<PAGE>
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, 1999
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 0-22485
CNL INCOME FUND XVII, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-329393
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801-3336
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
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:
Units of limited partnership interest ($10 per Unit)
(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. No [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 30,000 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 for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
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 and were used as of December 31, 1998, to acquire
29 Properties, pay acquisition fees totalling $1,350,000 and to establish a
working capital reserve for Partnership purposes. The 29 Properties include four
Properties owned by joint ventures in which the Partnership is a co-venturer and
three Properties owned with affiliates of the General Partners as
tenants-in-common. During 1998, the Partnership received $306,100 in a
reimbursement from the developer of the Properties in Aiken, South Carolina and
Weatherford, Texas, upon final reconciliation of total construction costs.
During 1999, the Partnership invested these amounts, along with other net
offering proceeds, in a Property in Zephyrhills, Florida, with an affiliate as
tenants-in-common, and entered into a joint venture arrangement, Ocean Shores
Joint Venture, with an affiliate of the General Partners to purchase and hold
one Property in Ocean Shores, Washington, indirectly through a joint venture in
which the Partnership is a co-venturer. In addition, during 1999, CNL/GC El
Cajon Joint Venture, in which the Partnership owns an 80 percent interest, sold
its Property to the tenant and the Partnership received a return of capital from
the net sales proceeds. In January 2000, the Partnership reinvested the majority
of the net sales proceeds received from El Cajon Joint Venture in a Property in
Wilmette, Illinois. The Partnership generally leases the Properties on a
triple-net basis with the lessees responsible for all repairs and maintenance,
property taxes, insurance and utilities.
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. 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.
On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Termination
of Merger"). APF is a real estate investment trust whose primary business is the
ownership of restaurant properties leased on a long-term, "triple-net" basis to
operators of national and regional restaurant chains. Subsequent to entering
into the Merger agreement, the General Partners received a number of comments
from brokers who sold the Partnership's units concerning the loss of passive
income treatment in the event the Partnership merged with APF. On June 3, 1999,
the General Partners, on behalf of the Partnership, and APF agreed that it would
be in the best interests of the Partnership and APF that APF not attempt to
acquire the Partnership in the acquisition. Therefore in June 1999, APF entered
into a termination agreement with the General Partners of the Partnership.
1
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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 13 to 20 years (the average being 17 years) and expire between 2011
and 2019. The majority of the leases are on a triple-net basis, with the lessees
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 $52,500 to
$229,300. The majority 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.
Lessees of 22 of the Partnership's 29 Properties 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. Fair market value will be
determined through an appraisal by an independent appraisal firm. Under the
terms of 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.
During 1998, the tenants of three Boston Market Properties, Boston Chicken,
Inc., Bostonwest L.L.C. and BCBM Southwest L.P., filed for bankruptcy. In April
1999, the leases relating to two of these three Properties were rejected and the
tenant ceased making rental payments. The Partnership will not recognize rental
and earned income from these two Properties until new tenants for these
Properties are located or until the Properties are sold and the proceeds from
such sales are reinvested in additional Properties. The Partnership has
continued receiving rental payments relating to the lease not rejected. While
the tenant has not rejected or affirmed the remaining lease, there can be no
assurance that it will not be rejected in the future. The lost revenues
resulting from the two leases that were rejected, as described above, and the
possible rejection of the remaining lease could have an adverse effect on the
results of operations of the Partnership if the Partnership is unable to
re-lease the Properties in a timely manner. The General Partners are currently
seeking either new tenants or purchasers for the two Properties.
In January 1999, the Partnership invested in an Arby's Property in
Zephyrhills, Florida, as tenants-in-common with an affiliate of the General
Partners. In addition, in January 1999, the Partnership entered into a joint
venture, Ocean Shores Joint Venture, with an affiliate of the General Partners,
to purchase and hold one Property indirectly. The lease terms for these
Properties are substantially the same as the Partnership's other leases as
described above in the first three paragraphs of this section.
In January 2000, the Partnership reinvested the majority of the net sales
proceeds received from the sale of the Property owned and leased by CNL/GC El
Cajon Joint Venture (as described above), in a Property located in Wilmette,
Illinois. The lease terms for this Property are substantially the same as the
Partnership's other leases, as described above.
Major Tenants
During 1999, four lessees of the Partnership and its consolidated joint
venture, Golden Corral Corporation, National Restaurant Enterprises, Inc.,
Phoenix Restaurant Group, Inc., and Jack in the Box Inc., each contributed more
than ten percent of the Partnership's total rental income (including rental
income from the Partnership's consolidated joint venture, the Partnership's
share of rental income from three Properties owned by unconsolidated joint
ventures and four Properties owned with affiliates of the General Partners as
tenants-in-common). As of December 31, 1999, each of Golden Corral Corporation
and National Restaurant Enterprises, Inc. was the lessee under leases relating
to three restaurants, and each of Phoenix Restaurant Group, Inc. and Jack in the
Box, Inc. was
2
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the lessee under leases relating to four restaurants. It is anticipated that
based on the minimum rental payments required by the leases, these four lessees
each will continue to contribute more than ten percent of the Partnership's
total rental income in 2000. In addition, four Restaurant Chains, Golden Corral
Family Steakhouse Restaurants, ("Golden Corral"), Jack in the Box, Burger King
and Arby's, each accounted for more than ten percent of the Partnership's total
rental income during 1999 (including rental income from the Partnership's
consolidated joint venture, the Partnership's share of rental income from three
Properties owned by unconsolidated joint ventures and four Properties owned with
affiliates of the General Partners as tenants-in-common). In 2000, it is
anticipated that each of these four Restaurant Chains will continue to
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 have a material adverse affect on the
Partnership's income if the Partnership is not able to re-lease the Properties
in a timely manner. As of December 31, 1999, no single lessee or group of
affiliated lessees leased Properties with an aggregate carrying value in excess
of 20 percent of the total assets of the Partnership.
Joint Venture and Tenancy in Common Arrangements
The Partnership had entered into a joint venture arrangement, CNL/GC El
Cajon Joint Venture, with an unaffiliated entity to purchase and hold a
Property. During 1999, CNL/GC El Cajon Joint Venture was liquidated upon the
sale of the Property held by the joint venture and the distribution of the net
sales proceeds to each joint venture partner in accordance with the terms of the
joint venture agreement.
