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. This Supplement replaces the Supplement
dated February 7, 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 February 13, 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 February 13, 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
February 13, 1997, the Company had received aggregate subscription proceeds of
$3,561,617 (356,162 Shares) from 198 stockholders. Net proceeds to the
Company after deduction of Selling Commissions, Marketing Support and Due
Diligence Expense Reimbursement Fees and Offering Expenses totalled
approximately $2,800,000. As of February 13, 1997, $160,273 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 February 13,
1997, the Company had invested or committed for investment approximately
$109,900,000 of net proceeds from the Initial Offering in 109 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 $24,100,000 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 January 25, 1997 and February 13, 1997, the Company acquired
eight Properties consisting of land and building. The Properties are four
Jack in the Box Properties (one in each of Humble and Houston, Texas; and
Murrieta and Palmdale, California), two Burger King Properties (in Kent, Ohio;
and Chattanooga, Tennessee), a Golden Corral Property (in Winchester,
Kentucky) and a Denny's Property (in Tampa, Florida). For information
regarding the 101 Properties acquired by the Company prior to January 25,
1997, see the Prospectus dated January 31, 1997.
The Burger King Property in Kent, Ohio, was acquired from an Affiliate
of the Company. The Affiliate had purchased and temporarily held title to the
Property in order to facilitate the acquisition of the Property by the
Company. The Property was acquired by the Company for a purchase price of
$872,861, representing the cost of the Property to the Affiliate (including
carrying costs) due to the fact that this amount was less than the Property's
appraised value.
February 18, 1997 Prospectus Dated April 26, 1996
In connection with the purchase of these eight Properties, the Company,
as lessor entered into long-term lease agreements with unaffiliated lessees.
The general terms of the lease agreements are described in the section of the
Prospectus entitled "Business - Description of Property Leases." 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
general terms of these agreements are described in the section of the
Prospectus entitled "Business - Site Selection and Acquisition of Properties -
Construction and Renovation."
The purchase price for the Burger King Property in Chattanooga,
Tennessee, includes a development fee of $100,000 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 Company than
those available from unaffiliated third parties and not less favorable than
those available from the Advisor or its Affiliates in transactions with
unaffiliated third parties. See the sections of the Prospectus entitled
"Management Compensation" and Business - Site Selection and Acquisition of
Properties."
As of February 13, 1997, the Company had initial commitments to acquire
seven properties, consisting of land and building. The acquisition of each of
these properties is subject to the fulfillment of certain conditions,
including, but not limited to, a satisfactory environmental survey and
property appraisal. There can be no assurance that any or all of the
conditions will be satisfied or, if satisfied, that one or more of these
properties will be acquired by the Company. If acquired, the leases of all
seven of these properties are expected to be entered into on substantially the
same terms described in the section of the Prospectus entitled "Business -
Description of Property Leases," except as described below.
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
- 2 -
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Burger King 20 years; two five-year 11% of Total Cost (1) for each lease year, None
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 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Hopkinsville, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Golden Corral 20 years; two five-year 11.25% of Total Cost for each lease year, at any time after
Somerset, KY renewal options (1); increases by 12% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Fresno, CA renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX (#4) 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
- 3 -
</TABLE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
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.
- 4 -
The following table sets forth the location of the eight Properties
consisting of land and building, acquired by the Company, from January 25,
1997 through February 13, 1997, a description of the competition, and a
summary of the principal terms of the acquisition and lease of each Property.
- 5 -
<TABLE>
PROPERTY ACQUISITIONS
From January 25, 1997 through February 13, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- --------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JACK IN THE BOX (7) $952,485 01/31/97 01/2015; four $97,630 (6); for each lease at any time
(the "Murrieta Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh lease
constructed costs) (3)(6) lease year and sales minus (ii) year
after every five the minimum
The Murrieta Property is years thereafter annual rent for
located within the during the lease such lease year
southeast quadrant of term (5)
Madison Avenue and Kalmia
Street, in Murrieta,
Riverside County,
California, in an area of
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Murrieta
Property include a KFC and
a McDonald's.
JACK IN THE BOX (7) $296,034 02/03/97 02/2015; four 10.75% of Total for each lease None
(the "Humble Property") (excluding five-year Cost (4); year, (i) 5% of
Restaurant to be closing and renewal options increases by 8% annual gross
constructed development after the fifth sales minus (ii)
costs) (3) lease year and the minimum
The Humble Property is after every five annual rent for
located on the north side years thereafter such lease year
of Beltway 8 east of Old during the lease (5)
Humble Road, in Houston, term
Harris County, Texas, in an
area of mixed retail,
commercial, and residential
development.
