CNL AMERICAN PROPERTIES FUND, INC.
Supplement No. 1, dated April 24, 1998
to Prospectus, dated January 26, 1998
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated January 26, 1998. This Supplement replaces all prior
Supplements to the Prospectus. 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 2, 1998, 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 2, 1998, will be reported in a
subsequent Supplement.
THE OFFERING
Upon completion of its Initial Offering on February 6, 1997, the
Company had received subscription proceeds of $150,591,765 (15,059,177 shares),
including 59,177 shares ($591,765) issued pursuant to the Reinvestment Plan.
Following the completion of its Initial Offering, the Company commenced its 1997
Offering of up to 27,500,000 shares and upon completion of such offering on
March 2, 1998, had received aggregate subscription proceeds of $251,872,648
(25,187,265 shares), including 187,265 shares ($1,872,648) issued pursuant to
the Reinvestment Plan. Net offering proceeds to the Company from the Prior
Offerings, after deduction of selling commissions, marketing support and due
diligence expense reimbursement fees and offering expenses, totalled
approximately $361,100,000. As of March 2, 1998, the Company had invested or
committed for investment approximately $282,900,000 of aggregate net proceeds in
250 Properties, in providing mortgage financing through Mortgage Loans, and in
paying acquisition fees and certain acquisition expenses, leaving approximately
$78,200,000 in aggregate net offering proceeds available for investment in
Properties and Mortgage Loans. It is anticipated that the Company will acquire a
total of 670 to 730 Properties if the maximum number of Shares is sold in this
offering (including approximately 320 to 360 Properties to be acquired with the
proceeds of this offering and an additional approximately 100 to 120 Properties
to be acquired with the remaining proceeds of the 1997 Offering).
MANAGEMENT COMPENSATION
For information concerning compensation and fees paid to the Advisor
and its Affiliates since the date of inception of the Company, see "Certain
Transactions."
CONFLICTS OF INTEREST
As of March 2, 1998, CNL American Realty Fund, Inc. and CNL Income &
Growth Fund VIII, Ltd. had approximately $12,475,000 and $2,254,000,
respectively, available for investment.
<PAGE>
BUSINESS
GENERAL
The table set forth below provides information with respect to certain
Restaurant Chains in which the Company and Affiliates of the Company (consisting
of 18 public partnerships and 8 private partnerships) and a listed public REIT
(which was managed by an Affiliate through December 31, 1997, at which time such
Affiliate merged with the REIT) had invested, as of December 31, 1997:
<TABLE>
<CAPTION>
Approximate Aggregate
Dollars Invested Percentage of Number of
Restaurant Chain by Affiliates Dollars Invested Prior Programs
- ---------------- ------------- ---------------- --------------
<S> <C>
Golden Corral $158,221,000 16.4% 26
Burger King 105,659,000 11.0% 25
Jack in the Box 97,713,000 10.1% 15
Denny's 91,365,000 9.5% 20
Hardee's 58,599,000 6.1% 13
Boston Market 53,732,000 5.6% 11
IHOP 37,970,000 3.9% 8
Shoney's 37,240,000 3.9% 13
Long John Silver's 32,029,000 3.3% 6
Wendy's 31,499,000 3.3% 16
TGI Friday's 30,228,000 3.1% 9
Darryl's 22,296,000 2.3% 4
Checkers 21,263,000 2.2% 7
Chevy's Fresh Mex 16,313,000 1.7% 6
Perkins 16,311,000 1.7% 9
Ground Round 15,751,000 1.6% 3
Pizza Hut 15,578,000 1.6% 8
Black-eyed Pea 15,211,000 1.6% 4
KFC 14,436,000 1.5% 11
Popeyes 10,589,000 1.1% 9
Arby's 10,493,000 1.1% 6
Taco Bell 7,435,000 0.8% 8
Tumbleweed Southwest
Mesquite Grill & Bar 6,402,000 0.7% 1
Houlihan's 4,741,000 0.5% 1
</TABLE>
COMPLETED INVESTMENTS
As of March 2, 1998, the Company had invested or committed for
investment approximately $282,900,000 of the net proceeds from the Prior
Offerings in 250 Properties (185 Properties which consist of land and building,
44 Properties which consist of land only and 21 Properties which consist of
building only), in providing mortgage financing to the tenants of the 44
Properties consisting of land only to purchase the buildings on these Properties
and the buildings on two additional properties through Mortgage Loans, and to
pay related acquisition fees and acquisition expenses. See "Certain
Transactions." All of the Properties are owned directly by the Company, except
for one Property which is owned through a joint venture arrangement. All of the
Properties were acquired since the Company commenced operations on June 1, 1995
and have leases expiring from 5 to 25 years after the date on which each lease
commenced.
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<PAGE>
The following tables set forth information for the Properties owned by
the Company as of March 2, 1998, including the number of Properties by
Restaurant Chain and the number of Properties by state.
Restaurant Number of Properties
---------- --------------------
Applebee's 2
Arby's 10
Bennigan's 1
Black-eyed Pea 18
Boston Market 32
Burger King 9
Charley's Place 2
Chevy's Fresh Mex 4
Darryl's 15
Denny's 4
Einstein Bros. Bagels 2
Golden Corral 30
Ground Round 13
Houlihan's 3
IHOP 8
Jack in the Box 30
KFC 1
Mr. Fable's 1
On The Border 1
Pizza Hut 44
Popeyes 1
Ruby Tuesday's 1
Ruth's Chris Steak House 1
Ryan's Family Steak House 1
Shoney's 3
TGI Friday's 1
Tumbleweed Southwest Mesquite Grill & Bar 7
Wendy's 5
----
Total 250
====
-3-
<PAGE>
State Number of Properties
----- --------------------
Alabama 5
Arizona 8
California 23
Colorado 5
Connecticut 1
Delaware 1
Florida 14
Georgia 2
Idaho 1
Illinois 5
Indiana 5
Iowa 5
Kansas 3
Kentucky 4
Maryland 7
Michigan 8
Minnesota 3
Missouri 7
Nebraska 1
Nevada 2
New Jersey 2
New Mexico 3
New York 1
North Carolina 9
Ohio 37
Oklahoma 6
Oregon 3
Pennsylvania 6
Tennessee 15
Texas 35
Utah 1
Virginia 8
Washington 2
West Virginia 10
Wisconsin 2
----
Total 250
====
PROPERTY ACQUISITIONS
Between January 1, 1998 and March 2, 1998, the Company acquired six
Properties consisting of land and building. These Properties are two Golden
Corral Properties (one in each of Dubuque, Iowa; and Edmond, Oklahoma), two
Tumbleweed Southwest Mesquite Grill & Bar Properties (one in each of Clarksville
and Hermitage, Tennessee), one Arby's Property (in Jacksonville, Florida) and
one Jack in the Box Property (in Los Angeles, California).
In connection with the purchase of these six Properties, the Company,
as lessor, entered into long-term lease agreements with unaffiliated lessees.
The general terms of the lease agreements are described in "Business -
Description of Property Leases." In addition, in connection with the purchase of
these Properties,
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<PAGE>
which are 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 "Business - Site Selection and Acquisition of
Properties - Construction and Renovation."
The following table sets forth the location of the six Properties
consisting of land and building, acquired by the Company from January 1, 1998
through March 2, 1998, a description of the competition, and a summary of the
principal terms of the acquisition and lease of each Property. For information
regarding the Properties acquired by the Company prior to January 1, 1998, see
Exhibit B, Schedule III - Real Estate and Accumulated Depreciation attached.
-5-
<PAGE>
PROPERTY ACQUISITIONS
From January 1, 1998 through March 2, 1998
<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>
Golden Corral (6) $520,186 01/20/98 07/2013; four 10.75% of Total for each lease during the
(the "Dubuque #2 (excluding five-year renewal Cost (4) year, 5% of the first through
Property ") development options amount by seventh
Restaurant to be costs) (3) which annual lease years
constructed gross sales and the
exceed tenth
The Dubuque #2 $2,833,105 (5) through
Property is located on fifteenth
the northeast corner of lease years
the intersection of only
Northwest Arterial and
Chavenelle Road, in
Dubuque, Dubuque
County, Iowa, in an
area of mixed retail,
commercial, and
residential
development.
-6-
<PAGE>
Golden Corral (6) $546,484 01/20/98 07/2013; four 10.75% of Total for each lease during the
(the "Edmond (excluding five-year renewal Cost (4) year, 5% of the first through
Property ") development options amount by seventh
Restaurant to be costs) (3) which annual lease years
constructed gross sales and the
exceed tenth
The Edmond Property $2,776,470 (5) through
is located on the fifteenth
northwest corner of lease years
Broadway Extension only
and Comfort Drive, in
Edmond, Oklahoma
County, Oklahoma, in
an area of mixed retail,
commercial, and residential
development. Other fast-
food, family-style and
casual dining restaurants
located in proximity to
the Edmond Property include
an Applebee's, a Chili's,
an Outback Steak House, a
Perkins, a Chick-Fil-A, a
Taco Bell, a McDonald's,
a Burger King, a Hardee's,
and several local restaurants.
-7-
<PAGE>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- ----------- ------------ -------- --------------- --------------- ---------------- -----------
Tumbleweed $565,440 02/10/98 02/2018; two 11% of Total for each lease at any time
Southwest Mesquite (excluding five-year renewal Cost (4); year, (i) 5% of after the
Grill & Bar (7) development options increases by 10% annual gross seventh
(the "Clarksville costs) (3) after the fifth sales minus (ii) lease year
Property ") lease year and the minimum
Restaurant to be after every five annual rent for
constructed years thereafter such lease year
during the lease
The Clarksville term
Property is located on
the northwest corner
of Wilma-Rudolph
Boulevard and SR
374, in Clarksville,
Montgomery County,
Tennessee, in an area
of mixed retail,
commercial, and
residential development.
Tumbleweed $511,103 02/10/98 02/2018; two 11% of Total for each lease at any time
Southwest Mesquite (excluding five-year renewal Cost (4); year, (i) 5% of after the
Grill & Bar (7) development options increases by 10% annual gross seventh
(the "Hermitage costs) (3) after the fifth sales minus (ii) lease year
Property ") lease year and the minimum
Restaurant to be after every five annual rent for
constructed years thereafter such lease year
during the lease
The Hermitage term
Property is located on
the east side of Old
Hickory Boulevard, in
Hermitage, Davidson
County, Tennessee, in
an area of mixed retail,
commercial, and
residential
development. Other
fast-food, family-style
and casual dining
restaurants located in
proximity to the
Hermitage Property
include an Applebee's
and a Schlotzsky's
Deli.
-8-
<PAGE>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- ----------- ------------ -------- --------------- --------------- --------------- -----------
Arby's $424,738 02/20/98 02/2018; two (8) None at any time
(the "Jacksonville (excluding five-year renewal after the
Property") development options seventh
Restaurant to be costs) (3) lease year
constructed
The Jacksonville Property
is located on the
northwest corner of
DeBarry Avenue and Wells
Road, in Jacksonville,
Clay County, Florida, in
an area of mixed retail,
commercial, and
residential development.
Other fast-food,
family-style and casual
dining restaurants
located in proximity to
the Jacksonville Property
include a Steak-n- Shake,
a Chili's, an Outback
Steak House, a Burger
King, a Ruby Tuesday, a
Tony Roma's, and several
local restaurants.
-9-
<PAGE>
Jack in the Box $1,380,250 02/23/98 02/2016; four $134,574 (9); None at any time
(the "Los Angeles #4 (3) (9) five-year renewal increases by 8% after the
Property ") options after the fifth seventh
Restaurant to be lease year and lease year
constructed after every five
years thereafter
The Los Angeles #4 during the lease
Property is located on term
the southeast corner of
Pico Boulevard and
Hoover Street, in Los
Angeles, Los Angeles
County, California, in
an area of mixed retail,
commercial, and
residential
development. Other
fast-food, family-style
and casual dining
restaurants located in
proximity to the Los
Angeles #4 Property
include a Wendy's, a
Domino's Pizza and
several local
restaurants.
</TABLE>
-10-
<PAGE>
- -----------------------
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the construction Properties acquired, once
the buildings are constructed, is set forth below:
Property Federal Tax Basis
-------- -----------------
Dubuque #2 Property $1,074,000
Edmond Property 1,012,000
Clarksville Property 926,000
Hermitage Property 926,000
Jacksonville Property 599,000
Los Angeles #4 Property 620,000
(2) For the Dubuque #2, Edmond, Clarksville, Hermitage and Jacksonville
Properties, minimum annual rent will become due and payable on the
earlier of (i) 180 days after execution of the lease, (ii) the date the
certificate of occupancy for the restaurant is issued, or (iii) the
date the restaurant opens for business to the public or (for the
Clarksville, Hermitage and Jacksonville Properties), (iv) the date the
tenant receives from the landlord its final funding of the construction
costs. During the period commencing with the effective date of the
lease to the date minimum annual rent becomes payable for the Dubuque
#2 and Edmond Properties, 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 Properties shall accrue and
be payable in a single lump sum at the time of final funding of the
construction costs. During the period commencing with the effective
date of the lease to the date minimum annual rent becomes payable for
the Clarksville and Hermitage Properties, as described above, the
tenant shall pay monthly interim rent equal to 11% per annum of the
amount funded by the Company in connection with the purchase and
construction of the Properties. During the period commencing with the
effective date of the lease to the date minimum annual rent becomes
payable for the Jacksonville Property, as described above, the tenant
shall pay interim rent equal to the product of 325 basis points over
the "Applicable Treasury Rate" (US Treasuries with a maturity date of
20 years) multiplied by the amounts funded by the Company in connection
with the purchase and construction of the Property.
(3) The development agreements for the Properties which are to be
constructed, provides that construction must be completed no later than
the dates set forth below. The maximum cost to the Company, (including
the purchase price of the land, development costs, and closing and
acquisition costs) is not expected to, but may, exceed the amount set
forth below:
<TABLE>
<CAPTION>
Property Estimated Maximum Cost Estimated Final Completion Date
-------- ---------------------- -------------------------------
<S> <C>
Dubuque #2 Property $1,647,329 July 19, 1998
Edmond Property 1,616,169 July 19, 1998
Clarksville Property 1,488,802 August 9, 1998
Hermitage Property 1,432,291 August 9, 1998
Jacksonville Property 1,025,168 August 19, 1998
Los Angeles #4 Property 1,380,250 August 22, 1998
</TABLE>
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
-11-
<PAGE>
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) The lessee of the Dubuque #2 and Edmond Properties is the same
unaffiliated lessee.
(7) The lessee of the Clarksville and Hermitage Properties is the same
unaffiliated lessee.
(8) Initial minimum annual rent shall equal the rate which is in effect 15
business days prior to the commencement of the annual rent (2),
multiplied by the amounts funded by the Company in connection with the
purchase and construction of the Property. Minimum annual rent shall be
adjusted upward at the end of each 36 month period after the Company's
closing on the property by the lower of (i) 4.14% of the minimum annual
rent or (ii) an amount equal to the product obtained by multiplying the
Consumer Price Index by three.
(9) 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.
-12-
<PAGE>
PENDING INVESTMENTS
As of March 2, 1998, the Company had initial commitments to acquire ten
properties, including eight properties consisting of land and building and two
properties consisting of building 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 ten of these properties are expected to
be entered into on substantially the same terms described in "Business -
Description of Property Leases."
In connection with the IHOP property in Saugus, Massachusetts, and one
of the Shoney's properties in Phoenix, Arizona, the Company anticipates owning
only the building and not the underlying land. However, for the Saugus property,
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, and for the Phoenix property, the Company anticipates entering into a
tri-party agreement with the lessee and the landlord of the land, 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.
-13-
<PAGE>
<TABLE>
<CAPTION>
Lease Term and Option to
Property Renewal Options Minimum Annual Rent Percentage Rent Purchase
- -------- --------------- ------------------- --------------- --------
<S> <C>
Boston Market 15 years; five five- 10.38% of the Company's total for each lease year at any time after
Colorado Springs, CO year renewal options cost to purchase the property; after the fifth lease the fifth lease year
Existing restaurant increases by 10% after the fifth year, (i) 4% of annual
lease year and after every five gross sales minus (ii)
years thereafter during the the minimum annual rent
lease term for such lease year
Ground Round 20 years; five five- 10.25% of the Company's (2) at any time after
Maple Shade, NJ year renewal options total cost to purchase the the seventh lease
Existing restaurant property year
IHOP (3) (4) 11.78% of the Company's for each lease year, (i) 3% at any time after
Saugus, MA total cost to purchase the of annual gross sales minus the fifth lease
Existing restaurant building; increases by 5.81% (ii) the minimum annual rent year
after the fifth lease year, for such lease year
4.66% after the tenth lease
year, and 2.83% after the
fifteenth lease year
Jack in the Box 18 years; four five- 9.75% of Total Cost (1); None at any time after
Pflugerville, TX year renewal options increases by 8% after the the seventh lease
Restaurant to be fifth lease year and after year (5)
constructed every five years thereafter
during the lease term
Jack in the Box 18 years; four five- 9.75% of Total Cost (1); None at any time after
St. Louis, MO year renewal options increases by 8% after the the seventh lease
Restaurant to be fifth lease year and after year (5)
constructed every five years thereafter
during the lease term
Jack in the Box 18 years; four five- 9.75% of Total Cost (1); None at any time after
Waxahachie, TX year renewal options increases by 8% after the the seventh lease
Restaurant to be fifth lease year and after year (5)
constructed every five years thereafter
during the lease term
Ruby Tuesday 20 years; two five- 11% of Total Cost (1); increases for each lease year, (i) at any time after
Georgetown, KY year renewal options by 10% after the fifth lease 6% of annual gross sales the seventh lease
Restaurant to be year and after every five years minus (ii) the minimum year
constructed thereafter during the lease term annual rent for such
lease year
Ruby Tuesday 20 years; two five- 11% of Total Cost (1); increases for each lease year, (i) at any time after
Somerset, KY year renewal options by 10% after the fifth lease 6% of annual gross sales the seventh lease
Restaurant to be year and after every five years minus (ii) the minimum year
constructed thereafter during the lease term annual rent for such
lease year
-14-
<PAGE>
Lease Term and Option to
Property Renewal Options Minimum Annual Rent Percentage Rent Purchase
- -------- --------------- ------------------- --------------- --------
Shoney's 20 years; two five- 11% of Total Cost (1); for each lease year, (i) 6% at any time after
Phoenix, AZ (#4) year renewal options increases by 10% after the of annual gross sales minus the seventh lease
Restaurant to be fifth lease year and after (ii) the minimum annual rent year
renovated every five years thereafter for such lease year
during the lease term
Shoney's (6) (7) 11% of Total Cost (1); for each lease year, (i) 2.5% at any time after
Phoenix, AZ (#5) increases by 10% after the of annual gross sales minus the seventh lease
Restaurant to be fifth lease year and after (ii) the minimum annual rent year
constructed every five years thereafter for such lease year
during the lease term
</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) For each lease year, percentage rent shall be calculated upon the
amount by which gross sales exceed a to be determined breakpoint (base
sales) as follows; 6% for an increase of 0% to 33.33% above base sales,
5.5% for an increase of 33.34% to 66.7% above base sales, and 5% for an
increase of 66.8% to 100% above base sales. For increases in gross
sales in excess of 100%, percentage rent shall decrease by .5% for
every additional 33.33% increase above base sales.
(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 term shall expire upon the earlier of (i) the date 20 years
from the date of closing, (ii) the expiration of the original term of
the ground lease, or (iii) the earlier termination of the ground lease.
(5) In the event the Company purchases the property directly from the
lessee, the lessee will have no option to purchase the property.
(6) 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 tri-party agreement with the lessee and the
landlord of the land in order to provide the Company with certain
rights with respect to the land on which the building is located.
(7) The lease term shall expire upon the earlier of (i) the expiration of
the original term of the ground lease, or (ii) the earlier termination
of the ground lease.
-15-
<PAGE>
INVESTMENT OF OFFERING PROCEEDS
Additional Secured Equipment Leases will be funded with the proceeds of
the Line of Credit. No portion of Gross Proceeds of this offering will be used
to fund Secured Equipment Leases. Although management cannot estimate the number
of additional Secured Equipment Leases that may be entered into, the aggregate
outstanding principal amount of Secured Equipment Leases will not exceed 10% of
the gross proceeds of this offering, the Prior Offerings and any subsequent
offerings, including the approximately $23,388,700 of Secured Equipment Leases
funded as of March 2, 1998. The Board of Directors may determine to obtain
additional financing to be used by the Company to fund Secured Equipment Leases,
provided that the amount of such additional financing may not exceed 10% of
gross proceeds of this offering, the Prior Offerings and any subsequent
offering. Management has undertaken, consistent with its objective of qualifying
as a REIT for federal income tax purposes, to ensure that the total value of all
Secured Equipment Leases will not exceed 25% of the Company's total assets, and
that Secured Equipment Leases to a single lessee, in the aggregate, will not
exceed 5% of total assets.
DESCRIPTION OF PROPERTY LEASES
Term of Leases. The following table sets forth the number of Property
leases expiring in each year for the Properties owned by the Company as of March
2, 1998. Since lease renewal options are exercisable at the option of the
tenant, the table below only presents the year in which the initial lease term
expires.
Year of Initial Lease
Term Expiration Number of Properties
--------------- --------------------
2002 1
2006 1
2008 2
2009 1
2010 10
2011 22
2012 39
2013 8
2014 4
2015 31
2016 54
2017 72
2018 4
2022 1
----
Total 250
====
BORROWING
As of March 2, 1998, the Company had funded $23,388,700 in Secured
Equipment Leases and had used $19,000,000 of uninvested net offering proceeds
from the 1997 Offering to temporarily reduce the balance outstanding under the
Line of Credit pending the investment of such offering proceeds in Properties or
Mortgage Loans in order to reduce interest expense incurred by the Company.
-16-
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain financial information for the
Company, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements included in Exhibit B to this Prospectus.
<TABLE>
<CAPTION>
May 2,
1994 (Date
of Inception)
through
Year Ended December 31, December 31,
1997 1996 1995 1994
--------------- --------------- -------------- ----------------
<S> <C>
Revenues $ 19,457,933 $ 6,206,684 $ 659,131 $ -
Net earnings 15,564,456 4,745,962 368,779 -
Cash distributions declared (1) 16,854,297 5,436,072 638,618 -
Funds from operations (2) 17,348,723 5,257,040 469,097 -
Earnings per Share 0.66 0.59 0.19 -
Cash distributions declared per Share 0.74 0.71 0.31 -
Gross Proceeds received from Prior
Offerings 222,482,560 100,792,991 38,454,158 -
Weighted average number of Shares
outstanding (3) 23,423,868 8,071,670 1,898,350 -
December 31, December 31, December 31, December 31,
1997 1996 1995 1994
------------ ------------ ------------ ------------
Total assets $339,077,762 $134,825,048 $ 33,603,084 $ 929,585
Total stockholders' equity 321,638,101 122,867,427 31,980,648 200,000
</TABLE>
(1) Approximately eight percent, 13 percent and 42 percent of cash
distributions ($0.06, $0.09 and $0.13 per Share) for the years ended
December 31, 1997, 1996 and 1995, respectively, represent a return of
capital in accordance with generally accepted accounting principles
("GAAP"). Cash distributions treated as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net earnings on a GAAP basis. The Company has not treated
such amount as a return of capital for purposes of calculating Invested
Capital and the Stockholders' 8% Return.
(2) Funds from operations ( "FFO "), based on the revised definition
adopted by the Board of Governors of NAREIT and as used herein, means
net earnings determined in accordance with GAAP, excluding gains or
losses from debt restructuring and sales of property, plus depreciation
and amortization of real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. (Net earnings
determined in accordance with GAAP include the noncash effect of
straight-lining rent increases throughout the lease term and/or rental
payments during the construction of a property prior to the date it is
placed in service. Straight-lining rent is a GAAP convention requiring
real estate companies to report rental revenue based on the average
rent per year over the life of the lease. During the years ended
December 31, 1997, 1996 and 1995, net earnings included $1,941,054,
$517,067 and $39,142, respectively, of these amounts.) FFO was
developed by NAREIT as a relative measure of performance and liquidity
of an equity REIT in order to recognize that income-producing real
estate historically has not depreciated on the basis determined under
GAAP. However, FFO (i) does not represent cash generated from operating
activities determined in accordance with GAAP (which, unlike FFO,
generally reflects all cash effects of transactions and other events
that enter into the determination of net earnings), (ii) is not
necessarily indicative of cash flow available to fund cash needs and
(iii) should not be considered as an alternative to net earnings
determined in accordance with GAAP as an indication of the Company's
operating performance, or to cash flow from operating activities
determined in accordance with GAAP as a measure of either liquidity or
the Company's
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ability to make distributions. Accordingly, the Company believes that
in order to facilitate a clear understanding of the consolidated
historical operating results of the Company, FFO should be considered
in conjunction with the Company's net earnings and cash flows as
reported in the accompanying consolidated financial statements and
notes thereto. See Exhibit B - Financial Information.
(3) The weighted average number of Shares outstanding is based upon the
period the Company was operational.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OF THE COMPANY
INTRODUCTION
The Company is a Maryland corporation that was organized on May 2,
1994, to acquire Properties, directly or indirectly through Joint Venture or
co-tenancy arrangements, to be leased on a long-term, "triple-net" basis to
operators of certain Restaurant Chains. In addition, the Company may provide
Mortgage Loans for the purchase of buildings, generally by borrowers that lease
the underlying land from the Company. To a lesser extent, the Company may offer
Secured Equipment Leases to operators of Restaurant Chains.
LIQUIDITY AND CAPITAL RESOURCES
The Company was formed in May 1994, at which time the Company received
initial capital contributions of $200,000 for 20,000 shares of Common Stock from
the Advisor. In April 1995, the Company commenced a public offering for the sale
of up to 16,500,000 Shares ($165,000,000) of Common Stock, the net proceeds of
which were used to invest in Properties and Mortgage Loans. Of the 16,500,000
Shares offered, 1,500,000 Shares ($15,000,000) were available only to
stockholders who elected to participate in the Company's Reinvestment Plan. Upon
completion of its Initial Offering on February 6, 1997, the Company had received
subscription proceeds of $150,591,765 (15,059,177 Shares), including 59,177
Shares ($591,765) issued pursuant to the Company's Reinvestment Plan.
Following the completion of its Initial Offering, the Company commenced
the 1997 Offering of up to 27,500,000 Shares of Common Stock. Of the 27,500,000
Shares offered, 2,500,000 were available only to stockholders who elected to
participate in the Company's Reinvestment Plan. As of December 31, 1997, the
Company had received subscription proceeds of $361,729,707 (36,172,971 Shares)
from the Initial Offering and 1997 Offering, including 246,441 Shares
($2,464,413) issued pursuant to the Reinvestment Plan.
As of December 31, 1997, net proceeds to the Company from its Initial
Offering, 1997 Offering and capital contributions from the Advisor, after
deduction of selling commissions, marketing support and due diligence expense
reimbursement fees, and organizational and offering expenses, totalled
$323,867,890. As of December 31, 1997, approximately $272,140,000 of net
offering proceeds had been used to invest, or committed for investment, in 244
Properties (including ten Properties on which restaurants were being constructed
as of December 31, 1997), to provide mortgage financing of $17,047,000, to pay
acquisition fees to the Advisor totalling $16,277,837 and to pay certain
acquisition expenses. The Company acquired 18 of the 244 Properties from
Affiliates for purchase prices totalling approximately $14,681,000. 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
acquired from an Affiliate was purchased 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 ten Properties under construction at December
31, 1997, the Company has entered into various development agreements with
tenants which provide terms and specifications for the construction of buildings
the tenants have agreed to lease. The agreements provide a maximum amount of
development costs (including the purchase price of the land and closing costs)
to be paid by the Company. The aggregate maximum development costs the Company
has agreed to pay are approximately $14,495,000, of which approximately
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$10,202,000 had been incurred as of December 31, 1997. The buildings under
construction as of December 31, 1997, are expected to be operational by June
1998. In connection with the purchase of each Property, the Company, as lessor,
entered into a long-term lease agreement.
During 1997, the Company sold five of its Properties and the Equipment
relating to two Secured Equipment Leases to tenants. The Company received net
proceeds of approximately $7,252,000, which was equal to the carrying value of
the Properties and the Equipment at the time of the sales. As a result, no gain
or loss was recognized for financial reporting purposes. The Company used the
net sales proceeds relating to the sale of the Equipment to repay amounts
previously advanced under its Line of Credit. The Company reinvested the
proceeds from the sale of Properties in additional Properties.
In connection with the $17,047,000 of mortgage financing provided by
the Company as of December 31, 1997, the Company entered into four Mortgage
Loans collateralized by mortgages on the buildings relating to 44 Pizza Hut
Properties and two additional Pizza Hut buildings. The Mortgage Loans bear
interest at rates ranging from 10.5% to 10.75% per annum and are being collected
in 240 equal installments totalling $172,369. Mortgage notes receivable at
December 31, 1997 and 1996 of $17,622,010 and $13,389,607, respectively, include
accrued interest of $118,887 and $35,285, respectively.
In March 1996, the Company entered into a line of credit and security
agreement with a bank, the proceeds of which were to be used by the Company to
fund Secured Equipment Leases. The line of credit provided that the Company
would be able to receive advances of up to $15,000,000 until March 4, 1998.
