardee's, an
Arby's, a Black-eyed Pea, two
Burger King's, a Church's Fried
Chicken, two Pizza Hut's, a Ryan's
Family Steak House, a Sonic, and a
Wendy's.
- 30 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Boston Market $550,540 12/17/96 12/2011; five 10.38% of Total Cost for each lease at any time
(the "Atlanta Property") (excluding five-year (4); increases by 10% year after the after the
Restaurant to be constructed closing and renewal options after the fifth lease fifth lease year, fifth lease
development year and after every (i) 5% of annual year
The Atlanta Property is located costs) (3) five years thereafter gross sales minus
on the south side of Briarcliff during the lease term (ii) the minimum
Road at the junction with North annual rent for
Druid Hills Road, in Atlanta, such lease year
Dekalb County, Georgia, in an
area of mixed retail, commercial,
and residential development. Other
fast-food and family-style
restaurants located in proximity
to the Atlanta Property include an
Arby's, a Burger King, a
Chick-Fil-A, a Grady's, a
McDonald's, a Taco Bell, and several
local restaurants.
Jack in the Box (22) $831,459 12/17/96 12/2014; four $85,225 (19); increases for each lease None
(the "Dallas Property") (excluding five-year by 8% after the fifth year, (i) 5% of
Restaurant to be constructed closing renewal options lease year and after annual gross
costs) every five years sales minus (ii)
The Dallas Property is located (3)(19) thereafter during the the minimum
within the southwest portion of lease term annual rent for
the intersection formed by such lease year
Interstate Highway 20 and Wheatland (6)
Road, in Dallas, Dallas County,
Texas, in an area of mixed retail,
commercial, and residential
development. Other fast-food and
family-style restaurants located
in proximity to the Dallas
Property include an Arby's, a
Wendy's, and a Sonic.
- 31 -
<PAGE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- -------------------- --------------- -----------
<S> <C>
Jack in the Box (22) $1,397,771 01/07/97 01/2015; four $143,272 (19); increases for each lease None
(the "Los Angeles Property") (excluding five-year by 8% after the fifth year, (i) 5% of
Restaurant to be constructed closing renewal options lease year and after annual gross
costs) every five years sales minus (ii)
The Los Angeles Property is (3)(19) thereafter during the the minimum
located at the northwest corner lease term annual rent for
of the intersection of Wilshire such lease year
Boulevard and Sycamore Avenue, in (6)
Los Angeles, 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 Los Angeles
Property include several McDonald's,
a KFC, several Burger Kings, a
Numero Uno Pizza, a Subway Sandwich
Shop, an El Pollo Loco, a Denny's, a
Pizza Hut, a Taco Bell, and several
local restaurants.
Jack in the Box (22) $1,248,333 01/07/97 01/2015; four $127,954 (19); for each lease None
(the "Las Vegas Property") (excluding five-year increases by 8% after year, (i) 5% of
Restaurant to be constructed closing renewal options the fifth lease year annual gross
costs) and after every five sales minus (ii)
The Las Vegas Property is located (3)(19) years thereafter the minimum
at the northeast corner of the during the lease term annual rent for
intersection of Sunset Road and such lease year
Pecos Road, in Las Vegas, Clark (6)
County, Nevada, in an area of
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in proximity
to the Las Vegas Property include
an Arby's, a Burger King, a KFC,
two Del Tacos, a McDonald's, a
Subway Sandwich Shop, an Olive
Garden, an Outback Steakhouse,
two Taco Bells, a Wendy's, a
Dairy Queen, and several local
restaurants.
</TABLE>
- 32 -
<PAGE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
<TABLE>
<CAPTION>
Property Federal Tax Basis Property Federal Tax Basis
<S> <C>
Hamden Property $1,195,000 La Quinta Property $ 485,000
Knoxville Property 510,000 Merced Property 401,000
Port Richey Property 1,208,000 Spring Hill Property 1,363,000
Hillsboro Property 742,000 Avon Property 484,000
McKinney Property 627,000 Florissant Property 618,000
Camarillo Property 672,000 Salinas Property 648,000
Sevierville Property 519,000 Chicago Property 753,000
Ellisville Property 635,000 San Diego Property 641,000
Golden Valley Property 529,000 Lufkin Property 977,000
Humble #1 Property 610,000 Columbia Property 880,000
Corvallis Property 624,000 Chattanooga Property 706,000
Houston #1 Property 620,000 Eastlake Property 1,250,000
Kendallville Property 304,000 Moberly Property 863,000
Rockwall Property 422,000 St. Joseph Property 594,000
Upland Property 433,000 Atlanta Property 683,000
Houston #2 Property 595,000 Dallas Property 507,000
Montclair Property 825,000 Las Angeles Property 567,000
Brooklyn Property 1,040,000 Las Vegas Property 592,000
</TABLE>
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Hamden,
Port Richey, Hillsboro, Lufkin and Moberly Properties, 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) a specified number
of days (ranging from 150 to 180) after execution of the lease. For the
Knoxville, Camarillo, Sevierville, Montclair, Spring Hill , Salinas
and San Diego Properties, 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) a specified number of days (ranging from
120 to 180) after execution of the lease or (iv) the date the tenant
receives from the landlord its final funding of the construction costs.
For the Corvallis, Ellisville, Golden Valley and Rockwall Properties,
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 tenant
receives from the landlord its final funding of the construction costs.
For the Humble #1, Houston #1 and Houston #2 Properties, minimum annual
rent will become due and payable on the earlier of (i) the date the
restaurant opens for business to the public or (ii) 180 days after the
execution of the lease. For the Upland, La Quinta, Merced, Florissant,
St. Joseph and Atlanta Properties, minimum annual rent will become due
and payable on the date the tenant receives from the landlord its final
funding of the construction costs. For the Chicago and Chattanooga
Properties, minimum annual rent will become due and payable on the
possession dates, which are December 28, 1996 and April 4, 1997,
respectively (the "Possession Date"). During the period commencing with
the effective date of the lease to the date minimum annual rent becomes
payable for
- 33 -
<PAGE>
the Knoxville, Camarillo, Sevierville, Ellisville, Golden Valley,
Humble #1, Corvallis, Houston #1, Rockwall, Upland, Houston #2,
Montclair, La Quinta, Merced, Spring Hill, Florissant , Salinas, San
Diego, Lufkin, Moberly, St. Joseph and Atlanta Properties, as described
above, the tenant shall pay monthly "interim rent" equal to a specified
rate per annum (ranging from 10% to 11%) of the amount funded by the
Company in connection with the purchase and construction of the
Properties. For the Chicago Property, "interim rent" equal to 11
percent per annum of the amount funded by the Company in connection
with the purchase and construction of the Property shall accrue prior
to the Possession Date and shall be payable in a single lump sum at the
time of final funding of the construction costs.
(3) The Company accepted an assignment of an interest in the ground lease
relating to the Hamden , Sevierville and San Diego Properties,
effective April 24, 1996 , June 5, 1996 and October 16, 1996,
respectively, in consideration of its funding of certain preliminary
development costs and its agreement to fund remaining development costs
not in excess of the amounts specified below. 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:
<TABLE>
<CAPTION>
Property Estimated Maximum Cost Estimated Final Completion Date
<S> <C>
Hamden Property $1,200,972 Opened for business August 26, 1996
Knoxville Property 830,966 Opened for business July 8, 1996
Port Richey Property 1,675,000 Opened for business September 30, 1996
Hillsboro Property 1,119,248 August 28, 1997
Camarillo Property 1,264,789 Opened for business July 28, 1996
Sevierville Property 517,571 Opened for business June 13, 1996
Ellisville Property 1,026,746 Opened for business September 3, 1996
Golden Valley Property 1,128,899 Opened for business September 30, 1996
Humble #1 Property 949,413 Opened for business September 12, 1996
Corvallis Property 952,684 Opened for business October 6, 1996
Houston #1 Property 926,397 Opened for business September 25, 1996
Rockwall Property 795,087 Opened for business October 27, 1996
Upland Property 977,643 Opened for business September 30, 1996
Houston #2 Property 926,235 Opened for business July 14, 1996
Montclair Property 1,654,545 Opened for business December 16, 1996
La Quinta Property 951,872 Opened for business December 16, 1996
Merced Property 930,834 Opened for business October 6, 1996
Spring Hill Property 1,881,818 February 15, 1997
Florissant Property 1,264,986 Opened for business December 29, 1996
Salinas Property 1,339,000 February 6, 1997
Chicago Property 1,613,636 March 1, 1997
San Diego Property 638,966 Opened for business December 6, 1996
Lufkin Property 1,454,545 Opened for business December 27, 1996
Chattanooga Property 1,181,818 April 4, 1997
Moberly Property 1,294,011 June 15, 1997
Atlanta Property 1,216,003 June 15, 1997
Dallas Property (19) June 15, 1997
Los Angeles Property (19) July 6, 1997
Las Vegas Property (19) July 6, 1997
</TABLE>
- 34 -
<PAGE>
(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, and in the case of the
Hamden, Port Richey and Hillsboro Properties, (iv) "construction
financing costs" during the development period.
(5) If the lessee exercises its purchase option after the third lease year
and before the eleventh lease year, the purchase price to be paid by
the lessee shall be equal to the net present value of the monthly lease
rental payments for the remainder of the lease term (including previous
and scheduled rent increases) discounted at the lesser of (i) 11% per
annum, or (ii) the then-current annual yield on 7-year Treasury
securities plus 4.5%, plus the full amount of any late fees, default
interest, enforcement costs or other sums otherwise due or payable by
the lessee under the lease. If the lessee exercises its option after
the tenth lease year, the purchase price to be paid by the lessee shall
be equal to the net present value of the monthly lease payments for the
remainder of the lease term (based, however, for purposes hereof on the
initial monthly installment amount of annual rental and not including
previous and scheduled increases) discounted at 11% per annum, plus the
full amount of any late fees, default interest, enforcement costs or
other sums otherwise due or payable by the lessee under the lease.
(6) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(7) If the Property is not producing percentage rent and the lessee
determines, in good faith, that the restaurant has become uneconomic
and unsuitable the lessee may elect, during the first through seventh
and again during the tenth through 15th lease years:
(i) to purchase the Property for a purchase price, net of closing
costs, equal to the greater of (a) the then fair-market value of the
Property as determined by an independent appraisal, or (b) 100% of the
Company's original cost for the Property if the Company is successful
in effectuating the lessee's purchase through a tax-free "like-kind"
exchange, or 120% of the Company's original cost for the Property if a
tax-free, "like-kind" exchange is not effectuated; or
(ii) to sublet the Property as described in the section of the
Prospectus entitled "Description of Property Leases - Assignment and
Sublease;" or
(iii) to substitute the Property for another Golden Corral restaurant
property on terms similar to those described in the section of the
Prospectus entitled "Description of Property Leases - Substitution of
Properties."
(8) The lease relating to this Property is a land lease only. The Company
entered into a Mortgage Loan evidenced by a Master Mortgage Note for
$3,888,000 collateralized by building improvements. The Master Mortgage
Note bears interest at a rate of 10.75% per annum and principal and
interest will be collected in equal monthly installments over 20 years
beginning in July 1996.
(9) The Company entered into a Master Lease Agreement for the Beaver,
Bluefield, Huntington, Hurricane, Milton, Ronceverte, Beckley, Belle,
Cross Lanes and Marietta Properties.
- 35 -
<PAGE>
(10) The lease relating to this Property is a land lease only. The Company
entered into a Mortgage Loan evidenced by a Master Mortgage Note for
$484,000 collateralized by building improvements. The Master Mortgage
Note bears interest at a rate of 10.75% per annum and principal and
interest will be collected in equal monthly installments over 20 years
beginning in February 1997.
(11) The Company entered into a Master Lease Agreement for the Toledo and
Bowling Green Properties.
(12) The Company and the lessee entered into remediation and indemnity
agreements on May 17, 1996, with the seller of the land and an adjacent
site owner/operator (the "Indemnitors") due to Phase I and Phase II
environmental testing results indicating that there were action levels
of environmental contamination on the Bluefield, Hurricane and Marrieta
Properties relating to underground gasoline storage tanks from one
property adjacent to the Hurricane Property and past use of the other
two Properties. Under the remediation and indemnity agreements, the
Indemnitors have agreed to notify all applicable federal, state, or
local government agencies or authorities of the environmental
contamination, to undertake all remediation work on these sites at no
expense to the Company or lessee, and to indemnify, defend and hold
harmless the Company, the lessee and investors from losses arising out
of or related to any claim, action, proceeding, lawsuit, notice of
violation or demand by any (i) governmental authority in connection
with the presence of any environmental contamination, (ii) failure of
the Indemnitors to notify any applicable governmental authorities,
(iii) remediation work, and (iv) claim, action, proceeding, lawsuit, or
demand by third parties who are not the successors in interest of the
indemnified parties and are not affiliated with the indemnified
parties. If as to any of the affected sites, the remediation work is
not satisfactorily completed within two years after the effective date,
such that the Company is willing, in its discretion, to remain the
owner of a particular affected site, the Company may "put" the
particular affected site back to the seller, and the seller will
purchase the Company's ownership interest in the affected site.
(13) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/[purchase price of the building + (annual rent due under the
land lease/land lease cap rate)]
(14) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/(purchase price of the building + $685,714)
(15) In the event that the aggregate amount of percentage rent paid by the
lessee to the Company over the term of the lease shall equal or exceed
15% of the purchase price paid by the Company, then the option purchase
price shall equal one dollar. In the event that the aggregate
percentage rent paid shall be less than 15% of the purchase price paid
by the Company, then the option purchase price shall equal the
difference of 15% of the purchase price, less the aggregate percentage
rent paid to the landlord by the lessee under the lease.
(16) The Company has committed to pay $793,326, including development costs.
Of the total committed, $252,130 was paid at closing.
(17) The lessee also has the option to purchase the Property after the
lessee operates at least five Applebee's restaurants.
(18) The Company accepted an assignment of an interest in the ground lease
relating to the Brooklyn Property effective August 23, 1996.
(19) 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.
(20) The lessee of the Knoxville, Camarillo, and Sevierville Properties is
the same unaffiliated lessee.
- 36 -
<PAGE>
(21) The lessee of the Ellisville, Golden Valley , Florissant and St. Joseph
Properties is the same unaffiliated lessee.
(22) The lessee of the Humble #1, Houston #1 , Houston #2, Dallas, Los
Angeles and Las Vegas Properties is the same unaffiliated lessee.
(23) The lessee of the Hillsboro and McKinney Properties is the same
unaffiliated lessee.
(24) The lessee of the Kendallville and Avon Properties is the same
unaffiliated lessee.
(25) The lessee of the Upland and La Quinta Properties is the same
unaffiliated lessee.
(26) The lessee of the Lufkin and Moberly Properties is the same
unaffiliated lessee.
(27) The lessee of the Chicago and Chattanooga Properties is the same
unaffiliated lessee.
- 37 -
<PAGE>
BORROWING AND SECURED EQUIPMENT LEASES
Between April 10, 1996 and January 8, 1997, the Company obtained ten
advances totalling $3,613,396 under its $15,000,000 Loan. The proceeds of the
advances were used to acquire Equipment for nine restaurant properties at a cost
of approximately $3,613,396, including Secured Equipment Lease Servicing Fees of
$70,070 to the Advisor. Six of the ten advances are fully amortizing term loans
repayable over six years and bear interest at a rate per annum equal to 215
basis points above the Reserve Adjusted LIBOR Rate (as defined in the Loan). Two
of the remaining advances relating to the Winnemucca Secured Equipment Lease are
considered to be an interest only loan for the first three months and upon
obtaining an additional advance in January 1997, will become a fully amortizing
term loan repayable over the duration of the Winnemucca Secured Equipment Lease,
but in no event greater than six years. The other two remaining advances
relating to the Hopkinsville Secured Equipment Lease and the Spring Hill Secured
Equipment Lease are considered to be interest only loans for the first two
months and upon obtaining an additional advance prior to February 1997 will
become fully amortizing term loans repayable over six years. The advances will
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.
- 38 -
<PAGE>
SECURED EQUIPMENT LEASES
From April 10, 1996 through January 8, 1997
<TABLE>
<CAPTION>
Option
Description Purchase Price (1) Date Acquired Lease Expiration Annual Rent (2) To Purchase
- --------------------------------- ------------------ -------------- ---------------- --------------- -----------
<S> <C>
Equipment for Golden Corral $538,790 06/14/96 06/2003 $109,617 (3)
restaurant in Middleburg (excluding closing
Heights, Ohio (8)(10) costs and Secured
(The "Middleburg Heights Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for Golden Corral $560,411 07/02/96 07/2003 $113,994 (3)
restaurant in Brooklyn, (excluding closing
Ohio (8) costs and Secured
(The "Brooklyn Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for TGI Friday's $509,573 07/15/96 07/2001 $132,664 (4)
restaurant in Hazlet, New (excluding closing
Jersey (9) costs and Secured
(The "Hazlet Secured Equipment Equipment Lease
Lease") Servicing Fee)
Equipment for TGI Friday's $562,742 08/09/96 08/2001 $146,484 (2) (4)
restaurant in Marlboro, New (excluding closing
Jersey (9) costs and Secured
(The "Marlboro Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for Denny's $143,075 (5) (5) (6) (6) (7)
restaurant in Winnemucca, (excluding closing
Nevada costs and Secured
(The "Winnemucca Secured Equipment Lease
Equipment Lease") Servicing Fee)
- 39 -
<PAGE>
<CAPTION>
Option
Description Purchase Price (1) Date Acquired Lease Expiration Annual Rent (2) To Purchase
- --------------------------------- ------------------ -------------- ---------------- --------------- -----------
<S> <C>
Equipment for Golden Corral $150,000 (8) (9) (9) (10)
restaurant in Hopkinsville, (excluding closing
Kentucky costs and Secured
(The "Hopkinsville Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for Golden Corral $466,573 12/04/96 12/2003 $7,901 (10)
restaurant in Columbia, (excluding closing
Tennessee costs and Secured
(The "Columbia Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for Ryan's Family $150,000 (11) (12) (12) (10)
Steak House in Spring Hill, (excluding closing
Florida costs and Secured
(The "Spring Hill Secured Equipment Lease
Equipment Lease") Servicing Fee)
Equipment for Applebee's $454,693 12/31/96 12/2003 $7,954 (10)
restaurant in Montclair, (excluding closing
California costs and Secured
(The "Montclair 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) At the end of the lease term, if no event of default has occurred under
the terms of the Secured Equipment Lease, the lessee will have the
option to purchase the Equipment for $1.
(4) Lessee may purchase the Equipment prior to the expiration of the
Secured Equipment Lease, at the then present value of the remaining
rental payments, discounted at a rate of ten percent per annum.
(5) On August 28, 1996, the Company obtained an advance of $102,570 for
partial funding of the Equipment for a restaurant property in
Winnemucca, Nevada. On September 30, 1996, the Company obtained another
advance of $44,157 for additional funding of the Equipment
- 40 -
<PAGE>
for the restaurant property. The Company anticipates obtaining another
advance under its Loan totalling $146,727 to fund the balance of the
acquisition price of the Equipment in January 1997.
(6) 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, which is expected to occur in the fourth 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 seven 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 10.68% per
annum.
(7) 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 10.68% per annum.
(8) On November 20, 1996, the Company obtained an advance of $153,676 for
partial funding of the Equipment for a restaurant property in
Hopkinsville, Kentucky. The Company anticipates obtaining another
advance of $261,916 to fund the balance of the acquisition price of the
Equipment within three months of obtaining the initial advance of
$153,676 described above.
(9) The temporary Secured Equipment Lease entered into on November 20,
1996, has a term of three months and requires the payment of monthly
rent of $1,281. 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 seven 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 ten percent per annum.
(10) 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 ten percent per annum.
(11) On December 12, 1996, the Company obtained an advance of $155,234 for
partial funding of the Equipment for a restaurant property in Spring
Hill, Florida. The Company anticipates obtaining another advance of
approximately $250,000 to fund the balance of the acquisition price of
the Equipment within three months of obtaining the initial advance of
$155,234 described above.
(12) The temporary Secured Equipment Lease entered into on December 12,
1996, has a term of three months and requires the payment of monthly
rent of $2,648. 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 seven 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 10.875% per annum.
(13) The lessee of the Middleburg Heights and Brooklyn Secured Equipment
Leases is the same unaffiliated lessee.
(14) The lessee of the Hazlet and Marlboro Secured Equipment Leases is the
same unaffiliated lessee.
(15) The lessee of the Middleburg Heights Secured Equipment Lease leases the
restaurant property from an Affiliate of the Advisor.
