FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2000
-----------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the transition period from ___________________ to ________________________
Commission file number
001-15581
---------------------------------------
CNL American Properties Fund, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 59-3239115
----------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
----------------------------------------- --------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
--------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
43,495,919 shares of common stock, $.01 par value, outstanding as of November 8,
2000.
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Part I Page
<S><C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of
Stockholders' Equity and Comprehensive
Income/(Loss) 3
Condensed Consolidated Statements of Cash Flows 4-5
Notes to Condensed Consolidated Financial
Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 19
Part II
Other Information 20-22
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
----------------- -----------------
ASSETS
<S><C>
Land, buildings and equipment on operating leases, less accumulated
depreciation of $21,789,229 and $14,742,596, respectively and
allowance for loss of $4,651,770 and $4,656,707, respectively $ 725,331,420 $ 681,210,344
Net investment in direct financing leases, less allowance for loss
of $3,135,064 and $3,734,022, respectively 162,556,729 145,743,195
Mortgage loans held for sale 143,927,618 63,466,474
Equipment and other notes receivable 44,461,783 42,748,420
Other investments 66,906,185 75,806,738
Cash and cash equivalents 33,521,029 46,011,592
Restricted Cash 551,991 --
Receivables, less allowance for doubtful accounts
of $6,451,573 and $2,660,069, respectively 3,310,541 3,329,557
Accrued rental income 14,632,507 8,116,794
Due from related parties 3,899,273 1,315,721
Intangibles and other assets 103,619,168 70,443,958
================= =================
$ 1,302,718,244 $1,138,192,793
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Credit Facility $ 71,000,000 $ 248,000,000
Note payable 85,616,992 140,504,000
Mortgage warehouse facilities 147,893,500 30,749,540
Subordinated note payable 34,000,000 --
Bonds payable 279,949,596 --
Accrued construction costs payable 3,442,849 17,566,758
Accounts payable and accrued expenses 4,780,659 8,833,695
Due to related parties 7,895,050 10,626,929
Other payables 14,987,913 8,700,414
----------------- -----------------
Total liabilities 649,566,559 464,981,336
----------------- -----------------
Minority interests 18,907,820 997,353
----------------- -----------------
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 62,500,000
shares, issued 43,533,221 shares, outstanding 43,495,919 shares 434,958 434,958
Capital in excess of par value 791,418,955 791,418,955
Accumulated other comprehensive loss (10,642 ) (177,119 )
Accumulated distributions in excess of net earnings (157,599,406 ) (119,462,690 )
----------------- -----------------
Total stockholders' equity 634,243,865 672,214,104
----------------- -----------------
$ 1,302,718,244 $1,138,192,793
================= =================
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------------- -------------- -------------- ---------------
<S><C>
Revenues:
Rental income from operating leases $ 18,258,041 $ 12,771,149 $ 50,595,576 $ 34,959,700
Earned income from direct
financing leases 4,446,940 3,348,946 11,918,473 9,061,289
Interest income from mortgage,
equipment and other notes
receivable 5,804,817 2,095,347 10,923,798 4,136,067
Investment and interest income 2,141,897 1,347,926 7,133,151 3,498,586
Unrealized holding loss on investment in
trading securities (3,823,535 ) -- (3,823,535 ) --
Other income 1,160,093 367,525 3,626,430 425,606
--------------- -------------- -------------- ---------------
27,988,253 19,930,893 80,373,893 52,081,248
--------------- -------------- -------------- ---------------
Expenses:
General operating and administrative 5,404,390 1,712,971 14,479,570 3,513,953
Interest expense 11,854,196 3,584,675 30,142,294 3,584,675
Property expense 1,508,620 148,239 3,176,842 591,665
Asset management fees to
related party -- 796,664 -- 2,478,534
State and other taxes 266,191 93,250 1,004,422 558,216
Depreciation and amortization 4,156,440 2,555,424 11,899,007 6,267,098
Transaction costs 1,306,554 620,946 8,009,509 1,103,951
Advisor acquisition expense -- 76,384,337 -- 76,384,337
--------------- -------------- -------------- ---------------
24,496,391 85,896,506 68,711,644 94,482,429
--------------- -------------- -------------- ---------------
Earnings/(Losses) Before Minority Interest in
Income of Consolidated Joint Ventures,
Equity in Earnings of Unconsolidated
Joint Venture, Gain/(Loss) on Sales
of Assets, and Provision for
Losses on Assets 3,491,862 (65,965,613 ) 11,662,249 (42,401,181 )
Minority Interest in (Income) and losses of
Consolidated Joint Ventures 856,835 (8,008 ) 648,172 (25,618 )
Equity in Earnings/(Loss) of Unconsolidated
Joint Venture 21,681 24,046 70,346 72,897
Gain/(Loss) on Sales of Assets (121,265 ) (368,963 ) 77,417 (570,806 )
Provision for Losses on Assets (673,067 ) 136,904 (847,708 ) (403,618 )
--------------- -------------- -------------- ---------------
Net Earnings/(Loss) $ 3,576,046 $ (66,181,634 ) $ 11,610,476 $ (43,328,326 )
=============== ============== ============== ===============
Earnings/(Loss) Per Share of Common
Stock (Basic and Diluted) $ 0.08 $ (1.68 ) $ 0.27 $ (1.14 )
=============== ============== ============== ===============
Weighted Average Number of Shares
of Common Stock Outstanding 43,495,919 39,353,069 43,495,919 38,023,623
=============== ============== ============== ===============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME/(LOSS)
Nine Months Ended September 30, 2000 and Year Ended December 31, 1999
<TABLE>
<CAPTION>
Accumulated
distributions Accumulated
Common stock Capital in in excess Other
Number Par excess of of net Comprehensive Comprehensive
of shares value par value earnings Income/(Loss) Total Income/(Loss)
------------ --------- ------------- -------------- ---------------- ------------- ----------------
<S><C>
Balance at
December 31, 1998 37,337,927 $ 373,379 $669,983,438 $ (9,546,531 ) $ -- $660,810,286 $ --
Subscriptions received for
common stock through
public offerings 10,537 105 210,631 -- -- 210,736 --
Stock issuance costs -- -- (1,662,749) -- -- (1,662,749 ) --
Common stock issued
through merger 6,150,000 61,500 122,938,500 -- -- 123,000,000 --
Net loss -- -- -- (49,837,334 ) -- (49,837,334 ) (49,837,334 )
Other comprehensive loss,
market revaluation on
available for sale
securities -- -- -- -- (177,119 ) (177,119 ) (177,119 )
---------------
Comprehensive income
-- -- -- -- -- -- $ (50,014,453 )
---------------
Retirement of common stock (2,545 ) (26) (50,865) -- -- (50,891 ) --
Distributions declared and
paid ($1.52 per share) -- -- -- (60,078,825 ) -- (60,078,825 ) --
------------ --------- ------------- -------------- ---------------- -------------
Balance at
December 31, 1999 43,495,919 434,958 791,418,955 (119,462,690 ) (177,119 ) 672,214,104 --
Net earnings -- -- -- 11,610,476 -- 11,610,476 11,610,476
Other comprehensive
income, market
revaluation on
available -- -- -- -- 166,477 166,477 166,477
for sale securities
----------------
Comprehensive Income -- -- -- -- -- -- $ 11,776,953
