424(b)(3)
No. 33-90998
CNL INCOME FUND XVII, LTD.
AND
CNL INCOME FUND XVIII, LTD.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated August 11, 1995 and the Prospectus Supplement dated July 31,
1996. Capitalized terms used in this Supplement have the same meaning as in
the Prospectus unless otherwise stated herein.
All subscriptions are for the purchase of Units of CNL Income Fund XVII,
Ltd. ("CNL XVII"). No offers are being made nor are the General Partners
accepting subscriptions for Units of CNL Income Fund XVIII, Ltd. THE
ACQUISITION OF UNITS OF ONE PARTNERSHIP WILL NOT ENTITLE THE INVESTOR TO ANY
OWNERSHIP INTEREST IN THE OTHER PARTNERSHIP OR ITS PROPERTIES.
Information as to proposed properties for which CNL XVII has received
initial commitments and as to the number and types of Properties acquired by
CNL XVII is presented as of July 25, 1996, and all references to commitments
or Property acquisitions should be read in that context. Proposed properties
for which CNL XVII receives initial commitments, as well as property
acquisitions that occur after July 25, 1996, will be reported in a subsequent
Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of July 25, 1996, CNL XVII had received total subscription proceeds
of $23,065,492 (2,306,549 Units) from 1339 limited partners. As of July 25,
1996, CNL XVII had invested or committed for investment approximately
$17,500,000 of such proceeds in 16 Properties and to pay Acquisition Fees and
miscellaneous Acquisition Expenses, leaving approximately $2,600,000 in
offering proceeds available for investment in Properties. As of July 25,
1996, CNL XVII had incurred $1,037,947 in Acquisition Fees to an Affiliate of
the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between July 11, 1996 and July 25, 1996, CNL XVII acquired one
Property. The Property is a Boston Market Property (in Troy, Ohio). For
information regarding the 15 Properties acquired by CNL XVII prior to July 11,
1996, see the Prospectus Supplement dated July 31, 1996.
In connection with the purchase of the Troy Property, CNL XVII, as
lessor, entered into a long-term lease agreement with an unaffiliated lessee.
The general terms of the lease agreement is described in the section of the
Prospectus entitled "Business - Description of Leases."
July 31, 1996 Prospectus Dated August 11, 1995
As of July 25, 1996, CNL XVII had initial commitments to acquire six
additional properties. 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 CNL XVII.
If acquired, the leases of all six of these properties are expected to be
entered into on substantially the same terms described in the Prospectus in
the section entitled "Business - Description of Leases," except as described
below.
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- ------------------- ------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Burger King 20 years; two five- 10.75% of Total for each lease None
Munster, IN year renewal Cost (1) year, (i) 8.5% of
Restaurant to be options annual gross sales
constructed minus (ii) the
minimum annual rent
for such lease year
Wendy's (2) 20 years; three 11.98% of CNL for each lease upon the expiration
Carmel Mountain, CA five-year renewal XVII's total cost year, (i) 6% of of the initial term
Existing restaurant options to purchase the annual gross sales of the lease and
building; increases times the Building during any renewal
by 8% after the Overage Multiplier period thereafter
fifth lease year (3) minus (ii) the (4)
and after every minimum annual rent
five years for such lease year
thereafter during
the lease term
Fazoli's 20 years; two five- 11.75% of Total for each lease at any time after
Warner Robbins, GA year renewal Cost (1); increases year, (i) 6% of the seventh lease
Restaurant to be options by 10% after the annual gross sales year
constructed fifth lease year minus (ii) the
and after every minimum annual rent
five years for such lease year
thereafter during
the lease term
Popeyes 20 years; two five- 11.75% of Total for each lease at any time after
Warner Robbins, GA year renewal Cost (1); increases year, (i) 6% of the seventh lease
Restaurant to be options by 10% after the annual gross sales year
constructed fifth lease year minus (ii) the
and after every minimum annual rent
five years for such lease year
thereafter during
the lease term
Burger King 20 years; two five- 11% of Total cost for each lease None
Lyons, IL year renewal (1) year, (i) 8.5% of
Restaurant to be options annual gross sales
constructed minus (ii) the
minimum annual rent
for such lease year
Denny's 20 years; two five- 10.625% of the for each lease during the eighth,
Pensacola, FL year renewal total cost to year, (i) 5% of tenth and twelfth
Restaurant to be options purchase the annual gross sales lease years only
renovated property; increases minus (ii) the
by 11% after the minimum annual rent
fifth lease year for such lease year
and after every
five years
thereafter during
the lease term
</TABLE>
[FN]
- -------------------------------------------
FOOTNOTES:
(1) The "Total Cost" is equal to the sum of (i) the purchase price of the
property, (ii) closing costs and (iii) actual development costs incurred
under the development agreement.