In 1997, the Partnership entered into two joint venture arrangements: CNL
Mansfield Joint Venture with CNL Income Fund VII, Ltd., an affiliate of the
General Partners, to purchase and hold one Property; and CNL Kingston Joint
Venture with CNL Income Fund XIV, Ltd., an affiliate of the General Partners, to
purchase and hold one Property. In addition, during 1999, the Partnership
entered into Ocean Shores Joint Venture with CNL Income Fund X, Ltd., an
affiliate of the General Partners, to purchase and hold one Property. Each joint
venture arrangement provides for the Partnership and its joint venture partners
to share in all costs and benefits associated with the joint venture in
proportion to each partner's percentage interest in the joint venture. The
Partnership owns a 21 percent interest in CNL Mansfield Joint Venture, a 60.06%
interest in CNL Kingston Joint Venture, and a 30.94% interest in Ocean Shores
Joint Venture. The Partnership and its joint venture partners are also jointly
and severally liable for all debts, obligations and other liabilities of the
respective joint venture. Each of the affiliates is a limited partnership
organized pursuant to the laws of the State of Florida.
Each 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 venturer or by an event of
dissolution. Events of dissolution include the bankruptcy, insolvency or
termination of either of the joint venturer partner, sale of the Property owned
by the joint venture and mutual agreement of the Partnership and its joint
venture partners to dissolve the joint venture.
The Partnership shares management control equally with affiliates of the
General Partners for CNL Mansfield Joint Venture, CNL Kingston Joint Venture and
Ocean Shores Joint Venture. The joint venture agreements restrict 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 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 Mansfield Joint Venture, CNL Kingston
Joint Venture and Ocean Shores Joint Venture is distributed 21 percent, 60.06%
and 30.94% respectively, to the Partnership and the balance is distributed to
each other joint venture partner in accordance with its percentage ownership in
the respective joint venture. 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 arrangements, the Partnership
entered into: an agreement to hold a Property in Fayetteville, North Carolina,
as tenants-in-common with CNL Income Fund XVI, Ltd., an affiliate of the General
Partners; an agreement to hold a Property in Corpus Christi, Texas, as
tenants-in-common, with CNL
3
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Income Fund XI, Ltd., an affiliate of the General Partners; an agreement to hold
a Property in Akron, Ohio, as tenants-in-common, with CNL Income Fund XIII,
Ltd., an affiliate of the General Partners, and an agreement to hold a Property
in Zephyrhills, Florida, as tenants-in-common, with CNL Income Fund IV, Ltd., an
affiliate of the General Partners. The agreements provide for the Partnership
and the affiliates to share in the profits and losses of the Properties and net
cash flow from the Properties in proportion to each co-tenant's percentage
interest. The Partnership owns a 19.56%, 27.42%, 36.91% and 24 percent interest
in the Properties in Fayetteville, North Carolina; Corpus Christi, Texas; Akron,
Ohio; and Zephryhills, Florida, respectively.
Each of the affiliates is a limited partnership organized pursuant to the
laws of the State of Florida. The tenancy in common agreement restricts each
co-tenant's ability to sell, transfer, or assign its interest in the tenancy in
common's Property without first offering it for sale to the remaining co-tenant.
The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional property, or at times when a
suitable opportunity to purchase an additional property is not available. The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of
the property if the proceeds are reinvested in an additional property.
Certain 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 tenant's 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.
Employees
The Partnership has no employees. The officers of CNL Realty Corporation
and the officers and employees of APF, the parent company 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 Financial Group, Inc. (formerly CNL Group, Inc.), a diversified
real estate company, and its affiliates, who may also perform certain services
for the Partnership.
Item 2. Properties
As of December 31, 1999, the Partnership owned 29 Properties. Of the 29
Properties, 22 are owned by the Partnership in fee simple, three are owned
through joint venture arrangements and four are owned through tenancy in common
arrangements. See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.
4
<PAGE>
Description of Properties
Land. The Partnership's Property sites range from approximately 15,185 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.
The following table lists the Properties owned by the Partnership as of
December 31, 1999 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation for the year ended December 31, 1999.
<TABLE>
<CAPTION>
State Number of Properties
----- --------------------
<S> <C>
California 4
Florida 3
Georgia 2
Illinois 3
Indiana 2
Michigan 1
North Carolina 1
Nevada 1
Ohio 1
South Carolina 1
Tennessee 3
Texas 6
Washington 1
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TOTAL PROPERTIES 29
=================
</TABLE>
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. 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. As of December 31, 1999, the Partnership had no plans for renovation
of the Properties. Depreciation expense is computed for buildings and
improvements using the straight line method using a depreciable life of 40 years
for federal income tax purposes. As of December 31, 1999, the aggregate cost of
the Properties owned by the Partnership and joint ventures (including Properties
owned through tenancy in common arrangements) for federal income tax purposes
was $12,994,373 and $3,893,731, respectively.
5
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The following table lists the Properties owned by the Partnership as of
December 31, 1999 by Restaurant Chain.
<TABLE>
<CAPTION>
Restaurant Chain Number of Properties
<S> <C>
Arby's 4
Black-eyed Pea 1
Boston Market 4
Burger King 5
Denny's 2
Fazoli's 1
Golden Corral 3
Jack in the Box 4
Mr. Fable's 1
Popeyes 1
Taco Bell 1
Wendy's 2
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TOTAL PROPERTIES 29
=================
</TABLE>
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
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 unlikely event a tenant's insurance policy
lapses or is insufficient to cover a claim relating to the Property.
Leases. The Partnership leases the Properties to operators of selected
national and regional fast-food, family-style and casual dining restaurant
chains. The leases are generally on a long-term "triple net" basis, meaning that
the tenant is responsible for repairs, maintenance, property taxes, utilities
and insurance. 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. The terms of
the leases of the Properties owned by the Partnership are described in Item 1.
Business - Leases.
At December 31, 1999, 1998, 1997, and 1996, the Properties were 93%, 100%,
100%, and 100% occupied, respectively. The following is a schedule of the
average rent per Property for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental Income(1) $2,667,611 $2,983,830 $2,762,605 $1,190,656
Properties 29 28 28 24
Average Rent per Property $ 91,987 $ 106,565 $ 98,664 $ 49,611
</TABLE>
(1) Rental income includes the Partnership's share of rental income from the
Properties owned through joint venture arrangements and the Properties
owned through tenancy in common arrangements. Rental revenues have been
adjusted, as applicable, for any amounts for which the Partnership has
established an allowance for doubtful accounts.
6
<PAGE>
The following is a schedule of lease expirations for leases in place as of
December 31, 1999 for each year for the next ten years and thereafter.