==============
==============
Distributions declared and
paid ($1.14 per share) -- -- -- (49,747,192 ) -- (49,747,192 ) --
----------- ---------- ------------ ------------- ---------------- -------------
Balance at September 30,
2000 43,495,919 $ 434,958 791,418,955 $(157,599,406 ) $ (10,642 ) $634,243,865 --
=========== ========== ============= ============== ================ =============
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
------------------ -----------------
<S><C>
Increase (Decrease) in Cash and Cash Equivalents
Net Cash (Used in)/Provided by Operating Activities $ (49,906,204 ) $ 39,347,255
------------------ -----------------
Cash Flows from Investing Activities:
Additions to land and buildings on operating leases (73,487,261 ) (215,155,626 )
Investment in direct financing leases (24,570,474 ) (54,738,743 )
Proceeds from sale of assets 12,795,410 5,247,474
Increase in restricted cash (551,991 ) --
Investment in joint ventures -- (149,620 )
Increase in other investments -- (33,538,228 )
Investment in mortgage notes receivable -- (3,799,645 )
Collections on mortgage notes receivable -- 393,468
Investment in equipment and other notes receivable (9,915,979 ) (25,588,794 )
Collections on equipment and other notes receivable 7,292,405 3,324,267
Proceeds from sale of loans -- 290,226,905
Redemption of certificates of deposit -- 2,000,000
Increase in intangibles and other assets (377,755 ) (1,854,343 )
------------------ -----------------
Net cash used in investing activities (88,815,645 ) (33,632,885 )
------------------ -----------------
Cash Flows from Financing Activities:
Reimbursement of costs paid by related parties on behalf of
the Company (2,731,879 ) (1,492,231 )
Proceeds from borrowing on credit facility, note payable and
subordinated note payable 388,538,000 278,437,245
Payments on credit facility and note payable (586,425,008 ) (32,580,289 )
Proceeds from borrowing on mortgage warehouse facilities 121,476,384 --
Payments on mortgage warehouse facilities (4,332,424 ) (320,226,905 )
Issuance of bonds 280,906,000 --
Payment on bonds (956,404 ) --
Payment of loan costs (20,408,783 ) (3,869,432 )
Subscriptions received from stockholders -- 210,736
Distributions to minority interests (87,408 ) (42,706 )
Contributions from minority interests -- 628,107
Distributions to stockholders (49,747,192 ) (43,496,424 )
Retirement of shares of common stock -- (50,891 )
Payment of stock issuance costs -- (735,513 )
------------------ -----------------
Net cash provided by (used in) financing activities 126,231,286 (123,218,303 )
------------------ -----------------
Net Decrease in Cash and Cash Equivalents (12,490,563 ) (117,503,933 )
Cash and Cash Equivalents at Beginning of Period 46,011,592 123,199,837
------------------ -----------------
Cash and Cash Equivalents at End of Period $ 33,521,029 $ 5,695,904
================== =================
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
----------------- -----------------
<S><C>
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain acquisition
and stock issuance costs on behalf of the Company as follows:
Acquisition costs $ -- $ 579,206
Stock issuance costs -- 124,031
----------------- -----------------
$ -- $ 703,237
================= =================
Land and buildings under operating leases
exchanged for land and buildings under
operating leases $ -- $ 652,356
================= ================
Contributions of properties in exchange
for investment in a non-controlled subsidiary. $ 5,301,107 $ --
================= ================
Acquisition of buildings in exchange for cancellation of
mortgages. $ 4,297,977 $ --
================= =================
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
1. Organization and Nature of Business:
CNL American Properties Fund, Inc. ("APF" or the "Company") is a real
estate investment trust ("REIT") that provides a full range of
financial, development, advisory and other real estate services to
operators of national and regional restaurant chains.
In June, the Company formed a partnership by the name of CNL Franchise
Network, L.P. ("CFN") and transferred certain assets and operations to
it in exchange for a combined general and limited partnership interest
of 84.39%. Limited partnership interests amounting to 9.18% were issued
to Bank of America in exchange for Bank of America's franchise finance
business unit based in Atlanta, Georgia. In addition, limited
partnership interests amounting to 6.43% were issued to CNL Financial
Group, Inc., an affiliate of a director of the Company, in exchange for
the operations of a company that specialized in merger, acquisition and
other advisory services to restaurant operators. CFN accounted for the
issuance of the Bank of America and CNL Financial Group, Inc.
partnership interests at the fair value of the assets acquired. The
excess of the purchase price over the fair value of the net tangible
assets acquired of approximately $17 million was recorded as goodwill
and is being amortized over a period of 20 years.
In addition to forming the partnership, CFN also entered into a
Strategic Alliance Agreement as well as additional mortgage warehouse
and other credit facilities with Bank of America and its affiliates as
described below. Among other provisions, the Strategic Alliance
Agreement provides the Company with the ability to offer additional
financial related products and services to the restaurant operators it
serves as well as access to the portfolio lending capabilities provided
by Bank of America.
The condensed consolidated financial statements include the accounts of
CFN. Minority interests include the minority partners proportionate
share of the equity in the partnership.
2. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 2000 may not be
indicative of the results that may be expected for the year ending
December 31, 2000. Amounts as of December 31, 1999 included in the
financial statements, have been derived from audited financial
statements as of that date.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
2. Basis of Presentation-Continued:
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Form 10-K for the year ended December 31, 1999. Certain items in the
prior year's financial statements have been reclassified to conform
with the 2000 presentation. These reclassifications had no effect on
stockholders' equity or net earnings.
3. Credit Facility:
At the time of the strategic alliance with Bank of America, the Company
terminated its $300 million line of credit and entered into a new $125
million unsecured revolving credit facility and a $175 unsecured bridge
financing. The $175 million bridge facility was repaid from the
proceeds of the net lease securitization leaving the Company with the
$125 million revolving credit facility (the "Credit Facility"). At
September 30, 2000, the outstanding balance on the Credit Facility was
$71 million. In connection with obtaining the Credit Facility, the
Company incurred commitment fees, legal fees and closing costs of
approximately $2 million which were capitalized. Interest on advances
under the Credit Facility is determined according to (i) a tiered rate
structure between 175 and 215 basis points above LIBOR (based upon the
Company's overall leverage ratio) or (ii) the lenders' prime rate plus
0.25%, whichever the Company selects at the time of each advance.
