Rule 424(b)(3)
No. 333-37657
CNL AMERICAN PROPERTIES FUND, INC.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated May 12, 1998 and the Prospectus Supplement dated June 25, 1998.
This Supplement replaces the Supplement dated July 9, 1998. Capitalized terms
used in this Supplement have the same meaning as in the Prospectus unless
otherwise stated herein.
THE OFFERINGS
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 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 received by 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. Following the completion of the 1997 Offering, the
Company commenced this offering of up to 34,500,000 Shares. As of July 24, 1998,
the Company had received subscription proceeds of $134,129,777 (13,412,978
Shares), including 182,829 Shares ($1,828,291) issued pursuant to the
Reinvestment Plan in connection with this offering. Net offering proceeds
received by the Company from this offering, after deduction of selling
commissions, marketing support and due diligence expense reimbursement fees and
offering expenses, totalled approximately $121,967,844. As of July 24, 1998, the
Company had invested or committed for investment approximately $386,400,000 of
aggregate net proceeds from its offerings in 317 Properties, in providing
mortgage financing through Mortgage Loans, and in paying acquisition fees and
certain acquisition expenses, leaving approximately $96,700,000 in aggregate net
offering proceeds available for investment in Properties and Mortgage Loans.
BUSINESS
PORTFOLIO ACQUISITIONS
As previously reported, the Company formed a special committee (the
"Special Committee") consisting of the Independent Directors for the purpose of
evaluating strategic alternatives designed to maximize stockholder value. The
Special Committee retained the investment banking firms of Merrill Lynch,
Pierce, Fenner & Smith, Incorporated and Smith Barney, Inc. (the "Advising
Firms") to advise the Special Committee regarding its strategic alternatives. On
July 17, 1998, the Advising Firms presented their findings and supporting
financial information to the Special Committee. Based on the reports of the
Advising Firms and its own analyses, on July 20, 1998, the Special Committee
unanimously agreed to present the recommendations described below to the full
Board of Directors. The full Board of Directors unanimously adopted the
recommendations of the Special Committee at a meeting held on July 24, 1998.
In summary, the Special Committee concluded that the best means to
maximize stockholder value would be for the Company to (i) significantly
increase the size of the Company by acquiring from affiliates of the Company's
Advisor portfolios of properties similar to those currently held by the Company;
(ii) become internally advised; (iii) acquire internal real estate development
capability by acquiring the Advisor; (iv) expand its mortgage lending
capabilities by acquiring an affiliate of the Advisor, thus allowing the Company
to offer a full range of financing options to restaurant operators; and (v) list
its common stock on a national stock exchange, assuming market conditions are
favorable.
July 27, 1998 Prospectus Dated May 12, 1998
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Recommendation to Acquire CNL Funds' Restaurant Portfolios. The Special
Committee recommended that the Company proceed to take the steps necessary to
offer to acquire securities of the Company the portfolios of restaurant
properties and certain related restaurant businesses owned by 18 CNL Income
Funds and eight CNL Income & Growth Funds (collectively, the "CNL Funds"). The
CNL Funds are Florida limited partnerships that were formed from 1985 to 1997 by
affiliates of CNL Group, Inc. and currently own or have invested in, in the
aggregate, over 775 restaurant properties. Similar to the restaurant properties
owned by the Company, the restaurant properties owned by the CNL Funds are
generally leased on a triple-net basis to operators of selected national and
regional fast-food, family-style, and casual dining restaurant chains. The
acquisition of the CNL Funds' restaurant portfolios would result in the Company
becoming one of the largest owners of restaurant properties in the United States
with over $1.3 billion in assets.
Recommendation to Acquire CNL Restaurant Related Entities. The Special
Committee also recommended that the Company become an internally advised
restaurant REIT and become a full-service development and financing entity by
acquiring, in exchange for securities of the Company, the restaurant related
activities conducted by CNL affiliates. The Special Committee recommended the
Company acquire CNL Fund Advisors, Inc. (the "Advisor") and CNL Financial
Corporation ("CFC"). Their businesses are described below.
Since its inception, the Advisor has been the Company's advisor and, as
such, has been responsible for the day-to-day operations of the Company,
including investment analysis, acquisitions, due diligence, asset management and
accounting services. CNL Restaurant Development, Inc., a company which develops
restaurant properties for the Company and some of the CNL Funds, recently was
merged with and into the Advisor. As a result of that merger, the Advisor now
has restaurant development capabilities. The acquisition by the Company of the
Advisor would give the Company internal administrative, management, acquisition
and development capability.
CFC funds mortgage loans on restaurant properties comparable to the
restaurant properties currently owned by the Company. After funding the mortgage
loans, CFC "securitizes" such loans by contributing them to a securitization
entity which subsequently issues trust certificates representing beneficial
ownership interests in the pool of mortgage loans and the proceeds received by
the securitization entity are remitted to CFC. The acquisition of CFC would
permit the Company to significantly expand its mortgage lending capabilities,
thus allowing the Company to offer a full range of financing alternatives to
restaurant operators.
Recommendation to List Company Shares. The Special Committee also
recommended that the Company provide increased liquidity and a trading market
for its securities by listing its common stock on a national stock exchange. The
Special Committee recommended that the Company seek to list its common stock
either concurrently with the acquisitions described above or as shortly
thereafter as market conditions are deemed to be favorable for such listing. The
Special Committee further recommended that the Company evaluate a public
offering of its common stock concurrently with the listing of its shares.
The acquisitions of the CNL Funds' portfolios and the CNL restaurant
related entities are subject to the Company negotiating acceptable purchase
prices and other acquisition terms with each of the sellers and to obtain
approval of the acquisitions by the limited partners of the CNL Funds and the
shareholders of the other CNL restaurant related entities. Accordingly, the
acquisition of such entities is not assured.
In addition, in order to effect the acquisitions, the Company will need
to increase its authorized common stock, which requires the approval of the
Company's stockholders. It is expected that the request for a vote on such
increase will be presented to the stockholders in early 1999. In connection with
such vote, complete information on the proposed transaction will be delivered to
the Company's stockholders. Prior to seeking that vote, the Company will obtain
and furnish to the stockholders an opinion of a third party that the
consideration proposed to be paid by the Company for the acquisitions is fair to
the Company from a financial point of view.
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