SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CNL American Properties Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, of
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, Florida 32801
March 9, 1998
To our stockholders:
You are cordially invited to attend the annual meeting of stockholders
of CNL American Properties Fund, Inc., (the "Company") on May 4, 1998 at 10:30
a.m. at the CNL Management Center at 450 E. South Street, Suite 101, Orlando,
Florida. The directors and officers of the Company look forward to greeting you
personally. Enclosed for your review are the proxy, proxy statements, notice of
meeting for the annual meeting of stockholders and annual report.
The Company experienced a year of tremendous growth in 1997. A
favorable market environment combined with our conservative investment
philosophy and strong management team contributed to the successful results.
During 1997, the Company received over $220 million in capital through its
public offerings of shares of common stock and acquired or invested in 150
properties. The number of restaurant chains in the Company's portfolio nearly
doubled from 15 to 29 and the Company added 15 new states increasing its
presence to 35 states. We believe the Company is extremely well-positioned to
participate in the expected continued growth in the restaurant real estate
market. Following the successful completion of its initial public offering of
common stock in February 1997, the Company commenced an offering of up to
$275,000,000 (27,500,000 shares) of its common stock which we anticipate will be
completed in the first quarter of 1998. A third offering of up to $345,000,000
(34,500,000 shares) is expected to commence immediately following the completion
of the Company's current offering. The net proceeds of these offerings will be
invested in additional triple-net leased properties and mortgage loans. If the
current and planned third offerings are completed, it is anticipated that the
Company will own a total portfolio of approximately 670-730 properties.
We believe that the raising of additional capital by the Company
through its current offering and its planned third offering will provide the
following benefits:
Additional diversification: Additional capital received by the
Company will be used to invest in additional properties and
mortgage loans, providing the Company with increased
diversification by restaurant concept, tenant and geographic
concentration.
Cost efficiencies: The expansion of the Company will allow
further economies of scale of general and administrative
expenses of the Company.
Market capitalization: Additional capital will provide the
Company with a larger market capitalization if the Board of
Directors determines to list the shares of common stock on a
national securities exchange. At September 30, 1997, the
average equity market capitalization for publicly traded net
lease Real Estate Investment Trusts ("REITS") exceeded $600
million. According to the National Association of Real Estate
Investment Trusts, the average equity market capitalization
for non-health care real estate investment trusts have
increased from $268.3 million at December 31, 1995 to $691.9
million at December 31, 1997.
<PAGE>
We believe that it is important to continue to grow the Company to a
larger equity capital base, which we believe will provide more visibility in the
event the Board determines that listing is the appropriate course of action.
With considerable diligence and forethought, the Board of Directors has begun
investigating the opportunities related to listing the Company's shares on a
national securities exchange in the future. The Board of Directors' proposal to
increase the number of authorized common shares from 75,000,000 to 125,000,000
will allow the Company greater flexibility to raise additional capital.
Additionally, we believe an increased number of authorized shares of common
stock will provide the Company a means of executing stock for property swaps. As
the Company considers listing its shares as a possible option in the future, we
believe purchase opportunities may exist where a value-premium could be captured
via the public markets.
The proposals included in this year's proxy statement reflect changes
consistent with the Company's anticipated future growth and success in the
coming years. Therefore, the Board of Directors unanimously recommends that you
vote to approve the proposals presented in this year's proxy statement. Your
vote counts. Please complete and return the attached ballot today. Thank you for
your attention to this matter.
Sincerely,
/s/ James M. Seneff, Jr. /s/ Robert A. Bourne
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James M. Seneff, Jr. Robert A. Bourne
Chairman of the Board and President
Chief Executive Officer
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, Florida 32801
Notice of Annual Meeting of Stockholders
To Be Held May 4, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of CNL
AMERICAN PROPERTIES FUND, INC. (the "Company") will be held at 10:30 a.m. local
time, on May 4, 1998, at the CNL Management Center at 450 E. South Street, Suite
101, Orlando, Florida, for the following purposes:
1. To elect five directors.
2. To approve an amendment to the Company's Amended and Restated
Articles of Incorporation increasing the number of authorized
shares of beneficial interest from 156,000,000 shares
(consisting of 75,000,000 Common Shares, 3,000,000 Preferred
Shares and 78,000,000 Excess Shares) to 206,000,000 shares
(consisting of 125,000,000 Common Shares, 3,000,000 Preferred
Shares and 78,000,000 Excess Shares).
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 20, 1998,
will be entitled to notice of and to vote at the annual meeting or at any
adjournment thereof.
Stockholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO
COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A
POSTAGE PAID RETURN ENVELOPE IS PROVIDED.