The principal balance, together with all unpaid interest, is due in
full upon termination of the Credit Facility on June 15, 2002. The
Company believes, based on current terms, that the carrying value of
its Credit Facility at September 30, 2000 approximates fair value.
In June 1999, in connection with the Line of Credit, the Company
entered into an interest rate swap agreement. In April 2000, the
Company terminated this swap agreement relating to the Line of Credit,
and purchased a two year interest rate cap for a $200,000,000 notional
principal balance (the "Cap"). The purpose of the Cap is to reduce the
impact of rising interest rates on its floating rate debt. The amount
paid to the Company is equal to $200,000,000 multiplied by LIBOR for
the periods outlined above. In August 2000, the Company used a portion
of the proceeds to reduce the notional amount of the interest rate cap
to $100,000,000. The combination of the Cap and the Company's
obligation result in the Company paying interest at a variable rate
plus the spread above LIBOR on up to $100,000,000 of the outstanding
line of credit balance for periods when LIBOR is below 7.50%. When
LIBOR reaches 7.50%, the Company receives the spread above LIBOR on up
to $100,000,000.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
4. Mortgage Warehouse Facilities:
At September 30, 2000, the Company had two mortgage warehouse
facilities with a total borrowing capacity of $1 billion ("Mortgage
Warehouse Facilities"). Both of these Mortgage Warehouse Facilities
enable the Company to provide net lease or mortgage financing to
franchised businesses and periodically securitize the loans through the
securitization market. One of the facilities bears interest at LIBOR
plus 90 basis points per annum and the other facility bears interest at
LIBOR plus 75 basis points per annum. As of September 30, 2000 the
weighted average interest rate for the two facilities approximated
7.24%. After consideration of the Company's interest rate swaps, the
effective weighted average interest rate for the outstanding balance
relating to the two Mortgage Warehouse Facilities was 7.79% as of
September 30, 2000. As of September 30, 2000 the Company had
approximately $148 million outstanding under these Mortgage Warehouse
Facilities. The Company believes, based on current terms, that the
carrying value at September 30, 2000 approximates fair value.
5. Subordinated Note Payable:
In June 2000, CFN, a limited partnership in which the Company has an
84.39% interest, entered into a $43,750,000 senior subordinated
convertible note payable ("Subordinated Note Payable") with Bank of
America which provides the Company additional working capital and the
ability to receive advances to purchase and develop properties and to
fund mortgage loans. This note is subordinated to the existing senior
debt of the Company. The principal amount outstanding under the
Subordinated Note Payable shall bear interest at a rate of 8.5% per
annum payable quarterly. The principal balance, together with all
unpaid interest, is due in full upon maturity of the note in June 2007.
The Company believes, based on current terms, that the carrying value
of its Subordinated Note Payable at September 30, 2000 approximates
fair value.
As more fully described above, Bank of America holds a limited
partnership interest in CFN. The Subordinated Note Payable has a
conversion feature to allow the bank, subsequent to a specified
conversion date, to have the outstanding note converted into an
additional 19.94% limited partnership interest in CFN.
6. Stockholders' Equity:
As consideration in its acquisition on September 1, 1999 of CNL Fund
Advisors, Inc. ("Advisor"), CNL Financial Services, Inc. and CNL
Financial Corporation and subsidiaries (the "CNL Restaurant Financial
Services Group"), the Company paid 6.15 million shares. Of the 6.15
million shares issued, 1.0 million were being held in escrow. The
shares held in escrow will be released to the former stockholders of
the Advisor and
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
6. Stockholders' Equity-Continued:
the CNL Restaurant Financial Services Group based on the value of the
restaurant properties acquired, mortgage loans made and development
projects completed by the Company. As of September 30, 2000,
approximately 508,700 shares were released from escrow, with
approximately 491,300 shares remaining.
7. Bonds Payable:
In August of 2000, the Company issued Triple Net Lease Mortgage Bonds,
Series 2000-A. The bonds have an aggregate principal balance of
$280,906,000. Collateral for the bonds consists of 257 commercial real
estate properties leased to tenants for operation as restaurants.
Interest on $103,706,000 (Class A-1) of bond principal is payable
monthly at 7.721% and interest on $177,200,000 (Class A-2) of bond
principal balance is payable monthly at 8.044%. Under the terms of the
bond indenture, monthly lease payments received from tenants and
available for debt service are generally required to be applied first
to payment of interest on both Class A-1 and A-2, then to payment of
principal on Class A-1 and then to payment of principal on Class A-2.
If payments by the tenants on the leased properties are received as
expected with no defaults or early terminations, it is anticipated that
the Class A-1 bonds will have a final payment date in August 2009 and
the Class A-2 bonds will have a final payment date in April 2017.
These payment assumptions are expected to result in the following
approximate principal reductions as of July 25 of each of the following
years:
2001 $ 6,200,000
2002 6,200,000
2003 8,300,000
2004 9,300,000
2005 11,400,000
Thereafter 239,506,000
=====================
$ 280,906,000
=====================
The indenture relating to the bonds provides for an optional redemption
of the bonds at their remaining principal balance when the remaining
amounts due under the leases that serve as collateral for the bonds are
less than 10 percent of the aggregate initial amounts due under the
leases.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2000 and 1999
8. Terminated Mergers:
On February 23, 2000, the Company and each of the 16 CNL Income Funds
mutually agreed to terminate the Agreement and Plan of Merger entered
into in March 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information, including, without limitation, the
Quantitative and Qualitative Disclosures About Market Risk, that are not
historical facts, may be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements generally are characterized by the use of
terms such as "believe," "expect" and "may." Although the company believes that
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the company's actual results could differ materially
from those set forth in the forward-looking statements. Factors that might cause
such a difference include: changes in general economic conditions, changes in
real estate conditions, availability of capital from borrowings under the
company's credit facilities, the availability of other debt and equity financing
alternatives, increases in interest rates under the company's current credit
facilities and under any additional variable rate debt arrangements that the
company may enter into the future, the ability of the company to refinance
amounts outstanding under its credit facilities at maturity on terms favorable
to the company, the ability of the company to locate suitable tenants for its
restaurant properties and borrowers for its mortgage loans, the ability of
tenants and borrowers to make payments under their respective leases, secured
equipment leases or mortgage loans, the ability of the company to re-lease
properties that are currently vacant or that become vacant and the ability of
the company to securitize mortgage loans on a favorable and timely basis. Given
these uncertainties, readers are cautioned not to place undue reliance on such
statements.
