SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
-----------------------------
Date of Report (Date of earliest event reported): June 17, 1997
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 333-15411 59-3239115
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
<PAGE>
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Status of the Offering
On February 6, 1997, the Company commenced an offering (the
"Offering") of up to 27,500,000 shares of common stock (the "Shares"). As of
July 2, 1997, the Company had received subscription proceeds of $74,851,028
(7,485,103 Shares) including $643,293 (64,329 Shares) issued pursuant to the
Reinvestment Plan, from 3,561 stockholders in connection with the Offering. The
proceeds of the Offering will be used primarily to acquire properties (the
"Properties") located across the United States to be leased on a long-term,
triple-net basis to operators of selected national and regional fast-food,
family-style and casual dining restaurant chains. The Company may also provide
financing (the "Mortgage Loans") for the purchase of buildings, generally by
lessees that lease the underlying land from the Company.
Acquisition of Properties
Between June 13, 1997 and July 2, 1997, the Company acquired eight
Properties consisting of land and building, with the proceeds of the Offering.
These Properties are two Golden Corral Properties (one in each of Enid,
Oklahoma, and Liberty, Missouri), one IHOP Property (in Fairfax, Virginia), two
Boston Market Properties (one in each of Southlake and Stafford, Texas), two
Jack in the Box Properties (one in each of Channelview and Garland, Texas) and
one KFC Property (in Putnam, Connecticut).
In connection with the purchase of these eight Properties, the
Company, as lessor, entered into long-term lease agreements with unaffiliated
lessees. The leases are on a triple-net basis, with the lessee responsible for
all repairs and maintenance, property taxes, insurance and utilities. The lessee
also is required to pay for special assessments, sales and use taxes, and the
cost of any renovations permitted under the lease. For the Properties that are
to be constructed, the Company has entered into development and indemnification
and put agreements with the lessees.
The following table sets forth the location of the eight
Properties, consisting of land and building, acquired by the Company from June
13, 1997 through July 2, 1997, a description of the competition, and a summary
of the principal terms of the acquisition and lease of each Property.
- 1 -
<PAGE>
PROPERTY ACQUISITIONS
From June 13, 1997 through July 2, 1997
<TABLE>
<CAPTION>
Lease
Purchase Date Expiration and Minimum Percentage Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- ---------- -----------
<S> <C>
GOLDEN CORRAL (7) $355,340 06/17/97 06/2012; 10.75% of for each during the
(the "Enid Property") (excluding four five- Total Cost lease year, first
Restaurant to be constructed developmen year renewal (4) 5% of the through
costs) (3) options amount by seventh
The Enid Property is located on which annual lease years
the southeast corner of West gross sales and the
Garriott Road and West Brow Road, exceed tenth
in Enid, Garfield County, $2,034,928 through
Oklahoma, in an area of mixed (5) fifteenth
retail, commercial, and lease years
residential development. Other only
fast-food and family-style
restaurants located in proximity
to the Enid Property include an
Applebee's, a Red Lobster, a
Grandy's, and several local
restaurants.
IHOP $1,709,091 06/18/97 06/2017; $173,045; for each during the
(the "Fairfax Property") three five- increases by lease year, eleventh
Existing restaurant year renewal 10% after (i) 4% of lease year
options the fifth annual gross and at the
The Fairfax Property is located lease year sales minus end of the
at the southeast corner of the and after (ii) the initial
intersection of Lee Highway and every five minimum lease term
Blake Lane, in Fairfax, Fairfax years annual rent
County, Virginia, in an area of thereafter for such
mixed retail, commercial, and during the lease year
residential development. Other lease term
fast-food and family-style
restaurants located in proximity
to the Fairfax Property include a
McDonald's, a Ruby Tuesday, a
Subway Sandwich Shop, and several
local restaurants.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Lease
Purchase Date Expiration and Minimum Percentage Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- ---------- -----------
<S> <C>
GOLDEN CORRAL (7) $397,339 06/19/97 06/2012; 10.75% of for each during the
(the "Liberty #2 Property") (excluding four five- Total Cost lease year, first
Restaurant to be constructed development year renewal (4) 5% of the through
costs) (3) options amount by seventh
The Liberty #2 Property is which annual lease years
located within the southwest gross sales and the
quadrant of North Church Road and exceed tenth
State Route 152, in Liberty, Clay $2,349,786 through
County, Missouri, in an area of (5) fifteenth
mixed retail, commercial, and lease years
residential development. Other only
fast-food and family-style
restaurants located in proximity
to the Liberty #2 Property
include an Applebee's, a Cracker
Barrel, a McDonald's, and a local
restaurant.
