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): April 16, 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
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
STATUS OF THE OFFERING
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective March 29, 1995, CNL American
Properties Fund, Inc. (the "Company") registered for sale an aggregate of
$165,000,000 of shares of common stock (the "Shares") (16,500,000 Shares at
$10 per Share). The Company completed its offering (the "Initial Offering")
on February 6, 1997, upon receiving aggregate subscription proceeds of
$150,591,765 (15,059,177 Shares) from 7,724 stockholders, including $591,765
(59,177 Shares) issued pursuant to the Company's reinvestment plan. Following
the completion of its Initial Offering, the Company commenced an offering of
up to 27,500,000 Shares (the "Subsequent Offering"). As of May 7, 1997, the
Company had received aggregate subscription proceeds of $44,093,060 (4,409,306
Shares) including $269,438 (26,944 Shares) issued pursuant to the Reinvestment
Plan, from 2,127 stockholders in connection with the Subsequent Offering.
As stated in the registration statement of the Company, including the
Prospectus which constitutes a part thereof, as amended, the proceeds of the
Initial and Subsequent Offerings 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 creditworthy operators of selected national and
regional fast-food, family-style and casual dining restaurant chains. The
Company may also provide financing (the "Mortgage Loans") for the purchase of
buildings, generally by lessees that lease the underlying land from the
Company.
ACQUISITION OF PROPERTIES
Between April 3, 1997 and May 7, 1997, the Company acquired 19
Properties, including 17 Properties consisting of land and building, one
Property consisting of building only and one Property consisting of land only,
with the aggregate proceeds of the Initial Offering and the Subsequent
Offering. These Properties are 11 Boston Market Properties (one in each of
Arvada, Colorado; Liberty, Missouri; Indianapolis, Indiana; San Antonio,
Texas; Vacaville, California; Lansing Michigan; and Baltimore, Gambrills,
Jessup, Riverdale, and Waldorf, Maryland), one Black-eyed Pea Property (in
Scottsdale, Arizona), two Jack in the Box Properties (one in each of Enumclaw,
Washington, and Bacliff, Texas), two Einstein Bros. Bagels Properties (one in
each of Dearborn, Michigan, and Springfield, Virginia), one Shoney's Property
(in Guadalupe, Arizona), one Pizza Hut Property (in Dover, Ohio) and one
Golden Corral Property (in Jacksonville, Florida).
In connection with the purchase of the 11 Boston Market Properties,
the two Einstein Bros. Bagels Properties, the two Jack in the Box Properties,
the Shoney's Property, and the Golden Corral Property, which are land and
building, the Company, as lessor, entered into long-term lease agreements with
unaffiliated lessees. The leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The lessee also is required to pay for special assessments, sales
and use taxes, and the cost of any renovations permitted under the lease. For
the Properties that are to be constructed or renovated, the Company has
entered into development and indemnification and put agreements with the
lessees.
The purchase price for the Shoney's Property in Guadalupe, Arizona,
includes a development fee of $49,500 to an affiliate of the advisor for
services provided in connection with the development of the Property. The
Company considers development fees, to the extent that they are paid to
affiliates, to be acquisition fees. Such development fees must be approved by
a majority of the Directors (including a majority of the Independent
Directors) not otherwise interested in such transactions, subject to a
determination that such transactions are fair and reasonable to the Company
and on terms and conditions not less favorable to the
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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.
In connection with the Black-eyed Pea Property in Scottsdale,
Arizona, which is building only, the Company, as lessor, entered into a long-
term lease agreement with an unaffiliated lessee. The lease is 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. In addition, the Company has entered into a
landlord estoppel agreement with the landlord of the land and a collateral
assignment of the ground lease with the lessee in order to provide the Company
with certain rights with respect to the land on which the building is located.
In connection with the Pizza Hut Property in Dover, Ohio, which is
land only, the Company acquired the land and is leasing this parcel to the
lessee, Castle Hill Holdings VII, L.L.C. ("Castle Hill"), along with eight
Pizza Hut Properties previously acquired, pursuant to a master lease agreement
(the "Master Lease Agreement"). Castle Hill has subleased the Pizza Hut
Property in Dover, Ohio, along with the eight Pizza Hut Properties previously
acquired, to one of its affiliates, Midland Food Services III, L.L.C., which
is the operator of the restaurants. The Master Lease Agreement is 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 and sales and use taxes. If the lessee does not
exercise its option to purchase the Properties upon termination of the Master
Lease Agreement, the sublessee and lessee will surrender possession of the
Properties to the Company, together with any improvements on such Properties.