Generally, all advances under the line of credit bore interest at either (i) a
rate per annum equal to 215 basis points above the Reserve Adjusted LIBOR Rate
(as defined in the line of credit) or (ii) a rate per annum equal to the bank's
prime rate, whichever the Company selected at the time advances were made. As a
condition of obtaining the line of credit, the Company agreed to grant to the
bank a first security interest in the Secured Equipment Leases.
In August 1997, the Company's $15,000,000 line of credit was amended
and restated to enable the Company to receive advances on a revolving
$35,000,000 uncollateralized Line of Credit to provide equipment financing, to
purchase and develop Properties and to fund Mortgage Loans. The advances bear
interest at a rate of LIBOR plus 1.65% or the bank's prime rate, whichever the
Company selects at the time of borrowing. Interest only is repayable monthly
until July 31, 1999, at which time all remaining interest and principal shall be
due. The Line of Credit provides for two one-year renewal options.
In addition, during 1996, the Company entered into interest rate swap
agreements with a commercial bank to reduce the impact of changes in interest
rates on its floating rate long-term debt. These agreements effectively change
the Company's interest rate exposure on notional amounts totalling approximately
$2,110,000 of the outstanding floating rate notes to fixed rates ranging from
8.75% to nine percent per annum. The notional amounts of the interest rate swap
agreements amortize over the period of the agreements which approximate the term
of the related notes. As of December 31, 1997, the notional balances were
approximately $1,750,000. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements; however,
the Company does not anticipate nonperformance by the counterparty.
The Company will not encumber Properties in connection with the Line of
Credit. Management believes that during the offering period the Line of Credit
will allow the Company to make investments in Properties and Mortgage Loans that
the Company otherwise would be forced to delay until it raised a sufficient
amount of proceeds from the sale of Shares to allow the Company to make the
investments. By eliminating this delay the Company will also eliminate the risk
that these investments will no longer be available, or the terms of the
investments will be less favorable, when the Company has raised sufficient
offering proceeds. Alternatively, Affiliates of the Advisor could make such
investments, pending receipt by the Company of sufficient offering proceeds, in
order to preserve the investment opportunities for the Company. However,
Properties acquired by the Company in this manner would be subject to closing
costs both on the original purchase by the Affiliate and on the subsequent
purchase by the Company, which would increase the amount of expenses associated
with the acquisition of Properties and reduce the amount of offering proceeds
available for investment in income-producing assets. Management believes that
the use of the Line of Credit by the Company will enable the Company to reduce
or eliminate the instances in which the Company will be required to pay
duplicate closing costs.
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During the years ended December 31, 1997 and 1996, the Company obtained
advances totalling $19,721,804 and $3,666,896, respectively, under the lines of
credit, the proceeds of which were used to fund Secured Equipment Leases and to
pay loan costs. During the year ended December 31, 1997, the Company used
proceeds relating to the sale of Equipment, as described above, and uninvested
net offering proceeds, to repay $20,784,577 of amounts advanced under the Line
of Credit. During the year ended December 31, 1996, the Company used amounts
collected under the terms of the Secured Equipment Leases to repay $145,080 of
amounts advanced under the line of credit. The Company expects to obtain
additional advances under the Line of Credit to fund future Equipment financings
and to purchase Properties and to invest in Mortgage Loans.
Advances used to fund Secured Equipment Leases will be repaid using
payments received from Secured Equipment Leases and will be refinanced in regard
to any Secured Equipment Lease not fully repaid at the end of the term of the
Line of Credit. The Company, from time to time, may use uninvested net offering
proceeds to repay a portion of or all of the balance outstanding under the Line
of Credit pending the investment of such offering proceeds in Properties or
Mortgage Loans in order to reduce the Company's interest cost during such
period. Advances used to purchase and develop Properties and to fund Mortgage
Loans will be repaid using additional offering proceeds or refinanced on a
long-term basis.
During the period January 1, 1998 through March 2, 1998, the Company
acquired six additional Properties (all on which restaurants are being
constructed) for cash at a total cost of approximately $3,948,200, excluding
development and closing costs. The development costs (including the purchase of
the land and closing costs) to be paid by the Company relating to the six
Properties under construction are estimated to be approximately $8,590,000. In
connection with the purchase of each of the six Properties, the Company, as
lessor, entered into a long-term lease agreement. The buildings under
construction are expected to be operational by August 1998. The Company
currently is negotiating to acquire additional Properties, but as of March 2,
1998, had not acquired any such Properties.
The Company completed its 1997 Offering on March 2, 1998, at which time
the Company had received subscription proceeds of $402,464,413 (40,246,441
Shares) from its Initial Offering and 1997 Offering, including 246,441 Shares
($2,464,413) issued pursuant to the Company's Reinvestment Plan. As of March 2,
1998, the Company had invested, or committed for investment, a total of
approximately $282,900,000 of such proceeds in 250 Properties, in providing
mortgage financing totalling $17,047,000 for Mortgage Loans relating to 44
Properties consisting of land only and the buildings on two additional
properties, and to pay acquisition fees totalling $18,110,899 to the Advisor,
leaving approximately $78,200,000 in aggregate net offering proceeds from the
Prior Offerings available for investment in Properties and Mortgage Loans.
Following the completion of its 1997 Offering, the Company commenced
the sale of up to 34,500,000 Shares. Of the 34,500,000 Shares being offered,
2,000,000 Shares are available only to stockholders purchasing Shares through
the Reinvestment Plan. Management believes that the increase in the amount of
assets of the Company that will result from this offering will increase the
diversification of the Company's assets and the likelihood of Listing the
Company's Shares on a national securities exchange or over-the-counter market,
although there is no assurance that Listing will occur. If the Shares are not
listed on a national securities exchange or over-the-counter market by December
31, 2005, as to which there can be no assurance, the Company will commence
orderly sale of its assets and the distribution of the proceeds. Listing does
not assure liquidity.
The Company expects to use uninvested net offering proceeds from the
Prior Offerings, plus any Net Offering Proceeds from the sale of Shares in this
offering, to purchase additional Properties, to fund construction costs relating
to the Properties under construction and to make Mortgage Loans. The Company
does not intend to use net offering proceeds to fund Secured Equipment Leases;
however, from time to time the Company may use uninvested net offering proceeds
to repay all or a portion of the balance outstanding under the Line of Credit
pending the investment of such offering proceeds in Properties or Mortgage Loans
in order to reduce the Company's interest cost during such period. The Company
expects to fund the Secured Equipment Leases with proceeds from the Line of
Credit. The number of Properties to be acquired and Mortgage Loans to be entered
into will depend upon the amount of net offering proceeds available to the
Company, although the Company is expected to have a total
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portfolio of approximately 670 to 730 Properties if the maximum number of Shares
is sold in this offering. The Company intends to limit equipment financing to
ten percent of the aggregate gross offering proceeds from its offerings.
Properties are and will be leased on a long-term, triple-net basis,
meaning that tenants are generally required to pay all repairs and maintenance,
property taxes, insurance and utilities. Rental payments under the leases are
expected to exceed the Company's Operating Expenses. For these reasons, no
short-term or long-term liquidity problems currently are anticipated by
management.
Until Properties are acquired, or Mortgage Loans are entered into, net
offering proceeds are held in short-term, highly liquid investments which
management believes to have appropriate safety of principal. This investment
strategy provides high liquidity in order to facilitate the Company's use of
these funds to acquire Properties at such time as Properties suitable for
acquisition are located or to fund Mortgage Loans. At December 31, 1997, the
Company had $49,595,001 invested in such short-term investments (including a
certificate of deposit in the amount of $2,000,000) as compared to $42,450,088
at December 31, 1996. The increase in the amount invested in short-term
investments reflects subscription proceeds derived from the sale of Shares
during the year ended December 31, 1997, net of the repayment of amounts
advanced under the Line of Credit, as described above. These funds will be used
primarily to purchase and develop or renovate Properties (directly or indirectly
through joint venture arrangements), to make Mortgage Loans, to pay offering and
acquisition costs, to pay Distributions to stockholders, to temporarily reduce
amounts outstanding under the Company's Line of Credit pending the investment of
net offering proceeds, to meet Company expenses and, in management's discretion,
to create cash reserves.
During the years ended December 31, 1997, 1996 and 1995, Affiliates of
the Company incurred on behalf of the Company $2,351,244, $804,617 and
$2,084,145, respectively, for certain organizational and offering expenses,
$514,908, $206,103 and $131,629, respectively, for certain acquisition expenses
and $368,516, $243,402 and $54,234, respectively, for certain operating
expenses. As of December 31, 1997, the Company owed the Advisor and its
Affiliates $1,524,294 for such amounts, unpaid fees and accounting and
administrative expenses. As of March 2, 1998, the Company had reimbursed all
such amounts. The Advisor has agreed to pay or reimburse to the Company all
organizational and offering expenses in excess of three percent of gross
offering proceeds from each of the Initial Offering, 1997 Offering and this
offering.
During the years ended December 31, 1997, 1996 and 1995, the Company
generated cash from operations (which includes cash received from tenants and
interest and other income received, less cash paid for operating expenses) of
$17,076,214, $5,482,540 and $498,459, respectively. Based on current and
anticipated future cash from operations, the Company declared Distributions to
the stockholders of $16,854,297, $5,436,072 and $638,618 during 1997, 1996 and
1995, respectively. In addition, in January, February and March 1998, the
Company declared Distributions to its stockholders totalling $2,298,433,
$2,421,992 and $2,556,539, respectively, payable in March 1998. For the years
ended December 31, 1997, 1996 and 1995, 93.33%, 90.25% and 59.82%, respectively,
of the Distributions received by stockholders were considered to be ordinary
income and 6.67%, 9.75% and 40.18%, respectively, were considered a return of
capital for federal income tax purposes. However, no amounts distributed or to
be distributed to the stockholders as of March 2, 1998, are required to be or
have been treated by the Company as a return of capital for purposes of
calculating the Stockholders' 8% Return on their Invested Capital.
Management believes that the Properties are adequately covered by
insurance. In addition, the Advisor has obtained contingent liability and
property coverage for the Company. This insurance policy is intended to reduce
the Company's exposure in the unlikely event a tenant's insurance policy lapses
or is insufficient to cover a claim relating to the Property. The Company's
investment strategy of acquiring Properties for cash and leasing them under
triple-net leases to operators who meet specified financial standards is
expected to minimize the Company's Operating Expenses.
Due to the fact that the Properties are leased on a long-term,
triple-net basis, management does not believe that working capital reserves are
necessary at this time. Management has the right to cause the Company to
maintain reserves if, in their discretion, they determine such reserves are
required to meet the Company's working capital needs.
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Management expects that the cash generated from operations will be
adequate to pay Operating Expenses.
RESULTS OF OPERATIONS
No significant operations commenced until the Company received the
minimum offering proceeds of $1,500,000 on June 1, 1995.
As of December 31, 1997, the Company and its consolidated joint
venture, CNL/Corral South Joint Venture, had purchased and entered into
long-term, triple-net leases for 244 Properties. The leases provide for minimum,
annual, base rental payments (payable in monthly installments) ranging from
approximately $61,900 to $467,500. In addition, certain leases provide for
percentage rent based on sales in excess of a specified amount. The majority of
the leases also provide that, commencing in generally the sixth lease year, the
annual base rent required under the terms of the leases will increase. In
connection therewith, during the years ended December 31, 1997, 1996, and 1995,
the Company earned a total of $15,490,615, $4,357,298 and $539,776,
respectively, in rental income from operating leases, earned income from the
direct financing leases and contingent rental income from 244 Properties and 27
Secured Equipment Leases in 1997, from 85 Properties and six Secured Equipment
Leases in 1996 and from 16 Properties in 1995, respectively. Because the Company
did not commence significant operations until it received the minimum offering
proceeds on June 1, 1995, and intends to make additional investments in
Properties, Mortgage Loans and Secured Equipment Leases, revenues for the years
ended December 31, 1997, 1996 and 1995, represent only a portion of revenues
which the Company is expected to earn during future years in which the Company
has completed additional investments and the Company's Properties are
operational (and other investments in place) for the full period.
During the years ended December 31, 1997 and 1996, the Company earned
$1,687,456 and $1,069,349, respectively, in mortgage interest income relating to
the Mortgage Loans collateralized by Pizza Hut Properties, as described above in
"Liquidity and Capital Resources." The increase during the year ended December
31, 1997, is attributable to investing in an additional Mortgage Loan during
1997.
During 1997, three of the Company's lessees and borrowers, or
affiliated groups of lessees and borrowers, Castle Hill Holdings V, L.L.C.,
Castle Hill Holdings VI, L.L.C. and Castle Hill Holdings VII, L.L.C.
(collectively, "Castle Hill"), Foodmaker, Inc. and Houlihan's Restaurants Inc.,
each contributed more than ten percent of the Company's total rental, earned and
interest income relating to its Properties, Mortgage Loans and Secured Equipment
Leases. Castle Hill is the lessee under leases relating to the land portion of
44 restaurants and is the borrower on Mortgage Loans relating to the buildings
on such Properties, as well as two additional properties. Foodmaker, Inc. is the
lessee under leases relating to 29 restaurants and Houlihan's Restaurants, Inc.
is the lessee under leases relating to 20 restaurants. In addition, four
Restaurant Chains, Pizza Hut, Golden Corral Family Steakhouse, Jack in the Box
and Boston Market, each accounted for more than ten percent of the Company's
total rental, earned and interest income relating to its Properties, Mortgage
Loans and Secured Equipment Leases during 1997. Because the Company has not
completed its investment in Properties, Mortgage Loans and Secured Equipment
Leases as yet, it is not possible to determine which lessees, borrowers or
Restaurant Chains will contribute more than ten percent of the Company's rental,
earned and interest income during 1998 and subsequent years. In the event that
certain lessees, borrowers or Restaurant Chains contribute more than ten percent
of the Company's rental, earned income and interest income in future years, any
failure of such lessees, borrowers or Restaurant Chains could materially affect
the Company's income.
During the years ended December 31, 1997, 1996 and 1995, the Company
also earned $2,254,375, $773,404 and $118,859, respectively, in interest income
from Secured Equipment Leases, as described above in "Liquidity and Capital
Resources," and from investments in money market accounts or other short-term,
highly liquid investments and other income. Interest income is expected to
increase as the Company invests subscription proceeds received in the future
relating to this offering in highly liquid investments pending investment in
Properties and Mortgage Loans. However, as net offering proceeds are invested in
Properties and used to make Mortgage Loans, interest income from investments in
money market accounts or other short-term, highly liquid investments is expected
to decrease.
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Operating expenses, including depreciation and amortization expense,
were $3,862,024, $1,430,795 and $290,276 for the years ended December 31, 1997,
1996 and 1995, respectively. Total operating expenses increased during each of
the years ended December 31, 1997 and 1996, as compared to the prior year,
primarily as a result of the Company having invested in additional Properties
and Mortgage Loans during each year. General and administrative expenses as a
percentage of total revenues is expected to decrease as the Company acquires
additional Properties, invests in additional Mortgage Loans and the Properties
under construction become operational. However, asset management fees and
depreciation and amortization expense are expected to increase as the Company
invests in additional Properties and Mortgage Loans.
The Company has made an election under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), to be taxed as a REIT under the
Code beginning with its taxable year ended December 31, 1995. As a REIT, for
federal income tax purposes, the Company generally will not be subject to
federal income tax on income that it distributes to its stockholders. If the
Company fails to qualify as a REIT in any taxable year, it will be subject to
federal income tax on its taxable income at regular corporate rates and will not
be permitted to qualify for treatment as a REIT for federal income tax purposes
for four years following the year during which qualification is lost. Such an
event could materially affect the Company's net income. However, the Company
believes that it is organized and operates in such a manner as to qualify for
treatment as a REIT for the years ended December 31, 1997, 1996 and 1995. In
addition, the Company intends to continue to operate the Company so as to remain
qualified as a REIT for federal income tax purposes.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." The
statement, which is effective for fiscal years ending after December 15, 1997,
provides for a revised computation of earnings per share. The Company adopted
this standard during the year ended December 31, 1997. Adoption of this standard
had no material effect on the Company's financial position or results of
operations.
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 "Reporting Comprehensive Income." The statement, which is effective for
fiscal years beginning after December 15, 1997, requires the reporting of net
earnings and all other changes to equity during the period, except those
resulting from investments by owners and distributions to owners, in a separate
statement that begins with net earnings. Currently, the Company's only component
of comprehensive income is net earnings. The Company does not believe that
adoption of this standard will have a material effect on the Company's financial
position or results of operations.
The Advisor of the Company is in the process of assessing and
addressing the impact of the year 2000 on its computer package software. The
hardware and built-in software used by the Advisor are believed to be year 2000
compliant. Accordingly, the Company does not expect this matter to materially
impact how it conducts business nor its future results of operations or
financial position.
All of the Company's leases as of December 31, 1997, are triple-net
leases and generally contain provisions that management believes will mitigate
the adverse effect of inflation. Such provisions include clauses requiring the
payment of percentage rent based on certain restaurant sales above a specified
level and/or automatic increases in base rent at specified times during the term
of the lease. Management expects that increases in restaurant sales volumes due
to inflation and real sales growth should result in an increase in rental income
over time. Continued inflation also may cause capital appreciation of the
Company's Properties. Inflation and changing prices, however, also may have an
adverse impact on the sales of the restaurants and on potential capital
appreciation of the Properties.
This information contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause such a
difference include the following: changes in general economic conditions,
changes in real estate conditions, continued availability of proceeds from this
offering, the ability of the Company to invest the remaining
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proceeds of the 1997 Offering and the proceeds of this offering, the ability of
the Company to locate suitable tenants for its Properties and borrowers for its
Mortgage Loans, and the ability of such tenants and borrowers to make payments
under their respective leases, Secured Equipment Leases or Mortgage Loans.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and executive officers of the Company are listed below:
Name Age Position with the Company
---- --- -------------------------
James M. Seneff, Jr. 51 Director, Chairman of the Board, and
Chief Executive Officer
Robert A. Bourne 51 Director and President
G. Richard Hostetter 58 Independent Director
J. Joseph Kruse 65 Independent Director
Richard C. Huseman 59 Independent Director
Curtis B. McWilliams 42 Executive Vice President
John T. Walker 39 Chief Operating Officer and Executive
Vice President
Jeanne A. Wall 39 Executive Vice President
Steven D. Shackelford 34 Chief Financial Officer
Lynn E. Rose 49 Secretary and Treasurer
James M. Seneff, Jr. Director, Chairman of the Board, and Chief
Executive Officer. Mr. Seneff currently holds the position of Chairman of the
Board, Chief Executive Officer and director of CNL Fund Advisors, Inc., the
Advisor to the Company. Mr. Seneff also has served as Chairman of the Board,
Chief Executive Officer and a director of CNL American Realty Fund, Inc. since
1996 and of CNL Real Estate Advisors, Inc. since January 1997. Mr. Seneff is a
principal stockholder of CNL Group, Inc., a diversified real estate company, and
has served as its Chairman of the Board of Directors, director, and Chief
Executive Officer since its formation in 1980. CNL Group, Inc. is the parent
company of CNL Securities Corp., which is acting as the Managing Dealer in this
offering, CNL Investment Company, CNL Fund Advisors, Inc. and CNL Real Estate
Advisors, Inc. Mr. Seneff has been Chairman of the Board, Chief Executive
Officer and a director of CNL Securities Corp. since its formation in 1979. Mr.
Seneff also has held the position of Chairman of the Board, Chief Executive
Officer, President and a director of CNL Management Company, a registered
investment advisor, since its formation in 1976, has served as Chief Executive
Officer, Chairman of the Board and a director of CNL Investment Company, and
Chief Executive Officer and Chairman of the Board of Commercial Net Lease
Realty, Inc. since 1992, served as Chief Executive Officer and Chairman of the
Board of CNL Realty Advisors, Inc. from its inception in 1991 through 1997, at
which time such company merged with Commercial Net Lease Realty, Inc., and has
held the position of Chief Executive Officer, Chairman of the Board and a
director of CNL Institutional Advisors, Inc., a registered investment advisor,
since its inception in 1990. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Since 1971, Mr. Seneff has been active in the acquisition,
development, and management of real estate projects and, directly or through an
affiliated entity, has served as a general partner or joint venturer in over 100
real estate ventures involved in the financing, acquisition, construction, and
rental of restaurants, office buildings, apartment complexes, hotels, and other
real
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estate. Included in these real estate ventures are approximately 65 privately
offered real estate limited partnerships with investment objectives similar to
one or more of the Company's investment objectives, in which Mr. Seneff,
directly or through an affiliated entity, serves or has served as a general
partner. Mr. Seneff received his degree in Business Administration from Florida
State University in 1968.
Robert A. Bourne. Director and President. Mr. Bourne currently holds
the position of Vice Chairman of the Board of Directors, director and Treasurer
of CNL Fund Advisors, Inc., the Advisor to the Company. Mr. Bourne served as
President of CNL Fund Advisors, Inc. from the date of its inception through
October 1997. Mr. Bourne also has served as President and a director of CNL
American Realty Fund, Inc. since 1996 and of CNL Real Estate Advisors, Inc.
since January 1997. Mr. Bourne is President and Treasurer of CNL Group, Inc.,
President, Treasurer, a director, and a registered principal of CNL Securities
Corp. (the Managing Dealer of this offering), President, Treasurer, a director
and a registered principal of CNL Investment Company, and Chief Investment
Officer, a director and Treasurer of CNL Institutional Advisors, Inc., a
registered investment advisor. Mr. Bourne served as President of CNL
Institutional Advisors, Inc. from the date of its inception through June 30,
1997. Mr. Bourne served as President and a director from July 1992 to February
1996, served as Secretary and Treasurer from February 1996 through December
1997, and has served as Vice Chairman of the Board of Directors since February
1996, of Commercial Net Lease Realty, Inc. In addition, Mr. Bourne served as
President of CNL Realty Advisors, Inc. from 1991 to February 1996, and served as
a director of CNL Realty Advisors, Inc. from 1991 through December 1997, and as
Treasurer and Vice Chairman from February 1996 through December 1997, at which
time such company merged with Commercial Net Lease Realty, Inc. Upon graduation
from Florida State University in 1970, where he received a B.A. in Accounting,
with honors, Mr. Bourne worked as a certified public accountant and, from
September 1971 through December 1978 was employed by Coopers & Lybrand,
Certified Public Accountants, where he held the position of tax manager
beginning in 1975. From January 1979 until June 1982, Mr. Bourne was a partner
in the accounting firm of Cross & Bourne and from July 1982 through January 1987
he was a partner in the accounting firm of Bourne & Rose, P.A., Certified Public
Accountants. Mr. Bourne, who joined CNL Securities Corp. in 1979, has
participated as a general partner or joint venturer in over 100 real estate
ventures involved in the financing, acquisition, construction, and rental of
restaurants, office buildings, apartment complexes, hotels, and other real
estate. Included in these real estate ventures are approximately 64 privately
offered real estate limited partnerships with investment objectives similar to
one or more of the Company's investment objectives, in which Mr. Bourne,
directly or through an affiliated entity, serves or has served as a general
partner. Mr. Bourne oversaw the acquisition and oversees the management of over
1,500 properties located across 47 states with a total value in excess of $2
billion.
G. Richard Hostetter, Esq. Independent Director. Mr. Hostetter 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. Mr. Hostetter
graduated from the University of Georgia and received his J.D. from Emory Law
School in 1966. 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.
J. Joseph Kruse. Independent Director. Mr. Kruse 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. Mr. Kruse received a Bachelors of
Science in Education degree from the
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<PAGE>
University of Florida in 1957 and a Masters of Science in Administration in 1958
from Florida State University. He also graduated from the Advanced Management
Program of the Harvard Graduate School of Business.
Richard C. Huseman. Independent Director. Mr. Huseman also serves as a
director of CNL American Realty Fund, Inc. Mr. 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. Mr. Huseman received a B.A. from Greenville College in 1961 and an M.A.
and a Ph.D. from the University of Illinois in 1963 and 1965, respectively.
Curtis B. McWilliams. Executive Vice President. Mr. McWilliams joined
CNL Group, Inc. in April 1997 and currently serves as an Executive Vice
President. In addition, Mr. McWilliams serves as President of CNL Fund Advisors,
Inc. (the Advisor to the Company), CNL Financial Services, Inc. and certain
other subsidiaries of CNL Group, Inc. From September 1983 through March 1997,
Mr. McWilliams was employed by Merrill Lynch. 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 larger corporate relationships. 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 a group of bankers and client relationships, including the
firm's transportation group. In addition, from September 1996 to March 1997, Mr.
McWilliams served as Chairman of Merrill Lynch's Private Advisory Services. Mr.
McWilliams received a B.S.E. in Chemical Engineering from Princeton University
in 1977 and a Masters of Business Administration with a concentration in finance
from the University of Chicago in 1983.
John T. Walker. Chief Operating Officer and Executive Vice President.
Mr. Walker joined CNL Fund Advisors, Inc. in September 1994, as Senior Vice
President, responsible for Research and Development. He currently serves as the
Chief Operating Officer and Executive Vice President of CNL Fund Advisors, Inc.,
the Advisor to the Company. Mr. Walker is also Executive Vice President of CNL
American Realty Fund, Inc. and CNL Real Estate Advisors, Inc. From May 1992 to
May 1994, he was Executive Vice President for Finance and Administration and
Chief Financial Officer of Z Music, Inc., a cable television network which was
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. Mr. Walker
is a Cum Laude graduate of Wake Forest University with a B.S. in Accountancy and
is a certified public accountant.
Jeanne A. Wall. Executive Vice President. Ms. Wall serves as Executive
Vice President of CNL Fund Advisors, Inc., the Advisor to the Company. Ms. Wall
is also Executive Vice President of CNL American Realty Fund, Inc. and CNL Real
Estate Advisors, Inc. 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. In 1985, Ms. Wall became Vice
President of CNL Securities Corp., in 1987 she became a 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 product development, partnership administration and
investor services for programs offered through participating brokers and
corporate communications for CNL Group, Inc. and its Affiliates. Ms. Wall also
has served as Senior Vice President
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<PAGE>
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 through 1997, and as Vice President of Commercial Net Lease Realty, Inc.
since 1992 through 1997. Ms. Wall holds a B.A. in Business Administration from
Linfield College and is a registered principal of CNL Securities Corp. 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.
Steven D. Shackelford. Chief Financial Officer. Mr. Shackelford joined
CNL Fund Advisors, Inc., the Advisor to the Company, in September 1996 as the
Chief Financial Officer. From March 1995 to July 1996, he 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 senior from 1986 to 1992 in the Orlando,
Florida office of Price Waterhouse. Mr. Shackelford received a B.A. in
Accounting, with honors, and a Masters of Business Administration from Florida
State University and is a certified public accountant.
Lynn E. Rose. Secretary and Treasurer. Ms. Rose is also Secretary and
Treasurer of CNL American Realty Fund, Inc. Ms. Rose serves as Secretary and a
director of CNL Fund Advisors, Inc., the Advisor to the Company, and serves as
Secretary, Treasurer and a director of CNL Real Estate Advisors, Inc. Ms. Rose
served as Treasurer of CNL Fund Advisors, Inc. 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 Secretary and a director of CNL Realty Advisors, Inc. from its
inception in 1991 through 1997, and as a Treasurer of CNL Realty Advisors, Inc.
from 1991 to February 1996. In addition, Ms. Rose served as Secretary and
Treasurer of Commercial Net Lease Realty, Inc. from 1992 to February 1996. 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 250 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. Ms. Rose holds a B.A. in
Sociology from the University of Central Florida and is a registered financial
and operations principal of CNL Securities Corp. She was licensed as a certified
public accountant in 1979.
THE ADVISOR AND THE ADVISORY AGREEMENT
THE ADVISORY AGREEMENT
The Advisory Agreement, which was entered into by the Company with the
unanimous approval of the Board of Directors, including the Independent
Directors, expires one year after the date of execution, subject to successive
one-year renewals upon mutual consent of the parties. The current Advisory
Agreement expires on April 19, 1999. In the event that a new Advisor is
retained, the previous Advisor will cooperate with the Company and the Directors
in effecting an orderly transition of the advisory functions. The Board of
Directors (including a majority of the Independent Directors) shall approve a
successor Advisor only upon a determination that the Advisor possesses
sufficient qualifications to perform the advisory functions for the Company and
that the compensation to be received by the new Advisor pursuant to the new
Advisory Agreement is justified.
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<PAGE>
CERTAIN TRANSACTIONS
The Managing Dealer 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 period January 1, 1998 through March 2, 1998, and the
years ended December 31, 1997, 1996 and 1995, the Company incurred $3,055,103,
$16,686,192, $7,559,474 and $2,884,062, respectively, of such fees in connection
with the Prior Offerings, of which approximately $2,900,400, $15,563,500,
$7,059,000 and $2,682,000, respectively, was paid by the Managing Dealer as
commissions to other broker-dealers.
In addition, the Managing Dealer 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 period January 1, 1998 through March 2, 1998, and
the years ended December 31, 1997, 1996 and 1995, the Company incurred $203,673,
$1,112,413, $503,965 and $192,271, respectively, of such fees in connection with
the Prior Offerings, substantially all of which were reallowed to other
broker-dealers and from which all bona fide due diligence expenses were paid.