BOSTON MARKET (8) $1,035,153 07/02/97 07/2012; $107,449; for each at any time
(the "Southlake Property") five five- increases by lease year after the
Existing restaurant year renewal 10% after after the fifth lease
options the fifth fifth lease year
The Southlake Property is located lease year year; (i) 4%
on the east side of Davis and after of annual
Boulevard, just south of every five gross sales
Southlake Boulevard, in years minus (ii)
Southlake, Tarrant County, Texas, thereafter the minimum
in an area of mixed retail, during the annual rent
commercial, and residential lease term for such
development. Other fast-food and lease year
family-style restaurants located
in proximity to the Southlake
Property include a Taco Bell, a
McDonald's, a Wendy's, and a
Schlotzsky's Deli.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Lease
Purchase Date Expiration and Minimum Percentage Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- ---------- -----------
<S> <C>
BOSTON MARKET (8) $1,077,979 07/02/97 07/2012; $111,894; for each at any time
(the "Stafford Property") five-year increases by lease year after the
Existing restaurant renewal 10% after after the fifth lease
options the fifth fifth lease year
The Stafford Property is located lease year year, (i) 4%
at the southwest quadrant of the and after of annual
intersection of Southwest Freeway every five gross sales
and Airport Boulevard, in years minus (ii)
Stafford, Fort Bend County, thereafter the minimum
Texas, in an area of mixed during the annual rent
retail, commercial, and lease term for such
residential development. Other lease year
fast-food and family-style
restaurants located in proximity
to the Stafford Property include
a Captain D's, a Jack in the Box,
a Taco Bell, a Macaroni Grill, a
Chuck E. Cheese, and several
local restaurants.
JACK IN THE BOX (9) $1,008,970 07/02/97 07/2015; $103,419 for each at any time
(the "Channelview Property") (3)(6) four five- (6); lease year, after the
Restaurant to be constructed year renewal increases by (i) 5% of seventh
options 8% after the annual gross lease year
The Channelview Property is fifth lease sales minus
located on the northeast corner year and (ii) the
of Interstate Highway 10 and after every minimum
Magnolia Avenue, in Channelview, five years annual rent
Harris County, Texas, in an area thereafter for such
of mixed retail, commercial, and during the lease year
residential development. lease term (5)
JACK IN THE BOX (9) $936,119 07/02/97 07/2015; $95,952 (6); for each at any time
(the "Garland Property") (3)(6) four five- increases by lease year, after the
Restaurant to be constructed year renewal 8% after the (i) 5% of seventh
options fifth lease annual gross lease year
The Garland Property is located year and sales minus
on the northeast quadrant of the after every (ii) the
intersection of Interstate 30 and five years minimum
Roan Road, in Garland, Dallas thereafter annual rent
County, Texas, in an area of during the for such
mixed retail, commercial, and lease term lease year
residential development. (5)
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Lease
Purchase Date Expiration and Minimum Percentage Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- ---------- -----------
<S> <C>
KFC $794,700 07/02/97 05/2022; $89,960; None None
(the "Putnam Property") four five- increases by
Existing restaurant year renewal 10% after
options the fifth
The Putnam Property is located on lease year
the east side of the entrance and after
drive to the Putnam Parkade every five
shopping center, in Putnam, years
Windham County, Connecticut, in thereafter
an area of mixed retail, during the
commercial, and residential lease term
development. Other fast-food and
family-style restaurants located
in proximity to the Putnam
Property include a McDonald's, a
Wendy's, a Dunkin Donuts, and a
Subway Sandwich Shop.
- -------------------------------------------
FOOTNOTES
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set forth
below:
Property Federal Tax Basis
-------- -----------------
Enid Property $776,000
Fairfax Property 703,000
Liberty #2 Property 925,000
Southlake Property 620,000
Stafford Property 679,000
Channelview Property 708,000
Garland Property 608,000
Putnam Property 534,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Enid
and Liberty #2 Properties, minimum annual rent will become due and
payable on the earlier of (i) 180 days after executionof the lease,
(ii) the date the certificate of occupancy for the restaurant is
issued, or (iii) the date the restaurant opens for business to the
public. During the period commencing with the effective date of the
lease to the date minimum annual becomes payable for the Enid and
Liberty #2 Properties, as described, interim rent equal to 10% per
annum of the amount funded by the Company in connection with the
purchase and construction of the Properties, shall accrue and be
payable in a single lump sum at the time of final funding of the
construction costs.