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<PAGE>
MANAGEMENT COMPENSATION
FEES AND EXPENSES PAID TO THE
ADVISOR AND ITS AFFILIATES
Selling Commissions and Marketing Support and Due Diligence Expense
Reimbursement Fee. In connection with the formation of the Company and the
offering of the Shares, the Managing Dealer will receive Selling Commissions of
7.5% (a maximum of $11,250,000 if 15,000,000 Shares are sold), and a marketing
support and due diligence expense reimbursement fee of 0.5% (a maximum of
$750,000 if 15,000,000 Shares are sold), of the total amount raised from the
sale of Shares, computed at $10.00 per Share sold ("Gross Proceeds"). The
Managing Dealer in turn may reallow Selling Commissions of up to 7% on Shares
sold, and all or a portion of the 0.5% marketing support and due diligence
expense reimbursement fee to certain Soliciting Dealers, who are not Affiliates
of the Company. As of September 30, 1996, the Company had incurred $7,722,067
for Selling Commissions due to the Managing Dealer, a substantial portion
(approximately $7,200,000) of which has been paid as commissions to other
Soliciting Dealers. In addition, as of September 30, 1996, the Company had
incurred $514,805 in marketing support and due diligence expense reimbursement
fees due to the Managing Dealer. A portion of these fees has been reallowed to
other Soliciting Dealers, and all due diligence expenses will be paid from such
fees.
Soliciting Dealer Servicing Fee. The Company will incur a Soliciting
Dealer Servicing Fee in the amount of .20% of Invested Capital (a maximum of
$300,000 if 15,000,000 Shares are sold). The Soliciting Dealer Servicing Fee
will be payable on December 31 of each year, commencing on December 31 of the
year following the year in which the offering terminates, and generally will be
payable to the Managing Dealer, which in turn may reallow all or a portion of
such fee to Soliciting Dealers whose clients held Shares on such date. The
Company has determined, however, that the Company may pay the Soliciting Dealer
Servicing Fee directly to any Soliciting Dealer exempt from registration as a
broker-dealer and whose clients held Shares on such date. As of September 30,
1996, no such fees had been incurred by the Company.
Acquisition Fees. The Advisor is entitled to receive acquisition fees
for services in identifying the Properties and structuring the terms of the
acquisition and leases of the Properties equal to 4.5% of Gross Proceeds,
payable by the Company as Acquisition Fees. As of September 30, 1996, the
Company had incurred $4,633,240 in such acquisition fees payable to the Advisor.
Acquisition fees incurred by the Company as of June 30, 1996, are included as
part of the cost of land and buildings on operating leases, net investment in
direct financing lease and other assets.
Development/Construction Management Fees to Affiliates of the Company.
In connection with the acquisition of Properties that have been constructed or
renovated by Affiliates, the Company will incur development/construction
management fees of generally 5% to 10% of the cost of constructing or renovating
a Property, payable to Affiliates of the Company as Acquisition Fees. Such fees
will be included in the purchase price of Properties purchased from developers
that are Affiliates of the Company. See "Business -Site Selection and
Acquisition of Properties." Development/construction management fees, which are
based on the number of Properties purchased from developers that are Affiliates
of the Company, the cost of construction or renovation of such Properties and
the percentage amount of each development/construction management fee, are not
determinable at this time. As of September 30, 1996, the Company had incurred
$21,500 in Development/Construction Management Fees to Affiliates.
Construction Financing Fees to Affiliates of the Company. In connection
with the acquisition of Properties from affiliated or unaffiliated developers,
to whom Affiliates of the Company have provided construction financing, the
Company will incur construction financing fees, payable to Affiliates of the
Company as Acquisition Fees. Such fees will be in an amount equal to generally
1% to 2% of the total amount of each loan plus the difference between the
Affiliate - lender's cost of funds and the amount of interest charged to the
developer with such difference determined by applying an annual percentage rate
of generally
- 42 -
<PAGE>
1.5% to 3% throughout the duration of the loan to the outstanding amount of the
loan. Such fees will be included in the purchase price of Properties purchased
from developers that receive such loans. See "Business Site Selection and
Acquisition of Properties." Construction loan fees, which are based on the
number of Properties for which Affiliates of the Company provide construction
financing, the amount and duration of such loans and the amount of each
construction financing fee, are not determinable at this time. As of September
30, 1996, no such fees had been incurred by the Company.
The total of all Acquisition Fees and Acquisition Expenses shall be
reasonable and shall not exceed an amount equal to 6% of the Real Estate Asset
Value of a Property unless a majority of the Board of Directors, including a
majority of the Independent Directors, not otherwise interested in the
transaction approves fees in excess of these limits subject to a determination
that the transaction is commercially competitive, fair and reasonable to the
Company.
Asset Management Fee. For managing the Properties, the Advisor will be
entitled to receive a monthly Asset Management Fee of one-twelfth of .60% of the
Company's Real Estate Asset Value (generally, the total amount invested in the
Properties, exclusive of Acquisition Fees and Acquisition Expenses) as of the
end of the preceding month. As of September 30, 1996, the Company had incurred
$167,886 of such fees, $10,595 of which has been capitalized as part of the cost
of building for Properties under construction.
Mortgage Management Fee. For managing mortgage loans, the Advisor will
be entitled to receive a monthly Mortgage Management Fee of one-twelfth of .60%
of the total principal amount of the Mortgage Loans as of the end of the
preceding month. As of September 30, 1996, the Company had incurred $41,561 of
such fees.
Secured Equipment Lease Servicing Fee. For negotiating Secured
Equipment Leases and supervising the Secured Equipment Lease program, the
Advisor will be entitled to receive from the Company a one-time Secured
Equipment Lease Servicing Fee of 2% of the purchase price of the Equipment that
is the subject of a Secured Equipment Lease. As of September 30, 1996, the
Company had incurred $46,292 of such fees.
Real Estate Disposition Fee. Prior to Listing, the Advisor may receive
a real estate disposition fee of 3% of the gross sales price of one or more
Properties for providing substantial services in connection with the Sale, which
will be deferred and subordinated until the stockholders have received
Distributions equal to the sum of 100% of the stockholders' aggregate Invested
Capital plus an aggregate, annual, cumulative, noncompounded 8% return on their
Invested Capital, excluding Distributions attributable to proceeds of the Sale
of a Property (the "Stockholders' 8% Return"). Upon Listing, if the Advisor has
accrued but not been paid such real estate disposition fee, then for purposes of
determining whether the subordination conditions have been satisfied,
stockholders will be deemed to have received a Distribution in an amount equal
to the product of the total number of Shares outstanding and the average closing
prices of the Shares over a period, beginning 180 days after Listing, of 30 days
during which the Shares are traded. See "The Advisor and The Advisory Agreement
- -The Advisory Agreement." As of September 30, 1996, no such fees had been
incurred by the Company.
Subordinated Share of Net Sales Proceeds. A subordinated share of Net
Sales Proceeds will be paid to the Advisor upon the Sale of one or more
Properties or Secured Equipment Leases in an amount equal to 10% of Net Sales
Proceeds. This amount will be subordinated and paid only after the stockholders
have received Distributions equal to the sum of 100% of the stockholders'
aggregate Invested Capital, plus the Stockholders' 8% Return. As of September
30, 1996, no such amounts had been incurred by the Company.
Administrative and Other Expenses. The Advisor provides accounting and
administrative services (including accounting and administrative services in
connection with the Offering of Shares) to the Company
- 43 -
<PAGE>
on a day-to-day basis. As of September 30, 1996, the Company had incurred
$1,315,488 of such costs that are included in stock issuance costs and $304,207
of such costs that are included in general and administrative expenses.
Reimbursement of Out-of-Pocket Expenses. The Advisor and its Affiliates
are entitled to receive reimbursement, at cost, for expenses they incur for
Organizational and Offering Expenses, Acquisition Expenses and Operating
Expenses. As of September 30, 1996, the Advisor and its Affiliates had incurred
$3,181,611, $267,970, and $262,390 on behalf of the Company for Organizational
and Offering Expenses, Acquisition Expenses, and Operating Expenses,
respectively.
SELECTED FINANCIAL DATA
The following table sets forth certain financial information for CNL
American Properties Fund, Inc., and should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements included in Exhibit B to this
Prospectus Supplement and Exhibit B to the Prospectus.
<TABLE>
<CAPTION>
May 2,
1994 (Date
Nine Months Ended of Inception)
September 30, Year Ended through
1996 December 31, December 31,
(Unaudited) 1995 1994
--------------------- --------------- --------------
<S> <C>
Revenues $3,883,714 $ 659,131 $ -
Net earnings 2,757,759 368,779 -
Cash distributions declared (1) 3,403,427 638,618 -
Earnings per Share 0.41 0.19 -
Cash distributions declared
per Share 0.50 0.34 -
Weighted average number of
Shares outstanding (2) 6,771,120 1,898,350 -
</TABLE>
September 30,
1996 December 31, December 31,
(Unaudited) 1995 1994
-------------- --------------- ------------
Total assets $97,998,150 $33,603,084 $929,585
Total equity 89,528,514 31,980,648 200,000
(1) Approximately 11 percent and 40 percent of cash distributions
($0.06 and $0.14 per Share) for the nine months ended
September 30, 1996 and the year ended December 31, 1995,
respectively, represents a return of capital in accordance
with generally accepted accounting principles ("GAAP"). Cash
distributions treated as a return of capital on a GAAP basis
represent the amount of cash distributions in excess of
accumulated net earnings on a GAAP basis. The Company has not
treated such amount as a return of capital for purposes of
calculating the stockholders' Invested Capital and the
Stockholders' 8% Return, as described in the Prospectus.
- 44 -
<PAGE>
(2) The weighted average number of Shares outstanding is based
upon the period the Company was operational.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company is a Maryland corporation that was organized on May 2,
1994, to acquire Properties, directly or indirectly through Joint Venture or
co-tenancy arrangements, to be leased on a long-term, "triple- net" basis to
operators of certain Restaurant Chains. In addition, the Company may provide
Mortgage Loans for the purchase of buildings, generally by tenants that lease
the underlying land from the Company. To a lesser extent, the Company intends to
offer Secured Equipment Leases to operators of Restaurant Chains. Secured
Equipment Leases will be funded from the proceeds of the Loan, in an amount up
to 10% of Gross Proceeds from the offering, which the Company has obtained.
As of September 30, 1996, the Company owned 82 Properties (including
one Property through a joint venture arrangement consisting of land and
building, 42 consisting of land and building, six consisting of building only
and 33 consisting of land only and in connection with which the Company provided
Mortgage Loans to the tenant for the purchase of the buildings on the
Properties). Of the 82 Properties, ten were under construction at September 30,
1996. In addition, as of September 30, 1996, the Company had entered into five
Secured Equipment Leases.
This information contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference include the following: changes in general economic conditions,
changes in local real estate conditions, continued availability of proceeds from
the Company's offering, the availability of proceeds from the Company's
anticipated subsequent offering, the ability of the Company to locate suitable
tenants for its Properties and borrowers for its Mortgage Loans, and the ability
of tenants and borrowers to make payments under their respective leases or
Mortgage Loans.
LIQUIDITY AND CAPITAL RESOURCES
In April 1995, the Company commenced an offering of its Shares of
common stock. As of September 30, 1996, the Company had received subscription
proceeds of $102,960,892 (10,296,089 Shares) from the offering, including
$391,348 (39,135 Shares) through the Reinvestment Plan.
As of September 30, 1996, net proceeds to the Company from its offering
of Shares and capital contributions from the Advisor after deduction of Selling
Commissions, Marketing Support and Due Diligence Expense Reimbursement Fees and
Organizational and Offering Expenses, totalled $90,224,022.
- 45 -
<PAGE>
As of September 30, 1996, approximately $80,872,000 had been used to invest, or
committed for investment, in 82 Properties (ten of which were undeveloped land
on which a restaurant was being constructed), in providing mortgage financing of
$12,363,000 to the tenants of the 33 Properties consisting of land only and to
pay Acquisition Fees to the Advisor totalling $4,633,240 and certain Acquisition
Expenses. The Company acquired 12 of the 82 Properties from Affiliates, for
purchase prices totalling approximately $8,979,000. The Affiliates had purchased
and temporarily held title to these Properties in order to facilitate the
acquisition of the Properties by the Company. Each Property was acquired at a
cost no greater than the lesser of the cost of the Property to the Affiliate
(including carrying costs) or the Property's appraised value. The Company
expects to use Net Offering Proceeds from the sale of Shares to purchase
additional Properties, to fund construction costs relating to the Properties
under construction and to make Mortgage Loans. The number of Properties to be
acquired and Mortgage Loans to be entered into will depend upon the amount of
Net Offering Proceeds available to the Company.
On March 5, 1996, the Company entered into the Loan with a bank. The
Loan is to be used by the Company to offer Secured Equipment Leases. The Loan
provides that the Company will be able to receive advances of up to $15,000,000
until March 4, 1998. Generally, advances under the Loan will be fully amortizing
term loans repayable in terms equal to the duration of the Secured Equipment
Leases, but in no event greater than 72 months. In addition, advances for
short-term needs (to acquire equipment to be leased under Secured Equipment
Leases) may be requested in an aggregate amount which does not exceed the
Revolving Sublimit (defined in the Loan as $1,000,000) and such advances may be
repaid and readvanced; provided, however, that advances made pursuant to the
Revolving Sublimit shall be converted to term loans the earlier of (i) the end
of each 60 day period following the closing date (defined in the Loan as March
5, 1996), or (ii) when the aggregate amount outstanding equals or exceeds
$1,000,000. Interest on advances made pursuant to the Revolving Sublimit shall
be paid monthly in arrears. In addition, principal amounts under advances
pursuant to the Revolving Sublimit, if not sooner paid or converted into term
loans, shall be paid, together with any unpaid interest relating to such
advances, to the bank on March 5, 1998. Generally, all advances under the Loan
will bear interest at either (i) a rate per annum equal to 215 basis points
above the Reserve Adjusted LIBOR Rate (as defined in the Loan) or (ii) a rate
per annum equal to the bank's prime rate, whichever the Company selects at the
time advances are made. As a condition of obtaining the Loan, the Company agreed
to grant to the bank a first security interest in the Secured Equipment Leases.
In connection with the Loan, the Company incurred a commitment fee, legal fees
and closing costs of $53,500 relating to the Loan. As of September 30, 1996, the
Company had obtained advances totalling $2,417,572 relating to the Loan. The
proceeds were used to fund Secured Equipment Leases at an aggregate cost of
approximately $2,364,000, including Secured Equipment Lease Servicing Fees of
$46,292 to the Advisor and to pay loan costs of $53,500 described above. The
Company expects to use the proceeds of the Loan to fund the Secured Equipment
Lease program, as described above.
During the quarter ended September 30, 1996, the Company entered into
interest rate swap agreements to reduce the impact of changes in interest rates
on its floating rate long-term debt. At September 30, 1996, the Company had
outstanding two interest rate swap agreements with a commercial bank, having a
total notional amount of approximately $2,206,000. Those agreements effectively
change the Company's interest rate exposure on approximately $1,641,000 of the
outstanding floating rate notes to a fixed nine percent per annum and
approximately $565,000 of the outstanding floating rate notes to a fixed rate of
8.75% per annum. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements. However,
the Company does not anticipate nonperformance by the counterparty.
The Company has entered into various development agreements with
tenants which provide terms and specifications for the construction of buildings
the tenants have agreed to lease once construction is completed. The agreements
provide a maximum amount of development costs (including the purchase price of
the land and closing costs) to be paid by the Company. As of September 30, 1996,
the aggregate maximum development costs the Company had agreed to pay was
approximately $12,162,800, of which approximately $6,976,000
- 46 -
<PAGE>
in land and other costs had been incurred as of September 30, 1996. The
buildings under construction as of September 30, 1996, are expected to be
operational by February 1997. In connection with the purchase of each Property,
the Company, as lessor, entered into a long-term, triple-net lease agreement.
During the period October 1, 1996 through January 8, 1997, the Company
acquired 14 additional Properties (11 Properties consisting of land and
building, eight of which are being constructed, two Properties consisting of
land only and one Property consisting of building only which is being
constructed) for cash at a total cost of approximately $10,535,000, excluding
development and closing costs. The development costs (including the purchase of
the land and closing costs) to be paid by the Company relating to the nine
Properties under construction are estimated to be approximately $10,877,000. The
buildings under construction are expected to be operational by July 1997.
The Company presently is negotiating to acquire additional Properties,
but as of January 8, 1997, had not acquired any such Properties.
In addition, during the period October 1, 1996 through January 8, 1997,
the Company obtained four additional advances totalling approximately $1,249,000
under its $15,000,000 Loan. The proceeds of the advances were used to fund four
Secured Equipment Leases at a cost of approximately $1,249,000, including
Secured Equipment Lease Servicing Fees of $23,778 paid to the Advisor.
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 the Company's current $150,000,000 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 the Company's current 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 the
Company's shares of common stock on a national securities exchange or
over-the-counter market ("Listing"), although there is no assurance
that Listing will occur.
As of January 8, 1997, the Company had received subscription proceeds
of $140,906,434 (14,090,643 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
Organizational and Offering Expenses, net proceeds to the Company totalled
approximately $125,000,000. As of January 8, 1997, the Company had invested or
committed for investment approximately $97,400,000 of such net proceeds in 96
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 $6,340,788 and certain Acquisition Expenses, leaving
approximately $27,700,000 in Net Offering Proceeds available for investment in
Properties and Mortgage Loans.
Properties are and will be leased on a triple-net basis, meaning that
tenants are generally required to pay all repairs and maintenance, property
taxes, insurance and utilities. Rental payments under the leases are expected to
exceed the Company's operating expenses. For these reasons, no short-term or
long-term liquidity problems currently are anticipated by management.
Until Properties are acquired, or Mortgage Loans are entered into, by
the Company, all offering proceeds are held in short-term, highly liquid
investments which management believes to have appropriate safety of principal.
This investment strategy provides high liquidity in order to facilitate the
Company's use of these funds to acquire Properties at such time as Properties
suitable for acquisition are located or to fund Mortgage Loans. At September 30,
1996, the Company had $22,256,995 invested in such short-term investments as
compared to $11,508,445 at December 31, 1995. The increase in the amount
invested in short-term investments reflects subscription proceeds derived from
the sale of shares during the nine months ended September 30, 1996. These funds
will be used primarily to purchase and develop or renovate Properties (directly
or indirectly through joint venture arrangements), to make Mortgage Loans,
- 47 -
<PAGE>
to pay organization and offering and acquisition costs, to pay Distributions to
stockholders, to meet Company expenses and, in management's discretion, to
create cash reserves.
During the nine months ended September 30, 1996 and 1995, Affiliates of
the Company incurred on behalf of the Company $615,600 and $1,974,281,
respectively, for certain Offering Expenses. In addition, during the nine months
ended September 30, 1996 and 1995, Affiliates of the Company incurred on behalf
of the Company $136,341 and $75,501 for certain Acquisition Expenses and
$208,156 and $22,930 for certain Operating Expenses. As of September 30, 1996,
the Company owed the Advisor $236,463 for such amounts, accounting and
administrative expenses and Acquisition Fees. As of November 5, 1996, the
Company had reimbursed all such amounts. The Advisor has agreed to pay or
reimburse to the Company all Offering Expenses in excess of three percent of
gross offering proceeds. Other liabilities increased to $7,944,717 at September
30, 1996, from $1,256,486 at December 31, 1995, primarily as a result of the
accrual of construction costs incurred and unpaid as of September 30, 1996.
During the nine months ended September 30, 1996 and 1995, the Company
generated cash from operations (which includes cash received from tenants and
interest and other income received, less cash paid for operating expenses) of
$3,244,519 and $124,187, respectively. Based on current and anticipated future
cash from operations, the Company declared Distributions to the stockholders of
$3,403,427 and $187,684 during the nine months ended September 30, 1996 and
1995, respectively ($1,534,940 and $172,536 for the quarters ended September 30,
1996 and 1995, respectively). On October 1, 1996, November 1, 1996, and December
1, 1996, the Company declared Distributions to its stockholders totalling
$615,914, $683,907 and $731,569, respectively, payable in December 1996. In
addition, on January 1, 1997, the Company declared Distributions to its
stockholders totalling $827,967 payable in March 1997. For the nine months ended
September 30, 1996, approximately 89 percent of the Distributions received by
stockholders were considered to be ordinary income and 11 percent were
considered a return of capital for federal income tax purposes. However, no
amounts distributed or to be distributed to the stockholders as of January 8,
1997, are required to be or have been treated by the Company as a return of
capital for purposes of calculating the stockholders' return on their Invested
Capital.
Management believes that the Properties are adequately covered by
insurance. The Advisor has obtained contingent liability and property coverage
for the Company. This insurance policy is intended to reduce the Company's
exposure in the unlikely event a tenant's insurance policy lapses or is
insufficient to cover a claim relating to the Property.
The Company's investment strategy of acquiring Properties for cash and
leasing them under triple-net leases to operators who meet specified financial
standards is expected to minimize the Company's Operating Expenses. Accordingly,
management believes that any anticipated decrease in the Company's liquidity in
1997, due to its investment of available Net Offering Proceeds in Properties and
Mortgage Loans, will not have an adverse effect on the Company's operations.
During the operational stage, management believes that the leases will generate
cash flow in excess of Operating Expenses. Since the leases are expected
generally to have an initial term of 15 to 20 years, with two or more five-year
renewal options, and provide for specified percentage rent in addition to the
annual base rent and, in certain cases, increases in the base rent at specified
times during the terms of the leases, it is anticipated that rental income will
increase over time.
