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 Supplement dated August 27, 1998.
Capitalized terms used in this Supplement have the same meaning as in the
Prospectus unless otherwise stated herein.
The term "Company" includes, unless the context otherwise requires, CNL
American Properties Fund, Inc. and its wholly owned subsidiary, CNL APF
Partners, LP.
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 September 29,
1998, the Company had received subscription proceeds of $217,061,780 (21,706,178
Shares), including 310,785 Shares ($3,107,848) 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 $196,200,000. As of September 29,
1998, the Company had invested or committed for investment approximately
$449,100,000 of aggregate net proceeds from its offerings in 349 Properties, in
providing mortgage financing through Mortgage Loans, and in paying acquisition
fees and certain acquisition expenses, leaving approximately $108,200,000 in
aggregate net offering proceeds available for investment in Properties and
Mortgage Loans.
BUSINESS
PROPERTY ACQUISITIONS
Between August 15, 1998 and September 29, 1998, the Company acquired 26
Properties consisting of land and building. In connection with the purchase of
these 26 Properties, the Company, as lessor, entered into long-term lease
agreements with unaffiliated lessees. The general terms of the lease agreements
are described in the section of the Prospectus entitled "Business - Description
of Property Leases." For the Properties that are to be constructed or renovated,
the Company has entered into development and indemnification and put agreements
with the lessees. The general terms of these agreements are described in the
section of the Prospectus entitled "Business - Site Selection and Acquisition of
Properties - Construction and Renovation."
In addition, the Company acquired a seven acre parcel of land located
in Orlando, Florida, on which the Company expects to construct three or four
restaurant Properties. The Company expects to enter into leases relating to each
of these Properties on substantially the same terms described in "Business -
Description of property Leases." The Company also expects to enter into
development and indemnification and put agreements with the lessees. The general
terms of these agreements are described in the section of the Prospectus
entitled "Business - Site Selection and Acquisition of Properties - Construction
and Renovation."
The following table sets forth the location of the 26 Properties
consisting of land and building, acquired by the Company from August 15, 1998
through September 29, 1998, a description of the competition, and a summary of
the principal terms of the acquisition and lease of each Property.
October 13, 1998 Prospectus Dated May 12, 1998
<PAGE>
PROPERTY ACQUISITIONS
From August 15, 1998 through September 29, 1998
<TABLE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum Percentage Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Rent To Purchase
- --------------------------------- ----------- -------- --------------- ---------------- ---------- -----------
<S> <C>
Black-eyed Pea $817,944 08/2013; three 10.50% of Total (5) (6) during the
(the "Glendale Property") (excluding 08/18/98 five-year Cost (4); increases eighth, tenth,
Restaurant to be constructed development renewal options by 10% after the and twelfth
costs) (3) tenth lease year lease years
The Glendale Property is located on and after every only
the northwest corner of Bell Road five years
and 73rd Avenue, in Glendale, thereafter during
Maricopa County, Arizona, in an area the lease term
of mixed retail, commercial, and
residential development. Other
fast-food, family-style, and casual
dining restaurants located in
proximity to the Glendale Property
include a Don Pablo's.
Arby's (7) $541,212 08/2018; two 9% of Total Cost for each lease at any time
(the "Canton Property") (excluding 08/20/98 five-year (4); increases by year, (i) 4% after the
Restaurant to be constructed development renewal options 1.25% on September of annual gross seventh lease
costs) (3) 1 every lease year sales minus year
The Canton Property is located on during the lease (ii) the
the north side of Georgia Highway 5, term minimum annual
west of Interstate 575, in Canton, rent for such
Cherokee County, Georgia, in an area lease year (6)
of mixed retail, commercial, and
residential development. Other
fast-food, family-style, and casual
dining restaurants located in
proximity to the Canton Property
include an Applebee's, a Lone Star
Steakhouse & Saloon, and a
Schlotzsky's Deli.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- --------- --------------- --------------- --------------- -----------
Applebee's (8) $1,309,469 08/2018; two $130,947; increases for each lease (9)
(the "Antioch Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Antioch Property is located on five years (ii) the
the northwest quadrant of Hickory thereafter during minimum annual
Hollow Parkway and Bell Road, in the lease term rent for such
Antioch, Davidson County, Tennessee, lease year
in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Antioch Property include a TGI
Friday's, an Arby's, a McDonald's, a
Pizza Hut, a KFC, a Burger King, a
Red Lobster, and several local
restaurants.
Applebee's (8) $1,460,378 08/2018; two $146,038; increases for each lease (9)
(the "Clarksville Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Clarksville Property is located five years (ii) the
on the southwest corner of Wilma thereafter during minimum annual
Rudolph Boulevard and St. Bethlehem the lease term rent for such
Drive, in Clarksville, Montgomery lease year
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 Clarksville
Property include a Miami Subs, a
Ponderosa Steak House, a KFC, a Taco
Bell, a Boston Market, an Arby's, a
Waffle House, a Rio Bravo, a Burger
King, a McDonald's, a Shoney's, and
several local restaurants.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
Applebee's (8) $1,482,063 08/2018; two $148,206; increases for each lease (9)
(the "Columbia Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Columbia Property is located on five years (ii) the
the southwest corner of South James thereafter during minimum annual
Campbell Boulevard and Fairview the lease term rent for such
Drive, in Columbia, Maury County, lease year
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 Columbia Property include a
Golden Corral, a Ruby Tuesday, a
Ponderosa Steak House, a Sonic
Drive-In, a Subway Sandwich Shop, a
Waffle House, and several local
restaurants.
