UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
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 33-90998
CNL INCOME FUND XVII, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3295393
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street, Suite 500
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART I
Item 1. Business
CNL Income Fund XVII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on February 10, 1995. The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on September 2, 1995, the
Partnership offered for sale up to $30,000,000 of limited partnership interests
(the "Units") (3,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
August 11, 1995. The offering terminated on September 19, 1996, at which date
the maximum offering proceeds of $30,000,000 had been received from investors
who were admitted to the Partnership as limited partners (the "Limited
Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food, family-style and casual dining
restaurant chains (the "Restaurant Chains"). Net proceeds to the Partnership
from its offering of Units, after deduction of organizational and offering
expenses, totalled $26,400,000. The Partnership acquired its first Property on
December 20, 1995, which was under construction. During the year ended December
31, 1996, the Partnership completed construction of the Property acquired in
1995, and acquired 23 additional Properties (two of which were under
construction as of December 31, 1996), including one Property owned by a joint
venture in which the Partnership is a co-venturer and one Property owned with an
affiliate, as tenants-in-common, at an aggregate cost of approximately
$23,406,500, including acquisition fees and certain acquisition expenses. As a
result of the above transactions, as of December 31, 1996, the Partnership had
acquired 24 Properties, including one Property owned by a joint venture in which
the Partnership is a co-venturer and one Property owned with an affiliate, as
tenants-in-common. During the period January 1, 1997, through March 6, 1997, the
Partnership had used the majority of its remaining net offering proceeds to
acquire two additional Properties, as tenants-in-common, with two separate
affiliates. In addition, the Partnership entered into a joint venture, CNL
Mansfield Joint Venture, with an affiliate of the General Partners, to own an
approximate 21 percent interest in the joint venture.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. In general, the General Partners plan to seek the sale of some of
the Properties commencing seven to 12 years after their acquisition. The
Partnership has no obligation to sell all or any portion of a Property at any
particular time, except as may be required under property purchase options
granted to certain lessees.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties provide for initial terms
ranging from 15 to 20 years (the average being 18 years) and expire between 2011
and 2016. All leases are on a triple-net basis, with the lessee responsible for
all repairs and maintenance, property taxes, insurance and utilities. The leases
of the Properties provide for minimum base annual rental payments (payable in
monthly installments) ranging from approximately $66,200 to $240,800. All of the
leases provide for percentage rent, based on sales in excess of a specified
amount. In addition, the majority of the leases provide that, commencing in
specified lease years (generally the sixth lease year), the annual base rent
required under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Certain lessees also have been granted options to purchase
Properties at the Property's then fair market value after a specified portion of
the lease term has elapsed. Under the terms of
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certain leases, the option purchase price may equal the Partnership's original
cost to purchase the Property (including acquisition costs), plus a specified
percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to the terms of the lease, the Partnership
first must offer the lessee the right to purchase the Property on the same terms
and conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
The leases for the two Properties acquired between January 1, 1997 and
March 6, 1997, as tenants-in-common, with separate affiliates, and the lease for
the Property acquired by CNL Mansfield Joint Venture, are substantially the same
as those described above.
Major Tenants
During 1996, four lessees, or group of affiliated lessees, of the
Partnership, (i) Golden Corral Corporation, (ii) National Restaurant
Enterprises, Inc., (iii) DenAmerica Corp. and (iv) RTM Indianapolis, Inc. and
RTM Southwest Texas, Inc., (hereinafter referred to as RTM, Inc.), each
contributed more than ten percent of the Partnership's total rental income. As
of December 31, 1996, Golden Corral Corporation, National Restaurant
Enterprises, Inc., DenAmerica Corp. and RTM, Inc. were each lessee under leases
relating to three restaurants. It is anticipated that based on the minimum
rental payments required by the leases, Golden Corral Corporation, DenAmerica
Corp. and Foodmaker, Inc. each will contribute more than ten percent of the
Partnership's total rental income in 1997 and subsequent years. In addition,
four Restaurant Chains, Golden Corral Family Steakhouse Restaurants, ("Golden
Corral"), Arby's, Denny's and Burger King, each accounted for more than ten
percent of the Partnership's total rental income during 1996. In subsequent
years, it is anticipated that Golden Corral, Jack in the Box, Denny's, Burger
King and Boston Market, each will contribute more than ten percent of the
Partnership's rental income to which the Partnership is entitled under the terms
of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income. As of December 31, 1996, no single
tenant or group of affiliated tenants leased Properties with an aggregate
carrying value, excluding acquisition fees and certain acquisition expenses, in
excess of 20 percent of the total assets of the Partnership.
Joint Venture Arrangements
In October 1996, the Partnership entered into an agreement to hold a
Boston Market Property as tenants-in-common with an affiliate of the General
Partners. The agreement provides for the Partnership and the affiliate to share
in the profits and losses of the Property and net cash flow from the Property in
proportion to each co-venturer's percentage interest in the Property. The
Partnership owns a 19.73% interest in this Property.
In addition in December 1996, the Partnership entered into a joint
venture arrangement, CNL/GC El Cajon Joint Venture, with an unaffiliated entity
to purchase and hold one Property. The Partnership owns an 80 percent interest
in this joint venture.
The joint venture arrangement provides for the Partnership and its
joint venture partner to share in all costs and benefits associated with the
joint venture in accordance with their respective percentage interests in the
joint venture. The Partnership and its joint venture partner are also jointly
and severally liable for all debts, obligations and other liabilities of the
joint ventures.
CNL/GC El Cajon Joint Venture has an initial term of 20 years and,
after the expiration of the initial term, continues in existence from year to
year unless terminated at the option of either of the joint venturers or by an
event of dissolution. Events of dissolution include the bankruptcy, insolvency
or termination of either of the joint venturers, sale of the Property owned by
the joint venture and mutual agreement of the Partnership and its joint venture
partner to dissolve the joint venture.
The Partnership has management control of CNL/GC El Cajon Joint
Venture. The joint venture agreement restricts any venturer's ability to sell,
transfer or assign its joint venture interest without first offering it for sale
to its joint venture partner, either upon such terms and conditions as to which
the venturers may agree or, in the event
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the venturers cannot agree, on the same terms and conditions as any offer from a
third party to purchase such joint venture interest.
Net cash flow from operations of CNL/GC El Cajon is distributed 80
percent to the Partnership and 20 percent to the other joint venture partner.
Any liquidation proceeds, after paying joint venture debts and liabilities and
funding reserves for contingent liabilities, will be distributed first to the
joint venture partners with positive capital account balances in proportion to
such balances until such balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.
In addition to the above joint venture agreements, during the period
January 1, 1997 through March 6, 1997, the Partnership entered into two
agreements to hold a Black-eyed Pea Property and a Burger King Property, each as
tenants-in-common, with affiliates of the General Partners. The agreements
provide for the Partnership and the affiliates to share in the profits and
losses of the Property in proportion to each co-venturer's percentage interest.
The Partnership owns an approximate 27 percent and 37 percent interest in the
Black-eyed Pea and Burger King Properties, respectively. In addition, the
Partnership also acquired a 21 percent interest in CNL Mansfield Joint Venture,
with an affiliate of the General Partners, to purchase and hold one Property.
Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food, family-style and casual dining restaurant business is
characterized by intense competition. The restaurants on the Partnership's
Properties compete with independently owned restaurants, restaurants which are
part of local or regional chains and restaurants in other well-known national
chains, including those offering different types of food and service.
The Partnership also will be in competition with other persons and
entities both to locate suitable Properties to acquire and to locate purchasers
for its Properties. The Partnership also will compete with other financing
sources such as banks, mortgage lenders and sale/leaseback companies for
suitable Properties and tenants.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who may
also perform certain services for the Partnership.
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Item 2. Properties
As of December 31, 1996, the Partnership owned 24 Properties, located
in 12 states. Reference is made to the Schedule of Real Estate and Accumulated
Depreciation filed with this report for a listing of the Property and its cost,
including acquisition fees and certain acquisition expenses.
During the period January 1, 1997 through March 6, 1997, the
Partnership acquired two additional Properties, as tenants-in-common, with two
separate affiliates, for cash, at a total cost of approximately $717,300. In
addition, the Partnership entered into a joint venture, CNL Mansfield Joint
Venture, with an affiliate of the General Partners. In conjunction therewith,
the Partnership contributed $163,964 in exchange for an approximate 21 percent
interest in the joint venture. The leases of these three Properties are
substantially the same as the leases described in Item 1. Business - Leases.
Description of Properties
Land. As of December 31, 1996, the Partnership's Property sites ranged
from approximately 18,200 to 91,400 square feet depending upon building size and
local demographic factors. Sites purchased by the Partnership are in locations
zoned for commercial use which have been reviewed for traffic patterns and
volume.
Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. The buildings
generally are rectangular and are constructed from various combinations of
stucco, steel, wood, brick and tile. As of December 31, 1996, the sizes of the
buildings owned by the Partnership ranged from approximately 2,100 to 11,300
square feet. All buildings on Properties acquired by the Partnership are
freestanding and surrounded by paved parking areas. Buildings are suitable for
conversion to various uses, although modifications may be required prior to use
for other than restaurant operations.