Due to anticipated low Operating Expenses, rental income expected to be
obtained from Properties after they are acquired, the fact that as of January 8,
1997, the Company had entered into Secured Equipment Leases for amounts borrowed
under the Loan and the fact that payments due to the Company from the Secured
Equipment Leases are expected to exceed debt service requirements for the Loan,
management does not believe that working capital reserves will be necessary at
this time. Management has
- 48 -
<PAGE>
the right to cause the Company to maintain reserves if, in their discretion,
they determine such reserves are required to meet the Company's working capital
needs.
Management expects that the cash generated from operations will be
adequate to pay Operating Expenses.
RESULTS OF OPERATIONS
No significant operations commenced until the Company received the
minimum offering proceeds of $1,500,000 on June 1, 1995.
As of September 30, 1996, the Company and its consolidated joint
venture had purchased 82 Properties, including one which is owned through a
Joint Venture consisting of land and building, 42 Properties consisting of land
and building, six Properties consisting of building only and 33 Properties
consisting of land only, and entered into lease agreements relating to these
Properties. The leases provide for minimum base annual rental payments (payable
in monthly installments) ranging from approximately $75,800 to $467,500. In
addition, certain leases provide for percentage rent based on sales in excess of
a specified amount. The majority of the leases also provide that, commencing in
generally the sixth lease year, the annual base rent required under the terms of
the leases will increase.
During the nine months ended September 30, 1996 and 1995, the Company
and its consolidated joint venture, CNL/Corral South Joint Venture, earned
$2,667,866 and $122,787, respectively, in rental income from operating leases
and earned income from the direct financing leases from 72 and 14 Properties,
respectively, ($963,681 and $122,418 of which was earned during the quarters
ended September 30, 1996 and 1995, respectively) . Because the Company did not
commence significant operations until it received the minimum offering proceeds
on June 1, 1995, and has not yet acquired all of its Properties, revenues for
the nine months ended September 30, 1996, represent only a portion of revenues
which the Company is expected to earn in future periods in which the Company's
Properties are operational.
During the nine months ended September 30, 1996, the Company entered
into two Mortgage Loans in the principal sum of $12,363,000, collateralized by a
mortgage on the buildings relating to 33 Pizza Hut Properties. The Mortgage
Loans bear interest at a rate of 10.75% per annum and are being collected in 240
equal monthly installments totalling $125,513. In connection therewith, the
Company earned $796,378 in interest income relating to such Mortgage Loans
during the nine months ended September 30, 1996, $330,880 of which was earned
during the quarter ended September 30, 1996.
During the quarter ended September 30, 1996, five lessees, or groups of
affiliated lessees of the Company, Golden Corral Corporation , Castle Hill
Holdings V, L.L.C. and Castle Hill Holdings VI, L.L.C. (hereinafter referred to
as Castle Hill), DenAmerica Corporation, Briad Restaurant Group, Inc. and Corral
Northeast, Inc., each contributed more than ten percent of the Company's total
rental income. Golden Corral Corporation is the lessee under leases relating to
five restaurants , Castle Hill is the lessee under leases relating to 33
restaurants, DenAmerica Corporation is the lessee under leases relating to five
restaurants, Briad Restaurant Group, Inc. is the lessee under leases relating to
four restaurants and two Secured Equipment Leases and Corral Northeast, Inc. is
the lessee under leases relating to two restaurants. During the quarter ended
September 30, 1996, the Company also earned $330,880 in interest income from
- 49 -
<PAGE>
mortgage notes receivable under which Castle Hill is the borrower. In addition,
five restaurant chains, Golden Corral Family Steakhouse , Pizza Hut, TGI
Friday's, Denny's and Boston Market each accounted for more than ten percent of
the Company's total rental income during the quarter ended September 30, 1996.
Because the Company has not yet completed its acquisition of Properties, it is
not possible to determine which lessees or Restaurant Chains will contribute
more than ten percent of the Company's rental income during the remainder of
1996 and subsequent years, with the exception of Castle Hill , Pizza Hut and
Boston Market, each of which the Company anticipates will contribute more than
ten percent of the Company's income during the remainder of 1996 . In the event
that certain lessees, borrowers or Restaurant Chains contribute more than ten
percent of the Company's total income in the current and future years, any
failure of such lessees, borrowers or Restaurants Chains could materially affect
the Company's income.
During the nine months ended September 30, 1996 and 1995, the Company
also earned $419,470 and $42,117, respectively, in interest income from
investments in money market accounts or other short-term, highly liquid
investments and other income, $207,681 and $34,289 of which was earned during
the quarters ended September 30, 1996 and 1995, respectively. Interest income
from investing in money market accounts or other short-term, highly liquid
investments is expected to increase as the Company invests subscription proceeds
in highly liquid investments pending the acquisition of Properties or investing
in Mortgage Loans. However, as Net Offering Proceeds are invested in Properties
and used to make Mortgage Loans, interest income from investments in money
market accounts or other short-term, highly liquid investments is expected to
decrease.
Operating expenses, including depreciation and amortization expense,
were $1,104,368 and $78,564 for the nine months ended September 30, 1996 and
1995, respectively, of which $434,261 and $74,822 were incurred during the
quarters ended September 30, 1996 and 1995, respectively. Operating expenses
increased during the quarter and nine months ended September 30, 1996, as
compared to the quarter and nine months ended September 30, 1995, primarily as a
result of the fact that the Company did not commence operations until June 1,
1995. General and administrative expenses as a percentage of total revenues is
expected to decrease as the Company acquires additional Properties and the
Properties under construction become operational. However, asset management fees
and depreciation and amortization expense are expected to increase as the
Company acquires additional Properties.
- 50 -
<PAGE>
PRIOR PERFORMANCE INFORMATION
The information presented in this section represents the historical
experience of certain real estate programs organized by certain officers and
directors of the Advisor. INVESTORS IN THE COMPANY SHOULD NOT ASSUME THAT THEY
WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN
SUCH PRIOR REAL ESTATE PROGRAMS. INVESTORS WHO PURCHASE SHARES IN THE COMPANY
WILL NOT THEREBY ACQUIRE ANY OWNERSHIP INTEREST IN ANY PARTNERSHIPS TO WHICH THE
FOLLOWING INFORMATION RELATES.
Two Directors of the Company, Robert A. Bourne and James M. Seneff,
Jr., individually or with others have served as general partners of 84 and 85
real estate limited partnerships, respectively, including the 18 publicly
offered CNL Income Fund partnerships, which purchased properties similar to
those to be acquired by the Company, listed in the table below. None of these
limited partnerships has been audited by the IRS. Of course, there is no
guarantee that the Company will not be audited. Based on an analysis of the
operating results of the prior partnerships, the general partners of these
partnerships believe that each of such partnerships has met or is meeting its
principal investment objectives in a timely manner.
CNL Realty Corporation, which was organized as a Florida corporation in
November 1985 and whose sole stockholders are Messrs. Bourne and Seneff,
currently serves as the corporate general partner with Messrs. Bourne and Seneff
as individual general partners of 18 CNL Income Fund limited partnerships, all
of which were organized to invest in fast-food, family-style and, in the case of
two funds, casual dining restaurant properties similar to those that the Company
intends to acquire and have investment objectives similar to those of the
Company. As of September 30, 1996, these 18 partnerships had raised a
total of $580,510,431 from a total of 47,461 investors, and had invested in 653
fast-food or family-style restaurant properties.
As of September 30, 1996, 17 of the 18 CNL public partnerships had
completed their offerings. As indicated in Exhibit C, the eight public
partnerships, the offerings of which were fully subscribed between October 1991
and September 1996, had made annualized cash distributions to limited partners
in amounts equal to from 4.5% to 9.1% of invested capital as of June 30, 1996.
As of June 30, 1996, an average of approximately .54% (ranging from zero to
2.4%) of the cumulative cash distributions to limited partners from these
partnerships constituted cash distributions that exceeded accumulated net income
on a GAAP basis, primarily as the result of depreciation deductions. Accumulated
net income includes deductions for depreciation and amortization expense and
income from certain non-cash items. The partnerships do not treat these amounts,
which are presented as a "return of capital on a GAAP basis" in Table III of the
Prior Performance Tables included in Exhibit C, as a return of capital for any
other purpose. Certain additional information relating to the offerings and
investment history of the 18 public partnerships is set forth below.
<TABLE>
<CAPTION>
Date 90% of Net
Number of Proceeds Fully
Maximum Limited Invested or
Name of Offering Partnership Committed to
Partnership Amount (1) Date Closed Units Sold Investment (2)
- ----------- ---------- ----------- ---------- --------------
<S> <C>
CNL Income $15,000,000 December 31, 1986 30,000 December 1986
Fund, Ltd. (30,000 Units)
CNL Income $25,000,000 August 21, 1987 50,000 November 1987
Fund II, Ltd. (50,000 Units)
CNL Income $25,000,000 April 29, 1988 50,000 June 1988
Fund III, Ltd. (50,000 Units)
CNL Income $30,000,000 December 6, 1988 60,000 February 1989
Fund IV, Ltd. (60,000 Units)
- 51 -
<PAGE>
CNL Income $25,000,000 June 7, 1989 50,000 December 1989
Fund V, Ltd. (50,000 Units)
CNL Income $35,000,000 January 19, 1990 70,000 May 1990
Fund VI, Ltd. (70,000 Units)
CNL Income $30,000,000 August 1, 1990 30,000,000 January 1991
Fund VII, Ltd. (30,000,000 Units)
CNL Income $35,000,000 March 7, 1991 35,000,000 September 1991
Fund VIII, Ltd. (35,000,000 Units)
CNL Income $35,000,000 September 6, 1991 3,500,000 November 1991
Fund IX, Ltd. (3,500,000 Units)
CNL Income $40,000,000 March 18, 1992 4,000,000 June 1992
Fund X, Ltd. (4,000,000 Units)
CNL Income $40,000,000 September 28, 1992 4,000,000 September 1992
Fund XI, Ltd. (4,000,000 Units)
CNL Income $45,000,000 March 15, 1993 4,500,000 July 1993
Fund XII, Ltd. (4,500,000 Units)
CNL Income $40,000,000 August 26, 1993 4,000,000 August 1993
Fund XIII, Ltd. (4,000,000 Units)
CNL Income $45,000,000 February 22, 1994 4,500,000 May 1994
Fund XIV, Ltd. (4,500,000 Units)
CNL Income $40,000,000 September 1, 1994 4,000,000 December 1994
Fund XV, Ltd. (4,000,000 Units)
CNL Income $45,000,000 June 12, 1995 4,500,000 August 1995
Fund XVI, Ltd. (4,500,000 Units)
CNL Income $30,000,000 September 19, 1996 3,000,000 (3)
Fund XVII, Ltd. (3,000,000 Units)
CNL Income $35,000,000 (4) (4) (4)
Fund XVIII, Ltd. (3,500,000 Units)
</TABLE>
- ------------------------------------
(1) The amount stated includes the exercise by the general partners of each
partnership of their option to increase by $5,000,000 the maximum size
of the offering of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL
Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund VI,
Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income
Fund XII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XVI, Ltd.,
and CNL Income Fund XVIII, Ltd.
(2) For a description of the property acquisitions by these limited
partnerships during the last ten years, see the table set forth on the
following page.
- 52 -
<PAGE>
(3) As of September 30, 1996, CNL Income Fund XVII, Ltd. had purchased 19
properties for approximately $20,130,700, representing an investment of
77% of net proceeds received.
(4) As of September 30, 1996, CNL Income Fund XVIII, Ltd., which is
offering a maximum of 3,500,000 limited partnership units
($35,000,000), had received subscriptions totalling $606,756 (60,676
units). As of such date, CNL Income Fund XVIII, Ltd. had not purchased
any properties.
As of September 30, 1996, Mr. Seneff and Mr. Bourne, directly or
through affiliated entities, also had served as joint general partners of 64
nonpublic real estate limited partnerships. The offerings of 63 of these 64
nonpublic limited partnerships had terminated as of September 30, 1996. These 63
partnerships raised a total of $164,419,266 from approximately 4,111 investors,
and purchased, directly or through participation in a joint venture or limited
partnership, interests in a total of 197 projects as of September 30, 1996.
These 197 projects consist of 19 apartment projects (comprising 11% of the total
amount raised by all 64 partnerships), 13 office buildings (comprising 5% of the
total amount raised by all 64 partnerships), 151 fast-food or family-style
restaurant property and business investments (comprising 69% of the total amount
raised by all 64 partnerships), one condominium development (comprising .5% of
the total amount raised by all 64 partnerships), four hotels/motels (comprising
5% of the total amount raised by all 64 partnerships), seven commercial/retail
properties (comprising 9% of the total amount raised by all 64 partnerships),
and two tracts of undeveloped land (comprising .5% of the total amount raised by
all 64 partnerships). The offering of the one remaining nonpublic limited
partnership (offering of $15,000,000) had raised $335,831 from eight investors
(approximately 2.25% of the total offering amount) as of September 30, 1996.
Mr. Bourne also has served, without Mr. Seneff, as a general partner of
one additional nonpublic real estate limited partnership program which raised a
total of $600,000 from 13 investors and purchased, through participation in a
limited partnership, one apartment building located in Georgia with a purchase
price of $1,712,000.
Mr. Seneff also has served, without Mr. Bourne, as a general partner of
two additional nonpublic real estate limited partnerships which raised a total
of $240,000 from 12 investors and purchased two office buildings with an
aggregate purchase price of $928,390. Both of the office buildings are located
in Florida.
Of the 83 real estate limited partnerships whose offerings had closed
as of September 30, 1996 (including 17 CNL Income Fund limited partnerships) in
which Mr. Seneff and/or Mr. Bourne serve or have served as general partners in
the past ten years, 35 invested in restaurant properties leased on a
"triple-net" basis, including six which also invested in franchised restaurant
businesses (accounting for approximately 93% of the total amount raised by all
83 real estate limited partnerships).
The following table sets forth summary information, as of September 30,
1996 regarding property acquisitions during the ten preceding years by the 17
limited partnerships that, either individually or through a joint venture or
partnership arrangement, acquired restaurant properties and that have investment
objectives similar to those of the Company.
<TABLE>
<CAPTION>
Name of Type of Method of Type of
Partnership Property Location Financing Program
<S> <C>
CNL Income 20 fast-food or AL, AZ, CA, FL, All cash Public
Fund, Ltd. family-style GA, LA, MD, OK,
restaurants TX, VA
CNL Income 43 fast-food or AL, AZ, CO, FL, All cash Public
Fund II, Ltd. family-style GA, IL, IN, LA,
restaurants MI, MN, MO, NC,
NM, OH, TX, WY
CNL Income 32 fast-food or AZ, CA, FL, GA, All cash Public
Fund III, Ltd. family-style IA, IL, IN, KS, KY,
restaurants MD, MI, MN, MO,
NE, OK, TX
- 53 -
<PAGE>
CNL Income 43 fast-food or AL, DC, FL, GA, All cash Public
Fund IV, Ltd. family-style IL, IN, KS, MA,
restaurants MD, MI, MS, NC,
OH, PA, TN, TX,
VA
CNL Income 30 fast-food or FL, GA, IL, IN, All cash Public
Fund V, Ltd. family-style MI, NH, NY, OH,
restaurants SC, TN, TX, UT,
WA
CNL Income 46 fast-food or AR, AZ, FL, IN, All cash Public
Fund VI, Ltd. family-style MA, MI, MN, NC,
restaurants NE, NM, NY, OH,
OK, PA, TN, TX,
VA, WY
CNL Income 45 fast-food or AZ, CO, FL, GA, All cash Public
Fund VII, Ltd. family-style IN, LA, MI, MN,
restaurants OH, SC, TN, TX,
UT, WA
CNL Income 40 fast-food or AZ, FL, IN, LA, All cash Public
Fund VIII, Ltd. family-style MI, MN, NC, NY,
restaurants OH, TN, TX, VA
CNL Income 41 fast-food or AL, FL, GA, IL, All cash Public
Fund IX, Ltd. family-style IN, LA, MI, MN,
restaurants MS, NC, NH, NY,
OH, SC, TN, TX
CNL Income 49 fast-food or AL, CA, CO, FL, All cash Public
Fund X, Ltd. family-style ID, IL, LA, MI,
restaurants MO, MT, NC, NH,
NM, NY, OH, PA,
SC, TN, TX
CNL Income 39 fast-food or AL, AZ, CA, CO, All cash Public
Fund XI, Ltd. family-style CT, FL, KS, LA,
restaurants MA, MI, MS, NC,
NH, NM, OH, OK,
PA, SC, TX, VA,
WA
CNL Income 49 fast-food or AL, AZ, CA, FL, All cash Public
Fund XII, Ltd. family-style GA, LA, MO, MS,
restaurants NC, NM, OH, SC,
TN, TX, WA
CNL Income 48 fast-food or AL, AR, AZ, CA, All cash Public
Fund XIII, Ltd. family-style CO, FL, GA, IN,
restaurants KS, LA, MD, NC,
OH, PA, SC, TN,
TX, VA
- 54 -
<PAGE>
CNL Income 56 fast-food or AL, AZ, CO, FL, All cash Public
Fund XIV, Ltd. family-style GA, KS, LA, MO,
restaurants MS, NC, NJ, NV,
OH, SC, TN, TX,
VA
CNL Income 47 fast-food or CA, FL, GA, KS, All cash Public
Fund XV, Ltd. family-style KY, MO, MS, NC,
restaurants NJ, NM, OH, OK,
PA, SC, TN, TX,
VA
CNL Income 43 fast-food or AZ, CA, CO, DC, All cash Public
Fund XVI, Ltd. family-style FL, GA, ID, IN,
restaurants KS, MN, MO, NC,
NM, NV, OH, TN,
TX, UT, WI
CNL Income 19 fast-food, CA, FL, GA, IL, All cash Public
Fund XVII, Ltd. family-style or IN, MI, NV, OH,
casual dining SC, TN, TX
restaurant
properties
CNL Income (1) (1) All cash Public
Fund XVIII, Ltd.
</TABLE>
- ------------------------------------
(1) As of September 30, 1996, CNL Income Fund XVIII, Ltd. had not purchased
any properties.
A more detailed description of the acquisitions by real estate limited
partnerships sponsored by Messrs. Bourne and Seneff is set forth in prior
performance Table VI, included in Part II of the registration statement filed
with the Securities and Exchange Commission for this offering. A copy of Table
VI is available to stockholders from the Company upon request, free of charge.
In addition, upon request to the Company, the Company will provide, without
charge, a copy of the most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission for CNL Income Fund, Ltd., CNL Income Fund
II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund
V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund
VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income Fund
XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund
XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund
XVII, Ltd., and CNL Income Fund XVIII, Ltd., as well as a copy, for a reasonable
fee, of the exhibits filed with such reports.
In order to provide potential purchasers of Shares in the Company with
information to enable them to evaluate the prior experience of the Messrs.
Seneff and Bourne as general partners of real estate limited partnerships,
including those set forth in the foregoing table, certain financial and other
information concerning those limited partnerships with investment objectives
similar to one or more of the Company's investment objectives in which Messrs.
Seneff and Bourne are general partners is provided in the Prior Performance
Tables included as Exhibit C. Information about the previous public
partnerships, the offerings of which were fully subscribed between October 1991
and September 1996, is included therein. Potential stockholders are encouraged
to examine the Prior Performance Tables attached as Exhibit C (in Table III),
which include information as to the operating results of these prior
partnerships, for more detailed information concerning the experience of Messrs.
Seneff and Bourne.
- 55 -
<PAGE>
THE ADVISOR AND THE ADVISORY AGREEMENT
THE ADVISORY AGREEMENT
The Advisory Agreement was renewed for a period of one year with the
unanimous approval of the Board of Directors, including the Independent
Directors, and shall expire on April 19, 1997, subject to successive one-year
renewals upon mutual consent of the parties.
SUMMARY OF THE
ARTICLES OF INCORPORATION AND BYLAWS
DESCRIPTION OF CAPITAL STOCK
The Company will not issue share certificates except to stockholders
who make a written request to the Company.
- 56 -
<PAGE>
ADDENDUM TO
EXHIBIT B
FINANCIAL INFORMATION
THE UPDATED PRO FORMA FINANCIAL STATEMENTS AND THE UNAUDITED FINANCIAL
STATEMENTS OF CNL AMERICAN PROPERTIES FUND, INC. CONTAINED IN THIS ADDENDUM
SHOULD BE READ IN CONJUNCTION WITH EXHIBIT B TO THE ATTACHED PROSPECTUS, DATED
APRIL 26, 1996.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO UPDATED FINANCIAL STATEMENTS
-------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of September 30, 1996 B-2
Pro Forma Consolidated Statement of Earnings for the nine months ended September 30, 1996 B-3
Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1995 B-4
Notes to Pro Forma Consolidated Financial Statements for the nine months ended
September 30, 1996 and the year ended December 31, 1995 B-5
Updated Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995 B-9
Condensed Consolidated Statements of Earnings for the nine months ended
September 30, 1996 and 1995 B-10
Condensed Consolidated Statements of Stockholders' Equity for the nine months
ended June 30, 1996 and the year ended December 31, 1995 B-11
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 B-12
Notes to Condensed Consolidated Financial Statements for the nine months ended
September 30, 1996 and 1995 B-14
<PAGE>
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 September
30, 1996, including the receipt of $102,960,893 in gross offering proceeds from
the sale of 10,296,089 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 82 properties (including 42 properties
which consist of land and building, one property through a joint venture
arrangement which consists of land and building, six properties which consist of
building only and 33 properties consisting of land only), 10 of which were under
construction at September 30, 1996, to provide mortgage financing to the lessees
of the 33 properties consisting of land only, and to pay organizational and
offering expenses, acquisition fees and miscellaneous acquisition expenses, (ii)
the receipt of $37,945,508 in gross offering proceeds from the sale of 3,794,551
additional shares of common stock during the period October 1, 1996 through
January 8, 1997, and (iii) the application of such funds to purchase 14
additional properties acquired during the period October 1, 1996 through January
8, 1997 (nine of which are under construction and consist of land and building,
one which is under construction and consists of building only, two properties
which consist of land and building and two properties which consist of land
only), to pay additional costs for the 10 properties under construction at
September 30, 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 September 30, 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 September 30,
1996.