The lessee owns the buildings located on the Pizza Hut Property in Dover,
Ohio, along with the eight Pizza Hut Properties previously acquired. In
addition, the Company provided mortgage financing of $4,200,000 to the lessee,
pursuant to a Mortgage Loan evidenced by a master mortgage note (the "Master
Mortgage Note") which is collateralized by the building improvements on the
Pizza Hut Property in Dover, Ohio, the eight Pizza Hut Properties previously
acquired, and two additional Pizza Hut Properties in Wintersville, Ohio, and
Weirton, West Virginia, which will not be owned by the Company. The Master
Mortgage Note bears interest at a rate of 10.50% per annum and principal and
interest are due in equal monthly installments over 20 years starting May 1,
1997. The Master Mortgage Note equals approximately 88 percent 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 Pizza Hut
Property in Dover, Ohio, and the eight Pizza Hut Properties previously
acquired, and due to other underwriting criteria, the Company has sufficient
collateral for the Master Mortgage Note.
The following table sets forth the location of the 19 Properties,
including 17 Properties consisting of land and building, one Property
consisting of building only and one Property consisting of land only, acquired
by the Company, from April 3, 1997 through May 7, 1997, a description of the
competition, and a summary of the principal terms of the acquisition and lease
of each Property.
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<TABLE>
PROPERTY ACQUISITIONS
From April 3, 1997 through May 7, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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BOSTON MARKET $629,435 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Arvada Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Arvada Property is after every five sales minus (ii)
located on the northwest years thereafter the minimum
quadrant of West 55th during the lease annual rent for
Avenue and the Wadsworth term such lease year
Bypass, in Arvada,
Jefferson County, Colorado,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Arvada
Property include an
Applebee's, a Ruby Tuesday,
an IHOP, a Fazoli's, a
McDonald's, and several
local restaurants.
BOSTON MARKET $456,801 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Liberty Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 5% of year
lease year and annual gross
The Liberty Property is after every five sales minus (ii)
located at the southeast years thereafter the minimum
corner of the intersection during the lease annual rent for
of North Highway 291 and term such lease year
Landmark Avenue, in
Liberty, Clay County,
Missouri, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Liberty
Property include a
Ponderosa, a KFC, a
Perkins, and a Pizza Hut.
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<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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EINSTEIN BROS. BAGELS (10) $422,512 04/16/97 04/2012; five 10.38% of Total for each lease at any time
(the "Dearborn Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Dearborn Property is after every five sales minus (ii)
located on the southeast years thereafter the minimum
corner of Telegraph Road during the lease annual rent for
and Sheridan Road, in term such lease year
Dearborn, Wayne County,
Michigan, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Dearborn
Property include a Boston
Market, a Subway Sandwich
Shop, and several local
restaurants.
JACK IN THE BOX (11) $843,431 04/16/97 04/2015; four $86,452 (6); for each lease at any time
(the "Enumclaw Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be renovated renewal options after the fifth annual gross seventh lease
lease year and sales minus (ii) year
The Enumclaw Property is after every five the minimum
located at the northwest years thereafter annual rent for
corner of the intersection during the lease such lease year
of Griffin Avenue and Cedar term (5)
Street, in Enumclaw, King
County, Washington, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Enumclaw
Property include a Subway
Sandwich Shop, a Burger
King, a McDonald's, a Pizza
Hut, and a local
restaurant.
-4-
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Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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SHONEY'S $679,095 04/16/97 04/2017; two 11% of Total Cost for each lease at any time
(the "Guadalupe Property") (excluding five-year (4); increases by year, (i) 6% of after the
Restaurant to be development renewal options 10% after the annual gross seventh lease
constructed costs) (3) fifth lease year sales minus (ii) year
and after every the minimum
The Guadalupe Property is five years annual rent for
located within the thereafter during such lease year
southeast quadrant of the lease term
Interstate 10 and Baseline
Road, in Guadalupe,
Maricopa County, Arizona,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Guadalupe
Property include a Denny's,
a Taco Bell, a KFC, a Jack
in the Box, a Waffle House,
and several local
restaurants.
BLACK-EYED PEA (7) $769,863 04/17/97 02/2011 $105,450 (6); None at any time
(the "Scottsdale Property") (3)(6) increases to after the
Restaurant to be renovated $107,511 during fifth lease
the eleventh year
The Scottsdale Property is through
located within the fourteenth lease
southeast quadrant of years
Indian Bend Road and Pima
Road, in Scottsdale,
Maricopa County, Arizona,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Scottsdale
Property include a KFC, a
Denny's, an Arby's, a Taco
Bell, a McDonald's, and a
local restaurant.
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<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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PIZZA HUT (8)(9) $224,378 04/17/97 03/2017; two $23,560; None at any time
(the "Dover Property") ten-year increases by 10% after the
Land only renewal options after the fifth seventh lease
and tenth lease year
The Dover Property is years and 12%
located on the west side of after the
Boulevard Street, in Dover, fifteenth lease
Tuscarawas County, Ohio, in year
an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Dover
Property include a Taco
Bell, a Long John Silver's,
a Friendly's, and several
local restaurants.