The Advisor 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 period
January 1, 1998 through March 2, 1998, and the years ended December 31, 1997,
1996 and 1995, the Company incurred $1,833,062, $10,011,715, $4,535,685 and
$1,730,437, respectively, of such fees in connection with the Prior Offerings.
For negotiating Secured Equipment Leases and supervising the Secured
Equipment Lease program, the Advisor is 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
years ended December 31, 1997 and 1996, the Company incurred $366,865 and
$70,070, respectively, in such fees. No such amounts were incurred for the
period January 1, 1998 through March 2, 1998 or for the year ended December 31,
1995.
The Company and the Advisor have entered into an Advisory Agreement
pursuant to which the Advisor will receive a monthly asset management fee of
one-twelfth of 0.60% of the Company's Real Estate Asset Value, plus one-twelfth
of 0.60% of the total principal amount of the Company's 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
the Advisor. 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 the Advisor shall determine. For January and February 1998, the Company
incurred $120,115 and $121,152, respectively, of such fees, $3,309 and $6,465,
respectively, of which has been capitalized as part of the cost of the buildings
for Properties that have been or are being constructed. For the years ended
December 31, 1997, 1996 and 1995, the Company incurred $881,668, $278,902 and
$27,950, respectively, of such fees, $76,789, $27,702 and $4,872, respectively,
of which has been capitalized as part of the cost of the buildings for
Properties that have been or are being constructed.
The Advisor 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 years
ended December 31, 1997, 1996 and 1995, the Company incurred a total of
$2,232,466, $1,103,828 and $782,690, respectively, for these services,
$1,676,226, $769,225 and $714,674, respectively, of such costs representing
stock issuance costs and $556,240, $334,603 and $68,016, respectively,
representing general operating and administrative expenses, including costs
related to preparing and distributing reports required by the Securities and
Exchange Commission.
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<PAGE>
During the years ended December 31, 1997, 1996 and 1995, the Company
acquired five, four and nine Properties, respectively, for approximately
$5,450,000, $2,610,000 and $6,621,000, respectively, 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 in 1997 and three
Properties in 1996 that were constructed or renovated by Affiliates, the Company
incurred development/construction management fees totalling $369,570 and
$159,350, respectively. Such fees were included in the purchase price of
Properties and therefore included in the basis on which the Company charges rent
on the Properties. No such amounts were incurred for the period January 1, 1998
through March 2, 1998 or for the year ended December 31, 1995.
The Advisor and the Managing Dealer are wholly owned subsidiaries of
CNL Group, Inc., of which James M. Seneff, Jr., Chairman of the Board and Chief
Executive Officer of the Company, and his spouse are the sole stockholders.
All of these fees were paid in accordance with the provisions of the
Company's Articles of Incorporation.
PRIOR PERFORMANCE INFORMATION
The information presented in this section represents the historical
experience of certain real estate programs organized by certain officers and
directors of the Advisor. INVESTORS IN THE COMPANY SHOULD NOT ASSUME THAT THEY
WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN
SUCH PRIOR REAL ESTATE PROGRAMS. INVESTORS WHO PURCHASE SHARES IN THE COMPANY
WILL NOT THEREBY ACQUIRE ANY OWNERSHIP INTEREST IN ANY PARTNERSHIPS TO WHICH THE
FOLLOWING INFORMATION RELATES.
Two Directors of the Company, Robert A. Bourne and James M. Seneff,
Jr., individually or with others have served as general partners of 88 and 89
real estate limited partnerships, respectively, including the 18 publicly
offered CNL Income Fund partnerships, which purchased properties similar to
those to be acquired by the Company, listed in the table below. None of these
limited partnerships has been audited by the IRS. Of course, there is no
guarantee that the Company will not be audited. Based on an analysis of the
operating results of the prior partnerships, the general partners of these
partnerships believe that each of such partnerships has met or is meeting its
principal investment objectives in a timely manner.
CNL Realty Corporation, which was organized as a Florida corporation in
November 1985 and whose sole stockholders are Messrs. Bourne and Seneff,
currently serves as the corporate general partner with Messrs. Bourne and Seneff
as individual general partners of 18 CNL Income Fund limited partnerships, all
of which were organized to invest in fast-food, family-style and, in the case of
two of the partnerships, casual dining restaurant properties and have investment
objectives similar to those of the Company. As of December 31, 1997, the 18
partnerships had raised a total of $614,145,759 from a total of 48,907
investors, and had invested in 708 fast-food, family-style or casual dining
restaurant properties. Certain additional information relating to the offerings
and investment history of the 18 public partnerships is set forth below.
<TABLE>
<CAPTION>
Date 90% of Net
Number of Proceeds Fully
Maximum Limited Invested or
Name of Offering Partnership Committed to
Partnership Amount (1) Date Closed Units Sold Investment (2)
- ----------- ---------- ----------- ---------- --------------
<S> <C>
CNL Income $15,000,000 December 31, 1986 30,000 December 1986
Fund, Ltd. (30,000 units)
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<PAGE>
CNL Income $25,000,000 August 21, 1987 50,000 November 1987
Fund II, Ltd. (50,000 units)
CNL Income $25,000,000 April 29, 1988 50,000 June 1988
Fund III, Ltd. (50,000 units)
CNL Income $30,000,000 December 6, 1988 60,000 February 1989
Fund IV, Ltd. (60,000 units)
CNL Income $25,000,000 June 7, 1989 50,000 December 1989
Fund V, Ltd. (50,000 units)
CNL Income $35,000,000 January 19, 1990 70,000 May 1990
Fund VI, Ltd. (70,000 units)
CNL Income $30,000,000 August 1, 1990 30,000,000 January 1991
Fund VII, Ltd. (30,000,000 units)
CNL Income $35,000,000 March 7, 1991 35,000,000 September 1991
Fund VIII, Ltd. (35,000,000 units)
CNL Income $35,000,000 September 6, 1991 3,500,000 November 1991
Fund IX, Ltd. (3,500,000 units)
CNL Income $40,000,000 March 18, 1992 4,000,000 June 1992
Fund X, Ltd. (4,000,000 units)
CNL Income $40,000,000 September 28, 1992 4,000,000 September 1992
Fund XI, Ltd. (4,000,000 units)
CNL Income $45,000,000 March 15, 1993 4,500,000 July 1993
Fund XII, Ltd. (4,500,000 units)
CNL Income $40,000,000 August 26, 1993 4,000,000 August 1993
Fund XIII, Ltd. (4,000,000 units)
CNL Income $45,000,000 February 22, 1994 4,500,000 May 1994
Fund XIV, Ltd. (4,500,000 units)
CNL Income $40,000,000 September 1, 1994 4,000,000 December 1994
Fund XV, Ltd. (4,000,000 units)
CNL Income $45,000,000 June 12, 1995 4,500,000 August 1995
Fund XVI, Ltd. (4,500,000 units)
CNL Income $30,000,000 September 19, 1996 3,000,000 December 1996
Fund XVII, Ltd. (3,000,000 units)
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<PAGE>
CNL Income $35,000,000 (3) (3) (3)
Fund XVIII, Ltd. (3,500,000 units)
</TABLE>
- ----------------
(1) The amount stated includes the exercise by the general partners of each
partnership of their option to increase by $5,000,000 the maximum size of
the offering of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income
Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XII, Ltd.,
CNL Income Fund XIV, Ltd., CNL Income Fund XVI, Ltd, and CNL Income Fund
XVIII, Ltd.
(2) For a description of the property acquisitions by these limited
partnerships, see the table set forth on the following page.
(3) As of December 31, 1997, CNL Income Fund XVIII, Ltd., which is offering a
maximum of 3,500,000 limited partnership units ($35,000,000), had accepted
subscriptions for $35,000,000 and had received subscriptions totalling
$34,145,759 (3,414,576 units). As of such date, CNL Income Fund XVIII, Ltd.
had purchased 22 properties. On February 6, 1998, CNL Income Fund XVIII,
Ltd.'s offering terminated upon receipt of the remaining proceeds of
$854.241, representing the remaining 85,424 units.
As of December 31, 1997, Mr. Seneff and Mr. Bourne, directly or through
affiliated entities, also had served as joint general partners of 69 nonpublic
real estate limited partnerships. The offerings of 68 of these 69 nonpublic
limited partnerships had terminated as of December 31, 1997. These 68
partnerships raised a total of $170,327,353 from approximately 4,241 investors,
and purchased, directly or through participation in a joint venture or limited
partnership, interests in a total of 206 projects as of December 31, 1997. These
206 projects consist of 19 apartment projects (comprising 10% of the total
amount raised by all 68 partnerships), 13 office buildings (comprising 5% of the
total amount raised by all 68 partnerships), 159 fast-food, family-style or
casual dining restaurant property and business investments (comprising 68% of
the total amount raised by all 68 partnerships), one condominium development
(comprising .5% of the total amount raised by all 68 partnerships), four
hotels/motels (comprising 5% of the total amount raised by all 68 partnerships),
eight commercial/retail properties (comprising 11% of the total amount raised by
all 68 partnerships), and two tracts of undeveloped land (comprising .5% of the
total amount raised by all 68 partnerships). The offering of the one remaining
nonpublic limited partnership (offering totalling $15,000,000) had raised
$9,962,500 from 152 investors (approximately 66.42% of the total offering
amount) as of December 31, 1997.
Mr. Bourne also has served, without Mr. Seneff, as a general partner of
one additional nonpublic real estate limited partnership program which raised a
total of $600,000 from 13 investors and purchased, through participation in a
limited partnership, one apartment building located in Georgia with a purchase
price of $1,712,000.
Mr. Seneff also has served, without Mr. Bourne, as a general partner of
two additional nonpublic real estate limited partnerships which raised a total
of $240,000 from 12 investors and purchased two office buildings with an
aggregate purchase price of $928,390. Both of the office buildings are located
in Florida.
Of the 88 real estate limited partnerships whose offerings had closed
as of December 31, 1997 (including 17 CNL Income Fund limited partnerships) in
which Mr. Seneff and/or Mr. Bourne serve or have served as general partners in
the past, 37 invested in restaurant properties leased on a "triple-net" basis,
including seven which also invested in franchised restaurant businesses
(accounting for approximately 93% of the total amount raised by all 88 real
estate limited partnerships).
The following table sets forth summary information, as of December 31,
1997, regarding property acquisitions by the 18 limited partnerships that,
either individually or through a joint venture or partnership arrangement,
acquired restaurant properties and that have investment objectives similar to
those of the Company.
<TABLE>
<CAPTION>
Name of Type of Method of Type of
Partnership Property Location Financing Program
- ----------- -------- -------- --------- -------
<S> <C>
CNL Income 22 fast-food or AL, AZ, CA, FL, All cash Public
Fund, Ltd. family-style GA, LA, MD, OK,
restaurants PA, TX, VA, WA
CNL Income 47 fast-food or AL, AZ, CO, FL, All cash Public
Fund II, Ltd. family-style GA, IL, IN, LA, MI,
restaurants MN, MO, NC, NM,
OH, TX, WA, WY
CNL Income 35 fast-food or AZ, CA, CO, FL, All cash Public
Fund III, Ltd. family-style GA, IA, IL, IN, KS,
restaurants KY, MD, MI, MN,
MO, NC, NE, OK,
TX
CNL Income 45 fast-food or AL, DC, FL, GA, All cash Public
Fund IV, Ltd. family-style IL, IN, KS, MA,
restaurants MD, MI, MS, NC,
OH, PA, TN, TX,
VA
CNL Income 34 fast-food or AZ, FL, GA, IL, IN, All cash Public
Fund V, Ltd. family-style MI, NH, NY, OH,
restaurants SC, TN, TX, UT,
WA
CNL Income 51 fast-food or AR, AZ, FL, GA, All cash Public
Fund VI, Ltd. family-style IL, IN, MA, MI,
restaurants MN, NC, NE, NM,
NY, OH, OK, PA,
TN, TX, VA, WA,
WY
CNL Income 49 fast-food or AZ, CO, FL, GA, All cash Public
Fund VII, Ltd. family-style IN, LA, MI, MN,
restaurants NC, OH, SC, TN,
TX, UT, WA
CNL Income 42 fast-food or AZ, FL, IN, LA, All cash Public
Fund VIII, Ltd. family-style MI, MN, NC, NY,
restaurants OH, TN, TX, VA
CNL Income 43 fast-food or AL, CO, FL, GA, All cash Public
Fund IX, Ltd. family-style IL, IN, LA, MI,
restaurants MN, MS, NC, NH,
NY, OH, SC, TN,
TX
CNL Income 51 fast-food or AL, CA, CO, FL, All cash Public
Fund X, Ltd. family-style ID, IL, LA, MI,
restaurants MO, MT, NC, NH,
NM, NY, OH, PA,
SC, TN, TX
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<PAGE>
CNL Income 40 fast-food or AL, AZ, CA, CO, All cash Public
Fund XI, Ltd. family-style CT, FL, KS, LA,
restaurants MA, MI, MS, NC,
NH, NM, OH, OK,
PA, SC, TX, VA,
WA
CNL Income 49 fast-food or AL, AZ, CA, FL, All cash Public
Fund XII, Ltd. family-style GA, LA, MO, MS,
restaurants NC, NM, OH, SC,
TN, TX, WA
CNL Income 50 fast-food or AL, AR, AZ, CA, All cash Public
Fund XIII, Ltd. family-style CO, FL, GA, IN,
restaurants KS, LA, MD, NC,
OH, PA, SC, TN,
TX, VA
CNL Income 63 fast-food or AL, AZ, CO, FL, All cash Public
Fund XIV, Ltd. family-style GA, KS, LA, MN,
restaurants MO, MS, NC, NJ,
NV, OH, SC, TN,
TX, VA
CNL Income 54 fast-food or AL, CA, FL, GA, All cash Public
Fund XV, Ltd. family-style KS, KY, MN, MO,
restaurants MS, NC, NJ, NM,
OH, OK, PA, SC,
TN, TX, VA
CNL Income 44 fast-food or AZ, CA, CO, DC, All cash Public
Fund XVI, Ltd. family-style FL, GA, ID, IN, KS,
restaurants MN, MO, NC, NM,
NV, OH, TN, TX,
UT, WI
CNL Income 28 fast-food, CA, FL, GA, IL, IN, All cash Public
Fund XVII, Ltd. family-style or MI, NC, NV, OH,
casual dining SC, TN, TX
restaurants
CNL Income 22 fast-food, AZ, CA, FL, GA, All cash Public
Fund XVIII, Ltd. family-style or IL, KY, MD, MN,
casual dining NC, NV, NY, OH,
restaurants TN, TX
</TABLE>
--------------------------------------------
A more detailed description of the acquisitions by real estate limited
partnerships sponsored by Messrs. Bourne and Seneff is set forth in prior
performance Table VI, included in Part II of the registration statement filed
with the Securities and Exchange Commission for this offering. A copy of Table
VI is available to stockholders from the Company upon request, free of charge.
In addition, upon request to the Company, the Company will provide, without
charge, a copy of the most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission for CNL Income Fund, Ltd., CNL Income Fund
II, Ltd., CNL Income Fund III, Ltd., CNL
-32-
<PAGE>
Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL
Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., and CNL Income Fund XVIII,
Ltd., as well as a copy, for a reasonable fee, of the exhibits filed with such
reports.
In order to provide potential purchasers of Shares in the Company with
information to enable them to evaluate the prior experience of the Messrs.
Seneff and Bourne as general partners of real estate limited partnerships,
including those set forth in the foregoing table, certain financial and other
information concerning those limited partnerships with investment objectives
similar to one or more of the Company's investment objectives in which Messrs.
Seneff and Bourne are general partners is provided in the Prior Performance
Tables included as Exhibit C. Information about the previous public
partnerships, the offerings of which became fully subscribed between January
1993 and December 1997, is included therein. Potential stockholders are
encouraged to examine the Prior Performance Tables attached as Exhibit C (in
Table III), which include information as to the operating results of these prior
partnerships, for more detailed information concerning the experience of Messrs.
Seneff and Bourne.
DISTRIBUTION POLICY
DISTRIBUTIONS
The following table reflects the total Distributions and Distributions
per Share declared by the Company for each month since the Company commenced
operations.
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
Month Total Per Share Total Per Share Total Per Share
- ----- ----------- --------- ---------- --------- ----------- ---------
<S> <C>
January $ - $ - $225,354 $0.058300 $ 827,978 $0.059375
February - - 255,649 0.058300 884,806 0.059375
March - - 287,805 0.058300 980,573 0.060416
April - - 323,721 0.058300 1,091,142 0.061458
May - - 368,155 0.058300 1,202,718 0.062500
June 15,148 0.030000 407,803 0.058300 1,295,253 0.062500
July 30,682 0.030000 458,586 0.059375 1,403,187 0.062500
August 57,739 0.035000 517,960 0.059375 1,516,980 0.062500
September 84,467 0.050000 558,394 0.059375 1,677,332 0.063540
October 104,733 0.050000 615,914 0.059375 1,844,923 0.063540
November 155,665 0.058300 683,907 0.059375 1,991,289 0.063540
December 190,184 0.058300 732,824 0.059375 2,138,116 0.063540
</TABLE>
The Company intends to make regular Distributions to stockholders. The
payment of Distributions commenced in July 1995. Distributions will be made to
those stockholders who are stockholders as of the record date selected by the
Directors. Distributions will be declared monthly and paid on a quarterly basis
during the offering period and declared and paid quarterly thereafter. The
Company is required to distribute annually at least 95% of its real estate
investment trust taxable income to maintain its objective of qualifying as a
REIT. Generally, income distributed will not be taxable to the Company under
federal income tax laws if the Company complies with the provisions relating to
qualification as a REIT. If the cash available to the Company is insufficient to
pay such Distributions, the Company may obtain the necessary funds by borrowing,
issuing new securities, or selling assets. These methods of obtaining funds
could affect future Distributions by increasing operating costs. To the extent
that Distributions to stockholders exceed earnings and profits, such amounts
constitute a return capital for federal income tax purposes, although such
Distributions will not reduce stockholders' aggregate Invested Capital. For the
years ended December 31, 1997, 1996 and 1995, the Company declared and made
Distributions totalling $16,854,297,
-33-
<PAGE>
$5,436,072 and $638,618, respectively, of which 93.33%, 90.25% and 59.82%,
respectively, of such amounts were characterized as ordinary income and 6.67%,
9.75% and 40.18%, respectively, were characterized as return of capital for
federal income tax purposes. In addition, in January, February and March 1998,
the Company declared distributions to its stockholders totalling $2,298,433,
$2,421,992 and $2,556,539, respectively, payable in March 1998. However, no
amounts distributed to stockholders as of March 2, 1998, are required to be or
have been treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their Invested Capital. Due to the fact
that the Company had not acquired all of its Properties and was still in its
offering period as of December 31, 1997, the characterization of Distributions
for federal income tax purposes is not necessarily considered by management to
be representative of the characterization of Distributions in future years.
Distributions in kind shall not be permitted, except for distributions of
readily marketable securities; distributions of beneficial interests in a
liquidating trust established for the dissolution of the Company and the
liquidation of its assets in accordance with the terms of the Articles of
Incorporation; or distributions of in-kind property as long as the Directors (i)
advise each stockholder of the risks associated with direct ownership of the
property; (ii) offer each stockholder the election of receiving in-kind property
distributions; and (iii) distribute in-kind property only to those stockholders
who accept the Directors' offer.
SUMMARY OF THE
ARTICLES OF INCORPORATION AND BYLAWS
DESCRIPTION OF CAPITAL STOCK
The Company has authorized a total of 156,000,000 shares of capital
stock, consisting of 75,000,000 shares of Common Stock, $.01 par value per
share, 3,000,000 shares of Preferred Stock ("Preferred Stock"), and 78,000,000
additional shares of excess stock ("Excess Shares"), $.01 par value per share.
Of the 78,000,000 Excess Shares, 75,000,000 are issuable in exchange for Common
Stock and 3,000,000 are issuable in exchange for Preferred Stock as described
below at "-- Restriction of Ownership." As of March 2, 1998, the Company had
40,266,441 shares of Common Stock outstanding (including 20,000 issued to the
Advisor prior to the commencement of the Initial Offering and 246,441 issued
pursuant to the Reinvestment Plan) and no Preferred Stock or Excess Shares
outstanding.
The Company's annual meeting of stockholders is scheduled to be held on
May 4, 1998, at which time the stockholders will vote regarding an amendment to
the Company's Amended and Restated Articles of Incorporation to increase the
number of authorized shares of capital stock to 206,000,000 shares (consisting
of 125,000,000 shares of Common Stock, 3,000,000 shares of Preferred Stock and
78,000,000 Excess Shares). The Board of Directors may determine to engage in
future offerings of Common Stock of up to the number of unissued authorized
shares of Common Stock available.
EXPERTS
The audited consolidated financial statements (including the financial
statement schedules) of the Company, as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996 and 1995, included in this Prospectus,
have been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
DEFINITIONS
"1997 Offering" means the public offering of the Company of 27,500,000
shares of Common Stock, including 2,500,000 shares available pursuant to the
Reinvestment Plan, which commenced in February 1997 and terminated on March 2,
1998.
-34-
<PAGE>
EXHIBIT B
FINANCIAL INFORMATION
THE FINANCIAL STATEMENTS INCLUDED IN
THIS EXHIBIT B UPDATE AND REPLACE
EXHIBIT B TO THE ATTACHED PROSPECTUS,
DATED JANUARY 26, 1998.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO UPDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of December 31, 1997 B-2
Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1997 B-3
Notes to Pro Forma Consolidated Financial Statements for the year ended December
31, 1997 B-4
Audited Consolidated Financial Statements:
Report of Independent Accountants B-7
Consolidated Balance Sheets as of December 31, 1997 and 1996 B-8
Consolidated Statements of Earnings for the years ended December 31, 1997,
1996 and 1995 B-9
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995 B-10
Consolidated Statements of Cash Flows for the years ended December
31, 1997, 1996 and 1995 B-11
Notes to Consolidated Financial Statements for the years ended December
31, 1997, 1996 and 1995 B-13
Financial Statement Schedules:
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1997 B-32
Notes to Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1997 B-48
Schedule IV - Mortgage Loans on Real Estate as of December 31, 1997 B-50
Notes to Schedule IV - Mortgage Loans on Real Estate as of December 31, 1997 B-51
</TABLE>
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Pro Forma Consolidated Balance Sheet of the Company gives
effect to (i) property acquisition transactions from inception through December
31, 1997, including the receipt of $361,729,709 in gross offering proceeds from
the sale of 36,172,971 shares of common stock and the application of such
proceeds to purchase 244 properties (including 178 properties which consist of
land and building, one property through a joint venture arrangement which
consists of land and building, 21 properties which consist of building only and
44 properties which consist of land only), ten of which were under construction
at December 31, 1997, to provide mortgage financing to the lessees of the 44
properties consisting of land only, and to pay organizational and offering
expenses, acquisition fees and miscellaneous acquisition expenses, (ii) the
receipt of $40,734,704 in gross offering proceeds from the sale of 4,073,470
additional shares of common stock during the period January 1, 1998 through
March 2, 1998, (iii) the application of such funds to purchase six additional
properties acquired during the period January 1, 1998 through March 2, 1998 (all
six of which are under construction), to pay additional costs for the ten
properties under construction at December 31, 1997, to pay offering expenses,
acquisition fees and miscellaneous acquisition expenses, and (iv) the
application of such funds to purchase ten properties, including eight properties
consisting of land and building and two properties consisting of building only,
for which the Company has made initial commitments to acquire as of March 2,
1998, all as reflected in the pro forma adjustments described in the related
notes. The Pro Forma Consolidated Balance Sheet as of December 31, 1997,
includes the transactions described in (i) above from the historical
consolidated balance sheet, adjusted to give effect to the transactions in (ii),
(iii) and (iv) above, as if they had occurred on December 31, 1997.
The Pro Forma Consolidated Statement of Earnings for the year ended
December 31, 1997, includes the historical operating results of the properties
described in (i) above from the dates of their acquisitions plus operating
results for three of the properties that were acquired by the Company during the
period January 1, 1997 through March 2, 1998, and had a previous rental history
prior to the Company's acquisition of such properties, from (A) the later of (1)
the date the property became operational as a rental property by the previous
owner or (2) January 1, 1997, to (B) the earlier of (1) the date the property
was acquired by the Company or (2) the end of the pro forma period presented. No
pro forma adjustments have been made to the Pro Forma Consolidated Statement of
Earnings for the remaining properties acquired by the Company during the period
January 1, 1997 through March 2, 1998, or the properties for which the Company
has made initial commitments to acquire as of March 2, 1998, due to the fact
that these properties did not have a previous rental history.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates, or been in effect during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as predictive of the Company's financial results or conditions in the
future.
B-1
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $205,338,186 $ 12,897,271 (a)
8,697,232 (b) $226,932,689
Net investment in direct
financing leases (c) 47,613,595 2,054,464 (b) 49,668,059
Cash and cash equivalents 47,586,777 11,239,389 (a)
(10,205,000)(b) 48,621,166
Certificates of deposit 2,008,224 2,008,224
Receivables, less allowance for
doubtful accounts 635,796 635,796
Notes receivable 13,548,044 13,548,044
Mortgage notes receivable 17,622,010 17,622,010
Accrued rental income 1,772,261 1,772,261
Intangibles and other assets 2,952,869 1,177,268 (a)
(546,696)(b) 3,583,441
------------ ------------ ------------
$339,077,762 $ 25,313,928 $364,391,690
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $ 2,459,043 $ 2,459,043
Accrued construction costs
payable 10,978,211 $(10,978,211)(a) -
Accounts payable and other
accrued expenses 1,060,497 1,060,497
Due to related parties 1,524,294 1,524,294
Rents paid in advance 517,428 517,428
Deferred rental income 557,576 38,252 (a) 595,828
Other payables 56,878 56,878
Total liabilities 17,153,927 (10,939,959) 6,213,968
Minority interest 285,734 285,734
Stockholders' equity:
Preferred stock, without par
value. Authorized and unissued
3,000,000 shares - -
Excess shares, $0.01 par value per
share. Authorized and unissued
78,000,000 shares - -
Common stock, $0.01 par value per
share. Authorized 75,000,000
shares; issued and outstanding
36,192,971 shares; issued and
outstanding, as adjusted,
40,266,441 shares 361,930 40,734 (a) 402,664
Capital in excess of par value 323,525,961 36,213,153 (a) 359,739,114
Accumulated distributions in
excess of net earnings (2,249,790) (2,249,790)
------------ ------------ ------------
321,638,101 36,253,887 357,891,988
------------ ------------ ------------
$339,077,762 $ 25,313,928 $364,391,690
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma consolidated
financial statements.
B-2
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Revenues:
Rental income from
operating leases $12,457,200 $ 20,249 (1) $12,477,449
Earned income from
direct financing leases (6) 3,033,415 3,033,415
Interest income from
mortgage notes receivable 1,687,456 1,687,456
Other interest income 2,254,375 (9,189)(2) 2,245,186
Other income 25,487 25,487
---------- --------- ----------
19,457,933 11,060 19,468,993
---------- --------- ----------
Expenses:
General operating and
administrative 944,763 944,763
Professional services 65,962 65,962
Asset and mortgage management
fees to related party 804,879 1,506 (3) 806,385
State taxes 251,358 251,358
Depreciation and amortization 1,795,062 4,321 (4) 1,799,383
--------- --------- ---------
3,862,024 5,827 3,867,851
--------- --------- ---------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 15,595,909 5,233 15,601,142
Minority Interest in Income of
Consolidated Joint Venture (31,453) (31,453)
----------- --------- -----------
Net Earnings $15,564,456 $ 5,233 $15,569,689
=========== ========= ===========
Earnings Per Share of
Common Stock (Basic
and Diluted) (5) $ 0.66 $ 0.66
=========== ===========
Weighted Average Number of
Shares of Common Stock
Outstanding (5) 23,423,868 23,423,868
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated
financial statements.
B-3
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Balance Sheet:
- -------------------------------------
(a) Represents gross proceeds of $40,734,704 from the issuance of 4,073,471
shares of common stock during the period January 1, 1998 through March
2, 1998 and the receipt of $38,252 of rental income during construction
(capitalized as deferred rental income) used (i) to acquire six
properties (all of which consist of land and building) for $8,166,301,
(ii) to fund estimated construction costs of $15,053,387 ($10,978,211
of which was accrued as construction costs payable at December 31,
1997) relating to ten wholly owned properties under construction at
December 31, 1997, (iii) to pay acquisition fees of $1,833,062
($655,794 of which was allocated to properties acquired through March
2, 1998 and $1,177,268 of which was classified as other assets and will
be allocated to future properties) and (iv) to pay selling commissions
and offering expenses (stock issuance costs) of $4,480,817, which have
been netted against capital in excess of par value, leaving $11,239,389
in cash and cash equivalents for future investment.