The Pro Forma Consolidated Statements of Earnings for the nine months
ended September 30, 1996 and the year ended December 31, 1995, include the
historical operating results of the properties described in (i) above from the
dates of their acquisitions plus operating results for the seven of the 96
properties that were owned by the Company as of January 8, 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) June 2, 1995 (the date the Company became
operational), 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 Statements of Earnings
for the remaining 89 properties owned by the Company as of January 8, 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.
B-1
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 50,053,887 $ 15,143,401 (a) $ 65,197,288
Net investment in direct
financing leases (b) 10,840,639 5,350,726 (a) 16,191,365
Cash and cash equivalents 22,256,995 8,862,665 (a) 31,119,660
Receivables 153,642 153,642
Mortgage notes receivable 12,311,892 12,311,892
Prepaid expenses 29,283 29,283
Organization costs, less
accumulated amortization 14,682 14,682
Loan costs, less accumulated
amortization 38,183 38,183
Accrued rental income 314,564 314,564
Other assets 1,984,383 665,473 (a) 2,649,856
------------ ----------- ------------
$ 97,998,150 $ 30,022,265 $128,020,415
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 2,376,235 $ 2,376,235
Accrued interest payable 11,238 11,238
Accrued construction costs payable 4,887,602 $ (4,887,602)(a) -
Accounts payable and accrued
expenses 38,363 38,363
Escrowed real estate taxes payable 9,696 9,696
Due to related parties 390,489 390,489
Deferred financing income 41,973 41,973
Rents paid in advance 425,584 425,584
------------ ------------ ------------
Total liabilities 8,181,180 (4,887,602) 3,293,578
------------ ------------ ------------
Minority interest 288,456 - 288,456
------------ ------------ ------------
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
10,316,089 shares; issued and
outstanding, as adjusted,
14,110,640 shares 103,161 37,946 (a) 141,107
Capital in excess of par value 90,340,860 34,871,921 (a) 125,212,781
Accumulated distributions in
excess of net earnings (915,507) (915,507)
------------ ------------ ------------
89,528,514 34,909,867 124,438,381
------------ ------------ ------------
$ 97,998,150 $ 30,022,265 $128,020,415
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
B-2
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues:
Rental income from
operating leases $2,342,959 $ 43,538 (1) $2,386,497
Earned income from
direct financing leases (2) 324,907 34,282 (1) 359,189
Interest income from
mortgage notes receivable 796,378 796,378
Other interest and income 419,470 (16,508)(3) 402,962
---------- ---------- ----------
3,883,714 61,312 3,945,026
---------- ---------- ----------
Expenses:
General operating and
administrative 402,046 402,046
Professional services 50,101 50,101
Asset and mortgage management
fees to related party 175,773 4,352 (4) 180,125
State and other taxes 40,366 1,129 (5) 41,495
Interest expense 47,269 47,269
Depreciation and amortization 388,813 3,300 (6) 392,113
---------- ---------- ----------
1,104,368 8,781 1,113,149
---------- ---------- ----------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 2,779,346 52,531 2,831,877
Minority Interest in Earnings of
Consolidated Joint Venture (21,587) (21,587)
---------- ---------- ----------
Net Earnings $2,757,759 $ 52,531 $2,810,290
========== ========== ==========
Earnings Per Share of
Common Stock $ .41 $ .42
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding 6,771,120 6,771,120
========== ==========
See accompanying notes to unaudited pro forma consolidated financial statements.
B-3
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues:
Rental income from
operating leases $ 498,817 $ 96,945 (1) $ 595,762
Earned income from direct
financing leases (2) 28,935 28,935
Contingent rental income 12,024 12,024
Interest income 119,355 (29,664)(3) 89,691
--------- --------- ---------
659,131 67,281 726,412
--------- --------- ---------
Expenses:
General operating and
administrative 134,759 134,759
Professional services 8,119 8,119
Asset management fee to
related party 23,078 4,368 (4) 27,446
State taxes 20,189 1,769 (5) 21,958
Depreciation and amortization 104,131 14,700 (6) 118,831
--------- --------- ---------
290,276 20,837 311,113
--------- --------- ---------
Earnings Before Minority
Interest in Earnings of
Consolidated Joint Venture 368,855 46,444 415,299
Minority Interest in Earnings
of Consolidated Joint Venture (76) (76)
--------- --------- ---------
Net Earnings $ 368,779 $ 46,444 $ 415,223
========= ========= =========
Earnings Per Share of
Common Stock (7) $ .19 $ .22
========= =========
Weighted Average Number
of Shares of Common Stock
Outstanding (7) 1,898,350 1,905,970
========= =========
See accompanying notes to unaudited pro forma consolidated financial statements.
B-4
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $37,945,508 from the issuance of 3,794,551
shares of common stock during the period October 1, 1996 through
January 8, 1997, used (i) to acquire 14 properties for $14,545,488 (of
which one property consists of building only, two properties consist of
land only and 11 properties consist of land and building), (ii) to fund
estimated construction costs of $9,794,166 ($4,887,602 of which was
accrued as construction costs payable at September 30, 1996) relating
to 10 wholly-owned properties under construction at September 30, 1996,
(iii) to pay acquisition fees of $1,707,548 ($1,042,075 of which was
allocated to properties and $665,473 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 $3,035,641,
which have been netted against capital in excess of par value, leaving
$8,862,665 in cash and cash equivalents available for future
investment.
The pro forma adjustments to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
transactions were as follows:
<TABLE>
<CAPTION>
Estimated
purchase price
(including con-
struction and Acquisition
closing costs) fees
and additional allocated
construction costs to property Total
------------------ ----------- -----
<S> <C>
Burger King in Chicago, IL $ 1,577,172 $ 84,491 $ 1,661,663
Wendy's in San Diego, CA 608,189 32,582 640,771
Golden Corral in Lufkin, TX 1,365,226 73,137 1,438,363
Golden Corral in Columbia, TN 1,294,199 69,332 1,363,531
Two Pizza Huts in Ohio 316,000 16,929 332,929
Burger King in Chattanooga, TN 1,155,455 61,900 1,217,355
Golden Corral in Eastlake, OH 1,637,199 87,707 1,724,906
Golden Corral in Moberly, MO 1,172,196 62,796 1,234,992
Boston Market in St. Joseph, MO 786,262 42,121 828,383
Boston Market in Atlanta, GA 1,159,027 62,091 1,221,118
Jack in the Box in Dallas, TX 830,459 44,489 874,948
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
Ten wholly owned properties
under construction at
September 30, 1996 4,906,564 262,851 5,169,415
----------- ----------- -----------
$19,452,052 $ 1,042,075 $20,494,127
=========== =========== ===========
Adjustment classified
as follows:
Land and buildings on
operating leases $15,143,401
Net investment in
direct financing
leases 5,350,726
-----------
$20,494,127
===========
</TABLE>
B-5
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Balance Sheet - Continued:
(b) 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.
Fourteen properties have been classified as direct financing leases.
For the leases classified as direct financing leases, the building
portions of six of the properties have been classified as direct
financing leases while the land portions of these leases are operating
leases.
Pro Forma Consolidated Statements of Earnings:
(1) Represents rental income from operating leases and earned income from
direct financing leases for the seven of the 96 properties acquired
during the period June 2, 1995 (the date the Company began operations)
through January 8, 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) June 2, 1995 (the date the Company became
operational), 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 seven 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 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 Statements of Earnings.
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
Jack in the Box in
Los Angeles, CA June 1995 June 1995
Kenny Rogers Roasters in
Grand Rapids, MI August 1995 June 1995
Kenny Rogers Roasters in
Franklin, TN August 1995 June 1995
Denny's in Pasadena, TX September 1995 August 1995
Denny's in Shawnee, OK September 1995 August 1995
Denny's in Grand Rapids, MI March 1996 September 1995
Denny's in McKinney, TX June 1996 December 1995
B-6
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Statements of Earnings - Continued:
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.
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 and 1995 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the nine months ended September 30, 1996 and the year ended
December 31, 1995.
(2) See Note (b) 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) June 2, 1995 (the date the Company became
operational), 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 nine months ended September 30, 1996
and the year ended December 31, 1995.
(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) June 2, 1995 (the date the
Company became operational), 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 $6,219,000 and $5,241,000
for the Pro Forma Properties for the nine months ended September 30,
1996 and the year ended December 31, 1995, respectively), 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 five 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.
B-7
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
Pro Forma Consolidated Statements of Earnings - Continued:
(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 nine
months ended September 30, 1996, and during the period the Company was
operational, June 2, 1995 (the date following when the Company received
the minimum offering proceeds and funds were released from escrow)
through December 31, 1995.
As a result of three of the six Pro Forma Properties being treated in
the Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1995, as placed in service on June 2, 1995 (the date the
Company became operational), the Company assumed approximately 347,100
shares of common stock were sold, and the net offering proceeds were
available for investment, on June 2, 1995. Due to the fact that
approximately 184,800 of these shares of common stock were actually
sold subsequently, during the period June 3, 1995 through June 20,
1995, the weighted average number of shares outstanding for the pro
forma period was adjusted. Pro forma earnings per share were calculated
based upon the weighted average number of shares of common stock
outstanding, as adjusted, during the period the Company was
operational, June 2, 1995 through December 31, 1995.
B-8
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
------------- -----------
Land and buildings on operating leases,
less accumulated depreciation $50,053,887 $19,723,726
Net investment in direct financing leases 10,840,639 1,373,882
Cash and cash equivalents 22,256,995 11,508,445
Receivables 153,642 113,613
Mortgage notes receivable 12,311,892 -
Prepaid expenses 29,283 8,090
Organization costs, less accumulated
amortization of $5,318 and $2,318 14,682 17,682
Loan costs, less accumulated amortization
of $15,317 at September 30, 1996 38,183 -
Accrued rental income 314,564 39,142
Other assets 1,984,383 818,504
----------- -----------
$97,998,150 $33,603,084
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable $ 2,376,235 $ -
Accrued interest payable 11,238 -
Accrued construction costs payable 4,887,602 1,058,825
Accounts payable and accrued expenses 38,363 79,904
Escrowed real estate taxes payable 9,696 9,696
Due to related parties 390,489 248,584
Deferred financing income 41,973 -
Rents paid in advance 425,584 25,351
----------- -----------
Total liabilities 8,181,180 1,422,360
----------- -----------
Minority interest 288,456 200,076
----------- -----------
Commitments (Note 12)
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 10,316,089 and 3,865,416,
respectively 103,161 38,654
Capital in excess of par value 90,340,860 32,211,833
Accumulated distributions in excess of
net earnings (915,507) (269,839)
----------- -----------
Total stockholders' equity 89,528,514 31,980,648
----------- -----------
$97,998,150 $33,603,084
=========== ===========
See accompanying notes to condensed consolidated financial statements.
B-9
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Rental income from
operating leases $ 724,958 $ 122,418 $2,342,959 $ 122,787
Earned income from direct
financing leases 238,723 - 324,907 -
Interest income from
mortgage notes receiv-
able 330,880 - 796,378 -
Other interest and income 207,681 34,289 419,470 42,117
---------- ---------- ---------- ----------
1,502,242 156,707 3,883,714 164,904
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 132,727 43,112 402,046 46,464
Professional services 1,710 1,392 50,101 1,392
Asset and mortgage
management fees to
related party 78,100 3,864 175,773 3,864
State and other taxes 27,982 3,500 40,366 3,519
Interest expense 43,691 - 47,269 -
Depreciation and amorti-
zation 150,051 22,954 388,813 23,325
---------- ---------- ---------- ----------
434,261 74,822 1,104,368 78,564
---------- ---------- ---------- ----------
Earnings Before Minority
Interest in Loss (Income)
of Consolidated Joint
Venture 1,067,981 81,885 2,779,346 86,340
Minority Interest in Loss
(Income) of Consolidated
Joint Venture 736 - (21,587) -
---------- ---------- ---------- ----------
Net Earnings $1,068,717 $ 81,885 $2,757,759 $ 86,340
========== ========== ========== ==========
Earnings Per Share of
Common Stock $ 0.12 $ 0.06 $ 0.41 $ 0.08
========== ========== ========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding 8,993,595 1,324,609 6,771,120 1,088,791
========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements.
B-10
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 1996 and
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Accumulated
distributions
Common stock Capital in in excess
Number Par excess of of net
of shares value par value earnings Total
--------- ----- --------- ------------- -----
<S> <C>
Balance at
December 31, 1994 20,000 $ 200 $ 199,800 $ - $ 200,000
Subscriptions
received for
common stock
through public
offering and
distribution
reinvestment
plan 3,845,416 38,454 38,415,704 - 38,454,158
Stock issuance
costs - - (6,403,671) - (6,403,671)
Net earnings - - - 368,779 368,779
Distributions
declared and
paid ($.03
to $.06 per
share) - - - (638,618) (638,618)
---------- -------- ----------- ----------- -----------
Balance at
December 31, 1995 3,865,416 38,654 32,211,833 (269,839) 31,980,648
Subscriptions
received for
common stock
through public
offering and
distribution
reinvestment
plan 6,450,673 64,507 64,442,227 - 64,506,734
Stock issuance
costs - - (6,313,200) - (6,313,200)
Net earnings - - - 2,757,759 2,757,759
Distributions
declared and
paid ($.06
per share) - - - (3,403,427) (3,403,427)
---------- -------- ----------- ----------- -----------
Balance at
September 30,
1996 10,316,089 $103,161 $90,340,860 $ (915,507) $89,528,514
========== ======== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
B-11
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
1996 1995
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents:
Net cash provided by operating
activities $ 3,244,519 $ 124,187
------------ ------------
Cash Flows From Investing Activities:
Additions to land and buildings
on operating leases (27,023,938) (13,588,527)
Investment in direct financing
leases (9,406,953) -
Investment in mortgage notes
receivable (12,363,000) -
Collection of deferred financing
income 43,270 -
Collection of mortgage notes
payments 86,815 -
Increase in other assets (877,463) (188,531)
------------ ------------
Net cash used in investing
activities (49,541,269) (13,777,058)
------------ ------------
Cash Flows From Financing Activities:
Reimbursement of acquisition,
organization and stock issuance
costs paid by related parties
on behalf of the Company (765,996) (2,268,907)
Proceeds of borrowing on line
of credit 2,417,572 -
Payment on line of credit (41,337) -
Payment of loan costs (53,500) -
Contribution from minority
interest of consolidated
joint venture 97,419 200,000
Subscriptions received from
stockholders 64,506,734 20,746,392
Distribution to minority interest (30,626) -
Distributions to stockholders (3,406,759) (15,148)
Payment of stock issuance costs (5,680,757) (1,729,078)
Other 2,550 -
------------ ------------
Net cash provided by
financing activities 57,045,300 16,933,259
------------ ------------
Net Increase in Cash and Cash Equivalents 10,748,550 3,280,388
Cash and Cash Equivalents at Beginning
of Period 11,508,445 945
------------ ------------
Cash and Cash Equivalents at End
of Period $ 22,256,995 $ 3,281,333
============ ============
See accompanying notes to condensed consolidated financial statements.
B-12
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Nine Months Ended
September 30,
1996 1995
------------ --------
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain
acquisition, organization and
stock issuance costs on behalf
of the Company as follows:
Acquisition costs $ 136,341 $ 75,501
Organization costs - 20,000
Stock issuance costs 615,600 1,974,281
------------ ------------
$ 751,941 $ 2,069,782
============ ============
Land, building and other costs
incurred and unpaid at end of
period $ 5,080,365 $ 1,037,687
============ ============
Commissions, marketing support and
due diligence expense reimbursement
fee, and other stock issuance costs
incurred and unpaid at end of period $ 193,781 $ 310,657
============ ============
Distributions declared and unpaid at
end of period $ - $ 172,536
============ ============
See accompanying notes to condensed consolidated financial statements.
B-13
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 1996 and 1995
1. Organization and Nature of Business:
CNL American Properties Fund, Inc. (the "Company") was organized in
Maryland on May 2, 1994, for the purpose of acquiring, directly or
indirectly through joint venture or co-tenancy arrangements, restaurant
properties (the "Properties") to be leased on a long-term, triple-net
basis to operators of certain national and regional fast-food,
family-style and casual dining restaurant chains. To a lesser extent,
the Company intends to offer furniture, fixtures and equipment
financing ("Secured Equipment Leases") to operators of restaurant
chains. Secured Equipment Leases will be funded from the proceeds of a
loan of up to ten percent of the gross proceeds from the Company's
current $150,000,000 offering.
2. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and
do not include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 1996, may not be
indicative of the results that may be expected for the year ending
December 31, 1996. Amounts as of December 31, 1995, included in the
financial statements, have been derived from audited financial
statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Form 10-K for the year ended December 31, 1995.
The Company was a development stage enterprise from May 2, 1994 through
June 1, 1995. Since operations had not begun, activities through June
1, 1995, were devoted to organization of the Company.
The Company accounts for its 85.47% interest in CNL/Corral South Joint
Venture using the consolidation method. Minority interest represents
the minority joint venture partner's proportionate share of the equity
in the Company's consolidated joint venture. All significant
intercompany accounts and transactions have been eliminated.
B-14
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
2. Basis of Presentation - Continued:
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
Statement requires that an entity review long-lived assets and certain
identifiable intangibles, to be held and used, for impairment whenever
events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. Adoption of this standard had no
material effect on the Company's financial position or results of
operations.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks, certificates of deposit and money market
funds (some of which are backed by government securities). Cash
equivalents are stated at cost plus accrued interest, which
approximates market value.
Cash accounts maintained on behalf of the Company in demand deposits at
commercial banks, money market funds and certificates of deposit may
exceed federally insured levels; however, the Company has not
experienced any losses in such accounts. The Company limits investment
of temporary cash investments to financial institutions with high
credit standing; therefore, management believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Rents Paid in Advance - Rents paid in advance by lessees for future
periods are deferred upon receipt and are recognized as revenues during
the period in which the rental income is earned. Rents paid in advance
include "interim rent" payments required to be paid under the terms of
certain leases for construction properties, equal to a pre-determined
rate times the amount funded by the Company during the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable. Once minimum annual rent becomes payable,
the "interim rent" payments are amortized and recorded as income either
(i) over the lease term so as to produce a constant periodic rate of
return for leases accounted for using the direct financing method, or
(ii) over the lease term using the straight-line method for leases
accounted for using the operating method, whichever is applicable.
B-15
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
2. Basis of Presentation - Continued:
Interest Rate Swaps - Income or expense associated with interest rate
swap agreements related to equipment financing is recognized on the
accrual basis over the life of the swap agreement as an adjustment to
interest expense.
Earnings Per Share - Earnings per share are calculated based upon the
weighted average number of shares of common stock outstanding during
the period the Company was operational.
3. Leases:
The Company leases its land, buildings and equipment subject to Secured
Equipment Leases to operators of national and regional fast-food,
family-style and casual dining restaurants. The leases are accounted
for under the provisions of Statement of Financial Accounting Standards
No. 13, "Accounting for Leases." The leases relating to 73 of the
Company's Properties have been classified as operating leases
(including the leases relating to ten Properties under construction as
of September 30, 1996) and the leases relating to nine Properties and
four Secured Equipment Leases have been classified as direct financing
leases. For the leases classified as direct financing leases, the
building portions of the leases are accounted for as direct financing
leases while the land portions of three of these leases are accounted
for as operating leases.
4. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at:
September 30, December 31,
1996 1995
Land $29,397,769 $ 8,890,471
Buildings 19,716,006 10,049,032
----------- -----------
49,113,775 18,939,503
Less accumulated
depreciation (423,115) (100,318)
----------- -----------
48,690,660 18,839,185
Construction in
progress 1,363,227 884,541
----------- -----------
$50,053,887 $19,723,726
=========== ===========
B-16
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
4. Land and Buildings on Operating Leases - Continued:
Some leases provide for escalating guaranteed minimum rents throughout
the lease term. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the quarter and nine months ended September 30, 1996, the Company
recognized $99,342 and $275,422, respectively, and for the quarter and
nine months ended September 30, 1995, the Company recognized $8,984 and
$9,034, respectively, of such rental income.