Applebee's (8) $1,417,129 08/2018; two $141,713; increases for each lease (9)
(the "Cookeville Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Cookeville Property is located five years (ii) the
on the south side of Interstate thereafter during minimum annual
Drive, south of the Cookeville the lease term rent for such
Central Business District, in lease year
Cookeville, Putnam 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 Cookeville Property include a
Red Lobster, a Fazoli's, an Outback
Steakhouse, a Chili's, and several
local restaurants.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
Applebee's (8) $1,438,745 08/2018; two $143,875; increases for each lease year, (9)
(the "Hendersonville Property") 08/24/98 five-year by 10% after the (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Hendersonville Property is five years (ii) the
located on the north side of East thereafter during minimum annual
Main Street, east of the the lease term rent for such
Hendersonville Central Business lease year
District, in Hendersonville, Sumner
County, Tennessee, in an area of
mixed retail and commercial
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Hendersonville Property include
a Burger King, a Shoney's, and a
local restaurant.
Applebee's (8) $1,482,830 08/2018; two $148,283; increases for each lease (9)
(the "Hermitage Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Hermitage Property is located on five years (ii) the
the northwest corner of Old Hickory thereafter during minimum annual
Boulevard and Juarez Road, in the lease term rent for such
Hermitage, Davidson County, lease year
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 a
Schlotzsky's Deli, a Fazoli's, and a
Steak-N-Shake.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- ----------- -----------
Applebee's (8) $1,264,927 08/2018; two $126,493; increases for each lease (9)
(the "Hopkinsville Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Hopkinsville Property is located five years (ii) the
on the northwest corner of Fort thereafter during minimum annual
Campbell Boulevard and Sivley Road, the lease term rent for such
in Hopkinsville, Christian County, lease year
Kentucky, in an area of mixed
retail, commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Hopkinsville Property include a
Golden Corral and a Shoney's.
Applebee's (8) $1,416,862 08/2018; two $141,686; increases for each lease (9)
(the "Lebanon Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Lebanon Property is located on five years (ii) the
the east side of South Cumberland thereafter during minimum annual
Street, north of Interstate 40, in the lease term rent for such
Lebanon, Wilson County, Tennessee, lease year
in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Lebanon Property include a
Cracker Barrel.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- --------- -------- --------------- --------------- --------------- -----------
Applebee's (8) $1,495,558 08/2018; two $149,556; increases for each lease (9)
(the "Madison Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Madison Property is located on five years (ii) the
the east side of Gallatin Pike, thereafter during minimum annual
northeast of the Nashville Central the lease term rent for such
Business District, in Madison, lease year
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 Madison
Property include an Outback
Steakhouse, a Sonic Drive-In, and
several local restaurants.
Applebee's (8) $1,265,541 08/2018; two $126,554; increases for each lease (9)
(the "Tullahoma Property") 08/24/98 five-year by 10% after the year, (i) 7% of
Existing restaurant renewal options fifth lease year annual gross
and after every sales minus
The Tullahoma Property is located on five years (ii) the
the west side of North Jackson thereafter during minimum annual
Street, north of the Tullahoma the lease term rent for such
Central Business District, in lease year
Tullahoma, Coffee 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 Tullahoma Property include a
Fazoli's, a Shoney's, a Ruby
Tuesday, a Waffle House, a Hardee's,
a Captain D's, a Sonic Drive-In, and
a Red Lobster.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ------------ -------- --------------- --------------- --------------- -----------
Arby's (7) $490,232 08/2018; two 9% of Total Cost for each lease at any time
(the "Whitehall Property") (excluding 09/01/98 five-year (4); increases by year, (i) 4% of after the
Restaurant to be renovated development renewal options 1.25% on September annual gross seventh lease
costs) (3) 1 every lease year sales minus year
The Whitehall Property is located on during the lease (ii) the
the northeast corner of East Main term minimum annual
Street and Ross Road, in Whitehall, rent for such
Franklin County, Ohio, in an area of lease year
mixed retail, commercial, and
residential development. Other
fast-food, family-style, and casual
dining restaurants located in
proximity to the Whitehall Property
include a Golden Corral, a
Fuddrucker's, a Burger King, a
Wendy's, a Pizza Hut, a KFC, a Long
John Silver's, a Ponderosa Steak
House, a White Castle, a Blimpie's,
and several local restaurants.
Bennigan's $1,635,000 09/2013; three $169,631 (10); for each lease at any time
(the "Ocala Property") (3) (10) 09/04/98 five-year increases by 10% year, (i) 6% of after the
Restaurant to be renovated renewal options after the fifth annual gross fifth lease
lease year and sales minus year
The Ocala Property is located on the after every five (ii) the
northeast quadrant of Southwest years thereafter minimum annual
College Road and Southwest 36th during the lease rent for such
Avenue, in Ocala, Marion County, term lease year
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 Ocala Property include
a Shoney's, a Chili's, a Chick-Fil-A, a
Ruby Tuesday, a Lone Star Steakhouse &
Saloon, a Perkins, a Red Lobster, an
Olive Garden, a Quincy's Family Steak
House, an Outback Steakhouse, a Wendy's,
and several local restaurants.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
Popeyes $510,429 09/14/98 09/2018; two $53,595; increases None at any time
(the "Valdosta Property") five-year by 10% after the after the
Existing restaurant renewal options fifth lease year seventh
and after every lease year
The Valdosta Property is located on five years
the northeast quadrant of Bemiss thereafter during
Road and Lakeland Avenue, in the lease term
Valdosta, Lowndes County, Georgia,
in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Valdosta Property include a Long
John Silver's, a Burger King, a
Checkers, a McDonald's, a Krystal
Burger, a Domino's Pizza, and a
local restaurant.