IT IS IMPORTANT THAT YOUR SHARES BE VOTED.IF YOU DECIDE TO ATTEND
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
Lynn E. Rose
Secretary
March 9, 1998
Orlando, Florida
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, Florida 32801
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PROXY STATEMENT
----------------------------------------------------------
This Proxy Statement is furnished by the Board of Directors of CNL American
Properties Fund, Inc. (the "Company") in connection with the solicitation by
management of proxies to be voted at the annual meeting of stockholders to be
held on May 4, 1998, and at any adjournment thereof, for the purposes set forth
in the accompanying notice of such meeting. All stockholders of record at the
close of business on February 20, 1998, will be entitled to vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted FOR each Proposal set forth
in this Proxy Statement. Any stockholder giving a proxy has the power to revoke
it at any time before it is exercised. A proxy may be revoked (1) by delivery of
a written statement to the Secretary of the Company stating that the proxy is
revoked, (2) by presentation at the annual meeting of a subsequent proxy
executed by the person executing the prior proxy, or (3) by attendance at the
annual meeting and voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated
and a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company also may solicit proxies by telephone or telegram or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. It is
anticipated that this Proxy Statement and the enclosed proxy first will be
mailed to stockholders on or about March 9, 1998.
As of February 20, 1998, ___________ shares of common stock of the Company
were outstanding. Each share of common stock entitles the holder thereof to one
vote on each of the matters to be voted upon at the annual meeting. As of the
record date, officers and directors of the Company had the power to vote
approximately ____% of the outstanding shares of common stock.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROPOSAL I: Election of Directors............................................................................ 3
Executive Compensation........................................................................... 9
Performance Graph................................................................................ 10
PROPOSAL II:Amendment to the Company's Amended and Restated Articles
of Incorporation to Increase the Number of Authorized Shares...................................... 11
SECURITY OWNERSHIP............................................................................................ 13
CERTAIN TRANSACTIONS.......................................................................................... 14
INDEPENDENT AUDITORS.......................................................................................... 16
OTHER MATTERS................................................................................................. 16
PROPOSALS FOR NEXT ANNUAL MEETING............................................................................. 16
ANNUAL REPORT................................................................................................. 16
</TABLE>
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<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
Nominees
The persons named below have been nominated by the Board of Directors for
election as directors to serve until the next annual meeting of stockholders or
until their successors shall have been elected and qualified. Messrs. Bourne and
Seneff have been directors since May 1994. Messrs. Hostetter, Huseman and Kruse
have been directors since March 1995. The table sets forth each nominee's name,
age, principal occupation or employment during at least the last five years, and
directorships in other public corporations.
The Company's officers and directors have advised the Company that they
intend to vote their shares of common stock for the election of each of the
nominees. Proxies will be voted FOR the election of the following nominees
unless authority is withheld.
<TABLE>
<CAPTION>
Name and Age Background
<S> <C>
Robert A. Bourne, 50 Mr. Bourne has served as President and a director of the Company
since May 1994, and as director of CNL Fund Advisors, Inc. ("Fund
Advisors") since its inception in 1994. Mr. Bourne has served as
President of Fund Advisors from the date of its inception through
October 1997, has served as Treasurer since September 1997 and as
Vice Chairman of the Board of Directors since October 1997. Fund
Advisors is responsible for the day-to-day operation of the Company
and performs certain other administrative services for the Company.
See "Certain Transactions." Mr. Bourne also serves as President and
Treasurer of CNL Group, Inc. In addition, Mr. Bourne is President, a
director and a registered principal of CNL Securities Corp., President
and a director of CNL Investment Company, Vice Chairman of the
Board of Directors of Commercial Net Lease Realty, Inc., President of
CNL Realty Corp. and Chief Investment Officer, Vice Chairman of the
Board of Directors, Treasurer and a director of CNL Institutional
Advisors, Inc., a registered investment advisor. Mr. Bourne
previously served as Secretary and Treasurer of Commercial Net
Lease Realty, Inc. through December 31, 1997. Mr. Bourne also
served as President of CNL Institutional Advisors, Inc. from the date
of its inception through June 30, 1997. Mr. Bourne also served as
director, Treasurer and Vice Chairman of CNL Realty Advisors, Inc.
until December 31, 1997, at which time CNL Realty Advisors, Inc.
merged with Commercial Net Lease Realty, Inc. In addition, Mr.
Bourne serves as President and a director of CNL American Realty
Fund, Inc. and CNL Real Estate Advisors, Inc. All such entities are
affiliates of CNL Group, Inc., a privately held, diversified real estate
company of which Fund Advisors is a wholly owned subsidiary. Since
joining CNL Securities Corp. in 1979, Mr. Bourne has been active in
the acquisition, development, and management of real estate
projects throughout the United States. Mr. Bourne formerly was a
certified public accountant with Coopers & Lybrand L.L.P. and a
partner in the firm of Bourne & Rose, P.A.