JACK IN THE BOX (11) $1,049,420 04/29/97 04/2015; four $107,566 (6); for each lease at any time
(the "Bacliff Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be renewal options after the fifth annual gross seventh lease
constructed lease year and sales minus (ii) year
after every five the minimum
The Bacliff Property is years thereafter annual rent for
located on the southeast during the lease such lease year
corner of Texas State term (5)
Highway 146 and FM 646, in
Bacliff, Galveston County,
Texas, in an area of mixed
commercial and residential
development.
-6-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $860,790 04/29/97 04/2012; five 10.38% of Total for each lease at any time
(the "Indianapolis (excluding five-year Cost (4); year after the after the
Property") development renewal options increases by 10% fifth lease fifth lease
Restaurant to be costs) (3) after the fifth year, (i) 4% of year
constructed lease year and annual gross
after every five sales minus (ii)
The Indianapolis Property years thereafter the minimum
is located on the west side during the lease annual rent for
of U.S. 31 South, in term such lease year
Indianapolis, Marion
County, Indiana, in an area
of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the
Indianapolis Property
include a McDonald's, a
Steak N Shake, a Wendy's,
and several local
restaurants.
BOSTON MARKET $469,369 04/30/97 04/2012; five 10.38% of Total for each lease at any time
(the "San Antonio (excluding five-year Cost (4); year after the after the
Property") development renewal options increases by 10% fifth lease fifth lease
Restaurant to be costs) (3) after the fifth year, (i) 4% of year
constructed lease year and annual gross
after every five sales minus (ii)
The San Antonio Property is years thereafter the minimum
located at the northwest during the lease annual rent for
corner of Tezel Road and term such lease year
Camino Rosa, in San
Antonio, Bexar County,
Texas, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located
in proximity to the San
Antonio Property include a
Burger King, a Taco Bell,
and several local
restaurants.
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<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $970,269 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Baltimore Property") (including five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Baltimore Property is after every five sales minus (ii)
located on the south side years thereafter the minimum
of Security Boulevard and during the lease annual rent for
the north side of Whitehead term such lease year
Court, in Baltimore,
Baltimore County, Maryland,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Baltimore
Property include a Wendy's,
a Red Lobster, a Burger
King, two McDonald's, an
IHOP, a Bennigan's, and
several local restaurants.
BOSTON MARKET (12) $854,895 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Gambrills Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Gambrills Property is after every five sales minus (ii)
located on the south side years thereafter the minimum
of Maryland Route 3, south during the lease annual rent for
of its intersection with term such lease year
Waugh Chapel Road, in
Gambrills, Anne Arundel
County, Maryland, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Gambrills
Property include a Wendy's,
a Taco Bell, a Popeyes, a
Pizza Hut, a KFC, and a
McDonald's.
-8-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $909,041 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Jessup Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Jessup Property is after every five sales minus (ii)
located on the southeast years thereafter the minimum
quadrant of U.S. Route 1 during the lease annual rent for
and Assateague Drive, in term such lease year
Jessup, Howard County,
Maryland, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Jessup
Property include a Burger
King, a Subway Sandwich
Shop, and several local
restaurants.
BOSTON MARKET $451,618 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Lansing Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 5% of year
lease year and annual gross
The Lansing Property is after every five sales minus (ii)
located on the northeast years thereafter the minimum
side of Cedar Street, north during the lease annual rent for
of the intersection of term such lease year
American Road and Cedar
Street, in Lansing, Ingham
County, Michigan, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Lansing
Property include a Denny's,
a KFC, a Long John
Silver's, a Wendy's, a Bob
Evans, and several local
restaurants.
-9-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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BOSTON MARKET (12) $629,929 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Riverdale Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Riverdale Property is after every five sales minus (ii)
located within the years thereafter the minimum
southeast corner of the during the lease annual rent for
intersection formed by term such lease year
Kenilworth Avenue and
Patterson Road, in
Riverdale, Prince George's
County, Maryland, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Riverdale
Property include a Wendy's,
a McDonald's, and an IHOP.
BOSTON MARKET $711,882 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Vacaville Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Vacaville Property is after every five sales minus (ii)
located on the southeast years thereafter the minimum
corner of Nut Tree Parkway during the lease annual rent for
and Helen Power Drive, in term such lease year
Vacaville, Solana County,
California, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Vacaville
Property include an
Applebee's and several
local restaurants.