The following is a schedule of future minimum lease payments to be
received on the noncancellable operating leases at September 30, 1996:
1996 $ 1,187,752
1997 4,396,156
1998 4,400,938
1999 4,418,883
2000 4,446,816
Thereafter 65,292,354
-----------
$84,142,899
===========
These amounts do not include minimum lease payments that will become
due when Properties under development are completed (See Note 12).
5. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at:
September 30, December 31,
1996 1995
------------- -----------
Minimum lease payments
receivable $ 20,935,800 $ 2,498,881
Estimated residual
values 441,657 343,740
Less unearned income (10,536,818) (1,468,739)
------------ ------------
Net investment in
direct financing
leases $ 10,840,639 $ 1,373,882
============ ============
B-17
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
5. Net Investment in Direct Financing Leases - Continued:
The following is a schedule of future minimum lease payments to be
received on the direct financing leases at September 30, 1996:
1996 $ 432,805
1997 1,736,012
1998 1,736,012
1999 1,736,012
2000 1,739,331
Thereafter 13,555,628
-----------
$20,935,800
===========
6. Mortgage Notes Receivable:
In January 1996, in connection with the acquisition of land for 23
Pizza Hut restaurants, the Company accepted a promissory note in the
principal sum of $8,475,000, collateralized by a mortgage on the
buildings on the 23 Pizza Hut Properties. The promissory note bears
interest at a rate of 10.75% per annum and is being collected in 240
equal monthly installments of $86,041. As of September 30, 1996,
$8,425,423 was outstanding relating to this note, including $23,187 in
accrued interest.
In addition, in May 1996, in connection with the acquisition of land
for 10 Pizza Hut restaurants, the Company accepted a promissory note in
the principal sum of $3,888,000, collateralized by a mortgage on the
buildings on the 10 Pizza Hut Properties. The promissory note bears
interest at a rate of 10.75% per annum and is being collected in 240
equal monthly installments of $39,472. As of September 30, 1996,
$3,886,469 was outstanding relating to this note, including $12,520 in
accrued interest.
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of the fair
value of significant financial instruments. Management believes, based
upon the current terms, that the estimated fair value of the Company's
mortgage notes receivable as of September 30, 1996, was $12,311,892,
the same as its carrying value.
B-18
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
7. Note Payable:
On March 5, 1996, the Company entered into a line of credit (the
"Loan") and security agreement with a bank. The Loan is to be used by
the Company to offer Secured Equipment Leases. The Loan provides that
the Company will be able to receive advances of up to $15,000,000 until
March 4, 1998. Generally, advances under the Loan will be fully
amortizing term loans repayable in terms equal to the duration of the
Secured Equipment Leases, but in no event greater than 72 months. In
addition, advances for short-term needs (to acquire equipment to be
leased under Secured Equipment Leases) may be requested in an aggregate
amount which does not exceed the Revolving Sublimit (defined in the
Loan as $1,000,000) and such advances may be repaid and readvanced;
provided, however, that advances made pursuant to the Revolving
Sublimit shall be converted to term loans the earlier of (i) the end of
each 60 day period following the closing date (defined in the Loan as
March 5, 1996), or (ii) when the aggregate amount outstanding equals or
exceeds $1,000,000. Interest on advances made pursuant to the Revolving
Sublimit shall be paid monthly in arrears. In addition, principal
amounts under advances pursuant to the Revolving Sublimit, if not
sooner paid or converted into term loans, shall be paid, together with
any unpaid interest relating to such advances, to the bank on March 5,
1998. Generally, all advances under the Loan will bear interest at
either (i) a rate per annum equal to 215 basis points above the Reserve
Adjusted LIBOR Rate (as defined in the Loan) or (ii) a rate per annum
equal to the bank's prime rate, whichever the Company selects at the
time advances are made. As a condition of obtaining the Loan, the
Company agreed to grant to the bank a first security interest in the
Secured Equipment Leases. In connection with the Loan, the Company
incurred a commitment fee, legal fees and closing costs of $53,500.
As of September 30, 1996, the Company had obtained seven advances
totalling $2,417,572 relating to the Loan. In general, the advances are
fully amortizing terms loans repayable over six years and bear interest
at a rate per annum equal to 215 basis points above the Reserve
Adjusted LIBOR Rate. The proceeds of the advances were used to fund
Secured Equipment Leases at an aggregate cost of approximately
$2,364,000 and to pay $53,500 in loan costs described above. As of
September 30, 1996, $2,376,235 of principal was outstanding relating to
the Loan, plus $11,238 of accrued interest.
B-19
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
7. Note Payable - Continued:
During the quarter ended September 30, 1996, the Company entered into
interest rate swap agreements to reduce the impact of changes in
interest rates on its floating rate long-term debt. At September 30,
1996, the Company had outstanding two interest rate swap agreements
with a commercial bank, having a total notional amount of approximately
$2,206,000. Those agreements effectively change the Company's interest
rate exposure on approximately $1,641,000 of the outstanding floating
rate notes to a fixed nine percent per annum and approximately $565,000
of the outstanding floating rate notes to a fixed rate of 8.75% per
annum. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements.
However, the Company does not anticipate nonperformance by the
counterparty.
8. Stock Issuance Costs:
The Company has incurred certain expenses of its offering of shares,
including commissions, marketing support and due diligence expense
reimbursement fees, filing fees, legal, accounting, printing and escrow
fees, which have been deducted from the gross proceeds of the offering.
Preliminary costs incurred prior to raising capital were advanced by
CNL Fund Advisors, Inc. (the "Advisor"). The Advisor has agreed to pay
all organizational and offering expenses (excluding commissions and
marketing support and due diligence expense reimbursement fees) which
exceed three percent of the gross offering proceeds received from the
sale of shares of the Company.
As of September 30, 1996 and December 31, 1995, the Company had
incurred a total of $12,736,871 and $6,423,671, respectively, in
organizational and offering costs, including $8,236,871 and $3,076,333,
respectively, in commissions and marketing support and due diligence
expense reimbursement fees (see Note 10). Of these amounts as of
September 30, 1996 and December 31, 1995, $12,716,871 and $6,403,671,
respectively, has been treated as stock issuance costs and $20,000 has
been treated as organization costs. The stock issuance costs have been
charged to stockholders' equity subject to the three percent cap
described above.
B-20
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
9. Distributions:
Distributions declared for the nine months ended September 30, 1996,
represent approximately $3,015,000 of ordinary income and approximately
$389,000 of return of capital to stockholders for federal income tax
purposes. No amounts distributed to the stockholders for the nine
months ended September 30, 1996, are required to be or have been
treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital. The
characterization for tax purposes of distributions declared for the
nine months ended September 30, 1996, may not be indicative of the
results that may be expected for the year ending December 31, 1996.
10. Related Party Transactions:
During the nine months ended September 30, 1996, the Company incurred
$4,838,005 in selling commissions due to CNL Securities Corp. for
services in connection with the offering of shares. A substantial
portion of this amount (approximately $4,520,000) was or will be paid
as commissions to other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing
support and due diligence expense reimbursement fee equal to 0.5% of
the total amount raised from the sale of shares, a portion of which may
be reallowed to other broker-dealers. During the nine months ended
September 30, 1996, the Company incurred $322,534 of such fees.
The Advisor is entitled to receive acquisition fees for services in
identifying the Properties and structuring the terms of the acquisition
and leases of the Properties and structuring the terms of the Mortgage
Loans equal to 4.5% of the total amount raised from the sale of shares.
During the nine months ended September 30, 1996, the Company incurred
$2,902,803 of such fees. Such fees are included in land and buildings
on operating leases, net investment in direct financing leases and
other assets.
In connection with the acquisition of Properties that are being or have
been constructed or renovated by affiliates, subject to approval by the
Company's Board of Directors, the Company may incur
development/construction management fees of generally five to ten
percent of the cost of constructing or renovating a Property, payable
to affiliates of the Company as acquisition fees. Such fees will be
included in the purchase
B-21
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
10. Related Party Transactions - Continued:
price of Properties purchased from developers that are affiliates of
the Company. During the quarter and nine months ended September 30,
1996, the Company incurred $21,500 in development/construction
management fees. No development/con- struction management fees were
incurred for the quarter and nine months ended September 30, 1995.
For negotiating Secured Equipment Leases and supervising the Secured
Equipment Lease program, the Advisor will be entitled to receive from
the Company a one-time secured equipment lease servicing fee of two
percent of the purchase price of the equipment that is the subject of a
Secured Equipment Lease. During the quarter and nine months ended
September 30, 1996, the Company incurred $35,516 and $46,292,
respectively, in secured equipment lease servicing fees. Such fees are
included in net investment in direct financing leases and other assets.
The Company and the Advisor have entered into an advisory agreement
pursuant to which the Advisor will receive a monthly asset and mortgage
management fee of one-twelfth of 0.60% of the Company's real estate
asset value (generally, the total amount invested in the Properties as
of the end of the preceding month, exclusive of acquisition fees and
acquisition expenses), plus one-twelfth of .60% of the Company's total
principal amount of the mortgage loans as of the end of the preceding
month. The management fee, which will not exceed fees which are
competitive for similar services in the same geographic area, may or
may not be taken, in whole or in part as to any year, in the sole
discretion of the Advisor. All or any portion of the management fee not
taken as to any fiscal year shall be deferred without interest and may
be taken in such other fiscal year as the Advisor shall determine.
During the quarter and nine months ended September 30, 1996, the
Company incurred $80,971 and $181,497, respectively, in total asset and
mortgage management fees, $2,871 and $5,724, respectively, of which was
capitalized as part of the cost of Properties under construction.
During the quarter and nine months ended September 30, 1995, the
Company incurred $5,400 in asset management fees, $1,536 of which was
capitalized as part of the cost of building for Properties under
construction.
B-22
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
10. Related Party Transactions - Continued:
The Advisor and its affiliates provide accounting and administrative
services to the Company (including accounting and administrative
services in connection with the offering of shares) on a day-to-day
basis. For the nine months ended September 30, 1996 and 1995, the
expenses incurred for these services were classified as follows:
1996 1995
-------- ------
Stock issuance costs $558,383 $515,772
General operating and
administrative expenses 236,191 20,504
-------- --------
$794,574 $536,276
======== ========
During the nine months ended September 30, 1996, the Company acquired
three Properties for an aggregate purchase price of approximately
$2,358,000 from affiliates of the Company. The affiliates had purchased
and temporarily held title to these Properties in order to facilitate
the acquisition of the Properties by the Company. Each Property was
acquired at a cost equal to the cost of the Property to the affiliate
(including carrying costs) due to the fact that these amounts were less
than each Property's appraised value.
B-23
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
10. Related Party Transactions - Continued:
The due to related parties consisted of the following at:
September 30, December 31,
1996 1995
------------- --------
Due to the Advisor:
Expenditures incurred
on behalf of the
Company and account-
ing and administra-
tive services $ 53,961 $108,316
Acquisition fees 182,502 45,118
Asset and mortgage
management fees - 9,108
Distributions - 3,332
-------- --------
236,463 165,874
-------- --------
Due to CNL Securities
Corp:
Commissions 144,397 75,197
Marketing support
and due diligence
expense reimburse-
ment fees 9,629 5,013
-------- --------
154,026 80,210
-------- --------
Other - 2,500
-------- --------
$390,489 $248,584
======== ========
11. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing
more than ten percent of the Company's total rental and earned income
for at least one of the quarters ended September 30:
1996 1995
---- ----
Castle Hill Holdings V,
L.L.C. and Castle Hill
Holdings VI, L.L.C.
("Castle Hill") $184,765 $ -
Golden Corral Corporation 143,214 37,568
Briad Restaurant Group, Inc. 129,775 -
Corral Northeast, Inc. 113,182 -
DenAmerica Corporation 109,270 18,977
Roasters Corp. 52,754 29,387
Foodmaker, Inc. 41,115 33,591
B-24
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
11. Concentration of Credit Risk - Continued:
During the quarter ended September 30, 1996, the Company also earned
$330,880 in interest income from mortgage notes receivable under which
Castle Hill is the borrower.
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Company's total rental and earned income for at
least one of the quarters ended September 30:
1996 1995
-------- ------
Golden Corral Family
Steakhouse Restaurants $306,106 $ 37,568
Pizza Hut 184,765 -
TGI Friday's 129,775 -
Denny's 109,270 18,977
Boston Market 108,111 3,265
Kenny Rogers' Roasters 52,754 29,387
Jack in the Box 41,115 33,591
Although the Company's Properties are geographically diverse and the
Company's lessees operate a variety of restaurant concepts, failure of
any one of these restaurant chains or any lessee or borrower that
contributes more than ten percent of the Company's total income could
significantly impact the results of operations of the Company. However,
management believes that the risk of such a default is reduced due to
the essential or important nature of these Properties for the on-going
operations of the lessees and borrowers.
It is expected that the percentage of total rental and earned income
contributed by these lessees, borrowers and restaurant chains will
decrease as additional Properties are acquired and leased in 1996 and
subsequent years.
12. Commitments:
The Company has entered into various development agreements with
tenants which provide terms and specifications for the construction of
buildings the tenants have agreed to lease once construction is
completed. The agreements provide a maximum amount of development costs
(including the purchase price of the land and closing costs) to be paid
by the Company. The aggregate maximum development costs the Company has
agreed to pay is approximately $12,162,800, of which approximately
$6,976,000 in land and other costs had been
B-25
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
12. Commitments - Continued:
incurred as of September 30, 1996. The buildings currently under
construction are expected to be operational by February 1997. In
connection with the purchase of each Property, the Company, as lessor,
entered into a long-term, triple-net lease agreement.
In August 1996, the Company entered into a temporary Secured Equipment
Lease, as lessor, with an operator of a family-style restaurant. In
connection therewith, the Company provided initial funding of $102,570
for the equipment. The Company has agreed to fund the remaining balance
of the equipment purchase price of approximately $191,000. Upon funding
the balance, which is expected to occur in December 1996, the Company
will enter into a final Secured Equipment Lease. Until a final Secured
Equipment Lease is entered into, the tenant will pay monthly rent in
accordance with the temporary lease.
13. Subsequent Events:
During the period October 1, 1996 through November 5, 1996, the Company
received subscription proceeds for an additional 1,315,769 shares
($13,157,688) of common stock.
Subsequent to September 30, 1996, the Company declared distributions of
$615,914 and $683,758, respectively, or $.059375 per share of common
stock, payable in December 1996, to stockholders of record on October
1, 1996 and November 1, 1996, respectively.
During the period October 1, 1996 through November 5, 1996, the Company
acquired two Properties (both of which are undeveloped land on which
restaurants are being constructed) for cash at a total cost of
approximately $940,934, excluding closing and development costs. The
development costs (including the purchase of the land and closing
costs) to be paid by the Company relating to the two properties under
construction are estimated to be approximately $2,253,000. The
buildings under construction are expected to be operational by February
1997. In connection with the purchase of each Property, the Company, as
lessor, entered into a long-term, triple-net lease agreement.
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
B-26
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarters and Nine Months Ended September 30, 1996 and 1995
13. Subsequent Events - Continued:
"Subsequent Offering") expected to commence immediately following the
termination of the Company's current $150,000,000 offering. 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.
B-27
<PAGE>
ADDENDUM TO
EXHIBIT C
PRIOR PERFORMANCE TABLES
THE FOLLOWING INFORMATION UPDATES AND
REPLACES THE CORRESPONDING INFORMATION
IN EXHIBIT C TO THE ATTACHED PROSPECTUS,
DATED APRIL 26, 1996.
<PAGE>
EXHIBIT C
PRIOR PERFORMANCE TABLES
The information in this Exhibit C contains certain relevant summary
information concerning certain prior public partnerships sponsored by two of the
Company's principals (who also serve as the Chairman of the Board and President
of the Company) and their Affiliates (the "Prior Public Partnerships") which
like the Company, were formed to invest in restaurant properties leased on a
triple-net basis to operators of national and regional fast-food and
family-style restaurant chains.
A more detailed description of the acquisitions by the Prior Public
Partnerships is set forth in Part II of the registration statement filed with
the Securities and Exchange Commission for this Offering and is available from
the Company upon request, without charge. In addition, upon request to the
Company, the Company will provide, without charge, a copy of the most recent
Annual Report on Form 10-K filed with the Securities and Exchange Commission for
CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL
Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL
Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd. and CNL Income Fund XVIII,
Ltd., as well as a copy, for a reasonable fee, of the exhibits filed with such
reports.
The investment objectives of the Prior Public Partnerships (like those
of the Company) generally include preservation and protection of capital, the
potential for increased income and protection against inflation, and potential
for capital appreciation, all through investment in restaurant properties. In
addition, the investment objectives of the Prior Public Partnerships included
making partially tax-sheltered distributions.
STOCKHOLDERS SHOULD NOT CONSTRUE INCLUSION OF THE FOLLOWING TABLES AS
IMPLYING THAT THE COMPANY WILL HAVE RESULTS COMPARABLE TO THOSE REFLECTED IN
SUCH TABLES. DISTRIBUTABLE CASH FLOW, FEDERAL INCOME TAX DEDUCTIONS, OR OTHER
FACTORS COULD BE SUBSTANTIALLY DIFFERENT. STOCKHOLDERS SHOULD NOTE THAT, BY
ACQUIRING SHARES IN THE COMPANY, THEY WILL NOT BE ACQUIRING ANY INTEREST IN ANY
PRIOR PUBLIC PARTNERSHIPS.
Description of Tables
The following Tables are included herein:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to Sponsor
Table III - Operating Results of Prior Programs
Table V - Sales or Disposal of Properties
Unless otherwise indicated in the Tables, all information contained in
the Tables is as of June 30, 1996. The following is a brief description of the
Tables:
Table I - Experience in Raising and Investing Funds
Table I presents information on a percentage basis showing the
experience of two of the principals of the Company and their Affiliates in
raising and investing funds for the Prior Public Partnerships, the offerings of
which were fully subscribed between October 1991 and September 1996.
C-1
<PAGE>
The Table sets forth information on the offering expenses incurred and
amounts available for investment expressed as a percentage of total dollars
raised. The Table also shows the percentage of property acquisition cost
leveraged, the date the offering commenced, and the time required to raise funds
for investment.
Table II - Compensation to Sponsor
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to the general partners of the Prior
Public Partnerships.
The Table indicates the total offering proceeds and the portion of such
offering proceeds paid or to be paid to two of the principals of the Company and
their Affiliates in connection with the Prior Public Partnerships, the offerings
of which were fully subscribed between October 1991 and September 1996. The
Table also shows the amounts paid to two of the principals of the Company and
their Affiliates from cash generated from operations and from cash generated
from sales or refinancing by each of the Prior Public Partnerships on a
cumulative basis commencing with inception and ending June 30, 1996.
Table III - Operating Results of Prior Programs
Table III presents a summary of operating results for the period from
inception through June 30, 1996, of the Prior Public Partnerships, the offerings
of which were fully subscribed between October 1991 and September 1996.
The Table includes a summary of income or loss of the Prior Public
Partnerships, which are presented on the basis of generally accepted accounting
principles ("GAAP"). The Table also shows cash generated from operations, which
represents the cash generated from operations of the properties of the Prior
Public Partnerships, as distinguished from cash generated from other sources
(special items). The section of the Table entitled "Special Items" provides
information relating to cash generated from or used by items which are not
directly related to the operations of the properties of the Prior Public
Partnerships, but rather are related to items of a partnership nature. These
items include proceeds from capital contributions of limited partners and
disbursements made from these sources of funds, such as syndication and
organizational costs, acquisition of the properties and other costs which are
related more to the organization of the partnership and the acquisition of
properties than to the actual operations of the partnerships.
The Table also presents information pertaining to investment income,
returns of capital on a GAAP basis, cash distributions from operations, sales
and refinancing proceeds expressed in total dollar amounts as well as
distributions and tax results on a per $1,000 investment basis.
Table IV - Results of Completed Programs
Table IV is omitted from this Exhibit C because none of the directors
of the Company or their Affiliates has been involved in completed public
programs which made investments similar to those of the Company.
Table V - Sales or Disposal of Properties
Table V provides information regarding the sale or disposal of
properties owned by the Prior Public Partnerships between October 1991 and June
1996.
This Table includes the selling price of the property, the cost of the
property, the date acquired and the date of sale.
C-2
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income
Fund X, Fund XI, Fund XII, Fund XIII, Fund XIV,
Ltd. Ltd. Ltd. Ltd. Ltd.
<S> <C>
Dollar amount offered $40,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000
=========== =========== =========== =========== ===========
Dollar amount raised 100.0% 100.0% 100.0% 100.0% 100.0%
----------- ----------- ----------- ----------- -----------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5) (8.5) (8.5) (8.5)
Organizational expenses (3.0) (3.0) (3.0) (3.0) (3.0)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5) (0.5) (0.5) (0.5)
----------- ----------- ----------- ----------- -----------
(12.0) (12.0) (12.0) (12.0) (12.0)
----------- ----------- ----------- ----------- -----------
Reserve for operations -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Percent available for
investment 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== ===========
Acquisition costs:
Cash down payment 83.0% 83.0% 83.0% 82.5% 82.5%
Acquisition fees paid
to affiliates 5.0 5.0 5.0 5.5 5.5
Loan costs -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total acquisition costs 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== ===========
Percent leveraged
(mortgage financing
divided by total
acquisition costs) -- -- -- -- --
Date offering began 9/09/91 3/18/92 9/29/92 3/31/93 8/27/93
Length of offering (in
months) 6 6 6 5 6
Months to invest 90% of
amount available for
investment measured
from date of offering 7 6 11 10 11
</TABLE>
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. and CNL Income Fund XVIII, Ltd. each registered for sale
$30,000,000 of units of limited partnership interest (the "Units").
