SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 1997
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 333-15411 59-3239115
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
<PAGE>
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Status of the Offering
On February 6, 1997, the Company commenced an offering (the
"Offering") of up to 27,500,000 shares of common stock (the "Shares"). As of
December 31, 1997, the Company had received subscription proceeds of
$211,173,099 (21,117,310 Shares) including $1,872,648 (187,265 Shares) issued
pursuant to the reinvestment plan, from 9,214 stockholders in connection with
the Offering. The proceeds of the Offering will be used primarily to acquire
properties (the "Properties") located across the United States to be leased on a
long-term, triple-net basis to operators of selected national and regional
fast-food, family-style and casual dining restaurant chains. The Company may
also provide financing (the "Mortgage Loans") for the purchase of buildings,
generally by lessees that lease the underlying land from the Company.
Acquisition of Properties
Between October 4, 1997 and December 31, 1997, the Company
acquired 24 Properties, including 23 Properties consisting of land and building
and one Property consisting of building only. These Properties are 13 Ground
Round Properties (one in each of Allentown and Reading, Pennsylvania; Colerain
and Parma, Ohio; Dubuque and Waterloo, Iowa; Janesville and Wauwatosa,
Wisconsin; Gloucester and Ewing, New Jersey; Crystal, Minnesota; Kalamazoo,
Michigan; and Nanuet, New York), three Jack in the Box Properties (one in each
of Folsom and Los Angeles, California; and Florissant, Missouri), one On The
Border Property (in San Antonio, Texas), one Wendy's Property (in Westlake
Village, California), two Golden Corral Properties (one in each of Muskogee,
Oklahoma; and Council Bluffs, Iowa) and four Chevy's Fresh Mex Properties (one
in each of Beaverton and Lake Oswego, Oregon; Arapahoe, Colorado; and Greenbelt,
Maryland).
The Jack in the Box Properties in Folsom and Los Angeles, California, and
Florissant, Missouri, were acquired from Affiliates of the Company. The
Affiliates had purchased and temporarily held title to these Properties in order
to facilitate their acquisition by the Company. The Properties were acquired by
the Company for an aggregate purchase price of approximately $3,674,000,
representing the cost of the Properties to the Affiliates (including carrying
costs) due to the fact that the amounts were less than each Property's appraised
value.
In connection with the purchase of the 13 Ground Round Properties, the
three Jack in the Box Properties, the one Wendy's Property, the two Golden
Corral Properties and the four Chevy's Fresh Mex Properties, which are land and
building, the Company, as lessor, entered into long-term lease agreements with
unaffiliated lessees. The leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The lessee also is required to pay for special assessments, sales and
use taxes, and the cost of any renovations permitted under the lease. For the
Properties that are to be constructed, the Company has entered into development
and indemnification and put agreements with the lessees.
In connection with the On The Border Property in San Antonio, Texas,
which is building only, the Company, as lessor, entered into a long-term lease
agreement with an unaffiliated lessee. In connection with the purchase of this
Property, which is to be constructed, the Company has entered into development
and indemnification and put agreements with the lessee. In connection with this
acquisition, the Company has also entered into a tri-party agreement with the
lessee and the owner of the land. The tri-party agreement provides that the
ground lessee is responsible for all obligations under the ground lease and
provides certain rights to the Company relating to the maintenance of its
interest in the building in the event of a default by the lessee under the terms
of the ground lease.
- 1 -
<PAGE>
The following table sets forth the location of the 24 Properties,
including 23 Properties consisting of land and building and one Property
consisting of building only, acquired by the Company, from October 4, 1997
through December 31, 1997, a description of the competition, and a summary of
the principal terms of the acquisition and lease of each Property.
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<PAGE>
PROPERTY ACQUISITIONS
From October 4, 1997 through December 31, 1997
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Jack in the Box (5) $1,076,237 10/17/97 09/2015; four $110,243 (6); for each lease at any time
(the "Florissant (3)(6) five-year increases by 8% year, (i) 5% of after the
Property") renewal options after the fifth lease annual gross seventh
Restaurant to be year and after every sales minus lease year
constructed five years thereafter (ii) the
during the lease minimum
The Florissant term annual rent for
Property is located on such lease
the southern quadrant year (7)
of Charbonier Road
and Howdershell
Road, in Florissant,
St. Louis County,
Missouri, in an area
of mixed retail,
commercial, and
residential
development.
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<PAGE>
Jack in the Box (5) $1,263,688 10/17/97 09/2015; four $129,482 (6); for each lease None
(the "Folsom (3)(6) five-year increases by 8% year, (i) 5% of
Property") renewal options after the fifth lease annual gross
Restaurant to be year and after every sales minus
constructed five years thereafter (ii) the
during the lease minimum
The Folsom Property term annual rent for
is located on the such lease
eastern quadrant of year (7)
Blue Ravine Road
and East Bidwell
Street, in Folsom,
Sacramento County,
California, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity
to the Folsom Property
include an IHOP, an
Arby's, a Burger King,
a Boston Market, a
Manhattan Bagel, a Subway
Sandwich Shop, a Taco
Bell, a McDonald's, a
KFC, a Pizza Hut and
several local restaurants.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- --------- -------- --------------- --------------- --------------- ---------
<S> <C>
On The Border (8) $292,767 10/17/97 10/2012; three 13.64% of Total for each lease at any time
(the "San Antonio (excluding five-year Cost (4); (9) year, (i) 4% of after the
Property") development renewal options annual gross tenth lease
Restaurant to be costs) (3) sales minus year
constructed (ii) the
minimum
The San Antonio annual rent for
Property is located on such lease
the east side of U.S. year (7)
Highway 281, within
the Alamo Quarry
Market Shopping
Center, in San
Antonio, Bexar
County, Texas, in an
area of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the San Antonio
Property include a
Ruth's Chris
Steakhouse and
several local
restaurants.