Organization and Nature of Business
CNL American Properties Fund, Inc. ("APF" or the "Company") is a
self-advised real estate investment trust ("REIT") that provides a full range of
financial, development, advisory and other real estate services to operators of
national and regional restaurant chains. At September 30, 2000, the Company's
servicing portfolio approximated 2,400 properties (the "Properties") (including
restaurant mortgage loans serviced for third parties). APF had financial
interests in 1,333 properties diversified among more than 80 operators in 41
states. The Company's portfolio included 713 properties represented by
investment in real estate mortgage loans and properties subject to leases and
620 properties secured by mortgage loans in which APF holds a residual interest.
In June, the Company formed a partnership, CNL Franchise Network, L.P.
("CFN" or the "Partnership") and contributed certain assets and operating
activities in exchange for an 84.39% interest. The Partnership subsequently
entered into a strategic alliance with Bank of America, the largest commercial
bank in the United States. Bank of America contributed its franchise finance
originations group in exchange for a 9.18% interest in the Partnership. In
addition to contributing its originations group, Bank of America also provided a
$500 million warehouse credit facility, a $43.75 million subordinated debt
facility, a $175 million bridge financing and served as administrative agent on
a $125 million revolving credit facility. The strategic alliance with Bank of
America broadens the Company's financial products and offerings and enhances the
Company's securitization platform thereby reducing the Company's reliance on
public equity markets.
In addition, limited partnership interests amounting to 6.43% were
issued to CNL Financial Group, Inc., an affiliate of a director of the Company,
in exchange for the operations of CNL Advisory Services, Inc. ("CAS"). CAS
specializes in providing merger, acquisition and other advisory services to
restaurant operators and rounds out the Company's services to the sector.
The Bank of America and CNL Advisory Services, Inc. transactions were
accounted for at the fair value of the assets acquired. The excess of the
purchase price over the fair value of the net tangible assets acquired of
approximately $17 million was recorded as goodwill and is being amortized over
twenty years. The condensed financial statements include the accounts of CFN.
Minority interests include the minority partners' proportionate share of the
equity in the partnership.
Liquidity and Capital Resources
During the nine months ended September 30, 2000, the Company originated
$210.1 million of restaurant real estate financing, consisting of $82.8 million
in net lease financing and $127.3 in mortgage debt financing.
Beginning with the strategic alliance with Bank of America, the Company
transitioned its financing platform for net lease originations from a portfolio
approach to a securitization approach. Historically, the Company has provided
long-term triple-net lease financing and held the property on its balance sheet
until maturity. Because of the challenges related to recycling sufficient
capital to successfully build volume levels, the Company, through its
partnership with Bank of America, developed a financial product for franchise
restaurant operators that permits the Company to securitize the related cash
flows. The $1 billion warehouse credit facilities enables the Company to finance
restaurant operators with either a securitizable net lease or debt product and
then recycle this capital through securitization to provide future franchise
financings.
Capital Resources
At September 30, 2000, CFN maintained two mortgage warehouse facilities
with a total borrowing capacity of $1 billion ("Mortgage Warehouse Facilities").
Both of these Mortage Warehouse Facilities enable the Company to provide net
lease or mortgage financing to restaurant operators. CFN had approximately $148
million in financing outstanding on the two facilities at September 30, 2000.
The Partnership also maintained a $500 million off-balance sheet
commercial paper facility that was terminated in October of 2000. In addition,
and as a result of the strategic alliance with Bank of America, the Company
transferred $172 million in loans from the off-balance sheet facility to one of
its Mortgage Warehouse Facilities. The anticipated termination of the
off-balance sheet facility resulted in an unrealized holding loss of $3.8
million.
The Mortgage Warehouse Facilities bear interest on a weighted-average
basis of approximately 89 basis points above LIBOR. As of September 30, 2000,
the weighted average interest rate for the two facilities approximated 7.24%.
CFN has entered into several interest rate swaps agreements to hedge a portion
of the interest rate risk relating to a portion of the outstanding balance at
September 30, 2000. CFN believes that its interest rate risk related to the
Mortgage Warehouse Facilities has been partially mitigated by the use of
interest rate swaps. The effective weighted average interest rate for the
outstanding balance related to the Mortgage Warehouse Facilities as of September
30, 2000 was 7.79%.
In August 2000, the Company issued Triple Net Lease Mortgage Bonds,
Series 2000-A. The net-lease securitization resulted in the Company selling
$280.9 million in bonds, the proceeds of which were used to pay down
shorter-term debt and more appropriately match maturities of long-term assets
with long-term liabilities. The bonds are collateralized by 257 real estate
properties leased to national and regional restaurant operators. The bonds were
rated and classified into different classes resulting into a weighted average
interest rate of 8.82% and have a weighted average life of 10.13 years. Under
the terms of the bond indenture, monthly lease payments received from tenants
and available for debt service are generally required to be applied to the
senior bonds. The indenture relating to the bonds provides for an optional
redemption of the bonds at their remaining principal balance when the remaining
amounts due under the leases that serve as collateral for the bonds are less
than 10 percent of the aggregate initial amounts due under the leases.
At the time of the strategic alliance with Bank of America, the Company
terminated its $300 million line of credit and entered into a new $125 million
unsecured revolving credit facility and a $175 unsecured bridge financing. The
$175 million bridge facility was repaid from the proceeds of the net lease
securitization leaving the Company with the $125 million revolving credit
facility (the "Credit Facility"). At September 30, 2000, the outstanding balance
on the Credit Facility was $71 million. In connection with obtaining the Credit
Facility, the Company incurred commitment fees, legal fees and closing costs of
$2 million which were capitalized. Interest on advances under the Credit
Facility is determined according to (i) a tiered rate structure between 175 and
215 basis points above LIBOR (based upon the Company's overall leverage ratio)
or (ii) the lenders' prime rate plus 0.25%, whichever the Company selects at the
time of each advance.
The principal balance, together with all unpaid interest, is due in
full upon termination of the Credit Facility on June 15, 2002. The Company
believes, based on current terms, that the carrying value of its Credit Facility
at September 30, 2000 approximates fair value.
In October 1999, the Company entered into a secured credit facility
(the "Secured Credit Facility") in the amount of $147,000,000 which will expire
in October 2002. The proceeds of the Secured Credit Facility are intended to be
used for property acquisitions. Borrowings under the Secured Credit Facility
bear interest at the rate of commercial paper plus 56 basis points per annum. As
of September 30, 2000, the interest rate on the Secured Credit Facility was
6.72%, outstanding borrowings under the Secured Credit Facility were
approximately $85.6 million and the Secured Credit Facility was collateralized
by mortgages on 81 Properties and an assignment of rents.