Generally, a lessee is required, under the terms of its lease
agreement, to make such capital expenditures, as may be reasonably necessary, to
refurbish buildings, premises, signs and equipment, so as to comply with the
lessee's obligations, if applicable, under the franchise agreement to reflect
the current commercial image of its Restaurant Chain. These capital expenditures
are required to be paid by the lessee during the term of the lease.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 1996 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Golden Corral Corporation leases three Golden Corral restaurants. The
initial term of each lease is 15 years (expiring in 2011) and the average
minimum base annual rent is approximately $157,100 (ranging from approximately
$127,800 to $190,000).
National Restaurant Enterprises, Inc. leases three Burger King
restaurants. The initial term of each lease is 20 years (expiring in 2016) and
the average minimum base annual rent is approximately $141,700 (ranging from
approximately $123,200 to $155,000).
DenAmerica Corp. leases three Denny's restaurants. The initial term of
each lease is 20 years (expiring between 2015 and 2016) and the average minimum
base annual rent is approximately $110,400 (ranging from approximately $98,700
to $130,000).
RTM, Inc. leases three Arby's restaurants. The initial term of each
lease is 20 years (expiring in 2016) and the average minimum base annual rent is
approximately $82,300 (ranging from approximately $79,400 to $84,700).
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
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Item 3. Legal Proceedings
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of March 6, 1997, there were 1,613 holders of record of the Units.
There is no public trading market for the Units, and it is not anticipated that
a public market for the Units will develop. Limited Partners who wish to sell
their Units may offer the Units for sale pursuant to the Partnership's
distribution reinvestment plan (the "Plan"), and Limited Partners who wish to
have their distributions used to acquire additional Units (to the extent Units
are available for purchase), may do so pursuant to such Plan. The General
Partners have the right to prohibit transfers of Units. Since inception, the
price to be paid for any Unit transferred pursuant to the Plan has been $10.00
per Unit. The price to be paid for any Unit transferred other than pursuant to
the Plan is subject to negotiation by the purchaser and the selling Limited
Partner. The Partnership will not redeem or repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 1996 other than pursuant
to the Plan. No transfer of Units took place during the period February 10, 1995
(date of inception) through December 31, 1995. A total of 4,000 Units were
transferred other than pursuant to the Plan for the year ended December 31,
1996.
High Low Average
------ ------ --------
First Quarter (1) (1) (1)
Second Quarter (1) (1) (1)
Third Quarter (1) (1) (1)
Fourth Quarter $10.00 $10.00 $10.00
(1) No transfer of Units took place during the quarter other than pursuant
to the Plan.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For the year ended December 31, 1996 and the period February 10, 1995
(date of inception) through December 31, 1995, the Partnership declared cash
distributions of $1,166,689 and $28,275, respectively, to the Limited Partners.
No amounts distributed to partners for the year ended December 31, 1996 and the
period February 10, 1995 (date of inception) through December 31, 1995, are
required to be or have been treated by the Partnership as a return of capital
for purposes of calculating the Limited Partners' return on their adjusted
capital contributions. No distributions have been made to the General Partners
to date. As indicated in the chart below, these distributions were declared
following the close of each of the Partnership's calendar quarters following the
first admission of Limited Partners to the Partnership. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis.
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Quarter Ended 1996 1995
------------- ---------- ---------
March 31 $115,044 $ -
June 30 211,692 -
September 30 349,869 -
December 31 490,084 28,275
For the period February 10, 1995 (date of inception) through November
3, 1995, the Partnership did not make any cash distributions because operations
had not commenced.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions for an annual fee.
Item 6. Selected Financial Data
February 10,
1995 (date
of inception)
Year Ended through
December 31, December 31,
1996 1995 (1)
-------------- ------------
Revenues (2) $ 1,444,503 $ 12,153
Net income 1,095,759 8,351
Cash distributions declared 1,166,689 28,275
Net income per Unit (3) 0.37 .02
Cash distributions declared per Unit (3) 0.39 .08
Weighted average number of Limited Partner
Units outstanding (3) 2,999,513 340,780
As of December 31,
1996 1995
------------ -----------
Total assets $28,675,007 $4,878,421
Partners' capital 26,320,146 4,642,233
(1) Operations did not commence until November 4, 1995, the date following
when the Partnership received the minimum offering proceeds of
$1,500,000, and such proceeds were released from escrow.
(2) Revenues include equity in earnings of the joint venture.
(3) Represents the weighted average number of Units outstanding during the
period the Partnership was operational.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on February 10, 1995, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurant Properties were to be constructed, which are leased primarily to
operators of selected national and regional fast-food, family-style and casual
dining Restaurant Chains. The leases are triple-net leases, with the lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 1996, the Partnership owned 24 Properties,
either directly or through joint venture arrangements.
Liquidity and Capital Resources
On September 2, 1995, the Partnership commenced an offering to the
public of up to 3,000,000 Units of limited partnership interest. The
Partnership's offering of Units terminated on September 19, 1996, at which time
the maximum proceeds of $30,000,000 (3,000,000 Units) had been received from
investors. The Partnership, therefore, will derive no additional capital
resources from the offering.
Net proceeds to the Partnership from its offering of Units, after
deduction of organizational and offering expenses, totalled $26,400,000. As of
December 31, 1995, approximately $1,539,000 had been used to invest in one
Property which was under construction at December 31, 1995, and to pay
acquisition fees and certain acquisition expenses. During 1996, the Partnership
completed construction of the Property acquired in 1995 and acquired 23
additional Properties (two which were under construction as of December 31,
1996), including one Property owned by a joint venture in which the Partnership
is a co-venturer and one Property, owned with an affiliate, as
tenants-in-common, at a cost of approximately $23,406,500, including acquisition
fees and miscellaneous acquisition expenses. As a result of the above
transactions, as of December 31, 1996, the Partnership had acquired 24
Properties, including one Property owned by a joint venture in which the
Partnership is a co-venturer, and one Property owned with an affiliate, as
tenants-in-common, and paid acquisition fees totalling $1,350,000 to an
affiliate of the General Partners.
As of March 6, 1997, the Partnership had used the majority of its
remaining net offering proceeds to acquire two additional Properties, as
tenants-in-common, with two separate affiliates. In addition, the Partnership
entered into a joint venture, CNL Mansfield Joint Venture, with an affiliate of
the General Partners, to own an approximate 21 percent interest in the joint
venture. The Partnership is presently negotiating to acquire one additional
Property, but as of March 6, 1997, had not acquired such Property.
Until Properties were acquired by the Partnership, all Partnership
proceeds were held in short-term, highly liquid investments which the General
Partners believed to have appropriate safety of principal. This investment
strategy provided high liquidity in order to facilitate the Partnership's use of
these funds to acquire Properties at such time as Properties suitable for
acquisition were located.
Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants, distributions from the
joint venture and interest received, less cash paid for expenses). Cash from
operations was $1,232,948 and $9,012 for the year ended December 31, 1996 and
the period February 10, 1995 (date of inception) through December 31, 1995,
respectively. The increase in cash from operations for the year ended December
31, 1996, is primarily a result of changes in income and expenses as discussed
in "Results of Operations" below.
None of the Properties owned by the Partnership is or may be
encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners. The Partnership will not
borrow under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners further have represented that
they will use their reasonable efforts to structure any borrowing so that it
will not constitute "acquisition indebtedness" for federal income tax purposes
and also will limit the Partnership's outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. In addition, the
Partnership will not borrow unless it first obtains an opinion of counsel that
such borrowing will not constitute acquisition indebtedness. Affiliates of the
General Partners from time to time incur
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certain operating expenses on behalf of the Partnership for which the
Partnership reimburses the affiliates without interest.
Currently, uninvested offering proceeds and rental income from the
Partnership's Properties are invested in money market accounts or other
short-term, highly liquid investments pending the Partnership's use of such
funds to pay Partnership expenses or to make distributions to partners. At
December 31, 1996, the Partnership had $4,716,719 invested in such short-term
investments as compared to $4,198,859 at December 31, 1995. The increase in the
amount invested in short-term investments reflects Limited Partner contributions
derived from the sale of Units during 1996. The funds remaining at December 31,
1996, after payment of accrued acquisition and construction costs and other
liabilities, will be used to purchase and develop the additional Properties
described above, to pay Limited Partner distributions and to meet the
Partnership's working capital and other needs.