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<PAGE>
Ground Round (10) $1,220,761 10/20/97 10/2017; five $125,128 (11) at any time
(the "Allentown five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Allentown Property is
located on the north side
of Grape Street, in
Allentown, Lehigh County,
Pennsylvania, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Allentown Property
include a Pizza Hut, a
Lonestar Steak House, a
Red Lobster, a Chili's, a
KFC, an Olive Garden, a
Ponderosa Steakhouse, a
Friendly's, a Wendy's, a
Perkins, a Burger King, a
Boston Market and several
local restaurants.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $772,727 10/20/97 10/2017; five $79,205 (11) at any time
(the "Colerain five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Colerain Property is
located on the north side
of Springdale Road, in
Colerain, Hamilton
County, Ohio, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Colerain Property
include a Red Lobster, an
Outback Steak House, an
Applebee's, an Olive
Garden, a White Castle,
an Arby's, a McDonald's,
a T.G.I. Friday's and
several local
restaurants.
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<PAGE>
Ground Round (10) $759,091 10/20/97 10/2017; five $77,807 (11) at any time
(the "Crystal five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Crystal Property is
located on the northeast
corner of Bass Lake Road
and Jersey Street, in
Crystal, Hennepin County,
Minnesota, in an area of
mixed retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants located
in proximity to the
Crystal Property include
a Dairy Queen, a Taco
Bell, a Subway Sandwich
Shop, a KFC and an
Applebee's.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $1,422,727 10/20/97 10/2017; five $145,830 (11) at any time
(the "Dubuque five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Dubuque Property is
located on the west side
of John F. Kennedy Road
and Cedar Cross Road, in
Dubuque, Dubuque County,
Iowa, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Dubuque Property
include a Hardee's, an
Olive Garden, a Wendy's
and several local
restaurants.
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<PAGE>
Ground Round (10) $900,000 10/20/97 10/2017; five $92,250 (11) at any time
(the "Gloucester five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Gloucester
Property is located on
the southeast corner of
Blackwood-Clementon
Road and Dartmouth
Drive, in Gloucester,
Camden County, New
Jersey, in an area of
mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Gloucester
Property include a
Friendly's, a Boston
Market, a Chili's, an
Olive Garden, a Red
Lobster, a Denny's, a
Burger King, a
McDonald's, a Taco
Bell, a Checkers and
several local
restaurants.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $945,455 10/20/97 10/2017; five $96,909 (11) at any time
(the "Janesville five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Janesville Property
is located on the
northwest corner of
Milton Avenue and Lodge
Street, in Janesville,
Rock County, Wisconsin,
in an area of mixed
retail, commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Janesville Property
include an Applebee's, a
Pizzeria Uno, a Perkins,
a Fazoli's and several
local restaurants.
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<PAGE>
Ground Round (10) $945,455 10/20/97 10/2017; five $96,909 (11) at any time
(the "Kalamazoo five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Kalamazoo
Property is located on
Stadium Drive, east of
the intersection of
Seneca Road, in
Kalamazoo,
Kalamazoo County,
Michigan, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Kalamazoo
Property include an
Olive Garden, an
Applebee's, a Chili's,
a McDonald's, a
Burger King and
several local
restaurants.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $1,118,182 10/20/97 10/2017; five $114,614 (11) at any time
(the "Parma five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Parma Property is
located on the south side
of Day Drive, in Parma,
Cuyahoga County, Ohio, in
an area of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Parma Property
include an Outback Steak
House, a Red Lobster, an
Olive Garden, an Arby's,
a Denny's and a local
restaurant.
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<PAGE>
Ground Round (10) $1,439,551 10/20/97 10/2017; five $147,554 (11) at any time
(the "Reading five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Reading Property
is located on the west
side of Fifth Street
Highway at the
entrance to the
Fairgrounds Mall, in
Reading, Berks
County, Pennsylvania,
in an area of mixed
retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Reading
Property include an
Arby's, a Pizza Hut, a
McDonald's, a Burger
King, a Bojangles, a
Taco Bell, a
Ponderosa Steakhouse,
a Boston Market, a
Subway Sandwich
Shop and several local
restaurants.
</TABLE>
- 14 -
<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $1,036,364 10/20/97 10/2017; five $106,227 (11) at any time
(the "Waterloo five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Waterloo Property is
located on the southwest
corner of East San Marnan
Drive and Penneys Street,
in Waterloo, Black Hawk
County, Iowa, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Waterloo Property
include an Olive Garden,
a Lonestar Steak House,
an Applebee's, a Pizza
Hut, a Boston Market, a
Long John Silver's and
several local
restaurants.
- 15 -
<PAGE>
Ground Round (10) $1,354,545 10/20/97 10/2017; five $138,841 (11) at any time
(the "Wauwatosa five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Wauwatosa Property is
located on the northwest
corner of Mayfair Road
and Blue Mound Road, in
Wauwatosa, Milwaukee
County, Wisconsin, in an
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Wauwatosa Property
include a Chili's, an
Applebee's, a Taco Bell,
a Pizza Hut and several
local restaurants.
