Rule 424(b)(3)
No. 333-15411
CNL AMERICAN PROPERTIES FUND, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated January 31, 1997 and the Prospectus Supplement dated March
17, 1997. Capitalized terms used in this Supplement have the same meaning as
in the Prospectus unless otherwise stated herein.
Information as to proposed properties for which the Company has received
initial commitments and as to the number and types of Properties acquired by
the Company is presented as of March 21, 1997, and all references to
commitments or Property acquisitions should be read in that context. Proposed
properties for which the Company receives initial commitments, as well as
property acquisitions that occur after March 21, 1997, will be reported in a
subsequent Supplement.
THE OFFERING
Following the completion of its Initial Offering on February 6, 1997,
the Company commenced this offering of up to 27,500,000 Shares. As of March
21, 1997, the Company had received aggregate subscription proceeds of
$21,454,558 (2,145,456 Shares) from 986 stockholders. Net proceeds to the
Company after deduction of Selling Commissions, Marketing Support and Due
Diligence Expense Reimbursement Fees and Offering Expenses totalled
approximately $19,300,000. As of March 21, 1997, $965,455 of such amount had
been incurred in Acquisition Fees to the Advisor and the balance was available
for investment in Properties and Mortgage Loans.
As of the completion of its Initial Offering, the Company had received
subscription proceeds of $150,591,765 (15,059,177 shares), including $591,765
(59,177 shares) issued pursuant to the Reinvestment Plan and after deduction
of selling commissions, marketing support and due diligence expense
reimbursement fees and offering expenses, net proceeds to the Company from its
Initial Offering totalled approximately $134,000,000. As of March 21, 1997,
the Company had invested or committed for investment approximately
$112,100,000 of net proceeds from the Initial Offering in 111 Properties, in
providing mortgage financing to the tenants of the 35 Properties consisting of
land only through Mortgage Loans, and in paying acquisition fees to the
Advisor totalling $6,776,629 and certain acquisition expenses, leaving
approximately $22,000,000 in net offering proceeds from the Initial Offering
available for investment in Properties and Mortgage Loans. The Company
expects to use such amount and Net Offering Proceeds from this offering to
invest in additional Properties and Mortgage Loans.
BUSINESS
PROPERTY ACQUISITIONS
Between March 7, 1997 and March 21, 1997, the Company acquired one
Property consisting of land and building. The Property is a Jack in the Box
Property (in Houston, Texas). For information regarding the 110 Properties
acquired by the Company prior to March 7, 1997, see the Prospectus dated
January 31, 1997 and the Prospectus Supplement dated March 17, 1997.
In connection with the purchase of this Property, the Company, as
lessor, entered into a long-term lease agreement with an unaffiliated lessee.
The general terms of the lease agreement are described in the section of the
Prospectus entitled "Business - Description of Property Leases." In addition,
in connection with the purchase of this Property, which is to be constructed,
the Company has entered into development and indemnification and put
agreements with the lessee. The general terms of these agreements are
described in the section of the Prospectus entitled "Business - Site Selection
and Acquisition of Properties - Construction and Renovation."
March 25, 1997 Prospectus Dated January 31, 1997
The following table sets forth the location of the one Property
consisting of land and building, acquired by the Company, from March 7, 1997
through March 21, 1997, a description of the competition, if any, and a
summary of the principal terms of the acquisition and lease of the Property.
2
<TABLE>
PROPERTY ACQUISITIONS
From March 7, 1997 through March 21, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ----------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JACK IN THE BOX $905,945 03/18/97 03/2015; four $92,859 (5); for each lease at any time
(the "Houston #4 Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be constructed closing renewal options after the fifth annual gross seventh
costs) lease year and sales minus lease year
The Houston #4 Property is (3)(5) after every (ii) the
located on the southeast corner five years minimum annual
of Hempstead Highway and 34th thereafter rent for such
Street, in Houston, Harris during the lease year (4)
County, Texas, in an area of lease term
mixed commercial and
residential development.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of the construction Property acquired, once the
building is constructed, is set forth below:
Property Federal Tax Basis
-------- -----------------
Houston #4 Property $539,000
(2) Minimum annual rent for the Houston #4 Property became payable on the
effective date of the lease.