Roadhouse Grill $1,186,847 09/15/98 09/2011; two 9.50% of Total Cost None at any time
(the "Jacksonville #7 Property") (excluding ten-year renewal (4); increases by after the
Restaurant to be renovated development options 4% after the second seventh lease
costs) (3) lease year and year
The Jacksonville #7 Property is after every two
located on the south side of years thereafter
Baymeadows Road, south of the during the lease
Jacksonville Central Business term
District, in Jacksonville, Duval
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 #7 Property include
a Waffle House, an Arby's, and
a Hardee's.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
Arby's (7) $467,523 09/2018; two 9% of Total Cost for each lease at any time
(the "Columbus #4 Property") (excluding 09/18/98 five-year (4); increases by year, (i) 4% of after the
Restaurant to be constructed development renewal options 1.25% on September annual gross seventh lease
costs) (3) 1 every lease year sales minus year
The Columbus #4 Property is located during the lease (ii) the
on the southeast quadrant of term minimum annual
Interstate 70 and West Broad Street, rent for such
in Columbus, Franklin County, Ohio, lease year
in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Columbus #4 Property include a
McDonald's, a Taco Bell, a White
Castle, a KFC, a Wendy's, a Burger
King, and a Subway Sandwich Shop.
Pollo Tropical (11) $1,750,000 09/2018; four $157,500; (12) None None
(the "Miami #2 Property") 09/22/98 five-year
Existing restaurant renewal options
The Miami #2 Property is
located on the east side of
North West 87th Avenue, west
of the Miami Central Business
District, in Miami, Dade
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 Miami #2
Property include a Grady's, a
Roadhouse Grill, a Miami Subs, a
Macaroni Grill, a Wendy's, a
Chili's, a Longhorn Steakhouse,
and a local restaurant.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
Pollo Tropical (11) $1,227,273 09/2018; four $110,455; (12) None None
(the "Miami #3 Property") 09/22/98 five-year
Existing restaurant renewal options
The Miami #3 Property is
located on the south side of
South West 56th Street, west
of the Miami Central Business
District, in Miami, Dade 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 Miami #3 Property include a
Boston Market, a McDonald's,
and a Checkers.
Pollo Tropical (11) $1,318,182 09/2018; four $118,636; (12) None None
(the "Miami #4 Property") 09/22/98 five-year
Existing restaurant renewal options
The Miami #4 Property is
located on the southeast corner
of North West 6th Street and North
West 57th Avenue, in Miami, Dade
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 Miami #4
Property include a McDonald's.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
Pollo Tropical (11) $1,818,182 09/2018; four $163,636; (12) None None
(the "Miami Springs Property") 09/22/98 five-year
Existing restaurant renewal options
The Miami Springs Property is
located on the northeast corner
of College Road and Northwest 36th
Street, in Miami Springs, Dade
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 Miami Springs
Property include a Burger King and
a Miami Subs.
Pollo Tropical (11) $1,590,909 09/2018; four $143,182; (12) None None
(the "North Miami Property") 09/22/98 five-year
Existing restaurant renewal options
The North Miami Property is located
on the southwest corner of Sans
Souci and Biscayne Boulevard, in
North Miami, Dade 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
North Miami Property include a Burger
King and a Denny's.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
IHOP (13) $1,308,412 09/2018; three $115,794 None during the
(the "Fort Worth #3 Property") 09/24/98 five-year eleventh lease
Existing restaurant renewal options year only
The Fort Worth #3 Property is
located on the southwest
quadrant of Northeast
Loop 820 and North Beach Road,
in Fort Worth, Tarrant County,
Texas, in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity
to the Fort Worth #3 Property
include a Whataburger and several
local restaurants.
IHOP (13) $1,275,701 09/2018; three $112,900 None during the
(the "Kansas City Property") 09/24/98 five-year eleventh lease
Existing restaurant renewal options year only
The Kansas City Property is located
on the southwest quadrant of Northwest
64th Street and Interstate 29, in
Kansas City, Platte County, Missouri,
in an area of mixed retail, commercial,
and residential development. Other fast-
food, family-style, and casual dining
restaurants located in proximity to the
Kansas City Property include a McDonald's,
a Pizza Hut, a Subway Sandwich Shop, and a
local restaurant.
<PAGE>
Lease Expira-
Purchase Date tion and Minimum Option
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------------------- ----------- -------- --------------- --------------- --------------- -----------
IHOP (13) $1,098,131 09/24/98 09/2018; three $97,185 None during the
(the "Killeen Property") five-year eleventh
Existing restaurant renewal options lease year
only
The Killeen Property is
located on the south side of the
Central Texas Expressway, south of
the Killeen Central Business District,
in Killeen, Bell County, Texas,
in an area of mixed retail,
commercial, and residential
development. Other fast-food,
family-style, and casual dining
restaurants located in proximity to
the Killeen Property include a
Golden Corral, a Long John Silver's,
a Taco Bell, a Wendy's, a McDonald's,
a Whataburger, a Denny's, and
several local restaurants
Arby's (7) $391,524 09/25/98 09/2018; two 9% of Total Cost for each lease at any time
(the "Redford Property") five-year (4); increases by year, (i) 4% of after the
Restaurant to be constructed renewal options 1.25% on September the annual seventh lease
1 every lease year gross sales year
The Redford Property is located on during the lease minus (ii) the
the east side of Inkster Road, north term minimum annual
of Plymouth Road, in Redford, Wayne rent for such
County, Michigan, in an area of lease year
mixed retail, commercial, and
residential development. Other
fast-food, family-style, and casual
dining restaurants located in
proximity to the Redford Property
include a Little Caesar's Pizza and
a local restaurant.