During 1996 and the period February 10, 1995 (date of inception)
through December 31, 1995, affiliates of the General Partners incurred on behalf
of the Partnership $231,885 and $356,450, respectively, for certain
organizational and offering expenses, $69,835 and $30,424, respectively, for
certain acquisition expenses and $64,906 and $790, respectively, for certain
operating expenses. As of December 31, 1996 and 1995, the Partnership owed
$17,153 and $97,187, respectively, to related parties for such amounts,
accounting and administrative services and management fees. As of March 6, 1997,
the Partnership had reimbursed the affiliates all such amounts. Other
liabilities, including distributions payable, increased to $2,197,032 at
December 31, 1996, from $139,001 at December 31, 1995, as a result of an
increase in distributions payable to Limited Partners, costs incurred with
respect to the Properties under construction and unpaid at December 31, 1996,
and an increase in rents paid in advance and deferred rental income at December
31, 1996. The General Partners believe that the Partnership has sufficient cash
on hand to meet its current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the Limited Partners of $1,166,689 and $28,275 for the year ended December
31, 1996 and the period February 10, 1995 (date of inception) through December
31, 1995, respectively. This represents distributions of $0.39 and $0.08 per
Unit for each of these periods, respectively. No amounts distributed or to be
distributed to the Limited Partners for the year ended December 31, 1996 and the
period February 10, 1995 (date of inception) through December 31, 1995, are
required to be or have been treated by the Partnership as a return of capital
for purposes of calculating the Limited Partners' return on their adjusted
capital contributions. The Partnership intends to continue to make distributions
of cash available for distribution to Limited Partners on a quarterly basis.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the event a tenant's insurance policy
lapses or is insufficient to cover a claim relating to the Properties.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will generate cash flow in excess
of operating expenses. Partnership net income is expected to increase throughout
1997, as rental income increases, due to the acquisition of additional
Properties and due to the fact that the Properties that were under construction
at December 31, 1996, will become operational. Accordingly, the General Partners
believe that any anticipated decrease in the Partnership's liquidity in 1997,
due to its investment of available net offering proceeds in additional
Properties and the payment of construction costs relating to the Properties
under construction at December 31, 1996, will not have an adverse effect on the
Partnership's operations during 1997.
Due to low operating expenses, ongoing cash flow and the fact that the
Partnership does not enter into a commitment to purchase a Property until
sufficient cash is available for such purchase, the General Partners do not
believe that working capital reserves are necessary at this time. In addition,
because all leases of the Partnership's Properties are on a triple-net basis, it
is not anticipated that a permanent reserve for maintenance and repairs is
necessary at this time. To the extent, however, that the Partnership has
insufficient funds for such purposes, the General Partners will contribute to
the Partnership an aggregate amount of up to one percent of the offering
proceeds for maintenance and repairs. The General Partners have the right to
cause the Partnership to maintain reserves if, in their discretion, they
determine such reserves are required to meet the Partnership's working capital
needs.
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The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Results of Operations
No significant operations commenced until the Partnership received the
minimum offering proceeds of $1,500,000 on November 3, 1995.
The Partnership owned and leased one wholly owned Property during 1995
and 22 wholly owned Properties during 1996. In addition, during 1996, the
Partnership owned and leased one Property through a joint venture arrangement in
which the Partnership is a co-venturer, and owned and leased one Property with
an affiliate of the General Partners, as tenants-in-common. As of December 31,
1996, the Partnership owned, either directly or through joint venture
arrangements, 24 Properties which are subject to long-term, triple-net leases.
The leases of the Properties provide for minimum base annual rental payments
(payable in monthly installments) ranging from approximately $66,200 to
$240,800. All of the leases provide for percentage rent based on sales in excess
of a specified amount. In addition, the majority of the leases provide that,
commencing in specified lease years (generally the sixth lease year), the annual
base rent required under the terms of the lease will increase. For further
description of the Partnership's leases and Properties, see Item 1. Business -
Leases and Item 2. Properties, respectively.
During the year ended December 31, 1996, the Partnership earned
$1,185,279 in rental income from operating leases, earned income from direct
financing leases and contingent rental income from the 21 wholly owned
Properties which were operational at December 31, 1996. In addition, for the
year ended December 31, 1996, the Partnership earned $4,834 attributable to net
income earned by the unconsolidated joint venture in which the Partnership is a
co-venturer. Because the Partnership did not commence significant operations
until it received the minimum offering proceeds on November 3, 1995, and has not
yet acquired all of its Properties, Partnership revenues for the year ended
December 31, 1996, represent only a portion of revenues which the Partnership is
expected to earn during the full year in which the Partnership's Properties are
operational.
During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, four lessees, or group of
affiliated lessees, of the Partnership, (i) Golden Corral Corporation, (ii)
National Restaurant Enterprises, Inc., (iii) DenAmerica Corp. and (iv) RTM
Indianapolis, Inc. and RTM Southwest Texas, Inc., (hereinafter referred to as
RTM, Inc.), each contributed more than ten percent of the Partnership's total
rental income. As of December 31, 1996, Golden Corral Corporation, National
Restaurant Enterprises, Inc., DenAmerica Corp. and RTM, Inc. were each lessee
under leases relating to three restaurants. It is anticipated that based on the
minimum rental payments required by the leases, Golden Corral Corporation,
DenAmerica Corp. and Foodmaker, Inc. each will contribute more than ten percent
of the Partnership's total rental income in 1997 and subsequent years. In
addition, four Restaurant Chains, Golden Corral Family Steakhouse Restaurants,
("Golden Corral"), Arby's, Denny's and Burger King, each accounted for more than
ten percent of the Partnership's total rental income during 1996. In subsequent
years, it is anticipated that Golden Corral, Jack in the Box, Denny's, Burger
King and Boston Market, each will contribute more than ten percent of the
Partnership's rental income to which the Partnership is entitled under the terms
of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income.
During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, the Partnership also earned
$244,406 and $12,153, respectively, in interest income from investments in money
market accounts or other short-term, highly liquid investments. The increase in
interest income during 1996, as compared to 1995, is primarily attributable to
the increase in the amount of funds invested in short-term liquid investments as
a result of additional Limited Partner contributions during 1996. As of December
31, 1996, the majority of these funds had been invested in Properties;
therefore, the Partnership expects interest income to decrease in 1997.
Operating expenses, including depreciation and amortization expense,
were $348,744 and $3,802 for the year ended December 31, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995, respectively.
The increase in operating expenses during 1996 is primarily attributable to an
increase in depreciation expense as the result of the acquisition of additional
Properties during 1996, and the fact that the Property acquired during 1995
became operational during 1996. Operating expenses also increased during 1996,
as compared to 1995,
9
<PAGE>
as a result of an increase in administrative expenses associated with operating
the Partnership and its Properties and an increase in management fees as a
result of the increase in rental revenues, as described above.
Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement
requires that an entity review long-lived assets and certain identifiable
intangibles, to be held and used, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. Adoption of this standard had no material effect on the
Partnership's financial position or results of operations.
The Partnership's leases as of December 31, 1996, are triple-net leases
and contain provisions that the General Partners believe mitigate the adverse
effect of inflation. Such provisions include clauses requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic increases in base rent at specified times during the term of the
lease. Management expects that increases in restaurant sales volume due to
inflation and real sales growth should result in an increase in rental income
over time. Continued inflation also may cause capital appreciation of the
Partnership's Properties. Inflation and changing prices, however, also may have
an adverse impact on the sales of the restaurants and on potential capital
appreciation of the Properties.
Item 8. Financial Statements and Supplementary Data
10
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
----
Report of Independent Accountants 12
Financial Statements:
Balance Sheets 13
Statements of Income 14
Statements of Partners' Capital 15
Statements of Cash Flows 16
Notes to Financial Statements 18
11
<PAGE>
Report of Independent Accountants
To the Partners
CNL Income Fund XVII, Ltd.