The pro forma adjustment to land and buildings on operating leases as a
result of the above transactions were as follows:
<TABLE>
<CAPTION>
Estimated purchase
price (including
construction and
closing costs) Acquisition fees
and additional allocated to
construction costs property Total
------------------ -------- -----
<S> <C>
Golden Corral in Edmond, OK $ 1,495,908 $ 80,138 $ 1,576,046
Golden Corral in Dubuque, IA 1,527,271 81,818 1,609,089
Tumbleweed Southwest Mesquite
Grill & Bar in Hermitage, TN 1,362,770 73,006 1,435,776
Tumbleweed Southwest Mesquite
Grill & Bar in Clarksville, TN 1,416,585 75,888 1,492,473
Arby's in Jacksonville, FL 984,017 52,715 1,036,732
Jack in the Box in Los Angeles, CA 1,379,750 73,915 1,453,665
Ten wholly owned properties under
construction at December 31, 1997 4,075,176 218,314 4,293,490
----------- ----------- -----------
$12,241,477 $ 655,794 $12,897,271
=========== =========== ===========
(b) Represents the use of the Company's net offering proceeds to acquire
ten properties (including eight properties consisting of land and
building and two properties consisting of building only) for which the
Company had made initial commitments to purchase as of March 2, 1998,
for an estimated cost of $10,205,000, and the allocation of $546,696 of
acquisition fees to these ten properties. See "Business Pending
Investments" for a detailed description of these initial commitments.
The pro forma adjustment to land and buildings and net investment in
direct financing leases as a result of the above commitments were as
follows:
Estimated purchase
price (including
construction and
closing costs) Acquisition fees
and additional allocated to
construction costs property Total
------------------ ---------------- -----------
Initial commitments to acquire ten
properties as of March 2, 1998 $10,205,000 $ 546,696 $10,751,696
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $ 8,697,232
Net investment in direct financing leases 2,054,464
-----------
$10,751,696
===========
</TABLE>
(c) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated
as direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental payments received.
B-4
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Statement of Earnings:
- ---------------------------------------------
(1) Represents rental income from operating leases and earned income from
direct financing leases for three of the properties acquired during the
period January 1, 1997 through March 2, 1998, which had a previous
rental history prior to the acquisition of the property by the Company
(the "Pro Forma Properties"), for the period commencing (A) the later
of (i) the date the Pro Forma Property became operational as a rental
property by the previous owner or (ii) January 1, 1997, to (B) the
earlier of (i) the date the Pro Forma Property was acquired by the
Company or (ii) the end of the pro forma period presented. Each of the
three Pro Forma Properties was acquired from an affiliate who had
purchased and temporarily held title to the property. The
noncancellable leases for the Pro Forma Properties in place during the
period the affiliate owned the properties were assigned to the Company
at the time the Company acquired the properties. The following presents
the actual date the Pro Forma Properties were acquired or placed in
service by the Company as compared to the date the Pro Forma Properties
were treated as becoming operational as a rental property for purposes
of the Pro Forma Consolidated Statement of Earnings.
Date Pro Forma
Date Placed Property Became
in Service Operational as
By the Company Rental Property
-------------- ---------------
Burger King in Kent, OH February 1997 December 1996
Golden Corral in
Hopkinsville, KY February 1997 February 1997
Jack in the Box in
Folsom, CA October 1997 September 1997
In accordance with generally accepted accounting principles, lease
revenue from leases accounted for under the operating method is
recognized over the terms of the leases. For operating leases providing
escalating guaranteed minimum rents, income is reported on a
straight-line basis over the terms of the leases. For leases accounted
for as direct financing leases, future minimum lease payments are
recorded as a receivable. The difference between the receivable and the
estimated residual values less the cost of the properties is recorded
as unearned income. The unearned income is amortized over the lease
terms to provide a constant rate of return. Accordingly, pro forma
rental income from operating leases and earned income from direct
financing leases does not necessarily represent rental payments that
would have been received if the properties had been operational for the
full pro forma period.
Generally, the leases provide for the payment of percentage rent in
addition to base rental income. However, due to the fact that no
percentage rent was due under the leases for the Pro Forma Properties
during the portion of 1997 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the year ended December 31, 1997.
(2) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the
previous owners or (ii) January 1, 1997, through (B) the earlier of (i)
the actual dates of acquisition by the Company or (ii) the end of the
pro forma period presented, as described in Note (1) above. The
estimated pro forma adjustment is based upon the fact that interest
income on interest bearing accounts was earned at a rate of
approximately four percent per annum by the Company during the year
ended December 31, 1997.
B-5
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Statement of Earnings - Continued:
(3) Represents incremental increase in asset management fees relating to
the Pro Forma Properties for the period commencing (A) on the later of
(i) the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) January 1, 1997 through (B)
the earlier of (i) the date the Pro Forma Properties were acquired by
the Company or (ii) the end of the pro forma period presented, as
described in Note (1) above. Asset management fees are equal to 0.60%
of the Company's Real Estate Asset Value (estimated to be approximately
$3,392,000 for the Pro Forma Properties for the year ended December 31,
1997), as defined in the Company's prospectus.
(4) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(5) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the year
ended December 31, 1997.
(6) See Note (c) under "Pro Forma Consolidated Balance Sheet" for a
description of direct financing leases.
B-6
<PAGE>
Report of Independent Accountants
To the Board of Directors
CNL American Properties Fund, Inc.
We have audited the accompanying consolidated balance sheets of CNL American
Properties Fund, Inc. (a Maryland corporation) and its subsidiary as of December
31, 1997 and 1996, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997 and the related financial statement schedules. These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CNL American
Properties Fund, Inc. and its subsidiary as of December 31, 1997 and 1996, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole present fairly, in all material
respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
Orlando, Florida
January 22, 1998
B-7
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31,
ASSETS 1997 1996
------------ ------------
Land and buildings on operating leases,
less accumulated depreciation $205,338,186 $ 60,243,146
Net investment in direct financing leases 47,613,595 15,204,972
Cash and cash equivalents 47,586,777 42,450,088
Certificates of deposit 2,008,224 -
Receivables, less allowance for doubtful
accounts of $99,964 and $2,857 635,796 142,389
Notes receivable 13,548,044 -
Mortgage notes receivable 17,622,010 13,389,607
Accrued rental income 1,772,261 422,076
Intangibles and other assets 2,952,869 2,972,770
------------ ------------
$339,077,762 $134,825,048
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit $ 2,459,043 $ 3,521,816
Accrued construction costs payable 10,978,211 6,587,573
Accounts payable and other accrued expenses 1,060,497 79,817
Due to related parties 1,524,294 997,084
Rents paid in advance 517,428 118,900
Deferred rental income 557,576 335,849
Other payables 56,878 28,281
------------ ------------
Total liabilities 17,153,927 11,669,320
------------ ------------
Minority interest 285,734 288,301
------------ ------------
Commitments (Note 13)
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000
shares - -
Excess shares, $0.01 par value per share.
Authorized and unissued 78,000,000
and 23,000,000 shares, respectively - -
Common stock, $0.01 par value per share.
Authorized 75,000,000 and 20,000,000
shares, respectively, issued and
outstanding 36,192,971 and 13,944,715,
respectively 361,930 139,447
Capital in excess of par value 323,525,961 123,687,929
Accumulated distributions in excess of
net earnings (2,249,790) (959,949)
------------ ------------
Total stockholders' equity 321,638,101 122,867,427
------------ ------------
$339,077,762 $134,825,048
============ ============
See accompanying notes to consolidated financial statements.
B-8
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
-----------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
----------- ----------- -----------
<S> <C>
Revenues:
Rental income from operating
leases $12,457,200 $ 3,731,806 $ 510,841
Earned income from direct
financing leases 3,033,415 625,492 28,935
Interest income from
mortgage notes receivable 1,687,456 1,069,349 -
Other interest income 2,254,375 773,404 118,859
Other income 25,487 6,633 496
----------- ----------- -----------
19,457,933 6,206,684 659,131
----------- ----------- -----------
Expenses:
General operating and
administrative 944,763 542,564 134,759
Professional services 65,962 58,976 8,119
Asset and mortgage manage-
ment fees to related party 804,879 251,200 23,078
State taxes 251,358 56,184 20,189
Depreciation and amorti-
zation 1,795,062 521,871 104,131
----------- ----------- -----------
3,862,024 1,430,795 290,276
----------- ----------- -----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 15,595,909 4,775,889 368,855
Minority Interest in Income of
Consolidated Joint Venture (31,453) (29,927) (76)
----------- ----------- -----------
Net Earnings $15,564,456 $ 4,745,962 $ 368,779
=========== =========== ===========
Earnings Per Share of Common
Stock (Basic and Diluted) $ 0.66 $ 0.59 $ 0.19
=========== =========== ===========
Weighted Average Number of
Shares of Common Stock
Outstanding 23,423,868 8,071,670 1,898,350
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
B-9
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Accumulated
Common stock Capital in distributions
Number Par excess of in excess of
of shares value par value net earnings Total
--------- ----- --------- ------------ -----
<S> <C>
Balance at December 31,
1994 20,000 $ 200 $ 199,800 $ - $ 200,000
Subscriptions received
for common stock
through public offering
and distribution
reinvestment plan 3,845,416 38,454 38,415,704 - 38,454,158
Stock issuance costs - - (6,403,671) - (6,403,671)
Net earnings - - - 368,779 368,779
Distributions declared
($0.31 per share) - - - (638,618) (638,618)
---------- -------- ------------ ----------- ------------
Balance at December 31,
1995 3,865,416 38,654 32,211,833 (269,839) 31,980,648
Subscriptions received
for common stock
through public offering
and distribution
reinvestment plan 10,079,299 100,793 100,692,198 - 100,792,991
Stock issuance costs - - (9,216,102) - (9,216,102)
Net earnings - - - 4,745,962 4,745,962
Distributions declared
($0.71 per share) - - - (5,436,072) (5,436,072)
---------- -------- ------------ ----------- ------------
Balance at December 31,
1996 13,944,715 139,447 123,687,929 (959,949) 122,867,427
Subscriptions received
for common stock
through public offering
and distribution
reinvestment plan 22,248,256 222,483 222,260,077 - 222,482,560
Stock issuance costs - - (22,422,045) - (22,422,045)
Net earnings - - - 15,564,456 15,564,456
Distributions declared
($0.74 per share) - - - (16,854,297) (16,854,297)
---------- -------- ------------ ----------- ------------
Balance at December 31,
1997 36,192,971 $361,930 $323,525,961 $(2,249,790) $321,638,101
========== ======== ============ =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
B-10
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------ ------------ --------
<S> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Cash Flows From Operating Activities:
Cash received from tenants $ 15,440,803 $ 4,543,506 $ 492,488
Cash paid for expenses (1,903,876) (928,001) (113,384)
Interest received 3,539,287 1,867,035 119,355
------------ ------------ ------------
Net cash provided by operating
activities 17,076,214 5,482,540 498,459
------------ ------------ ------------
Cash Flows From Investing Activities:
Additions to land and buildings on
operating leases (143,542,667) (36,104,148) (18,835,969)
Increase in net investment in direct
financing leases (39,155,974) (13,372,621) (1,364,960)
Proceeds from sale of buildings and
equipment under direct financing
leases 7,251,510 - -
Investment in certificates of deposit (2,000,000) - -
Investment in notes receivable (12,521,401) - -
Investment in mortgage notes
receivable (4,401,982) (13,547,264) -
Collections on mortgage notes
receivable 250,732 133,850 -
Increase in intangibles and other
assets - (1,103,896) (628,142)
------------ ------------ ------------
Net cash used in investing
activities (194,119,782) (63,994,079) (20,829,071)
------------ ------------ ------------
Cash Flows From Financing Activities:
Reimbursement of acquisition,
organization, deferred offering and
stock issuance costs paid by related
parties on behalf of the Company (2,857,352) (939,798) (2,500,056)
Proceeds from borrowing on line of
credit 19,721,804 3,666,896 -
Payment on line of credit (20,784,577) (145,080) -
Contribution from minority interest
of consolidated joint venture - 97,419 200,000
Subscriptions received from
stockholders 222,482,560 100,792,991 38,454,158
Distributions to minority interest (34,020) (39,121) -
Distributions to stockholders (16,854,297) (5,439,404) (635,286)
Payment of stock issuance costs (19,542,862) (8,486,188) (3,680,704)
Other 49,001 (54,533) -
------------ ------------ -----------
Net cash provided by financing
activities 182,180,257 89,453,182 31,838,112
------------ ------------ ------------
Net Increase in Cash and Cash Equivalents 5,136,689 30,941,643 11,507,500
Cash and Cash Equivalents at Beginning of
Year 42,450,088 11,508,445 945
------------ ------------ ------------
Cash and Cash Equivalents at End of Year $ 47,586,777 $ 42,450,088 $ 11,508,445
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
B-11
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
-------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------ ------------ ------------
<S> <C>
Reconciliation of Net Earnings to Net Cash
Provided by Operating Activities:
Net earnings $ 15,564,456 $ 4,745,962 $ 368,779
------------ ------------ ------------
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 1,784,268 511,078 100,318
Amortization 10,794 69,886 3,813
Increase in receivables (905,339) (160,984) (44,749)
Decrease in net investment in direct
financing leases 1,130,095 259,740 1,078
Increase in accrued rental income (1,350,185) (382,934) (39,142)
Increase in intangibles and other
assets (6,869) (4,293) (8,090)
Increase (decrease) in accounts
payable and other accrued expenses 153,223 (2,896) 38,461
Increase (decrease) in due to related
parties, excluding reimbursement of
acquisition, organization, deferred
offering and stock issuance costs
paid on behalf of the Company 15,466 (30,929) 42,868
Increase in rents paid in advance 398,528 93,549 25,351
Increase in deferred rental income 221,727 335,849 -
Increase in other payables 28,597 18,585 9,696
Increase in minority interest 31,453 29,927 76
------------ ------------ ------------
Total adjustments 1,511,758 736,578 129,680
------------ ------------ ------------
Net Cash Provided by Operating Activities $ 17,076,214 $ 5,482,540 $ 498,459
============ ============ ============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Related parties paid certain acquisition,
organization, deferred offering
and stock issuance costs on behalf
of the Company as follows:
Acquisition costs $ 514,908 $ 206,103 $ 131,629
Organization costs - - 20,000
Deferred offering costs - 466,405 -
Stock issuance costs 2,351,244 338,212 2,084,145
------------ ------------ ------------
$ 2,866,152 $ 1,010,720 $ 2,235,774
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
B-12
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies:
Organization and Nature of Business - CNL American Properties Fund,
Inc. (the "Company") was organized in Maryland on May 2, 1994,
primarily for the purpose of acquiring, directly or indirectly through
joint venture or co-tenancy arrangements, restaurant properties (the
"Properties") to be leased on a long-term, triple-net basis to
operators of certain national and regional fast-food, family-style and
casual dining restaurant chains. The Company also provides financing
(the "Mortgage Loans") for the purchase of buildings, generally by
tenants that lease the underlying land from the Company. In addition,
the Company offers furniture, fixtures and equipment financing through
leases or loans ("Secured Equipment Leases") to operators of restaurant
chains.
The Company was a development stage enterprise from May 2, 1994 through
June 1, 1995. Since operations had not begun, activities through June
1, 1995, were devoted to organization of the Company.
Principles of Consolidation - The Company accounts for its 85.47%
interest in CNL/Corral South Joint Venture using the consolidation
method. Minority interest represents the minority joint venture
partner's proportionate share of the equity in the Company's
consolidated joint venture. All significant intercompany accounts and
transactions have been eliminated.
Real Estate and Lease Accounting - The Company records the acquisition
of land, buildings and equipment at cost, including acquisition and
closing costs. In addition, interest costs incurred during construction
are capitalized in accordance with accounting standards. Land and
buildings are leased to unrelated third parties on a triple-net basis,
whereby the tenant is generally responsible for all operating expenses
relating to the Property, including property taxes, insurance,
maintenance and repairs. In addition, the Company offers equipment
financing through leases or loans. The Property leases are accounted
for using either the direct financing or the operating method. The
Secured Equipment Leases are accounted for using the direct financing
method. Such methods are described below:
B-13
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (Note 5). Unearned income is deferred and
amortized to income over the lease terms so as to produce a
constant periodic rate of return on the Company's net
investment in the leases.
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals (including rental payments, if
any, required during the construction of a Property) vary
during the lease term, income is recognized on a straight-line
basis so as to produce a constant periodic rent over the lease
term commencing on the date the Property is placed in service.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. In contrast, deferred
rental income represents the aggregate amount of scheduled
rental payments to date (including rental payments due during
construction and prior to the Property being placed in
service) in excess of income recognized on a straight-line
basis over the lease term commencing on the date the Property
is placed in service.
When the Properties or equipment are sold, the related cost and
accumulated depreciation for operating leases and the net investment
for direct financing leases, plus any accrued rental income or deferred
rental income, will be removed from the accounts and any gains or
losses from sales will be reflected in income. Management reviews its
Properties for
B-14
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through
operations. Management determines whether an impairment in value has
occurred by comparing the estimated future undiscounted cash flows,
including the residual value of the Property, with the carrying cost of
the individual Property. If an impairment is indicated, the assets are
adjusted to their fair value.
Mortgage Loans - The Company accounts for loan origination fees and
costs incurred in connection with Mortgage Loans in accordance with
Statement of Financial Accounting Standards No. 91, "Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring
Loans and Initial Direct Costs of Leases". This statement requires the
deferral of loan origination fees and the capitalization of direct loan
costs. The costs capitalized, net of the fees deferred, are amortized
to interest income as an adjustment of yield over the life of the
loans. The unpaid principal and accrued interest on the Mortgage Loans,
plus the unamortized balance of such fees and costs are included in
mortgage notes receivable (see Note 7).
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks, money market funds (some of which are
backed by government securities) and certificates of deposit (with
maturities of three months or less when purchased). Cash equivalents
are stated at cost plus accrued interest, which approximates market
value.
Cash accounts maintained on behalf of the Company in demand deposits at
commercial banks, money market funds and certificates of deposit may
exceed federally insured levels; however, the Company has not
experienced any losses in such accounts. The Company limits investment
of temporary cash investments to financial institutions with high
credit standing; therefore, management believes it is not exposed to
any significant credit risk on cash and cash equivalents.
B-15
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
Organization Costs - Organization costs are amortized over five years
using the straight-line method and are included in intangibles and
other assets. For the years ended December 31, 1997 and 1996,
accumulated amortization of $10,318 and $6,318, respectively, was
recorded.
Loan Costs - Loan costs incurred in connection with the Company's
$35,000,000 line of credit have been capitalized and are being
amortized over the term of the loan commitment using the effective
interest method. Income or expense associated with interest rate swap
agreements related to the line of credit is recognized on the accrual
basis as earned or incurred through an adjustment to interest expense.
Loan costs are included in intangibles and other assets. As of December
31, 1997 and 1996, the Company had aggregate gross loan costs of
$100,634 and $54,533, respectively. For the years ended December 31,
1997 and 1996, accumulated amortization of $61,783 and $22,034,
respectively, was recorded.
Income Taxes - The Company has made an election to be taxed as a real
estate investment trust ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, and related regulations. The
Company generally will not be subject to federal corporate income taxes
on amounts distributed to stockholders, providing it distributes at
least 95 percent of its REIT taxable income and meets certain other
requirements for qualifying as a REIT. Accordingly, no provision for
federal income taxes has been made in the accompanying consolidated
financial statements. Notwithstanding the Company's qualification for
taxation as a REIT, the Company is subject to certain state taxes on
its income and property.
Earnings Per Share - Basic earnings per share are calculated based upon
net earnings (income available to common stockholders) divided by the
weighted average number of shares of common stock outstanding during
the reporting period. The Company does not have any dilutive potential
common shares.
Use of Estimates - Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
B-16
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
1. Significant Accounting Policies - Continued:
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform with the 1997
presentation. These reclassifications had no effect on stockholders'
equity or net earnings.
New Accounting Standards - In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
128, "Earnings Per Share". The statement, which is effective for fiscal
years ending after December 15, 1997, provides for a revised
computation of earnings per share (see Earnings Per Share). Adoption of
this standard had no material effect on the Company's financial
position or results of operations.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure". The statement, which is effective
for fiscal years ending after December 15, 1997, provides for
disclosure of the Company's capital structure. At this time, the
Company's Board of Directors has not determined the relative rights,
preferences, and privileges of each class or series of preferred stock
authorized. Since the Company has not issued preferred shares, the
disclosures to this standard are not applicable.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive
Income". The statement, which is effective for fiscal years beginning
after December 15, 1997, requires the reporting of net earnings and all
other changes to equity during the period, except those resulting from
investments by owners and distributions to owners, in a separate
statement that begins with net earnings. Currently, the Company's only
component of comprehensive income is its net earnings. The Company does
not believe that adoption of this standard will have a material effect
on the Company's financial position or results of operations.
2. Public Offering:
The Company has a currently effective registration statement on Form
S-11 with the Securities and Exchange Commission for the sale of
27,500,000 shares ($275,000,000) of common stock (the "1997 Offering").
Of the 27,500,000 shares of common
B-17
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
2. Public Offering - Continued:
stock, the Company has registered, 2,500,000 shares ($25,000,000) are
available only to stockholders who elect to participate in the
Company's reinvestment plan. The Company has adopted a reinvestment
plan pursuant to which stockholders may elect to have the full amount
of their cash distributions from the Company reinvested in additional
shares of common stock of the Company. Prior to the 1997 Offering, the
Company received proceeds from its initial offering (the "Initial
Offering"), of $150,591,765 (15,059,177 shares), including $591,765
(59,177 shares) issued pursuant to the Company's reinvestment plan. As
of December 31, 1997, the Company had received aggregate subscription
proceeds from its Initial Offering and 1997 Offering of $361,729,709
(36,172,971 shares), including $2,464,413 (246,441 shares) issued
through the reinvestment plan.
On October 10, 1997, the Company filed a registration statement with
the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to 34,500,000 shares of common stock (the
"1998 Offering") in an offering expected to commence immediately
following the completion of the Company's 1997 Offering. Of the
34,500,000 shares of common stock to be offered, 2,000,000 will be
available only to stockholders purchasing shares through the
reinvestment plan. The price per share and the other terms of the 1998
Offering, including the percentage of gross proceeds payable to the
managing dealer for selling commissions and expenses in connection with
the offering, payable to the advisor for acquisition fees and
acquisition expenses and reimbursable to the advisor for offering
expenses, will be the same as those for the Company's 1997 Offering.
Net proceeds from the 1998 Offering will be invested in additional
Properties and Mortgage Loans.
3. Leases:
The Company leases its land, buildings and equipment to operators of
national and regional fast-food, family-style and casual dining
restaurants. The leases are accounted for under the provisions of
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases". For Property leases classified as direct financing leases, the
building portions of the majority of the leases are accounted for as
direct financing leases while the land portions of these leases are
B-18
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
3. Leases - Continued:
accounted for as operating leases. Substantially all Property leases
have initial terms of 15 to 20 years (expiring between 2006 and 2017)
and provide for minimum rentals. In addition, the majority of the
Property leases provide for contingent rentals and/or scheduled rent
increases over the terms of the leases. Each tenant also pays all
property taxes and assessments, fully maintains the interior and
exterior of the building and carries insurance coverage for public
liability, property damage, fire and extended coverage. The lease
options for the Property leases generally allow tenants to renew the
leases for two to four successive five-year periods subject to the same
terms and conditions as the initial lease. Most leases also allow the
tenant to purchase the Property at the greater of the Company's
purchase price plus a specified percentage of such purchase price or
fair market value after a specified portion of the lease has elapsed.
The Secured Equipment Leases recorded as direct financing leases as of
December 31, 1997 provide for minimum rentals payable monthly and have
lease terms ranging from four to seven years. The Secured Equipment
Leases generally include an option for the lessee to acquire the
equipment at the end of the lease term for a nominal fee.
4. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1997 1996
------------ ------------
Land $106,616,360 $ 33,850,436
Buildings 95,518,149 24,152,610
------------ ------------
202,134,509 58,003,046
Less accumulated
depreciation (2,395,665) (611,396)
------------ ------------
199,738,844 57,391,650
Construction in
progress 5,599,342 2,851,496
------------ ------------
$205,338,186 $ 60,243,146
============ ============
B-19
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
4. Land and Buildings on Operating Leases - Continued:
Some leases provide for scheduled rent increases throughout the lease
term and/or rental payments during the construction of a Property prior
to the date it is placed in service. Such amounts are recognized on a
straight-line basis over the terms of the leases commencing on the date
the Property is placed in service. For the years ended December 31,
1997, 1996 and 1995, the Company recognized $1,941,054, $517,067 and
$39,142, respectively, of such rental income.
During 1997, the Company sold five of its Properties and the equipment
relating to two Secured Equipment Leases to tenants. The Company
received net proceeds of approximately $7,252,000, which were equal to
the carrying value of the Properties and the net investment in the
direct financing leases for the equipment at the time of the sales. As
a result, no gain or loss was recognized for financial reporting
purposes. The Company used the net sales proceeds relating to the sale
of the equipment to repay amounts previously advanced under its line of
credit (see Note 8). The Company reinvested the proceeds from the sale
of Properties in additional Properties.
The following is a schedule of future minimum lease payments to be
received on the noncancellable operating leases at December 31, 1997:
1998 $ 18,891,310
1999 18,931,518
2000 18,960,643
2001 19,187,537
2002 19,982,822
Thereafter 265,518,312
------------
$361,472,142
============
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales. These
amounts also do not include minimum lease payments that will become due
when Properties under development are completed (see Note 13).
B-20
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
5. Net Investment in Direct Financing Leases:
The following lists the components of net investment in direct
financing leases at December 31:
1997 1996
------------ ------------
Minimum lease payments
receivable $ 98,121,853 $ 30,162,465
Estimated residual values 6,889,570 1,346,332
Secured equipment lease
interest receivable 67,614 18,286
Less unearned income (57,465,442) (16,322,111)
------------ ------------
Net investment in direct
financing leases $ 47,613,595 $ 15,204,972
============ ============
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1997:
1998 6,820,081
1999 6,820,081
2000 6,872,134
2001 6,644,067
2002 6,546,936
Thereafter 64,418,554
-----------
$98,121,853
===========
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 4).
6. Notes Receivable:
In October 1997, the Company entered into two promissory notes with a
borrower for equipment financing, totalling $13,225,000 which are
collateralized by restaurant equipment. The promissory notes bear
interest at a rate of ten percent per annum and will be collected in 84
equal monthly installments totalling $219,550 beginning January 1,
1998. At December 31, 1997, the Company had advanced $12,521,400 to the
borrower and had a remaining balance to fund of $703,600 (included in
accounts payable and other accrued expenses at December 31, 1997).
Notes receivable at December 31, 1997, include accrued interest of
$323,044.
B-21
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
6. Notes Receivable - Continued:
Management believes that the estimated fair value of notes receivable
at December 31, 1997 approximated the outstanding principal amount
based on estimated current rates at which similar loans would be made
to borrowers with similar credit and for similar maturities.
7. Mortgage Notes Receivable:
During 1996, in connection with the acquisition of land for 35 Pizza
Hut restaurants, the Company accepted three promissory notes in the
aggregate principal sum of $12,847,000, collateralized by mortgages on
the buildings on the 35 Pizza Hut Properties. The promissory notes bear
interest at a rate of 10.75% per annum and are being collected in 240
equal monthly installments totalling $130,426.
During 1997, in connection with the acquisition of land for nine Pizza
Hut restaurants, the Company accepted a promissory note in the
principal sum of $4,200,000, collateralized by a mortgage on the
buildings on the nine Pizza Hut Properties and two additional Pizza Hut
buildings. The promissory note bears interest at a rate of 10.5% per
annum and is being collected in 240 equal monthly installments of
$41,943.
Mortgage notes receivable consisted of the following at December 31:
1997 1996
----------- -----------
Outstanding principal $16,662,418 $12,713,151
Accrued interest income 118,887 35,285
Deferred financing income (85,448) (46,268)
Unamortized loan costs 926,153 687,439
----------- -----------
$17,622,010 $13,389,607
=========== ===========
Management believes that the estimated fair value of mortgage notes
receivable at December 31, 1997 and 1996 approximated the outstanding
principal amount based on estimated current rates at which similar
loans would be made to borrowers with similar credit and for similar
maturities.
B-22
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
8. Line of Credit:
In March 1996, the Company entered into a line of credit and security
agreement with a bank, the proceeds of which were to be used by the
Company to offer Secured Equipment Leases. The line of credit provided
that the Company would be able to receive advances of up to $15,000,000
until March 4, 1998. Generally, all advances under the line of credit
bore interest at either (i) a rate per annum equal to 215 basis points
above the Reserve Adjusted LIBOR Rate (as defined in the line of
credit) or (ii) a rate per annum equal to the bank's prime rate,
whichever the Company selected at the time advances were made. As a
condition of obtaining the line of credit, the Company agreed to grant
to the bank a first security interest in the Secured Equipment Leases.
In August 1997, the Company's $15,000,000 line of credit was amended
and restated to enable the Company to receive advances on a revolving
$35,000,000 uncollateralized line of credit (the "Line of Credit") to
provide equipment financing, to purchase and develop Properties and to
fund Mortgage Loans. The advances bear interest at a rate of LIBOR plus
1.65% or the bank's prime rate, whichever the Company selects at the
time of borrowing. Interest only is repayable monthly until July 31,
1999, at which time all remaining interest and principal shall be due.
The Line of Credit provides for two one-year renewal options.