</TABLE>
- 16 -
<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ----------- -------- --------------- --------------- --------------- ----------
<S> <C>
Ground Round (10) $1,000,000 11/18/97 11/2017; five $102,500 (11) at any time
(the "Ewing five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Ewing Property is
located on the northwest
quadrant of the
intersection of North
Olden Avenue and
Pennington Road, in
Ewing, Mercer County, New
Jersey, in an area of
mixed retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants located
in proximity to the Ewing
Property include a
McDonald's, an IHOP, an
Applebee's, a TGI
Friday's, a Taco Bell, a
Wendy's, a Burger King,
and a Boston Market.
- 17 -
<PAGE>
Wendy's $811,350 11/18/97 11/2017; two 10.25% of Total for each lease at any time
(the "Westlake Village (excluding five-year Cost (4) year, (i) 7% of after the
Property") development renewal options annual gross seventh
Restaurant to be costs ) (3) sales minus lease year
constructed (ii) the
minimum
The Westlake Village annual rent for
Property is located on such lease
the southeast quadrant year
of Thousand Oaks
Boulevard and
Lindero Canyon Road,
in Westlake Village,
Los Angeles County,
California, in an area
of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Westlake
Village Property
include a McDonald's,
a KFC, and a local
restaurant.
</TABLE>
- 18 -
<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Ground Round (10) $927,273 12/02/97 12/2017; five $95,045 (11) at any time
(the "Nanuet five-year after the
Property") renewal options seventh
Existing restaurant lease year
The Nanuet Property is
located on the northwest
corner of Route 59 West
and Dykes Road, in
Nanuet, Rockland County,
New York, in an area of
mixed retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants located
in proximity to the
Nanuet Property include a
Ruby Tuesday's, a Red
Lobster, a Pizza Hut, and
a local restaurant.
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<PAGE>
Golden Corral (12) $384,530 12/03/97 06/2013; four 10.75% of Total for each lease during the
(the "Muskogee (excluding five-year Cost (4) year, 5% of first
Property") development renewal options the amount by through
Restaurant to be costs) (3) which annual seventh
constructed gross sales lease years
exceed and the
The Muskogee $2,212,853 (7) tenth
Property is located on through
the south side of West fifteenth
Shawnee Avenue, in lease years
Muskogee, Muskogee only
County, Oklahoma, in
an area of mixed
retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Muskogee Property
include an Applebee's,
a Red Lobster, a Burger
King, a Long John Silver's,
a Western Sizzlin, and
several local restaurants.
</TABLE>
- 20 -
<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ---------
<S> <C>
Golden Corral (12) $467,593 12/30/97 06/2013; four 10.75% of Total for each lease during the
(the "Council Bluffs (excluding five-year Cost (4) year, 5% of first
Property") development renewal options the amount by through
Restaurant to be costs) (3) which annual seventh
constructed gross sales lease years
exceed and the
The Council Bluffs $2,713,081 (7) tenth
Property is located on through
the northeast quadrant fifteenth
of Dial Drive and lease years
32nd Avenue, in only
Council Bluffs,
Pottawattamie County,
Iowa, in an area of
mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Council Bluffs
Property include a
Cracker Barrel, a Red
Lobster, a Perkins, a
Dairy Queen, a Burger
King, a Long John
Silver's, a Taco
Bell, a McDonald's, a
Hardee's, and a Fazoli's.
- 21 -
<PAGE>
Jack in the Box (5) $1,333,345 12/30/97 04/2015; four $136,668; increases for each lease at any time
(the "Los Angeles #2 (3) five-year by 8% after the fifth year, (i) 5% of after the
Property") renewal options lease year and after annual gross seventh
Existing restaurant every five years sales minus lease year
thereafter during the (ii) the
The Los Angeles #2 lease term minimum
Property is located on annual rent for
the southeast corner of such lease
Crenshaw Boulevard year (7)
and Washington Boulevard,
in Los Angeles, Los
Angeles County,
California, in an
area of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style
restaurants located
in proximity to the
Los Angeles #2 Property
include a Taco Bell,
a McDonald's, and
several local restaurants.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ----------
<S> <C>
Chevy's Fresh Mex $2,521,428 12/31/97 12/2012; two $248,075; increases for each lease at any time
(13) five-year by 10% after the year, 5% of during the
(the "Arapahoe renewal options fifth lease year and the amount by lease term
Property") after every five which annual
Existing restaurant years thereafter gross sales
during the lease exceed
The Arapahoe term $3,213,500
Property is located on
the south side of
Arapahoe Road, in
Arapahoe, Arapahoe
County, Colorado, in
an area of mixed
retail, commercial,
and residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Arapahoe
Property include a
Bennigan's, a
Wendy's, a Ruby
Tuesday's, an Arby's,
a McDonald's, a
Denny's, and several
local restaurants.
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<PAGE>
Chevy's Fresh Mex $2,477,078 12/31/97 12/2012; two $243,712; increases for each lease at any time
(13) five-year by 10% after the year, 5% of during the
(the "Beaverton renewal options fifth lease year and the amount by lease term
Property") after every five which annual
Existing restaurant years thereafter gross sales
during the lease exceed
The Beaverton term $2,548,750
Property is located on
the southeast quadrant
of the intersection of
Hall Boulevard and
Nimbus Avenue, in
Beaverton,
Washington County,
Oregon, in an area of
mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Beaverton
Property include an
Arby's, and a local
restaurant.