The Company has initiated several interest rate swap agreements with
which it hedges the majority of the outstanding balance at September 30, 2000
against fluctuations in interest rates. The Company believes that its interest
rate risk related to the Secured Credit Facility has been mitigated by the use
of interest rate swaps. The effective interest rate for the outstanding balance
relating to the Secured Credit Facility as of September 30, 2000 was 6.99% per
annum.
In June 2000, CFN entered into a $43,750,000 senior subordinated note
payable ("Subordinated Note Payable") with Bank of America which provides CFN
additional working capital and the ability to receive advances to purchase and
develop properties and to fund mortgage loans. This note is subordinated to the
existing senior debt of the Company. The principal amount outstanding under the
Subordinated Note Payable bears interest at a rate of 8.5% per annum payable
quarterly. The principal balance, together with all unpaid interest, is due in
full upon maturity of the note in June 2007. The Company believes, based on
current terms, that the carrying value of its Subordinated Note Payable at
September 30, 2000 approximates fair value.
As previously stated, Bank of America holds a limited partnership
interest in CFN, which was issued as a result of Bank of America's contribution
of its franchise finance originations group. In addition, the Subordinated Note
Payable has a conversion feature that allows the bank, subsequent to a specified
conversion date, to have the note converted into an additional 19.94% limited
partnership interest in CFN.
Interest Rate Risk
As of September 30, 2000, the Company had $71,000,000, $85,616,992 and
$147,893,500 outstanding under its Credit Facility, Secured Credit Facility and
Mortgage Warehouse Facilities, respectively. The Company has exposure to
interest rate risk associated with the Credit Facility, Secured Credit Facility
and Mortgage Warehouse Facilities due to the variable interest rates. The
Company believes this risk has been partially mitigated with interest rate swap
agreements and an interest rate cap agreement to reduce the impact of changes in
interest rates on its floating rate debt.
The Company invests in certain financial instruments that are subject
to various forms of market risk such as interest rate fluctuations, credit risk
and prepayment risk. The Company believes that its primary exposure is the risk
of loss that may result from the potential change in the value of its mortgage
loans held for sale and investments held for sale as a result of changes in
interest rates.
Generally, from the time the fixed-rate mortgage loans are originated
and held until the time they are sold through a securitization, the Company
hedges against fluctuations in interest rates through the use of derivative
financial instruments (primarily interest rate swap contracts). The Company
terminates certain of these contracts upon securitization of the related
fixed-rate mortgage loans and, at that time, both the gain or loss on the sale
of the loans and the gain or loss on the termination of the interest rate swap
contracts will be measured and recognized in the consolidated statement of
operations. Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed upon
notional principal amount.
Management estimates that a one percent increase in long-term interest
rates as of September 30, 2000, would result in a corresponding decrease in the
fair value of its fixed rate loans and investments of approximately $7.5
million. This decline in fair value would be partially offset by an increase in
the fair value of certain interest rate swap positions of $4.2 million. In
addition, a one percent increase in short term interest rates for the nine
months ended September 30, 2000 would have resulted in additional interest costs
of approximately $1.8 million for the nine months ended September 30, 2000. This
sensitivity analysis contains certain simplifying assumptions (for example, it
does not consider the impact of changes in prepayment risk or credit spread
risk). Therefore, although it gives an indication of the Company's exposure to
interest rate changes at September 30, 2000, it is not intended to predict
future results and the Company's actual results will likely vary.
Capital Commitments
In connection with the acquisition of the 16 Properties under
construction or renovation at September 30, 2000, the Company entered into
development agreements with tenants which provide terms and specifications for
the construction or renovation of buildings the tenants have agreed to lease or
equipment financing the Company has agreed to provide. The agreements provide a
maximum amount of development costs (including the purchase price of the land
and closing costs) to be paid by the Company.
In the ordinary course of business, the Company has outstanding
commitments to qualified borrowers and tenants that are not reflected in the
accompanying condensed consolidated financial statements. These commitments, if
accepted by the potential borrowers, obligate the Company to provide funding.
The accepted and unfunded commitment totaled approximately $172,835,000 at
September 30, 2000 of which approximately $13,671,300 has been incurred as of
September 30, 2000. The primary source of funding will be the Mortgage Warehouse
Facilities augmented by the Subordinated Note Payable, the Credit Facility and
the Secured Credit Facility.
Cash and Cash Equivalents
At September 30, 2000 and December 31, 1999, the Company had
$33,521,029 and $46,011,592, respectively, invested in short-term highly-liquid
investments such as demand deposits at commercial banks and money markets with
less than a 30-day maturity date.
Liquidity Requirements
The Company expects to meet its short-term liquidity requirements,
other than for acquisition and development of Properties and investment in
Mortgage Loans and Secured Equipment Leases, primarily through cash flow
provided by operating activities and the Company's Credit Facility and Secured
Credit Facility. These short-term liquidity requirements consist of normal
recurring operating expenses, regular debt service requirements and
distributions to stockholders. The Company also intends to meet short-term
liquidity requirements for funding of property acquisitions and loans prior to
securitization using its Mortgage Warehouse Facilities to fund the acquisition
of Mortgage Loans and Properties. The Company will use the proceeds from the
subsequent securitization of these Mortgage Loans and Properties to repay the
Mortgage Warehouse Facilities.
The Company expects to meets its longer term liquidity requirements
through a combination of periodic securitizations of mortgage loans and
triple-net leases and short and long-term debt financing or equity financing.
Periodic securitization is an effective method for accessing capital and results
in the Company being less dependent on equity markets. In addition, the Company
will continue to evaluate an eventual listing of the Company's stock on the New
York Stock Exchange, which could permit the Company access to additional debt
and equity capital. As of November 8, 2000, the Company's long-term liquidity
requirements include the maturities of its Mortgage Warehouse Facilities in
2001, Credit Facility in 2002, Secured Credit Facility in 2002, Subordinated
Note Payable in 2007 and Bonds Payable through 2017.
The Company has 100 percent interest in subsidiaries (including CNL
Funding 2000-A, LP, CNL Funding 2001-A, LP, and CNL Restaurant Bond Holdings,
LP) or investments in entities (including CNL Funding 99-1, LP and CNL Funding
98-1, LP) that were or may be established as bankruptcy remote entities to
facilitate asset securitization. In connection therewith, assets have been or
will be transferred directly or indirectly by the Company or an affiliate to
such subsidiaries or entities. These bankruptcy remote entities are separate
legal entities whose assets are not available to satisfy the claims of creditors
of the Company, any subsidiary or any other affiliates.