<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 Property Federal Tax Basis
-------- ----------------- -------- -----------------
Glendale Property $ 1,140,000 Ocala Property $1,141,000
Canton Property 580,000 Valdosta Property 377,000
Antioch Property 767,000 Jacksonville #7 Property 1,533,000
Clarksville Property 979,000 Columbus #4 Property 616,000
Columbia Property 932,000 Miami #2 Property 1,191,000
Cookeville Property 1,000,000 Miami #3 Property 612,000
Hendersonville Property 963,000 Miami #4 Property 602,000
Hermitage Property 824,000 Miami Springs Property 1,008,000
Hopkinsville Property 939,000 North Miami Property 761,000
Lebanon Property 922,000 Fort Worth #3 Property 800,000
Madison Property 833,000 Kansas City Property 828,000
Tullahoma Property 1,006,000 Killeen Property 773,000
Whitehall Property 281,000 Redford Property 707,000
</TABLE>
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Canton,
Whitehall, Jacksonville #7, Columbus #4 and Redford 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, (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
Glendale 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 restaurant opens for business to the public or (iii) 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 Glendale,
Canton, Whitehall, Jacksonville #7, Columbus #4 and Redford Properties,
as described above, the tenant shall pay monthly interim rent equal to
a specified rate per annum (ranging from 9% to 10.50%) of the amount
funded by the Company in connection with the purchase and construction
of the Properties.
<PAGE>
(3) The development agreements or lease addendums for the Properties which
are to be constructed, provide 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
amounts set forth below:
<TABLE>
<CAPTION>
Property Estimated Maximum Cost Estimated Final Completion Date
-------- ---------------------- -------------------------------
<S> <C>
Glendale Property $1,682,243 February 14, 1999
Canton Property 1,121,495 February 16, 1999
Whitehall Property 782,321 February 28, 1999
Ocala Property 1,635,000 March 3, 1999
Jacksonville #7 Property 1,811,747 March 14, 1999
Columbus #4 Property 1,084,112 March 17, 1999
Redford Property 1,065,421 March 24, 1999
</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 or lease addendum.
(5) For the first through tenth lease years, 6% of the amount by which
annual gross sales exceed $2,200,000; for the eleventh lease year and
thereafter, (i) 6% of the amount by which annual gross sales exceed
$2,200,000 minus (ii) any increase in initial minimum annual rent for
such lease year.
(6) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(7) The lessee of the Canton, Whitehall, Columbus #4 and Redford Properties
is the same unaffiliated lessee.
(8) The lessee of the Antioch, Clarksville, Columbia, Cookeville,
Hendersonville, Hermitage, Hopkinsville, Lebanon, Madison and Tullahoma
Properties is the same unaffiliated lessee.
(9) At any time after the fifth lease year if the tenant has not exercised
such option for more than four properties; at any time after the sixth
lease year if the tenant has not exercised such option for more than
seven properties; or at any time after the seventh lease year.
(10) 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.
(11) The lessee of the Miami #2, Miami #3, Miami #4, Miami Springs and North
Miami Properties is the same unaffiliated lessee.
(12) Increases after the fourth lease year and after every two years
thereafter during the lease term by the lesser of (i) 4% of annual rent
or (ii) three times the average increase in the U.S. Consumer Price
Index.
(13) The lessee of the Fort Worth #3, Kansas City and Killeen Properties is
the same unaffiliated lessee.
<PAGE>
-35-
PENDING INVESTMENTS
As of September 29, 1998, the Company had initial commitments to
acquire 11 properties with purchase prices aggregating approximately
$14,100,000. These 11 properties include nine 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 11 of these properties
are expected to be entered into on substantially the same terms described in
"Business -- Description of Property Leases."
In connection with two of the 11 properties, the Company anticipates
owning only the buildings and not the underlying land. However, the Company
anticipates entering into a tri-party agreement with the lessee and the landlord
of the land in connection with one of the properties, and either a landlord
estoppel agreement with the landlord of the land and a collateral assignment of
the ground lease with the lessee or a tri-party agreement with the lessee and
the landlord of the land in connection with the other property, in order to
provide the Company with certain rights with respect to the land on which the
buildings are located.
BORROWING
As of September 29, 1998, the Company had funded $27,235,233 in Secured
Equipment Leases through advances under its Line of Credit and had used
$19,000,000 of uninvested net offering proceeds 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.
<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
CNL AMERICAN PROPERTIES FUND, INC.
PROPERTIES ACQUIRED FROM AUGUST 15, 1998
THROUGH SEPTEMBER 29, 1998
For the Year Ended December 31, 1997 (Unaudited)
The following schedule presents unaudited estimated taxable operating
results before dividends paid deduction of each Property acquired by the Company
from August 15, 1998 through September 29, 1998, and the total of all properties
for which the Company had an initial commitment as of September 29, 1998. The
statement presents unaudited estimated taxable operating results for each
acquired Property that was operational (or in the case of pending investments,
the total of all properties that were operational), as if the Property had been
acquired and operational on January 1, 1997 through December 31, 1997. 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.