We have audited the financial statements and the financial statement schedule of
CNL Income Fund XVII, Ltd. (a Florida limited partnership) listed in Item 14(a)
of this Form 10-K. These financial statements and financial statement schedule
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund XVII, Ltd. as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the year ended December 31, 1996 and the period February 10, 1995
(date of inception) through December 31, 1995 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
Orlando, Florida
February 10, 1997
12
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
ASSETS 1996 1995
------ ----------- ------------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $21,364,032 $ 402,244
Net investment in direct financing
leases 1,982,164 -
Investment in joint venture 201,171 -
Cash and cash equivalents 4,716,719 4,198,859
Receivables 63,253 410
Organization costs, less accumulated
amortization of $2,309 and $309 7,691 9,691
Accrued rental income 167,216 -
Other assets 172,761 267,217
----------- -----------
$28,675,007 $ 4,878,421
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,985 $ 42,609
Accrued construction costs payable 1,560,712 69,316
Distributions payable 490,084 27,076
Due to related parties 17,153 97,187
Rents paid in advance 52,769 -
Deferred rental income 90,482 -
----------- ----------
Total liabilities 2,214,185 236,188
Commitments (Note 11)
Minority interest 140,676 -
Partners' capital 26,320,146 4,642,233
----------- -----------
$28,675,007 $ 4,878,421
=========== ===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ ------------
<S> <C>
Revenues:
Rental income from operating
leases $1,029,891 $ -
Earned income from direct
financing leases 130,745 -
Contingent rental income 24,643 -
Interest 244,406 12,153
Other income 9,984 -
---------- ---------
1,439,669 12,153
---------- ----------
Expenses:
General operating and
administrative 144,728 3,360
Professional services 14,326 133
Management fee to related party 10,482 -
Depreciation and amortization 179,208 309
---------- ----------
348,744 3,802
---------- ----------
Income Before Equity in Earnings
of Unconsolidated Joint Venture 1,090,925 8,351
Equity in Earnings of Unconsoli-
dated Joint Venture 4,834 -
---------- ---------
Net Income $1,095,759 $ 8,351
========== ==========
Allocation of Net Income:
General partners $ (709) $ (3)
Limited partners 1,096,468 8,354
---------- ----------
$1,095,759 $ 8,351
========== ==========
Net Income Per Limited Partner
Unit $ 0.37 $ 0.02
========== ==========
Weighted Average Number of
Limited Partner Units
Outstanding 2,999,513 340,780
========== ==========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
<TABLE>
<CAPTION>
General Partners Limited Partners
------------------- ------------------------------------------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Losses butions butions Earnings Costs Total
------- -------- ----------- ----------- ---------- ----------- ------------
<S> <C>
Balance at Inception,
(February 10, 1995) $ - $ - $ - $ - $ - $ - $ -
Contributions from
general partners 1,000 - - - - - 1,000
Contributions from
limited partners - - 5,696,921 - - - 5,696,921
Distributions to limited
partners ($.08 per
limited partner unit) - - - (28,275) - - (28,275)
Syndication costs - - - - - (1,035,764) (1,035,764)
Net income - (3) - - 8,354 - 8,351
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1995 1,000 (3) 5,696,921 (28,275) 8,354 (1,035,764) 4,642,233
Contributions from
limited partners - - 24,303,079 - - - 24,303,079
Distributions to limited
partners ($0.39 per
limited partner unit) - - - (1,166,689) - - (1,166,689)
Syndication costs - - - - - (2,554,236) (2,554,236)
Net income - (709) - - 1,096,468 - 1,095,759
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1996 $1,000 $ (712) $30,000,000 $(1,194,964) $1,104,822 $(3,590,000) $26,320,146
====== ======= =========== =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ ------------
<S> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Cash Flows From Operating Activities:
Cash received from tenants $ 1,149,196 $ -
Distributions from unconsolidated
joint venture 4,985 -
Interest received 244,406 12,153
Cash paid for expenses (165,639) (3,141)
------------ ------------
Net cash provided by operating
activities 1,232,948 9,012
------------ ------------
Cash Flows From Investing Activities:
Additions to land and buildings on
operating leases (19,735,346) (332,928)
Investment in direct financing leases (1,784,925) -
Investment in joint venture (201,501) -
Increase in other assets - (221,282)
Other 410 (410)
------------ ------------
Net cash used in investing
activities (21,721,362) (554,620)
------------ ------------
Cash Flows From Financing Activities:
Reimbursement of acquisition, organiza-
tion and syndication costs paid by
related parties on behalf of the
Partnership (326,483) (347,907)
Contributions from general partners - 1,000
Contributions from limited partners 24,303,079 5,696,921
Contributions from minority interest 140,676 -
Distributions to limited partners (703,681) (1,199)
Payment of syndication costs (2,407,317) (604,348)
------------ ------------
Net cash provided by financing
activities 21,006,274 4,744,467
------------ ------------
Net Increase in Cash and Cash Equivalents 517,860 4,198,859
Cash and Cash Equivalents at Beginning of
Period 4,198,859 -
------------ -----------
Cash and Cash Equivalents at End of Period $ 4,716,719 $ 4,198,859
============ ============
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENT OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ ------------
<S> <C>
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $ 1,095,759 $ 8,351
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 176,995 -
Amortization 2,213 309
Equity in earnings of unconsolidated
joint venture, net of distributions 330 -
Increase in receivables (40,131) -
Decrease in net investment in direct
financing leases 16,345 -
Increase in accrued rental income (167,216) -
Increase in accounts payable and
accrued expenses 2,985 -
Increase in due to related parties,
excluding reimbursement of
acquisition, organization and
syndication costs paid on behalf
of the Partnership 2,596 352
Increase in rents paid in advance 52,769 -
Increase in deferred rental income 90,482 -
------------ -----------
Total adjustments 137,189 661
------------ ------------
Net Cash Provided by Operating Activities $ 1,232,948 $ 9,012
============ ============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Related parties paid certain acquisition,
organization and syndication costs
on behalf of the Partnership as follows:
Acquisition costs $ 69,836 $ 30,424
Organization costs - 10,000
Syndication costs 231,885 346,450
------------ ------------
$ 301,721 $ 386,874
============ ============
Distributions declared and unpaid at
December 31 $ 490,084 $ 27,076
============ ============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund XVII, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food, family-style and casual dining restaurant chains.
Under the terms of a registration statement filed with the Securities
and Exchange Commission, the Partnership was authorized to sell a
maximum of 3,000,000 units ($30,000,000) of limited partnership
interest. A total of 3,000,000 units ($30,000,000) of limited
partnership interest had been sold as of December 31, 1996.
The Partnership was a development stage enterprise from February 10,
1995 through November 3, 1995. Since operations had not begun,
activities through November 3, 1995, were devoted to organization of
the Partnership.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
the Corporate General Partner. The general partners have
responsibility for managing the day-to-day operations of the
Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's net
investment in the leases.
18
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals (including rental payments, if
any, required during the construction of a property) vary
during the lease term, income is recognized on a straight-line
basis so as to produce a constant periodic rent over the lease
term commencing on the date the property is placed in service.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. In contrast, deferred
rental income represents the aggregate amount of scheduled
rental payments to date (including rental payments due during
construction and prior to the property being placed in
service) in excess of income recognized on a straight-line
basis over the lease term commencing on the date the property
is placed in service.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, or deferred rental
income, will be removed from the accounts and gains or losses from
sales will be reflected in income. The general partners of the
Partnership review properties for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may
not be recoverable through operations. The general partners determine
whether an impairment in value has occurred by comparing the estimated
future undiscounted cash flows, including the residual value of the
property, with the carrying cost of the individual property. If an
impairment is indicated, a loss will be recorded for the amount by
which the carrying value of the asset exceeds its fair market value.
19
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
Investment in Joint Venture - The Partnership accounts for its 80
percent interest in CNL/GC El Cajon Joint Venture using the
consolidation method. Minority interest represents the minority joint
venture partner's proportionate share of the equity in the
Partnership's consolidated joint venture. All significant intercompany
accounts and transactions have been eliminated.
The Partnership's investment in a property in Fayetteville, North
Carolina, held as tenants-in-common, is accounted for using the equity
method since the Partnership shares control with affiliates which have
the same general partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks, certificates of deposit and money market
funds (some of which are backed by government securities). Cash
equivalents are stated at cost plus accrued interest, which
approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks, certificates of deposit and money market
funds may exceed federally insured levels; however, the Partnership has
not experienced any losses in such accounts. The Partnership limits
investment of temporary cash investments to financial institutions with
high credit standing; therefore, the Partnership believes it is not
exposed to any significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs are amortized over five years
using the straight-line method upon commencement of operations.
20
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment (Note 6).
Weighted Average Number of Limited Partner Units Outstanding - Net
income and distributions per limited partner unit are calculated based
upon the weighted average number of units of limited partnership
interest outstanding during the period the Partnership was operational.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounted principles. Actual results could differ from those
estimates.
New Accounting Standard - Effective January 1, 1996, the Partnership
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of LongLived Assets and for Long-Lived
Assets to Be Disposed Of." The statement requires that an entity review
long-lived assets and certain identifiable intangibles, to be held and
used, for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
Adoption of this standard had no material effect on the Partnership's
financial position or results of operations.
21
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
2. Leases:
The Partnership leases its land and buildings to operators of national
and regional fast-food and family-style restaurants. The leases are
accounted for under the provisions of Statement of Financial Accounting
Standards No. 13, "Accounting for Leases." Twenty of the leases are
classified as operating leases and three of the leases have been
classified as direct financing leases. For the leases classified as
direct financing leases, the building portions of the property leases
are accounted for as direct financing leases while the land portion of
the leases are operating leases. Substantially all leases are for 15 to
20 years and provide for minimum and contingent rentals. In addition,
the tenant pays all property taxes and assessments, fully maintains the
interior and exterior of the building and carries insurance coverage
for public liability, property damage, fire and extended coverage. The
lease options generally allow tenants to renew the leases for two to
four successive five-year periods subject to the same terms and
conditions as the initial lease. Most leases also allow the tenant to
purchase the property at fair market value after a specified portion of
the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1996 1995
----------- -----------
Land $10,148,827 $ 311,683
Buildings 11,168,540 -
----------- ---------
21,317,367 311,683
Less accumulated
depreciation (176,995) -
----------- ---------
21,140,372 311,683
Construction in progress 223,660 90,561
----------- ----------
$21,364,032 $ 402,244
=========== ==========
22
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
3. Land and Buildings on Operating Leases - Continued:
Some leases provide for escalating guaranteed minimum rents throughout
the lease term. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the year ended December 31, 1996, the Partnership recognized $167,216
of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1996:
1997 $ 1,952,331
1998 1,959,709
1999 1,972,275
2000 1,984,914
2001 2,041,471
Thereafter 27,891,100
-----------
$37,801,800
===========
Sinse renewal periods are exercisable at the option of the tenant, the
above table only presents future minimum lease payments due during the
initial lease terms. In addition, this table does not include any
amounts for future contingent rentals which may be received on the
leases based on a percentage of the tenant's gross sales. These amounts
do not include minimum lease payments that will become due when
properties under development are completed. (See Note 11.)