During the years ended December 31, 1997 and 1996, the Company obtained
advances totalling $19,721,804 and $3,666,896, respectively, under the
Line of Credit and made principal payments totalling $20,784,577 and
$145,080, respectively. As of December 31, 1997 and 1996, $2,459,043
and $3,521,816, respectively, of principal was outstanding relating to
the Line of Credit, plus $14,430 and $13,164, respectively, of accrued
interest. As of December 31, 1997, the interest rate on amounts
outstanding under the Line of Credit was 7.373% (LIBOR plus 1.65%). As
of December 31, 1996, the interest rate on amounts outstanding under
the Line of Credit ranged from 7.71% to 7.82% (215 basis points above
the Reserve Adjusted LIBOR Rate). The Company believes, based on
current terms, that the carrying value of its note payable at December
31, 1997 and 1996 approximated fair value. The terms of the Line of
Credit include financial covenants which provide for the maintenance of
certain financial ratios. The Company was in compliance with such
covenants as of December 31, 1997.
B-23
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
8. Line of Credit - Continued:
During 1996, the Company entered into interest rate swap agreements
with a commercial bank to reduce the impact of changes in interest
rates on its floating rate long-term debt. The agreements effectively
change the Company's interest rate exposure on notional amounts
totalling approximately $2,110,000 of the outstanding floating rate
notes to fixed rates ranging from 8.75% to nine percent per annum. The
notional amounts of the interest rate swap agreements amortize over the
period of the agreements which approximate the term of the related
notes. As of December 31, 1997, the notional balance was approximately
$1,750,000. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements;
however, the Company does not anticipate nonperformance by the
counterparty. Management does not believe the impact of any payments of
a termination penalty, in the event the Company determines to terminate
the swap agreements prior to the end of their respective terms, would
be material to the Company's financial position or results of
operations.
Interest costs (including amortization of loan costs) incurred for the
years ended December 31, 1997 and 1996, were $544,788 and $127,012,
respectively, all of which were capitalized as part of the cost of
buildings under construction. For the years ended December 31, 1997,
and 1996, the Company paid interest of $502,680 and $91,757,
respectively. No interest was paid during the year ended December 31,
1995.
9. Stock Issuance Costs:
The Company has incurred certain expenses in connection with the public
offerings of its shares, including commissions, marketing support and
due diligence expense reimbursement fees, filing fees, legal,
accounting, printing and escrow fees, which have been deducted from the
gross proceeds of the offerings. CNL Fund Advisors, Inc. (the
"Advisor") has agreed to pay all organizational and offering expenses
(excluding commissions and marketing support and due diligence expense
reimbursement fees) which exceed three percent of the gross offering
proceeds received from the sale of shares of the Company.
During the years ended December 31, 1997, 1996 and 1995, the Company
incurred $22,422,045, $9,216,102 and $6,423,671, respectively, in
organizational and offering costs, including
B-24
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
9. Stock Issuance Costs - Continued:
$17,798,605, $8,063,439 and $3,076,333, respectively, in commissions
and marketing support and due diligence expense reimbursement fees (see
Note 11). Of these amounts, as of December 31, 1997, 1996 and 1995,
$38,041,818, $15,619,773 and $6,403,671, respectively, have been
treated as stock issuance costs and $20,000 has been treated as
organization costs. The stock issuance costs have been charged to
stockholders' equity subject to the three percent cap described above.
10. Distributions:
For the years ended December 31, 1997, 1996 and 1995, 93.33%, 90.25%
and 59.82%, respectively, of the distributions received by stockholders
were considered to be ordinary income and 6.67%, 9.75% and 40.18%,
respectively, were considered a return of capital for federal income
tax purposes. No amounts distributed to stockholders for the years
ended December 31, 1997, 1996 and 1995 are required to be or have been
treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital.
11. Related Party Transactions:
Certain directors and officers of the Company hold similar positions
with the Advisor and the managing dealer of the Company's common stock
offerings, CNL Securities Corp.
CNL Securities Corp. is entitled to receive selling commissions
amounting to 7.5% of the total amount raised from the sale of shares
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. During the years ended December 31, 1997, 1996 and
1995, the Company incurred $16,686,192, $7,559,474 and $2,884,062,
respectively, of such fees, of which approximately $15,563,500,
$7,059,000 and $2,682,000, respectively, were or will be 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. During the years ended December
31, 1997, 1996 and 1995, the Company incurred $1,112,413, $503,965 and
$192,271, respectively, of such fees, the majority of which were
reallowed to other broker-dealers and from which all bona fide due
diligence expenses were paid.
B-25
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
11. Related Party Transactions - Continued:
CNL Securities Corp. will also receive, in connection with each common
stock offering, a soliciting dealer servicing fee payable annually by
the Company beginning on December 31 of the year following the year in
which the offering terminates in the amount of 0.20% of the
stockholders' investment in the Company. CNL Securities Corp. in turn
may reallow all or a portion of such fee to soliciting dealers whose
clients purchased shares in such offering held shares on such date. As
of December 31, 1997, no such fees had been incurred.
The Advisor 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.
During the years ended December 31, 1997, 1996 and 1995, the Company
incurred $10,011,715, $4,535,685 and $1,730,437, respectively, of such
fees. Such fees are included in land and buildings on operating leases,
net investment in direct financing leases, mortgage notes receivable
and other assets.
In connection with the acquisition of Properties that are being or have
been constructed or renovated by affiliates, subject to approval by the
Company's Board of Directors, the Company may incur
development/construction management fees, payable to affiliates of the
Company. Such fees are included in the purchase price of the Properties
and are therefore included in the basis on which the Company charges
rent on the Properties. During the years ended December 31, 1997 and
1996, the Company incurred $369,570 and $159,350, respectively, of such
amounts relating to six and three Properties, respectively. No such
amounts were incurred for the year ended December 31, 1995.
For negotiating Secured Equipment Leases and supervising the Secured
Equipment Lease program, the Advisor is entitled to receive 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. During the years ended December 31, 1997 and 1996, the Company
incurred $366,865 and $70,070, respectively, in Secured Equipment Lease
servicing fees. No such amounts were incurred for the year ended
December 31, 1995.
B-26
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
11. Related Party Transactions - Continued:
The Company and the Advisor have entered into an advisory agreement
pursuant to which the Advisor will receive a monthly asset and mortgage
management fee of one-twelfth of 0.60% of the Company's real estate
asset value and the outstanding principal balance of the Mortgage Loans
as of the end of the proceeding 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 the Advisor. 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 the
Advisor shall determine. During the years ended December 31, 1997, 1996
and 1995, the Company incurred $881,668, $278,902 and $27,950
respectively, of such fees, $76,789, $27,702 and $4,872, respectively,
of which has been capitalized as part of the cost of buildings for
Properties that have been or are being constructed.
Prior to such time, if any, as shares of the Company's common stock are
listed on a national securities exchange or over-the-counter market,
the Advisor is entitled to receive a deferred, subordinated real estate
disposition fee, payable upon the sale of one or more Properties based
on the lesser of one-half of a competitive real estate commission or
three percent of the sales price if the Advisor provides a substantial
amount of services in connection with the sale. However, if the sales
proceeds are reinvested in a replacement property, no such real estate
disposition fees will be incurred until such replacement property is
sold and the net sales proceeds are distributed. The real estate
disposition fee is payable only after the stockholders receive
distributions equal to the sum of an annual, aggregate, cumulative,
noncompounded eight percent return on their invested capital
("Stockholders' 8% Return") plus their aggregate invested capital. No
deferred, subordinated real estate disposition fees have been incurred
to date.
A subordinated share of net sales proceeds will be paid to the Advisor
upon the sale of Company assets in an amount equal to ten percent of
net sales proceeds. However, if net sales proceeds are reinvested in
replacement properties or replacement Secured Equipment Leases, no such
share of net sales proceeds will be paid to the Advisor until such
replacement property or Secured Equipment Lease is sold. This amount
will be paid only after the stockholders receive distributions equal to
the sum of the stockholders' aggregate
B-27
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
11. Related Party Transactions - Continued:
invested capital and the Stockholders' 8% Return. As of December 31,
1997, no such payments have been made to the Advisor.
The Advisor and its affiliates provide accounting and administrative
services to the Company on a day-to-day basis as well as services in
connection with the offering of shares. For the years ended December
31, 1997, 1996 and 1995, expenses incurred for these services were
classified as follows:
1997 1996 1995
---------- ---------- ----------
Stock issuance costs $1,676,226 $ 769,225 $ 714,674
General operating and
administrative expenses 556,240 334,603 68,016
---------- ---------- ----------
$2,232,466 $1,103,828 $ 782,690
========== ========== ==========
During the years ended December 31, 1997, 1996 and 1995, the Company
acquired five, four and nine Properties, respectively, for
approximately $5,450,000, $2,610,000 and $6,621,000, respectively, 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.
B-28
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
11. Related Party Transactions - Continued:
The due to related parties consisted of the following at December 31:
1997 1996
---------- ----------
Due to the Advisor:
Expenditures incurred on
behalf of the Company
and accounting and
administrative services $ 126,205 $ 199,068
Acquisition fees 386,972 383,210
---------- ----------
513,177 582,278
---------- ----------
Due to CNL Securities Corp.:
Commissions 940,520 372,227
Marketing support and
due diligence expense
reimbursement fees 63,097 42,579
---------- ----------
1,003,617 414,806
---------- ----------
Due to other affiliates 7,500 -
---------- ---------
$1,524,294 $ 997,084
========== ==========
12. Concentration of Credit Risk:
The following schedule presents rental, earned and interest income from
individual lessees or borrowers, or affiliated groups of lessees or
borrowers, each representing more than ten percent of the Company's
total rental, earned income and interest income from its Properties,
Mortgage Loans and Secured Equipment Leases for at least one of the
years ended December 31:
1997 1996 1995
---------- ---------- ----------
Castle Hill Holdings V,
L.L.C., Castle Hill
Holdings VI, L.L.C.
and Castle Hill Holdings
VII, L.L.C. $2,636,004 $1,699,986 $ -
Foodmaker, Inc. 1,980,338 346,179 66,813
Houlihan's Restaurants,
Inc. 1,847,574 - -
DenAmerica Corp. 1,120,534 420,810 66,595
Golden Corral Corporation 1,064,801 577,003 212,406
Northstar Restaurants,
Inc. 328,914 329,117 73,219
Roasters Corp. 47,264 187,609 82,136
B-29
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
12. Concentration of Credit Risk - Continued:
In addition, the following schedule presents total rental, earned, and
interest income from individual restaurant chains, each representing
more than ten percent of the Company's total rental, earned income and
interest income from its Properties, Mortgage Loans and Secured
Equipment Leases and financing for at least one of the years ended
December 31:
1997 1996 1995
---------- ---------- ---------
Pizza Hut $2,636,004 $1,699,986 $ -
Golden Corral Family
Steakhouse Restaurants 2,531,941 1,459,349 212,406
Boston Market 2,338,949 547,590 73,219
Jack in the Box 1,980,338 346,179 66,813
Denny's 931,752 420,810 66,595
Kenny Rogers' Roasters 47,264 187,609 82,136
Although the Company's Properties are geographically diverse throughout
the United States and the Company's lessees and borrowers operate a
variety of restaurant concepts, failure of any one of these restaurant
chains or any one of these lessees or borrowers that contributes more
than ten percent of the Company's rental, earned income and interest
income could significantly impact the results of operations of the
Company. However, management believes that the risk of such a default
is reduced due to the essential or important nature of these Properties
for the on-going operations of the lessees and borrowers.
13. Commitments:
The Company has entered into various development agreements with
tenants which provide terms and specifications for the construction of
buildings the tenants have agreed to lease. The agreements provide a
maximum amount of development costs (including the purchase price of
the land and closing costs) to be paid by the Company. The aggregate
maximum development costs the Company has agreed to pay are
approximately $14,495,000, of which approximately $10,202,000 in land
and other costs had been incurred as of December 31, 1997. The
buildings currently under construction are expected to be operational
by June 1998. In connection with the purchase of each Property, the
Company, as lessor, entered into a long-term lease agreement. The
general terms of the lease agreements are substantially the same as
those described in Note 3.
B-30
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
------------------------------------------------------
Years Ended December 31, 1997, 1996 and 1995
14. Subsequent Events:
During the period January 1, 1998 through January 22, 1998, the Company
received subscription proceeds for an additional 1,231,779 shares
($12,317,791) of common stock.
On January 1, 1998, the Company declared distributions of $2,299,701 or
$.06354 per share of common stock, payable on March 23, 1998, to
stockholders of record on January 1, 1998.
During the period January 1, 1998 through January 22, 1998, the Company
acquired two Properties (both on which restaurants are being
constructed) for cash at a total cost of approximately $1,067,000. The
buildings under construction are expected to be operational by July
1998. In connection with the purchase of each Property, the Company as
lessor, has entered into a long-term, triple-net lease agreement.
B-31
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Properties the Company
has Invested in Under
Operating Leases:
Applebee's Restaurants:
Montclair, California - $ 874,094 $ - $ - $ -
Salinas, California - 786,475 - - -
Arby's Restaurants:
Avon, Indiana - 338,486 497,282 - -
Greensboro, North Carolina - 363,478 404,650 - -
Greenville, North Carolina - 277,986 490,143 - -
Jonesville, North Carolina - 228,364 539,764 - -
Kendallville, Indiana - 276,567 505,359 - -
Kernersville, North Carolina - 273,325 413,077 - -
Kinston, North Carolina - 268,545 485,160 - -
Lexington, North Carolina - 320,924 463,347 - -
Barb Wires Steakhouse and Saloon
Restaurants:
Cookeville, Tennessee - 511,084 - - -
Lawrence, Kansas - 493,489 - - -
Murfreesboro, Tennessee - 514,900 - - -
Nashville, Tennessee - 420,176 - - -
Bennigan's Restaurant:
Arvada, Colorado - 714,194 1,302,733 - -
Black-eyed Pea Restaurants:
Hillsboro, Texas - 403,885 - - -
Mesa, Arizona - 784,939 - - -
Boston Market Restaurants:
Arvada, Colorado - 569,452 - 641,644 -
Atlanta, Georgia - 775,523 - 456,458 -
Baltimore, Maryland - 585,818 - 866,641 -
Cedar Park, Texas - 569,769 - 296,976 -
Chanhassen, Minnesota - 376,929 639,875 - -
Collinsville, Illinois - 507,544 - 328,353 -
Corvallis, Oregon - 365,784 - 605,763 -
Dubuque, Iowa - 353,608 663,969 - -
Edgewater, Colorado - 320,463 627,371 - -
Ellisville, Missouri - 397,036 - 639,422 -
Florissant, Missouri - 705,522 - 626,845 -
Franklin, Tennessee (k) - 566,562 442,992 - -
Gambrills, Maryland - 667,992 - 661,776 -
Golden Valley, Minnesota - 665,422 - 481,311 -
Grand Island, Nebraska - 234,685 644,615 - -
Hoover, Alabama - 493,536 619,786 - -
Indianapolis, Indiana - 885,234 - 867,523 -
Jessup, Maryland - 630,950 - 720,642 -
Lansing, Michigan - 515,827 - 572,706 -
</TABLE>
B-32
<PAGE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried Life
at Close of Period (b) on Which
--------------------------------------------------- Depreciation
in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
$ 874,094 (g) $ 874,094 (h) 1997 08/96 (h)
786,475 (g) 786,475 (h) 1997 09/96 (h)
338,486 497,282 835,768 $ 21,345 1996 09/96 (e)
363,478 404,650 768,128 5,515 1990 08/97 (e)
277,986 490,143 768,129 6,681 1995 08/97 (e)
228,364 539,764 768,128 7,357 1995 08/97 (e)
276,567 505,359 781,926 24,922 1995 07/96 (e)
273,325 413,077 686,402 5,630 1994 08/97 (e)
268,545 485,160 753,705 6,613 1995 08/97 (e)
320,924 463,347 784,271 7,162 1992 07/97 (e)
511,084 (g) 511,084 (h) 1994 08/97 (h)
493,489 (g) 493,489 (h) 1994 08/97 (h)
514,900 (g) 514,900 (h) 1995 08/97 (h)
420,176 (g) 420,176 (h) 1978 08/97 (h)
714,194 1,302,733 2,016,927 32,539 1997 04/97 (e)
403,885 (g) 403,885 (h) 1996 06/96 (h)
784,939 (g) 784,939 (h) 1994 09/97 (h)
569,452 641,644 1,211,096 10,566 1997 04/97 (e)
775,523 456,458 1,231,981 11,776 1997 12/96 (e)
585,818 866,641 1,452,459 11,625 1997 05/97 (e)
569,769 296,976 866,745 4,238 1997 04/97 (e)
376,929 639,875 1,016,804 45,872 1995 11/95 (e)
507,544 328,353 835,897 5,135 1997 04/97 (e)
365,784 605,763 971,547 26,005 1996 07/96 (e)
353,608 663,969 1,017,577 49,661 1995 10/95 (e)
320,463 627,371 947,834 7,692 1997 08/97 (e)
397,036 639,422 1,036,458 29,321 1996 06/96 (e)
705,522 626,845 1,332,367 22,067 1996 09/96 (e)
566,562 442,992 1,009,554 35,004 1995 08/95 (e)
667,992 661,776 1,329,768 7,691 1997 05/97 (e)
665,422 481,311 1,146,733 21,132 1996 06/96 (e)
234,685 644,615 879,300 49,053 1995 09/95 (e)
493,536 619,786 1,113,322 6,637 1997 09/97 (e)
885,234 867,523 1,752,757 9,527 1997 04/97 (e)
630,950 720,642 1,351,592 12,270 1997 05/97 (e)
515,827 572,706 1,088,533 4,759 1997 05/97 (e)
</TABLE>
B-33
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- -------- ------------ -------- --------
<S> <C>
La Quinta, California - 688,147 - 351,810 -
Liberty, Missouri - 469,049 - 334,826 -
Merced, California - 573,163 - 402,636 -
Newport News, Virginia - 473,596 586,377 - -
Riverdale, Maryland - 525,389 - 574,019 -
Rockwall, Texas - 528,118 - 340,297 -
San Antonio, Texas - 481,952 - 315,486 -
Saint Joseph, Missouri - 378,786 - 388,489 -
Stafford, Texas - 448,185 681,598 - -
Taylorsville, Utah - 901,777 - 475,260 -
Upland, California - 788,248 - 209,449 -
Vacaville, California - 751,576 - 757,026 -
Waldorf, Maryland - 651,867 - 775,634 -
Burger King Restaurants:
Burbank, Illinois - 543,095 - 620,617 -
Chattanooga, Tennessee - 680,192 - 575,426 -
Chattanooga, Tennessee - 769,842 - 411,012 -
Chicago, Illinois - 917,717 - 784,590 -
Highland, Indiana - 672,815 - 621,133 -
Indian Head Park, Illinois - 618,715 - 134,394 -
Kent, Ohio - 233,468 689,696 - -
Oak Lawn, Illinois - 1,211,346 - 829,339 -
Ooltewah, Tennessee - 546,261 - 714,114 -
Charley's Restaurants:
King of Prussia, Pennsylvania - 965,223 549,565 - -
McLean, Virginia - 944,585 689,363 - -
Chevy's Fresh Mex Restaurants:
Arapahoe, Colorado - 986,426 1,680,312 - -
Beaverton, Oregon - 938,162 1,681,670 - -
Greenbelt, Maryland - 945,234 1,475,339 - -
Lake Oswego, Oregon - 963,047 1,505,671 - -
Darryl's Restaurants:
Evansville, Indiana - 563,479 - - -
Hampton, Virginia - 698,367 570,468 - -
Huntsville, Alabama - 777,842 663,941 - -
Knoxville, Tennessee - 589,574 - - -
Louisville, Kentucky - 647,375 - - -
Mobile, Alabama - 495,195 - - -
Montgomery, Alabama - 346,380 - - -
Nashville, Tennessee - 513,218 - - -
Orlando, Florida - 1,485,631 772,853 - -
Pensacola, Florida - 389,394 - - -
Raleigh, North Carolina - 840,525 505,176 - -
Raleigh, North Carolina - 1,131,164 719,865 - -
Richmond, Virginia - 618,125 - - -
Richmond, Virginia - 311,196 - - -
Winston-Salem, North Carolina - 436,867 - - -
</TABLE>
B-34
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
688,147 351,810 1,039,957 12,379 1996 09/96 (e)
469,049 334,826 803,875 4,136 1997 04/97 (e)
573,163 402,636 975,799 16,620 1996 09/96 (e)
473,596 586,377 1,059,973 9,010 1997 07/97 (e)
525,389 574,019 1,099,408 4,508 1997 05/97 (e)
528,118 340,297 868,415 13,394 1996 07/96 (e)
481,952 315,486 797,438 2,802 1997 04/97 (e)
378,786 388,489 767,275 13,482 1996 12/96 (e)
448,185 681,598 1,129,783 11,344 1997 07/97 (e)
901,777 475,260 1,377,037 8,908 1997 04/97 (e)
788,248 209,449 997,697 9,637 1996 07/96 (e)
751,576 757,026 1,508,602 11,839 1997 05/97 (e)
651,867 775,634 1,427,501 12,130 1997 05/97 (e)
543,095 620,617 1,163,712 28,962 1996 03/96 (e)
680,192 575,426 1,255,618 13,403 1997 12/96 (e)
769,842 411,012 1,180,854 8,111 1997 02/97 (e)
917,717 784,590 1,702,307 21,908 1996 10/96 (e)
672,815 621,133 1,293,948 29,476 1996 04/96 (e)
618,715 134,394 753,109 (c) (d) 04/96 (c)
233,468 689,696 923,164 20,833 1970 02/97 (e)
1,211,346 829,339 2,040,685 35,597 1996 03/96 (e)
546,261 714,114 1,260,375 11,104 1997 04/97 (e)
965,223 549,565 1,514,788 10,163 1977 06/97 (e)
944,585 689,363 1,633,948 12,748 1971 06/97 (e)
986,426 1,680,312 2,666,738 153 1994 12/97 (e)
938,162 1,681,670 2,619,832 154 1995 12/97 (e)
945,234 1,475,339 2,420,573 135 1994 12/97 (e)
963,047 1,505,671 2,468,718 138 1995 12/97 (e)
563,479 (g) 563,479 (h) 1983 06/97 (h)
698,367 570,468 1,268,835 10,550 1983 06/97 (e)
777,842 663,941 1,441,783 12,278 1981 06/97 (e)
589,574 (g) 589,574 (h) 1983 06/97 (h)
647,375 (g) 647,375 (h) 1983 06/97 (h)
495,195 (g) 495,195 (h) 1983 06/97 (h)
346,380 (g) 346,380 (h) 1984 06/97 (h)
513,218 (g) 513,218 (h) 1981 06/97 (h)
1,485,631 772,853 2,258,484 14,292 1983 06/97 (e)
389,394 (g) 389,394 (h) 1983 06/97 (h)
840,525 505,176 1,345,701 9,342 1980 06/97 (e)
1,131,164 719,865 1,851,029 13,313 1972 06/97 (e)
618,125 (g) 618,125 (h) 1982 06/97 (h)
311,196 (g) 311,196 (h) 1982 06/97 (h)
436,867 (g) 436,867 (h) 1978 06/97 (h)
</TABLE>
B-35
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Denny's Restaurants:
McKinney, Texas - 439,961 - - -
Pasadena, Texas - 466,555 506,094 - -
Shawnee, Oklahoma - 528,090 625,653 - -
Tampa, Florida - 397,302 - - -
Einstein Brothers' Bagels
Restaurants:
Dearborn, Michigan - 464,102 - 236,674 -
Springfield, Virginia - 628,804 - 36,311 -
Golden Corral Family
Steakhouse Restaurants:
Carlsbad, New Mexico - 384,221 - 643,854 -
Cleburne, Texas - 359,455 - 653,853 -
Columbia, Tennessee - 442,218 - - -
Columbus, Ohio - 1,031,098 - 1,092,939 -
Corpus Christi, Texas - 576,319 - 967,482 -
Corsicana, Texas - 349,227 699,756 - -
Council Bluffs, Iowa - 482,178 - 11,844 -
Dover, Delaware - 1,043,108 - 977,508 -
Duncan, Oklahoma - 161,573 - 955,184 -
Enid, Oklahoma - 364,860 - 790,942 -
Fort Walton Beach, Florida - 591,440 - 1,034,541 -
Fort Worth, Texas - 640,320 898,171 - -
Hopkinsville, Kentucky - 455,534 - - -
Jacksonville, Florida - 616,450 - 1,010,728 -
Jacksonville, Florida - 541,510 - 1,132,450 -
Liberty, Missouri - 409,209 - 930,147 -
Lufkin, Texas - 463,303 - 994,467 -
Moberly, Missouri - 581,989 - 664,344 -
Mobile, Alabama - 429,268 - 1,032,335 -
Muskogee, Oklahoma - 393,435 - 15,109 -
Olathe, Kansas - 547,126 - 916,145 -
Palatka, Florida - 322,919 - 950,722 -
Port Richey, Florida - 626,999 - 1,130,692 -
Tampa, Florida - 825,065 - 1,222,843 -
Universal City, Texas - 357,429 - 650,249 -
Winchester, Kentucky - 303,823 - 923,607 -
Ground Round Restaurants:
Allentown, Pennsylvania - 405,631 884,954 - -
Cincinnati, Ohio - 282,099 534,632 - -
Crystal, Minnesota - 370,667 431,642 - -
Dubuque, Iowa - 693,733 810,458 - -
Ewing, New Jersey - 371,254 685,847 - -
Gloucester, New Jersey - 422,489 528,849 - -
Janesville, Wisconsin - 451,235 548,178 - -
Kalamazoo, Michigan - 287,331 712,081 - -
</TABLE>
B-36
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
439,961 (g) 439,961 (h) 1996 06/96 (h)
466,555 506,094 972,649 39,131 1981 09/95 (e)
528,090 625,653 1,153,743 48,370 1987 09/95 (e)
397,302 (g) 397,302 (h) 1997 02/97 (h)
464,102 236,674 700,776 3,723 1997 04/97 (e)
628,804 36,311 665,115 588 1997 05/97 (e)
384,221 643,854 1,028,075 50,415 1995 08/95 (e)
359,455 653,853 1,013,308 48,395 1995 08/95 (e)
442,218 (g) 442,218 (h) 1996 12/96 (h)
1,031,098 1,092,939 2,124,037 77,421 1995 11/95 (e)
576,319 967,482 1,543,801 8,681 1997 05/97 (e)
349,227 699,756 1,048,983 55,883 1995 08/95 (e)
482,178 11,844 494,022 (c) (d) 12/97 (c)
1,043,108 977,508 2,020,616 75,038 1995 08/95 (e)
161,573 955,184 1,116,757 2,704 1997 08/97 (e)
364,860 790,942 1,155,802 2,745 1997 06/97 (e)
591,440 1,034,541 1,625,981 (c) (d) 08/97 (c)
640,320 898,171 1,538,491 70,972 1995 08/95 (e)
455,534 (g) 455,534 (h) 1996 02/97 (h)
616,450 1,010,728 1,627,178 9,069 1997 05/97 (e)
541,510 1,132,450 1,673,960 12,333 1997 06/97 (e)
409,209 930,147 1,339,356 5,946 1997 06/97 (e)
463,303 994,467 1,457,770 34,603 1997 11/96 (e)
581,989 664,344 1,246,333 14,349 1997 12/96 (e)
429,268 1,032,335 1,461,603 189 1997 09/97 (e)
393,435 15,109 408,544 (c) (d) 12/97 (c)
547,126 916,145 1,463,271 (c) (d) 10/97 (c)
322,919 950,722 1,273,641 434 1997 09/97 (e)
626,999 1,130,692 1,757,691 48,325 1996 05/96 (e)
825,065 1,222,843 2,047,908 77,496 1995 08/95 (e)
357,429 650,249 1,007,678 51,253 1995 08/95 (e)
303,823 923,607 1,227,430 17,586 1997 02/97 (e)
405,631 884,954 1,290,585 5,900 1983 10/97 (e)