(2) CNL XVII anticipates owning only the building for this property. CNL
XVII will not own the underlying land; although, CNL XVII anticipates
entering into a tri-party agreement with the lessee and the landlord of
the land in order to provide CNL XVII with certain rights with respect
to the land on which the building is located.
(3) The "Building Overage Multiplier" is calculated as follows:
Building Overage Multiplier = (purchase price of the
building)/[purchase price of the building + (initial annual rent
due under the land lease/10.50%)]
(4) In the event that the aggregate amount of percentage rent paid by the
lessee to CNL XVII over the term of the lease shall equal or exceed 15%
of the purchase price of the building paid by CNL XVII, then the option
purchase price shall equal one dollar. In the event that the aggregate
amount of percentage rent paid by the lessee to CNL XVII over the term
of the lease shall be less than 15% of the purchase price paid by CNL
XVII, then the option purchase price shall equal the difference of 15%
of the purchase price of the building paid by CNL XVII, less the
aggregate amount of percentage rent paid by the lessee to CNL XVII over
the term of the lease.
The following table sets forth the location of the one Property acquired
by CNL XVII from July 11, 1996 through July 25, 1996, a description of the
competition, and a summary of the principal terms of the acquisition and lease
of each Property.
<TABLE>
PROPERTY ACQUISITIONS
From July 11, 1996 through July 25, 1996
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ----------- --------- ---------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BOSTON MARKET $857,487 07/24/96 07/2011; five $89,007; for each lease at any time
(the "Troy Property") (excluding five-year increases by 10% year after the after the
Existing restaurant closing renewal options after the fifth fifth lease year, fifth lease
costs) lease year and (i) 5% of annual year
The Troy Property is located after every five gross sales minus
within the Troy Towne Center, years thereafter (ii) the minimum
accessed via an access drive during the lease annual rent for
from West Main Street, in Troy, term such lease year
Miami County, Ohio, in an area
of primarily retail, commercial
and residential development.
Other fast-food and family-
style restaurants located in
proximity to the Troy Property
include a Bob Evans Restaurant,
a Steak N Shake, a KFC, an
Applebee's, a Burger King, a
Golden Corral Family Steakhouse
Restaurant, a McDonald's, a
Taco Bell, a Friendly's, an
Arby's, and a Wendy's.
</TABLE>
[FN]
- ---------------------------------------------
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion
(the building portion) of the Property acquired is set forth below:
Property Federal Tax Basis
-------- -----------------
Troy Property $604,000
(2) Minimum annual rent for the Troy Property became payable on the effective
date of the lease.
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JULY 11, 1996
THROUGH JULY 25, 1996
FOR A 12-MONTH PERIOD (UNAUDITED)
<CAPTION>
The following schedule represents pro forma unaudited estimates of taxable income of each Property
acquired by CNL XVII from July 11, 1996 through July 25, 1996, for the 12-month period commencing on the
date of the inception of the respective lease on such Property. The schedule should be read in light of the
accompanying footnotes.
These estimates do not purport to present actual or expected operations of CNL XVII 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 with an
aggregate purchase price in excess of 20% of the expected total net offering proceeds of CNL XVII.
Boston Market
Troy, OH
--------------
<S> <C>
Pro Forma Estimate of Taxable
Income:
Base Rent (1) $ 89,007
Management Fees (2) (890)
General and Administrative
Expenses (3) (4,450)
--------
Estimated Cash Available from
Operations 83,667
Depreciation Expense (4) (15,084)
--------
Pro Forma Estimate of Taxable
Income of CNL XVII $ 68,583
========
See Footnotes
</TABLE>
[FN]
- ---------------------------------------------
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Property will be managed pursuant to a management agreement between
CNL XVII and an Affiliate of the General Partners, pursuant to which the
Affiliate will receive an annual management fee in an amount equal to
one percent of the gross revenues that CNL XVII earns from its Property.
See "Management Compensation."
(3) Estimated at five percent of gross rental income based on the previous
experience of Affiliates of the General Partners with 16 public limited
partnerships which own properties similar to that owned by CNL XVII.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of the Property has been depreciated on the straight-line
method over 40 years.