During the nine months ended September 30, 2000, the Company used cash
from operations (which includes cash received from tenants and interest and
other income received, less cash paid for operating expenses and funds used for
investment in mortgage loans) of $49,906,204. During the nine months ended
September 30, 1999, the Company generated cash from operations of $39,347,255.
As a result of the merger with CNL Financial Services, Inc. and CNL Financial
Corporation and subsidiaries, (collectively, "CNL Restaurant Financial Services
Group"), the Company became subject to Generally Accepted Accounting Principles
which require that the Company's investment in Mortgage Loans be classified as
an operating activity for financial reporting purposes. If the Company's
investment in mortgage loans were excluded from the nine months operating
activities, the Company would have generated an additional $33 million in cash
proceeds. The Company declared and paid distributions to its stockholders of
$49,747,192 and $43,496,424 during the nine months ended September 30, 2000 and
1999, respectively. No amounts distributed or to be distributed to the
stockholders as of November 8, 2000, are required to be or have been treated by
the Company as a return of capital for purposes of calculating the stockholders'
return on their invested capital. The Company intends to continue to make
distributions on a quarterly basis to its stockholders.
Results of Operations
The Company's financial performance in the third quarter of 2000
resulted in $3.6 million in net income as compared to a $66.2 million net loss
in 1999. Net income for the nine months ended September 30, 2000 increased to
$11.6 million compared to a $43.3 million loss for the comparable period in
1999. The financial performance in 1999 was impacted by a $76.4 million non-cash
charge resulting from the acquisition of the external advisor on September 1,
1999.
The Company earned $62,514,049 in rental income from operating leases
and earned income from direct financing leases from 705 Properties and 44
Secured Equipment Leases structured as leases during the nine months ended
September 30, 2000, and $44,020,989 from 614 Properties and 61 Secured Equipment
Leases structured as leases during the nine months ended September 30, 1999
($22,704,981 and $16,120,095 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively). The increase during the quarter and
nine months ended September 30, 2000, as compared to the quarter and nine months
ended September 30, 1999, was attributable to the Company's investment in
restaurant properties increasing from approximately $756,481,260 at September
30, 1999 to $887,888,149 at September 30, 2000.
The Company also earned $10,923,798 and $4,136,067 in interest income
from Mortgage Loans and Secured Equipment Leases structured as loans during the
nine months ended September 30, 2000 and 1999, respectively ($5,804,817 and
$2,095,347 of which were earned during the quarters ended September 30, 2000 and
1999, respectively). The increase in interest income from Mortgage Loans and
Secured Equipment Leases during the quarter and nine months ended September 30,
2000, as compared to the quarter and nine months ended September 30, 1999, was
attributable to the Company's increase in mortgage loans to approximately
$188,389,000 at September 30, 2000 from $122,299,000 at September 30, 1999.
Interest income reflects adjustments to reflect reductions in fixed rate loan
values that result from rising interest rates, or any recoveries of such
reductions when interest rates decrease. Interest income in the quarters ended
September 30, 2000 and 1999 reflect $1,811,670 and $54,486, respectively, of
such adjustments.
During the nine months ended September 30, 2000 and 1999, the Company
earned $7,133,151 and $3,498,586, respectively, in investment and interest
income from investments in franchise loan certificates, residual interests in
loan sales, money market accounts or other short-term, highly liquid investments
($2,141,897 and $1,347,926 of which was earned during the quarters ended
September 30, 2000 and 1999, respectively). The increase in investment and
interest income for the quarter and nine months ended September 30, 2000, as
compared to the quarter and nine months ended September 30, 1999, was
attributable to the acquisition of approximately $53.6 million in non-investment
grade securities resulting from the merger with CNL Restaurant Financial
Services Group and the November 1999 securitization. During the quarter and nine
months ended September 30, 2000, the Company recorded an unrealized holding loss
of $3.8 million on its investment in the off-balance sheet loan sale facility.
During the nine months ended September 30, 2000 and 1999, the Company
earned $3,626,430 and $425,606, respectively in other income ($1,160,093 and
$367,525 of which was earned during the quarters ended September 30, 2000 and
1999, respectively). The increase in other income for the quarter and nine
months ended September 30, 2000, as compared to the quarter and nine months
ended September 30, 1999, was primarily attributable to servicing and fee income
earned on the Company's expanded loan portfolio resulting from the merger with
CNL Financial Services on September 1, 1999.
Expenses
General and administrative expenses were approximately $14,480,000 and
$3,514,000 for the nine months ended September 30, 2000 and 1999, respectively
including approximately $5,404,000 and $1,713,000 applicable to the quarter
ended September 30, 2000 and 1999, respectively. The asset management fees to
related party were $0 and approximately $2,479,000 for the nine months ended
September 30, 2000 and 1999, respectively including $0 and approximately
$797,000 applicable to the quarter ended September 30, 2000 and 1999
respectively. In September 1999, the Company acquired the Advisor and became
internally advised. While the Company no longer incurs external expenses for
asset management services, those expenses now impact the Company through direct
payments of salaries, benefits and other expenses. Certain expenses previous
capitalized when incurred through the external Advisor are now required to be
expensed as period costs. The current year securitization of net leases coupled
with the alliance with Bank of America has created a substantial increase in the
Company's ability to expand through property acquisitions and lending
activities. The Company also continues to develop its network to gain from the
Bank of America products that can be offered to Company clients.
Interest expense was approximately $30,142,000 and $3,585,000 for the
nine months ended September 30, 2000 and 1999, respectively, including
$11,854,000 and $3,585,000 applicable to the quarters ended September 30, 2000
and 1999, respectively. The Company has continued to expand its operations
through increased property acquisitions and the origination of mortgage loans
that were substantially funded through the Mortgage Warehouse Facilities. In
addition the Company has utilized its access to debt to finance certain costs
associated with the Company's strategic initiatives, including expenses
associated with the transition to an internally advised real estate investment
trust ("REIT"), the proposed merger with the CNL Income Funds that was
subsequently withdrawn, and costs associated with the new strategic direction
currently underway with Bank of America as a partner. The overall level of debt
has increased accordingly creating the increased interest expense between
reporting periods.
Property expenses were approximately $3,177,000 and $592,000 for the
nine months ended September 30, 2000 and 1999, respectively, including
approximately $1,509,000 and $148,000 applicable to the quarters ended September
30, 2000 and 1999, respectively. The Company is continuing to expand its
portfolio of leased properties and experiences an ongoing level of vacancies,
delinquencies, or other property matters resulting in bad debt, legal and other
professional expenses. The increase in the quarter and nine months ended
September 30, 2000, as compared to the quarter and nine months ended September
30, 1999, was the result of servicing a portfolio that increased from 614
Properties at September 30, 1999 to 705 Properties at September 30, 2000. Also
impacting results was the recording of bad debt expense of approximately
$362,000 and $1,304,000 during the quarter and nine months ended September 30,
2000, respectively, as compared to approximately $37,000 during the nine months
ended September 30, 1999. No bad debt expense was recorded for the quarter ended
September 30, 1999. Management continues to actively seek resolution for tenants
experiencing financial difficulties, and solicits new tenants or buyers for
affected properties in an attempt to return the investment to productive status.