282,099 534,632 816,731 3,564 1981 10/97 (e)
370,667 431,642 802,309 2,878 1981 10/97 (e)
693,733 810,458 1,504,191 5,403 1982 10/97 (e)
371,254 685,847 1,057,101 2,756 1979 11/97 (e)
422,489 528,849 951,338 3,526 1981 10/97 (e)
451,235 548,178 999,413 3,655 1982 10/97 (e)
287,331 712,081 999,412 4,747 1980 10/97 (e)
</TABLE>
B-37
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- -------- ------------ -------- --------
<S> <C>
Nanuet, New Jersey - 375,116 605,067 - -
Parma, Ohio - 388,699 793,475 - -
Reading, Pennsylvania - 728,574 793,410 - -
Waterloo, Iowa - 436,471 659,089 - -
Wauwatosa, Wisconsin - 627,680 804,399 - -
Houlihan's Restaurants:
Bethel Park, Pennsylvania - 846,183 595,600 - -
Langhorne, Pennsylvania - 817,039 648,765 - -
Plymouth Meeting, Pennsylvania - 1,181,460 908,880 - -
International House of Pancakes
Restaurants:
Elk Grove, California - 584,766 - - -
Fairfax, Virginia - 1,096,763 705,345 - -
Houston, Texas - 645,365 856,532 - -
Lake Jackson, Texas - 460,167 802,640 - -
Leesburg, Virginia - 665,015 580,798 - -
Loveland, Colorado - 488,259 - - -
Stockbridge, Georgia - 765,743 707,406 - -
Victoria, Texas - 319,237 - - -
Jack in the Box Restaurants:
Bacliff, Texas - 419,488 - 697,861 -
Channelview, Texas - 361,238 - 711,595 -
Corinth, Texas - 396,864 - 620,042 -
Dallas, Texas - 369,886 - 513,533 -
Enumclaw, Washington - 124,468 - 773,506 -
Florissant, Missouri - 388,820 - 773,834 -
Folsom, California - 635,343 703,067 - -
Fresno, California - 286,850 - 606,547 -
Garland, Texas - 382,042 - 613,690 -
Hollister, California - 537,223 - 592,536 -
Houston, Texas - 545,485 - 527,020 -
Houston, Texas - 403,002 - 610,815 -
Houston, Texas - 375,776 - 643,445 -
Houston, Texas - 370,342 - 548,107 -
Houston, Texas - 420,521 - 543,338 -
Humble, Texas - 437,667 - 591,877 -
Humble, Texas - 390,509 - 596,872 -
Kent, Washington - 737,038 - 604,806 -
Kingsburg, California - 415,880 - 649,681 -
Las Vegas, Nevada - 730,674 - 600,180 -
Los Angeles, California - 603,354 602,630 - -
Los Angeles, California - 911,754 - 581,552 -
Los Angeles, California - 740,616 678,189 - -
Moscow, Idaho - 217,851 - 751,664 -
Murrieta, California - 387,455 - 625,933 -
Oxnard, California - 681,663 - 642,924 -
Palmdale, California - 631,275 - 567,912 -
West Sacramento, California - 523,089 - 617,131 -
Woodland, California - 358,130 - 668,383 -
</TABLE>
B-38
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
375,116 605,067 980,183 1,658 1982 12/97 (e)
388,699 793,475 1,182,174 5,290 1977 10/97 (e)
728,574 793,410 1,521,984 5,289 1982 10/97 (e)
436,471 659,089 1,095,560 4,394 1982 10/97 (e)
627,680 804,399 1,432,079 5,363 1977 10/97 (e)
846,183 595,600 1,441,783 11,015 1972 06/97 (e)
817,039 648,765 1,465,804 11,998 1976 06/97 (e)
1,181,460 908,880 2,090,340 16,808 1974 06/97 (e)
584,766 (g) 584,766 (h) 1997 08/97 (h)
1,096,763 705,345 1,802,108 12,593 1995 06/97 (e)
645,365 856,532 1,501,897 14,256 1996 07/97 (e)
460,167 802,640 1,262,807 9,767 1997 08/97 (e)
665,015 580,798 1,245,813 11,855 1994 05/97 (e)
488,259 (g) 488,259 (h) 1997 08/97 (h)
765,743 707,406 1,473,149 11,774 1997 07/97 (e)
319,237 (g) 319,237 (h) 1997 08/97 (h)
419,488 697,861 1,117,349 9,576 1997 04/97 (e)
361,238 711,595 1,072,833 6,580 1997 07/97 (e)
396,864 620,042 1,016,906 6,016 1997 06/97 (e)
369,886 513,533 883,419 15,527 1997 12/96 (e)
124,468 773,506 897,974 10,826 1997 04/97 (e)
388,820 773,834 1,162,654 (c) (d) 10/97 (c)
635,343 703,067 1,338,410 4,880 1997 10/97 (e)
286,850 606,547 893,397 6,772 1997 05/97 (e)
382,042 613,690 995,732 5,338 1997 07/97 (e)
537,223 592,536 1,129,759 14,421 1997 01/97 (e)
545,485 527,020 1,072,505 32,199 1996 11/95 (e)
403,002 610,815 1,013,817 26,930 1996 07/96 (e)
375,776 643,445 1,019,221 27,207 1996 07/96 (e)
370,342 548,107 918,449 13,540 1997 02/97 (e)
420,521 543,338 963,859 9,949 1997 03/97 (e)
437,667 591,877 1,029,544 26,729 1996 06/96 (e)
390,509 596,872 987,381 18,025 1997 02/97 (e)
737,038 604,806 1,341,844 14,388 1997 01/97 (e)
415,880 649,681 1,065,561 15,693 1997 01/97 (e)
730,674 600,180 1,330,854 16,285 1997 01/97 (e)
603,354 602,630 1,205,984 50,272 1986 06/95 (e)
911,754 581,552 1,493,306 12,720 1997 01/97 (e)
740,616 678,189 1,418,805 124 1997 12/97 (e)
217,851 751,664 969,515 19,157 1992 01/97 (e)
387,455 625,933 1,013,388 14,948 1997 01/97 (e)
681,663 642,924 1,324,587 10,642 1997 04/97 (e)
631,275 567,912 1,199,187 11,695 1997 02/97 (e)
523,089 617,131 1,140,220 5,312 1997 07/97 (e)
358,130 668,383 1,026,513 5,127 1997 07/97 (e)
</TABLE>
B-39
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Kenny Rogers' Roasters
Restaurant:
Grand Rapids, Michigan - 282,806 599,309 - -
Kentucky Fried Chicken
Restaurant:
Putnam, Connecticut - 301,723 - - -
Mr. Fables's Restaurant:
Grand Rapids, Michigan - 320,594 559,433 - -
On The Border Restaurant:
San Antonio, TX - - - 1,305,075 -
Pizza Hut Restaurants:
Adrian, Michigan - 242,239 - - -
Beaver, West Virginia - 212,053 - - -
Beckley, West Virginia - 209,432 - - -
Bedford, Ohio - 174,721 - - -
Belle, West Virginia - 46,737 - - -
Bluefield, West Virginia - 120,449 - - -
Bolivar, Ohio - 190,009 - - -
Bowling Green, Ohio - 200,442 - - -
Bowling Green, Ohio - 135,831 - - -
Carrollton, Ohio - 187,082 - - -
Cleveland, Ohio - 116,849 - - -
Cleveland, Ohio - 126,494 - - -
Cleveland, Ohio - 226,163 - - -
Cross Lanes, West Virginia - 215,881 - - -
Defiance, Ohio - 242,239 - - -
Dover, Ohio - 245,145 - - -
East Cleveland, Ohio - 194,012 - - -
Euclid, Ohio - 202,050 - - -
Fairview Park, Ohio - 142,570 - - -
Huntington, West Virginia - 212,093 - - -
Hurricane, West Virginia - 180,803 - - -
Lambertville, Michigan - 99,166 - - -
Marietta, Ohio - 169,454 - - -
Mayfield Heights, Ohio - 202,552 - - -
Middleburg Heights, Ohio - 216,518 - - -
Millersburg, Ohio - 213,090 - - -
Milton, West Virginia - 99,815 - - -
Monroe, Michigan - 152,215 - - -
New Philadelphia, Ohio - 149,206 - - -
New Philadelphia, Ohio - 223,981 - - -
North Olmsted, Ohio - 259,922 - - -
Norwalk, Ohio - 261,529 - - -
Ronceverte, West Virginia - 99,733 - - -
Sandusky, Ohio - 259,922 - - -
Seven Hills, Ohio - 239,023 - - -
Steubenville, Ohio - 228,199 - - -
Strongsville, Ohio - 186,476 - - -
</TABLE>
B-40
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
282,806 599,309 882,115 48,123 1995 08/95 (e)
301,723 (g) 301,723 (h) 1997 07/97 (h)
320,594 559,433 880,027 33,362 1967 03/96 (e)
- 1,305,075 1,305,075 (c) (d) 10/97 (c)
242,239 - 242,239 (f) 1989 01/96 (f)
212,053 - 212,053 (f) 1986 05/96 (f)
209,432 - 209,432 (f) 1978 05/96 (f)
174,721 - 174,721 (f) 1975 01/96 (f)
46,737 - 46,737 (f) 1980 05/96 (f)
120,449 - 120,449 (f) 1986 05/96 (f)
190,009 - 190,009 (f) 1996 03/97 (f)
200,442 - 200,442 (f) 1985 01/96 (f)
135,831 - 135,831 (f) 1992 12/96 (f)
187,082 - 187,082 (f) 1990 03/97 (f)
116,849 - 116,849 (f) 1978 01/96 (f)
126,494 - 126,494 (f) 1986 01/96 (f)
226,163 - 226,163 (f) 1987 01/96 (f)
215,881 - 215,881 (f) 1990 05/96 (f)
242,239 - 242,239 (f) 1977 01/96 (f)
245,145 - 245,145 (f) 1975 05/97 (f)
194,012 - 194,012 (f) 1986 01/96 (f)
202,050 - 202,050 (f) 1983 01/96 (f)
142,570 - 142,570 (f) 1996 01/96 (f)
212,093 - 212,093 (f) 1978 05/96 (f)
180,803 - 180,803 (f) 1978 05/96 (f)
99,166 - 99,166 (f) 1994 01/96 (f)
169,454 - 169,454 (f) 1986 05/96 (f)
202,552 - 202,552 (f) 1980 04/96 (f)
216,518 - 216,518 (f) 1975 01/96 (f)
213,090 - 213,090 (f) 1989 03/97 (f)
99,815 - 99,815 (f) 1986 05/96 (f)
152,215 - 152,215 (f) 1994 01/96 (f)
149,206 - 149,206 (f) 1975 03/97 (f)
223,981 - 223,981 (f) 1983 03/97 (f)
259,922 - 259,922 (f) 1976 01/96 (f)
261,529 - 261,529 (f) 1993 01/96 (f)
99,733 - 99,733 (f) 1991 05/96 (f)
259,922 - 259,922 (f) 1978 01/96 (f)
239,023 - 239,023 (f) 1983 01/96 (f)
228,199 - 228,199 (f) 1983 03/97 (f)
186,476 - 186,476 (f) 1976 04/96 (f)
</TABLE>
B-41
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- -------- ------------ -------- --------
<S> <C>
Toledo, Ohio - 128,604 - - -
Toledo, Ohio - 194,097 - - -
Toledo, Ohio - 208,480 - - -
Toledo, Ohio - 176,170 - - -
Toledo, Ohio - 197,227 - - -
Uhrichsville, Ohio - 279,779 - - -
Wellsburg, West Virginia - 167,170 - - -
Ruby Tuesday's Restaurant:
London, Kentucky - 354,415 - - -
Ruth's Chris Steak House
Restaurant:
Tampa, Florida - 1,076,442 1,062,751 - -
Ryan's Family Steak House
Restaurant:
Spring Hill, Florida - 591,371 - 1,175,273 -
Shoney's Restaurants:
Indian Harbor Beach, Florida - 309,101 - 420,249 -
Las Vegas, Nevada - 656,316 - 970,452 -
Guadalupe, Arizona - 623,725 - - -
TGI Friday's Restaurant:
Mesa, Arizona - 903,876 - 284,913 -
Wendy's Old Fashioned
Hamburgers Restaurants:
Camarillo, California - 640,061 - 687,385 -
Knoxville, Tennessee - 358,027 - 444,622 -
Westlake Village, California - 763,232 - 153,034 -
------------ ----------- ----------- -------
$106,616,360 $43,045,117 $58,072,374 $ -
============ =========== =========== =======
</TABLE>
B-42
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
128,604 - 128,604 (f) 1988 04/96 (f)
194,097 - 194,097 (f) 1993 12/96 (f)
208,480 - 208,480 (f) 1975 01/96 (f)
176,170 - 176,170 (f) 1985 01/96 (f)
197,227 - 197,227 (f) 1978 01/96 (f)
279,779 - 279,779 (f) 1983 03/97 (f)
167,170 - 167,170 (f) 1980 03/97 (f)
354,415 (g) 354,415 (h) 1997 08/97 (h)
1,076,442 1,062,751 2,139,193 20,236 1996 06/97 (e)
591,371 1,175,273 1,766,644 38,505 1996 09/96 (e)
309,101 420,249 729,350 11,312 1997 01/97 (e)
656,316 970,452 1,626,768 (c) (d) 08/97 (c)
623,725 (g) 623,725 (h) 1997 04/97 (h)
903,876 284,913 1,188,789 (c) (d) 09/97 (c)
640,061 687,385 1,327,446 33,167 1996 06/96 (e)
358,027 444,622 802,649 19,300 1996 05/96 (e)
763,232 153,034 916,266 (c) (d) 11/97 (c)
------------ ------------ ------------ ----------
$106,616,360 $101,117,491 $207,733,851 $2,395,665
============ ============ ============ ==========
</TABLE>
B-43
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Properties the Company
has Invested in Under
Direct Financing Leases:
Applebee's Restaurants:
Montclair, California - $ - $ - $ 890,100 $ -
Salinas, California - - - 794,058 -
Barb Wires Steakhouse and
Saloon Restaurants:
Cookeville, Tennessee - - 1,029,717 - -
Hendersonville, Tennessee - - 782,282 - -
Lawrence, Kansas - - 1,022,607 - -
Murfreesboro, Tennessee - - 976,699 - -
Nashville, Tennessee - - 949,367 - -
Black-Eyed Pea Restaurants:
Albuquerque, New Mexico - - 705,746 - -
Albuquerque, New Mexico - - 704,757 - -
Bedford, Texas - - 655,028 - -
Dallas, Texas - - 655,011 - -
Dallas, Texas - - 698,827 - -
Forestville, Maryland - - 681,034 - -
Fort Worth, Texas - - 655,014 - -
Hillsboro, Texas - - - 849,816 -
Houston, Texas - - 685,977 - -
Mesa, Arizona - - 906,740 - -
Oklahoma City, Oklahoma - - 651,523 - -
Phoenix, Arizona - - 677,681 - -
Phoenix, Arizona - - 677,805 - -
Phoenix, Arizona - - 682,141 - -
Scottsdale, Arizona - - - 823,188 -
Tucson, Arizona - - 678,333 - -
Waco, Texas - - 699,815 - -
Wichita, Kansas - - 698,827 - -
Darryl's Restaurants:
Evansville, Indiana - - 974,401 - -
Knoxville, Tennessee - - 709,047 - -
Louisville, Kentucky - - 915,201 - -
Mobile, Alabama - - 1,009,042 - -
Montgomery, Alabama - - 952,382 - -
Nashville, Tennessee - - 736,400 - -
Pensacola, Florida - - 725,709 - -
Richmond, Virginia - - 775,617 - -
Richmond, Virginia - - 650,175 - -
Winston-Salem, North Carolina - - 812,752 - -
Denny's Restaurants:
McKinney, Texas - - - 655,052 -
Tampa, Florida - - - 715,957 -
</TABLE>
B-44
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
-------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
(g) (g) (g) (h) 1997 08/96 (h)
(g) (g) (g) (h) 1997 09/96 (h)
(g) (g) (g) (h) 1994 08/97 (h)
(j) (g) (g) (h) 1974 08/97 (h)
(g) (g) (g) (h) 1994 08/97 (h)
(g) (g) (g) (h) 1995 08/97 (h)
(g) (g) (g) (h) 1978 08/97 (h)
(j) (g) (g) (h) 1993 10/97 (h)
(j) (g) (g) (h) 1993 10/97 (h)
(j) (g) (g) (h) 1993 03/97 (h)
(j) (g) (g) (h) 1996 03/97 (h)
(j) (g) (g) (h) 1991 10/97 (h)
(j) (g) (g) (h) 1989 10/97 (h)
(j) (g) (g) (h) 1991 03/97 (h)
(g) (g) (g) (h) 1996 06/96 (h)
(j) (g) (g) (h) 1990 10/97 (h)
(g) (g) (g) (h) 1994 09/97 (h)
(j) (g) (g) (h) 1992 03/97 (h)
(j) (g) (g) (h) 1991 09/97 (h)
(j) (g) (g) (h) 1993 09/97 (h)
(j) (g) (g) (h) 1994 09/97 (h)
(j) (g) (g) (h) 1997 04/97 (h)
(j) (g) (g) (h) 1995 09/97 (h)
(j) (g) (g) (h) 1991 10/97 (h)
(j) (g) (g) (h) 1992 10/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1984 06/97 (h)
(g) (g) (g) (h) 1981 06/97 (h)
(g) (g) (g) (h) 1983 06/97 (h)
(g) (g) (g) (h) 1982 06/97 (h)
(g) (g) (g) (h) 1982 06/97 (h)
(g) (g) (g) (h) 1978 06/97 (h)
(g) (g) (g) (h) 1996 06/96 (h)
(g) (g) (g) (h) 1997 02/97 (h)
</TABLE>
B-45
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ----------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Golden Corral Family
Steakhouse Restaurants:
Brooklyn, Ohio - - 1,044,311 - -
Columbia, Tennessee - - - 939,712 -
Eastlake, Ohio - 256,332 1,473,307 - -
Hopkinsville, Kentucky - - - 869,221 -
International House of
Pancakes Restaurants:
Elk Grove, California - - 1,039,584 - -
Loveland, Colorado - - 963,597 - -
Victoria, Texas - - 814,015 - -
Kentucky Fried Chicken
Restaurant:
Putnam, Connecticut - - 530,846 - -
Popeye's Chicken Restaurant:
Starke, Florida - 208,910 - 427,067 -
Ruby Tuesday's Restaurant:
London, Kentucky - - - 845,249 -
Shoney's Restaurant:
Guadalupe, Arizona - - - 919,322 -
Wendy's Old Fashioned
Hamburgers Restaurants:
San Diego, California - - - 590,058 -
Sevierville, Tennessee - - - 531,726 -
----------- ----------- ----------- -------
$ 465,242 $ 30,001,317 $ 9,850,526 $ -
=========== ============ =========== =======
</TABLE>
B-46
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
--------------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ------------
<S> <C>
(j) (g) (g) (h) 1995 08/96 (h)
(g) (g) (g) (h) 1996 12/96 (h)
(g) (g) (g) (i) 1996 12/96 (i)
(g) (g) (g) (h) 1996 02/97 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (h) 1997 07/97 (h)
(g) (g) (g) (i) 1997 05/97 (i)
(g) (g) (g) (h) 1997 08/97 (h)
(g) (g) (g) (h) 1997 04/97 (h)
(j) (g) (g) (h) 1996 10/96 (h)
(j) (g) (g) (h) 1996 06/96 (h)
</TABLE>
B-47
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------------------------------
December 31, 1997
(a) Transactions in real estate and accumulated depreciation during 1997,
1996 and 1995 are summarized as follows:
Accumulated
Cost (b) Depreciation
------------ ------------
Properties the Company
has Invested in Under
Operating Leases:
Balance, December 31, 1994 $ - $ -
Acquisitions (l) 19,824,044 -
Depreciation expense (e) - 100,318
------------ ------------
Balance, December 31, 1995 19,824,044 100,318
Acquisitions (l) 41,030,498 -
Depreciation expense (e) - 511,078
------------ ------------
Balance, December 31, 1996 60,854,542 611,396
Acquisitions (1) 146,879,309 -
Depreciation expense (e) - 1,784,269
------------ ------------
Balance, December 31, 1997 $207,733,851 $ 2,395,665
============ ============
(b) As of December 31, 1997, 1996 and 1995, the aggregate cost of the
Properties owned by the Company and its subsidiary for federal income
tax purposes was $248,050,936, $73,144,286 and $21,199,004,
respectively. All of the leases are treated as operating leases for
federal income tax purposes.
(c) Property was not placed in service as of December 31, 1997;
therefore, no depreciation was taken.
(d) Scheduled for completion in 1998.
(e) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(f) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(g) For financial reporting purposes, certain components of the lease
relating to land and/or building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(h) For financial reporting purposes, the portion of this lease relating
to the building has been recorded as direct financing lease. The cost
of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(i) For financial reporting purposes, the lease for the land and building
has been recorded as direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
B-48
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
---------------------------------------------------
DEPRECIATION - CONTINUED
------------------------
December 31, 1997
(j) The Company owns the building only relating to this Property. This
Property is subject to a ground lease between the tenant and an
unaffiliated third party. In connection therewith, the Company entered
into either a tri-party agreement with the tenant and the owner of the
land or an assignment of interest in the ground lease with the landlord
of the land. The tri-party agreement or assignment of interest each
provide that the tenant is responsible for all obligations under the
ground lease and provide certain rights to the Company to help protect
its interest in the building in the event of a default by the tenant
under the terms of the ground lease.
(k) The restaurant on the property in Franklin, Tennessee, was converted
from a Kenny Rogers' Roasters restaurant to a Boston Market restaurant
in 1996.
(l) During the years ended December 31, 1997, 1996 and 1995, the Company
(i) incurred acquisition fees totalling $10,011,715, $4,535,685 and
$1,730,437, respectively, paid to the Advisor, (ii) purchased land and
buildings from affiliates of the Company for an aggregate cost of
approximately $5,450,000, $2,610,000 and $6,621,000, respectively, and
(iii) paid development/construction management fees to affiliates of
the Company totalling $369,570 and $159,350 during the years ended
December 31, 1997 and 1996, respectively. No development/construction
management fees were paid to affiliates during the year ended December
31, 1995. Such amounts are included in land and buildings on operating
leases, net investment in direct financing leases and other assets at
December 31, 1997, 1996 and 1995.
B-49
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
-------------------------------------------
December 31, 1997
<TABLE>
<CAPTION>
Principal
Amount
of Loans
Subject to
Final Periodic Face Carrying Delinquent
Interest Maturity Payment Prior Amount of Amount of Principal
Description Rate Date Terms Liens Mortgages Mortgages or Interest
- ------------------------------ -------- ------------- -------- ----- ----------- ----------- -----------
<S> <C>
Castle Hill Holdings V, L.L.C.
First Mortgages 10.75% January, 2016 (1) $ - $ 8,475,000 $ 8,700,023 $ -
Pizza Hut Restaurants:
Adrian, MI
Bedford, OH
Bowling Green, OH
Cleveland, OH
Cleveland, OH
Cleveland, OH
Defiance, OH
East Cleveland, OH
Euclid, OH
Fairview Park, OH
Lambertville, MI
Mayfield Heights, OH
Middleburg Heights, OH
Monroe, MI
North Olmstead, OH
Norwalk, OH
Sandusky, OH
Seven Hills, OH
Strongsville, OH
Toledo, OH
Toledo, OH
Toledo, OH
Toledo, OH
Castle Hill Holdings VI, L.L.C.
First Mortgages 10.75% June, 2016 (1) - 3,888,000 4,030,612 -
Pizza Hut Restaurants:
Beaver, WV
Beckley, WV
Belle, WV
Bluefield, WV
Cross Lanes, WV
Huntington, WV
Hurricane, WV
Marietta, OH
Milton, WV
Ronceverte, WV
Castle Hill Holdings VII, L.L.C.
First Mortgages 10.75% January, 2017 (1) - 484,000 503,900 -
Pizza Hut Restaurants:
Bowling Green, OH
Toledo, OH
Castle Hill Holdings VII (Phase II), L.L.C.
First Mortgages 10.50% April, 2017 (2) - 4,200,000 4,387,475 -
Pizza Hut Restaurants:
Bolivar, OH
Carrollton, OH
Dover, OH
Millersburg, OH
New Philadelphia, OH
New Philadelphia, OH
Steubenville, OH
Uhrichsville, OH
Weirton, WV
Wellsburg, WV
Wintersville, OH
Total $ - $17,047,000 $17,622,010 (4) $
===== =========== =========== =====
</TABLE>
B-50
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARY
SCHEDULE IV - NOTES TO MORTGAGE LOANS ON REAL ESTATE
----------------------------------------------------
December 31, 1997
(1) Equal monthly payments of principal and interest at an annual rate of
10.75%.
(2) Equal monthly payments of principal and interest at an annual rate of
10.50%.
(3) The tax carrying value of the notes is $17,622,010.
(4) The changes in the carrying amounts are summarized as follows:
1997 1996 1995
----------- ----------- ----------
Balance at beginning of period $13,389,607 $ - $ -
New mortgage loans 4,200,000 12,847,000 -
Accrued interest 83,601 35,286 -
Collection of principal (250,732) (133,850) -
Deferred financing income (39,180) (46,268) -
Unamortized loan costs 238,714 687,439 -
----------- ----------- ----------
Balance at end of period $17,622,010 $13,389,607 $ -
=========== =========== ==========
B-51
ADDENDUM TO
EXHIBIT C
PRIOR PERFORMANCE TABLES
THE FOLLOWING INFORMATION UPDATES
AND REPLACES THE CORRESPONDING
INFORMATION IN EXHIBIT C TO THE
ATTACHED PROSPECTUS, DATED
JANUARY 26, 1998.
<PAGE>
EXHIBIT C
PRIOR PERFORMANCE TABLES
The information in this Exhibit C contains certain relevant summary
information concerning certain prior public programs sponsored by two of the
Company's principals (who also serve as the Chairman of the Board and President
of the Company) and their Affiliates (the "Prior Public Programs") which like
the Company, were formed to invest in restaurant properties leased on a
triple-net basis to operators of national and regional fast-food and
family-style restaurant chains, or in the case of CNL American Realty Fund,
Inc., to invest in restaurant properties and hotel properties.
A more detailed description of the acquisitions by the Prior Public
Programs is set forth in Part II of the registration statement filed with the
Securities and Exchange Commission for this Offering and is available from the
Company upon request, without charge. In addition, upon request to the Company,
the Company will provide, without charge, a copy of the most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission for CNL
Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL
Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL
Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd.,
and CNL American Realty Fund, Inc., as well as a copy, for a reasonable fee, of
the exhibits filed with such reports.
The investment objectives of the Prior Public Programs (like those of
the Company) generally include preservation and protection of capital, the
potential for increased income and protection against inflation, and potential
for capital appreciation, all through investment in restaurant properties, or in
the case of CNL American Realty Fund, Inc., through investment in restaurant
properties and hotel properties. In addition, the investment objectives of the
Prior Public Programs included making partially tax-sheltered distributions.
STOCKHOLDERS SHOULD NOT CONSTRUE INCLUSION OF THE FOLLOWING TABLES AS
IMPLYING THAT THE COMPANY WILL HAVE RESULTS COMPARABLE TO THOSE REFLECTED IN
SUCH TABLES. DISTRIBUTABLE CASH FLOW, FEDERAL INCOME TAX DEDUCTIONS, OR OTHER
FACTORS COULD BE SUBSTANTIALLY DIFFERENT. STOCKHOLDERS SHOULD NOTE THAT, BY
ACQUIRING SHARES IN THE COMPANY, THEY WILL NOT BE ACQUIRING ANY INTEREST IN ANY
PRIOR PUBLIC PROGRAMS.
Description of Tables
The following Tables are included herein:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to Sponsor
Table III - Operating Results of Prior Programs
Table V - Sales or Disposal of Properties
Unless otherwise indicated in the Tables, all information contained in
the Tables is as of December 31, 1997. The following is a brief description of
the Tables:
Table I - Experience in Raising and Investing Funds
Table I presents information on a percentage basis showing the
experience of two of the principals of the Company and their Affiliates in
raising and investing funds for the Prior Public Programs, the offerings of
which became fully subscribed between January 1993 and December 1997.
C-1
<PAGE>
The Table sets forth information on the offering expenses incurred and
amounts available for investment expressed as a percentage of total dollars
raised. The Table also shows the percentage of property acquisition cost
leveraged, the date the offering commenced, and the time required to raise funds
for investment.
Table II - Compensation to Sponsor
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to the general partners of the Prior
Public Programs.
The Table indicates the total offering proceeds and the portion of such
offering proceeds paid or to be paid to two of the principals of the Company and
their Affiliates in connection with the Prior Public Programs, the offerings of
which became fully subscribed between January 1993 and December 1997. The Table
also shows the amounts paid to two of the principals of the Company and their
Affiliates from cash generated from operations and from cash generated from
sales or refinancing by each of the Prior Public Programs on a cumulative basis
commencing with inception and ending December 31, 1997.
Table III - Operating Results of Prior Programs
Table III presents a summary of operating results for the period from
inception through December 31, 1997, of the Prior Public Programs, the offerings
of which became fully subscribed between January 1993 and December 1997.
The Table includes a summary of income or loss of the Prior Public
Programs, which are presented on the basis of generally accepted accounting
principles ("GAAP"). The Table also shows cash generated from operations, which
represents the cash generated from operations of the properties of the Prior
Public Programs, as distinguished from cash generated from other sources
(special items). The section of the Table entitled "Special Items" provides
information relating to cash generated from or used by items which are not
directly related to the operations of the properties of the Prior Public
Programs, but rather are related to items of a partnership nature. These items
include proceeds from capital contributions of limited partners and
disbursements made from these sources of funds, such as syndication and
organizational costs, acquisition of the properties and other costs which are
related more to the organization of the partnership and the acquisition of
properties than to the actual operations of the partnerships.
The Table also presents information pertaining to investment income,
returns of capital on a GAAP basis, cash distributions from operations, sales
and refinancing proceeds expressed in total dollar amounts as well as
distributions and tax results on a per $1,000 investment basis.
Table IV - Results of Completed Programs
Table IV is omitted from this Exhibit C because none of the directors
of the Company or their Affiliates has been involved in completed programs which
made investments similar to those of the Company.
Table V - Sales or Disposal of Properties
Table V provides information regarding the sale or disposal of
properties owned by the Prior Public Programs between January 1993 and December
1997.
The Table includes the selling price of the property, the cost of the
property, the date acquired and the date of sale.