- 5 -
<PAGE>
(3) The development agreements for the Properties which are to be
constructed, provide that construction must be completed no later than
the dates set forth below. The maximum cost to the Company, including
the purchase price of the land (if applicable), development costs (if
applicable), and closing and acquisition costs) is not expected to, but
may, exceed the amounts set forth below:
</TABLE>
<TABLE>
<CAPTION>
Property Estimated Maximum Cost Estimated Final Completion Date
-------- ---------------------- -------------------------------
<S> <C>
Enid Property $1,202,286 December 14, 1997
Liberty #2 Property 1,378,020 December 16, 1997
Channelview Property 1,008,970 December 29, 1997
Garland Property 936,119 December 29, 1997
</TABLE>
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The Company paid for all construction or renovation costs in advance at
closing; therefore, minimum annual rent was determined on the date
acquired and is not expected to change.
(7) The lessee of the Enid and Liberty #2 Properties is the same
unaffiliated lessee.
(8) The lessee of the Southlake and Stafford Properties is the same
unaffiliated lessee.
(9) The lessee of the Channelview and Garland Properties is the same
unaffiliated lessee.
- 6 -
<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL AMERICAN PROPERTIES FUND, INC.
PROPERTIES ACQUIRED FROM JUNE 13, 1997
THROUGH JULY 2, 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 June 13, 1997 through July 2, 1997, for the 12-month period
commencing on the date of the inception of the respective lease on such
Property. The schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties or has borrowed funds from the Company with an aggregate purchase
price in excess of 20% of the expected total net offering proceeds of the
Company.
<TABLE>
<CAPTION>
Golden Corral IHOP Golden Corral Boston Market
Enid, OK (9) Fairfax, VA (10) Liberty #2, MO (9) Southlake, TX (8)
------------- ---------------- ------------------ -----------------
<S> <C>
Estimated Taxable
Operating Results
Base Rent (1) (5) $173,045 (5) $107,449
Asset Management Fees (2) (5) (10,223) (5) (6,154)
General and Administrative
Expenses (3) (5) (10,729) (5) (6,662)
-------- --------
Estimated Cash Available from
Operations (5) 152,093 (5) 94,633
Depreciation and Amortization
Expense (4) (5) (18,015) (5) (15,904)
-------- --------
Estimated Taxable
Operating Results (5) $134,078 (5) $ 78,729
======== ========
</TABLE>
See Footnotes
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Boston Market Jack in the Box Jack in the Box KFC
Stafford, TX (8) Channelview, TX (7) Garland, TX (7) Putnam, CT
---------------- ------------------- --------------- ----------
<S> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $111,894 (5) (5) $ 89,960
Asset Management Fees (2) (6,409) (5) (5) (4,768)
General and Administrative
Expenses (3) (6,937) (5) (5) (5,578)
-------- --------
Estimated Cash Available from
Operations 98,548 (5) (5) 79,614
Depreciation and Amortization
Expense (4) (17,411) (5) (5) (13,688)
-------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 81,137 (5) (5) $ 65,926
======== ========
</TABLE>
See Footnotes
- 8 -
<PAGE>
Total
-----
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $482,348
Asset Management Fees (2) (27,554)
General and Administrative
Expenses (3) (29,906)
---------
Estimated Cash Available from
Operations 424,888
Depreciation and Amortization
Expense (4) (65,018)
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $359,870
========
- ----------------------------------------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement
between the Company and CNL Fund Advisors, Inc. (the "Advisor"),
pursuant to which the Advisor will receive monthly asset management
fees in an amount equal to one-twelfth of .60% of the Company's Real
Estate Asset Value as of the end of the preceding month as defined in
such agreement.
(3) Estimated at 6.2% of gross rental income based on the previous
experience of affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the
Company. Amount does not include soliciting dealer servicing fee due to
the fact that such fee will not be incurred until December 31 of the
year following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the
building portion) of each Property has been depreciated on the
straight-line method over 39 years.