COMPLETED INVESTMENTS:
<TABLE>
<CAPTION>
Black-eyed Pea Arby's Applebee's Applebee's
Glendale, AZ Canton, GA (6) Antioch, TN (7) Clarksville, TX (7)
-------------- -------------- --------------- -------------------
<S> <C>
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) (5) (5) $130,947 $146,038
Asset Management Fees (2) (5) (5) (7,829) (8,731)
General and Administrative
Expenses (3) (5) (5) (8,119) (9,054)
-------- -------
Estimated Cash Available from
Operations (5) (5) 114,999 128,253
Depreciation Expense (4) (5) (5) (19,676) (25,113)
-------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction (5) (5) $ 95,323 $103,140
======== ========
See Footnotes
<PAGE>
Applebee's Applebee's Applebee's Applebee's
Columbia, TN (7) Cookeville, TN (7) Hendersonville, TN (7) Hermitage, TN (7)
---------------- ------------------ ---------------------- -----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) $148,206 $141,713 $143,875 $148,283
Asset Management Fees (2) (8,861) (8,473) (8,602) (8,866)
General and Administrative
Expenses (3) (9,189) (8,786) (8,920) (9,194)
------- -------- -------- --------
Estimated Cash Available from
Operations 130,156 124,454 126,353 130,223
Depreciation Expense (4) (23,910) (25,634) (24,689) (21,136)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $106,246 $ 98,820 $101,664 $109,087
======== ======== ======== ========
See Footnotes
<PAGE>
Applebee's Applebee's Applebee's Applebee's
Hopkinsville, KY (7) Lebanon, TN (7) Madison, TN (7) Tullahoma, TN (7)
-------------------- --------------- --------------- -----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) $126,493 $141,686 $149,556 $126,554
Asset Management Fees (2) (7,563) (8,471) (8,942) (7,566)
General and Administrative
Expenses (3) (7,843) (8,785) (9,272) (7,846)
-------- -------- ------- --------
Estimated Cash Available from
Operations 111,087 124,430 131,342 111,142
Depreciation Expense (4) (24,087) (23,628) (21,353) (25,783)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 87,000 $100,802 $109,989 $ 85,359
======= ======== ======== ========
See Footnotes
<PAGE>
Arby's Bennigan's Popeyes Roadhouse Grill
Whitehall, OH (6) Ocala, FL Valdosta, GA Jacksonville #7, FL
----------------- ---------- ------------ -------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) (5) (5) $53,595 (5)
Asset Management Fees (2) (5) (5) (3,046) (5)
General and Administrative
Expenses (3) (5) (5) (3,323) (5)
-------
Estimated Cash Available from
Operations (5) (5) 47,226 (5)
Depreciation Expense (4) (5) (5) (9,656) (5)
-------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction (5) (5) $37,570 (5)
=======
See Footnotes
<PAGE>
Arby's Pollo Tropical Pollo Tropical Pollo Tropical
Columbus #4, OH (6) Miami #2, FL (8) Miami #3, FL (8) Miami #4, FL (8)
------------------- ---------------- ---------------- ----------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) (5) $157,500 $110,455 $118,636
Asset Management Fees (2) (5) (10,499) (7,363) (7,908)
General and Administrative
Expenses (3) (5) (9,765) (6,848) (7,355)
-------- -------- --------
Estimated Cash Available from
Operations (5) 137,236 96,244 103,373
Depreciation Expense (4) (5) (30,548) (15,691) (15,435)
-------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction (5) $106,688 $ 80,553 $ 87,938
======== ======== ========
See Footnotes
<PAGE>
Pollo Tropical Pollo Tropical IHOP IHOP
Miami Springs, FL (8) North Miami, FL (8) Fort Worth #3, TX (9) Kansas City, MO (9)
--------------------- ------------------- --------------------- -------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) $163,636 $143,182 $115,794 $112,900
Asset Management Fees (2) (10,908) (9,544) (7,819) (7,623)
General and Administrative
Expenses (3) (10,145) (8,877) (7,179) (7,000)
-------- -------- -------- --------
Estimated Cash Available from
Operations 142,583 124,761 100,796 98,277
Depreciation Expense (4) (25,843) (19,517) (20,510) (21,230)
-------- -------- -------- --------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $116,740 $105,244 $ 80,286 $ 77,047
======== ======== ======== ========
See Footnotes
<PAGE>
IHOP Arby's Completed Investments Pending Investments
Killeen, TX (9) Redford, MI (6) Total Total (11)
--------------- --------------- --------------------- -------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) $97,185 (5) $2,476,234 $1,163,801
Asset Management Fees (2) (6,560) (5) (155,174) (72,846)
General and Administrative
Expenses (3) (6,025) (5) (153,525) (72,155)
------- ---------- ----------
Estimated Cash Available from
Operations 84,600 (5) 2,167,535 1,018,800
Depreciation Expense (4)(11) (19,815) (5) (413,254) (194,964)
------- ---------- ----------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $64,785 (5) $1,754,281 $ 823,836
======= ========== ==========
See Footnotes
<PAGE>
Grand Total
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental income (1) $3,640,035
Asset Management Fees (2) (228,020)
General and Administrative
Expenses (3) (225,680)
Estimated Cash Available from
Operations 3,186,335
Depreciation Expense (4) (608,218)
----------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $2,578,117
==========
</TABLE>
- ----------------------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to an advisory agreement
between the Company and CNL Fund Advisors, Inc. (the "Advisor"),
pursuant to which the Advisor will receive monthly asset management
fees in an amount equal to one-twelfth of .60% of the Company's Real
Estate Asset Value as of the end of the preceding month as defined in
such agreement. See "Management Compensation."