</TABLE>
- 24 -
<PAGE>
<TABLE>
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option To
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- ----------
<S> <C>
Chevy's Fresh Mex $2,288,676 12/31/97 12/2012; two $225,176; increases for each lease at any time
(13) five-year by 10% after the year, 5% of during the
(the "Greenbelt renewal options fifth lease year and the amount by lease term
Property") after every five which annual
Existing restaurant years thereafter gross sales
during the lease exceed
The Greenbelt term $2,722,250
Property is located on
the southeast quadrant
of the intersection of
Greenbelt Road and
the Baltimore
Washington Parkway,
in Greenbelt, Prince
Georges County, Maryland,
in an area of mixed retail,
commercial, and
residential development.
Other fast-food and
family- style restaurants
located in proximity to
the Greenbelt Property include
a Denny's, a Wendy's, a T.G.I.
Friday's, and several local
restaurants.
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<PAGE>
Chevy's Fresh Mex $2,334,198 12/31/97 12/2012; two $229,654; increases for each lease at any time
(13) five-year by 10% after the year, 5% of during the
(the "Lake Oswego renewal options fifth lease year and the amount by lease term
Property") after every five which annual
Existing restaurant years thereafter gross sales
during the lease exceed
The Lake Oswego term $2,983,250
Property is located
between Interstate
Highway 5 and Bangy
Road, in Lake
Oswego, Clackamas
County, Oregon, in an
area of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity
to the Lake Oswego
Property include an
Applebee's, an Olive
Garden, and a Taco
Bell.
</TABLE>
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<PAGE>
- -----------------------------
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Florissant Property $ 723,000
Folsom Property 702,000
San Antonio Property 1,265,000
Allentown Property 882,000
Colerain Property 533,000
Crystal Property 188,000
Dubuque Property 807,000
Gloucester Property 527,000
Janesville Property 547,000
Kalamazoo Property 710,000
Parma Property 791,000
Reading Property 790,000
Waterloo Property 657,000
Wauwatosa Property 802,000
Ewing Property 683,000
Westlake Village Property 759,000
Nanuet Property 603,000
Muskogee Property 853,000
Council Bluffs Property 1,059,000
Los Angeles #2 Property 585,000
Arapahoe Property 1,674,000
Beaverton Property 1,675,000
Greenbelt Property 1,470,000
Lake Oswego Property 1,500,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the San
Antonio Property, minimum annual rent will become due and payable on
the earlier of (i) 180 days after execution of the lease, (ii) the date
the certificate of occupancy for the restaurant is issued, (iii) the
date the restaurant opens for business to the public, or (iv) the date
the tenant receives from the landlord its final funding of the
construction costs. For the Westlake Village Property, minimum annual
rent will become due and payable on the earlier of (i) 120 days after
execution of the lease, (ii) the date the certificate of occupancy for
the restaurant is issued, (iii) the date the restaurant opens for
business to the public, or (iv) the date the tenant receives from the
landlord its final funding of the construction costs. For the Muskogee
and Council Bluffs 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
- 27 -
<PAGE>
restaurant opens for business to the public. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the San Antonio and Westlake Village
Properties, as described above, the tenant shall pay monthly "interim
rent" equal to a specified rate per annum (ranging from 10.25% to 11%)
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 Muskogee and Council Bluffs 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.
(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>
Florissant Property $1,075,539 March 16, 1998
Folsom Property 1,263,239 March 4, 1998
San Antonio Property 1,260,879 April 15, 1998
Westlake Village Property 1,488,479 March 18, 1998
Muskogee Property 1,301,592 June 1, 1998
Council Bluffs Property 1,580,790 June 28, 1998
Los Angeles #2 Property 1,341,495 Opened for business September 28, 1997
</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.
(5) The lessee of the Florissant, Folsom and Los Angeles #2 Properties is
the same unaffiliated lessee.
(6) 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.
(7) Percentage rent shall be calculated on a calendar year basis (January
1 to December 31).
(8) The Company owns the building only for this Property. The Company does
not own the underlying land; although, the Company entered 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.
(9) Base rent shall increase after every five years during the lease term
by the lesser of (i) 10% of the minimum base rent during the preceding
year or (ii) 150% of the percentage change in the Consumer Price Index.
(10) The lessee of the Allentown, Colerain, Crystal, Dubuque, Gloucester,
Janesville, Kalamazoo, Parma, Reading, Waterloo, Wauwatosa, Ewing and
Nanuet Properties is the same unaffiliated lessee.
- 28 -
<PAGE>
(11) For each lease year, percentage rent shall be calculated upon the
amount by which gross sales exceed 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. Base sales are as follows:
Property Base Sales
-------- ----------
Allentown Property $2,085,487
Colerain Property 1,320,076
Crystal Property 1,296,780
Dubuque property 2,430,493
Gloucester Property 1,537,500
Janesville Property 1,615,152
Kalamazoo Property 1,615,152
Parma Property 1,910,355
Reading Property 2,459,233
Waterloo Property 1,770,455
Wauwatosa Property 2,314,015
Ewing Property 1,708,333
Nanuet Property 1,583,777
(12) The lessee of the Muskogee and Council Bluffs Properties is the same
unaffiliated lessee.
(13) The lessee of the Arapahoe, Beaverton, Greenbelt and Lake Oswego
Properties is the same unaffiliated lessee.
- 29 -
<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
CNL AMERICAN PROPERTIES FUND, INC.