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<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
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BOSTON MARKET (12) $961,255 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Waldorf Property") (excluding five-year Cost (4); year after the after the
Restaurant to be development renewal options increases by 10% fifth lease fifth lease
constructed costs) (3) after the fifth year, (i) 4% of year
lease year and annual gross
The Waldorf Property is after every five sales minus (ii)
located on the northwest years thereafter the minimum
corner of Crain Highway and during the lease annual rent for
Plaza Drive, in Waldorf, term such lease year
Charles County, Maryland,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Waldorf
Property include a
Shoney's, a Red Lobster, a
McDonald's, a Pizzeria Uno,
an Olive Garden, a Kenny
Rogers Roasters, a Taco
Bell, a Burger King, a
Checkers, and several local
restaurants.
EINSTEIN BROS. BAGELS (10) $601,677 05/06/97 05/2012; five 10.38% of Total for each lease at any time
(the "Springfield (excluding five-year Cost (4); year after the after the
Property") development renewal options increases by 10% fifth lease fifth lease
Restaurant to be costs) (3) after the fifth year, (i) 4% of year
constructed lease year and annual gross
after every five sales minus (ii)
The Springfield Property is years thereafter the minimum
located at the southeast during the lease annual rent for
quadrant of the term such lease year
intersection formed by Old
Keene Mill Road and Rolling
Road, in Springfield,
Fairfax County, Virginia,
in an area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the
Springfield Property
include two McDonald's and
several local restaurants.
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<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ --------- --------------- --------------- --------------- -----------
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GOLDEN CORRAL $561,270 05/06/97 05/2012; four 10.75% of Total for each lease during the
(the "Jacksonville (excluding five-year Cost (4) year, 5% of the first through
Property") development renewal options amount by which seventh lease
Restaurant to be costs) (3) annual gross years and the
constructed sales exceed tenth through
$2,893,405 (5) fifteenth
The Jacksonville Property lease years
is located on the southwest only
corner of Merrill Road and
Jane Street, in
Jacksonville, Duval County,
Florida, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the
Jacksonville Property
include a Burger King, a
Hardee's, a Ryan's Family
Steak House, and several
local restaurants.
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</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Arvada Property $667,000
Liberty Property 357,000
Dearborn Property 266,000
Enumclaw Property 764,000
Guadalupe Property 905,000
Scottsdale Property 810,000
Bacliff Property 691,000
Indianapolis Property 883,000
San Antonio Property 336,000
Baltimore Property 471,000
Gambrills Property 471,000
Jessup Property 435,000
Lansing Property 651,000
Riverdale Property 474,000
Vacaville Property 805,000
Waldorf Property 455,000
Springfield Property 34,000
Jacksonville Property 1,105,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the
Liberty, Dearborn, San Antonio, Indianapolis, Baltimore, Gambrills,
Jessup, Lansing, Riverdale, Vacaville, Waldorf and Springfield
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 Arvada Property, minimum annual rent for
the remainder of 1997 and 1998 shall be prepaid on the date the tenant
receives from the landlord its final funding of the construction costs.
For the Guadalupe Property, minimum annual rent will become due and
payable on the earlier of (i) 210 days after execution of the lease,
(ii) the date the certificate of occupancy for the restaurant is issued,
(iii) the date the restaurant opens for business to the public, or (iv)
the date the tenant receives from the landlord its final funding of the
construction costs. For the Jacksonville Property, minimum annual rent
will become due and payable on the earlier of (i) 180 days after
execution of 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 rent becomes payable for
the Arvada, Liberty, Dearborn, San Antonio, Indianapolis, Baltimore,
Gambrills, Jessup, Lansing, Riverdale, Vacaville, Waldorf, Springfield
and Jacksonville Properties, as described above, interim rent equal to a
specified rate per annum (ranging from 10% to 10.38%) 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. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Guadalupe Property, as described
above, the tenant shall pay monthly "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.
-13-
(3) The development agreements for the Properties which are to be
constructed or renovated, provide that construction or renovation must
be completed no later than the dates set forth below. The maximum cost
to the Company, (including the purchase price of the land (if
applicable), development costs (if applicable), and closing and
acquisition costs) is not expected to, but may, exceed the amounts set
forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Arvada Property $1,152,262 October 13, 1997
Liberty Property 764,164 October 13, 1997
Dearborn Property 667,305 October 13, 1997
Enumclaw Property 843,431 October 13, 1997
Guadalupe Property 1,452,517 November 12, 1997
Scottsdale Property 769,863 September 14, 1997
Bacliff Property 1,049,420 October 26, 1997
Indianapolis Property 1,663,194 October 26, 1997
San Antonio Property 757,069 October 27, 1997
Baltimore Property 1,378,051 November 2, 1997
Gambrills Property 1,264,241 November 2, 1997
Jessup Property 1,285,243 November 2, 1997
Lansing Property 1,033,941 November 2, 1997
Riverdale Property 1,041,107 November 2, 1997
Vacaville Property 1,437,474 November 2, 1997
Waldorf Property 1,357,356 November 2, 1997
Springfield Property 633,101 November 2, 1997
Jacksonville Property 1,681,435 November 2, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The Company paid for all construction or renovation costs in advance at
closing; therefore, minimum annual rent was determined on the date
acquired and is not expected to change.