(5) The Property is under construction and therefore was not operational
for the period presented. The development agreements for the Properties
which are to be constructed, provide that construction must be
completed no later than the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Enid Property December 14, 1997
Liberty #2 Property December 16, 1997
Channelview Property December 29, 1997
Garland Property December 29, 1997
- 9 -
<PAGE>
(6) The lessee of the Enid and Liberty #2 Properties is the same
unaffiliated lessee.
(7) The lessee of the Southlake and Stafford Properties is the same
unaffiliated lessee.
(8) The lessee of the Channelview and Garland Properties is the same
unaffiliated lessee.
- 10 -
<PAGE>
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Not applicable.
Item 6. Resignation of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- 11 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
-----------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of March 31, 1997 14
Pro Forma Consolidated Statement of Earnings for the quarter ended March 31, 1997 15
Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1996 16
Notes to Pro Forma Consolidated Financial Statements for the quarter ended
March 31, 1997 and the year ended December 31, 1996 17
</TABLE>
- 12 -
<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 March 31,
1997, including the receipt of $177,015,590 in gross offering proceeds from the
sale of 17,701,559 shares of common stock and the application of such proceeds
to purchase 123 properties (including 68 properties which consist of land and
building, one property through a joint venture arrangement which consists of
land and building, 11 properties which consist of building only and 43
properties which consist of land only), 17 of which were under construction at
March 31, 1997, to provide mortgage financing to the lessees of the 43
properties consisting of land only, and to pay organizational and offering
expenses, acquisition fees and miscellaneous acquisition expenses, (ii) the
receipt of net sales proceeds in the amount of $5,266,327 relating to the sale
of four properties consisting of building only which had been acquired as of
March 31, 1997, (iii) the receipt of $48,427,203 in gross offering proceeds from
the sale of 4,842,721 additional shares of common stock during the period April
1, 1997 through July 2, 1997, and (iv) the application of such funds and
$38,583,057 of cash and cash equivalents at March 31, 1997, to purchase 60
additional properties acquired during the period April 1, 1997 through July 2,
1997 (32 of which are under construction and consist of land and building, 26
properties which consist of land and building, one property which consists of
land only and one property which consists of building only), to pay additional
costs for the 17 properties under construction at March 31, 1997, 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 March 31, 1997, includes the
transactions described in (i) above from the historical consolidated balance
sheet, adjusted to give effect to the transactions in (ii), (iii) and (iv)
above, as if they had occurred on March 31, 1997.
The Pro Forma Consolidated Statements of Earnings for the quarter ended
March 31, 1997 and the year ended December 31, 1996, include the historical
operating results of the properties described in (i) above from the dates of
their acquisitions plus operating results for six of the properties that were
acquired by the Company during the period January 1, 1996 through July 2, 1997,
and had a previous rental history prior to the Company's acquisition of such
properties, from (A) the later of (1) the date the property became operational
as a rental property by the previous owner or (2) January 1, 1996, to (B) the
earlier of (1) the date the property was acquired by the Company or (2) the end
of the pro forma period presented. No pro forma adjustments have been made to
the Pro Forma Consolidated Statement of Earnings for the remaining properties
acquired by the Company during the period January 1, 1996 through July 2, 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.
- 13 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------- -------------- -------------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 82,040,349 $ 64,250,680 (a) $146,291,029
Net investment in direct
financing leases (c) 19,816,023 15,369,932 (a)
(5,266,327)(b) 29,919,628
Cash and cash equivalents 44,132,920 (38,583,057)(a)
5,266,327 (b) 10,816,190
Restricted cash 231,787 231,787
Receivables 334,698 334,698
Mortgage notes receivable 17,803,151 17,803,151
Organization costs, less
accumulated amortization 12,682 12,682
Loan costs, less accumulated
amortization 25,599 25,599
Accrued rental income 606,879 606,879
Other assets 2,718,273 (1,869,129)(a) 849,144
------------ ------------ ------------
$167,722,361 $ 39,168,426 $206,890,787