PROPERTIES ACQUIRED FROM OCTOBER 4, 1997
THROUGH DECEMBER 31, 1997
For the Year Ended December 31, 1996 (Unaudited)
The following schedule presents unaudited estimated taxable operating
results before dividends paid deduction of each Property acquired by the Company
from October 4, 1997 through December 31, 1997. The statement presents unaudited
estimated taxable operating results for each Property that was operational as if
the Property had been acquired and operational on January 1, 1996 through
December 31, 1996. The schedule should be read in light of the accompanying
footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties or has borrowed funds from the Company with an aggregate purchase
price in excess of 20% of the expected total net offering proceeds of the
Company.
<TABLE>
<CAPTION>
Jack in the Box Jack in the Box On The Border Ground Round
Florissant, MO (6) Folsom, CA (6) San Antonio, TX Allentown, PA (7)
------------------ --------------- --------------- -----------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) (5) (5) (5) $125,128
Asset Management Fees (2) (5) (5) (5) (7,322)
General and Administrative
Expenses (3) (5) (5) (5) (7,758)
--------
Estimated Cash Available from
Operations (5) (5) (5) 110,048
Depreciation and Amortization
Expense (4) (5) (5) (5) (22,607)
--------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction (5) (5) (5) $ 87,441
========
</TABLE>
See Footnotes
- 30 -
<PAGE>
<TABLE>
<CAPTION>
Ground Round Ground Round Ground Round Ground Round
Colerain, OH (7) Crystal, MN (7) Dubuque, IA (7) Gloucester, NJ(7)
----------------- --------------- --------------- -----------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $ 79,205 $ 77,807 $145,830 $ 92,250
Asset Management Fees (2) (4,633) (4,552) (8,533) (5,397)
General and Administrative
Expenses (3) (4,911) (4,824) (9,041) (5,720)
-------- -------- -------- --------
Estimated Cash Available from
Operations 69,661 68,431 128,256 81,133
Depreciation and Amortization
Expense (4) (13,658) (4,824) (20,701) (13,511)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 56,003 $ 63,607 $107,555 $ 67,622
======== ======== ======== ========
</TABLE>
See Footnotes
- 31 -
<PAGE>
<TABLE>
<CAPTION>
Ground Round Ground Round Ground Round Ground Round
Janesville, WI (7) Kalamazoo, MI (7) Parma, OH(7) Reading, PA(7)
------------------ ----------------- ------------ --------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $ 96,909 $ 96,909 $114,614 $147,554
Asset Management Fees (2) (5,670) (5,670) (6,706) (8,634)
General and Administrative
Expenses (3) (6,008) (6,008) (7,106) (9,148)
-------- -------- -------- --------
Estimated Cash Available from
Operations 85,231 85,231 100,802 129,772
Depreciation and Amortization
Expense (4) (14,015) (18,201) (20,290) (20,254)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 71,216 $ 67,030 $ 80,512 $109,518
======== ======== ======== ========
</TABLE>
See Footnotes
- 32 -
<PAGE>
<TABLE>
<CAPTION>
Ground Round Ground Round Ground Round Wendy's
Waterloo, IA (7) Wauwatosa, WI (7) Ewing, NJ (7) Westlake Village, CA
---------------- ----------------- ------------- --------------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $106,227 $138,841 $102,500 (5)
Asset Management Fees (2) (6,215) (8,124) (5,997) (5)
General and Administrative
Expenses (3) (6,586) (8,608) (6,355) (5)
-------- -------- --------
Estimated Cash Available from
Operations 93,426 122,109 90,148 (5)
Depreciation and Amortization
Expense (4) (16,846) (20,557) (17,518) (5)
-------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 76,580 $101,552 $ 72,630 (5)
======== ======== ========
</TABLE>
See Footnotes
- 33 -
<PAGE>
<TABLE>
<CAPTION>
Ground Round Golden Corral Golden Corral Jack in the Box
Nanuet, NY (7) Muskogee, OK (8) Council Bluffs, IA (8) Los Angeles #2, CA (6)
-------------- ---------------- ---------------------- ----------------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $ 95,045 (5) (5) (5)
Asset Management Fees (2) (5,561) (5) (5) (5)
General and Administrative
Expenses (3) (5,893) (5) (5) (5)
--------
Estimated Cash Available from
Operations 83,591 (5) (5) (5)
Depreciation and Amortization
Expense (4) (15,455) (5) (5) (5)
--------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 68,136 (5) (5) (5)
========
</TABLE>
See Footnotes
- 34 -
<PAGE>
<TABLE>
<CAPTION>
Chevy's Fresh Mex Chevy's Fresh Mex Chevy's Fresh Mex Chevy's Fresh Mex
Arapahoe, CO (9) Beaverton, OR (9) Greenbelt, MD (9) Lake Oswego, OR (9)
----------------- ----------------- ----------------- -------------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $248,075 $243,712 $225,176 $229,654
Asset Management Fees (2) (15,129) (14,862) (13,732) (14,005)
General and Administrative
Expenses (3) (15,381) (15,110) (13,961) (14,239)
-------- -------- -------- --------
Estimated Cash Available from
Operations 217,565 213,740 197,483 201,410
Depreciation and Amortization
Expense (4) (42,922) (42,955) (37,682) (38,458)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $174,643 $170,785 $159,801 $162,952
======== ======== ======== ========
</TABLE>
See Footnotes
- 35 -
<PAGE>
Total
-------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Base Rent (1) $2,365,436
Asset Management Fees (2) (140,742)
General and Administrative
Expenses (3) (146,657)
---------
Estimated Cash Available from
Operations 2,078,037
Depreciation and Amortization
Expense (4) (380,454)
----------- ---------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $1,697,583
==========
- --------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement
between the Company and CNL Fund Advisors, Inc. (the "Advisor"),
pursuant to which the Advisor will receive monthly asset management
fees in an amount equal to one-twelfth of .60% of the Company's Real
Estate Asset Value as of the end of the preceding month as defined in
such agreement.