<TABLE>
<CAPTION>
Percentage of
Expiration Number Annual Rental Gross Annual
Year of Leases Revenues Rental Income
---------- --------- ------------- -------------
<S> <C> <C> <C>
2000 -- $ -- --
2001 -- -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 -- -- --
2006 -- -- --
2007 -- -- --
2008 -- -- --
2009 -- -- --
Thereafter 27 2,549,548 100.00%
---- ------------- --------
Total (1) 27 $ 2,549,548 100.00%
==== ============= ========
</TABLE>
(1) Excludes two Properties which were vacant at December 31, 1999.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 1999 (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 $146,100 (ranging from approximately
$107,600 to $190,000).
National Restaurant Enterprises, Inc. leases three Burger King restaurants.
The initial term of each lease is 20 years (expiring between 2016 and 2017) and
the average minimum base annual rent is approximately $138,163 (ranging from
approximately $123,200 to $153,584).
Phoenix Restaurant Group, Inc. leases two Denny's restaurants, one Mr.
Fable's restaurant and one Black-eyed Pea restaurant. The initial term of each
lease is 20 years (expiring between 2015 and 2016) and the average minimum base
annual rent is approximately $120,300 (ranging from approximately $98,700 to
$153,800).
Jack in the Box, Inc. leases four Jack in the Box restaurants. The initial
term of each lease is 18 years (expiring between 2014 and 2015) and the average
minimum base annual rent is approximately $93,900 (ranging from approximately
$80,100 to $117,900).
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.
7
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Item 3. Legal Proceedings
On May 11, 1999, four limited partners in several CNL Income Funds served a
derivative and purported class action lawsuit filed April 22, 1999 against the
General Partners and APF in the Circuit Court of the Ninth Judicial Circuit of
Orange County, Florida, alleging that the General Partners breached their
fiduciary duties and violated provisions of certain of the CNL Income Fund
partnership agreements in connection with the proposed Merger. The plaintiffs
are seeking unspecified damages and equitable relief. On July 8, 1999, the
plaintiffs filed an amended complaint which, in addition to naming three
additional plaintiffs, includes allegations of aiding and abetting and
conspiring to breach fiduciary duties, negligence and breach of duty of good
faith against certain of the defendants and seeks additional equitable relief.
As amended, the caption of the case is Jon Hale, Mary J. Hewitt, Charles A.
------------------------------------
Hewitt, Gretchen M. Hewitt, Bernard J. Schulte, Edward M. and Margaret Berol
- ----------------------------------------------------------------------------
Trust, and Vicky Berol v. James M. Seneff, Jr., Robert A. Bourne, CNL Realty
- ----------------------------------------------------------------------------
Corporation, and CNL American Properties Fund, Inc., Case No. CIO-99-0003561.
- ----------------------------------------------------
On June 22, 1999, a limited partner of several CNL Income Funds served a
purported class action lawsuit filed April 29, 1999 against the General Partners
and APF, Ira Gaines, individually and on behalf of a class of persons similarly
----------------------------------------------------------------------
situated, v. CNL American Properties Fund, Inc., James M. Seneff, Jr., Robert A.
- ----------------------------------------------------------------------------
Bourne, CNL Realty Corporation, CNL Fund Advisors, Inc., CNL Financial
- ----------------------------------------------------------------------------
Corporation a/k/a CNL Financial Corp., CNL Financial Services, Inc. and CNL
- ----------------------------------------------------------------------------
Group, Inc., Case NO. CIO-99-3796, in the Circuit Court of the Ninth Judicial
- ------------
Circuit of Orange County, Florida, alleging that the General Partners breached
their fiduciary duties and that APF aided and abetted their breach of fiduciary
duties in connection with the proposed Merger. The plaintiff is seeking
unspecified damages and equitable relief.
On September 23, 1999, Judge Lawrence Kirkwood entered an order
consolidating the two cases under the caption In re: CNL Income Funds
-----------------------
Litigation, Case No. 99-3561. Pursuant to this order, the plaintiffs in these
- ----------------------------
cases filed a consolidated and amended complaint on November 8, 1999. On
December 22, 1999, the General Partners and CNL Group, Inc. filed motions to
dismiss and motions to strike. On December 28, 1999, APF and CNL Fund Advisors,
Inc. filed motions to dismiss. On March 6, 2000, all of the defendants filed a
Joint Notice of Filing Form 8-K Reports and Suggestion of Mootness.
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
(a) As of March 15, 2000, there were 1,611 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. During 1999, Limited Partners who
wished to sell their Units may have offered the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their distributions used to acquire additional Units (to the
extent Units were available for purchase), may have done so pursuant to such
Plan. The General Partners had the right to prohibit transfers of Units. From
inception through December 31, 1999, the price paid for any Unit transferred
pursuant to the Plan ranged from $9.14 to $9.50 per Unit. The price paid for any
Unit transferred other than pursuant to the Plan was subject to negotiation by
the purchaser and the selling Limited Partner. The Partnership will not redeem
or repurchase Units.
8
<PAGE>
The following table reflects, for each calendar quarter, the high, low and
average sales prices for transfers of Units during 1999 and 1998, other than
pursuant to the Plan, net of commissions.
<TABLE>
<CAPTION>
1999 1998 (1)
-------------------------------------------- -----------------------------------------
High Low Average High Low Average
----------- ----------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter (2) (2) (2) (2) (2) (2)
Second Quarter (2) (2) (2) $7.73 $7.73 $7.73
Third Quarter $10.00 $10.00 $10.00 (2) (2) (2)
Fourth Quarter (2) (2) (2) (2) (2) (2)
</TABLE>
(1) A total of 5,500 and 400 Units were transferred other than pursuant to the
Plan for the years ended December 31, 1999 and 1998, respectively.
(2) 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 each of the years ended December 31, 1999 and 1998, the Partnership
declared cash distributions of $2,400,000 to the Limited Partners. No amounts
distributed to partners for the years ended December 31, 1999 and 1998, 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. These
amounts include monthly distributions made in arrears for the Limited Partners
electing to receive such distributions on this basis.
<TABLE>
<CAPTION>
Quarter Ended 1999 1998
------------- ---- ----
<S> <C> <C>
March 31 $600,000 $600,000
June 30 600,000 600,000
September 30 600,000 600,000
December 31 600,000 600,000
</TABLE>
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.
(b) Not applicable.
9
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
February 10, 1995
(date
of inception)
Year Ended Year Ended Year Ended Year Ended through
December 31, December 31, December 31, December 31, December 31,
1999 1998 1997 1996 1995 (1)
------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Revenues (2) $2,611,294 $2,946,048 $2,772,714 $1,444,503 $ 12,153
Net income (3) 1,839,269 2,394,158 2,203,557 1,095,759 8,351
Cash distributions
declared 2,400,000 2,400,000 2,287,500 1,166,689 28,275
Net income per Unit(3)(4) 0.61 0.80 0.73 0.52 0.02
Cash distributions
declared per Unit(4) 0.80 0.80 0.76 0.55 0.08
<CAPTION>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
At December 31:
Total assets $26,561,963 $27,365,705 $27,524,148 $28,675,007 $ 4,878,421
Partners' capital 25,669,630 26,230,361 26,236,203 26,320,146 4,642,233
</TABLE>
(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 joint ventures.