Depreciation and amortization expenses were approximately $11,899,000
and $6,267,000 for the nine months ended September 30, 2000 and 1999
respectively, including approximately $4,156,000 and $2,555,000 applicable to
the quarters ended September 30, 2000 and 1999 respectively. Leased properties
subject to depreciation have increased consistently throughout the past year.
Goodwill associated with the September 1, 1999 acquisition of the debt
operations and with the issuance of limited partnership interests to Bank of
America and CNL Financial Group, Inc. have resulted in increased amortization of
goodwill compared to the prior periods.
Transaction costs were approximately $8,010,000 and $1,104,000 for the
nine months ended September 30, 2000 and 1999 respectively, including
approximately $1,307,000 and $621,000 applicable to the quarters ended September
30, 2000 and 1999 respectively. Transaction costs reflect the costs associated
with the proposed merger with the CNL Income Funds that was subsequently
withdrawn. Costs also include items associated with the new strategic direction
currently underway with Bank of America as a partner, including the write-off of
unamortized loan issuance costs relative to the repayment and termination of the
former line of credit upon the creation of the new Credit Facility.
As described above, the quarter and nine months ended September 30,
1999 included a non-cash expense of approximately $76,384,000 associated with
the acquisition of CNL Fund Advisors, Inc., the Company's external advisor from
a related party.
Dispositions
During the quarters ended September 30, 2000 and 1999, the Company sold
Properties resulting in losses of $121,265 and $368,963, respectively, for
financial reporting purposes. During the nine months ended September 30, 2000
and 1999, the Company sold additional Properties resulting in gains of $198,682
and losses of $201,843, respectively for financial reporting purposes.
Provisions for Losses on Assets
During the quarter and nine months ended September 30, 2000, the Company
recorded provisions for losses on assets of $673,067 and $847,708, respectively,
for financial reporting purposes. During the quarter ended September 30, 1999,
the Company reclassified $136,904 previously recorded as a provision for loss on
asset, to an actual loss on sale of assets due to the actual sale of a Property
during the quarter ended September 30, 1999. During the nine months ended
September 30, 1999, the Company recorded provisions for losses on assets of
$403,618 for financial reporting purposes. The allowances represent the
difference between the carrying value of the Properties at September 30, 2000
and 1999 and the fair market value of these Properties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information regarding the Company's market risk at December 31, 1999 is
included in its Annual Report on Form 10-K for the year ended December 31, 1999.
The material changes in the Company's market risk are discussed above.
Information regarding the Company's market risk relating to changes in interest
rates are incorporated herein by reference to Item 2. "Liquidity and Capital
Resources Debt Financing Interest Rate Risk."
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
2.1 Agreement and Plan of Merger, by and among the Registrant,
CFA Acquisition Corp., CNL Fund Advisors, Inc. and CNL
Group, Inc., dated March 11, 1999 (Included as Exhibit
10.38 to the Registrant's Registration Statement No.
333-74329 on Form S-4 (the "Form S-4") as originally filed
and incorporated herein by reference).
2.2 Agreement and Plan of Merger, by and among the Registrant,
CFC Acquisition Corp., CFS Acquisition Corp., CNL Financial
Corp., CNL Financial Services, Inc., CNL Group, Inc., Five
Arrows Realty Securities L.L.C., Robert A. Bourne, Curtis
B. McWilliams and Brian Fluck, dated March 11, 1999
(Included as Exhibit 10.39 to the Form S-4 as originally
filed and incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and Restated
Articles of Incorporation, as amended (Included as Exhibit
3.1 to the Registrant's Form 10-Q for the quarter ended
June 30, 1999 and incorporated herein by reference).
3.2 CNL American Properties Fund, Inc. Amended and Restated
Bylaws (Included as Exhibit 3.2 to the Registrant's
Registration Statement No. 333-37657 on Form S-11 and
incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (filed herewith).
4.1 Form of Stock Certificate (Included as Exhibit 4.5 to the
Registrant's Registration Statement No. 33-78790 on Form
S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April 18,
1995, between CNL American Properties Fund, Inc. and each
of James M. Seneff, Jr., Robert A. Bourne, G. Richard
Hostetter, J. Joseph Kruse, Richard C. Huseman, John T.
Walker, Jeanne A. Wall, Lynn E. Rose and Edgar J.
McDougall, dated as of January 27, 1997 between CNL
American Properties Fund, Inc. and Steven D. Shackelford,
and dated as of February 18, 1998, between CNL American
Properties Fund, Inc. and Curtis B. McWilliams (Included as
Exhibit 10.9 to the Registrant's Registration Statement No.
333-15411 on Form S-11 and incorporated herein by
reference).
10.2 Amended and Restated Agreement of Limited Partnership of
CNL APF Partners, LP (Included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated herein by
reference).
10.3 Amended and Restated Credit Agreement by and among CNL APF
Partners, LP, Registrant, First Union National Bank, First
Union Capital Markets Group, Banc of America Securities
LLC, NationsBank, N.A., The Chase Manhattan Bank and other
financial institutions, dated June 9, 1999 (Included as
Exhibit 10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit Agreement
dated as of December 31, 1999 between CNL APF Partners, LP
and First Union National Bank, as Agent (Included as
Exhibit 10.4 to the Registrant's Form 10-K for the year
ended December 31, 1999 (the "1999 10-K") and incorporated
herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement dated
as of October 14, 1999 between CNL APF Partners, LP and
Neptune Funding Corporation (filed as Exhibit 10.5 to the
1999 10-K and incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security Agreement
dated as of September 18, 1998, and Amended Agreement dated
as of August 30, 1999 between CNL APF Partners, LP and
Prudential Securities Credit Corporation (filed as Exhibit
10.6 to the 1999 10-K and incorporated herein by
reference).
10.7 1999 Performance Incentive Plan (Included as Exhibit 10.1
to Amendment No. 1 to the Form S-4 and incorporated herein
by reference).
10.8 Registration Rights Agreement by and among the Registrant,
Robert A. Bourne, Curtis B. McWilliams, John T. Walker,
Howard Singer, Steven D. Shackelford and CNL Group, Inc.,
dated as of March 11, 1999 (Included as Exhibit 10.40 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference).