- 6 -
</TABLE>
<TABLE>
<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>
GOLDEN CORRAL $302,363 02/03/97 02/2012; four 10.75% of Total for each lease during the
(the "Winchester Property") (excluding five-year Cost (4) year, 5% of the first through
Restaurant to be closing and renewal options amount by which seventh lease
constructed development annual gross years and the
costs) (3) sales exceed tenth through
The Winchester Property is $2,161,048 (5) fifteenth
located on the west side of lease years
the Winchester Bypass, in only
Winchester, Clark County,
Kentucky, in an area of
mixed, retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Winchester
Property include a Sonic
Drive-In, a Papa John's,
and several local
restaurants.
BURGER KING $872,861 02/03/97 02/2017; four $89,688; for each lease during the
(the "Kent Property") (excluding five-year increases by 5% year, (i) 6% of eighth,
Existing restaurant closing renewal options after the fifth annual gross ninth, tenth,
costs) lease year and sales minus (ii) eleventh and
The Kent Property is by 10% after the the minimum twelfth lease
located on the east side of tenth lease year annual rent for years only
South Water Street, in and after every such lease year
Kent, Portage County, Ohio, five years
in an area of mixed retail, thereafter
commercial, and residential during the lease
development. Other fast- term
food and family-style
restaurants located in
proximity to the Kent
Property include a Wendy's,
a Papa John's, two
McDonald's, a Dairy Queen,
and a local restaurant.
- 7 -
</TABLE>
<TABLE>
<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>
BURGER KING $791,984 02/10/97 02/2017; two 11% of Total for each lease None
(the "Chattanooga (excluding five-year Cost (4) year, (i) 8.5%
Property") closing and renewal options of annual gross
Restaurant to be renovated development sales minus (ii)
costs) (3) the minimum
The Chattanooga Property is annual rent for
located on the southwest such lease year
corner of Hamilton Place
Boulevard and Bams Drive,
in Chattanooga, Hamilton
County, Tennessee, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the
Chattanooga Property
include a Krystal's, an
Arby's, a Taco Bell, an
Olive Garden, a Wendy's, a
McDonald's, and several
local restaurants.
DENNY'S $1,038,037 02/11/97 02/2017; two $110,291 (6); for each lease during the
(the "Tampa Property") (excluding five-year increases by 11% year, (i) 5% of eighth,
Restaurant to be renovated closing renewal options after the fifth annual gross tenth, and
costs) (3)(6) lease year and sales minus (ii) twelfth lease
The Tampa Property is after every five the minimum years only
located at the southeast years thereafter annual rent for
quadrant of the during the lease such lease year
intersection of U.S. term
Highway 301 and Interstate
4, in Tampa, Hillsborough
County, Florida, in an area
of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Tampa
Property include a Waffle
House and a Subway Sandwich
Shop.
- 8 -
</TABLE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- --------- -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JACK IN THE BOX (7) $1,125,244 02/11/97 02/2015; four $115,337 (6); for each lease at any time
(the "Palmdale Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh lease
constructed costs) (3)(6) lease year and sales minus (ii) year
after every five the minimum
The Palmdale Property is years thereafter annual rent for
located at the southeast during the lease such lease year
corner of Avenue P and term (5)
Antelope Valley Freeway 14,
in Palmdale, Los Angeles
County, California, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Palmdale
Property include a
McDonald's, a Taco Bell, an
Applebee's, a Boston
Market, a Chili's, and
several local restaurants.
JACK IN THE BOX (7) $861,735 02/11/97 02/2015; four $88,328 (6); for each lease at any time
(the "Houston #3 Property") (excluding five-year increases by 8% year, (i) 5% of after the
Restaurant to be closing renewal options after the fifth annual gross seventh lease
constructed costs) (3)(6) lease year and sales minus (ii) year
after every five the minimum
The Houston #3 Property is years thereafter annual rent for
located on the northwest during the lease such lease year
corner of Airport Boulevard term (5)
and Ruthby Street, in
Houston, Harris County,
Texas, in an area of mixed
retail, commercial, and
residential development.