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1996 1995
----------- -----------
Minimum lease payments
receivable $ 4,301,029 $ -
Estimated residual
values 499,627 -
Less unearned income (2,818,492) -
----------- ----------
Net investment in
direct financing
leases $ 1,982,164 $ -
=========== ==========
23
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
4. Net Investment in Direct Financing Leases - Continued:
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1996:
1997 $ 224,495
1998 224,495
1999 224,495
2000 224,495
2001 224,495
Thereafter 3,178,554
----------
$4,301,029
==========
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).
5. Investment in Joint Venture:
In October 1996, the Partnership acquired an approximate 20 percent
interest in a property in Fayetteville, North Carolina, as
tenants-in-common, with an affiliate of the general partners that is
leased to an operator of a familystyle restaurant. The Partnership
accounts for its investment in this property using the equity method
since the Partnership shares control with an affiliate, and amounts
relating to its investment are included in investment in joint
ventures.
The following presents the combined, condensed financial information
for the property held as tenants-in-common with an affiliate at
December 31:
1996 1995
-------- -------
Land and building on operating
lease, less accumulated
depreciation $960,732 $ -
Cash 100 -
Accrued rental income 3,929 -
Liabilities 23 -
Partners' capital 964,738 -
Revenues 29,293 -
Net income 24,502 -
24
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
5. Investment in Joint Ventures - Continued:
The Partnership recognized income totalling $4,834 for the year ended
December 31, 1996 from this property held as tenants-in-common with an
affiliate.
6. Syndication Costs:
Syndication costs consisting of legal fees, commissions, the due
diligence expense reimbursement fee, printing and other expenses
incurred in connection with the offering totalled $3,590,000. These
offering expenses were charged to the limited partners' capital
accounts to reflect the net capital proceeds of the offering.
7. Allocations and Distributions:
Generally, distributions of net cash flow, as defined in the limited
partnership agreement of the Partnership, are made 95 percent to the
limited partners and five percent to the general partners; provided,
however, that for any particular year, the five percent of net cash
flow to be distributed to the general partners will be subordinated to
receipt by the limited partners in that year of an eight percent
noncumulative, noncompounded return on their aggregate invested capital
contributions (the "Limited Partners' 8% Return").
Generally, net income (determined without regard to any depreciation
and amortization deductions and gains and losses from the sale of
properties) is allocated between the limited partners and the general
partners first, in an amount not to exceed the net cash flow
distributed to the partners attributable to such year in the same
proportions as such net cash flow is distributed; and thereafter, 99
percent to the limited partners and one percent to the general
partners. All deductions for depreciation and amortization are
allocated 99 percent to the limited partners and one percent to the
general partners.
25
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
7. Allocations and Distributions - Continued:
Net sales proceeds from the sale of a property generally will be
distributed first to the limited partners in an amount sufficient to
provide them with the return of their invested capital contributions,
plus their cumulative Limited Partners' 8% Return. The general partners
will then receive a return of their capital contributions and, to the
extent previously subordinated and unpaid, a five percent interest in
all net cash flow distributions. Any remaining net sales proceeds will
be distributed 95 percent to the limited partners and five percent to
the General Partners.
Any gain from the sale of a property will be, in general, allocated in
the same manner as net sales proceeds are distributable. Any loss will
be allocated first, on a pro rata basis to the partners with positive
balances in their capital accounts; and thereafter, 95 percent to the
limited partners and five percent to the general partners.
During the year ended December 31, 1996 and during the period February
10, 1995 (date of inception) through December 31, 1995, the Partnership
declared distributions to the limited partners of $1,166,689 and
$28,275, respectively. No distributions have been made to the general
partners to date.
26
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
8. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the year
ended December 31, 1996 and the period February 10, 1995 (date of
inception) through December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
---------- -------
<S> <C>
Net income for financial
reporting purposes $1,095,759 $ 8,351
Depreciation for financial
reporting purposes in excess
of depreciation for tax
reporting purposes 13,226 -
Direct financing leases recorded
as operating leases for tax
reporting purposes 16,345 -
Equity in earnings of unconsolidated
joint venture for financial
reporting purposes in excess of
equity in earnings of unconsolidated
joint venture for tax
reporting purposes (479) -
Capitalization of administrative
expenses for tax reporting
purposes 11,940 3,493
Amortization for tax reporting
purposes in (excess of) less
than amortization for financial
reporting purposes (2,025) 309
Accrued rental income (167,216) -
Deferred rental income 90,176 -
Rents paid in advance 52,769 -
Other 4,469 -
---------- ---------
Net income for federal income
tax purposes $1,114,964 $ 12,153
========== ==========
</TABLE>
27
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of
CNL Securities Corp. and CNL Fund Advisors, Inc. The other individual
general partner, Robert A. Bourne, is the president of CNL Securities
Corp. and CNL Fund Advisors, Inc.
For the years ended December 31, 1996 and 1995, the Partnership
incurred $2,065,762 and $484,238, respectively, in syndication costs
due to CNL Securities Corp. for services in connection with selling
limited partnership interests. A substantial portion of these amounts
($2,359,831) was paid as commissions to other broker-dealers.
In addition, for the years ended December 31, 1996 and 1995, the
Partnership incurred $121,515 and $28,485, respectively, as a due
diligence expense reimbursement fee due to CNL Securities Corp. This
fee equals 0.5% of the limited partner contributions of $30,000,000.
The majority of this fee was reallowed to other broker-dealers for
payment of bona fide due diligence expenses.
Additionally, the Partnership incurred $1,093,639 and $256,361 for the
years ended December 31, 1996 and 1995, respectively, in acquisition
fees due to CNL Fund Advisors, Inc. for services in finding,
negotiating and acquiring properties on behalf of the Partnership.
These fees represent 4.5% of the limited partner capital contributions
of $30,000,000.
During the years ended December 31, 1996 and 1995, CNL Fund Advisors,
Inc. acted as manager of the Partnership's properties pursuant to a
management agreement with the Partnership. In connection therewith, the
Partnership agreed to pay CNL Fund Advisors, Inc. an annual management
fee of one percent of the sum of gross revenues from properties wholly
owned by the Partnership and the Partnership's allocable share of gross
revenues from joint ventures. The management fee, which will not exceed
fees which are competitive for similar services in the same geographic
area, may or may not be taken, in whole or in part as to any year, in
the sole discretion of CNL Fund Advisors, Inc. All or any portion of
the management fee not taken as to any fiscal year shall be deferred
without
28
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Related Party Transactions - Continued:
interest and may be taken in such other fiscal year as CNL Fund
Advisors, Inc. shall determine. The Partnership incurred a management
fee of $10,482 for the year ended December 31, 1996.
During the year ended December 31, 1996 and for the period February 10,
1995 (date of inception) through December 31, 1995, CNL Fund Advisors,
Inc. and its affiliates provided accounting and administrative services
to the Partnership (including accounting and administrative services in
connection with the offering of units) on a day-to-day basis. For the
year ended December 31, 1996 and the period February 10, 1995 (date of
inception) through December 31, 1995, the expenses incurred for these
services were classified as follows:
1996 1995
-------- --------
Syndication costs $177,683 $133,982
General operating and
administrative expenses 96,729 2,659
-------- --------
$274,412 $136,641
======== ========
29
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Related Party Transactions - Continued:
The due to related parties consisted of the following at December 31:
1996 1995
-------- ------
Due to CNL Securities Corp:
Commissions $ - $ 29,298
Due diligence expense
reimbursement fee - 1,723
-------- --------
- 31,021
-------- --------
Due to CNL Fund Advisors, Inc.
and its affiliates:
Expenditures incurred on
behalf of the Partnership 14,312 38,070
Acquisition fees - 15,511
Accounting and administra-
tive services 2,192 12,585
Management fee 649 -
-------- -------
17,153 66,166
-------- --------
$ 17,153 $ 97,187
======== ========
During the year ended December 31, 1996, the Partnership acquired from
affiliates of the general partners three properties, one of which was
held with another affiliate as tenants-in-common, for an aggregate
purchase price of $1,667,140. The affiliates of the general partners
had purchased and temporarily held title to these properties in order
to facilitate the acquisition of these properties by the Partnership.
The purchase prices paid by the Partnership represented the costs
incurred by the affiliates of the general partners to acquire the
properties, including closing costs.