(3) Net income for the year ended December 31, 1999 includes $82,914 from loss
on dissolution of joint venture.
(4) Based on the weighted average number of Limited Partner Units outstanding
during the years ended December 31, 1999, 1998, 1997, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995.
The above selected financial data should be read in conjunction with the
financial statements and related notes contained in Item 8 hereof.
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 generally triple-net leases, with the lessees
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 1999, the Partnership owned 29 Properties,
either directly or through joint venture or tenancy in common arrangements.
Capital Resources
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, 1996, the Partnership had invested $23,406,500 of its net
10
<PAGE>
offering proceeds. During 1997, the Partnership used the majority of its
remaining net offering proceeds to acquire two additional Properties, as
tenants-in-common, with affiliates of the General Partners. In addition, during
1997, the Partnership entered into two joint ventures, CNL Mansfield Joint
Venture and CNL Kingston Joint Venture, with affiliates of the General Partners,
to own an approximate 21 percent interest and 60.06 percent interest,
respectively, in two Properties. During 1998, the Partnership contributed
$124,500 to Kingston Joint Venture to pay for additional construction costs. In
addition, during 1998, the Partnership received $306,100 in reimbursements from
the developer upon final reconciliation of total construction costs relating to
the Properties in Aiken, South Carolina and Weatherford, Texas, in accordance
with the related development agreements. During 1999, the Partnership invested
these amounts, along with other net offering proceeds, in a Property in
Zephyrhills, Florida, with an affiliate as tenants-in-common for a 24 percent
interest in the property, and entered into a joint venture arrangement, Ocean
Shores Joint Venture, with affiliates of the General Partners, to own a 30.94%
interest in the profits and losses of the joint venture. As a result of the
above transactions, as of December 31, 1999, the Partnership had acquired 29
Properties, including three Properties owned by joint ventures in which the
Partnership is a co-venturer and four properties owned with affiliates as
tenants-in-common, and had paid acquisition fees totalling $1,350,000 to an
affiliate of the General Partners. During January 2000, the Partnership acquired
a Baker's Square Property in Wilmette, Illinois. The remaining net offering
proceeds from the Partnership's offering of Units were reserved for Partnership
purposes.
In addition, in December 1999, CNL/GC El Cajon Joint Venture, in which the
Partnership owned a 80 percent interest, sold its Property to its tenant for
$2,094,231. Due to the fact that the joint venture had recorded accrued rental
income (income the joint venture had recognized since the inception of the lease
relating to the straight-lining of future schedule rent increases in accordance
with generally accepted accounting principles) the joint venture wrote off
$172,496 in accrued rental income in connection with the sale. In addition, as a
result of the sale of the Property, the joint venture was dissolved in
accordance with the joint venture agreement. As a result, the Partnership
received approximately $1,675,400, representing its prorata share of the net
sales proceeds received by the joint venture and recorded a loss on dissolution
of $82,914 as of December 31, 1999, which represented the balance of unamortized
costs recorded by the joint venture. In January 2000, the Partnership reinvested
the majority of the return of capital in a Baker's Square Property in Wilmette,
Illinois. The Partnership acquired the Property from an affiliate of the General
Partners. The affiliate had purchased and temporarily held title to the Property
in order to facilitate the acquisition of the Property by the Partnership. The
purchase price paid by the Partnership represented the costs incurred by the
affiliate to acquire the Property, including closing costs. The Partnership
anticipates that it will distribute amounts sufficient to enable the Limited
Partners to pay federal and state income taxes, if any (at a level reasonably
assumed by the General Partners), resulting from the sale.
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 ventures and interest received, less cash paid for expenses). Cash from
operations was $2,450,018, $2,520,919 and $2,495,114 for the years ended
December 31, 1999, 1998 and 1997, respectively. The decrease in cash from
operations during 1999 as compared to 1998, and the increase during 1998, as
compared to 1997, is primarily a result of changes in the Partnership's working
capital and changes in income and expenses as described in "Results of
Operations" below.
None of the Properties owned by the Partnership, or the joint ventures or
tenancy in common arrangements in which the Partnership owns an interest, 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
11
<PAGE>
constitute acquisition indebtedness. 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.
Currently, rental income from the Partnership's Properties and cash
reserves are invested in money market accounts or other short-term, highly
liquid investments such as demand deposit accounts at commercial banks,
certificates of deposit and money market accounts with less than a 30-day
maturity date, pending the Partnership's use of such funds to pay Partnership
expenses or to make distributions to partners. At December 31, 1999, the
Partnership had $2,644,465 invested in such short-term investments as compared
to $1,492,343 at December 31, 1998. The increase in the amount invested in
short-term investments at December 31, 1999, as compared to December 31, 1998,
is primarily attributable to the Partnership receiving sales proceeds from
CNL/GC El Cajon Joint Venture, as described above. As of December 31, 1999, the
average interest rate earned by the Partnership on rental income deposited in
demand deposit accounts at commercial banks was approximately 2.2% annually. The
funds remaining at December 31, 1999, after payment of distribution and other
liabilities, will be used to meet the Partnership's working capital and other
needs.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily of
the operating expenses of the Partnership.
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.
Due to low operating expenses and ongoing cash flow, the General Partners
do not believe that working capital reserves are necessary at this time. In
addition, because generally 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.
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.
The Partnership generally distributes cash from operations remaining after
the payment of the operating expenses of the Partnership, to the extent that the
General Partners determine that such funds are available for distribution. Based
on cash from operations, the Partnership declared distributions to the Limited
Partners of $2,400,000, $2,400,000 and $2,287,500 for the years ended December
31, 1999, 1998 and 1997, respectively. This represents distributions of $0.80,
$0.80 and $0.76 per Unit for the years ended December 31, 1999, 1998 and 1997,
respectively. No amounts distributed to the Limited Partners for the years ended
December 31, 1999, 1998 and 1997 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.
During the year ended December 31, 1997, affiliates of the General Partners
incurred on behalf of the Partnership $11,262 for certain acquisition expenses.