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 5,469,649 $ 5,469,649
Accrued interest payable 13,936 13,936
Accrued construction costs payable 4,409,764 $ (4,409,764)(a) -
Accounts payable and other accrued
expenses 83,986 83,986
Due to related parties 733,581 733,581
Rents paid in advance 227,391 227,391
Deferred rental income 592,125 26,353 (a) 618,478
Other payables 13,495 13,495
------------ ------------ ------------
Total liabilities 11,543,927 (4,383,411) 7,160,516
------------ ------------ ------------
Minority interest 287,647 287,647
------------ ------------ ------------
Stockholders' equity:
Preferred stock, without par
value. Authorized and unissued
3,000,000 shares (d) - -
Excess shares, $.01 par value per
share. Authorized and unissued
23,000,000 shares (d) - -
Common stock, $.01 par value per
share. Authorized 20,000,000
shares; issued and outstanding
17,721,559 shares; issued and
outstanding, as adjusted,
22,564,280 shares (d) 177,215 48,427 (a) 225,642
Capital in excess of par value 157,115,036 43,503,410 (a) 200,618,446
Accumulated distributions in
excess of net earnings (1,401,464) (1,401,464)
------------ ------------ ------------
155,890,787 43,551,837 199,442,624
------------ ------------ ------------
$167,722,361 $ 39,168,426 $206,890,787
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
- 14 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- -------------
<S> <C>
Revenues:
Rental income from
operating leases $1,643,074 $8,188 (1) $ 1,651,262
Earned income from
direct financing leases (2) 446,711 446,711
Interest income from
mortgage notes receivable 375,357 375,357
Other interest and income 474,416 (8,185)(3) 466,231
---------- ---------- ----------
2,939,558 3 2,939,561
---------- ---------- ----------
Expenses:
General operating and
administrative 255,456 255,456
Professional services 38,463 38,463
Asset and mortgage management
fees to related party 110,516 2,126 (4) 112,642
State and other taxes 35,350 35,350
Depreciation and amortization 240,038 2,142 (6) 242,180
---------- ---------- ----------
679,823 4,268 684,091
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 2,259,735 (4,265) 2,255,470
Minority Interest in Income of
Consolidated Joint Venture (7,893) (7,893)
---------- ---------- ----------
Net Earnings $ 2,251,842 $ (4,265) $ 2,247,577
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.14 $ 0.14
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 15,630,532 15,630,532
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
- 15 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- --------------- ---------
<S> <C>
Revenues:
Rental income from
operating leases $3,717,886 $62,167 (1) $3,780,053
Earned income from
direct financing leases (2) 625,492 34,282 (1) 659,774
Contingent rental income 13,920 13,920
Interest income from
mortgage notes receivable 1,069,349 1,069,349
Other interest and income 780,037 (33,667)(3) 746,370
---------- ---------- ----------
6,206,684 62,782 6,269,466
---------- ---------- ----------
Expenses:
General operating and
administrative 542,564 542,564
Professional services 58,976 58,976
Asset and mortgage management
fees to related party 251,200 7,945 (4) 259,145
State and other taxes 56,184 1,218 (5) 57,402
Depreciation and amortization 521,871 6,852 (6) 528,723
---------- ---------- ----------
1,430,795 16,015 1,446,810
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 4,775,889 46,767 4,822,656
Minority Interest in Income of
Consolidated Joint Venture (29,927) (29,927)
---------- ---------- ----------
Net Earnings $4,745,962 $ 46,767 $4,792,729
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.59 $ 0.59
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 8,071,670 8,071,670
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
- 16 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet:
- ------------------------------------
(a) Represents gross proceeds of $48,427,203 from the issuance of 4,842,721
shares of common stock during the period April 1, 1997 through July 2,
1997, the receipt of $26,353 of rental income during construction
(capitalized as deferred rental income), and $38,583,057 of cash and
cash equivalents used (i) to acquire 60 properties for $72,840,464 of
which one property consists of building only, one property consists of
land only and 58 properties consist of land and building, (ii) to fund
estimated construction costs of $7,141,559 ($4,409,764 of which was
accrued as construction costs payable at March 31, 1997) relating to 17
wholly- owned properties under construction at March 31, 1997, (iii) to
pay acquisition fees of $2,179,224 and reclassify from other assets
$1,869,129 of acquisition fees previously incurred relating to the
acquired properties and (iv) to pay selling commissions and offering
expenses (stock issuance costs) of $4,875,366, which have been netted
against capital in excess of par value.