(3) Estimated at 6.2% of gross rental income based on the previous
experience of Affiliates of the Advisor with 17 public limited
partnerships which own properties similar to those owned by the
Company. Amount does not include soliciting dealer servicing fee due to
the fact that such fee will not be incurred until December 31 of the
year following the year in which the offering terminates.
(4) The estimated federal tax basis of the depreciable portion (the
building portion) of each Property has been depreciated on the
straight-line method over 39 years.
- 36 -
<PAGE>
(5) The Property is either under construction or was under construction
during, or subsequent to, the period presented, and therefore was not
operational for the period presented. The development agreements for
the Properties which are to be constructed, provide that construction
must be completed no later than the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Florissant Property March 16, 1998
Folsom Property March 4, 1998
San Antonio Property April 15, 1998
Westlake Village Property March 18, 1998
Muskogee Property June 1, 1998
Council Bluffs Property June 28, 1998
Los Angeles #2 Property Opened for business September 28, 1997
(6) The lessee of the Florissant, Folsom and Los Angeles #2 Properties is
the same unaffiliated lessee.
(7) The lessee of the Allentown, Colerain, Crystal, Dubuque, Gloucester,
Janesville, Kalamazoo, Parma, Reading, Waterloo, Wauwatosa, Ewing and
Nanuet Properties is the same unaffiliated lessee.
(8) The lessee of the Muskogee and Council Bluffs Properties is the same
unaffiliated lessee.
(9) The lessee of the Arapahoe, Beaverton, Greenbelt and Lake Oswego
Properties is the same unaffiliated lessee.
- 37 -
<PAGE>
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Not applicable.
Item 6. Resignation of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- 38 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Pro Forma Consolidated Financial Information (unaudited):
<S> <C>
Pro Forma Consolidated Balance Sheet as of September 30, 1997 23
Pro Forma Consolidated Statement of Earnings for the nine months ended September 30, 1997 24
Pro Forma Consolidated Statement of Earnings for the year ended December 31, 1996 25
Notes to Pro Forma Consolidated Financial Statements for the nine months ended
September 30, 1997 and the year ended December 31, 1996 26
- 39 -
</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 September
30, 1997, including the receipt of $288,474,843 in gross offering proceeds from
the sale of 28,847,485 shares of common stock and the application of such
proceeds to purchase 212 properties (including 154 properties which consist of
land and building, one property through a joint venture arrangement which
consists of land and building, 13 properties which consist of building only and
44 properties which consist of land only), 16 of which were under construction
at September 30, 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 $73,290,021 in gross offering proceeds from the sale of 7,329,002
additional shares of common stock during the period October 1, 1997 through
December 31, 1997, (iii) the application of such funds to purchase 32 additional
properties acquired during the period October 1, 1997 through December 31, 1997
(seven properties which consist of building only and 25 properties which consist
of land and building, including seven of which are under construction), to pay
additional costs for the 16 properties under construction at September 30, 1997,
and to pay offering expenses, acquisition fees and miscellaneous acquisition
expenses, all as reflected in the pro forma adjustments described in the related
notes. The Pro Forma Consolidated Balance Sheet as of September 30, 1997,
includes the transactions described in (i) above from the historical
consolidated balance sheet, adjusted to give effect to the transactions in (ii),
and (iii) above, as if they had occurred on September 30, 1997.
The Pro Forma Consolidated Statements of Earnings for the nine months
ended September 30, 1997 and the year ended December 31, 1996, include the
historical operating results of the properties described in (i) above from the
dates of their acquisitions plus operating results for eight of the properties
that were acquired by the Company during the period January 1, 1996 through
December 31, 1997, and had a previous rental history prior to the Company's
acquisition of such properties, from (A) the later of (1) the date the property
became operational as a rental property by the previous owner or (2) January 1,
1996, to (B) the earlier of (1) the date the property was acquired by the
Company or (2) the end of the pro forma period presented. No pro forma
adjustments have been made to the Pro Forma Consolidated Statement of Earnings
for the remaining properties acquired by the Company during the period January
1, 1996 through December 31, 1997, due to the fact that these properties did not
have a previous rental history.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates, or been in effect during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as predictive of the Company's financial results or conditions in the
future.