(3) Estimated at 6.2% of gross rental income or in the case of pending
investments, estimated gross rental income, based on the previous
experience of the Company and of Affiliates of the Advisor with 18
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 acquired has been depreciated on the
straight-line method over 39 years.
<PAGE>
(5) The Property is under construction for the period presented. The
development agreements or lease addendums 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
-------- -------------------------------
Glendale Property February 14, 1999
Canton Property February 16, 1999
Whitehall Property February 28, 1999
Ocala Property March 3, 1999
Jacksonville #7 Property March 14, 1999
Columbus #4 Property March 17, 1999
Redford Property March 24, 1999
The Company anticipates the pending investments that are construction
properties will generally be operational within 180 days after
acquisition.
(6) The lessee of the Canton, Whitehall, Columbus #4 and Redford Properties
is the same unaffiliated lessee.
(7) The lessee of the Antioch, Clarksville, Columbia, Cookeville,
Hendersonville, Hermitage, Hopkinsville, Lebanon, Madison and Tullahoma
Properties is the same unaffiliated lessee.
(8) The lessee of the Miami #2, Miami #3, Miami #4, Miami Springs and North
Miami Properties is the same unaffiliated lessee.
(9) The lessee of he Fort Worth #3, Kansas City and Killeen Properties is
the same unaffiliated lessee.
(10) Information relating to the nine pending investments that are existing
is based on estimated purchase prices for each of the nine properties.
The remaining two properties that will be under construction once they
are acquired are not included.
(11) For pending investments which consist of land and building, for
purposes of calculating depreciation, the allocation of the estimated
cost of the property between land and building is based upon the
average allocation of the actual cost of properties (consisting of both
land and building) acquired by the Company as of December 31, 1997.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
----
Pro Forma Consolidated Financial Information (unaudited):
Pro Forma Consolidated Balance Sheet as of June 30, 1998 29
Pro Forma Consolidated Statement of Earnings for the six
months ended June 30, 1998 30
Pro Forma Consolidated Statement of Earnings for the year
ended December 31, 1997 31
Notes to Pro Forma Consolidated Financial Statements for
the six months ended June 30, 1998 and the year ended
December 31, 1997 32
<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 June 30,
1998, including the receipt of $514,300,100 in gross offering proceeds from the
sale of 51,430,010 shares of common stock and the application of such proceeds
to purchase 310 properties (including 243 properties which consist of land and
building, two properties through joint venture arrangements which consist of
land and building, 21 properties which consist of building only and 44
properties which consist of land only), 16 of which were under construction at
June 30, 1998, 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
$105,226,093 in gross offering proceeds from the sale of 10,522,610 additional
shares of common stock during the period July 1, 1998 through September 29,
1998, (iii) the receipt of net sales proceeds in the amount of $1,152,262
relating to the sale of one property (on which a restaurant was being developed)
during the period July 1, 1998 through September 29, 1998, (iv) the application
of such funds and $6,489,831 of cash and cash equivalents at June 30, 1998 to
purchase 40 additional properties acquired during the period July 1, 1998
through September 29, 1998 (13 of which are under construction and consist of
land and building, two which are under construction and consist of building
only, 24 which consist of land and building and one parcel of vacant land on
which four restaurants will be developed), to pay additional costs for the 16
properties under construction at June 30, 1998, to invest in franchise loan
certificates, to provide mortgage financing, and to pay offering expenses,
acquisition fees and miscellaneous acquisition expenses, and (v) the application
of such funds to purchase 11 properties, including nine 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 September 29, 1998, all as
reflected in the pro forma adjustments described in the related notes. The Pro
Forma Consolidated Balance Sheet as of June 30, 1998, includes the transactions
described in (i) above from the historical consolidated balance sheet, adjusted
to give effect to the transactions in (ii), (iii), (iv) and (v) above, as if
they had occurred on June 30, 1998.