In addition, during the years ended December 31, 1999, 1998 and 1997, affiliates
incurred on behalf of the Partnership $65,281, $64,521 and $59,451,
respectively, for certain operating expenses. As of December 31, 1999, 1998 and
1997, the Partnership owed $23,597, $14,448 and $2,875, respectively, to related
parties for such amounts, as accounting and administrative services and
management fees. As of March 15, 2000, the Partnership had reimbursed the
affiliates all such amounts. Other liabilities, including distributions payable,
increased to $868,736 at December 31, 1999, from $688,094 at December 31, 1998,
partially as a result of the Partnership receiving and holding approximately
$84,500 in a security deposit at December 31, 1999 relating to one of the three
Boston Market Properties whose lease was not rejected in conjunction with the
tenant filing for bankruptcy as described below in "Results of Operations". The
increase during 1999 is also a result of the Partnership accruing transaction
costs relating to the proposed merger with APF, as described in "Termination
12
<PAGE>
of Merger." The General Partners believe that the Partnership has sufficient
cash on hand to meet its current working capital needs.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
The Partnership owned and leased 22 wholly owned Properties during 1999,
1998 and 1997. In addition, during 1997 and 1998, the Partnership was a
co-venturer in three joint ventures that each owned and leased one Property and
also owned and leased three Properties with affiliates of the General Partners,
as tenants-in-common. During 1999, the Partnership was also a co-venturer in one
additional joint venture that owned and leased one Property and also owned and
leased one additional Property with affiliates of the General Partners, as
tenants-in-common (including one Property owned and leased by CNL/GC El Cajon
Joint Venture, which was sold in December 1999). As of December 31, 1999, the
Partnership owned, either directly or through joint venture arrangements, 29
Properties (including one Property in Troy, Ohio exchanged for one Property in
Inglewood, California), which are generally 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 $52,500 to
$229,300. 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 years ended December 31, 1999, 1998 and 1997, the Partnership
and its consolidated joint venture, CNL/GC El Cajon Joint Venture, earned
$2,392,160, $2,813,442 and $2,642,743, respectively, in rental income from
operating leases (net of adjustments to accrued rental income) and earned income
from direct financing leases.
During 1998, the tenant of three Boston Market Properties filed for
bankruptcy, but continued making rental payments on the Properties. In April
1999, the tenant rejected, vacated and ceased making rental payments on two of
the three leases resulting in a decrease in rental and earned income during 1999
of approximately $135,800. In addition, the Partnership wrote off approximately
$59,700 of accrued rental income (non-cash accounting adjustment relating to the
straight-lining of future scheduled rent increases over the terms of the leases
in accordance with generally accepted accounting principles) relating to the two
rejected leases during 1999. The Partnership will not recognize rental and
earned income from these two Properties until new tenants for these Properties
are located or until the Properties are sold and the proceeds from the sale are
reinvested in additional Properties. While the tenant has not rejected or
affirmed the remaining lease, there can be no assurance that the lease will not
be rejected in the future. The lost revenues resulting from the rejection of the
two leases and the possible rejection of the third lease could have an adverse
effect of the results of operations of the Partnership if the Partnership is
unable to re-lease these Properties in a timely manner.
In addition, the decrease in rental and earned income during 1999, as
compared to 1998, was partially attributable to the fact that in 1999, the
Partnership's consolidated joint venture, CNL/GC El Cajon Joint Venture, sold
its Property. As a result of the sale, the joint venture wrote-off approximately
$172,500 of accrued rental income (non-cash accounting adjustment relating to
the straight-lining of future scheduled rent increases over the term of the
lease in accordance with generally accepted accounting principles) that had been
recognized as income in prior periods. The decrease was partially offset by an
increase of approximately $42,000, in unamortized interim rental income. The
balance was recognized in 1999 due to the fact that the property was sold and
the lease terminated.
The decrease in rental and earned income during 1999, as compared to 1998,
was partially attributable to a decrease in rental income due from the tenants
of the Properties in Aiken, South Carolina and Weatherford, Texas, as a result
of receiving reimbursements of construction costs from the developer during 1999
which reduced the cost of the Property on which rental income is computed.
13
<PAGE>
The increase in rental and earned income during 1998, as compared to 1997,
was primarily attributable to the fact that two Properties were operational for
only a partial year during 1997, as compared to a full year during 1998, due to
acquisitions by the Partnership during 1997. The increase was partially offset
by a decrease in rental income due from the tenants of the Properties in Aiken,
South Carolina and Weatherford, Texas, as a result of receiving reimbursements
of construction costs from the developer, as described above in "Capital
Resources," which reduced the rent basis of the Property.
In addition, for the years ended December 31, 1999, 1998 and 1997, the
Partnership earned $182,132, $140,595 and $100,918, respectively, attributable
to net income earned by unconsolidated joint ventures in which the Partnership
is a co-venturer. The increase in net income earned by unconsolidated joint
ventures during 1999, as compared to 1998, was primarily due to the fact that
the Partnership entered into a joint venture arrangement, Ocean Shores Joint
Venture, with CNL Income Fund X, Ltd., an affiliate of the General Partners, and
invested in a Property in Zephyrhills, Florida, as tenants-in-common with CNL
Income Fund IV, Ltd., an affiliate of the General Partners, in January 1999. The
increase in net income earned by unconsolidated joint ventures during 1998, as
compared to the 1997 was primarily attributable to the fact the Properties were
operational for the full year during 1998, as compared to a partial year during
1997.
During the year ended December 31, 1999, four lessees of the Partnership
and its consolidated joint venture, Golden Corral Corporation, National
Restaurant Enterprises, Inc., Phoenix Restaurant Group, Inc. and Jack in the
Box, Inc., each contributed more than ten percent of the Partnership's total
rental income (including rental and earned income from the Partnership's
consolidated joint venture and the Partnership's share of rental income from
three Properties owned by unconsolidated joint venture and four Properties owned
with separate affiliates of the General Partners as tenants-in-common). As of
December 31, 1999, Golden Corral Corporation and National Restaurant
Enterprises, Inc. were each lessee under leases relating to three restaurants,
and each of Phoenix Restaurant Group, Inc. and Jack in the Box Inc. were each
the lessee under leases relating to four restaurants. It is anticipated that
based on the minimum rental payments required by the leases, these four lessees
each will continue to contribute more than ten percent of the Partnership's
total rental income in 2000. In addition, four Restaurant Chains, Golden Corral
Family Steakhouse Restaurant, Burger King, Jack in the Box and Arby's, each
accounted for more than ten percent of the Partnership's total rental income
during the year ended December 31, 1999 (including rental and earned income from
the Partnership's consolidated joint venture, the Partnership's share of rental
income from three Properties owned by unconsolidated joint ventures and four
Properties owned with separate affiliates of the General Partners as
tenants-in-common). In 2000, it is anticipated that each of these four
Restaurant Chains will continue to 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 have a
material adverse affect on the Partnership's income if the Partnership is not
able to re-lease the Properties in a timely manner.