- 40 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $170,249,188 $ 37,074,307 (a) $207,323,494
Net investment in direct
financing leases (b) 39,344,776 9,818,586 (a) 49,163,362
Cash and cash equivalents 41,324,755 6,432,770 (a) 47,757,525
Restricted cash 16,014,345 16,014,345
Receivables, less allowance for
doubtful accounts 736,931 736,931
Mortgage notes receivable 17,657,131 17,657,131
Organization costs, less
accumulated amortization 10,682 10,682
Loan costs, less accumulated
amortization 46,214 46,214
Accrued rental income 1,320,957 1,320,957
Other assets 1,446,066 913,666 (a) 2,359,733
------------ ------------ ------------
$288,151,045 $ 54,239,329 $342,390,374
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Note payable $ 17,990,638 $ 17,990,638
Accrued interest payable 28,456 28,456
Accrued construction costs
payable 11,080,621 $(11,080,621)(a) -
Accounts payable and other
accrued expenses 139,471 139,471
Due to related parties 1,148,881 1,148,881
Rents paid in advance 700,171 700,171
Deferred rental income 1,167,099 91,831 (a) 1,258,930
Other payables 6,058 6,058
------------ ------------ -----------
Total liabilities 32,261,395 (10,988,790) 21,272,605
------------ ------------ -----------
Minority interest 286,372 286,372
------------ ------------ ------------
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
28,867,485 shares; issued and
outstanding, as adjusted,
36,196,487 shares 288,675 73,290 (a) 361,965
Capital in excess of par value 257,416,712 65,154,829 (a) 322,571,541
Accumulated distributions in
excess of net earnings (2,102,109) (2,102,109)
255,603,278 65,228,119 320,831,397
------------ ------------ ------------
$288,151,045 $ 54,239,329 $342,390,374
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma consolidated
financial statements.
- 41 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Revenues:
Rental income from
operating leases $7,826,671 $ 15,697 (1) $7,842,368
Earned income from
direct financing leases (2) 1,809,955 1,809,955
Interest income from
mortgage notes receivable 1,252,326 1,252,326
Other interest and income 1,363,498 (9,063)(3) 1,354,435
---------- ---------- ----------
12,252,450 6,634 12,259,084
---------- ---------- ----------
Expenses:
General operating and
administrative 664,585 664,585
Professional services 53,334 53,334
Asset and mortgage management
fees to related party 493,921 873 (4) 494,794
State and other taxes 173,604 173,604
Depreciation and amortization 1,105,611 3,456 (6) 1,109,067
---------- ---------- ----------
2,491,055 4,329 2,495,384
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 9,761,395 2,305 9,763,700
Minority Interest in Income of
Consolidated Joint Venture (23,586) (23,586)
--------- ---------- ---------
Net Earnings $9,737,809 $ 2,305 $9,740,114
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.48 $ 0.48
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 20,368,867 20,368,867
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated
financial statements.
- 42 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Revenues:
Rental income from
operating leases $3,717,886 $ 62,167 (1) $3,780,053
Earned income from
direct financing leases (2) 625,492 34,282 (1) 659,774
Contingent rental income 13,920 13,920
Interest income from
mortgage notes receivable 1,069,349 1,069,349
Other interest and income 780,037 (24,826)(3) 755,211
---------- ---------- ----------
6,206,684 71,623 6,278,307
---------- ---------- ----------
Expenses:
General operating and
administrative 542,564 542,564
Professional services 58,976 58,976
Asset and mortgage management
fees to related party 251,200 5,435 (4) 256,635
State and other taxes 56,184 1,218 (5) 57,402
Depreciation and amortization 521,871 6,852 (6) 528,723
---------- ---------- ----------
1,430,795 13,505 1,444,300
---------- ---------- ----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 4,775,889 58,118 4,834,007
Minority Interest in Income of
Consolidated Joint Venture (29,927) (29,927)
---------- ---------- ----------
Net Earnings $4,745,962 $ 58,118 $4,804,080
========== ========== ==========
Earnings Per Share of
Common Stock (7) $ 0.59 $ 0.60
========== ==========
Weighted Average Number of
Shares of Common Stock
Outstanding (7) 8,071,670 8,071,670
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated
financial statements.
- 43 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $73,290,021 from the issuance of 7,329,002
shares of common stock during the period October 1, 1997 through
December 31, 1997 and the receipt of $91,831 of rental income during
construction (capitalized as deferred rental income) used (i) to
acquire 32 properties for $38,590,558 of which seven properties consist
of building only and 25 properties consist of land and building, (ii)
to fund estimated construction costs of $16,998,571 ($11,080,621 of
which was accrued as construction costs payable at September 30, 1997)
relating to 16 wholly owned properties under construction at September
30, 1997, (iii) to pay acquisition fees of $3,298,051 ($2,384,385 of
which was allocated to properties and $913,666 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
$8,061,902, which have been netted against capital in excess of par
value, leaving $6,432,770 in cash and cash equivalents available for
future investment.