-3-
<PAGE>
G. Richard Hostetter, Esq., 58 Mr. Hostetter serves as a director of the Company and also serves as
a director of CNL American Realty Fund, Inc. Mr. Hostetter was
associated with the law firm of Miller and Martin from 1966 through
1989, the last ten years of such association as a senior partner. As
a lawyer, he served for more than 20 years as counsel for various
corporate real estate groups, fast-food companies and public
companies, including The Krystal Company, resulting in his extensive
participation in transactions involving the sale, lease, and
sale/leaseback of approximately 250 restaurant units. He is licensed
to practice law in Tennessee and Georgia. From 1989 to date, Mr.
Hostetter has served as President and General Counsel of Mills,
Ragland & Hostetter, Inc., the corporate general partner of MRH, L.P.,
a holding company involved in corporate acquisitions, in which he
also is a general and limited partner.
Richard C. Huseman, 59 Dr. Huseman serves as a director of the Company and also serves as
a director of CNL American Realty Fund, Inc. Dr. Huseman is
presently a professor in the College of Business Administration, and
from 1990 through 1995, served as the Dean of the College of
Business Administration of the University of Central Florida. He has
served as a consultant in the area of managerial strategies to a
number of Fortune 500 corporations, including IBM, AT&T, and 3M, as
well as to several branches of the U.S. government, including the U.S.
Department of Health and Human Services, the U.S. Department of
Justice, and the Internal Revenue Service.
J. Joseph Kruse, 65 Mr. Kruse serves as a director of the Company and also serves as a
director of CNL American Realty Fund, Inc. From 1993 to the
present, Mr. Kruse has been President and Chief Executive Officer of
Kruse & Co., Inc., a merchant banking company engaged in real
estate. Formerly, Mr. Kruse was a Senior Vice President with
Textron, Inc. for twenty years, and then served as Senior Vice
President at G. William Miller & Co., a firm founded by the former
Chairman of the Federal Reserve Board and the Treasury Secretary.
Mr. Kruse was responsible for evaluations of commercial real estate
and retail shopping mall projects and continues to serve of counsel
to the firm.
-4-
<PAGE>
James M. Seneff, Jr., 51 Mr. Seneff has been Chief Executive
Officer and a director since May 1994
and Chairman of the Board of the Company
since December 1994, as well as Chief
Executive Officer, Chairman of the Board
and a director of Fund Advisors since
its inception in 1994. Mr. Seneff has
served as Chief Executive Officer,
Chairman of the Board of Directors,
director, and a principal stockholder of
CNL Group, Inc. since its formation in
1980. In addition, Mr. Seneff is Chief
Executive Officer, a director and a
registered principal of CNL Securities
Corp., Chief Executive Officer and
Chairman of the Board of CNL Investment
Company, Chief Executive Officer and
Chairman of the Board of Commercial Net
Lease Realty, Inc., Chief Executive
Officer and Chairman of the Board of CNL
Realty Corp. and Chief Executive Officer
and a director of CNL Institutional
Advisors, Inc., a registered investment
advisor. Mr. Seneff also served as
Chief Executive Officer and Chairman of
the Board of CNL Realty Advisors, Inc.
until December 31, 1997, at which time
CNL Realty Advisors, Inc. merged with
Commercial Net Lease Realty, Inc. In
addition, Mr. Seneff serves as Chief
Executive Officer, Chairman of the Board
and a director of CNL American Realty
Fund, Inc. and CNL Real Estate Advisors,
Inc. Mr. Seneff previously served on the
Florida State Commission on Ethics. Mr.
Seneff also served on the Florida
Investment Advisory Council, which
oversees the $60 billion Florida State
retirement plan, from 1986 to 1994, and
was Chairman of the Council from 1991 to
1992. Since 1971, Mr. Seneff has been
active in the acquisition, development
and management of real estate projects
throughout the United States.
</TABLE>
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in the
proxy will vote FOR the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote is required for the election
of directors.
A majority of the Company's directors are required to be independent, as
that term is defined in the Company's Articles of Incorporation. Messrs.
Hostetter, Kruse and Huseman are independent directors.
Compensation of Directors
During the year ended December 31, 1997, each independent director earned
$6,000 for serving on the Board of Directors. Each independent director also
received $750 per Board meeting attended ($375 for each telephonic meeting in
which the director participated), including committee meetings. The Company has
not, and in the future will not, pay any compensation to the directors of the
Company who also serve as officers and directors of the Company's advisor, CNL
Fund Advisors, Inc.