C-2
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income CNL Income CNL Income CNL American
Fund XII, Fund XIII, Fund XIV, Fund XV, Fund XVI, Fund XVII, Fund XVIII, Realty Fund,
Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Inc.
<S> <C> (Note 1) (Note 2)
Dollar amount offered $45,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000 $30,000,000
=========== =========== =========== =========== =========== ===========
Dollar amount raised 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
----------- ----------- ----------- ----------- ----------- -----------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5) (8.5) (8.5) (8.5) (8.5)
Organizational expenses (3.0) (3.0) (3.0) (3.0) (3.0) (3.0)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5)
----------- ----------- ----------- ----------- ----------- -----------
(12.0) (12.0) (12.0) (12.0) (12.0) (12.0)
----------- ----------- ----------- ----------- ----------- -----------
Reserve for operations -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Percent available for
investment 88.0% 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== =========== ===========
Acquisition costs:
Cash down payment 83.0% 82.5% 82.5% 82.5% 82.5% 83.5%
Acquisition fees paid
to affiliates 5.0 5.5 5.5 5.5 5.5 4.5
Loan costs -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Total acquisition costs 88.0% 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== =========== ===========
Percent leveraged
(mortgage financing
divided by total
acquisition costs) -- -- -- -- -- --
Date offering began 9/29/92 3/31/93 8/27/93 2/23/94 9/02/94 9/02/95
Length of offering (in
months) 6 5 6 6 9 12
Months to invest 90% of
amount available for
investment measured
from date of offering 11 10 11 10 11 15
</TABLE>
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII, Ltd. ("CNL XVIII")
each registered for sale $30,000,000 of units of limited partnership
interest (the "Units"). The offering of Units of CNL XVII commenced
September 2, 1995. Pursuant to the Registration Statement, the
offering of Units of CNL XVIII could not commence until the offering of
Units of CNL XVII had terminated. CNL XVII terminated its offering of
Units on September 19, 1996, at which time subscriptions for an
aggregate 3,000,000 Units ($30,000,000) had been received. Upon the
termination of the offering of Units of CNL XVII, CNL XVIII commenced
its offering to the public of 3,500,000 Units ($35,000,000). As of
December 31, 1997, CNL XVIII had accepted subscriptions for 3,500,000
Units and had received subscription proceeds for 3,414,576 Units,
representing $34,145,759 of capital contributed by limited partners.
The remaining proceeds of $854,241, representing the remaining 85,424
Units were received during the period January 1, 1998 through February
6, 1998, at which time CNL XVIII terminated its offering.
C-3
<PAGE>
Note 2: Pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, effective July 9, 1997, CNL
American Realty Fund, Inc. registered for sale $165,000,000 of shares
of common stock. The offering of shares of CNL American Realty Fund,
Inc. commenced July 9, 1997.
C-4
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income CNL Income CNL Income CNL American
Fund XII, Fund XIII, Fund XIV, Fund XV, Fund XVI, Fund XVII, Fund XVIII, Realty Fund,
Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Inc.
(Note 1) (Note 2)
<S> <C>
Date offering commenced 9/29/92 3/31/93 8/27/93 2/23/94 9/02/94 9/02/95
Dollar amount raised $45,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000 $30,000,000
=========== =========== =========== =========== =========== ===========
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,825,000 3,400,000 3,825,000 3,400,000 3,825,000 2,550,000
Real estate commissions - - - - - -
Acquisition fees 2,250,000 2,200,000 2,475,000 2,200,000 2,475,000 1,350,000
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 225,000 200,000 225,000 200,000 225,000 150,000
----------- ----------- ----------- ----------- ---------- ----------
Total amount paid to sponsor 6,300,000 5,800,000 6,525,000 5,800,000 6,525,000 4,050,000
=========== =========== =========== =========== ========== ==========
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1997 3,940,072 3,395,200 3,734,726 3,419,967 3,909,781 2,611,191
1996 4,089,655 3,494,528 3,841,163 3,557,073 3,911,609 1,340,159
1995 3,928,473 3,482,461 3,823,939 3,361,477 2,619,840 11,671
1994 3,933,486 3,232,046 2,897,432 1,154,454 212,171 -
1993 3,320,549 1,148,550 329,957 - - -
1992 63,401 - - - - -
1991 - - - - - -
1990 - - - - - -
1989 - - - - - -
1988 - - - - - -
1987 - - - - - -
1986 - - - - - -
1985 - - - - - -
1984 - - - - - -
1983 - - - - - -
1982 - - - - - -
1981 - - - - - -
Amount paid to sponsor from
operations (administrative,
accounting and
management fees):
1997 133,084 121,643 128,536 113,372 129,357 116,077
1996 137,966 126,947 134,867 122,391 157,883 107,211
1995 109,111 103,083 114,095 122,107 138,445 2,659
1994 84,524 83,046 84,801 37,620 7,023 -
1993 73,789 27,003 8,220 - - -
1992 2,031 - - - - -
1991 - - - - - -
1990 - - - - - -
1989 - - - - - -
1988 - - - - - -
1987 - - - - - -
1986 - - - - - -
1985 - - - - - -
1984 - - - - - -
1983 - - - - - -
1982 - - - - - -
1981 - - - - - -
Dollar amount of property sales
and refinancing before
deducting payments to sponsor:
Cash 1,640,000 1,769,260 3,196,603 3,312,297 1,385,384 -
Notes - - - - - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - - - - - -
Incentive fees - - - - - -
Other - - - - - -
</TABLE>
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII, Ltd. ("CNL
XVIII") each registered for sale $30,000,000 of units of limited
partnership interest (the "Units"). The offering of Units of CNL XVII
commenced September 2, 1995. Pursuant to the Registration Statement,
the offering of Units of CNL XVIII could not commence until the
offering of Units of CNL XVII had terminated. CNL XVII terminated its
offering of Units on September 19, 1996, at which time subscriptions
for an aggregate 3,000,000 Units ($30,000,000) had been received. Upon
the termination of the offering of Units of CNL XVII, CNL XVIII
commenced its offering to the public of 3,500,000 Units ($35,000,000).
As of December 31, 1997, CNL XVIII had accepted subscriptions for
3,500,000 Units and had received subscription proceeds for 3,414,576
Units, representing $34,145,759 of capital contributed by limited
partners, and 22 properties had been acquired. From commencement of
the offering through December 31, 1997, total selling commissions and
discounts were $2,902,389, due diligence expense reimbursement fees
were $170,729, and acquisition fees were $1,536,559, for a total amount
paid to sponsor of $4,609,677. CNL XVIII had cash generated from
operations for the period October 11, 1996 (the date funds were
originally released from escrow) through December 31, 1997, of
$1,388,756. CNL XVIII made payments of $113,041 to the sponsor from
operations for this period. As of December 31, 1997, CNL XVIII had
accepted subscriptions for 3,500,000 Units and had received
subscription proceeds for 3,414,576 Units, representing $34,145,759 of
capital contributed by limited partners. The remaining proceeds of
$854,241, representing the remaining 85,424 Units were received during
the period January 1, 1998 through February 6, 1998, at which time CNL
XVIII terminated its offering.
C-5
<PAGE>
Note 2: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective July 9, 1997, CNL American Realty
Fund, Inc. registered for sale $165,000,000 of shares of common stock.
The offering of shares of CNL American Realty Fund, Inc. commenced
September 11, 1997. As of December 31, 1997, CNL American Realty Fund,
Inc. had sold 1,132,540 shares, representing subscription proceeds of
$11,325,402 from the offering, including 106 shares, ($1,056) through
the reinvestment plan. From the commencement of the offering through
December 31, 1997, total selling commissions and discounts were
$849,405, marketing support and due diligence expense reimbursement
fees were $56,627, and acquisition fees were $509,643, for a total
amount paid to sponsor of $1,415,675. CNL American Realty Fund, Inc.
had cash generated from operations for the period October 15, 1997 (the
date funds were originally released from escrow) through December 31,
1997, of $22,469. CNL American Realty Fund, Inc. made payments of
$6,889 to the sponsor from operations for this period.
C-6
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XII, LTD.
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ --------
<S> <C>
Gross revenue $ 0 $ 25,133 $ 3,374,640 $ 4,397,881
Equity in earnings of joint ventures 0 46 49,604 85,252
Profit (loss) from sale of properties
(Note 7) 0 0 0 0
Interest income 0 45,228 190,082 65,447
Less: Operating expenses 0 (7,211) (193,804) (192,951)
Interest expense 0 0 0 0
Depreciation and amortization 0 (3,997) (286,293) (327,795)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 59,199 3,134,229 4,027,834
============ ============ ============ ============
Taxable income
- from operations 0 58,543 2,749,072 3,301,005
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 5) 0 61,370 3,246,760 3,848,962
Cash generated from sales (Note 7) 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 61,370 3,246,760 3,848,962
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (61,370) (1,972,769) (3,768,754)
- from sale of properties 0 0 0 0
- from return of capital (Note 4) 0 (60,867) 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 (60,867) 1,273,991 80,208
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 21,543,270 23,456,730 0
General partners' capital
contributions 1,000 0 0 0
Organization costs 0 (10,000) 0 0
Syndication costs 0 (2,066,937) (2,277,637) 0
Acquisition of land and buildings 0 (7,536,009) (15,472,737) (230)
Investment in direct financing
leases 0 (2,503,050) (11,875,100) (591)
Loan to tenant of joint venture,
net of repayments 0 0 (207,189) 6,400
Investment in joint ventures 0 (372,045) (468,771) (4,400)
Payment of lease costs 0 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XII, Ltd. by
related parties 0 (704,923) (432,749) 0
Increase in other assets 0 (654,497) 0 0
Other 0 0 0 973
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 7,634,942 (6,003,462) 82,360
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 5 64 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ -------------
<S> <C>
Gross revenue $ 4,404,792 $ 4,264,273 $ 4,171,654
Equity in earnings of joint ventures 81,582 200,499 277,325
Profit (loss) from sale of properties
(Note 7) 0 (15,355) 0
Interest income 84,197 88,286 73,237
Less: Operating expenses (228,404) (279,341) (249,972)
Interest expense 0 0 0
Depreciation and amortization (327,795) (315,319) (320,030)
------------ ------------ ------------
Net income - GAAP basis 4,014,372 3,943,043 3,952,214
============ ============ ============
Taxable income
- from operations 3,262,046 3,275,495 3,195,801
============ ============ ============
- from gain (loss) on sale 0 (41,506) 0
============ ============ ============
Cash generated from operations
(Notes 2 and 5) 3,819,362 3,951,689 3,806,988
Cash generated from sales (Note 7) 0 1,640,000 0
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 3,819,362 5,591,689 3,806,988
Less: Cash distributions to investors
(Note 6)
- from operating cash flow (3,819,362) (3,870,008) (3,806,988)
- from sale of properties 0 0 0
- from return of capital (Note 4) 0 0 0
- from cash flow from prior period (5,645) 0 (18,020)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions (5,645) 1,721,681 (18,020)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0 0
General partners' capital
contributions 0 0 0
Organization costs 0 0 0
Syndication costs 0 0 0
Acquisition of land and buildings 0 0 (55,000)
Investment in direct financing
leases 0 0 0
Loan to tenant of joint venture,
net of repayments 7,008 7,741 4,886
Investment in joint ventures 0 (1,645,024) 0
Payment of lease costs 0 0 (26,052)
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XII, Ltd. by
related parties 0 0 0
Increase in other assets 0 0 0
Other 0 0 0
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,363 84,398 (94,186)
============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 72 72 70
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 (1) 0
============ ============ ============
</TABLE>
C-8
<PAGE>
TABLE III - CNL INCOME FUND XII, LTD. (continued)
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993 1994
------------ ------------ ------------ --------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 5 46 84
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
- from return of capital (Note 3) 0 7 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 0 12 46 84
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 6 46 84
- from return of capital (Note 3) 0 6 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis
(Note 6) 0 12 46 84
============ ============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 8 and 9) 0.00% 5.00% 6.75% 8.50%
Total cumulative cash distributions
per $1,000 investment from inception 0 12 58 142
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period)
presented (original total acquisition cost
of properties retained, divided by original
total acquisition cost of all properties
in program) (Note 7) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XII, Ltd. ("CNL XII") and CNL
Income Fund XI, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XI, Ltd. commenced March 12, 1992. Pursuant to the
registration statement, CNL XII could not commence until the offering
of Units of CNL Income Fund XI, Ltd. was terminated. CNL Income Fund
XI, Ltd. terminated its offering of Units on September 28, 1992, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XI, Ltd., CNL XII commenced its offering of Units. Activities
through October 8, 1992, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund XII, Ltd. has not treated this amount as a return of capital for
any other purpose.
Note 4: CNL Income Fund XII, Ltd. makes its distributions in the current
period rather than in arrears based on estimated operating results. In
cases where distributions exceed cash from operations in the current
period, once finally determined, subsequent distributions are lowered
accordingly in order to avoid any return of capital. This amount is not
required to be presented as a return of capital except for purposes of
this table, and CNL Income Fund XII, Ltd. has not treated this amount
as a return of capital for any other purpose.
Note 5: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XII, Ltd.
Note 6: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994, 1995 and 1996, are reflected in the 1994, 1995, 1996 and
1997 columns, respectively, for distributions on a cash basis due to
the payment of such distributions in January 1994, 1995, 1996 and 1997,
respectively. As a result of 1994, 1995, 1996 and 1997 distributions
being presented on a cash basis, distributions declared and unpaid as
of December 31, 1994, 1995, 1996 and 1997 are not included in the 1994,
1995, 1996 and 1997 totals, respectively.
C-9
<PAGE>
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 85 86 85
- from capital gain 0 0 0
- from investment income from
prior period 0 0 0
- from return of capital (Note 3) 0 0 0
------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 85 86 85
============ ============ ============
Source (on cash basis)
- from sales 0 0 0
- from refinancing 0 0 0
- from operations 85 86 85
- from return of capital (Note 3) 0 0 0
- from cash flow from prior period 0 0 0
------------ ------------ ------------
Total distributions on cash basis
(Note 6) 85 86 85
============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 8 and 9) 8.60% 8.50% 8.50%
Total cumulative cash distributions
per $1,000 investment from inception 227 313 398
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period)
presented (original total acquisition cost
of properties retained, divided by original
total acquisition cost of all properties
in program) (Note 7) 100% 100% 100%
</TABLE>
Note 7: In April 1996, CNL Income Fund XII, Ltd. sold one of its properties to
an unrelated third party for $1,640,000. As a result of this
transaction, CNL Income Fund XII, Ltd. recognized a loss of $15,355 for
financial reporting purposes primarily due to acquisition fees and
miscellaneous acquisition expenses CNL Income Fund XII, Ltd. had
allocated to this property. In May 1996, CNL Income Fund XII, Ltd.
reinvested the proceeds from this sale, along with additional funds,
for a total of $1,645,024 in Middleburg Joint Venture.
Note 8: On December 31, 1995, CNL Income Fund XII, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .10% of
the total invested capital. Accordingly, the total yield for 1995 was
8.60%.
Note 9: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 10: Certain data for columns representing less than 12 months have been
annualized.
C-10
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XIII, LTD.
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ----------- ------------ -----------
<S> <C>
Gross revenue $ 0 $ 966,564 $ 3,558,447 $ 3,806,944
Equity in earnings of joint ventures 0 1,305 43,386 98,520
Profit (loss) from sale of properties
(Notes 4, 5 and 6) 0 0 0 (29,560)
Interest income 0 181,568 77,379 51,410
Less: Operating expenses 0 (59,390) (183,311) (214,705)
Interest expense 0 0 0 0
Depreciation and amortization 0 (148,170) (378,269) (393,435)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 941,877 3,117,632 3,319,174
============ ============ ============ ============
Taxable income
- from operations 0 978,535 2,703,252 2,920,859
============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,121,547 3,149,000 3,379,378
Cash generated from sales (Notes 4, 5 and 6) 0 0 0 286,411
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,121,547 3,149,000 3,665,789
Less: Cash distributions to investors
(Note 7)
- from operating cash flow 0 (528,364) (2,800,004) (3,350,014)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after
cash distributions 0 593,183 348,996 315,775
Special items (not including sales
and refinancing):
Limited partners' capital
contributions 0 40,000,000 0 0
General partners' capital
contributions 1,000 0 0 0
Syndication costs 0 (3,932,017) (181) 0
Acquisition of land and buildings 0 (19,691,630) (5,764,308) (336,116)
Investment in direct financing leases 0 (6,760,624) (1,365,075) 0
Investment in joint ventures 0 (314,998) (545,139) (140,052)
Increase (decrease) in restricted cash 0 0 0 0
Loan to tenant 0 0 0 0
Collections on loan to tenant 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIII, Ltd. by related parties 0 (799,980) (25,036) (3,074)
Increase in other assets 0 (454,909) 9,226 0
Other 0 0 0 954
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 8,639,025 (7,341,517) (162,513)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 67 72
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Notes 4, 5 and 6) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C>
Gross revenue $ 3,685,280 $ 3,654,128
Equity in earnings of joint ventures 60,654 150,417
Profit (loss) from sale of properties
(Notes 4, 5 and 6) 82,855 (48,538)
Interest income 49,820 27,925
Less: Operating expenses (253,360) (354,206)
Interest expense 0 0
Depreciation and amortization (393,434) (394,099)
------------ -----------
Net income - GAAP basis 3,231,815 3,035,627
============ ===========
Taxable income
- from operations 2,972,159 2,470,268
============ ===========
- from gain (loss) on sale 0 (9,715)
============ ===========
Cash generated from operations
(Notes 2 and 3) 3,367,581 3,273,557
Cash generated from sales (Notes 4, 5 and 6) 550,000 932,849
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 3,917,581 4,206,406
Less: Cash distributions to investors
(Note 7)
- from operating cash flow (3,367,581) (3,273,557)
- from sale of properties 0 0
- from cash flow from prior period (32,427) (126,451)
------------ -----------
Cash generated (deficiency) after
cash distributions 517,573 806,398
Special items (not including sales
and refinancing):
Limited partners' capital
contributions 0 0
General partners' capital
contributions 0 0
Syndication costs 0 0
Acquisition of land and buildings 0 0
Investment in direct financing leases 0 0
Investment in joint ventures 0 (1,482,849)
Increase (decrease) in restricted cash (550,000) 550,000
Loan to tenant 0 (196,980)
Collections on loan to tenant 0 127,843
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIII, Ltd. by related parties 0 0
Increase in other assets 0 0
Other 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items (32,427) (195,588)
============ ===========
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 74 61
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) (Notes 4, 5 and 6) 0 0
============ ============
</TABLE>
C-12
<PAGE>
TABLE III - CNL INCOME FUND XIII, LTD. (continued)
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ --------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 18 70 82
- from capital gain 0 0 0 0
- from investment income from prior
period 0 0 0 2
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 7) 0 18 70 84
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 18 70 84
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 7) 0 18 70 84
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 8) 0.00% 5.33% 7.56% 8.44%
Total cumulative cash distributions per
$1,000 investment from inception 0 18 88 172
Amount (in percentage terms) remaining
invested in program properties at the end
of each year (period) presented (original
total acquisition cost of properties retained,
divided by original total acquisition cost
of all properties in program) (Notes 4, 5 and 6) N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to the offering of Units by CNL
Income Fund XIII, Ltd. became effective on March 17, 1993. Activities
through April 15, 1993, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XIII, Ltd.
Note 4: During 1995, the partnership sold one of its properties to a tenant
for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used to
acquire an additional property. As a result of this transaction, the
partnership recognized a loss for financial reporting purposes of
$29,560 primarily due to acquisition fees and miscellaneous acquisition
expenses the partnership had allocated to the property and due to the
accrued rental income relating to future scheduled rent increases that
the partnership had recorded and reversed at the time of sale.
Note 5: In November 1996, CNL Income Fund XIII, Ltd. sold one of its
properties and received net sales proceeds of $550,000, resulting in a
gain of $82,855 for financial reporting purposes. In January 1997, the
partnership reinvested the net sales proceeds in an additional property
as tenants-in-common with an affiliate of the general partners.
Note 6: In October 1997, the partnership sold one of its properties and
received net sales proceeds of $932,849, resulting in a loss of $48,538
for financial reporting purposes. In December 1997, the partnership
reinvested the net sales proceeds in an additional property as
tenants-in-common with affiates of the general partners.
Note 7: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994, 1995 and 1996, are reflected in the 1994, 1995, 1996 and
1997 columns, respectively, for distributions on a cash basis due to
the payment of such distributions in January 1994, 1995, 1996 and 1997,
respectively. As a result of 1994, 1995, 1996 and 1997 distributions
being presented on a cash basis, distributions declared and unpaid as
of December 31, 1994, 1995, 1996 and 1997, are not included in the
1994, 1995, 1996 and 1997 totals, respectively.
Note 8: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 9: Certain data for columns representing less than 12 months have been
annualized.
C-13
<PAGE>
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 78 75
- from capital gain 2 0
- from investment income from prior
period 5 10
------------ ------------
Total distributions on GAAP basis (Note 7) 85 85
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 84 82
- from cash flow from prior period 1 3
------------ ------------
Total distributions on cash basis (Note 7) 85 85
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 8) 8.50% 8.50%
Total cumulative cash distributions per
$1,000 investment from inception 257 342
Amount (in percentage terms) remaining
invested in program properties at the end
of each year (period) presented (original
total acquisition cost of properties retained,
divided by original total acquisition cost
of all properties in program) (Notes 4, 5 and 6) 100% 99%
</TABLE>
C-14
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XIV, LTD.
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 256,234 $ 3,135,716 $ 4,017,266
Equity in earnings of joint ventures 0 1,305 35,480 338,717
Profit (Loss) from sale of properties
(Note 4) 0 0 0 (66,518)
Interest income 0 27,874 200,499 50,724
Less: Operating expenses 0 (14,049) (181,980) (248,840)
Interest expense 0 0 0 0
Depreciation and amortization 0 (28,918) (257,640) (340,112)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 242,446 2,932,075 3,751,237
============ ============ ============ ============
Taxable income
- from operations 0 278,845 2,482,240 3,162,165
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 321,737 2,812,631 3,709,844
Cash generated from sales (Note 4) 0 0 0 696,012
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 321,737 2,812,631 4,405,856
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (9,050) (2,229,952) (3,543,751)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 312,687 582,679 862,105
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 28,785,100 16,214,900 0
General partners' capital
contributions 1,000 0 0 0
Syndication costs 0 (2,771,892) (1,618,477) 0
Acquisition of land and buildings 0 (13,758,004) (11,859,237) (964,073)
Investment in direct financing leases 0 (4,187,268) (5,561,748) (75,352)
Investment in joint ventures 0 (315,209) (1,561,988) (1,087,218)
Return of capital from joint venture 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 (706,215) (376,738) (577)
Increase in other assets 0 (444,267) 0 0
Other 0 0 0 5,530
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 6,914,932 (4,180,609) (1,259,585)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 16 56 70
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
1996 1997
------------ -----------
<S> <C>
Gross revenue $ 3,999,813 $ 3,918,582
Equity in earnings of joint ventures 459,137 309,879
Profit (Loss) from sale of properties
(Note 4) 0 0
Interest income 44,089 40,232
Less: Operating expenses (246,621) (262,592)
Interest expense 0 0
Depreciation and amortization (340,089) (340,161)
----------- ------------
Net income - GAAP basis 3,916,329 3,665,940
=========== ============
Taxable income
- from operations 3,236,329 3,048,675
=========== ============
- from gain on sale 0 47,256
=========== ============
Cash generated from operations
(Notes 2 and 3) 3,706,296 3,606,190
Cash generated from sales (Note 4) 0 0
Cash generated from refinancing 0 0
----------- ------------
Cash generated from operations, sales
and refinancing 3,706,296 3,606,190
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (3,706,296) (3,606,190)
- from sale of properties 0 0
- from cash flow from prior period (6,226) (106,330)
----------- ------------
Cash generated (deficiency) after cash
distributions (6,226) (106,330)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0
General partners' capital
contributions 0 0
Syndication costs 0 0
Acquisition of land and buildings 0 0
Investment in direct financing leases 0 0
Investment in joint ventures (7,500) (121,855)
Return of capital from joint venture 0 51,950
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 0
Increase in other assets 0 0
Other 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items (13,726) (176,235)
=========== ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 71 67
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) (Note 4) 0 1
============ ============
</TABLE>
C-16
<PAGE>
TABLE III - CNL INCOME FUND XIV, LTD. (continued)
<TABLE>
<CAPTION>
1992
(Note 1) 1993 1994 1995
------------ ------------ ------------ -------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 51 79
- from capital gain 0 0 0 0
- from return of capital 0 0 0 0
- from investment income from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 1 51 79
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 51 79
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 1 51 79
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 4.50% 6.50% 8.06%
Total cumulative cash distributions
per $1,000 investment from inception 0 1 52 131
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XIV, Ltd. ("CNL XIV") and CNL
Income Fund XIII, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XIII, Ltd. commenced March 17, 1993. Pursuant to the
registration statement, CNL XIV could not commence until the offering
of Units of CNL Income Fund XIII, Ltd. was terminated. CNL Income Fund
XIII, Ltd. terminated its offering of Units on August 26, 1993, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XIII, Ltd., CNL XIV commenced its offering of Units. Activities
through September 13, 1993, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XIV, Ltd.
Note 4: During 1995, the partnership sold two of its properties to a tenant
for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used to
acquire two additional properties. As a result of these transactions,
the partnership recognized a loss for financial reporting purposes of
$66,518 primarily due to acquisition fees and miscellaneous acquisition
expenses the partnership had allocated to the property and due to the
accrued rental income relating to future scheduled rent increases that
the partnership had recorded and reversed at the time of sale. In
addition, during 1996, Wood-Ridge Real Estate Joint Venture, in which
the partnership owns a 50% interest, sold its two properties to the
tenant and recognized a gain of approximately $261,100 for financial
reporting purposes. As a result, the partnership's pro rata share of
such gain of approximately $130,550 is included in equity and earnings
of unconsolidated joint ventures for 1996.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994, 1995 and 1996, are reflected in the 1994, 1995, 1996 and
1997 columns, respectively, for distributions on a cash basis due to
the payment of such distributions in January 1994, 1995, 1996 and 1997,
respectively. As a result of 1994, 1995, 1996 and 1997 distributions
being presented on a cash basis, distributions declared and unpaid as
of December 31, 1994, 1995, 1996 and 1997 are not included in the 1994,
1995, 1996 and 1997 totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-17
<PAGE>
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 83 81
- from capital gain 0 0
- from return of capital 0 0
- from investment income from prior
period 0 2
------------ ------------
Total distributions on GAAP basis (Note 5) 83 83
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 83 81
- from cash flow from prior period 0 2
------------ ------------
Total distributions on cash basis (Note 5) 83 83
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 8.25% 8.25%
Total cumulative cash distributions
per $1,000 investment from inception 214 297
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) 100% 100%
</TABLE>
C-18
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XV, LTD.
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 1,143,586 $ 3,546,320 $ 3,632,699
Equity in earnings of joint ventures 0 8,372 280,606 392,862
Profit (Loss) from sale of properties
(Note 4) 0 0 (71,023) 0
Interest income 0 167,734 88,059 43,049
Less: Operating expenses 0 (62,926) (228,319) (235,319)
Interest expense 0 0 0 0
Depreciation and amortization 0 (70,848) (243,175) (248,232)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 1,185,918 3,372,468 3,585,059
============ ============ ============ ============
Taxable income
- from operations 0 1,026,715 2,861,912 2,954,318
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,116,834 3,239,370 3,434,682
Cash generated from sales (Note 4) 0 0 811,706 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,116,834 4,051,076 3,434,682
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (635,944) (2,650,003) (3,200,000)
- from sale of properties 0 0 0 0
- from cash flow from prior period
------------- ------------ ------------- -----------
Cash generated (deficiency) after cash
distributions 0 480,890 1,401,073 234,682
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0 40,000,000 0 0
General partners' capital contra-
bunions 1,000 0 0 0
Syndication costs 0 (3,892,003) 0 0
Acquisition of land and buildings 0 (22,152,379) (1,625,601) 0
Investment in direct financing
leases 0 (6,792,806) (2,412,973) 0
Investment in joint ventures 0 (1,564,762) (720,552) (129,939)
Return of capital from joint venture 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0 (1,098,197) (23,507) 0
Increase in other assets 0 (187,757) 0 0
Other (38) (6,118) 25,150 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 962 4,786,868 (3,356,410) 104,743
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 71 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
1997
----
<S> <C>
Gross revenue $ 3,622,123
Equity in earnings of joint ventures 239,249
Profit (Loss) from sale of properties
(Note 4) 0
Interest income 46,642
Less: Operating expenses (224,761)
Interest expense 0
Depreciation and amortization (248,348)
-----------
Net income - GAAP basis 3,434,905
===========
Taxable income
- from operations 2,856,893
===========
- from gain on sale 47,256
===========
Cash generated from operations
(Notes 2 and 3) 3,306,595
Cash generated from sales (Note 4) 0
Cash generated from refinancing 0
-----------
Cash generated from operations, sales
and refinancing 3,306,595
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (3,280,000)
- from sale of properties 0
- from cash flow from prior period 0
-----------
Cash generated (deficiency) after cash
distributions 26,595
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0
General partners' capital contra-
bunions 0
Syndication costs 0
Acquisition of land and buildings 0
Investment in direct financing
leases 0
Investment in joint ventures 0
Return of capital from joint venture 51,950
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0
Increase in other assets 0
Other 0
-----------
Cash generated (deficiency) after cash
distributions and special items 78,545
===========
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 71
===========
- from recapture 0
===========
Capital gain (loss) (Note 4) 1
===========
</TABLE>
C-20
<PAGE>
TABLE III - CNL INCOME FUND XV, LTD. (continued)
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ -------------- ------------ --------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 21 66 80
- from capital gain 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 21 66 80
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 21 66 80
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 21 66 80
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Notes 6
and 7). 0 5.00% 7.25% 8.20%
Total cumulative cash distributions per
$1,000 investment from inception 0 21 87 167
Amount (in percentage terms) remaining
invested in program properties at the end of
each year (period) presented (original
total acquisition cost of properties
retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to this offering of Units of CNL
Income Fund XV, Ltd. became effective February 23, 1994. Activities
through March 23, 1994, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint venture, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XV, Ltd.