30
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
10. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, and the respective
restaurant chains, each representing more than ten percent of the
Partnership's total rental and earned income for the year ended
December 31, 1996 and the period February 10, 1995 (date of inception)
through December 31, 1995:
1996 1995
-------- --------
Golden Corral Corporation
(operating Golden Corral
Family Steakhouse
Restaurants) $286,307 $ -
DenAmerica Corp. (operating
Denny's Restaurants) 250,535 -
National Restaurant
Enterprises, Inc.(operating
Burger King restaurants) 197,882 -
RTM Indianapolis, Inc. and
RTM Southwest, Texas, Inc.
(operating Arby's
Restaurants) 133,200 -
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership. However, the general partners believe that the risk
of such a default is reduced due to the essential or important nature
of these properties for the on-going operations of the lessees.
It is expected that the percentage of total rental and earned income
contributed by these lessees and restaurant chains will decrease as
additional Properties are acquired and leased during 1997.
31
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
11. Commitments:
The Partnership has entered into a development agreement with a tenant
which provides terms and specifications for the construction of a
building that the tenant has agreed to lease. The agreement provides a
maximum amount of development costs (including the purchase price of
the land and closing costs) to be paid by the Partnership. The
aggregate maximum development costs the Partnership has agreed to pay
is approximately $1,396,300, of which approximately $988,300 in land
and other costs had been incurred as of December 31, 1996. The building
under construction is currently expected to be operational by April
1997. The lease agreement for this property has substantially the same
terms as those described in Note 2.
In addition, in December 1996, the Partnership acquired an 80 percent
interest in CNL/GC El Cajon Joint Venture, for which the Partnership
accounts for this 80 percent interest using the consolidation method.
In conjunction therewith, the Partnership has agreed to fund 80
percent, or approximately $1,639,200 in development costs (including
the purchase price of land and closing costs) relating to the property
owned by the consolidated joint venture. As of December 31, 1996, the
Partnership had funded $855,202 of these costs. The building under
construction is currently expected to be operational by April 1997. The
lease agreement for this property has substantially the same terms as
those described in Note 2.
12. Subsequent Events:
In January 1997, the Partnership invested in a property in Akron, Ohio,
and a property in Corpus Christi, Texas, as tenants-in-common, with
affiliates of the general partners, at a total cost of $717,263. The
properties were acquired from affiliates of the general partners. In
connection therewith, the Partnership and its affiliates entered into
separate agreements whereby each co-venturer will share in the profits
and losses of these properties in proportion to their applicable
percentage interest. The Partnership owns an approximate 37% and 27%
interest in the properties in Akron, Ohio, and Corpus Christi, Texas,
respectively, held as tenants-in-common with affiliates of the general
partners.
32
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
12. Subsequent Events - Continued:
On February 5, 1997, the Partnership entered into a joint venture
arrangement, CNL Mansfield Joint Venture, with an affiliate of the
Partnership which has the same general partners, to hold one restaurant
property in Mansfield, Texas. The Partnership and its co-venture
partner each agreed to contribute $163,964 and $616,245, respectively,
to the joint venture. The Partnership and its co-venture partner expect
to have a 21 percent and 79 percent interest, respectively, in the
profits and losses of the joint venture. The Partnership will account
for its investment in this joint venture under the equity method since
the Partnership will share control with an affiliate of the general
partners.
33
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 50, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation in
1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc.
Mr. Seneff is Chief Executive Officer, and has been a director and registered
principal of CNL Securities Corp., which served as the managing dealer in the
Partnership's offering of Units, since its formation in 1979. Mr. Seneff also
has held the position of President and a director of CNL Management Company, a
registered investment advisor, since its formation in 1976, has served as Chief
Executive Officer and Chairman of the Board of CNL Investment Company, and Chief
Executive Officer and Chairman of the Board of Commercial Net Lease Realty, Inc.
since 1992, has served as the Chairman of the Board and the Chief Executive
Officer of CNL Realty Advisors, Inc. since its inception in 1991, served as
Chairman of the Board and Chief Executive Officer of CNL Income Fund Advisors,
Inc. since its inception in 1994 through December 31, 1995, has served as
Chairman of the Board and Chief Executive Officer of CNL Fund Advisors, Inc.
since its inception in 1994, and has held the position of Chief Executive
Officer and a director of CNL Institutional Advisors, Inc., a registered
investment advisor, since its inception in 1990. In addition, Mr. Seneff has
served as Chairman of the Board and Chief Executive Officer of CNL American
Properties Fund, Inc. since 1994, and has served as Chairman of the Board and
Chief Executive Officer of CNL American Realty Fund, Inc. since 1996 and of CNL
Real Estate Advisors, Inc. since January 1997. Mr. Seneff previously served on
the Florida State Commission on Ethics and is a former member and past Chairman
of the State of Florida Investment Advisory Council, which recommends to the
Florida Board of Administration investments for various Florida employee
retirement funds. The Florida Board of Administration, Florida's principal
investment advisory and money management agency, oversees the investment of more
than $40 billion of retirement funds. Since 1971, Mr. Seneff has been active in
the acquisition, development and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
joint venturer in over 100 real estate ventures involved in the financing,
acquisition, construction and rental of office buildings, apartment complexes,
restaurants, hotels and other real estate. Included in these real estate
ventures are approximately 65 privately offered real estate limited partnerships
in which Mr. Seneff, directly or through an affiliated entity, serves or has
served as a general partner. Also included are CNL Income Fund, Ltd., CNL Income
Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income
Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income
Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income
Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income
Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd. and CNL
Income Fund XVIII, Ltd. (the "CNL Income Fund Partnerships"), public real estate
limited partnerships with investment objectives similar to those of the
Partnership, in which Mr. Seneff serves as a general partner. Mr. Seneff
received his degree in Business Administration from Florida State University in
1968.
Robert A. Bourne, age 49, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.
(the managing dealer of the offering), President and a director of CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective
34
<PAGE>
January 1, 1996, CNL Income Fund Advisors, Inc., and President, Chief Investment
Officer and a director of CNL Institutional Advisors, Inc., a registered
investment advisor. Mr. Bourne also has served as a director since 1992, as
President from July 1992 to February 1996, and since February 1996, as Vice
Chairman of the Board of Directors, Secretary and Treasurer of Commercial Net
Lease Realty, Inc. In addition, Mr. Bourne has served as a director since its
inception in 1991, as President from 1991 to February 1996, as Secretary from
February 1996 to July 1996, and since February 1996, as Treasurer and Vice
Chairman of CNL Realty Advisors, Inc. In addition, Mr. Bourne has served as
President and a director of CNL American Properties Fund, Inc. since 1994, and
has served as President and a director of CNL American Realty Fund, Inc. since
1996 and of CNL Real Estate Advisors, Inc. since January 1997. Upon graduation
from Florida State University in 1970, where he received a B.A. in Accounting,
with honors, Mr. Bourne worked as a certified public accountant and, from
September 1971 through December 1978, was employed by Coopers & Lybrand,
Certified Public Accountants, where he held the position of tax manager
beginning in 1975. From January 1979 until June 1982, Mr. Bourne was a partner
in the accounting firm of Cross & Bourne and from July 1982 through January
1987, he was a partner in the accounting firm of Bourne & Rose, P.A., Certified
Public Accountants. Mr. Bourne, who joined CNL Securities Corp. in 1979, has
participated as a general partner or joint venturer in over 100 real estate
ventures involved in the financing, acquisition, construction and rental of
office buildings, apartment complexes, restaurants, hotels and other real
estate. Included in these real estate ventures are approximately 64 privately
offered real estate limited partnerships in which Mr. Bourne, directly or
through an affiliated entity, serves or has served as a general partner. Also
included are the CNL Income Fund Partnerships, public real estate limited
partnerships with investment objectives similar to those of the Partnership, in
which Mr. Bourne serves as a general partner.
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships.
CNL Fund Advisors, Inc., is a corporation organized in 1994 under the
laws of the State of Florida, and its principal office is located at 400 East
South Street, Suite 500, Orlando, Florida 32801. CNL Fund Advisors, Inc. is a
wholly owned subsidiary of CNL Group, Inc., a diversified real estate company,
and was organized to perform property acquisition, property management and other
services.
CNL Group, Inc., which is the parent company of the managing dealer,
CNL Securities Corp., and CNL Fund Advisors, Inc., is a diversified real estate
corporation organized in 1980 under the laws of the State of Florida. Other
subsidiaries and affiliates of CNL Group, Inc. include a property development
and management company, two investment advisory companies, and seven
corporations organized as strategic business units. James M. Seneff, Jr., an
individual General Partner of the Partnership, is the Chairman of the Board,
Chief Executive Officer, and a director of CNL Group, Inc. Mr. Seneff and his
wife own all of the outstanding shares of CNL Group, Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as members
of the Boards of Directors of those entities. The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.
John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc. From May 1992 to May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable television
network which was subsequently acquired by Gaylord Entertainment, where he was
responsible for overall financial and administrative management and planning.
From January 1990 through April 1992, Mr. Walker was Chief Financial Officer of
the First Baptist Church in Orlando, Florida. From April 1984 through December
1989, he was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge of audit and consulting services, and
from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior at Price
35
<PAGE>
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with a
B.S. in Accountancy and is a certified public accountant.