The Board of Directors met five times during the year ended December 31,
1997, and the average attendance by directors at Board meetings was
approximately 96 percent. Each current member attended at least 86 percent of
the total meetings of the Board and of any committee on which he served.
-5-
<PAGE>
Committees of the Board of Directors
The Company has a standing Audit Committee, the members of which are
selected by the Board of Directors each year. The current members of the Audit
Committee, who have served since 1995, are Messrs. Hostetter, Kruse and Huseman.
The Audit Committee makes recommendations to the Board of Directors as to the
independent accountants of the Company and reviews with such accounting firm the
scope of the audit and the results of the audit upon its completion. The Audit
Committee met twice during the year ended December 31, 1997.
At such time, if any, as the Company's shares of common stock are listed on
a national securities exchange or over-the-counter market, the Company will form
a compensation committee, the members of which will be selected by the full
Board of Directors each year. Currently, the Company does not have a
compensation committee.
The Company does not have a nominating committee.
-6-
<PAGE>
Executive Officers
The executive officers of the Company are as follows:
Name Position
James M. Seneff, Jr. Chief Executive Officer and Chairman of the Board
Robert A. Bourne President
Curtis B. McWilliams Executive Vice President
John T. Walker Chief Operating Officer and Executive Vice President
Jeanne A. Wall Executive Vice President
Steven D. Shackelford Chief Financial Officer
Lynn E. Rose Secretary and Treasurer
Mr. McWilliams, age 42, has served as Executive Vice President of the
Company since February 1998. Mr. McWilliams joined CNL Fund Advisors, Inc. in
April 1997 and currently serves as President of the Advisor. In addition, Mr.
McWilliams serves as Executive Vice President of CNL Group, Inc. and as
President of CNL Institutional Advisors, Inc. and certain other subsidiaries of
CNL Group, Inc. From January 1991 to August 1996, Mr. McWilliams was a managing
director in the corporate banking group of Merrill Lynch's investment banking
division. During this time, he was a senior relationship manager with Merrill
Lynch and as such was responsible for a number of the firm's relationships with
companies such as AT&T, AT&T Capital, AMR Corporation, J.C. Penney and the
Robert M. Bass Group. In addition, from February 1990 to February 1993, he
served as co-head of one of the Industrial Banking Groups within Merrill Lynch's
investment banking division and had administrative responsibility for 25 bankers
overseeing 150 client relationships, including the firm's transportation group.
In addition, from September 1996 to March 1997, Mr. McWilliams served as
Chairman of Private Advisory Services, Merrill Lynch's high net worth brokerage
business.
Mr. Walker, age 39, has served as Executive Vice President of the Company
since January 1996 and Chief Operating Officer of the Company since March 1995,
and previously served as Senior Vice President since December 1994. In addition,
Mr. Walker has served as Executive Vice President of Fund Advisors since January
1996 and Chief Operating Officer of Fund Advisors since April 1995, and
previously served as Senior Vice President of Fund Advisors since November 1994.
In addition, Mr. Walker serves as Executive Vice President of CNL American
Realty Fund, Inc. and CNL Real Estate Advisors, Inc. From May 1992 to May 1994,
Mr. Walker, a certified public accountant, was Executive Vice President for
Finance and Administration and Chief Financial Officer of Z Music, Inc., a cable
television network (subsequently acquired by Gaylord Entertainment), where he
was responsible for overall financial and administrative management and
planning. From January 1990 through April 1992, Mr. Walker was Chief Financial
Officer of the First Baptist Church in Orlando, Florida. From April 1984 through
December 1989, he was a partner in the accounting firm of Chastang, Ferrell &
Walker, P.A., where he was the partner in charge of audit and consulting
services, and from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior
at Price Waterhouse.
-7-
<PAGE>
Ms. Wall, age 39, has served as Executive Vice President of the Company
since December 1994 and as Executive Vice President of Fund Advisors since
November 1994, and previously served as Vice President of Fund Advisors since
March 1994. Ms. Wall has served as Chief Operating Officer of CNL Investment
Company and of CNL Securities Corp. since November 1994 and has served as
Executive Vice President of CNL Investment Company since January 1991. In 1984,
Ms. Wall joined CNL Securities Corp. as its Partnership Administrator. In 1985,
Ms. Wall became Vice President of CNL Securities Corp., in 1987, she became
Senior Vice President and in July 1997, she became Executive Vice President of
CNL Securities Corp. In this capacity, Ms. Wall serves as national marketing and
sales director and oversees the national marketing plan for the CNL investment
programs. In addition, Ms. Wall oversees partnership administration and investor
services for programs offered through participating brokers. Ms. Wall also has
served as Senior Vice President of CNL Institutional Advisors, Inc., a
registered investment advisor, from 1990 to 1993, as Vice President of CNL
Realty Advisors, Inc. since its inception in 1991 until December 31, 1997, at
which time CNL Realty Advisors, Inc. merged with Commercial Net Lease Realty,
Inc., and served as Vice President of Commercial Net Lease Realty, Inc. from
1992 through December 31, 1997. In addition, Ms. Wall serves as Executive Vice
President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors, Inc.