- 9 -
</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
-------- -----------------
Murrieta Property $617,000
Humble Property 627,000
Winchester Property 910,000
Kent Property 686,000
Chattanooga Property 473,000
Tampa Property 695,000
Palmdale Property 559,000
Houston #3 Property 543,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Humble
Property, minimum annual rent will become due and payable on the earlier
of (i) 180 days after execution of the lease or (ii) the date the
restaurant opens for business to the public. For the Winchester
Property, minimum annual rent will become due and payable on the earlier
of (i) the date the certificate of occupancy for the restaurant is
issued, (ii) the date the restaurant opens for business to the public
or (iii) 180 days after execution of the lease. For the Chattanooga
Property, minimum annual rent will become due and payable on the
possession date, which is June 24, 1997 (the "Possession Date"). During
the period commencing with the effective date of the lease to the date
minimum annual rent becomes payable for the Humble Property, as
described above, the tenant shall pay monthly "interim rent" equal to
10.75% per annum of the amount funded by the Company in connection with
the purchase and construction of the Property. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Winchester Property, as described
above, "interim rent" equal to ten percent per annum of the amount
funded by the Company in connection with the purchase and construction
of the Property shall accrue and shall be payable in a single lump sum
on the date minimum annual rent becomes payable for this Property.
(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
-------- ---------------------- ---------------
Murrieta Property $ 952,485 July 30, 1997
Humble Property 912,409 August 2, 1997
Winchester Property 1,272,678 August 2, 1997
Chattanooga Property 1,202,224 June 24, 1997
Tampa Property 1,038,037 August 10, 1997
Palmdale Property 1,125,244 August 10, 1997
Houston #3 Property 861,735 August 10, 1997
- 10 -
(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 and 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 Murrieta, Humble, Palmdale and Houston #3 Properties
is the same unaffiliated lessee.
- 11 -
BORROWING AND SECURED EQUIPMENT LEASE
Between January 25, 1997 and February 13, 1997, the Company obtained
three advances totalling $533,068 under its $15,000,000 Loan. The proceeds of
these advances were used to acquire Equipment for three restaurant properties,
two in Warner Robins, Georgia (the "Warner Robins #1 Secured Equipment Lease"
and the "Warner Robins #2 Secured Equipment Lease") and one in El Cajon,
California (the "El Cajon Secured Equipment Lease"), at a cost of $533,068,
including Secured Equipment Lease Servicing Fees of $10,412 to the Advisor.
The Warner Robins #1 Secured Equipment Lease and Warner Robins #2 Secured
Equipment Lease are fully amortizing term loans repayable over five years.
The El Cajon Secured Equipment Lease is considered to be an interest only loan
for the first two months and upon obtaining an additional advance prior to May
1997 will become a fully amortizing term loan repayable over six years. The
advances bear interest at a rate per annum equal to 215 basis points above the
Reserve Adjusted LIBOR Rate (as defined in the Loan).
The following table sets forth a summary of the principal terms of the
acquisition and lease of the Equipment.
- 12 -
<TABLE>
SECURED EQUIPMENT LEASE
From January 25, 1997 through February 13, 1997
<CAPTION>
Purchase Date Lease Annual Option
Description Price (1) Acquired Expiration Rent (2) To Purchase
- ----------- --------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
EQUIPMENT FOR FAZOLI'S $178,307 01/28/97 01/2002 $3,924 (5)
RESTAURANT IN WARNER (excluding closing
ROBINS, GEORGIA costs and Secured
(the "Warner Robins #1 Equipment Lease
Secured Equipment Lease") Servicing Fee)
EQUIPMENT FOR POPEYE'S $192,311 01/28/97 01/2002 $4,231 (5)
RESTAURANT IN WARNER (excluding closing
ROBINS, GEORGIA costs and Secured
(the "Warner Robins #2 Equipment Lease
Secured Equipment Lease") Servicing Fee)
EQUIPMENT FOR GOLDEN $150,000 (3) (4) (4) (5)
CORRAL RESTAURANT IN EL (excluding closing
CAJON, CALIFORNIA costs and Secured
(the "El Cajon Secured Equipment Lease
Equipment Lease") Servicing Fee)
</TABLE>
FOOTNOTES:
(1) The Secured Equipment Lease is expected to be treated as a loan secured
by personal property for federal income tax purposes.
(2) Rental payments due under the Secured Equipment Lease are payable
monthly, commencing on the effective date of the lease.
(3) On February 10, 1997, the Company obtained an advance of $153,658 for
partial funding of the Equipment for a restaurant property in El Cajon,
California. The Company anticipates obtaining another advance of
$323,376 to fund the balance of the acquisition price of the Equipment
within three months of obtaining the initial advance of $153,658
described above.