(3) The development agreement for the Houston #4 Property, which is to be
constructed, provides that construction must be completed no later than
the date 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 amount set forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Houston #4 Property $ 905,945 September 14, 1997
(4) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
3
(5) The Company paid for all construction costs in advance at closing;
therefore, minimum annual rent was determined on the date acquired and
is not expected to change.
4
BORROWING AND SECURED EQUIPMENT LEASES
Between March 7, 1997 and March 21, 1997, the Company obtained one
advance totalling $313,072 under its $15,000,000 Loan. This advance was the
final advance relating to the acquisition of Equipment for the restaurant
property in Hopkinsville, Kentucky (the "Hopkinsville Secured Equipment
Lease").
PENDING INVESTMENTS
As of March 21, 1997, the Company had initial commitments to acquire 25
properties, including 11 properties consisting of land and building, five
properties consisting of building only and nine properties consisting of land
only. The acquisition of each of these properties is subject to the
fulfillment of certain conditions, including, but not limited to, a
satisfactory environmental survey and property appraisal. There can be no
assurance that any or all of the conditions will be satisfied or, if
satisfied, that one or more of these properties will be acquired by the
Company. If acquired, the leases of all 25 of these properties are expected
to be entered into on substantially the same terms described in the section of
the Prospectus entitled "Business -Description of Property Leases," except as
described below.
In connection with the nine Pizza Hut properties consisting of land
only, the Company anticipates acquiring the land and leasing it to the tenant,
Castle Hill, pursuant to a master lease agreement for these nine properties.
The tenant is expected to own the buildings for these nine Pizza Hut
properties. In connection therewith, the Company anticipates providing
mortgage financing to the tenant which will be collateralized by the building
improvements. If the mortgage note is executed, it is expected to be executed
under substantially the same terms described in "Business - Mortgage Loans."
In addition, the Company has an initial commitment to provide mortgage
financing for two additional Pizza Hut properties in Weirton, West Virginia,
and Wintersville, Ohio, which will be collateralized by the building
improvements. The Company does not expect to own the land for these two
properties. If the mortgage note is executed, it is expected to be executed
under substantially the same terms described in "Business - Mortgage Loans."
In connection with the Black-eyed Pea properties in Bedford, Dallas and
Fort Worth, Texas; Oklahoma City, Oklahoma; and Scottsdale, Arizona, the
Company anticipates owning only the buildings and not the underlying land.
However, the Company anticipates entering into landlord estoppel agreements
with the landlords of the land and collateral assignments of the ground leases
with the lessees in order to provide the Company with certain rights with
respect to the land on which the buildings are located.
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
5
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Bennigan's 15 years; three five- 10.375% of the for each lease year, at any time after
Arvada, CO year renewal options Company's total cost (i) 6% of annual lease year five
Existing restaurant to purchase the gross sales minus
property; increases by (ii) the minimum
10% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
Black-eyed Pea (3) 16 years 12.83% of the None (6)
Bedford, TX Company's total cost
Existing restaurant to purchase the
building
Black-eyed Pea (3) 19 years 12.12% of the None (6)
Dallas, TX Company's total cost
Existing restaurant to purchase the
building
Black-eyed Pea (3) 14 years 13.59% of the None (6)
Fort Worth, TX Company's total cost
Existing restaurant to purchase the
building
Black-eyed Pea (3) 15 years 13.24% of the None (6)
Oklahoma City, OK Company's total cost
Existing restaurant to purchase the
building
Black-eyed Pea (3) 14 years 13.66% of Total Cost None (6)
Scottsdale, AZ (1)
Restaurant to be
renovated
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
Ooltewah, TN renewal options (i) 8.5% of annual
Restaurant to be gross sales minus
constructed (ii) the minimum
annual rent for such
lease year
Golden Corral 15 years; four five-year 10.75% of Total Cost for each lease year, during the first
Jacksonville, FL renewal options (1) 5% of the amount by through seventh
Restaurant to be which annual gross lease years and the
constructed sales exceed a to be tenth through
determined breakpoint fifteenth lease
years only
6
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
IHOP 20 years; three five- 10.125% of the for each lease year, during the eleventh
Fairfax, VA year renewal options Company's total cost (i) 4% of annual lease year and at
Existing restaurant to purchase the gross sales minus the end of the
property; increases by (ii) the minimum initial lease term
10% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
IHOP 20 years; three five- 10.125% of the for each lease year, during the eleventh
Hollywood, CA year renewal options Company's total cost (i) 4% of annual lease year and at
Existing restaurant to purchase the gross sales minus the end of the
property; increases by (ii) the minimum initial lease term
10% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
IHOP 20 years; three five- 10.125% of the for each lease year, during the eleventh
Leesburg, VA year renewal options Company's total cost (i) 4% of annual lease year and at
Existing restaurant to purchase the gross sales minus the end of the
property; increases by (ii) the minimum initial lease term
10% after the fifth annual rent for such
lease year and after lease year
every five years
thereafter during the
lease term
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Bacliff, TX renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Enunclaw, WA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
7
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Fresno, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Oxnard, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Bolivar, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Carrolton, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Dover, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
8
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Millersburg, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
New Philadelphia, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
New Philadelphia- renewal options Company's total cost the seventh lease
West, OH to purchase the land; year
Land only increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Steubenville, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Uhrichsville, OH renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
9
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Pizza Hut (4)(5) 20 years; two ten-year 10.50% of the None at any time after
Wellsburg, WV renewal options Company's total cost the seventh lease
Land only to purchase the land; year
increases by 10% after
the fifth and tenth
lease years and 12%
after the fifteenth
lease year
Shoney's 20 years; two five-year 11% of Total Cost; for each lease year, at any time after
Phoenix, AZ renewal options increases by 10% after (i) 6% of annual the seventh lease
Restaurant to be the fifth lease year gross sales minus year
constructed and after every five (ii) the minimum
years thereafter annual rent for such
during the lease term lease year
(1)
</TABLE>
FOOTNOTES:
(1) The "Total Cost" is equal to the sum of (i) the purchase price of the
property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(2) In the event the Company purchases the property directly from the
lessee, the lessee will have no option to purchase the property.
(3) The Company anticipates owning the building only for this property. The
Company will not own the underlying land; although, the Company
anticipates entering 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.
(4) The lease relating to this property is a land lease only. The Company
anticipates entering into a master mortgage note receivable
collateralized by the Bolivar, Carrolton, Dover, Millersburg, New
Philadelphia, New Philadelphia-West, Steubenville and Uhrichsville,
Ohio, and Wellsburg, West Virginia building improvements.
(5) The Company anticipates entering into a master lease agreement for the
Bolivar, Carrolton, Dover, Millersburg, New Philadelphia, New
Philadelphia-West, Steubenville and Uhrichsville, Ohio, and Wellsburg,
West Virginia properties.
(6) The Company anticipates conveying the building to the tenant at the end
of the lease term for $1.
10
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM MARCH 7, 1997
THROUGH MARCH 21, 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 March 7, 1997 through March 21, 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.
Jack in the Box
Houston #4, TX (5)
------------------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction:
Base Rent (1) $ 92,859
Asset Management Fees (2) (5,430)
General and Administrative
Expenses (3) (5,757)
--------
Estimated Cash Available from
Operations 81,672
Depreciation and Amortization
Expense (4) (13,833)
--------
Pro Forma Estimate of Taxable
Income Before Dividends Paid
Deduction of the Company $ 67,839
========
See Footnotes
11
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Property will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
See "Management Compensation."
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the Company.
Amount does not include soliciting dealer servicing fee due to the fact
that such fee will not be incurred until December 31 of the year
following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of the Property has been depreciated on the straight-line
method over 39 years.
(5) The development agreement for the Property which is to be constructed,
provides that construction must be completed no later than the date set
forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Houston #4 Property September 14, 1997
12