During the years ended December 31, 1999, 1998 and 1997, the Partnership
also earned $24,279, $3,403 and $1,128, respectively, in other income. The
increase in other income during 1999, as compared to 1998, was primarily due to
the fact that the Partnership reversed $13,399 in transaction costs during 1999.
These represented amounts that had previously been expensed related to the
General Partners retaining financial and legal advisors to assist them in
evaluating and negotiating the proposed merger with APF, as described below. The
General Partners and APF agreed that it would be in the best interest of the
Partnership that it not be acquired in the acquisition due to the Limited
Partners' loss of passive income in the acquisition, as described below. As a
result, the General Partners have agreed to reimburse the Partnership for these
costs.
Operating expenses, including depreciation and amortization expense, were
$689,111, $551,890 and $569,157 for the years ended December 31, 1999, 1998, and
1997, respectively. The increase in operating expenses during 1999, as compared
to 1998, and the decrease during 1998, as compared to 1997, are both partially
attributable to the fact that depreciation expense was lower during 1998 as a
result of an adjustment to depreciation expense relating to the reimbursement
from the developer of construction costs relating to the Properties in Aiken,
South Carolina and Weatherford, Texas, as described above, which reduced the
depreciable basis of each Property.
The increase in operating expenses during 1999, as compared to 1998, is
partially attributable to, and the decrease during 1998, as compared to 1997, is
partially offset by, the fact that the Partnership incurred $84,765 and $14,139
in 1999 and 1998, respectively, in transaction costs related to the General
Partners retaining financial and
14
<PAGE>
legal advisors to assist them in evaluating and negotiating the proposed Merger
with APF, as described below in "Termination of Merger."
Additionally, the increase in operating expenses during 1999, as compared
to 1998, was partially attributable to an increase in insurance, legal fees,
maintenance and real estate taxes incurred in connection with the fact that in
April 1999 the tenant of two Boston Market Properties who had filed for
bankruptcy, rejected the leases and ceased making rental payments relating to
these two Properties as described above. The Partnership will continue to incur
certain expenses such as real estate taxes, insurance and maintenance relating
to these Properties until replacement tenants or purchasers are located. The
Partnership is currently seeking either replacement tenants or purchasers for
these Properties.
The decrease in operating expenses during 1998 as compared to 1997 was
partially attributable to a decrease in administrative expenses, which includes
services related to accounting; financial, tax and regulatory compliance and
reporting; lease and loan compliance; limited partner distributions and
reporting; and investor relations. The decrease in operating expenses during
1998 as compared to 1997, was partially offset by the Partnership incurring
taxes relating to the filing of various state tax returns during 1998 and 1997.
The decrease during 1998 as compared to 1997, was also partially offset by the
fact that the Partnership incurred $14,139 in transaction costs related to the
General Partners retaining financial and legal advisors to assist them in
evaluating and negotiating the proposed Merger with APF, as described below.
As a result of the dissolution of the Partnership's consolidated joint
venture, CNL/GC El Cajon Joint Venture, the Partnership recognized a loss on
dissolution of $82,914 during the year ended December 31, 1999, for financial
reporting purposes, as described above in "Capital Resources."
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities." The Statement, which is effective for fiscal years beginning after
December 15, 1998, requires that an entity expense the costs of start-up
activities and organization costs as they are incurred. The Partnership adopted
this Statement in 1999. While historically these costs have been amortized over
five years, the General Partners believe that adoption of this Statement did not
have a material effect on the Partnership's financial position or results of
operations.
The Partnership's leases as of December 31, 1999, are generally 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.
Termination of Merger
On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with APF, pursuant to which the Partnership would be merged with and into
a subsidiary of APF. Subsequent to entering into the Merger agreement, the
General Partners received a number of comments from brokers who sold the
Partnership's units concerning the loss of passive income treatment in the event
the Partnership merged with APF. On June 3, 1999, the General Partners, on
behalf of the Partnership, and APF agreed that it would be in the best interests
of the Partnership and APF that APF not attempt to acquire the Partnership in
the acquisition. Therefore in June 1999, APF entered into a termination
agreement with the General Partners of the Partnership.
15
<PAGE>
Overview of Year 2000 Problem
The year 2000 problem concerns the inability of information and
non-information technology systems to properly recognize and process
date-sensitive information beyond January 1, 2000. The failure to accurately
recognize the year 2000 could result in a variety of problems from data
miscalculations to the failure of entire systems.
Status
The Partnership generally does not directly own information technology
systems. The General Partners and their affiliates generally provide all
services requiring the use of information and some non-information technology
systems. In early 1998, affiliates of the General Partners formed a year 2000
committee ("the Y2K Team") that assessed the readiness of any systems that are
date sensitive and completed upgrades for the hardware equipment and software
that was not year 2000 compliant, as necessary. The cost for these upgrades and
other remedial measures is the responsibility of the General Partners and their
affiliates. The General Partners and their affiliates do not expect that the
Partnership will incur any costs in connection with the year 2000 remedial
measures. In addition, the Y2K Team requested and received certifications of
compliance from other companies with which the General Partners, their
affiliates, and the Partnership have material third party relationships.
In assessing the risks presented by the year 2000 problem, the Y2K Team
identified potential worst case scenarios involving the future of the
information and non-information technology systems used by the Partnership's
transfer agent, financial institutions and tenants. As of January 14, 2000, the
General Partners and their affiliates have tested the information and
non-information technology systems used by the Partnership and have not
experienced material disruption or other significant problems. In addition, as
of the same date, the General Partners are not aware of any material year 2000
problems relating to information and non-information technology systems of third
parties with which the Partnership maintains material relationships, including
those of the Partnership's transfer agent, financial institutions and tenants.
In addition, in the Partnership's interactions with its transfer agent,
financial institutions and tenants, the systems of these third parties have
functioned normally. Until the Partnership's first distribution in 2000 and the
delivery of the information by the transfer agent to stockholders in early 2000,
the General Partners will continue to monitor the year 2000 compliance of the
transfer agent. In addition, the General Partners will continue to monitor the
systems used by the Partnership and to maintain contact with third parties with
which the Partnership has material relationships with respect to year 2000
compliance and any year 2000 issues that may arise at a later date. The General
Partners will develop contingency plans relating to ongoing year 2000 issues at
the time that such issues are identified and such plans are deemed necessary.