The offering of Units of CNL Income Fund XVII, Ltd. commenced September
2, 1995. Pursuant to the Registration Statement, the offering of Units
of CNL Income Fund XVIII, Ltd. would not commence until the offering of
Units of CNL Income Fund XVII, Ltd. had terminated. As of June 30,
1996, CNL Income Fund XVII, Ltd. was in the offering stage; therefore,
CNL Income Fund XVIII, Ltd. had not commenced its offering of Units.
C-3
<PAGE>
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income
Fund XV, Fund XVI, Fund XVII, Fund XVIII,
Ltd. Ltd. Ltd. Ltd.
(Note 1) (Note 1)
<S> <C>
Dollar amount offered $40,000,000 $45,000,000
=========== ===========
Dollar amount raised 100.0% 100.0%
----------- -----------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5)
Organizational expenses (3.0) (3.0)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5)
----------- -----------
(12.0) (12.0)
----------- -----------
Reserve for operations -- --
----------- -----------
Percent available for
investment 88.0% 88.0%
=========== ===========
Acquisition costs:
Cash down payment 82.5% 82.5%
Acquisition fees paid
to affiliates 5.5 5.5
Loan costs -- --
----------- -----------
Total acquisition costs 88.0% 88.0%
=========== ===========
Percent leveraged
(mortgage financing
divided by total -- --
acquisition costs)
2/23/94 9/02/94
Date offering began
Length of offering (in 6 9
months)
Months to invest 90% of
amount available for
investment measured 10 11
from date of offering
</TABLE>
C-4
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income
Fund X, Fund XI, Fund XII, Fund XIII, Fund XIV,
Ltd. Ltd. Ltd. Ltd. Ltd.
<S> <C>
Date offering commenced 9/09/91 3/18/92 9/29/92 3/31/93 8/27/93
Dollar amount raised $40,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000
=========== =========== =========== =========== ===========
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,400,000 3,400,000 3,825,000 3,400,000 3,825,000
Real estate commissions - - - - -
Acquisition fees 2,000,000 2,000,000 2,250,000 2,200,000 2,475,000
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 200,000 200,000 225,000 200,000 225,000
----------- ----------- ----------- ----------- -----------
Total amount paid to sponsor 5,600,000 5,600,000 6,300,000 5,800,000 6,525,000
=========== =========== =========== =========== ===========
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1996 (6 Months) 1,877,818 1,866,649 1,986,907 1,701,335 1,857,023
1995 3,603,470 3,758,271 3,928,473 3,482,461 3,823,939
1994 3,828,234 3,574,474 3,933,486 3,232,046 2,897,432
1993 3,499,905 3,434,512 3,320,549 1,148,550 329,957
1992 3,141,123 1,525,462 63,401 - -
1991 204,240 - - - -
1990 - - - - -
1989 - - - - -
1988 - - - - -
1987 - - - - -
1986 - - - - -
1985 - - - - -
1984 - - - - -
1983 - - - - -
1982 - - - - -
1981 - - - - -
1980 - - - - -
1979 - - - - -
1978 - - - - -
Amount paid to sponsor from
operations (administrative,
accounting and management fees):
1996 (6 Months) 55,272 55,339 55,932 53,682 57,121
1995 76,108 106,086 109,111 103,083 114,095
1994 42,741 76,533 84,524 83,046 84,801
1993 38,999 78,926 73,789 27,003 8,220
1992 39,505 30,237 2,031 - -
1991 2,834 - - - -
1990 - - - - -
1989 - - - - -
1988 - - - - -
1987 - - - - -
1986 - - - - -
1985 - - - - -
1984 - - - - -
1983 - - - - -
1982 - - - - -
1981 - - - - -
1980 - - - - -
1979 - - - - -
1978 - - - - -
Dollar amount of property
sales and refinancing
before deducting payments
to sponsor:
Cash 1,057,386 - 1,640,000 286,411 696,012
Notes - - - - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - - - - -
Incentive fees - - - - -
Other - - - - -
</TABLE>
Note 1: During the year ended December 31, 1995, CNL Income Fund X, Ltd.
received proceeds of $7,200 for a small parcel of land as a result of
an easement relating to a certain property.
C-5
<PAGE>
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income
Fund XV, Fund XVI, Fund XVII, Fund XVIII,
Ltd. Ltd. Ltd. Ltd.
(Note 2) (Note 2)
<S> <C>
Date offering commenced 2/23/94 9/02/94
Dollar amount raised $40,000,000 $45,000,000
=========== ===========
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,400,000 3,825,000
Real estate commissions - -
Acquisition fees 2,200,000 2,475,000
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 200,000 225,000
----------- -----------
Total amount paid to sponsor 5,800,000 6,525,000
=========== ===========
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1996 (6 Months) 1,741,150 1,936,583
1995 3,361,477 2,619,840
1994 1,154,454 212,171
1993 - -
1992 - -
1991 - -
1990 - -
1989 - -
1988 - -
1987 - -
1986 - -
1985 - -
1984 - -
1983 - -
1982 - -
1981 - -
1980 - -
1979 - -
1978 - -
Amount paid to sponsor from
operations (administrative,
accounting and management fees):
1996 (6 Months) 53,223 74,887
1995 122,107 138,445
1994 37,620 7,023
1993 - -
1992 - -
1991 - -
1990 - -
1989 - -
1988 - -
1987 - -
1986 - -
1985 - -
1984 - -
1983 - -
1982 - -
1981 - -
1980 - -
1979 - -
1978 - -
Dollar amount of property
sales and refinancing
before deducting payments
to sponsor:
Cash 811,706 775,000
Notes - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - -
Incentive fees - -
Other - -
</TABLE>
Note 2: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. and CNL Income Fund XVIII, Ltd. each registered for sale
$30,000,000 of units of limited partnership interest (the "Units"). The
offering of Units of CNL Income Fund XVII, Ltd. commenced September 2,
1995. Pursuant to the Registration Statement, the offering of Units of
CNL Income Fund XVIII, Ltd. would not commence until the offering of
Units of CNL Income Fund XVII, Ltd. had terminated. As of June 30,
1996, CNL Income Fund XVII, Ltd. was in the offering stage; therefore,
CNL Income Fund XVIII, Ltd. had not commenced its offering of Units. As
of June 30, 1996, CNL Income Fund XVII, Ltd. had sold 2,113,286 Units,
representing $21,132,863 of capital contributed by limited partners,
and 13 properties had been acquired. From commencement of the offering
through June 30, 1996, total selling commissions and discounts were
$1,796,293, due diligence expense reimbursement fees were $105,665, and
acquisition fees were $950,978, for a total amount paid to sponsor of
$2,852,936. CNL Income Fund XVII, Ltd. had cash generated from
operations for the period November 3, 1995 (the date funds were
originally released from escrow) through June 30, 1996, of $266,033.
CNL Income Fund XVII, Ltd. made payments of $47,754 to the sponsor from
operations for this period.
C-6
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND X, LTD.
<TABLE>
<CAPTION>
1990
(Note 1) 1991 1992 1993
------------ ------------ ------------ -------------
<S> <C>
Gross revenue $ 0 $ 80,723 $ 2,985,620 $ 3,729,533
Equity in earnings of unconsolidated
joint venture 0 0 184,425 273,564
Profit from sale of properties 0 0 0 0
Interest income 0 77,424 149,051 35,072
Less: Operating expenses 0 (7,078) (147,094) (178,294)
Interest expense 0 0 0 0
Depreciation and amortization 0 (5,603) (261,058) (215,143)
Minority interest in income of
consolidated joint venture 0 0 (4,902) (8,159)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 145,466 2,906,042 3,636,573
============ ============ ============ ============
Taxable income
- from operations 0 187,164 2,652,037 2,936,325
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 5) 0 201,406 3,101,618 3,460,906
Cash generated from sales (Note 4) 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 201,406 3,101,618 3,460,906
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (163,012) (2,760,446) (2,659,655)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 38,394 341,172 801,251
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 19,972,663 20,027,337 0
General partners' capital
contributions 1,000 0 0 0
Organization costs 0 (10,000) 0 0
Syndication costs 0 (1,942,339) (1,880,824) 0
Acquisition of land and buildings 0 (7,317,942) (12,095,378) (316)
Investment in direct financing
leases 0 (3,024,796) (8,018,153) (46,364)
Investment in joint ventures 0 0 (3,687,069) 0
Return of capital from joint
ventures 0 0 0 0
Deposit received for sale of land
and building 0 0 0 0
Increase in other assets (78) (482,466) 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund X, Ltd. by
related parties 0 (815,938) (313,196) (544)
Distributions to holder of minority
interest 0 0 (5,729) (5,543)
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 922 6,417,576 (5,631,840) 748,484
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 70 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
6 Months
1994 1995 1996
------------ ------------ ------------
<S> <C>
Gross revenue $ 3,710,792 $ 3,544,446 $ 1,763,069
Equity in earnings of unconsolidated
joint venture 271,512 267,799 134,133
Profit from sale of properties 0 67,214 0
Interest income 46,456 72,600 30,695
Less: Operating expenses (138,507) (189,230) (116,253)
Interest expense 0 0 0
Depreciation and amortization (208,941) (201,696) (95,126)
Minority interest in income of
consolidated joint venture (8,471) (9,066) (3,986)
------------ ------------ ------------
Net income - GAAP basis 3,672,841 3,552,067 1,712,532
============ ============ ============
Taxable income
- from operations 3,212,304 2,956,800 1,447,328
============ ============ ============
- from gain on sale 0 50,819 0
============ ============ ============
Cash generated from operations
(Notes 2 and 5) 3,785,493 3,527,362 1,822,546
Cash generated from sales (Note 4) 0 1,057,386 0
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 3,785,493 4,584,748 1,822,546
Less: Cash distributions to investors
(Note 6)
- from operating cash flow (3,500,017) (3,527,362) (1,822,546)
- from sale of properties 0 0 0
- from cash flow from prior period 0 (172,641) (17,454)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 285,476 884,745 (17,454)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0 0
General partners' capital
contributions 0 0 0
Organization costs 0 0 0
Syndication costs 0 0 0
Acquisition of land and buildings 0 (359,506) (978)
Investment in direct financing
leases 0 (566,097) (1,542)
Investment in joint ventures 0 0 (129,503)
Return of capital from joint
ventures 0 0 0
Deposit received for sale of land
and building 0 69,000 0
Increase in other assets 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund X, Ltd. by
related parties 0 0 0
Distributions to holder of minority
interest (7,909) (7,998) (3,677)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 277,567 20,144 (153,154)
============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 80 73 36
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 1 0
============ ============ ============
</TABLE>
C-8
<PAGE>
TABLE III - CNL INCOME FUND X, LTD. (continued)
<TABLE>
<CAPTION>
1990
(Note 1) 1991 1992 1993
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 13 73 66
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
- from return of capital (Note 3) 0 2 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 0 15 73 66
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 15 73 66
- from cash flow from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis
(Note 6) 0 15 73 66
============ ============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 7 and 8) 0.00% 5.75% 7.38% 8.75%
Total cumulative cash distributions
per $1,000 investment from inception 0 15 88 154
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund X, Ltd. ("CNL X") and CNL
Income Fund IX, Ltd. each registered for sale $35,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund IX, Ltd. commenced March 20, 1991. Pursuant to the
registration statement, CNL X's offering of Units could not commence
until the offering of Units of CNL Income Fund IX, Ltd. was terminated.
CNL Income Fund IX, Ltd. terminated its offering of Units on September
6, 1991, at which time the maximum offering proceeds of $35,000,000 had
been received. Upon the termination of the offering of Units of CNL
Income Fund IX, Ltd., CNL X commenced its offering of Units.
Activities through September 24, 1991, were devoted to organization of
the partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund X, Ltd. has not treated this amount as a return of capital for any
other purpose.
Note 4: In August 1995, CNL Income Fund X, Ltd. sold one of its properties
and received net sales proceeds of $1,050,186. In September 1995, the
partnership reinvested $928,122 in an additional property. In addition,
in January 1996, the partnership reinvested the remaining net sales
proceeds in an additional property as tenants-in-common with affiliates
of the general partners.
Note 5: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund X, Ltd.
Note 6: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
C-9
<PAGE>
<TABLE>
<CAPTION>
6 Months
1994 1995 1996
------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 88 87 42
- from capital gain 0 2 0
- from investment income from
prior period 0 4 4
- from return of capital (Note 3) 0 0 0
------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 88 93 46
============ ============ ============
Source (on cash basis)
- from sales 0 0 0
- from refinancing 0 0 0
- from operations 88 88 46
- from cash flow from prior
period 0 5 0
------------ ------------ ------------
Total distributions on cash basis
(Note 6) 88 93 46
============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 7 and 8) 9.06% 9.03% 9.00%
Total cumulative cash distributions
per $1,000 investment from inception 242 335 381
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) 100% 99% 100%
</TABLE>
Note 7: On December 31, 1994 and December 31, 1995, CNL Income Fund X, Ltd.
declared a special distribution of cumulative excess operating reserves
equal to .25% and .10%, respectively, of the total invested capital.
Accordingly, the total yield for 1994 and 1995 was 9.06% and 9.03%,
respectively.
Note 8: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 9: Certain data for columns representing less than 12 months have been
annualized.
C-10
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XI, LTD.
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 1,269,086 $ 3,831,648 $ 3,852,107
Equity in earnings of unconsolidated
joint ventures 0 33,367 121,059 119,370
Profit from sale of properties 0 0 0 0
Interest income 0 150,535 24,258 30,894
Less: Operating expenses 0 (63,390) (206,987) (179,717)
Interest expense 0 0 0 0
Depreciation and amortization 0 (180,631) (469,127) (481,226)
Minority interests in income of
consolidated joint ventures 0 (23,529) (68,399) (68,936)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 1,185,438 3,232,452 3,272,492
============ ============ ============ ============
Taxable income
- from operations 0 1,295,104 2,855,026 2,947,445
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 4) 0 1,495,225 3,355,586 3,497,941
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,495,225 3,355,586 3,497,941
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (1,205,030) (2,495,002) (3,400,001)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 290,195 860,584 97,940
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 40,000,000 0 0
General partners' capital
contributions 1,000 0 0 0
Minority interests' capital
contributions 0 426,367 0 0
Organization costs 0 (10,000) 0 0
Syndication costs 0 (3,922,875) 0 0
Acquisition of land and buildings 0 (26,428,556) (276,157) 0
Investment in direct financing
leases 0 (6,716,561) (276,206) 0
Investment in joint ventures 0 (1,658,925) (772) 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XI, Ltd. by
related parties 0 (1,011,487) (900) 0
Increase in other assets 0 (122,024) 0 0
Distributions to holders of minority
interests 0 (17,467) (51,562) (57,641)
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 828,667 254,987 40,299
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 45 71 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
6 Months
1995 1996
------------ ------------
<S> <C>
Gross revenue $ 3,820,990 $ 1,905,317
Equity in earnings of unconsolidated
joint ventures 118,384 56,598
Profit from sale of properties 0 0
Interest income 51,192 24,214
Less: Operating expenses (237,126) (148,842)
Interest expense 0 0
Depreciation and amortization (481,226) (240,613)
Minority interests in income of
consolidated joint ventures (70,038) (34,437)
------------ ------------
Net income - GAAP basis 3,202,176 1,562,237
============ ============
Taxable income
- from operations 2,985,221 1,414,282
============ ============
- from gain on sale 0 0
============ ============
Cash generated from operations
(Notes 2 and 4) 3,652,185 1,811,310
Cash generated from sales 0 0
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 3,652,185 1,811,310
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (3,500,023) (1,790,012)
- from sale of properties 0 0
- from cash flow from prior period 0 0
------------ -----------
Cash generated (deficiency) after cash
distributions 152,162 21,298
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0
General partners' capital
contributions 0 0
Minority interests' capital
contributions 0 0
Organization costs 0 0
Syndication costs 0 0
Acquisition of land and buildings 0 0
Investment in direct financing
leases 0 0
Investment in joint ventures 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XI, Ltd. by
related parties 0 0
Increase in other assets 0 0
Distributions to holders of minority
interests (54,227) (27,839)
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 97,935 (6,541)
============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 74 35
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) 0 0
============ ============
</TABLE>
C-12
<PAGE>
TABLE III - CNL INCOME FUND XI, LTD. (continued)
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 41 62 81
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 4
- from return of capital (Note 3) 0 1 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis
(Note 5) 0 42 62 85
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 42 62 85
- from cash flow from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis
(Note 5) 0 42 62 85
============ ============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 6 and 7) 0.00% 6.17% 8.31% 8.56%
Total cumulative cash distributions
per $1,000 investment from inception 0 42 104 189
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to the offering of Units by CNL
Income Fund XI, Ltd. became effective on March 12, 1992. Activities
through April 22, 1992, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund XI, Ltd. has not treated this amount as a return of capital for
any other purpose.
Note 4: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XI, Ltd.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: On December 31, 1995, CNL Income Fund XI, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .10% of
the total invested capital. Accordingly, the total yield for 1995 was
8.78%.
Note 7: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 8: Certain data for columns representing less than 12 months have been
annualized.
C-13
<PAGE>
<TABLE>
<CAPTION>
6 Months
1995 1996
------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 79 39
- from capital gain 0 0
- from investment income from
prior period 9 5
- from return of capital (Note 3) 0 1
------------ ------------
Total distributions on GAAP basis
(Note 5) 88 45
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 88 45
- from cash flow from prior
period 0 0
------------ ------------
Total distributions on cash basis
(Note 5) 88 45
============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 6 and 7) 8.78% 8.75%
Total cumulative cash distributions
per $1,000 investment from inception 277 322
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) 100% 100%
</TABLE>
C-14
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XII, LTD.
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 25,133 $ 3,374,640 $ 4,397,881
Equity in earnings of joint ventures 0 46 49,604 85,252
Profit (Loss) from sale of properties 0 0 0 0
Interest income (Note 7) 0 45,228 190,082 65,447
Less: Operating expenses 0 (7,211) (193,804) (192,951)
Interest expense 0 0 0 0
Depreciation and amortization 0 (3,997) (286,293) (327,795)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 59,199 3,134,229 4,027,834
============ ============ ============ ============
Taxable income
- from operations 0 58,543 2,749,072 3,301,005
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 5) 0 61,370 3,246,760 3,848,962
Cash generated from sales (Note 7) 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 61,370 3,246,760 3,848,962
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (61,370) (1,972,769) (3,768,754)
- from sale of properties 0 0 0 0
- from return of capital (Note 4) 0 (60,867) 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 (60,867) 1,273,991 80,208
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 21,543,270 23,456,730 0
General partners' capital
contributions 1,000 0 0 0
Organization costs 0 (10,000) 0 0
Syndication costs 0 (2,066,937) (2,277,637) 0
Acquisition of land and buildings 0 (7,536,009) (15,472,737) (230)
Investment in direct financing
leases 0 (2,503,050) (11,875,100) (591)
Loan to tenant of joint venture,
net of repayments 0 0 (207,189) 6,400
Investment in joint ventures 0 (372,045) (468,771) (4,400)
Increase in restricted cash 0 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XII, Ltd. by
related parties 0 (704,923) (432,749) 0
Increase in other assets 0 (654,497) 0 0
Other 0 0 0 973
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 7,634,942 (6,003,462) 82,360
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 5 64 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
6 Months
1995 1996
------------ ------------
<S> <C>
Gross revenue $ 4,404,792 $ 2,171,212
Equity in earnings of joint ventures 81,582 55,297
Profit (Loss) from sale of properties 0 (15,355)
Interest income (Note 7) 84,197 49,199
Less: Operating expenses (228,404) (150,511)
Interest expense 0 0
Depreciation and amortization (327,795) (156,420)
------------ ------------
Net income - GAAP basis 4,014,372 1,953,422
============ ============
Taxable income
- from operations 3,262,046 1,591,118
============ ============
- from gain (loss) on sale 0 (66,395)
============ ============
Cash generated from operations
(Notes 2 and 5) 3,819,362 1,930,975
Cash generated from sales (Note 7) 0 1,640,000
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 3,819,362 3,570,975
Less: Cash distributions to investors
(Note 6)
- from operating cash flow (3,819,362) (1,930,975)
- from sale of properties 0 0
- from return of capital (Note 4) 0 0
- from cash flow from prior period (5,645) (26,529)
------------ ------------
Cash generated (deficiency) after cash
distributions (5,645) 1,613,471
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0
General partners' capital
contributions 0 0
Organization costs 0 0
Syndication costs 0 0
Acquisition of land and buildings 0 0
Investment in direct financing
leases 0 0
Loan to tenant of joint venture,
net of repayments 7,008 3,774
Investment in joint ventures 0 (1,655,928)
Increase in restricted cash 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XII, Ltd. by
related parties 0 0
Increase in other assets 0 0
Other 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,363 (38,683)
============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 72 35
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) 0 (1)
============ ============
</TABLE>
C-16
<PAGE>
TABLE III - CNL INCOME FUND XII, LTD. (continued)
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 5 46 84
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
- from return of capital (Note 3) 0 7 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 0 12 46 84
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 6 46 84
- from return of capital (Note 4) 0 6 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis
(Note 6) 0 12 46 84
============ ============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 8 and 9) 0.00% 5.00% 6.75% 8.50%
Total cumulative cash distributions
per $1,000 investment from inception 0 12 58 142
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XII, Ltd. ("CNL XII") and CNL
Income Fund XI, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XI, Ltd. commenced March 12, 1992. Pursuant to the
registration statement, CNL XII could not commence until the offering
of Units of CNL Income Fund XI, Ltd. was terminated. CNL Income Fund
XI, Ltd. terminated its offering of Units on September 28, 1992, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XI, Ltd., CNL XII commenced its offering of Units. Activities
through October 8, 1992, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund XII, Ltd. has not treated this amount as a return of capital for
any other purpose.