(4) The temporary Secured Equipment Lease entered into on February 10, 1997,
has a term of three months and requires the payment of monthly rent of
$1,320. Upon funding the balance of the Equipment purchase price, which
is expected to occur in the third month following the initial Equipment
funding, the Company will enter into a final Secured Equipment Lease.
The final Secured Equipment Lease is expected to have a term of
approximately six years and provide for the payment of rent (payable
monthly) in an amount equal to the total purchase price of the Equipment
plus interest at a rate of approximately 10.50% per annum.
- 13 -
(5) Lessee may purchase the Equipment prior to the expiration of Secured
Equipment Lease, at the then present value of the remaining rental
payments, discounted at a rate of 10% per annum.
- 14 -
PRO FORMA ESTIMATE OF TAXABLE INCOME BEFORE DIVIDENDS PAID DEDUCTION OF
CNL AMERICAN PROPERTIES FUND, INC.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 25, 1997
THROUGH FEBRUARY 13, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of
taxable income before dividends paid deduction of each Property acquired by
the Company from January 25, 1997 through February 13, 1997, for the 12-month
period commencing on the date of the inception of the respective lease on such
Property. The schedule should be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties or has borrowed funds from the Company with an aggregate purchase
price in excess of 20% of the expected total net offering proceeds of the
Company.
<TABLE>
<CAPTION>
Jack in the Box Jack in the Box Golden Corral Burger King
Murrieta, CA (5)(6) Humble, TX (5)(6) Winchester, KY (5) Kent, OH
------------------- ----------------- ------------------ -----------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 97,630 $ 94,696 $126,063 $ 89,688
Asset Management Fees (2) (5,709) (5,294) (6,904) (5,237)
General and Administrative
Expenses (3) (6,053) (5,871) (7,816) (5,561)
-------- -------- -------- --------
Estimated Cash Available
from Operations 85,868 83,531 111,343 78,890
Depreciation and
Amortization Expense (4) (15,822) (16,083) (23,332) (17,602)
-------- -------- -------- --------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid Deduction
of the Company $ 70,046 $ 67,448 $ 88,011 $ 61,288
======== ======== ======== ========
</TABLE>
See Footnotes
- 15 -
<TABLE>
<CAPTION>
Burger King Denny's Jack in the Box Jack in the Box
Chattanooga, TN (5) Tampa, FL (5) Palmdale, CA (5)(6) Houston #3, TX (5)(6)
------------------- ------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $127,158 $110,291 $115,338 $ 88,328
Asset Management Fees (2) (6,662) (6,203) (6,745) (5,164)
General and Administrative
Expenses (3) (7,884) (6,838) (7,151) (5,476)
-------- -------- -------- --------
Estimated Cash Available
from Operations 112,612 97,250 101,442 77,688
Depreciation and
Amortization Expense (4) (12,122) (17,818) (14,329) (13,923)
-------- -------- -------- --------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid Deduction
of the Company $100,490 $ 79,432 $ 87,113 $ 63,765
======== ======== ======== ========
</TABLE>
See Footnotes
- 16 -
Total
---------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid
Deduction:
Base Rent (1) $ 849,192
Asset Management Fees (2) (47,918)
General and Administrative
Expenses (3) (52,650)
---------
Estimated Cash Available
from Operations 748,624
Depreciation and
Amortization Expense (4) (131,031)
---------
Pro Forma Estimate of
Taxable Income Before
Dividends Paid Deduction
of the Company $ 617,593
=========
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement between
the Company and CNL Fund Advisors, Inc. (the "Advisor"), pursuant to
which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such agreement.
See "Management Compensation."
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the Company.
Amount does not include soliciting dealer servicing fee due to the fact
that such fee will not be incurred until December 31 of the year
following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of the Properties has been depreciated on the straight-line
method over 39 years.
- 17 -
(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:
Estimated Final
Property Completion Date
-------- ---------------
Murrieta Property July 30, 1997
Humble Property August 2, 1997
Winchester Property August 2, 1997
Chattanooga Property June 24, 1997
Tampa Property August 10, 1997
Palmdale Property August 10, 1997
Houston #3 Property August 10, 1997
(6) The lessee of the Murrieta, Humble, Palmdale and Houston #1 Properties
is the same unaffiliated lessee.
- 18 -