Ms. Wall currently serves as a trustee on the Board of the Investment Program
Association and on the Direct Participation Program committee for the National
Association of Securities Dealers.
Mr. Shackelford, age 34, has served as Chief Financial Officer of the
Company since January 1997 and as Chief Financial Officer of Fund Advisors since
September 1996. From March 1995 to July 1996, Mr. Shackelford was a senior
manager in the national office of Price Waterhouse where he was responsible for
advising foreign clients seeking to raise capital and a public listing in the
United States. From August 1992 to March 1995, he served as a manager in the
Price Waterhouse, Paris, France office serving several multinational clients.
Mr. Shackelford was an audit staff and audit senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr Shackelford is a certified
public accountant.
Ms. Rose, age 49, has served as Secretary and Treasurer of the Company
since December 1994, as a director and Secretary of Fund Advisors since March
1994, and as Treasurer of Fund Advisors from the date of its inception through
June 30, 1997. Ms. Rose, a certified public accountant, has served as Secretary
of CNL Group, Inc. since 1987, as Chief Financial Officer of CNL Group, Inc.
since December 1993, and served as Controller of CNL Group, Inc. from 1987 until
December 1993. In addition, Ms. Rose has served as Chief Financial Officer and
Secretary of CNL Securities Corp. since July 1994. She has served as Chief
Operating Officer, Vice President and Secretary of CNL Corporate Services, Inc.
since November 1994. Ms. Rose also has served as Chief Financial Officer and
Secretary of CNL Institutional Advisors, Inc. since its inception in 1990, as
Treasurer of CNL Realty Advisors, Inc. from 1991 to February 1996, and as
Secretary and a director of CNL Realty Advisors, Inc. since its inception in
1991 until December 31, 1997, at which time CNL Realty Advisors, Inc. merged
with Commercial Net Lease Realty, Inc. In addition, Ms. Rose served as Secretary
and Treasurer of Commercial Net Lease Realty, Inc. from 1992 to February 1996.
Ms. Rose also serves as Secretary and Treasurer of CNL American Realty Fund,
Inc. and as Secretary, Treasurer and a director of CNL Real Estate Advisors,
Inc. Ms. Rose also currently serves as Secretary for approximately 50 additional
corporations. Ms. Rose oversees the management information services,
administration, legal compliance, accounting, tenant compliance, and reporting
for over 300 corporations, partnerships and joint ventures. Prior to joining
CNL, Ms. Rose was a partner with Robert A. Bourne in the accounting firm of
Bourne & Rose, P.A., Certified Public Accountants. She was licensed as a
certified public accountant in 1979.
The backgrounds of Messrs. Seneff and Bourne are described at "ELECTION OF
DIRECTORS."
-8-
<PAGE>
EXECUTIVE COMPENSATION
Annual Compensation
No annual or long-term compensation was paid by the Company to the Chief
Executive Officer for services rendered in all capacities to the Company during
the fiscal years ended December 31, 1995, 1996 and 1997. In addition, no
executive officer of the Company received an annual salary or bonus from the
Company during the fiscal year ended December 31, 1997. The Company's executive
officers also are employees and executive officers of Fund Advisors and receive
compensation from CNL Group, Inc. in part for services in such capacities. See
"Certain Transactions" for a description of the fees payable and expenses
reimbursed to Fund Advisors.
-9-
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the offering price of the Common
Stock and assuming the reinvestment of distributions ("APF"), with the S&P 500
Index ("S&P 500") and with the income rate of return from The National Council
of Real Estate Investment Fiduciaries ("NCREIF") from the month the Company
commenced operations through December 31, 1997. The graph assumes the investment
of $100 on June 30, 1995.