(7) The Company owns the building only for this Property. The Company does
not own the underlying land; although, the Company entered into a
landlord estoppel agreement with the landlord of the land and a
collateral assignment of the ground lease with the lessee in order to
provide the Company with certain rights with respect to the land on
which the building is located.
(8) The lease relating to this Property is a land lease only.
(9) The Company entered into a Master Lease Agreement for the Dover Property
and eight Pizza Hut Properties previously acquired.
(10) The lessee of the Dearborn and Springfield Properties is the same
unaffiliated lessee.
-14-
(11) The lessee of the Enumclaw and Bacliff Properties is the same
unaffiliated lessee.
(12) The lessee of the Indianapolis, Baltimore, Gambrills, Jessup, Riverdale
and Waldorf Properties is the same unaffiliated lessee.
-15-
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 3, 1997
THROUGH MAY 7, 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 3, 1997 through May 7, 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>
Einstein
Boston Market Boston Market Bros. Bagels Jack in the Box
Arvada, CO (5) Liberty, MO (5) Dearborn, MI (5)(6) Enumclaw, WA (5)(7)
-------------- --------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $119,605 $ 79,320 $ 69,266 $ 86,452
Asset Management Fees (2) (6,844) (4,535) (3,959) (5,055)
General and Administrative
Expenses (3) (7,415) (4,918) (4,295) (5,360)
-------- -------- -------- --------
Estimated Cash Available from
Operations 105,346 69,867 61,012 76,037
Depreciation and Amortization
Expense (4) (17,094) (9,142) (6,820) (19,584)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 88,252 $ 60,725 $ 54,192 $ 56,453
======== ======== ======== ========
See Footnotes
-16-
<CAPTION>
Shoney's Black-eyed Pea Pizza Hut Jack in the Box
Guadalupe, AZ (5) Scottsdale, AZ (5) Dover, OH Bacliff, TX (5)(7)
----------------- ------------------ --------- ------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $159,777 $105,450 $ 23,560 $107,566
Asset Management Fees (2) (8,673) (4,610) (1,346) (6,291)
General and Administrative
Expenses (3) (9,906) (6,538) (1,461) (6,669)
-------- -------- -------- --------
Estimated Cash Available from
Operations 141,198 94,302 20,753 94,606
Depreciation and Amortization
Expense (4) (23,195) (20,757) - (17,716)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $118,003 $ 73,545 $ 20,753 $ 76,890
======== ======== ======== ========
See Footnotes
-17-
<CAPTION>
Boston Market Boston Market Boston Market Boston Market
Indianapolis, IN San Antonio, TX Baltimore, MD Gambrills, MD
(5)(8) (5) (5)(8) (5)(8)
---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $172,640 $ 78,584 $143,042 $131,228
Asset Management Fees (2) (9,894) (4,497) (8,197) (7,519)
General and Administrative
Expenses (3) (10,704) (4,872) (8,869) (8,136)
-------- -------- -------- --------
Estimated Cash Available from
Operations 152,042 69,215 125,976 115,573
Depreciation and Amortization
Expense (4) (22,648) (8,626) (12,066) (12,086)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $129,394 $ 60,589 $113,910 $103,487
======== ======== ======== ========
See Footnotes
-18-
<CAPTION>
Boston Market Boston Market Boston Market Boston Market
Jessup, MD (5)(8) Lansing, MI (5) Riverdale, MD (5)(8) Vacaville, CA (5)
----------------- --------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $133,408 $107,323 $108,067 $149,210
Asset Management Fees (2) (7,644) (6,146) (6,190) (8,550)
General and Administrative
Expenses (3) (8,271) (6,654) (6,700) (9,251)
-------- -------- -------- --------
Estimated Cash Available from
Operations 117,493 94,523 95,177 131,409
Depreciation and Amortization
Expense (4) (11,155) (16,685) (12,141) (20,630)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $106,338 $ 77,838 $ 83,036 $110,779
======== ======== ======== ========
See Footnotes
-19-
<CAPTION>
Boston Market Einstein Bros. Bagels Golden Corral
Waldorf, MD (5)(8) Springfield, VA (5)(6) Jacksonville, FL (5) Total
------------------ ---------------------- -------------------- ----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $140,894 $ 65,716 $170,004 $2,151,112
Asset Management Fees (2) (8,073) (3,759) (9,489) (121,271)
General and Administrative
Expenses (3) (8,735) (4,074) (10,540) (133,368)
-------- -------- -------- ----------
Estimated Cash Available from
Operations 124,086 57,883 149,975 1,896,473
Depreciation and Amortization
Expense (4) (11,666) (876) (28,346) (271,233)
-------- -------- -------- ----------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $112,420 $ 57,007 $121,629 $1,625,240
======== ======== ======== ==========
See Footnotes
-20-
</TABLE>
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the Company.