Note 4: During 1995, the partnership sold three of its properties to a
tenant for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The majority of the net sales
proceeds were used to acquire additional properties. As a result of
these transactions, the partnership recognized a loss for financial
reporting purposes of $71,023 primarily due to acquisition fees and
miscellaneous acquisition expenses the partnership had allocated to the
three properties and due to the accrued rental income relating to
future scheduled rent increases that the partnership had recorded and
reversed at the time of sale. In addition, during 1996, Wood-Ridge Real
Estate Joint Venture, in which the partnership owns a 50% interest,
sold its two properties to the tenant and recognized a gain of
approximately $261,100 for financial reporting purposes. As a result,
the partnership's pro rata share of such gain of approximately $130,550
is included in equity and earnings of unconsolidated joint ventures for
1996.
Note 5: Distributions declared for the quarters ended December 31, 1994,
1995 and 1996 are reflected in the 1995, 1996 and 1997 columns,
respectively, due to the payment of such distributions in January 1995,
1996 and 1997, respectively. As a result of distributions being
presented on a cash basis, distributions declared and unpaid as of
December 31, 1994, 1995, 1996 and 1997 are not included in the 1994,
1995, 1996 and 1997 totals, respectively.
Note 6: On December 31, 1996, CNL Income Fund XV, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .20% of
the total invested capital. Accordingly, the total yield for 1996 was
8.20%
Note 7: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 8: Certain data for columns representing less than 12 months have been
annualized.
C-21
<PAGE>
<TABLE>
<CAPTION>
1997
----
<S> <C>
Cash distributions to investors
Source (on GAAP basis) 82
- from investment income 0
----
- from capital gain 82
====
Total distributions on GAAP basis (Note 5)
Source (on cash basis)
- from sales 0
- from refinancing 0
- from operations 82
-----
Total distributions on cash basis (Note 5) 82
=====
Total cash distributions as a percentage
of original $1,000 investment (Notes 6
and 7). 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 249
Amount (in percentage terms) remaining
invested in program properties at the end of
each year (period) presented (original
total acquisition cost of properties
retained, divided by original
total acquisition cost of all properties
in program) 100%
</TABLE>
C-22
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XVI, LTD.
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 186,257 $ 2,702,504 $ 4,343,390
Equity in earnings from joint venture 0 0 0 19,668
Profit from sale of properties (Notes 4
and 5) 0 0 0 124,305
Interest income 0 21,478 321,137 75,160
Less: Operating expenses 0 (10,700) (274,595) (261,878)
Interest expense 0 0 0 0
Depreciation and amortization 0 (9,458) (318,205) (552,447)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 187,577 2,430,841 3,748,198
============ ============ ============ ============
Taxable income
- from operations 0 189,864 2,139,382 3,239,830
============ ============ ============ ============
- from gain on sale (Notes 4 and 5) 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 205,148 2,481,395 3,753,726
Cash generated from sales (Notes 4 and 5) 0 0 0 775,000
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 205,148 2,481,395 4,528,726
Less: Cash distributions to investors
(Note 4)
- from operating cash flow 0 (2,845) (1,798,921) (3,431,251)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 202,303 682,474 1,097,475
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0 20,174,172 24,825,828 0
General partners' capital contri-
butions 1,000 0 0 0
Syndication costs 0 (1,929,465) (2,452,743) 0
Acquisition of land and buildings 0 (13,170,132) (16,012,458) (2,355,627)
Investment in direct financing
leases 0 (975,853) (5,595,236) (405,937)
Investment in joint ventures 0 0 0 (775,000)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0 (854,154) (405,569) (2,494)
Increase in other assets 0 (443,625) (58,720) 0
Other (36) (20,714) 20,714 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 964 2,982,532 1,004,290 (2,441,583)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 53 71
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Notes 4 and 5) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-23
<PAGE>
1997
-----
Gross revenue $ 4,308,853
Equity in earnings from joint venture 73,507
Profit from sale of properties (Notes 4
and 5) 41,148
Interest income 73,634
Less: Operating expenses (272,932)
Interest expense 0
Depreciation and amortization (563,883)
------------
Net income - GAAP basis 3,660,327
============
Taxable income
- from operations 3,178,911
============
- from gain on sale (Notes 4 and 5) 64,912
============
Cash generated from operations
(Notes 2 and 3) 3,780,424
Cash generated from sales (Notes 4 and 5) 610,384
Cash generated from refinancing 0
------------
Cash generated from operations, sales
and refinancing 4,390,808
Less: Cash distributions to investors
(Note 4)
- from operating cash flow (3,600,000)
- from sale of properties 0
------------
Cash generated (deficiency) after cash
distributions 790,808
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 0
General partners' capital contri-
butions 0
Syndication costs 0
Acquisition of land and buildings (23,501)
Investment in direct financing
leases (29,257)
Investment in joint ventures (610,384)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0
Increase in other assets 0
Other 0
------------
Cash generated (deficiency) after cash
distributions and special items 127,666
============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 70
============
- from recapture 0
============
Capital gain (loss) (Notes 4 and 5) 1
============
C-24
<PAGE>
TABLE III - CNL INCOME FUND XVI, LTD. (continued)
<TABLE>
<CAPTION>
1993
(Note 1) 1994 1995 1996
------------ ------------ ------------ --------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 45 76
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 6) 0 1 45 76
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 45 76
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 6) 0 1 45 76
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 7) 0.00% 4.50% 6.00% 7.88%
Total cumulative cash distributions per
$1,000 investment from inception 0 1 46 122
Amount (in percentage terms) remaining
invested in program properties at the end
of each year (period) presented
(original total acquisition cost of properties
retained, divided by original
total acquisition cost of all properties
in program) (Notes 4 and 5) N/A 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVI, Ltd. ("CNL XVI") and CNL
Income Fund XV, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XV, Ltd. commenced February 23, 1994. Pursuant to the
registration statement, CNL XVI could not commence until the offering
of Units of CNL Income Fund XV, Ltd. was terminated. CNL Income Fund
XV, Ltd. terminated its offering of Units on September 1, 1994, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XV, Ltd., CNL XVI commenced its offering of Units. Activities
through September 22, 1994, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included
in the financial statements of CNL Income Fund XVI, Ltd.
Note 4: In April 1996, CNL Income Fund XVI, Ltd. sold one of its properties
and received net sales proceeds of $775,000, resulting in a gain of
$124,305 for financial reporting purposes. In October 1996, the
partnership reinvested the net sales proceeds in an additional property
as tenants-in-common with an affiliate of the general partners.
Note 5: In March 1997, CNL Income Fund XVI, Ltd. sold one of its properties
and received net sales proceeds of $610,384, resulting in a gain of
$41,148 for financial reporting purposes. In January 1998, the
partnership reinvested the net sales proceeds in an additional property
as tenants-in-common with affiliates of the general partners.
Note 6: Distributions declared for the quarters ended December 31, 1994,
1995 and 1996 are reflected in the 1995, 1996 and 1997 columns,
respectively, due to the payment of such distributions in January 1995,
1996 and 1997, respectively. As a result of distributions being
presented on a cash basis, distributions declared and unpaid as of
December 31, 1994, 1995, 1996 and 1997 are not included in the 1994,
1995, 1996 and 1997 totals, respectively.
Note 7: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 8: Certain data for columns representing less than 12 months have been
annualized.
C-25
<PAGE>
<TABLE>
<CAPTION>
1997
----
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 80
- from capital gain 0
- from investment income from
prior period 0
----
Total distributions on GAAP basis (Note 6) 80
====
Source (on cash basis)
- from sales 0
- from refinancing 0
- from operations 80
----
Total distributions on cash basis (Note 6) 80
====
Total cash distributions as a percentage
of original $1,000 investment (Note 7) 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 202
Amount (in percentage terms) remaining
invested in program properties at the end
of each year (period) presented
(original total acquisition cost of properties
retained, divided by original
total acquisition cost of all properties
in program) (Notes 4 and 5) 100%
</TABLE>
C-26
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XVII, LTD.
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997
------------ ------------ --------
<S> <C>
Gross revenue $ 0 $ 1,195,263 $ 2,643,871
Equity in earnings of unconsolidated
joint ventures 0 4,834 100,918
Interest income 12,153 244,406 69,779
Less: Operating expenses (3,493) (169,536) (181,865)
Interest expense 0 0 0
Depreciation and amortization (309) (179,208) (387,292)
Minority interest in income of
consolidated joint venture 0 (41,854)
------------ ------------ ------------
Net income - GAAP basis 8,351 1,095,759 2,203,557
============ ============ ============
Taxable income
- from operations 12,153 1,114,964 2,058,601
============ ============ ============
- from gain on sale 0 0 0
============ ============ ============
Cash generated from operations
(Notes 2 and 3) 9,012 1,232,948 2,495,114
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 9,012 1,232,948 2,495,114
Less: Cash distributions to investors
(Note 4)
- from operating cash flow (1,199) (703,681) (2,177,584)
- from sale of properties 0 0 0
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 7,813 529,267 317,530
Special items (not including sales and
refinancing):
Limited partners' capital contri-
butions 5,696,921 24,303,079 0
General partners' capital contri-
butions 1,000 0 0
Contributions from minority interest 0 140,676 278,170
Distribution to holder of minority
interest 0 0 (41,507)
Syndication costs (604,348) (2,407,317) 0
Acquisition of land and buildings (332,928) (19,735,346) (1,740,491)
Investment in direct financing
leases 0 (1,784,925) (1,130,497)
Investment in joint ventures 0 (201,501) (1,135,681)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVII, Ltd. by related parties (347,907) (326,483) (25,444)
Increase in other assets (221,282) 0 0
Distributions to holder of minority
interest 0 0 0
Other (410) 410 0
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 4,198,859 517,860 (3,477,920)
============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 36 37 69
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 0 0
============ ============ ============
</TABLE>
C-29
<PAGE>
TABLE III - CNL INCOME FUND XVII, LTD. (continued)
<TABLE>
<CAPTION>
1995
(Note 1) 1996 1997
------------ ------------ -----------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 4 23 73
- from capital gain 0 0 0
- from investment income from
prior period 0 0 0
------------ ------------ ------------
Total distributions on GAAP basis (Note 4) 0 23 73
============ ============ ============
Source (on cash basis)
- from sales 0 0 0
- from refinancing 0 0 0
- from operations 4 23 73
------------ ------------ ------------
Total distributions on cash basis (Note 4) 4 23 73
============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 5) 5.00% 5.50% 7.625%
Total cumulative cash distributions per
$1,000 investment from inception 4 27 100
Amount (in percentage terms) remaining
invested in program properties at the end of each year
(period) presented (original total acquisition cost
of properties retained, divided by original
total acquisition cost of all properties
in program) N/A 98% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII, Ltd. each registered
for sale $30,000,000 units of limited partnership interests ("Units").
The offering of Units of CNL Income Fund XVII, Ltd. commenced September
2, 1995. Pursuant to the registration statement, CNL XVIII could not
commence until the offering of Units of CNL Income Fund XVII, Ltd. was
terminated. CNL Income Fund XVII, Ltd. terminated its offering of
Units on September 19, 1996, at which time subscriptions for the
maximum offering proceeds of $30,000,000 had been received. Upon the
termination of the offering of Units of CNL Income Fund XVII, Ltd., CNL
XVIII commenced its offering of Units. Activities through October 11,
1996, were devoted to organization of the partnership and operations
had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash
generated from operations per the statement of cash flows included in
the financial statements of CNL Income Fund XVII, Ltd.
Note 4: Distributions declared for the quarters ended December 31, 1995 and
1996 are reflected in the 1996 and 1997 columns, respectively, due to
the payment of such distributions in January 1996 and 1997,
respectively. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1996 and
1997 are not included in the 1996 and 1997 totals, respectively.
Note 5: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 4 above)
Note 6: Certain data for columns representing less than 12 months have been
annualized.
C-30
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
===================================================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA 02/05/87 06/12/92 $1,169,021 0 0 0 $1,169,021
Wendy's -
Fairfield, CA 07/01/87 10/03/94 1,018,490 0 0 0 1,018,490
Wendy's -
Casa Grande, AZ 12/10/86 08/19/97 795,700 0 0 0 795,700
Wendy's -
North Miami, FL (9) 02/18/86 08/21/97 473,713 0 0 0 473,713
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 05/29/87 07/21/93 746,800 0 0 0 746,800
Pizza Hut -
Graham, TX 08/24/87 07/28/94 261,628 0 0 0 261,628
Golden Corral -
Medina, OH (11) 11/18/87 11/30/94 825,000 0 0 0 825,000
Denny's -
Show Low, AZ (8) 05/22/87 01/31/97 620,800 0 0 0 620,800
KFC -
Eagan, MN 06/01/87 06/02/97 623,882 0 42,000 0 665,882
KFC -
Jacksonville, FL 09/01/87 09/09/97 639,363 0 0 0 639,363
Wendy's -
Farmington Hills, MI (12) 05/18/87 10/09/97 833,031 0 0 0 833,031
Wendy's -
Farmington Hills, MI (13) 05/18/87 10/09/97 1,085,259 0 0 0 1,085,259
Denny's -
Plant City, FL 11/23/87 10/24/97 910,061 0 0 0 910,061
Pizza Hut -
Mathis, TX 12/17/87 12/04/97 297,938 0 0 0 297,938
KFC -
Avon Park, FL 09/02/87 12/10/97 501,975 0 0 0 501,975
CNL Income Fund III, Ltd.:
Wendy's -
Chicago, IL 06/02/88 01/10/97 496,418 0 0 0 496,418
Perkins -
Bradenton, FL 06/30/88 03/14/97 1,310,001 0 0 0 1,310,001
Pizza Hut -
Kissimmee, FL 02/23/88 04/08/97 673,159 0 0 0 673,159
Burger King -
Roswell, GA 06/08/88 06/20/97 257,981 0 685,000 0 942,981
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
Cost of Properties
Including Closing and
Soft Costs
---------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==============================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA 0 $955,000 $955,000 $214,021
Wendy's -
Fairfield, CA 0 861,500 861,500 156,990
Wendy's -
Casa Grande, AZ 0 667,255 667,255 128,445
Wendy's -
North Miami, FL (9) 0 385,000 385,000 88,713
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 0 642,800 642,800 104,000
Pizza Hut -
Graham, TX 0 205,500 205,500 56,128
Golden Corral -
Medina, OH (11) 0 743,000 743,000 82,000
Denny's -
Show Low, AZ (8) 0 484,185 484,185 136,615
KFC -
Eagan, MN 0 601,100 601,100 64,782
KFC -
Jacksonville, FL 0 405,000 405,000 234,363
Wendy's -
Farmington Hills, MI (12) 0 679,000 679,000 154,031
Wendy's -
Farmington Hills, MI (13) 0 887,000 887,000 198,259
Denny's -
Plant City, FL 0 820,717 820,717 89,344
Pizza Hut -
Mathis, TX 0 202,100 202,100 95,838
KFC -
Avon Park, FL 0 345,000 345,000 156,975
CNL Income Fund III, Ltd.:
Wendy's -
Chicago, IL 0 591,362 591,362 (94,944)
Perkins -
Bradenton, FL 0 1,080,500 1,080,500 229,501
Pizza Hut -
Kissimmee, FL 0 474,755 474,755 198,404
Burger King -
Roswell, GA 0 775,226 775,226 167,755
</TABLE>
C-31
<PAGE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
=========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
-----------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
=========================================================================================================
<S> <C>
Wendy's -
Mason City, IA 02/29/88 10/24/97 217,040 0 0 0 217,040
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 03/22/89 04/27/94 712,000 0 0 0 712,000
Burger King -
Hastings, MI 08/12/88 12/15/95 518,650 0 0 0 518,650
Wendy's -
Tampa, FL 12/30/88 09/20/96 1,049,550 0 0 0 1,049,550
Checkers -
Douglasville, GA 12/08/94 11/07/97 380,695 0 0 0 380,695
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 02/28/90 08/25/95 0 0 1,040,000 0 1,040,000
Ponderosa -
St. Cloud, FL (6) 06/01/89 10/24/96 73,713 0 1,057,299 0 1,131,012
Franklin National Bank -
Franklin, TN 06/26/89 01/07/97 960,741 0 0 0 960,741
Shoney's -
Smyrna, TN 03/22/89 05/13/97 636,788 0 0 0 636,788
KFC -
Salem, NH 05/31/89 09/22/97 1,272,137 0 0 0 1,272,137
Perkins -
Port St. Lucie, FL 11/14/89 09/23/97 1,216,750 0 0 0 1,216,750
Hardee's -
Richmond, VA 02/17/89 11/07/97 397,785 0 0 0 397,785
Wendy's -
Tampa, FL 02/16/89 12/29/97 805,175 0 0 0 805,175
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 11/02/89 05/24/94 791,211 0 0 0 791,211
Hardee's -
Heber Springs, AR 02/13/90 05/24/94 638,270 0 0 0 638,270
Hardee's -
Little Canada, MN 11/28/89 06/29/95 899,503 0 0 0 899,503
Jack in the Box -
Dallas, TX 06/28/94 12/09/96 982,980 0 0 0 982,980
Denny's -
Show Low, AZ (8) 05/22/87 01/31/97 349,200 0 0 0 349,200
KFC -
Whitehall Township, MI 02/26/90 07/09/97 629,888 0 0 0 629,888
</TABLE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
==================================================================================
Cost of Properties
Including Closing and
Soft Costs
---------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
==================================================================================
<S> <C>
Wendy's -
Mason City, IA 0 190,252 190,252 26,788
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 0 616,501 616,501 95,499
Burger King -
Hastings, MI 0 419,936 419,936 98,714
Wendy's -
Tampa, FL 0 828,350 828,350 221,200
Checkers -
Douglasville, GA 0 363,768 363,768 16,927
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 0 986,418 986,418 53,582
Ponderosa -
St. Cloud, FL (6) 0 996,769 996,769 134,243
Franklin National Bank -
Franklin, TN 0 1,138,164 1,138,164 (177,423)
Shoney's -
Smyrna, TN 0 554,200 554,200 82,588
KFC -
Salem, NH 0 1,079,310 1,079,310 192,827
Perkins -
Port St. Lucie, FL 0 1,203,207 1,203,207 13,543
Hardee's -
Richmond, VA 0 695,464 695,464 (297,679)
Wendy's -
Tampa, FL 0 657,800 657,800 147,375
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 0 605,500 605,500 185,711
Hardee's -
Heber Springs, AR 0 532,893 532,893 105,377
Hardee's -
Little Canada, MN 0 821,692 821,692 77,811
Jack in the Box -
Dallas, TX 0 964,437 964,437 18,543
Denny's -
Show Low, AZ (8) 0 272,354 272,354 76,846
KFC -
Whitehall Township, MI 0 725,604 725,604 (95,716)
</TABLE>
C-32
<PAGE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
==========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
------------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
==========================================================================================================
<S> <C>
Perkins -
Naples, FL 12/26/89 07/09/97 1,487,725 0 0 0 1,487,725
Burger King -
Plattsmouth, NE 01/19/90 07/18/97 699,400 0 0 0 699,400
Shoney's -
Venice, FL 08/03/89 09/17/97 1,206,696 0 0 0 1,206,696
Jack in the Box -
Yuma, AZ (10) 07/14/94 10/31/97 510,653 0 0 0 510,653
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 06/14/90 05/19/92 700,000 0 0 0 700,000
Hardee's -
St. Paul, MN 08/09/90 05/24/94 869,036 0 0 0 869,036
Perkins -
Florence, SC (3) 08/28/90 08/25/95 0 0 1,160,000 0 1,160,000
Church's Fried Chicken -
Jacksonville, FL (4) 04/30/90 12/01/95 0 0 240,000 0 240,000
Shoney's -
Colorado Springs, CO 07/03/90 07/24/96 1,044,909 0 0 0 1,044,909
Hardee's -
Hartland, MI 07/10/90 10/23/96 617,035 0 0 0 617,035
Hardee's -
Columbus, IN 09/04/90 05/30/97 223,590 0 0 0 223,590
KFC -
Dunnellon, FL 08/02/90 10/07/97 757,800 0 0 0 757,800
Jack in the Box -
Yuma, AZ (10) 07/14/94 10/31/97 471,372 0 0 0 471,372
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 03/16/91 07/31/95 1,184,865 0 0 0 1,184,865
Church's Fried Chicken -
Jacksonville, FL (4) 09/28/90 12/01/95 0 0 240,000 0 240,000
Church's Fried Chicken -
Jacksonville, FL (5) 09/28/90 12/01/95 0 0 220,000 0 220,000
Ponderosa -
Orlando, FL (6) 12/17/90 10/24/96 0 0 1,353,775 0 1,353,775
CNL Income Fund IX, Ltd.:
Burger King -
Woodmere, OH 05/31/91 12/12/96 918,445 0 0 0 918,445
Burger King -
Alpharetta, GA 09/20/91 06/30/97 1,053,571 0 0 0 1,053,571
</TABLE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
==================================================================================
Cost of Properties
Including Closing and
Soft Costs
-----------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
====================================================================================
<S> <C>
Perkins -
Naples, FL 0 1,083,869 1,083,869 403,856
Burger King -
Plattsmouth, NE 0 561,000 561,000 138,400
Shoney's -
Venice, FL 0 1,032,435 1,032,435 174,261
Jack in the Box -
Yuma, AZ (10) 0 448,082 448,082 62,571
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 0 560,202 560,202 139,798
Hardee's -
St. Paul, MN 0 742,333 742,333 126,703
Perkins -
Florence, SC (3) 0 1,084,905 1,084,905 75,095
Church's Fried Chicken -
Jacksonville, FL (4) 0 233,728 233,728 6,272
Shoney's -
Colorado Springs, CO 0 893,739 893,739 151,170
Hardee's -
Hartland, MI 0 841,642 841,642 (224,607)
Hardee's -
Columbus, IN 0 219,676 219,676 3,914
KFC -
Dunnellon, FL 0 546,333 546,333 211,467
Jack in the Box -
Yuma, AZ (10) 0 413,614 413,614 57,758
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 0 949,199 949,199 235,666
Church's Fried Chicken -
Jacksonville, FL (4) 0 238,153 238,153 1,847
Church's Fried Chicken -
Jacksonville, FL (5) 0 215,845 215,845 4,155
Ponderosa -
Orlando, FL (6) 0 1,179,210 1,179,210 174,565
CNL Income Fund IX, Ltd.:
Burger King -
Woodmere, OH 0 918,445 918,445 0
Burger King -
Alpharetta, GA 0 713,866 713,866 339,705
</TABLE>
C-33
<PAGE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
=========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
-----------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
=========================================================================================================
<S> <C>
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 03/04/92 08/11/95 1,050,186 0 0 0 1,050,186
Jack in the Box -
Freemont, CA 03/26/92 09/23/97 1,366,550 0 0 0 1,366,550
CNL Income Fund XI, Ltd.:
Burger King -
Philadelphia, PA 09/29/92 11/07/96 1,044,750 0 0 0 1,044,750
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 12/28/92 04/10/96 1,640,000 0 0 0 1,640,000
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 03/31/94 04/24/95 286,411 0 0 0 286,411
Checkers -
Richmond, VA 03/31/94 11/21/96 550,000 0 0 0 550,000
Denny's -
Orlando, FL 09/01/93 10/24/97 932,849 0 0 0 932,849
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 03/31/94 03/01/95 339,031 0 0 0 339,031
Checkers -
Dallas, TX 03/31/94 03/01/95 356,981 0 0 0 356,981
TGI Friday's -
Woodridge, NJ (7) 01/01/95 09/27/96 1,753,533 0 0 0 1,753,533
Wendy's -
Woodridge, NJ (7) 11/28/94 09/27/96 747,058 0 0 0 747,058
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 05/27/94 03/01/95 263,221 0 0 0 263,221
Checkers -
Leavenworth, KS 06/22/94 03/01/95 259,600 0 0 0 259,600
Checkers -
Knoxville, TN 07/08/94 03/01/95 288,885 0 0 0 288,885
TGI Friday's -
Woodridge, NJ (7) 01/01/95 09/27/96 1,753,533 0 0 0 1,753,533
Wendy's -
Woodridge, NJ (7) 11/28/94 09/27/96 747,058 0 0 0 747,058
</TABLE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
======================================================================================
Cost of Properties
Including Closing and
Soft Costs
----------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
======================================================================================
<S> <C>
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 0 987,679 987,679 62,507
Jack in the Box -
Freemont, CA 0 1,102,766 1,102,766 263,784
CNL Income Fund XI, Ltd.:
Burger King -
Philadelphia, PA 0 818,850 818,850 225,900
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 0 1,636,643 1,636,643 3,357
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 0 286,411 286,411 0
Checkers -
Richmond, VA 0 413,288 413,288 136,712
Denny's -
Orlando, FL 0 934,120 934,120 (1,271)
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 0 339,031 339,031 0
Checkers -
Dallas, TX 0 356,981 356,981 0
TGI Friday's -
Woodridge, NJ (7) 0 1,510,245 1,510,245 243,288
Wendy's -
Woodridge, NJ (7) 0 672,746 672,746 74,312
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 0 263,221 263,221 0
Checkers -
Leavenworth, KS 0 259,600 259,600 0
Checkers -
Knoxville, TN 0 288,885 288,885 0
TGI Friday's -
Woodridge, NJ (7) 0 1,510,245 1,510,245 243,288
Wendy's -
Woodridge, NJ (7) 0 672,746 672,746 74,312
</TABLE>
C-34
<PAGE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
====================================================================================================================================
Cost of Properties
Selling Price, Net of Including Closing and
Closing Costs and GAAP Adjustments Soft Costs
------------------------------------------------- ------------------------
Purchase Total
Cash money Adjustments acquisition
received Mortgage mortgage resulting cost, capital
net of balance taken from Original improvements
Date Date of closing at time back by application mortgage closing and
Property Acquired Sale costs of sale program of GAAP Total financing soft costs (1)
====================================================================================================================================
<S> <C>
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 06/24/95 04/24/96 775,000 0 0 0 775,000 0 613,838
Checker's -
Oviedo, FL 11/14/94 02/28/97 610,384 0 0 0 610,384 0 506,311
</TABLE>
==================================================
Excess
(deficiency)
of property
operating cash
receipts over
cash
Property Total expenditures
==================================================
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 613,838 161,162
Checker's -
Oviedo, FL 506,311 104,073
(1) Amounts shown do not include pro rata share of original offering costs
or acquisition fees.
(2) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,006,004 in July 2000.
(3) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,106,657 in July 2000.
(4) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.00% per annum and
provides for a balloon payment of $218,252 in December 2005.
(5) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.00% per annum and provides
for a balloon payment of $200,324 in December 2005.
(6) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.75% per annum and
provides for 12 monthly payments of interest only and thereafter, 168 equal
monthly payments of principal and interest.
(7) CNL Income Fund XIV, Ltd. and CNL Income Fund XV, Ltd. each owned a 50
percent interest in Wood-Ridge Real Estate Joint Venture, which owned two
properties. The amounts presented for CNL Income Fund XIV, Ltd. and CNL
Income Fund XV, Ltd. represent each partnership's 50 percent interest in
the properties owned by Wood-Ridge Real Estate Joint Venture.
(8) CNL Income Fund II, Ltd. owns a 64 percent interest and CNL Income Fund VI,
Ltd. owns a 36 percent interest in this joint venture. The amounts
presented for CNL Income Fund II, Ltd. and CNL Income Fund VI, Ltd.
represent each partnership's percent interest in the property owned by Show
Low Joint Venture.
(9) CNL Income Fund, Ltd. owns a 50 percent interest in this joint venture.
The amounts presented represent the partnerships percent interest in the
property owned by Seventh Avenue Joint Venture. A third party owns the
remaining 50 percent interest in this joint venture.
(10) CNL Income Fund VI, Ltd. and CNL Income Fund VII, Ltd. own a 52 percent and
48 percent interest, respectively, in the property in Yuma, Arizona. The
amounts presented for CNL Income Fund VI, Ltd. and CNL Income Fund VII,
Ltd. represent each partnership's respective interest in the property.
(11) Cash received net of closing costs includes $198,000 received as a lease
termination fee.
(12) Cash received net of closing costs includes $93,885 received as a
lease termination fee.
(13) Cash received net of closing costs includes $120,115 received as a lease
termination fee.
C-35