The Pro Forma Consolidated Statements of Earnings for the six months
ended June 30, 1998 and the year ended December 31, 1997, include the historical
operating results of the properties described in (i) above from the dates of
their acquisitions plus operating results for five of the properties that were
acquired by the Company during the period January 1, 1997 through September 29,
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 Statements of Earnings for the remaining
properties acquired by the Company during the period January 1, 1997 through
September 29, 1998, or the properties for which the Company has made initial
commitments to acquire as of September 29, 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.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $236,704,020 $ 58,172,682 (a)
12,322,313 (b)
(1,152,262)(c) $306,046,753
Net investment in direct
financing leases (f) 114,426,551 3,803,499 (a)
2,582,300 (b) 120,812,350
Investment in joint venture 112,847 1,395,803 (d) 1,508,650
Cash and cash equivalents 76,369,080 25,099,933 (a)
(14,140,999)(b)
1,152,262 (c)
(1,326,323)(d)
(16,122,442)(e) 71,031,511
Certificates of deposit 2,008,304 2,008,304
Receivables, less allowance for
doubtful accounts of $200,361
and $99,964 respectively 390,005 390,005
Mortgage notes receivable 17,451,841 664,020 (a) 18,115,861
Equipment notes receivable 14,863,570 14,863,570
Other investments - 16,986,144 (e) 16,986,144
Accrued rental income 2,835,802 2,835,802
Other assets 4,957,390 1,527,847 (a)
(763,614)(b)
(69,480)(d)
(863,702)(e) 4,788,441
------------ ------------ ------------
$470,119,410 $ 89,267,981 $559,387,391
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $ 5,438,446 $ 5,438,446
Accrued construction costs payable 4,471,616 $ (4,471,616)(a) -
Accounts payable and accrued
expenses 158,872 158,872
Due to related parties 1,395,080 1,395,080
Rents paid in advance 822,999 822,999
Deferred rental income 980,974 88,374 (a) 1,069,348
Other payables 49,848 49,848
------------ ------------ ------------
Total liabilities 13,317,835 (4,383,242) 8,934,593
------------ ------------ ------------
Minority interest 283,229 283,229
------------ ------------ ------------
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 125,000,000
shares; issued and outstanding
51,450,010 shares; issued and
outstanding, as adjusted,
61,972,620 shares 514,500 105,226 (a) 619,726
Capital in excess of par value 460,230,969 93,545,997 (a) 553,776,966
Accumulated distributions in
excess of net earnings (4,227,123) (4,227,123)
------------ ------------ ------------
Total stockholders' equity 456,518,346 93,651,223 550,169,569
------------ ------------ ------------
$470,119,410 $ 89,267,981 $559,387,391
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma
consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C>
Revenues:
Rental income from
operating leases $11,012,231 $ 79,137 (1) $11,091,368
Earned income from
direct financing leases (6) 2,795,390 26,311 (1) 2,821,701
Interest income from
mortgage notes receivable 864,049 864,049
Other interest and income 2,957,408 (72,602)(2) 2,884,806
----------- --------- -----------
17,629,078 32,846 17,661,924
----------- --------- -----------
Expenses:
General operating and
administrative 971,727 971,727
Professional services 65,108 65,108
Asset management fees
to related party 729,860 9,277 (3) 739,137
State and other taxes 182,703 182,703
Depreciation and amortization 1,648,827 8,894 (4) 1,657,721
----------- --------- -----------
3,598,225 18,171 3,616,396
----------- --------- -----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 14,030,853 14,675 14,045,528
Minority Interest in Income of
Consolidated Joint Venture (15,380) (15,380)
----------- --------- -----------
Net Earnings $14,015,473 $ 14,675 $14,030,148
=========== ========= ===========
Earnings Per Share of
Common Stock (Basic
and Diluted) (5) $ 0.32 $ 0.33
=========== ===========
Weighted Average Number of
Shares of Common Stock
Outstanding (5) 43,166,433 43,166,433
=========== ===========
</TABLE>
See accompanying notes to
unaudited pro forma consolidated financial statements.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
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 $ 100,361 (1) $12,557,561
Earned income from
direct financing leases (6) 3,033,415 56,640 (1) 3,090,055
Interest income from
mortgage notes receivable 1,687,456 1,687,456
Other interest income 2,254,375 (58,190)(2) 2,196,185
Other income 25,487 25,487
----------- --------- -----------
19,457,933 98,811 19,556,744
----------- --------- -----------
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 8,296 (3) 813,175
State taxes 251,358 251,358
Depreciation and amortization 1,795,062 4,321 (4) 1,799,383
----------- --------- -----------
3,862,024 12,617 3,874,641
----------- --------- -----------
Earnings Before Minority
Interest in Income of
Consolidated Joint Venture 15,595,909 86,194 15,682,103
Minority Interest in Income of
Consolidated Joint Venture (31,453) (31,453)
----------- --------- -----------
Net Earnings $15,564,456 $ 86,194 $15,650,650
=========== ========= ===========
Earnings Per Share of
Common Stock (Basic
and Diluted) (5) $ 0.66 $ 0.67
=========== ===========
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.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $105,226,093 from the issuance of
10,522,610 shares of common stock during the period July 1, 1998
through September 29, 1998 and the receipt of $88,374 of rental income
during construction (capitalized as deferred rental income) used (i) to
acquire 40 properties (13 of which are under construction and consist
of land and building, two of which are under construction and consist
of building only, 24 of which consist of land and building and one
parcel of vacant land on which four restaurants will be developed) for
$54,014,600, (ii) to fund estimated construction costs of $9,259,890
($4,471,616 of which was accrued as construction costs payable at June
30, 1998) relating to 16 wholly owned properties under construction at
June 30, 1998, (iii) to provide mortgage financing in the amount of
$630,000 (iv) to pay acquisition fees of $4,735,174 ($3,173,307 of
which was allocated to properties, $34,020 of which was allocated to
the mortgage financing transaction and $1,527,847 of which was
classified as other assets and will be allocated to future properties)
and (v) to pay selling commissions and offering expenses (stock
issuance costs) of $11,574,870, which have been netted against capital
in excess of par value, leaving $25,099,933 in cash and cash
equivalents available for future investment.