Amount does not include soliciting dealer servicing fee due to the fact
that such fee will not be incurred until December 31 of the year
following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of each Property has been depreciated on the straight-line
method over 39 years.
(5) The development agreements for the Properties which are to be
constructed or renovated, provide that construction or renovation must
be completed no later than the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Arvada Property October 13, 1997
Liberty Property October 13, 1997
Dearborn Property October 13, 1997
Enumclaw Property October 13, 1997
Guadalupe Property November 12, 1997
Scottsdale Property September 14, 1997
Bacliff Property October 26, 1997
Indianapolis Property October 26, 1997
San Antonio Property October 27, 1997
Baltimore Property November 2, 1997
Gambrills Property November 2, 1997
Jessup Property November 2, 1997
Lansing Property November 2, 1997
Riverdale Property November 2, 1997
Vacaville Property November 2, 1997
Waldorf Property November 2, 1997
Springfield Property November 2, 1997
Jacksonville Property November 2, 1997
(6) The lessee of the Dearborn and Springfield Properties is the same
unaffiliated lessee.
-21-
(7) The lessee of the Enumclaw and Bacliff Properties is the same
unaffiliated lessee.
(8) The lessee of the Indianapolis, Baltimore, Gambrills, Jessup, Riverdale
and Waldorf Properties is the same unaffiliated lessee.
-22-
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.
-23-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
Page
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of
December 31, 1996 26
Pro Forma Consolidated Statement of Earnings
for the year ended December 31, 1996 27
Notes to Pro Forma Consolidated Financial Statements
for the years ended December 31, 1996 28
-24-
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Pro Forma Consolidated Balance Sheet of the Company gives
effect to (i) property acquisition transactions from inception through
December 31, 1996, including the receipt of $139,247,149 in gross offering
proceeds from the sale of 13,924,715 shares of common stock pursuant to a Form
S-11 under the Securities Act of 1933, as amended, effective March 29, 1995,
and the application of such proceeds to purchase 94 properties (including 51
properties which consist of land and building, one property through a joint
venture arrangement which consists of land and building, seven properties
which consist of building only and 35 properties consisting of land only),
nine of which were under construction at December 31, 1996, to provide
mortgage financing to the lessees of the 35 properties consisting of land
only, and to pay organizational and offering expenses, acquisition fees and
miscellaneous acquisition expenses, (ii) the receipt of $55,437,676 in gross
offering proceeds from the sale of 5,543,768 additional shares of common stock
during the period January 1, 1997 through May 7, 1997, and (iii) the
application of such funds and $16,304,845 of cash and cash equivalents at
December 31, 1996, to purchase 54 additional properties acquired during the
period January 1, 1997 through May 7, 1997 (37 of which are under construction
and consist of land and building, three properties which consist of land and
building, nine properties which consist of land only and five properties which
consist of building only), to provide mortgage financing to the lessee of the
nine properties consisting of land only, to pay additional costs for the nine
properties under construction at December 31, 1996, and to pay offering
expenses, acquisition fees and miscellaneous acquisition expenses, all as
reflected in the pro forma adjustments described in the related notes. The
Pro Forma Consolidated Balance Sheet as of December 31, 1996, includes the
transactions described in (i) above from its historical consolidated balance
sheet, adjusted to give effect to the transactions in (ii) and (iii) above, as
if they had occurred on December 31, 1996.
The Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1996, includes the historical operating results of the properties
described in (i) above from the dates of their acquisitions plus operating
results for the four of the properties that were acquired by the Company
during the period January 1, 1996 through May 7, 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 May 7, 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.