Quarterly Total Return Indexes
Date S&P 500 NCREIF APF
---- ------- ------ ---
06/30/95 100.00 100.00 100.00
09/30/95 104.19 102.23 101.15
12/31/95 110.40 104.55 102.84
03/31/96 116.32 106.90 104.63
06/30/96 121.55 109.37 106.46
09/30/96 125.30 111.78 108.36
12/31/96 135.75 114.24 110.29
03/31/97 139.39 116.73 112.27
06/30/97 163.72 119.40 114.34
09/30/97 175.99 122.06 116.49
12/31/97 181.05 124.84 118.71
The S&P 500 index contains both a capital and income component to its total
return. For companies included in the S&P 500 index, their total return is
measured by dividing the sum of (a) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (b) the difference
between the registrant's share price at the end and the beginning of the
measurement period; by the share price at the beginning of the measurement
period. There is currently no public trading market for the Company's shares,
therefore, the share price is fixed at $10 per share and its return is composed
of only the cumulative amount of distributions for the measurement period,
assuming reinvestment of distributions. The NCREIF income index measures net
operating income as a percentage of average daily investment. In order to
display a more comparative return, the component of the NCREIF total return
attributable to increases in share price has not been included in the cumulative
return.
-10-
<PAGE>
PROPOSAL II
APPROVAL OF AN AMENDMENT TO THE COMPANY'S AMENDED
AND RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
The Board of Directors of the Company has unanimously approved and directed
that there be submitted to stockholders for their approval an amendment to
Article VII of the Company's Amended and Restated Articles of Incorporation, as
amended (the "Restated Articles of Incorporation") which would increase the
number of shares that the Company is authorized to issue from 156,000,000 to
206,000,000 (the "Share Increase Amendment"). At February 20, 1998, the Company
had ___________ shares of common stock outstanding.
The text of the proposed amendment is set forth below:
RESOLVED, that Section 7.1 of Article VII of the Company's Restated
Articles of Incorporation be amended to read as follows:
SECTION 7.1 Authorized Shares. The beneficial interest in the Company shall
be divided into Equity Shares. The total number of Equity Shares which the
Company is authorized to issue is two hundred six million (206,000,000) shares
of beneficial interest, consisting of one hundred twenty-five million
(125,000,000) Common Shares (as defined and described in Section 7.2(ii)
hereof), three million (3,000,000) Preferred Shares (as defined in Section 7.3
hereof) and seventy-eight million (78,000,000) Excess Shares (as defined in
Section 7.7 hereof). All Shares shall be fully paid and nonassessable when
issued. Shares may be issued for such consideration as the Directors determine
or, if issued as a result of a Share dividend or Share split, without any
consideration.
The Board has determined that the approximately 1,000,000 shares of
presently authorized but unissued and unreserved common stock for sale in
connection with the Company's current offering of up to 27,500,000 shares of
common stock and planned third offering of up to 34,500,000 shares of common
stock would be insufficient to permit the Company to take advantage of certain
business and investment opportunities, if and as they become available, that
require the issuance of additional shares of common stock. The Company
anticipates that it may engage in additional equity financing, through either
public or private offerings of its securities for cash, issuance of such
securities in exchange for assets, or a combination of the foregoing, although
it currently is not involved in any negotiations and has not entered into any
arrangements relating to any of these capital transactions, other than its
planned third offering. In addition, the Company may need additional common
shares in the future for its distribution reinvestment plan. In order to permit
the Company greater flexibility to issue additional shares of common stock from
time to time in order to raise capital in public or private stock offerings,
consummate future acquisitions of properties, or authorize issuances pursuant to
the Company's distribution reinvestment plan, as well as for other similar
purposes, the Board of Directors considers it advisable that the Company be in a
position to issue 50,000,000 additional shares without the requirement of
stockholder approval.
The Share Increase Amendment will not change any other aspect of Article
VII. Holders of the capital stock of the Company, however, will not have the
right to approve the issuance of additional shares of common stock up to the
amount of authorized shares. In addition, holders of the capital stock of the
Company do not have any preemptive rights to subscribe for or purchase any
shares of capital stock of the Company, which means that current stockholders do
not have a prior right to purchase any new issue of common stock of the Company
in order to maintain their proportionate ownership. Consequently, the issuance
of additional shares of capital stock may dilute the interest of a current
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<PAGE>
stockholder if additional shares are issued at less than fair market value and
the stockholder does not purchase or is not offered the opportunity to purchase
additional shares.
The existence of a large number of authorized but unissued shares could
have the effect of hindering or frustrating a takeover of the Company. The
availability for issuance of additional shares of common stock would provide the
Board of Directors with flexibility in responding to a merger or acquisition bid
by placing blocks of shares with persons friendly to the Company, or by taking
other steps to prevent an acquisition of the Company under circumstances which
the Board of Directors does not believe to be in the Company's best interest.
The Company is not aware of any entity which intends to propose a merger with,
or seek to gain control of, the Company.
Approval of the Share Increase Amendment requires the affirmative vote of a
majority of the outstanding shares of the Company's Common Stock entitled to
vote thereon. The Company's officers and directors have advised the Company that
they intend to vote their shares of Common Stock for the Share Increase
Amendment.