The pro forma adjustment 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>
Wendy's in Knoxville, TN $ 454,930 $ 24,566 $ 479,496
Black-eyed Pea in Herndon, VA 1,278,118 69,018 1,347,136
Ponderosa in Blue Springs, MO 1,729,053 93,369 1,822,422
Golden Corral in Clovis, NM 1,164,741 62,896 1,227,637
IHOP in Poughkeepsie, NY 1,239,713 66,944 1,306,657
Jack in the Box in Chandler, AZ 1,050,116 56,706 1,106,822
Taco Bell in Livingston, TN 576,560 31,134 607,694
Jack in the Box in Lufkin, TX 1,004,688 54,253 1,058,941
Roadhouse Grill in Pensacola, FL 1,506,841 81,369 1,588,210
Golden Corral in Dublin, GA 1,288,271 69,566 1,357,837
TGI Friday's in El Paso, TX 1,596,707 86,222 1,682,929
IHOP in Greeley, CO 1,259,628 68,020 1,327,648
Wendy's in Seymour, TN 448,152 24,200 472,352
Black-eyed Pea in Glendale, AZ 1,647,393 88,959 1,736,352
Arby's in Canton, GA 1,082,443 58,452 1,140,895
Applebee's in Antioch, TN 1,304,830 70,461 1,375,291
Applebee's in Clarksville, TN 1,455,216 78,582 1,533,798
Applebee's in Columbia, TN 1,476,826 79,749 1,556,575
Applebee's in Cookeville, TN 1,412,116 76,254 1,488,370
Applebee's in Hendersonville, TN 1,433,658 77,418 1,511,076
Applebee's in Hermitage, TN 1,477,593 79,790 1,557,383
Applebee's in Hopkinsville, KY 1,260,438 68,064 1,328,502
Applebee's in Lebanon, TN 1,411,849 76,240 1,488,089
Applebee's in Madison, TN 1,490,276 80,475 1,570,751
Applebee's in Tullahoma, TN 1,261,052 68,097 1,329,149
Arby's in Whitehall, OH 750,295 40,516 790,811
Bennigan's in Ocala, FL 1,633,691 88,219 1,721,910
Roadhouse Grill in Jacksonville, FL (#7) 1,804,535 97,445 1,901,980
Popeyes in Valdosta, GA 507,679 27,415 535,094
Arby's in Columbus, OH (#4) 1,041,796 56,258 1,098,054
Pollo Tropical in Miami, FL (#2) 1,749,825 94,492 1,844,317
Pollo Tropical in Miami, FL (#3) 1,227,098 66,263 1,293,361
Pollo Tropical in Miami, FL (#4) 1,318,007 71,172 1,389,179
Pollo Tropical in Miami Springs, FL 1,818,007 98,172 1,916,179
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Balance Sheet - Continued:
Pollo Tropical in North Miami, FL 1,590,734 85,900 1,676,634
IHOP in Killeen, TX 1,093,388 59,043 1,152,431
IHOP in Kansas City, MO 1,270,465 68,605 1,339,070
IHOP in Fort Worth, TX (#3) 1,303,158 70,371 1,373,529
Little Lake Bryan land parcel
in Orlando, FL 4,543,927 245,372 4,789,299
Arby's in Redford, MI 1,050,787 56,742 1,107,529
16 wholly owned properties under
construction at June 30, 1998 4,788,274 256,518 5,044,792
----------- ---------- -----------
$58,802,874 $3,173,307 $61,976,181
=========== ========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $58,172,682
Net investment in direct financing leases 3,803,499
-----------
$61,976,181
===========
</TABLE>
(b) Represents the use of the Company's net offering proceeds to acquire 11
properties (including nine 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 September 29, 1998, for
an estimated cost of $14,140,999, and the allocation of $763,614 of
acquisition fees to these 11 properties. See "Business - Pending
Investments."
The pro forma adjustment to land and buildings on operating leases and
net investment in direct financing leases as a result of the above
commitments 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>
Initial commitments to acquire 11
properties as of September 29, 1998 $14,140,999 $ 763,614 $14,904,613
=========== ========= ===========
Adjustment classified as follows:
Land and buildings on operating leases $12,322,313
Net investment in direct financing leases 2,582,300
-----------
$14,904,613
===========
</TABLE>
(c) Represents net sales proceeds in the amount of $1,152,262 received in
conjunction with the sale of one property (on which a restaurant was
being developed), which was sold at approximately net carrying value.
(d) Represents the use of the Company's net offering proceeds in accordance
with the joint venture agreement of CNL/Lee Vista Joint Venture, to
fund estimated construction costs of $1,326,323 relating to the
property owned by the joint venture and the allocation of $69,480 of
acquisition fees to this joint venture. The Company accounts for its
approximate 68 percent interest in this joint venture under the equity
method because it shares control with the other joint venture partner.
(e) Represents the use of the Company's net proceeds in the amount of
$16,122,442 to acquire Class F, Class G and Class H Franchise Loan
Certificates, Series 1998-1 from CNL Funding 98-1, LP, a mortgage loan
securitization entity sponsored by an affiliate of the advisor of the
Company, and the allocation of $863,702 of acquisition fees to this
investment.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Balance Sheet - Continued:
(f) 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.
Pro Forma Consolidated Statements of Earnings:
(1) Represents rental income from operating leases and earned income from
direct financing leases for five of the properties acquired during the
period January 1, 1997 through September 29, 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
four 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
IHOP in Hollywood, CA June 1998 June 1997
Ponderosa in Blue Springs, MO July 1998 April 1998
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 and 1998 that the previous owners held the
properties, no pro forma adjustment was made for percentage rental
income for the six months ended June 30, 1998 and year ended December
31, 1997.
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS - CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
Pro Forma Consolidated Statements of Earnings:
(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) 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 from interest bearing accounts was earned at a rate of
approximately four percent per annum by the Company during the six
months ended June 30, 1998 and year ended December 31, 1997.
(3) Represents incremental increase in asset management fees relating to
the Pro Forma Properties for the period commencing (A) 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
$4,533,000 and $3,855,000 for the Pro Forma Properties for the six
months ended June 30, 1998 and the year ended December 31, 1997,
respectively), 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 six
months ended June 30, 1998 and the year ended December 31, 1997.
(6) See Note (f) under "Pro Forma Consolidated Balance Sheet" for a
description of direct financing leases.