-25-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------------ ---------------- ------------
<S> <C> <C> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 60,243,146 $ 47,026,684 (a) $107,269,830
Net investment in direct
financing leases (d) 15,186,686 8,978,557 (a) 24,165,243
Cash and cash equivalents 42,450,088 (16,304,845)(a) 26,145,243
Receivables 160,675 160,675
Mortgage notes receivable 13,389,607 4,200,000 (a)
(19,400)(a)
226,800 (c) 17,797,007
Organization costs, less
accumulated amortization 13,682 13,682
Loan costs, less accumulated
amortization 32,499 32,499
Accrued rental income 422,076 422,076
Other assets 2,926,589 (353,029)(a)
(466,405)(b)
(226,800)(c) 1,880,355
------------ ------------ ------------
$134,825,048 $ 43,061,562 $177,886,610
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 3,521,816 $ 3,521,816
Accrued interest payable 13,164 13,164
Accrued construction costs payable 6,587,573 $ (6,587,573)(a) -
Accounts payable and other accrued
expenses 79,817 79,817
Due to related parties 997,084 997,084
Rents paid in advance 118,900 118,900
Deferred rental income 335,849 7,018 (a) 342,867
Other payables 15,117 15,117
------------ ------------ ------------
Total liabilities 11,669,320 (6,580,555) 5,088,765
------------ ------------ ------------
Minority interest 288,301 288,301
------------ ------------ ------------
Stockholders' equity:
Preferred stock, without par
value. Authorized and unissued
3,000,000 shares - -
Excess shares, $.01 par value per
share. Authorized and unissued
23,000,000 shares - -
Common stock, $.01 par value per
share. Authorized 20,000,000
shares; issued and outstanding
13,944,715 shares; issued and
outstanding, as adjusted,
19,488,483 shares 139,447 55,438 (a) 194,885
Capital in excess of par value 123,687,929 50,053,084 (a)
(466,405)(b) 173,274,608
Accumulated distributions in
excess of net earnings (959,949) (959,949)
------------ ------------ ------------
122,867,427 49,642,117 172,509,544
------------ ------------ ------------
$134,825,048 $ 43,061,562 $177,886,610
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
-26-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- -------------- ----------
Revenues:
Rental income from
operating leases $3,717,886 $ 60,938 (1) $3,778,824
Earned income from
direct financing leases (2) 625,492 34,282 (1) 659,774
Contingent rental income 13,920 13,920
Interest income from
mortgage notes receivable 1,069,349 1,069,349
Other interest and income 780,037 (24,348)(3) 755,689
---------- ---------- ----------
6,206,684 70,872 6,277,556
---------- ---------- ----------
Expenses:
General operating and
administrative 542,564 542,564
Professional services 58,976 58,976
Asset and mortgage management
fees to related party 251,200 5,444 (4) 256,644
State and other taxes 56,184 1,218 (5) 57,402
Depreciation and amortization 521,871 6,537 (6) 528,408
---------- ---------- ----------
1,430,795 13,199 1,443,994
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 4,775,889 57,673 4,833,562
Minority Interest in Income of
Consolidated Joint Venture (29,927) (29,927)
---------- ---------- ----------
Net Earnings $4,745,962 $ 57,673 $4,803,635
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ .59 $ 0.60
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 8,071,670 8,071,670
========== ==========
See accompanying notes to unaudited pro forma
consolidated financial statements.
-27-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $55,437,676 from the issuance of 5,543,768
shares of common stock during the period January 1, 1997 through May 7,
1997, the receipt of $7,018 of rental income during construction
(capitalized as deferred rental income), the receipt of $19,400 of
deferred financing income (loan origination and commitment fees, net of
legal fees) from the $4,200,000 mortgage financing described below, and
$16,304,845 of cash and cash equivalents used (i) to acquire 54
properties for $49,178,478, of which five properties consist of building
only, nine properties consist of land only and 40 properties consist of
land and building, (ii) to fund estimated construction costs of
$10,566,612 ($6,587,573 of which was accrued as construction costs
payable at December 31, 1996) relating to nine wholly-owned properties
under construction at December 31, 1996, (iii) to pay acquisition fees
of $2,494,695 and reclassify from other assets $353,029 of acquisition
fees previously incurred relating to the acquired properties, (iv) to
pay selling commissions and offering expenses (stock issuance costs) of
$5,329,154, which have been netted against capital in excess of par
value and (v) to provide mortgage financing in the amount of $4,200,000
to the lessee of the nine properties consisting of land only.
-28-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
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> <C> <C>
Jack in the Box in Las Vegas, NV $ 1,247,333 $ 66,822 $ 1,314,155
Jack in the Box in Los Angeles, CA 1,396,771 74,827 1,471,598
Jack in the Box in Moscow, ID 909,814 48,740 958,554
Jack in the Box in Kent, WA 1,258,871 67,439 1,326,310
Jack in the Box in Hollister, CA 1,060,819 56,830 1,117,649
Jack in the Box in Kingsburg, CA 1,000,073 53,575 1,053,648
Shoney's in Indian Harbour Beach, FL 642,870 34,440 677,310
Jack in the Box in Murietta, CA 951,485 50,973 1,002,458
Jack in the Box in Humble, TX 882,362 47,270 929,632
Golden Corral in Winchester, KY 1,150,645 61,640 1,212,285
Burger King in Kent, OH 872,861 46,761 919,622
Burger King in Chattanooga, TN 1,110,330 59,482 1,169,812
Denny's in Tampa, FL 1,033,787 55,381 1,089,168
Jack in the Box in Palmdale, CA 1,124,244 60,228 1,184,472
Jack in the Box in Houston, TX 860,735 46,110 906,845
Golden Corral in Hopkinsville, KY 1,252,931 67,121 1,320,052
Jack in the Box in Houston, TX 904,945 48,479 953,424
Black-eyed Pea in Bedford, TX 619,336 33,179 652,515
Black-eyed Pea in Dallas, TX 619,320 33,178 652,498
Black-eyed Pea in Ft. Worth, TX 619,323 33,178 652,501
Black-eyed Pea in Oklahoma City, OK 616,022 33,001 649,023
Eight Pizza Huts (land only) in Ohio
and West Virginia 1,575,622 84,408 1,660,030
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
Nine wholly owned properties under
construction at December 31, 1996 3,979,039 213,163 4,192,202
----------- ----------- -----------
$53,157,517 $ 2,847,724 $56,005,241
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $47,026,684
Net investment in direct financing leases 8,978,557
-----------
$56,005,241
===========
</TABLE>
-29-
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
(b) Represents reclassification of deferred stock issuance costs totalling
$466,405 at December 31, 1996, to stock issuance costs which have been
netted against capital in excess of par value.