- 17 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
- ------------------------------------------------
The pro forma adjustments to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
transactions were as follows:
<TABLE>
<CAPTION>
Estimated purchase
price (including
construction and
closing costs) Acquisition fees
and additional allocated to
construction costs property Total
------------------ ----------------- -----------
<S> <C>
Jack in the Box in Oxnard, CA $ 1,244,340 $ 66,661 $ 1,311,001
Bennigan's in Arvada, CO 1,907,025 102,162 2,009,187
Boston Market in Cedar Park, TX 820,389 43,949 864,338
Boston Market in Collinsville, IL 786,924 42,157 829,081
Boston Market in Taylorsville, UT 1,296,749 69,469 1,366,218
Burger King in Ooltewah, TN 1,200,786 64,328 1,265,114
Boston Market in Arvada, CO 1,140,718 61,110 1,201,828
Boston Market in Liberty, MO 755,854 40,492 796,346
Einstein Bros. Bagels in Dearborn, MI 659,867 35,350 695,217
Jack in the Box in Enumclaw, WA 842,431 45,130 887,561
Shoney's in Guadalupe, AZ 1,445,517 77,438 1,522,955
Black-eyed Pea in Scottsdale, AZ 768,363 41,162 809,525
Pizza Hut in Dover, OH 224,378 12,020 236,398
Jack in the Box in Bacliff, TX 1,048,420 56,165 1,104,585
Boston Market in Indianapolis, IN 1,648,988 88,339 1,737,327
Boston Market in San Antonio, TX 749,581 40,156 789,737
Boston Market in Baltimore, MD 1,366,123 73,185 1,439,308
Boston Market in Gambrills, MD 1,253,116 67,131 1,320,247
Boston Market in Jessup, MD 1,273,959 68,248 1,342,207
Boston Market in Lansing, MI 1,024,386 54,878 1,079,264
Boston Market in Riverdale, MD 1,031,598 55,264 1,086,862
Boston Market in Vacaville, CA 1,424,970 76,338 1,501,308
Boston Market in Waldorf, MD 1,345,516 72,081 1,417,597
Einstein Bros. Bagels in Springfield, VA 626,546 33,565 660,111
Golden Corral in Jacksonville, FL 1,581,435 84,721 1,666,156
Golden Corral in Corpus Christi, TX 1,478,274 79,192 1,557,466
IHOP in Leesburg, VA 1,177,929 63,103 1,241,032
Popeyes in Starke, FL 572,263 30,657 602,920
Jack in the Box in Fresno, CA 838,981 44,945 883,926
Jack in the Box in Corinth, TX 954,333 51,125 1,005,458
Ruth's Chris Steak House in Tampa, FL 2,021,130 108,275 2,129,405
Golden Corral in Jacksonville, FL 1,578,529 84,564 1,663,093
Charley's Place in King of Prussia, PA 1,432,248 76,728 1,508,976
Charley's Place in McLean, VA 1,544,915 82,763 1,627,678
Darryl's in Evansville, IN 1,454,068 77,897 1,531,965
Darryl's in Hampton, VA 1,199,696 64,269 1,263,965
Darryl's in Huntsville, AL 1,363,221 73,030 1,436,251
Darryl's in Knoxville, TN 1,227,859 65,778 1,293,637
Darryl's in Louisville, KY 1,477,432 79,148 1,556,580
Darryl's in Mobile, AL 1,422,271 76,193 1,498,464
Darryl's in Montgomery, AL 1,227,992 65,785 1,293,777
Darryl's in Nashville, TN 1,181,527 63,296 1,244,823
Darryl's in Orlando, FL 2,135,420 114,398 2,249,818
Darryl's in Pensacola, FL 1,054,342 56,483 1,110,825
Darryl's in Raleigh #1, NC 1,272,374 68,163 1,340,537
Darryl's in Raleigh #2, NC 1,749,321 93,714 1,843,035
Darryl's in Richmond #1, VA 1,317,797 70,596 1,388,393
Darryl's in Richmond #2, VA 908,986 48,696 957,682
Darryl's in Winston-Salem, NC 1,181,527 63,296 1,244,823
Houlihan's in Bethel Park, PA 1,363,221 73,030 1,436,251
Houlihan's in Langhorne, PA 1,385,933 74,246 1,460,179
Houlihan's in Plymouth Meeting, PA 1,976,438 105,881 2,082,319
Golden Corral in Enid, OK 1,080,802 57,900 1,138,702
IHOP in Fairfax, VA 1,703,912 91,281 1,795,193
Golden Corral in Liberty, MO 1,258,020 67,394 1,325,414
Boston Market in Southlake, TX 1,025,712 54,949 1,080,661
Boston Market in Stafford, TX 1,068,222 57,226 1,125,448
Jack in the Box in Channelview, TX 1,007,970 53,998 1,061,968
Jack in the Box in Garland, TX 935,120 50,096 985,216
KFC in Putnam, CT 794,700 42,573 837,273
17 wholly owned properties under
construction at March 31, 1997 2,731,795 146,186 2,877,981
----------- ----------- -----------
$75,572,259 $ 4,048,353 $79,620,612
=========== =========== ===========
</TABLE>
- 18 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
- -------------------------------------------------
Adjustment classified as follows:
Land and buildings on operating leases $64,250,680
Net investment in direct financing leases 15,369,932
------------
$79,620,612
===========
(b) Represents net sales proceeds in the amount of $5,266,327 received in
conjunction with the sale of four properties consisting of building
only, which were sold at net carrying value.