Based on the information provided to the Y2K Team, the upgrades and
remedial measures by the General Partners and their affiliates, and the normal
functioning to date of information and non-information technology systems used
by the Partnership and those third parties, the General Partners do not foresee
significant risks associated with its year 2000 compliance at this time. In
addition, the General Partners and their affiliates do not expect to incur any
additional costs in connection with the year 2000 remedial efforts. However,
there can be no assurance that the General Partners and their affiliates or any
third parties will not have ongoing year 2000 issues that may have adverse
effects on the Partnership.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
16
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
CONTENTS
----------
Page
----
Report of Independent Certified Accountants 18
Financial Statements:
Balance Sheets 19
Statements of Income 20
Statements of Partners' Capital 21
Statements of Cash Flows 22
Notes to Financial Statements 25
17
<PAGE>
Report of Independent Certified Public Accountants
--------------------------------------------------
To the Partners
CNL Income Fund XVII, Ltd.
In our opinion, the financial statements listed in the index appearing under
item 14(a)(1) present fairly, in all material respects, the financial position
of CNL Income Fund XVII, Ltd. (a Florida limited partnership) at December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States. In addition, in
our opinion, the financial statement schedules listed in the index appearing
under item 14(a)(2) presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related financial
statements. These financial statements and the financial statement schedules are
the responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements and the financial statement
schedules based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
February 4, 2000
18
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
------
Land and buildings on operating leases, less
accumulated depreciation $19,301,187 $20,648,128
Net investment in direct financing leases 1,840,583 2,980,811
Investment in joint ventures 1,967,017 1,443,064
Cash and cash equivalents 2,644,465 1,492,343
Receivables, less allowance for doubtful
accounts of $48,138 and $1,283,
respectively 77,686 30,463
Due from related parties 3,939 3,500
Organization costs, less accumulated
amortization of $10,000 and $6,309,
respectively -- 3,691
Accrued rental income 693,671 644,643
Other assets 33,415 119,062
----------- -----------
$26,561,963 $27,365,705
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable $ 87,143 $ 3,598
Accrued and escrowed real estate taxes
payable 2,041 --
Distributions payable 600,000 600,000
Due to related parties 23,597 14,448
Rents paid in advance 119,113 20,578
Deferred rental income 60,439 63,918
----------- -----------
Total liabilities 892,333 702,542
Minority interest -- 432,802
Partners' capital 25,669,630 26,230,361
----------- -----------
$26,561,963 $27,365,705
=========== ===========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
--------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income from operating leases $ 2,271,450 $ 2,447,938 $ 2,323,256
Adjustments to accrued rental income (232,140) -- --
Earned income from direct financing leases 352,850 365,504 319,487
Interest 44,184 51,240 69,779
Other income 24,279 3,403 1,128
----------- ----------- -----------
2,460,623 2,868,085 2,713,650
----------- ----------- -----------
Expenses:
General operating and administrative 130,270 110,537 128,168
Professional services 30,086 19,504 21,877
Management fee to related party 25,246 26,690 25,377
Real estate taxes 20,254 -- --
State and other taxes 13,505 11,811 6,443
Depreciation and amortization 384,985 369,209 387,292
Transaction costs 84,765 14,139 --
----------- ----------- -----------
689,111 551,890 569,157
----------- ----------- -----------
Income Before Loss on Dissolution of Consolidated Joint
Venture, Minority Interest in Income of Consolidated
Joint Venture and Equity in Earnings of
Unconsolidated Joint Ventures 1,771,512 2,316,195 2,144,493
Loss on Dissolution of Consolidated Joint Venture (82,914) -- --
Minority Interest in Income of Consolidated Joint Venture (31,461) (62,632) (41,854)
Equity in Earnings of Unconsolidated Joint Ventures 182,132 140,595 100,918
----------- ----------- -----------
Net Income $ 1,839,269 $ 2,394,158 $ 2,203,557
=========== =========== ===========
Allocation of Net Income
General partners $ (3,850) $ (59) $ (839)
Limited partners 1,843,119 2,394,217 2,204,396
----------- ----------- -----------
$ 1,839,269 $ 2,394,158 $ 2,203,557
=========== =========== ===========
Net Income Per Limited Partner Unit $ 0.61 $ 0.80 $ 0.73
=========== =========== ===========
Weighted Average Number of Limited Partner Units
Outstanding 3,000,000 3,000,000 3,000,000
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
General Partners
-----------------------------
Accumulated
Contributions Earnings
------------- -----------
<S> <C> <C>
Balance, December 31, 1996 $ 1,000 $ (712)
Distributions to limited partners
($0.76 per limited partner unit) -- --
Net Income -- (839)
------- -------
Balance, December 31, 1997 1,000 (1,551)
Distributions to limited partners
($0.80 per limited partner unit) -- --
Net income -- (59)
------- -------
Balance, December 31, 1998 1,000 (1,610)
Distributions to limited partners
($0.80 per limited partner unit) -- --
Net income -- (3,850)
------- -------
Balance, December 31, 1999 $ 1,000 $(5,460)
======= =======
<CAPTION>
Limited Partners
----------------------------------------------------------------------------------
Accumulated Syndication
Contributions Distributions Earnings Costs Total
------------ ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $30,000,000 $(1,194,964) $ 1,104,822 $(3,590,000) $26,320,146
Distributions to limited partners
($0.76 per limited partner unit) -- (2,287,500) -- -- (2,287,500)
Net Income -- -- 2,204,396 -- 2,203,557
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 30,000,000 (3,482,464) 3,309,218 (3,590,000) 26,236,203
Distributions to limited partners
($0.80 per limited partner unit) -- (2,400,000) -- -- (2,400,000)
Net income -- -- 2,394,217 -- 2,394,158
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 30,000,000 (5,882,464) 5,703,435 (3,590,000) 26,230,361
Distributions to limited partners
($0.80 per limited partner unit) -- (2,400,000) -- -- (2,400,000)
Net income -- -- 1,843,119 -- 1,839,269
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 $30,000,000 $(8,282,464) $ 7,546,554 $(3,590,000) $25,669,630
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash Flows from Operating Activities:
Cash received from tenants $ 2,436,836 $ 2,493,780 $ 2,502,057
Distributions from unconsolidated joint
ventures 182,752 145,839 106,346
Cash paid for expenses (213,754) (169,940) (183,068)
Interest received 44,184 51,240 69,779
----------- ----------- -----------
Net cash provided by operating activities 2,450,018 2,520,919 2,495,114
----------- ----------- -----------
Cash Flows from Investing Activities:
Additions to land and buildings on
operating leases -- -- (1,740,491)
Reimbursement of construction costs from
developer -- 306,100 --
Investment in direct financing leases -- -- (1,130,497)
Investment in joint ventures (527,864) (124,452) (1,135,681)
Proceeds from dissolution of consolidated joint
venture 2,094,231 -- --
----------- ----------- -----------
Net cash provided by (used in) investing
activities 1,566,367 181,648 (4,006,669)
----------- ----------- -----------
Cash Flows from Financing Activities:
Reimbursement of acquisition costs paid by
related parties on behalf of the Partnership -- -- (25,444)
Contributions from holder of minority
interest -- -- 278,170
Distributions to limited partners (2,400,000) (2,400,000) (2,177,584)
Distributions to holder of minority interest (46,567) (49,023) (41,507)
Distribution to holder of minority interest on
dissolution of consolidated joint venture (417,696) -- --