Lynn E. Rose, age 48, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993. In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She
has served as Chief Operating Officer, Vice President and Secretary of CNL
Corporate Services, Inc. since November 1994. Ms. Rose also has served as Chief
Financial Officer and Secretary of CNL Institutional Advisors, Inc. since its
inception in 1990, a director of CNL Realty Advisors, Inc. since its inception
in 1991, Secretary of CNL Realty Advisors, Inc. since its inception in 1991
(excluding February 1996 to July 1996), Treasurer of CNL Realty Advisors, Inc.
from 1991 to February 1996, Secretary and Treasurer of Commercial Net Lease
Realty, Inc. from 1992 to February 1996, Secretary of CNL Income Fund Advisors,
Inc. since its inception in 1994 to December 1995, and a director, Secretary and
Treasurer of CNL Fund Advisors, Inc. since 1994 and has served as a director,
Secretary and Treasurer of CNL Real Estate Advisors, Inc. since January 1997.
Ms. Rose also has served as Secretary and Treasurer of CNL American Properties
Fund, Inc. since 1994, and has served as Secretary and Treasurer of CNL American
Realty Fund, Inc. since 1996. Ms. Rose also currently serves as Secretary for
approximately 50 additional corporations. Ms. Rose oversees the management
information services, administration, legal compliance, accounting, tenant
compliance, and reporting for over 250 corporations, partnerships, and joint
ventures. Prior to joining CNL, Ms. Rose was a partner with Robert A. Bourne in
the accounting firm of Bourne & Rose, P.A., Certified Public Accountants. Ms.
Rose holds a B.A. in Sociology from the University of Central Florida and is a
registered financial and operations principal of CNL Securities Corp. She was
licensed as a certified public accountant in 1979.
Jeanne A. Wall, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior Vice President of CNL Securities Corp. In
this capacity, Ms. Wall serves as national marketing and sales director and
oversees the national marketing plan for the CNL investment programs. In
addition, Ms. Wall oversees the partnership administration and investor services
for programs offered through participating brokers. Ms. Wall also has served as
Senior Vice President of CNL Institutional Advisors, Inc., a registered
investment advisor, from 1990 to 1993, as Vice President of CNL Realty Advisors,
Inc. since its inception in 1991, as Vice President of Commercial Net Lease
Realty, Inc. since 1992, as Executive Vice President of CNL Income Fund
Advisors, Inc. from its inception in 1994 to December 1995, as Executive Vice
President of CNL Fund Advisors, Inc. since 1994, and as Executive Vice President
of CNL American Properties Fund, Inc. since 1994. In addition, Ms. Wall has
served as Executive Vice President of CNL Real Estate Advisors, Inc. since
January 1997 and as Executive Vice President of CNL American Realty Fund, Inc.
since 1996. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp. Ms. Wall
currently serves as a trustee on the board of the Investment Program Association
and on the Direct Participation Program committee for the National Association
of Securities Dealers (NASD).
Steven D. Shackelford, age 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial Officer
of CNL American Properties Fund, Inc. From March 1995 to July 1996, he was a
senior manager in the national office of Price Waterhouse where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he served as a
manager in the Price Waterhouse, Paris, France office serving several
multinational clients. Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the Orlando, Florida office of Price Waterhouse. Mr Shackelford
received a B.A. in Accounting, with honors, and a Masters of Business
Administration from Florida State University and is a certified public
accountant.
36
<PAGE>
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 6, 1997, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 6, 1997, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Partner Beneficial Ownership Percent of Class
---------------- --------------- -------------------- -----------------
<S> <C>
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
Limited Partnership Interests James M. Seneff, Jr. 2,500 Units 0.08%
Robert A. Bourne 2,500 Units 0.08%
-----
0.16%
=====
</TABLE>
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 1996, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
-------------------- ---------------------- -----------------------
<S> <C>
Selling commissions to CNL Commissions of 8.5% per Unit $2,065,762
Securities Corp., as managing on all Units sold, up to eight
dealer of the Partnership's percent of which may be
offering of Units reallowed to other dealers
with respect to Units sold by
such dealers.
Due diligence expense reim- Fee equal to 0.5% of gross $121,515
bursement fee to CNL offering proceeds, a portion
Securities Corp. of which may be reallowed to
other dealers and from which
all due diligence expenses
will be paid.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
-------------------- ---------------------- -----------------------
<S> <C>
Reimbursement to General Actual expenses incurred, $409,568
Partners and their affiliates except that the General
for organizational and Partners will pay all such
offering expenses incurred in expenses in excess of three
connection with the percent of the gross offering
Partnership's offering of proceeds.
Units
Acquisition fees and expenses Fees equal to 4.5% of gross Acquisition fees:
to CNL Fund Advisors, Inc. offering proceeds to CNL Fund $1,093,639
Advisors, Inc., plus
reimburse-ment to the General Acquisition expenses:
Partners and their affiliates $69,835
for expenses actually
incurred.
Reimbursement to CNL Fund Operating expenses are Operating expenses
Advisors, Inc. and affiliates reimbursed at the lower of incurred on behalf of the
for operating expenses cost or 90 percent of the Partnership: $64,906
prevailing rate at which
comparable services could have Accounting and administra-
been obtained in the same tive services: $96,729
geographic area. Affiliates
of the General Partners from
time to time incur certain
operating expenses on behalf
of the Partnership for which
the Partnership reimburses the
affiliates without interest.
Annual management fee to CNL One percent of the sum of $10,482
Fund Advisors, Inc. gross revenues (excluding
noncash lease accounting
adjustments) from Properties
wholly owned by the
Partnership plus the
Partnership's allocable share
of gross revenues of joint
ventures in which the
Partnership is a co-venturer.
The management fee, which will
not exceed competitive fees
for comparable services in the
same geographic area, may or
may not be taken, in whole or
in part as to any year, in the
sole discretion of CNL Fund
Advisors, Inc. All or any
portion of the management fee
not taken as to any fiscal
year shall be deferred without
interest and may be taken in
such other fiscal year as CNL
Fund Advisors, Inc. shall
determine.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1996
-------------------- ---------------------- -----------------------
<S> <C>
Deferred, subordinated real A deferred, subordinated real $ - 0 -
estate disposition fee payable estate disposition fee,
to CNL Fund Advisors, Inc. payable upon sale of one or
more Properties, in an amount
equal to the lesser of (i)
one-half of a competitive real
estate commission, or (ii)
three percent of the sales
price of such Property or
Properties. Payment of such
fee shall be made only if CNL
Fund Advisors, Inc. provides a
substantial amount of services
in connection with the sale of
a Property or Properties and
shall be subordinated to
certain minimum returns to the
Limited Partners. However, if
the net sales proceeds are
reinvested in a replacement
property, no such real estate
disposition fee will be
incurred until such
replacement property is sold
and the net sales proceeds are
distributed.
General Partners' deferred, A deferred, subordinated share $ - 0 -
sub-ordinated share of equal to five percent of
Partnership net cash flow Partnership distributions of
net cash flow, subordinated to
certain minimum returns to the
Limited Partners.
General Partners' deferred, A deferred, subordinated share $ - 0 -
sub-ordinated share of equal to five percent of
Partnership net sales proceeds Partnership distributions of
from a sale or sales such net sales proceeds,
subordinated to certain
minimum returns to the Limited
Partners.
</TABLE>
39
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1996 and 1995
Statements of Income for the year ended December 31, 1996 and the
period February 10, 1995 (date of inception) through December 31,
1995
Statements of Partners' Capital for the year ended December 31,
1996 and the period February 10, 1995 (date of inception) through
December 31, 1995
Statements of Cash Flows for the year ended December 31, 1996 and
the period February 10, 1995 (date of inception) through December
31, 1995
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996
Notes to Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1996
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or notes
thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVII, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-90998 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVII, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-90998 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XVII, Ltd. (Included as Exhibit 4.2 to
Form 10-K filed with the Securities and Exchange
Commission on March 21, 1996, and incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XVII, Ltd.
and CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 21, 1996, and incorporated herein by
reference.)
27 Financial Data Schedule (Filed herewith.)
(b) The Registrant filed one report on Form 8-K on December 20, 1996,
reporting property acquisitions.
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 26th day of
March, 1997.
CNL INCOME FUND XVII, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ James M. Seneff, Jr.
-------------------------------
JAMES M. SENEFF, JR., President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
-------------------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
-------------------------------
JAMES M. SENEFF, JR.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S><C>
/s/ Robert A. Bourne Vice President, Secretary, Treasurer March 26, 1997
- ------------------------- and Director (Principal Financial and
Robert A. Bourne Accounting Officer)
/s/ James M. Seneff, Jr. President and Director (Principal March 26, 1997
- -------------------------- Executive Officer)
James M. Seneff, Jr.