The Share Increase Amendment, if approved by stockholders, will become
effective on the date the Company's Maryland Articles of Incorporation are filed
with the Maryland Department of Assessments and Taxation. It is anticipated that
the appropriate filing to effect the Share Increase Amendment will be made soon
after the annual meeting as practicable.
The Board of Directors unanimously recommends that stockholders vote FOR
the Share Increase Amendment. Proxies will be voted for the Share Increase
Amendment unless stockholders designate otherwise.
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<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of February 20, 1998, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's common
stock, by each director and nominee, and by all officers and directors as a
group, based upon information furnished to the Company by such stockholders,
officers and directors.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Shares
- ------------------- ------------------ ---------
<S> <C>
Robert A. Bourne 20,000 (1) (3)
400 East South Street
Orlando, Florida 32801
G. Richard Hostetter, Esq. (IRA) 5,376.34 (2) (3)
SunTrust Bank of Chattanooga, N.A.
Lynn E. Rose 20,000 (1) (3)
400 East South Street
Orlando, Florida 32801
James M. Seneff, Jr. 20,000 (1) (3)
400 East South Street
Orlando, Florida 32801
All directors and executive 25,376.34 (1)(2) (3)
officers as a group (4 persons)
</TABLE>
(1) Represents shares held by Fund Advisors, of which Messrs. Bourne and Seneff
and Ms. Rose are directors.
(2) Represents shares held by SunTrust Bank of Chattanooga, on behalf of Mr.
Hostetter in an IRA.
(3) Less than one percent.
Compliance With Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely upon a review of Section 16(a) reports furnished to the
Company for fiscal year 1997, written representations that no other reports were
required and other information known to the Company, the Company believes that
the foregoing persons complies with all filing requirements for fiscal year
1997, except that Mr. Hostetter did not timely file his change in ownership
report on Form 4 relating to one transaction.
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<PAGE>
CERTAIN TRANSACTIONS
All of the executive officers of the Company are executive officers of Fund
Advisors, a wholly owned subsidiary of CNL Group, Inc., of which Messrs. Seneff
and Bourne are affiliates. In addition, Messrs. Seneff and Bourne, Ms. Rose and
Ms. Wall are executive officers of CNL Securities Corp., the managing dealer of
the Company's offering of shares of common stock, and a wholly owned subsidiary
of CNL Group, Inc. Messrs. Seneff and Bourne are directors of the Company, Fund
Advisors and CNL Securities Corp., and Ms. Rose is a director of Fund Advisors.
Administration of the day-to-day operations of the Company is provided by Fund
Advisors, pursuant to the terms of an advisory agreement (the "Advisory
Agreement"). Fund Advisors also serves as the Company's consultant in connection
with policy decisions to be made by the Company's Board of Directors, manages
the Company's properties and renders such other services as the Board of
Directors deems appropriate. Fund Advisors also bears the expense of providing
the executive personnel and office space to the Company. Fund Advisors is at all
times subject to the supervision of the Board of Directors of the Company and
has only such functions and authority as the Company may delegate to it as the
Company's agent.
CNL Securities Corp. is entitled to receive selling commissions amounting
to 7.5% of the total amount raised from the sale of shares of common stock for
services in connection with the offering of shares, a substantial portion of
which has been or will be paid as commissions to other broker-dealers. For the
year ended December 31, 1997, the Company had incurred $16,686,192 of such fees,
of which approximately $15,563,500 was paid by CNL Securities Corp. as
commissions to other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a marketing
support and due diligence expense reimbursement fee equal to 0.5% of the total
amount raised from the sale of shares, a portion of which may be reallowed to
other broker-dealers. For the year ended December 31, 1997, the Company had
incurred $1,112,413 of such fees, the majority of which were reallowed to other
broker-dealers and from which all bona fide due diligence expenses were paid.
Fund Advisors is entitled to receive acquisition fees for services in
identifying the properties and structuring the terms of the acquisition and
leases of the properties and structuring the terms of the mortgage loans equal
to 4.5% of the total amount raised from the sale of shares. For the year ended
December 31, 1997, the Company had incurred $10,011,715 of such fees.
For negotiating secured equipment leases and supervising the secured
equipment lease program, Fund Advisors will be entitled to receive from the
Company a one-time secured equipment lease servicing fee of two percent of the
purchase price of the equipment that is the subject of a secured equipment
lease. For the year ended December 31, 1997, the Company incurred $366,865 in
such fees.