10.9 Registration Rights Agreement by and among the Registrant,
Five Arrows Realty Securities L.L.C., James M. Seneff, Jr.,
Robert A. Bourne, Curtis B. McWilliams and CNL Group, Inc.,
dated as of March 11, 1999 (Included as Exhibit 10.41 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference).
10.10 Employment Agreement by and between Curtis B. McWilliams
and the Registrant dated September 15, 1999 (Included as
Exhibit 10.42 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.11 Employment Agreement by and between Steven D. Shackelford
and the Registrant dated September 15, 1999 (Included as
Exhibit 10.43 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker and the
Registrant dated September 15, 1999 (Included as Exhibit
10.44 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.13 Employment Agreement by and between Howard J. Singer and
the Registrant dated September 15, 1999 (Included as
Exhibit 10.45 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and the
Registrant dated September 15, 1999 (Included as Exhibit
10.46 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin and
the Registrant dated September 15, 1999 (Included as
Exhibit 10.47 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J. Neville and
the Registrant, dated September 15, 1999 (Included as
Exhibit 10.48 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (Included as Exhibit
10.56 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.18 Amended and Restated Credit and Reimbursement Agreement by
and among CNL APF Partners, LP, CNL APF LP Corp., CNL APF
GP Corp., Bank of America, N.A. and Bank of America
Securities LLC, dated as of June 15, 2000 (filed herewith).
27 Financial Data Schedule (Filed herewith).
(b) Reports on Form 8-K. Inapplicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 13th day of November, 2000.
CNL AMERICAN PROPERTIES FUND, INC.
By: /s/ Curtis B. McWilliams
-------------------------------------
CURTIS B. MCWILLIAMS
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Steven D. Shackelford
-------------------------------------
STEVEN D. SHACKELFORD
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger, by and among the Registrant,
CFA Acquisition Corp., CNL Fund Advisors, Inc. and CNL
Group, Inc., dated March 11, 1999 (Included as Exhibit
10.38 to the Registrant's Registration Statement No.
333-74329 on Form S-4 (the "Form S-4") as originally filed
and incorporated herein by reference).
2.2 Agreement and Plan of Merger, by and among the Registrant,
CFC Acquisition Corp., CFS Acquisition Corp., CNL Financial
Corp., CNL Financial Services, Inc., CNL Group, Inc., Five
Arrows Realty Securities L.L.C., Robert A. Bourne, Curtis
B. McWilliams and Brian Fluck, dated March 11, 1999
(Included as Exhibit 10.39 to the Form S-4 as originally
filed and incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and Restated
Articles of Incorporation, as amended (Included as Exhibit
3.1 to the Registrant's Form 10-Q for the quarter ended
June 30, 1999 and incorporated herein by reference).
3.2 CNL American Properties Fund, Inc. Amended and Restated
Bylaws (Included as Exhibit 3.2 to the Registrant's
Registration Statement No. 333-37657 on Form S-11 and
incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (filed herewith).
4.1 Form of Stock Certificate (Included as Exhibit 4.5 to the
Registrant's Registration Statement No. 33-78790 on Form
S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April 18,
1995, between CNL American Properties Fund, Inc. and each
of James M. Seneff, Jr., Robert A. Bourne, G. Richard
Hostetter, J. Joseph Kruse, Richard C. Huseman, John T.
Walker, Jeanne A. Wall, Lynn E. Rose and Edgar J.
McDougall, dated as of January 27, 1997 between CNL
American Properties Fund, Inc. and Steven D. Shackelford,
and dated as of February 18, 1998, between CNL American
Properties Fund, Inc. and Curtis B. McWilliams (Included as
Exhibit 10.9 to the Registrant's Registration Statement No.
333-15411 on Form S-11 and incorporated herein by
reference).
10.2 Amended and Restated Agreement of Limited Partnership of
CNL APF Partners, LP (Included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated herein by
reference).
10.3 Amended and Restated Credit Agreement by and among CNL APF
Partners, LP, Registrant, First Union National Bank, First
Union Capital Markets Group, Banc of America Securities
LLC, NationsBank, N.A., The Chase Manhattan Bank and other
financial institutions, dated June 9, 1999 (Included as
Exhibit 10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit Agreement
dated as of December 31, 1999 between CNL APF Partners, LP
and First Union National Bank, as Agent (Included as
Exhibit 10.4 to the Registrant's Form 10-K for the year
ended December 31, 1999 (the "1999 10-K") and incorporated
herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement dated
as of October 14, 1999 between CNL APF Partners, LP and
Neptune Funding Corporation (filed as Exhibit 10.5 to the
1999 10-K and incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security Agreement
dated as of September 18, 1998, and Amended Agreement dated
as of August 30, 1999 between CNL APF Partners, LP and
Prudential Securities Credit Corporation (filed as Exhibit
10.6 to the 1999 10-K and incorporated herein by
reference).
10.7 1999 Performance Incentive Plan (Included as Exhibit 10.1
to Amendment No. 1 to the Form S-4 and incorporated herein
by reference).
10.8 Registration Rights Agreement by and among the Registrant,
Robert A. Bourne, Curtis B. McWilliams, John T. Walker,
Howard Singer, Steven D. Shackelford and CNL Group, Inc.,
dated as of March 11, 1999 (Included as Exhibit 10.40 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference).
10.9 Registration Rights Agreement by and among the Registrant,
Five Arrows Realty Securities L.L.C., James M. Seneff, Jr.,
Robert A. Bourne, Curtis B. McWilliams and CNL Group, Inc.,
dated as of March 11, 1999 (Included as Exhibit 10.41 to
Amendment No. 1 to the Form S-4 and incorporated herein by
reference).
10.10 Employment Agreement by and between Curtis B. McWilliams
and the Registrant dated September 15, 1999 (Included as
Exhibit 10.42 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.11 Employment Agreement by and between Steven D. Shackelford
and the Registrant, dated September 15, 1999 (Included as
Exhibit 10.43 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.44 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.13 Employment Agreement by and between Howard J. Singer and
the Registrant, dated September 15, 1999 (Included as
Exhibit 10.45 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and the
Registrant, dated September 15, 1999 (Included as Exhibit
10.46 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin and
the Registrant, dated September 15, 1999 (Included as
Exhibit 10.47 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J. Neville and
the Registrant, dated September 15, 1999 (Included as
Exhibit 10.48 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (Included as Exhibit
10.56 to Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.18 Amended and Restated Credit and Reimbursement Agreement by
and among CNL APF Partners, LP, CNL APF LP Corp., CNL APF
GP Corp., Bank of America, N.A. and Bank of America
Securities LLC, dated as of June 15, 2000 (filed herewith).
27 Financial Data Schedule (Filed herewith).
(b) Reports on Form 8-K. Inapplicable.