The pro forma adjustments to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
transactions were as follows:
<TABLE>
<CAPTION>
Estimated purchase
price (including
construction and
closing costs) Acquisition fees
and additional allocated to
construction costs property Total
------------------ -------- -----
<S> <C>
Black-eyed Pea in Albuquerque, NM (#1) 667,290 35,748 703,038
Black-eyed Pea in Albuquerque, NM (#2) 666,355 35,698 702,053
Black-eyed Pea in Dallas, TX 660,748 35,397 696,145
Black-eyed Pea in Forestville, MD 643,925 34,496 678,421
Black-eyed Pea in Houston, TX 648,599 34,745 683,344
Black-eyed Pea in Waco, TX 661,682 35,447 697,129
Black-eyed Pea in Wichita, KS 660,748 35,397 696,145
Golden Corral in Olathe, KS 1,557,340 83,429 1,640,769
Jack in the Box in Florissant, MO 1,078,237 57,763 1,136,000
Jack in the Box in Folsom, CA 1,266,379 67,842 1,334,221
On the Border in San Antonio, TX 1,200,597 64,318 1,264,915
Ground Round in Allentown, PA 1,220,261 65,372 1,285,633
Ground Round in Colerain, OH 772,227 41,369 813,596
Ground Round in Crystal, MN 758,591 40,638 799,229
Ground Round in Dubuque, IA 1,422,227 76,191 1,498,418
Ground Round in Gloucester, NJ 899,500 48,187 947,687
Ground Round in Janesville, WI 944,955 50,623 995,578
Ground Round in Kalamazoo, MI 944,955 50,623 995,578
Ground Round in Parma, OH 1,117,682 59,875 1,177,557
Ground Round in Reading, PA 1,439,051 77,092 1,516,143
Ground Round in Waterloo, IA 1,035,864 55,493 1,091,357
Ground Round in Wauwatosa, WI 1,354,044 72,539 1,426,583
Ground Round in Ewing, NJ 999,500 53,544 1,053,044
Wendy's in Westlake Village, CA 1,439,389 77,110 1,516,499
Ground Round in Nanuet, NY 926,773 49,649 976,422
Ground Round in Muskogee, OK 1,180,463 63,239 1,243,702
Golden Corral in Council Bluffs, IA 1,460,301 78,230 1,538,531
Jack in the Box in Los Angeles, CA 1,341,495 71,866 1,413,361
Chevy's Fresh Mex in Arapahoe, CO 2,521,428 135,077 2,656,505
Chevy's Fresh Mex in Beaverton, OR 2,477,078 132,701 2,609,779
Chevy's Fresh Mex in Greenbelt, MD 2,288,676 122,608 2,411,284
Chevy's Fresh Mex in Lake Oswego, OR 2,334,198 125,046 2,459,244
16 wholly owned properties under
construction at September 30, 1997 5,917,950 317,033 6,234,983
----------- ----------- -----------
$44,508,508 $ 2,384,385 $46,892,893
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $37,074,307
Net investment in direct financing leases 9,818,586
----------------------------------------- -----------
$46,892,893
===========
</TABLE>
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<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Balance Sheet - Continued:
(b) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated
as direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
Pro Forma Consolidated Statement of Earnings:
(1) Represents rental income from operating leases and earned income from
direct financing leases for eight of the properties acquired during the
period January 1, 1996 through December 31, 1997, which had a previous
rental history prior to the acquisition of the property by the Company
(the "Pro Forma Properties"), for the period commencing (A) the later
of (i) the date the Pro Forma Property became operational as a rental
property by the previous owner or (ii) January 1, 1996, to (B) the
earlier of (i) the date the Pro Forma Property was acquired by the
Company or (ii) the end of the pro forma period presented. Each of the
eight 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
-------------- ---------------
Mr. Fable's in Grand
Rapids, MI March 1996 January 1996
Denny's in McKinney, TX June 1996 January 1996
Boston Market in Merced, CA October 1996 July 1996
Boston Market in
St. Joseph, MO December 1996 June 1996
Burger King in Kent, OH February 1997 December 1996
Golden Corral in
Hopkinsville, KY February 19, 1997 February 18, 1997
Jack in the Box in
Folsom, CA October 1997 September 1997
Jack in the Box in
Los Angeles, CA December 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.
- 45 -
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Consolidated Statement of Earnings - Continued:
- ---------------------------------------------------------
Generally, the leases provide for the payment of percentage rent in
addition to base rental income. However, due to the fact that no
percentage rent was due under the leases for the Pro Forma Properties
during the portion of 1996 and 1997 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the nine months ended September 30, 1997 and the year ended
December 31, 1996.
(2) See Note (b) under "Pro Forma Consolidated Balance Sheet" above for a
description of direct financing leases.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the periods commencing (A) on the later of (i) the dates the Pro
Forma Properties became operational as rental properties by the
previous owners or (ii) January 1, 1996, through (B) the earlier of (i)
the actual dates of acquisition by the Company or the end of the pro
forma period presented, as described in Note (1) above. The estimated
pro forma adjustment is based upon the fact that interest income on
interest bearing accounts was earned at a rate of approximately four
percent per annum by the Company during the nine months ended September
30, 1997 and the year ended December 31, 1996.
(4) Represents incremental increase in asset management fees relating to
the Pro Forma Properties for the period commencing (A) on the later of
(i) the date the Pro Forma Properties became operational as rental
properties by the previous owners or (ii) January 1, 1996 through (B)
the earlier of (i) the date the Pro Forma Properties were acquired by
the Company or (ii) the end of the pro forma period presented, as
described in Note (1) above. Asset management fees are equal to 0.60%
of the Company's Real Estate Asset Value (estimated to be approximately
$873,000 and $3,509,000 for the Pro Forma Properties for the nine
months ended September 30, 1997 and the year ended December 31, 1996,
respectively), as defined in the Company's prospectus.
(5) Represents adjustment to state tax expense due to the incremental
increase in rental revenues of Pro Forma Properties. Estimated pro
forma state tax expense was calculated based on an analysis of state
laws of the various states in which the Company has acquired the Pro
Forma Properties. The estimated pro forma state taxes consist primarily
of income and franchise taxes ranging from zero to approximately two
percent of the Company's pro forma rental income of each Pro Forma
Property. Due to the fact that the Company's leases are triple net, the
Company has not included any amounts for real estate taxes in the pro
forma statement of earnings.
(6) Represents incremental increase in depreciation expense of the building
portions of the Pro Forma Properties accounted for as operating leases
using the straight-line method over an estimated useful life of 30
years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the nine
months ended September 30, 1997 and the year ended December 31, 1996.
- 46 -
<PAGE>
Item 8. Change in Fiscal Year.
Not applicable.
EXHIBITS
None.
- 47 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL AMERICAN PROPERTIES FUND, INC.
Dated: January 15, 1998 By: /s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