The Company and Fund Advisors have entered into an Advisory Agreement
pursuant to which Fund Advisors will receive a monthly asset management fee of
one-twelfth of 0.60% of the Company's real estate asset value (generally, the
total amount invested in the properties as of the end of the preceding month,
exclusive of acquisition fees and acquisition expenses), plus one-twelfth of
0.60% of the Company's total principal amount of the mortgage loans as of the
end of the preceding month. The management fee, which will not exceed fees which
are competitive for similar services in the same geographic area, may or may not
be taken, in whole or in part as to any year, in the sole discretion of Fund
Advisors. All or any portion of the management fee not taken as to any fiscal
year shall be deferred without interest and may be taken in such other fiscal
year as Fund Advisors shall determine. For the year ended December 31, 1997, the
Company had incurred $881,668 of such fees, $76,789 of which has been
capitalized as part of the cost of the buildings for properties under
construction.
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<PAGE>
The term of the Advisory Agreement expires April 17, 1998, subject to
successive one-year renewals upon mutual consent of the parties. The Advisory
Agreement may be terminated for cause by either party thereto, or by the mutual
consent of the parties (by a majority of the independent directors of the
Company or a majority of the Board of Directors of Fund Advisors, as the case
may be), upon 90 days written notice.
Fund Advisors and its affiliates provide accounting and administrative
services to the Company (including accounting and administrative services in
connection with the offering of shares) on a day-to-day basis. For the year
ended December 31, 1997, the Company incurred a total of $2,232,466 for these
services, $1,676,226 of such costs representing stock issuance costs and
$556,240 representing general operating and administrative expenses, including
costs related to preparing and distributing reports required by the Securities
and Exchange Commission.
During the year ended December 31, 1997, the Company acquired five
properties for an aggregate purchase price of approximately $5,450,000 from
affiliates of the Company. The affiliates had purchased and temporarily held
title to these properties in order to facilitate the acquisition of the
properties by the Company. Each property was acquired at a cost no greater than
the lesser of the cost of the property to the affiliate (including carrying
costs) or the property's appraised value.
In connection with the acquisition of six properties during the year ended
December 31, 1997, the Company incurred $369,570 in development/construction
management fees to affiliates of Fund Advisors that were constructed by such
affiliates. Such fees were included in the purchase price of the properties and
are therefore included in the basis on which the Company charges rent on the
properties.
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<PAGE>
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Board of Directors, including
the independent directors, Coopers & Lybrand L.L.P. has been selected to act as
independent certified public accountants for the Company during the current
fiscal year.
A representative of Coopers & Lybrand L.L.P. will be present at the annual
meeting and will be provided with the opportunity to make a statement if
desired. Such representative will also be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those stated above. If any other business should come
before the annual meeting, the person(s) named in the enclosed proxy will vote
thereon as he or they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 1999 must be received at the Company's office at 400 East South Street,
Orlando, Florida 32801, no later than November 9, 1998.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1997, accompanies this Proxy Statement.
By Order of the Board of Directors,
Lynn E. Rose
Secretary
February 27, 1998
Orlando, Florida
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<PAGE>
P R O X Y CNL AMERICAN PROPERTIES FUND, INC.
The undersigned hereby appoints James M. Seneff, Jr. and Robert A. Bourne,
and each of them, as proxies, with full power of substitution in each, to vote
all shares of common stock of CNL American Properties Fund, Inc. (the "Company")
which the undersigned is entitled to vote, at the Annual Meeting of Stockholders
of the Company to be held on May 4, 1998, at 10:30 a.m., local time, and any
adjournment thereof, on all matters set forth in the Notice of Annual Meeting
and Proxy Statement, dated March 9, 1998, a copy of which has been received by
the undersigned, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS:
1. Election of Five Directors
Nominees: |_|FOR ALL |_| WITHHELD FOR ALL
---------------------------------------------
Robert A. Bourne FOR ALL NOMINEES, EXCEPT VOTE WITHHELD FOR:
G. Richard Hostetter (Write that nominee's name above)
Richard C. Huseman
J. Joseph Kruse
James M. Seneff, Jr.
2. Proposal for Increase in Authorized Shares (See Proxy Statement page 11)
|_| FOR |_| AGAINST |_| ABSTAIN
3. Other Matters:
Grant authority upon such other matters as may come before the Meeting as
they determine to be in the best interest of the Company.
|_| FOR |_| AGAINST |_| ABSTAIN
(PLEASE SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE,
AND RETURN IN ENCLOSED ENVELOPE)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED "FOR" THE MATTERS STATED. EACH STOCKHOLDER IS URGED TO SUBMIT AN EXECUTED
PROXY.
Dated:__________________________ , 1998
______________________________________
______________________________________
Signature(s) of Stockholder(s)
IMPORTANT: Please mark this Proxy, date
it, sign it exactly as your name(s)
appear(s) and return it in the enclosed
postage paid envelope. Joint owners
should each sign personally. Trustees
and others signing in a representative
or fiduciary capacity should indicate
their full titles in such capacity.