Note 4: CNL Income Fund XII, Ltd. makes its distributions in the current
period rather than in arrears based on estimated operating results. In
cases where distributions exceed cash from operations in the current
period, once finally determined, subsequent distributions are lowered
accordingly in order to avoid any return of capital. This amount is not
required to be presented as a return of capital except for purposes of
this table, and CNL Income Fund XII, Ltd. has not treated this amount
as a return of capital for any other purpose.
Note 5: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XII, Ltd.
Note 6: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
C-17
<PAGE>
<TABLE>
<CAPTION>
6 Months
1995 1996
------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 85 44
- from capital gain 0 0
- from investment income from
prior period 0 0
- from return of capital (Note 3) 0 0
------------ ------------
Total distributions on GAAP basis
(Note 6) 85 44
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 85 43
- from return of capital (Note 4) 0 0
- from cash flow from prior period 0 1
------------ ------------
Total distributions on cash basis
(Note 6) 85 44
============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 8 and 9) 8.53% 8.50%
Total cumulative cash distributions
per $1,000 investment from inception 227 271
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) 100% 100%
</TABLE>
Note 7: In April 1996, CNL Income Fund XII, Ltd. sold one of its properties to
an unrelated third party for $1,640,000. As a result of this
transaction, CNL Income Fund XII, Ltd. recognized a loss of $15,355 for
financial reporting purposes primarily due to acquisition fees and
miscellaneous acquisition expenses CNL Income Fund XII, Ltd. had
allocated to this property. In May 1996, CNL Income Fund XII, Ltd.
reinvested the proceeds from this sale, along with additional funds,
for a total of $1,655,928 in Middleburg Joint Venture.
Note 8: On December 31, 1995, CNL Income Fund XII, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .10% of
the total invested capital. Accordingly, the total yield for 1995 was
8.53%.
Note 9: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 10: Certain data for columns representing less than 12 months have been
annualized.
C-18
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XIII, LTD.
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 966,564 $ 3,558,447 $ 3,806,944
Equity in earnings of joint ventures 0 1,305 43,386 98,520
Profit (Loss) from sale of properties
(Note 4) 0 0 0 (29,560)
Interest income 0 181,568 77,379 51,410
Less: Operating expenses 0 (59,390) (183,311) (214,705)
Interest expense 0 0 0 0
Depreciation and amortization 0 (148,170) (378,269) (393,435)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 941,877 3,117,632 3,319,174
============ ============ ============ ============
Taxable income
- from operations 0 978,535 2,703,252 2,920,859
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,121,547 3,149,000 3,379,378
Cash generated from sales (Note 4) 0 0 0 286,411
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,121,547 3,149,000 3,665,789
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (528,364) (2,800,004) (3,350,014)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after
cash distributions 0 593,183 348,996 315,775
Special items (not including sales
and refinancing):
Limited partners' capital
contributions 0 40,000,000 0 0
General partners' capital
contributions 1,000 0 0 0
Syndication costs 0 (3,932,017) (181) 0
Acquisition of land and buildings 0 (19,691,630) (5,764,308) (336,116)
Investment in direct financing leases 0 (6,760,624) (1,365,075) 0
Investment in joint ventures 0 (314,998) (545,139) (140,052)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIII, Ltd. by related parties 0 (799,980) (25,036) (3,074)
Increase in other assets 0 (454,909) 9,226 0
Other 0 0 0 954
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 8,639,025 (7,341,517) (162,513)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 67 72
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
6 Months
1996
------------
<S> <C>
Gross revenue $ 1,773,791
Equity in earnings of joint ventures 52,525
Profit (Loss) from sale of properties
(Note 4) 0
Interest income 18,430
Less: Operating expenses (173,194)
Interest expense 0
Depreciation and amortization (196,717)
------------
Net income - GAAP basis 1,474,835
============
Taxable income
- from operations 1,427,419
============
- from gain (loss) on sale 0
============
Cash generated from operations
(Notes 2 and 3) 1,647,653
Cash generated from sales (Note 4) 0
Cash generated from refinancing 0
------------
Cash generated from operations, sales
and refinancing 1,647,653
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (1,647,653)
- from sale of properties 0
- from cash flow from prior period (52,351)
------------
Cash generated (deficiency) after
cash distributions (52,351)
Special items (not including sales
and refinancing):
Limited partners' capital
contributions 0
General partners' capital
contributions 0
Syndication costs 0
Acquisition of land and buildings 0
Investment in direct financing leases 0
Investment in joint ventures 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIII, Ltd. by related parties 0
Increase in other assets 0
Other 0
------------
Cash generated (deficiency) after cash (52,351)
distributions and special items ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 35
============
- from recapture 0
============
Capital gain (loss) (Note 4) 0
============
</TABLE>
C-20
<PAGE>
TABLE III - CNL INCOME FUND XIII, LTD. (continued)
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C>
0 18 70 82
0 0 0 0
0 0 0 2
------------ ------------ ------------ ------------
0 18 70 84
============ ============ ============ ============
0 0 0 0
0 0 0 0
0 18 70 84
0 0 0 0
------------ ------------ ------------ ------------
0 18 70 84
============ ============ ============ ============
0.00% 5.33% 7.56% 8.44%
0 18 88 172
N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to the offering of Units by CNL
Income Fund XIII, Ltd. became effective on March 17, 1993. Activities
through April 15, 1993, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XIII, Ltd.
Note 4: During 1995, the partnership sold one of its properties to a tenant for
its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used
to acquire an additional property. As a result of this transaction,
the partnership recognized a loss for financial reporting purposes of
$29,560 primarily due to acquisition fees and miscellaneous acquisition
expenses the partnership had allocated to the property and due to the
accrued rental income relating to future scheduled rent increases that
the partnership had recorded and reversed at the time of sale.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996, are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-21
<PAGE>
<TABLE>
<CAPTION>
6 Months
1996
------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 37
- from capital gain 0
- from investment income from prior
period 6
------------
Total distributions on GAAP basis (Note 5) 43
============
Source (on cash basis)
- from sales 0
- from refinancing 0
- from operations 41
- from cash flow from prior period 2
------------
Total distributions on cash basis (Note 5) 43
============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 8.50%
Total cumulative cash distributions per
$1,000 investment from inception 215
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) 100%
</TABLE>
C-22
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XIV, LTD.
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 256,234 $ 3,135,716 $ 4,017,266
Equity in earnings of joint ventures 0 1,305 35,480 338,717
Profit (Loss) from sale of properties
(Note 4) 0 0 0 (66,518)
Interest income 0 27,874 200,499 50,724
Less: Operating expenses 0 (14,049) (181,980) (248,840)
Interest expense 0 0 0 0
Depreciation and amortization 0 (28,918) (257,640) (340,112)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 242,446 2,932,075 3,751,237
============ ============ ============ ============
Taxable income
- from operations 0 278,845 2,482,240 3,162,165
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 321,737 2,812,631 3,709,844
Cash generated from sales (Note 4) 0 0 0 696,012
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 321,737 2,812,631 4,405,856
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (9,050) (2,229,952) (3,543,751)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 312,687 582,679 862,105
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 28,785,100 16,214,900 0
General partners' capital
contributions 1,000 0 0 0
Syndication costs 0 (2,771,892) (1,618,477) 0
Acquisition of land and buildings 0 (13,758,004) (11,859,237) (964,073)
Investment in direct financing leases 0 (4,187,268) (5,561,748) (75,352)
Investment in joint ventures 0 (315,209) (1,561,988) (1,087,218)
Return of capital from joint venture 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 (706,215) (376,738) (577)
Increase in other assets 0 (444,267) 0 0
Other 0 0 0 5,530
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 6,914,932 (4,180,609) (1,259,585)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 16 56 70
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-23
<PAGE>
<TABLE>
<CAPTION>
6 Months
1996
------------
<S> <C>
Gross revenue $ 1,987,463
Equity in earnings of joint ventures 177,099
Profit (Loss) from sale of properties
(Note 4) 0
Interest income 21,659
Less: Operating expenses (138,978)
Interest expense 0
Depreciation and amortization (170,044)
------------
Net income - GAAP basis 1,877,199
============
Taxable income
- from operations 1,570,651
============
- from gain on sale 0
============
Cash generated from operations
(Notes 2 and 3) 1,799,902
Cash generated from sales (Note 4) 0
Cash generated from refinancing 0
------------
Cash generated from operations, sales
and refinancing 1,799,902
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (1,799,902)
- from sale of properties 0
- from cash flow from prior period (56,358)
------------
Cash generated (deficiency) after cash
distributions (56,358)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0
General partners' capital
contributions 0
Syndication costs 0
Acquisition of land and buildings 0
Investment in direct financing leases 0
Investment in joint ventures 0
Return of capital from joint venture 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0
Increase in other assets 0
Other 0
------------
Cash generated (deficiency) after cash
distributions and special items (56,358)
============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 35
============
- from recapture 0
============
Capital gain (loss) (Note 4) 0
============
</TABLE>
C-24
<PAGE>
TABLE III - CNL INCOME FUND XIV, LTD. (continued)
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 51 79
- from capital gain 0 0 0 0
- from return of capital 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 1 51 79
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 51 79
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 1 51 79
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 4.50% 6.50% 8.06%
Total cumulative cash distributions
per $1,000 investment from inception 0 1 52 131
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XIV, Ltd. ("CNL XIV") and CNL
Income Fund XIII, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XIII, Ltd. commenced March 17, 1993. Pursuant to the
registration statement, CNL XIV could not commence until the offering
of Units of CNL Income Fund XIII, Ltd. was terminated. CNL Income Fund
XIII, Ltd. terminated its offering of Units on August 26, 1993, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XIII, Ltd., CNL XIV commenced its offering of Units. Activities
through September 13, 1993, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XIV, Ltd.
Note 4: During 1995, the partnership sold two of its properties to a tenant for
its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used
to acquire two additional properties. As a result of these
transactions, the partnership recognized a loss for financial reporting
purposes of $66,518 primarily due to acquisition fees and miscellaneous
acquisition expenses the partnership had allocated to the property and
due to the accrued rental income relating to future scheduled rent
increases that the partnership had recorded and reversed at the time of
sale.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-25
<PAGE>
<TABLE>
<CAPTION>
6 Months
1996
------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 41
- from capital gain 0
- from return of capital 0
------------
Total distributions on GAAP basis (Note 5) 41
============
Source (on cash basis)
- from sales 0
- from refinancing 0
- from operations 40
- from cash flow from prior period 1
------------
Total distributions on cash basis (Note 5) 41
============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 8.25%
Total cumulative cash distributions
per $1,000 investment from inception 172
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) 100%
</TABLE>
C-26
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XV, LTD.
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 1,143,586 $ 3,546,320 $ 1,799,609
Equity in earnings of joint venture 0 8,372 280,606 144,539
Profit (Loss) from sale of properties
(Note 4) 0 0 (71,023) 0
Interest income 0 167,734 88,059 21,155
Less: Operating expenses 0 (62,926) (228,319) (138,719)
Interest expense 0 0 0 0
Depreciation and amortization 0 (70,848) (243,175) (124,093)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 1,185,918 3,372,468 1,702,491
============ ============ ============ ============
Taxable income
- from operations 0 1,026,715 2,861,912 1,399,634
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,116,834 3,239,370 1,687,927
Cash generated from sales (Note 4) 0 0 811,706 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,116,834 4,051,076 1,687,927
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (635,944) (2,650,003) (1,600,000)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 480,890 1,401,073 87,927
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0 40,000,000 0 0
General partners' capital contra-
bunions 1,000 0 0 0
Syndication costs 0 (3,892,003) 0 0
Acquisition of land and buildings 0 (22,152,379) (1,625,601) 0
Investment in direct financing
leases 0 (6,792,806) (2,412,973) 0
Investment in joint venture 0 (1,564,762) (720,552) (145,526)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0 (1,098,197) (23,507) 0
Increase in other assets 0 (187,757) 0 0
Other (38) (6,118) 25,150 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 962 4,786,868 (3,356,410) (57,599)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 71 35
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-27
<PAGE>
TABLE III - CNL INCOME FUND XV, LTD. (continued)
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 21 66 40
- from capital gain 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 21 66 40
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 21 66 40
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 21 66 40
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 5.00% 7.25% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 0 21 87 127
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to this offering of Units of CNL
Income Fund XV, Ltd. became effective February 23, 1994. Activities
through March 23, 1994, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint venture, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XV, Ltd.
Note 4: During 1995, the partnership sold three of its properties to a tenant
for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The majority of the net sales
proceeds were used to acquire additional properties. As a result of
these transactions, the partnership recognized a loss for financial
reporting purposes of $71,023 primarily due to acquisition fees and
miscellaneous acquisition expenses the partnership had allocated to the
three properties and due to the accrued rental income relating to
future scheduled rent increases that the partnership had recorded and
reversed at the time of sale.
Note 5: Distributions declared for the quarters ended December 31, 1994 and
1995 are reflected in the 1995 and 1996 columns, respectively, due to
the payment of such distributions in January 1995 and 1996,
respectively. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-28
<PAGE>
TABLE III
Operating Results of Prior Programs
CNL INCOME FUND XVI, LTD.
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 186,257 $ 2,702,504 $ 2,143,589
Profit from sale of properties (Note 5) 0 0 0 124,305
Interest income 0 21,478 321,137 43,562
Less: Operating expenses 0 (10,700) (274,595) (148,823)
Interest expense 0 0 0 0
Depreciation and amortization 0 (9,458) (318,205) (270,831)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 187,577 2,430,841 1,891,802
============ ============ ============ ============
Taxable income
- from operations 0 189,864 2,139,382 1,550,241
============ ============ ============ ============
- from gain on sale (Note 5) 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 205,148 2,481,395 1,861,696
Cash generated from sales (Note 5) 0 0 0 775,000
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 205,148 2,481,395 2,636,696
Less: Cash distributions to investors
(Note 4)
- from operating cash flow 0 (2,845) (1,798,921) (1,631,251)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 202,303 682,474 1,005,445
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0 20,174,172 24,825,828 0
General partners' capital contra-
bunions 1,000 0 0 0
Syndication costs 0 (1,929,465) (2,452,743) 0
Acquisition of land and buildings 0 (13,170,132) (16,012,458) (2,392,562)
Investment in direct financing
leases 0 (975,853) (5,595,236) (382,372)
Increase in restricted cash 0 0 0 (775,000)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0 (854,154) (405,569) 0
Collection of overpayment of acquit-
cyton and syndication costs paid
by related parties on behalf of the
partnership 0 0 0 1,204
Increase in other assets 0 (443,625) (58,720) 0
Other (36) (20,714) 20,714 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 964 2,982,532 1,004,290 (2,543,285)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 53 34
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 5) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-29
<PAGE>
TABLE III - CNL INCOME FUND XVI, LTD. (continued)
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 45 33
- from capital gain 0 0 0 3
- from investment income from
prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 4) 0 1 45 36
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 45 36
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 4) 0 1 45 36
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 4.50% 6.00% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 0 1 46 82
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 5) N/A 100% 100% 98%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVI, Ltd. ("CNL XVI") and CNL
Income Fund XV, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XV, Ltd. commenced February 23, 1994. Pursuant to the
registration statement, CNL XVI could not commence until the offering
of Units of CNL Income Fund XV, Ltd. was terminated. CNL Income Fund
XV, Ltd. terminated its offering of Units on September 1, 1994, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XV, Ltd., CNL XVI commenced its offering of Units. Activities
through September 22, 1994, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XVI, Ltd.
Note 4: Distributions declared for the quarters ended December 31, 1994 and
1995 are reflected in the 1995 and 1996 columns, respectively, due to
the payment of such distributions in January 1995 and 1996,
respectively. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 5: In April 1996, CNL Income Fund XVI, Ltd. sold one of its properties for
$775,000, resulting in a gain for financial reporting purposes of
$124,305. As of June 30, 1996, the net sales proceeds of $775,000,
plus accrued interest of $3,526, were being held in an interest-bearing
escrow account. The general partners believe that the sale of this
property will qualify as a like-kind exchange transaction in accordance
with Section 1031 of the Internal Revenue Code. As a result, no gain
or loss was recognized for federal income tax purposes. The remaining
net sales proceeds are expected to be invested in an additional
property or used for other Partnership purposes.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-30
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XVII, LTD.
1995 6 Months
(Note 1) 1996
------------ ------------
Gross revenue $ 0 $ 264,636
Profit from sale of properties 0 0
Interest income 12,153 102,696
Less: Operating expenses (3,493) (68,597)
Interest expense 0 0
Depreciation and amortization (309) (32,931)
------------ ------------
Net income - GAAP basis 8,351 265,804
============ ============
Taxable income
- from operations 12,153 254,708
============ ============
- from gain on sale 0 0
============ ============
Cash generated from operations
(Notes 2 and 3) 9,012 257,021
Cash generated from sales 0 0
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 9,012 257,021
Less: Cash distributions to investors
(Note 4)
- from operating cash flow (1,199) (142,120)
- from sale of properties 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions 7,813 114,901
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 5,696,921 15,435,942
General partners' capital contra-
bunions 1,000 0
Syndication costs (604,348) (1,544,293)
Acquisition of land and buildings (332,928) (10,087,458)
Investment in direct financing
leases 0 (1,258,674)
Increase in restricted cash 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVII, Ltd. by related parties (347,907) (339,105)
Increase in other assets (221,282) (65,775)
Other (410) 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 4,198,859 2,255,538
============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 36 194
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) 0 0
============ ============
C-31
<PAGE>
TABLE III - CNL INCOME FUND XVII, LTD. (continued)
1995 6 Months
(Note 1) 1996
------------ ------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 4 108
- from capital gain 0 0
- from investment income from
prior period 0 0
------------ ------------
Total distributions on GAAP basis (Note 4) 0 108
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 4 108
------------ ------------
Total distributions on cash basis (Note 4) 4 108
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 5) 0.00% 5.17%
Total cumulative cash distributions per
$1,000 investment from inception 4 112
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100%
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVII, Ltd. ("CNL XVII") and
CNL Income Fund XVIII, Ltd. each registered for sale $30,000,000 units
of limited partnership interests ("Units"). The offering of Units of
CNL Income Fund XVII, Ltd. commenced September 2, 1995. Pursuant to
the registration statement, CNL XVIII could not commence until the
offering of Units of CNL Income Fund XVII, Ltd. was terminated. CNL
Income Fund XVII, Ltd. terminated its offering of Units on September
19, 1996, at which time subscriptions for the maximum offering proceeds
of $30,000,000 had been received. Upon the termination of the offering
of Units of CNL Income Fund XVII, Ltd., CNL XVIII commenced its
offering of Units. Activities through September 30, 1996, were devoted
to organization of the partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XVII, Ltd.
Note 4: Distributions declared for the quarter ended December 31, 1995 are
reflected in the 1996 column due to the payment of such distributions
in January 1996. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of June 30, 1996 are not
included in the 1996 totals.
Note 5: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 4 above)
Note 6: Certain data for columns representing less than 12 months have been
annualized.