(c) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated
as direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
(d) At the Company's annual meeting of stockholders held on April 4, 1997,
the stockholders approved amendments to the Company's Amended and
Restated Articles of Incorporation, and effective May 8, 1997, the
Company filed an amendment with the State of Maryland, increasing the
number of authorized shares of capital stock from 46,000,000 shares to
156,000,000 shares (consisting of 75,000,000 common shares, 3,000,000
preferred shares and 78,000,000 excess shares).
Pro Forma Consolidated Statement of Earnings:
- ---------------------------------------------
(1) Represents rental income from operating leases and earned income from
direct financing leases for six of the properties acquired during the
period January 1, 1996 through July 2, 1997, which had a previous
rental history prior to the acquisition of the property by the Company
(the "Pro Forma Properties"), for the period commencing (A) the later
of (i) the date the Pro Forma Property became operational as a rental
property by the previous owner or (ii) January 1, 1996, to (B) the
earlier of (i) the date the Pro Forma Property was acquired by the
Company or (ii) the end of the pro forma period presented. Each of the
six Pro Forma Properties was acquired from an affiliate who had
purchased and temporarily held title to the property. The
noncancellable leases for the Pro Forma Properties in place during the
period the affiliate owned the properties were assigned to the Company
at the time the Company acquired the properties. The following
presents the actual date the Pro Forma Properties were acquired or
placed in service by the Company as compared to the date the Pro Forma
Properties were treated as becoming operational as a rental property
for purposes of the Pro Forma Consolidated Statement of Earnings.
<TABLE>
<CAPTION>
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
<S> <C>
Mr. Fable's in Grand
Rapids, MI March 1996 January 1996
Denny's in McKinney, TX June 1996 January 1996
Boston Market in Merced, CA October 1996 July 1996
Boston Market in
St. Joseph, MO December 1996 June 1996
Burger King in Kent, OH February 1997 December 1996
Golden Corral in
Hopkinsville, KY February 1997 October 1996
</TABLE>
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
- 19 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Statement of Earnings - Continued:
- --------------------------------------------------------
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 1997 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the quarter ended March 31, 1997 and the year ended December
31, 1996.
(2) See Note (c) under "Pro Forma Consolidated Balance Sheet" above for a
description of direct financing leases.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the
previous owners or (ii) January 1, 1996, through (B) the earlier of (i)
the actual dates of acquisition by the Company or the end of the pro
forma period presented, as described in Note (1) above. The estimated
pro forma adjustment is based upon the fact that interest income on
interest bearing accounts was earned at a rate of approximately four
percent per annum by the Company during the quarter ended March 31,
1997 and the year ended December 31, 1996.
(4) Represents incremental increase in asset management fees relating to
the Pro Forma Properties for the period commencing (A) on the later of
(i) the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) January 1, 1996 through (B)
the earlier of (i) the date the Pro Forma Properties were acquired by
the Company or (ii) the end of the pro forma period presented, as
described in Note (1) above. Asset management fees are equal to 0.60%
of the Company's Real Estate Asset Value (estimated to be approximately
$2,126,000 and $4,762,000 for the Pro Forma Properties for the quarter
ended March 31, 1997 and the year ended December 31, 1996,
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 two percent of the Company's pro forma rental income of
each Pro Forma Property. Due to the fact that the Company's leases are
triple net, the Company has not included any amounts for real estate
taxes in the pro forma statement of earnings.
(6) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the quarter
ended March 31, 1997 and the year ended December 31, 1996.
- 20 -
<PAGE>
Item 8. Change in Fiscal Year.
Not applicable.
EXHIBITS
None.
- 21 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL AMERICAN PROPERTIES FUND, INC.
Dated: July 17, 1997 By: /s/ Robert A. Bourne
---------------------
ROBERT A. BOURNE, President