</TABLE>
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
----------------------------------- ---------------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
---------- ------------ ------------ ------------ -----------
<S> <C>
Property the Partnership
has Invested in Under
Operating Leases:
Arby's Restaurants:
Muncie, Indiana - $ 242,759 $ - $ - $ -
Schertz, Texas - 348,245 470,577 - -
Plainfield, Indiana - 296,070 557,895 - -
Boston Market Restaurants:
Houston, Texas - 373,112 477,383 - -
Troy, Ohio - 327,924 571,730 - -
Long Beach, California - 455,048 - 499,731 -
Burger King Restaurants:
Harvey, Illinois - 489,340 734,010 - -
Chicago Ridge, Illinois - 771,965 - 699,556 -
Lyons, Illinois - 885,989 - 152,530 -
Denny's Restaurants:
Kentwood, Michigan - 287,732 626,865 - -
Mesquite, Nevada - 372,858 - - -
Pensacola, Florida - 305,509 670,990 - -
Fazoli's Restaurant:
Warner Robins, Georgia - 300,481 - 421,898 -
Golden Corral Family
Steakhouse Restaurants:
Orange Park, Florida - 711,838 1,162,406 - -
Aiken, South Carolina - 508,003 - 987,046 -
Weatherford, Texas - 344,610 - 891,747 -
El Cajon, California - 974,750 - 71,130 -
Jack in the Box Restaurants:
Dinuba, California - 324,970 - 509,982 -
LaPorte, Texas - 356,127 - 533,883 -
El Dorado, California - 617,397 - 550,097 -
Popeye's Famous Fried
Chicken Restaurant:
Warner Robins, Georgia - 260,513 - 330,100 -
Wendy's Old Fashioned
Hamburgers Restaurants:
Knoxville, Tennessee - 332,036 - 472,644 -
Livingston, Tennessee - 261,551 - - -
----------- ---------- ---------- ------
- $10,148,827 $5,271,856 $6,120,344 $ -
=========== ========== ========== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
Property the Partnership
has Invested in Under
Operating Leases:
Arby's Restaurants:
Muncie, Indiana $ 242,759 (h) $ 242,759 $ - 1995 03/96 (e)
Schertz, Texas 348,245 $ 470,577 818,822 8,359 1996 06/96 (g)
Plainfield, Indiana 296,070 557,895 853,965 3,465 1996 10/96 (g)
Boston Market Restaurants:
Houston, Texas 373,112 477,383 850,495 8,480 1996 06/96 (g)
Troy, Ohio 327,924 571,730 899,654 8,367 1996 07/96 (g)
Long Beach, California 455,048 499,731 954,779 1,232 1996 12/96 (g)
Burger King Restaurants:
Harvey, Illinois 489,340 734,010 1,223,350 20,093 1996 03/96 (g)
Chicago Ridge, Illinois 771,965 699,556 1,471,521 14,885 1996 03/96 (g)
Lyons, Illinois 885,989 152,530 1,038,519 (d) (c) 11/96 (d)
Denny's Restaurants:
Kentwood, Michigan 287,732 626,865 914,597 16,416 1980 03/96 (g)
Mesquite, Nevada 372,858 (h) 372,858 - 1996 12/95 (e)
Pensacola, Florida 305,509 670,990 976,499 9,023 1996 08/96 (g)
Fazoli's Restaurant:
Warner Robins, Georgia 300,481 421,898 722,379 2,235 1996 08/96 (g)
Golden Corral Family
Steakhouse Restaurants:
Orange Park, Florida 711,838 1,162,406 1,874,244 31,926 1996 03/96 (g)
Aiken, South Carolina 508,003 987,046 1,495,049 18,254 1996 04/96 (g)
Weatherford, Texas 344,610 891,747 1,236,357 9,793 1996 03/96 (g)
El Cajon, California 974,750 71,130 1,045,880 (d) (c) 12/96 (d)
Jack in the Box Restaurants:
Dinuba, California 324,970 509,982 834,952 5,926 1996 05/96 (g)
LaPorte, Texas 356,127 533,883 890,010 4,888 1996 07/96 (g)
El Dorado, California 617,397 550,097 1,167,494 4,835 1996 07/96 (g)
Popeye's Famous Fried
Chicken Restaurant:
Warner Robins, Georgia 260,513 330,100 590,613 2,171 1996 08/96 (g)
Wendy's Old Fashioned
Hamburgers Restaurants:
Knoxville, Tennessee 332,036 472,644 804,680 6,647 1996 05/96 (g)
Livingston, Tennessee 261,551 (h) 261,551 - 1996 06/96 (e)
----------- ----------- ----------- --------
$10,148,827 $11,392,200 $21,541,027 $176,995
=========== =========== =========== ========
</TABLE>
F-1
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
-------------------------- -------------------
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
-------- ------- ------------ -------- -------
<S> <C>
Property in Which the Partner-
ship has a 19.73% Interest
as Tenants-in-Common and has
Invested in Under an
Operating Lease:
Boston Market Restaurant:
Fayetteville, North Carolina - $ 377,800 $ 587,700 $ - $ -
========== ========== ========== ======
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Arby's Restaurant:
Muncie, Indiana - $ - $ 629,847 $ - $ -
Denny's Restaurant:
Mesquite, Nevada - - - 898,723 -
Wendy's Old Fashioned
Hamburgers Restaurant:
Livingston, Tennessee - - - 469,940 -
---------- ---------- ---------- ------
$ - $ 629,847 $1,368,663 $ -
========== ========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period (b) Depreciation
---------------------------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ --------- ------------ -------- --------- ------------
<S> <C>
Property in Which the Partner-
ship has a 19.73% Interest
as Tenants-in-Common and has
Invested in Under an
Operating Lease:
Boston Market Restaurant:
Fayetteville, North Carolina $ 377,800 $ 587,700 $ 965,500 $ 4,768 1996 10/96 (g)
=========== =========== =========== ========
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Arby's Restaurant:
Muncie, Indiana - (h) (h) (e) 1995 03/96 (e)
Denny's Restaurant:
Mesquite, Nevada - (h) (h) (e) 1996 12/95 (e)
Wendy's Old Fashioned
Hamburgers Restaurant:
Livingston, Tennessee - (h) (h) (e) 1996 06/96 (e)
</TABLE>
F-2
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996
and 1995 are summarized as follows:
Accumulated
Cost Depreciation
----------- ------------
Property the Partnership has
Invested in Under Operating
Leases:
Balance, December 31, 1994 $ - $ -
Acquisitions 402,244 -
Depreciation expense - -
----------- ----------
Balance, December 31, 1995 402,244 -
Acquisitions 21,138,783 -
Depreciation expense - 176,995
----------- -----------
Balance, December 31, 1996 $21,541,027 $ 176,995
=========== ===========
Property in Which the Partnership
has a 19.73% Interest as
Tenantsin-Common and has
Invested in Under an Operating
Lease:
Balance, December 31, 1995 $ - $ -
Acquisition 965,500 -
Depreciation expense - 4,768
----------- -----------
Balance, December 31, 1996 $ 965,500 $ 4,768
=========== ===========
(b) As of December 31, 1996, the aggregate cost of the Properties owned
by the Partnership and the joint venture for federal income tax
purposes was $23,387,006 and $833,230, respectively. All of the
leases are treated as operating leases for federal income tax
purposes.
(c) Scheduled for completion in 1997.
(d) Property was not placed in service as of December 31, 1996;
therefore, no depreciation was taken.
(e) For financial reporting purposes, the portion of the lease relating
to the building has been recorded as a direct financing lease. The
cost of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(f) During the year ended December 31, 1996, the Partnership incurred
acquisition fees totalling $1,093,639 paid to CNL Fund Advisors, Inc.
and purchased land and buildings from affiliates of the Partnership
for an aggregate cost of approximately $1,667,100. Such amounts are
included in land and buildings on operating leases, net investment in
direct financing leases, investment in joint venture and other assets
at December 31, 1996.
F-3
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1996
(g) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(h) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct financing
lease. Accordingly, costs relating to these components of this lease
are not shown.
F-4
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Page
- ------------- ----
<S> <C>
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVII, Ltd. (Included as Exhibit 3.1 to Registration
Statement No. 33-90998 on Form S-11 and incorporated herein by
reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVII, Ltd. (Included as Exhibit 3.1 to Registration
Statement No. 33-90998 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XVII, Ltd. and
CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
</TABLE>
i
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet of CNL Income Fund XVII, Ltd. at December 31, 1996, and its
statement of income for the year then ended and is qualified in its
entirety by reference to the Form 10-K of CNL Income Fund XVII, Ltd. for
the year ended December 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,716,719
<SECURITIES> 0
<RECEIVABLES> 67,722
<ALLOWANCES> 4,469
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,541,027
<DEPRECIATION> 176,995
<TOTAL-ASSETS> 28,675,007
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,320,146
<TOTAL-LIABILITY-AND-EQUITY> 28,675,007
<SALES> 0
<TOTAL-REVENUES> 1,439,669
<CGS> 0
<TOTAL-COSTS> 348,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,095,759
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,095,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,095,759
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XVII, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for
current assets and current liabilities.
</FN>
</TABLE>