C-32
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===================================================================================================================================
Cost of Properties
Selling Price, Net of Including Closing and
Closing Costs and GAAP Adjustments Soft Costs
---------------------------------------------- -------------------------------------
Purchase Total
Cash money Adjustments acquisition
received Mortgage mortgage resulting cost, capital
net of balance taken from Original improvements
Date Date of closing at time back by application mortgage closing and
Property Acquired Sale costs of sale program of GAAP Total financing soft costs (1) Total
===================================================================================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA 02/05/87 06/12/92 $1,169,021 0 0 0 $1,169,021 0 $955,000 $955,000
Wendy's -
Fairfield, CA 07/01/87 10/03/94 1,018,490 0 0 0 1,018,490 0 861,500 861,500
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 05/29/87 07/21/93 746,800 0 0 0 746,800 0 642,800 642,800
Pizza Hut -
Graham, TX 08/24/87 07/28/94 261,628 0 0 0 261,628 0 205,500 205,500
Golden Corral -
Medina, OH 11/18/87 11/30/94 626,582 0 0 0 626,582 0 743,000 743,000
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 03/22/89 04/27/94 712,000 0 0 0 712,000 0 616,501 616,501
Burger King -
Hastings, MI 08/12/88 12/15/95 518,650 0 0 0 518,650 0 419,936 419,936
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 02/28/90 08/25/95 0 0 1,040,000 0 1,040,000 0 986,418 986,418
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 11/02/89 05/24/94 791,211 0 0 0 791,211 0 605,500 605,500
Hardee's -
Heber Springs, AR 02/13/90 05/24/94 638,270 0 0 0 638,270 0 532,893 532,893
Hardee's -
Little Canada, MN 11/28/89 06/29/95 899,503 0 0 0 899,503 0 821,692 821,692
<CAPTION>
Excess
(deficiency)
of property
operating cash
receipts over
cash
expenditures
==================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA $214,021
Wendy's -
Fairfield, CA 156,990
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 104,000
Pizza Hut -
Graham, TX 56,128
Golden Corral -
Medina, OH (116,418)
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 95,499
Burger King -
Hastings, MI 98,714
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 53,582
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 185,711
Hardee's -
Heber Springs, AR 105,377
Hardee's -
Little Canada, MN 77,811
</TABLE>
C-33
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===================================================================================================================================
Cost of Properties
Selling Price, Net of Including Closing and
Closing Costs and GAAP Adjustments Soft Costs
------------------------------------------------ -------------------------------
Purchase Total
Cash money Adjustments acquisition
received Mortgage mortgage resulting cost, capital
net of balance taken from Original improvements
Date Date of closing at time back by application mortgage closing and
Property Acquired Sale costs of sale program of GAAP Total financing soft costs (1) Total
===================================================================================================================================
<S> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 06/14/90 05/19/92 700,000 0 0 0 700,000 0 560,202 560,202
Hardee's -
St. Paul, MN 08/09/90 05/24/94 869,036 0 0 0 869,036 0 742,333 742,333
Perkins -
Florence, SC (3) 08/28/90 08/25/95 0 0 1,160,000 0 1,160,000 0 1,084,905 1,084,905
Church's Fried Chicken -
Jacksonville, FL (4) 04/30/90 12/01/95 0 0 240,000 0 240,000 0 233,728 233,728
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 03/16/91 07/31/95 1,184,865 0 0 0 1,184,865 0 949,199 949,199
Church's Fried Chicken -
Jacksonville, FL (4) 09/28/90 12/01/95 0 0 240,000 0 240,000 0 238,153 238,153
Church's Fried Chicken -
Jacksonville, FL (5) 09/28/90 12/01/95 0 0 220,000 0 220,000 0 215,845 215,845
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 03/04/92 08/11/95 1,050,186 0 0 0 1,050,186 0 987,679 987,679
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 12/28/92 04/10/96 1,640,000 0 0 0 1,640,000 0 1,636,643 1,636,643
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 03/31/94 04/24/95 286,411 0 0 0 286,411 0 286,411 286,411
<CAPTION>
Excess
(deficiency)
of property
operating cash
receipts over
cash
expenditures
===================================================================
<S> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 139,798
Hardee's -
St. Paul, MN 126,703
Perkins -
Florence, SC (3) 75,095
Church's Fried Chicken -
Jacksonville, FL (4) 6,272
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 235,666
Church's Fried Chicken -
Jacksonville, FL (4) 1,847
Church's Fried Chicken -
Jacksonville, FL (5) 4,155
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 62,507
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 3,357
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 0
</TABLE>
C-34
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===================================================================================================================================
Cost of Properties
Selling Price, Net of Including Closing and
Closing Costs and GAAP Adjustments Soft Costs
---------------------------------------- ----------------------------------------
Purchase Total
Cash money Adjustments acquisition
received Mortgage mortgage resulting cost, capital
net of balance taken from Original improvements
Date Date of closing at time back by application mortgage closing and
Property Acquired Sale costs of sale program of GAAP Total financing soft costs (1) Total
===================================================================================================================================
<S> <C>
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 03/31/94 03/01/95 339,031 0 0 0 339,031 0 339,031 339,031
Checkers -
Dallas, TX 03/31/94 03/01/95 356,981 0 0 0 356,981 0 356,981 356,981
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 05/27/94 03/01/95 263,221 0 0 0 263,221 0 263,221 263,221
Checkers -
Leavenworth, KS 06/22/94 03/01/95 259,600 0 0 0 259,600 0 259,600 259,600
Checkers -
Knoxville, TN 07/08/94 03/01/95 288,885 0 0 0 288,885 0 288,885 288,885
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 06/24/95 04/24/96 775,000 0 0 0 775,000 0 613,838 613,838
<CAPTION>
Excess
(deficiency)
of property
operating cash
receipts over
cash
expenditures
===================================================================
<S> <C>
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 0
Checkers -
Dallas, TX 0
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 0
Checkers -
Leavenworth, KS 0
Checkers -
Knoxville, TN 0
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 161,162
</TABLE>
(1) Amounts shown do not include pro rata share of original offering costs or
acquisition fees.
(2) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,006,004 in July 2000.
(3) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,106,657 in July 2000.
(4) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.00% per annum and provides
for a balloon payment of $218,252 in December 2005.
(5) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.00% per annum and provides
for a balloon payment of $200,324 in December 2005.
C-35
<PAGE>
ADDENDUM TO
EXHIBIT E
PRO FORMA ESTIMATE OF TAXABLE INCOME
BEFORE DIVIDENDS PAID DEDUCTION
THE PRO FORMA ESTIMATE OF TAXABLE
INCOME CONTAINED IN THIS ADDENDUM
SHOULD BE READ IN CONJUNCTION WITH
EXHIBIT E TO THE ATTACHED PROSPECTUS,
DATED APRIL 26, 1996.
<PAGE>
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM APRIL 10, 1996
THROUGH JANUARY 8, 1997
For a 12-Month Period (Unaudited)
The following schedule represents pro forma unaudited estimates of taxable
income before dividends paid deduction of each Property acquired by the Company
from April 10, 1996 through January 8, 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. For information
regarding the 48 Properties acquired by the Company prior to April 10, 1996, see
Exhibit E to the attached Prospectus dated April 26, 1996.
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>
TGI Friday's Wendy's Golden Corral Ten Pizza
Hamden, CT (7) Knoxville, TN (7)(9) Port Richey, FL (7) Hut Properties
-------------- -------------------- ------------------- --------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 173,714 $ 81,898 $ 196,972 $ 166,320
Interest Income (2) - - - 415,686
---------- ---------- ---------- ----------
Total Revenues 173,714 81,898 196,972 582,006
---------- ---------- ---------- ----------
Asset Management Fees (3) (6,808) (4,746) (10,233) (8,922)
Mortgage Management Fee (4) - - - (23,167)
General and Administrative
Expenses (5) (10,770) (5,078) (12,212) (36,084)
---------- ---------- ---------- ----------
Total Operating Expenses (17,578) (9,824) (22,445) (68,173)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 156,136 72,074 174,527 513,833
Depreciation and Amortization
Expense (6) (30,652) (13,081) (30,970) (10,498)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 125,484 $ 58,993 $ 143,557 $ 503,335
========== ========== ========== ==========
</TABLE>
See Footnotes
E-1
<PAGE>
<TABLE>
<CAPTION>
Denny's Denny's Wendy's Wendy's
Hillsboro, TX (7)(12) McKinney, TX (12) Camarillo, CA (7)(9) Sevierville, TN(7)(9)
--------------------- ----------------- -------------------- ---------------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 114,346 $ 104,013 $ 124,655 $ 60,735
Interest Income (2) - - - -
---------- ---------- ---------- ---------
Total Revenues 114,346 104,013 124,655 60,735
---------- ---------- ---------- ----------
Asset Management Fees (3) (6,319) (5,874) (7,224) (2,956)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (7,089) (6,449) (7,729) (3,766)
---------- ---------- ---------- ----------
Total Operating Expenses (13,408) (12,323) (14,953) (6,722)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 100,938 91,690 109,702 54,013
Depreciation and Amortization
Expense (6) (19,022) (16,066) (17,220) (13,308)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 81,916 $ 75,624 $ 92,482 $ 40,705
========== ========== ========== ==========
</TABLE>
See Footnotes
E-2
<PAGE>
<TABLE>
<CAPTION>
Boston Market Boston Market Jack in the Box Boston Market
Ellisville, MO (7)(10) Golden Valley, MN (7)(10) Humble #1, TX (7)(11) Corvallis, OR (7)
---------------------- ------------------------- --------------------- -----------------
<S> <C>
Pro Forma Estimate
of Taxable
Income Before Dividends
Paid Deduction:
Base Rent (1) $ 102,675 $ 112,890 $ 100,061 $ 95,085
Interest Income (2) - - - -
---------- ---------- ---------- ----------
Total Revenues 102,675 112,890 100,061 95,085
---------- ---------- ---------- ----------
Asset Management Fees (3) (5,864) (6,448) (5,603) (5,440)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (6,366) (6,999) (6,204) (5,895)
---------- ---------- ---------- ----------
Total Operating Expenses (12,230) (13,447) (11,807) (11,335)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 90,445 99,443 88,254 83,750
Depreciation and Amortization
Expense (6) (16,272) (13,561) (15,646) (16,006)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 74,173 $ 85,882 $ 72,608 $ 67,744
========== ========== ========== ==========
</TABLE>
See Footnotes
E-3
<PAGE>
<TABLE>
<CAPTION>
Jack in the Box Arby's Boston Market
Houston #1, TX (7)(11) Kendallville, IN (13) Rockwall, TX (7)
---------------------- --------------------- ----------------
<S> <C>
Pro Forma Estimate
of Taxable
Income Before Dividends
Paid Deduction:
Base Rent (1) $ 95,757 $ 75,812 $ 79,356
Interest Income (2) - - -
---------- ----------- ----------
Total Revenues 95,757 75,812 79,356
---------- ----------- ----------
Asset Management Fees (3) (5,362) (4,430) (4,551)
Mortgage Management Fee (4) - - -
General and Administrative
Expenses (5) (5,937) (4,700) (4,920)
---------- ----------- ----------
Total Operating Expenses (11,299) (9,130) (9,471)
---------- ----------- ----------
Estimated Cash Available from
Operations 84,458 66,682 69,885
Depreciation and Amortization
Expense (6) (15,890) (7,794) (10,813)
---------- ----------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 68,568 $ 58,888 $ 59,072
========== =========== ==========
</TABLE>
See Footnotes
E-4
<PAGE>
<TABLE>
<CAPTION>
Boston Market Jack in the Box Applebee's Golden Corral
Upland, CA (7)(14) Houston #2, TX (7)(11) Montclair, CA (7) Brooklyn, OH (8)
------------------ ---------------------- ----------------- ----------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 101,479 $ 97,618 $ 176,084 $ 142,823
Interest Income (2) - - - -
---------- ---------- ---------- ----------
Total Revenues 101,479 97,618 176,084 142,823
---------- ---------- ---------- ----------
Asset Management Fees (3) (5,819) (5,467) (9,563) (5,921)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (6,292) (6,052) (10,917) (8,855)
---------- ---------- ---------- ----------
Total Operating Expenses (12,111) (11,519) (20,480) (14,776)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 89,368 86,099 155,604 128,047
Depreciation and Amortization
Expense (6) (11,115) (15,257) (21,142) (26,658)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 78,253 $ 70,842 $ 134,462 $ 101,389
========== ========== ========== ==========
</TABLE>
See Footnotes
E-5
<PAGE>
<TABLE>
<CAPTION>
Ryan's Family
Boston Market Boston Market Steak House Arby's
La Quinta, CA (7)(14) Merced, CA (7) Spring Hill, FL (7) Avon, IN (13)
--------------------- ----------------- ------------------- -------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 98,804 $ 96,704 $ 204,392 $ 81,044
Interest Income (2) - - - -
---------- ---------- ---------- ----------
Total Revenues 98,804 96,704 204,392 81,044
---------- ---------- ---------- ----------
Asset Management Fees (3) (5,660) (5,540) (11,112) (4,738)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (6,126) (5,996) (12,672) (5,025)
---------- ---------- ---------- ----------
Total Operating Expenses (11,786) (11,536) (23,784) (9,763)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 87,018 85,168 180,608 71,281
Depreciation and Amortization
Expense (6) (12,439) (10,283) (34,952) (12,415)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 74,579 $ 74,885 $ 145,656 $ 58,866
========== ========== ========== ==========
</TABLE>
See Footnotes
E-6
<PAGE>
<TABLE>
<CAPTION>
Boston Market Applebee's Burger King
Florissant, MO (7)(10) Salinas, CA (7) Chicago, IL (7)(16)
---------------------- --------------- -------------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 131,306 $ 145,549 $ 173,489
Interest Income (2) - - -
---------- ---------- ----------
Total Revenues 131,306 145,549 173,489
---------- ---------- ----------
Asset Management Fees (3) (7,523) (7,950) (9,463)
Mortgage Management Fee (4) - - -
General and Administrative
Expenses (5) (8,141) (9,024) (10,756)
---------- ---------- ----------
Total Operating Expenses (15,664) (16,974) (20,219)
---------- ---------- ----------
Estimated Cash Available from
Operations 115,642 128,575 153,270
Depreciation and Amortization
Expense (6) (15,852) (16,617) (19,317)
---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 99,790 $ 111,958 $ 133,953
========== ========== ==========
</TABLE>
See Footnotes
E-7
<PAGE>
<TABLE>
<CAPTION>
Wendy's Golden Corral Golden Corral Burger King
San Diego, CA (7) Lufkin, TX (7)(8)(15) Columbia, TN Chattanooga, TN (7)(16)
----------------- --------------------- ------------- -----------------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 82,267 $ 148,984 $ 147,024 $ 127,536
Interest Income (2) - - - -
---------- ---------- ---------- ---------
Total Revenues 82,267 148,984 147,024 127,536
---------- ---------- ---------- ----------
Asset Management Fees (3) (3,649) (8,191) (7,765) (6,933)
Mortgage Management Fee (4) - - - -
General and Administrative
Expenses (5) (5,101) (9,237) (9,115) (7,907)
---------- ---------- ---------- ----------
Total Operating Expenses (8,750) (17,428) (16,880) (14,840)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 73,517 131,556 130,144 112,696
Depreciation and Amortization
Expense (6) (16,430) (25,044) (22,551) (18,107)
---------- ---------- ---------- -----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 57,087 $ 106,512 $ 107,593 $ 94,589
========== ========== ========== ==========
</TABLE>
See Footnotes
E-8
<PAGE>
<TABLE>
<CAPTION>
Two Pizza Hut Golden Corral Golden Corral Boston Market
Properties Eastlake, OH Moberly, MO (7)(8)(15) St. Joseph, MO (10)
------------- ------------ ---------------------- -------------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 34,760 $ 186,091 $ 128,356 $ 82,437
Interest Income (2) 51,678 - - -
---------- ---------- ---------- ---------
Total Revenues 86,438 186,091 128,356 82,437
---------- ---------- ---------- ----------
Asset Management Fees (3) (1,896) (9,823) (7,033) (4,718)
Mortgage Management Fee (4) (2,904) - - -
General and Administrative
Expenses (5) (5,359) (11,538) (7,958) (5,111)
---------- ---------- ---------- ----------
Total Operating Expenses (10,159) (21,361) (14,991) (9,829)
---------- ---------- ---------- ----------
Estimated Cash Available from
Operations 76,279 164,730 113,365 72,608
Depreciation and Amortization
Expense (6) (1,307) (32,063) (22,117) (15,246)
---------- ---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 74,972 $ 132,667 $ 91,248 $ 57,362
========== ========== ========== ==========
</TABLE>
See Footnotes
E-9
<PAGE>
<TABLE>
<CAPTION>
Boston Market Jack in the Box Jack in the Box
Atlanta, GA (7) Dallas, TX (7)(11) Los Angeles, CA (7)(11)
--------------- ------------------ -----------------------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 121,366 $ 85,225 $ 143,272
Interest Income (2) - - -
---------- ---------- ----------
Total Revenues 121,366 85,225 143,272
---------- ---------- ----------
Asset Management Fees (3) (6,954) (4,983) (8,381)
Mortgage Management Fee (4) - - -
General and Administrative
Expenses (5) (7,525) (5,284) (8,883)
---------- ---------- ----------
Total Operating Expenses (14,479) (10,267) (17,264)
---------- ---------- ----------
Estimated Cash Available from
Operations 106,887 74,958 126,008
Depreciation and Amortization
Expense (6) (17,504) (13,004) (14,548)
---------- ---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 89,383 $ 61,954 $ 111,460
========== ========== ==========
</TABLE>
See Footnotes
E-10
<PAGE>
Jack in the Box
Las Vegas, NV (7)(11) Total
--------------------- -----
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 127,954 $4,548,853
Interest Income (2) - 467,364
---------- ----------
Total Revenues 127,954 5,016,217
---------- ----------
Asset Management Fees (3) (7,484) (247,346)
Mortgage Management Fee (4) - (26,071)
General and Administrative
Expenses (5) (7,933) (311,005)
---------- ----------
Total Operating Expenses (15,417) (584,422)
---------- ----------
Estimated Cash Available from
Operations 112,537 4,431,795
Depreciation and Amortization
Expense (6) (15,187) (655,954)
---------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 97,350 $3,775,841
========== ==========
- ------------------------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Company entered into a Master Mortgage Note agreement for
$3,888,000, collateralized by building improvements located on ten of
the Twelve Pizza Hut Properties. The Master Mortgage Note bears
interest at a rate of 10.75% per annum and principal and interest will
be collected in equal monthly installments over 20 years beginning in
July 1996. Amount does not include $19,440 of loan commitment fees and
$19,440 in loan origination fees collected by the Company at closing
from the borrower. In addition, the Company entered into a Master
Mortgage Note agreement for $484,000, collateralized by building
improvements located on two of the Twelve Pizza Hut Properties. The
Master Mortgage Note bears interest at a rate of 10.75% per annum and
principal and interest will be collected in equal monthly installments
over 20 years beginning in February 1997. Amount does not include
$2,420 of loan commitment fees and $2,420 in loan origination fees
collected by the Company at closing from the borrower.
(3) 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."
(4) For managing the Mortgage Loans, the Advisor will be entitled to
receive a monthly mortgage management fee of one-twelfth of .60% of the
total principal amount of the Mortgage Loans as of the end of the
preceding month. See "Management Compensation."
(5) Estimated at 6.2% of gross rental income and interest 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.
E-11
<PAGE>
(6) 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. In connection with the Twelve Pizza
Hut Properties, acquisition fees allocated to the Master Mortgage Notes
have been amortized on a straight-line basis over the life of the
agreements (20 years).
(7) The Company accepted an assignment of an interest in the ground lease
relating to the Hamden and Sevierville Properties effective April 24,
1996 and June 5, 1996, respectively, in consideration of its funding of
certain preliminary development costs and its agreement to fund
remaining development. 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:
<TABLE>
<CAPTION>
Property Estimated Final Completion Date Property Estimated Final Completion Date
-------- ------------------------------- -------- -------------------------------
<S> <C>
Hamden Property Opened for business August 26, 1996 La Quinta Property Opened for business December 16, 1996
Knoxville Property Opened for business July 8, 1996 Merced Property Opened for business October 6, 1996
Port Richey Property Opened for business September 30, 1996 Spring Hill Property February 15, 1997
Hillsboro Property August 28, 1997 Florissant Property Opened for business December 29, 1996
Camarillo Property Opened for business July 28, 1996 Salinas Property February 6, 1997
Sevierville Property Opened for business June 13, 1996 Chicago Property March 1, 1997
Ellisville Property Opened for business September 3, 1996 San Diego Property Opened for business December 6, 1996
Golden Valley Property Opened for business September 30, 1996 Lufkin Property Opened for business December 27, 1996
Humble #1 Property Opened for business September 12, 1996 Chattanooga Property April 4, 1997
Corvallis Property Opened for business October 6, 1996 Moberly Property June 15, 1997
Houston #1 Property Opened for business September 25, 1996 Atlanta Property June 15, 1997
Rockwall Property Opened for business October 27, 1996 Dallas Property June 15, 1997
Upland Property Opened for business September 30, 1996 Los Angeles Property July 6, 1997
Houston #2 Property Opened for business July 14, 1996 Las Vegas Property July 6, 1997
Montclair Property Opened for business December 16, 1996
</TABLE>
(8) The Company accepted an assignment of an interest in a ground lease
relating to the Brooklyn Property effective August 23, 1996.
(9) The lessee of the Knoxville, Camarillo, and Sevierville Properties is
the same unaffiliated lessee.
(10) The lessee of the Ellisville, Golden Valley, Florissant and St. Joseph
Properties is the same unaffiliated lessee.
(11) The lessee of the Humble #1, Houston #1, Houston #2, Dallas, Los
Angeles and Las Vegas Properties is the same unaffiliated lessee.
(12) The lessee of the Hillsboro and McKinney Properties is the same
unaffiliated lessee.
(13) The lessee of the Kendallville and Avon Properties is the same
unaffiliated lessee.
(14) The lessee of the Upland and La Quinta Properties is the same
unaffiliated lessee.
(15) The lessee of the Lufkin and Moberly Properties is the same
unaffiliated lessee.
(16) The lessee of the Chicago and Chattanooga Properties is the same
unaffiliated lessee.
E-12