(c) Represents reclassification of acquisition fees totalling $226,800 from
other assets to mortgage notes receivable relating to the $4,200,000
mortgage financing transaction described in (a) above.
(d) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated as
direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
Pro Forma Consolidated Statement of Earnings:
(1) Represents rental income from operating leases and earned income from
direct financing leases for four of the properties acquired during the
period January 1, 1996 through May 7, 1997, which had a previous rental
history prior to the acquisition of the property by the Company (the
"Pro Forma Properties"), for the period commencing (A) the later of (i)
the date the Pro Forma Property became operational as a rental property
by the previous owner or (ii) January 1, 1996, to (B) the earlier of (i)
the date the Pro Forma Property was acquired by the Company or (ii) the
end of the pro forma period presented. Each of the four Pro Forma
Properties was acquired from an affiliate who had purchased and
temporarily held title to the property. The noncancellable leases for
the Pro Forma Properties in place during the period the affiliate owned
the properties were assigned to the Company at the time the Company
acquired the properties. The following presents the actual date the Pro
Forma Properties were acquired or placed in service by the Company as
compared to the date the Pro Forma Properties were treated as becoming
operational as a rental property for purposes of the Pro Forma
Consolidated Statement of Earnings.
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
Denny's in Grand Rapids, MI March 1996 January 1996
Denny's in McKinney, TX June 1996 January 1996
Boston Market in Merced, CA October 1996 July 1996
Boston Market in
St. Joseph, MO December 1996 June 1996
In accordance with generally accepted accounting principles, lease
revenue from leases accounted for under the operating method is
recognized over the terms of the leases. For operating leases providing
escalating guaranteed minimum rents, income is reported on a straight-
line basis over the terms of the leases. For leases accounted for as
direct financing leases, future minimum lease payments are recorded as a
receivable. The difference between the receivable and the estimated
residual values less the cost of the properties is recorded as unearned
income. The unearned income is amortized over the lease terms to
provide a constant
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CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Statement of Earnings - Continued:
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 that the previous owners held the properties,
no pro forma adjustment was made for percentage rental income for the
year ended December 31, 1996.
(2) See Note (d) under "Pro Forma Consolidated Balance Sheet" above for a
description of direct financing leases.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the previous
owners or (ii) January 1, 1996, through (B) the earlier of (i) the
actual dates of acquisition by the Company or the end of the pro forma
period presented, as described in Note (1) above. The estimated pro
forma adjustment is based upon the fact that interest income on interest
bearing accounts was earned at a rate of approximately four percent per
annum by the Company during the year ended December 31, 1996.
(4) Represents incremental increase in asset management fees relating to the
Pro Forma Properties for the period commencing (A) on the later of (i)
the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) January 1, 1996 through (B)
the earlier of (i) the date the Pro Forma Properties were acquired by
the Company or (ii) the end of the pro forma period presented, as
described in Note (1) above. Asset management fees are equal to 0.60%
of the Company's Real Estate Asset Value (estimated to be approximately
$2,723,000 for the Pro Forma Properties for the year ended December 31,
1996), as defined in the Company's prospectus.
(5) Represents adjustment to state tax expense due to the incremental
increase in rental revenues of Pro Forma Properties. Estimated pro
forma state tax expense was calculated based on an analysis of state
laws of the various states in which the Company has acquired the Pro
Forma Properties. The estimated pro forma state taxes consist primarily
of income and franchise taxes ranging from zero to approximately two
percent of the Company's pro forma rental income of each Pro Forma
Property. Due to the fact that the Company's leases are triple net, the
Company has not included any amounts for real estate taxes in the pro
forma statement of earnings.
(6) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the year
ended December 31, 1996.
-31-
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
EXHIBITS
None.
-32-
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: May 27, 1997 By: /s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