----------- ----------- -----------
Net cash used in financing activities (2,864,263) (2,449,023) (1,966,365)
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 1,152,122 253,544 (3,477,920)
Cash and Cash Equivalents at Beginning of Year 1,492,343 1,238,799 4,716,719
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 2,644,465 $ 1,492,343 $ 1,238,799
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $ 1,839,269 $ 2,394,158 $ 2,203,557
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 372,148 358,063 376,973
Amortization 12,837 11,146 10,319
Loss on dissolution of joint venture 82,914 -- --
Minority interest in income of consolidated
joint venture 31,461 62,632 41,854
Equity in earnings of unconsolidated joint
ventures, net of distributions 620 5,244 5,428
Decrease (increase) in receivables (47,223) (29,850) 39,518
Increase in due from related parties (439) (3,500) --
Increase in prepaid expenses (3,122) (510) --
Decrease in net investment in direct financing
leases 38,950 34,640 30,454
Increase in accrued rental income (67,188) (287,397) (293,699)
Increase (decrease) in accounts payable and
accrued expenses 85,586 676 (63)
Increase (decrease) in due to related parties,
excluding acquisition costs paid on behalf of
the Partnership 9,149 11,573 (97)
Increase (decrease) in rents paid in advance
and deposits 98,535 (35,184) 2,993
Increase (decrease) in deferred rental income (3,479) (772) 77,877
----------- ----------- -----------
Total adjustments 610,749 126,761 291,557
----------- ----------- -----------
Net Cash Provided by Operating Activities $ 2,450,018 $ 2,520,919 $ 2,495,114
=========== =========== ===========
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Related parties paid certain acquisition costs on
behalf of the Partnership: $ -- $ -- $ 11,262
=========== =========== ===========
Land and building under operating lease exchanged
for land and building under operating lease $ -- $ 899,654 $ --
=========== =========== ===========
Distributions declared and unpaid at December 31 $ 600,000 $ 600,000 $ 600,000
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1999, 1998, and 1997
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 were sold.
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 generally 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.
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.
24
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
1. Significant Accounting Policies - Continued:
-------------------------------
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. Whenever a tenant defaults under the
terms of its lease, or events or changes in circumstance indicate that
the tenant will not lease the property through the end of the lease
term, the Partnership either reserves or reverses the cumulative
accrued rental income balance.
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. Although the general partners have made their best estimate of
the factors based on current conditions, it is reasonably possible that
change could occur in the near term which could adversely affect the
general partners' best estimate of net cash flows expected to be generated
from its properties and the need for asset impairment write downs. If an
impairment is indicated, the assets are adjusted to their fair value.
When the collection of amounts recorded as rental or other income is
considered to be doubtful, an adjustment is made to increase the allowance
for doubtful accounts, which is netted against receivables, and to decrease
rental or other income or increase bad debt expense for the current period,
although the Partnership continues to pursue collection of such amounts. If
amounts are subsequently determined to be uncollectible, the corresponding
receivable and allowance for doubtful accounts are decreased accordingly.
Investment in Joint Ventures - Prior to the liquidation of CNL/GC El Cajon
----------------------------
Joint Venture in December 1999, the Partnership accounted for its 80
percent interest in such 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.
25
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
1. Significant Accounting Policies - Continued:
-------------------------------
The Partnership's investments in CNL Kingston Joint Venture, CNL Mansfield
Joint Venture, and Ocean Shores Joint Venture, and a property in Corpus
Christi, Texas, a property in Akron, Ohio, a property in Fayetteville,
North Carolina, and a property in Zephyrhills, Florida for which each
property is held as tenants-in-common, are 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 - In April 1998, the American Institute of Certified
------------------
Public Accountants issued Statement of Position 98-5 "Reporting on the
Costs of Start-Up Activities." The Statement, which is effective for fiscal
years beginning after December 15, 1998, requires that an entity expense
the costs of start-up activities and organization costs as they are
incurred. The Partnership adopted this statement in 1999. The general
partners believe that adoption of this statement did not have a material
effect on the Partnership's financial position or results of operations.
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.
26
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
1. Significant Accounting Policies - Continued:
-------------------------------
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. The more significant areas requiring the use of
management estimates relate to the allowance for doubtful accounts and
future cash flows associated with long-lived assets. Actual results could
differ from those estimates.
Reclassification - Certain items in the prior years' financial statements
have been reclassified to conform to 1998 presentation. These
reclassifications had no effect on partners' capital or net income.
2. Leases:
------
The Partnership leases its land and buildings to operators of national and
regional fast-food and family-style and casual dining restaurants. The
leases are accounted for under the provisions of Statement of Financial
Accounting Standards No. 13, "Accounting for Leases." Some of the leases
are classified as operating leases and some 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. Leases are generally for 15 to 20 years and
provide for minimum and contingent rentals. In addition, generally 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 five
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.
27
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
3. Land and Buildings on Operating Leases:
--------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Land $ 9,384,719 $ 10,359,513
Buildings 11,164,433 11,164,432
------------ ------------
20,549,152 21,523,945
Less accumulated depreciation (1,247,965) (875,817)
------------ ------------
$ 19,301,187 $ 20,648,128
============ ============
</TABLE>
In June 1998, the tenant of the property in Troy, Ohio, exercised its
option under the terms of its lease agreement to substitute the existing
property for a replacement property. In conjunction therewith, the
Partnership exchanged the Boston Market property in Troy, Ohio, with a
Boston Market property in Inglewood, California. The lease for the property
in Troy, Ohio, was amended to allow the property in Inglewood, California
to continue under the terms of the original lease. All closing costs were
paid by the tenant. The Partnership accounted for this as a nonmonetary
exchange of similar assets and recorded the acquisition of the property in
Inglewood, California, at the net book value of the property in Troy, Ohio.
No gain or loss was recognized due to this being accounted for as a
nonmonetary exchange of similar assets.
In December 1999, CNL/GC El Cajon Joint Venture, the Partnership's
consolidated joint venture, sold its property to its tenant for $2,094,231
(see Note 5).
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 years ended
December 31, 1999, 1998, and 1997, the Partnership recognized $19,488 (net
of $232,140 in reversals), $287,397, and $293,699, respectively, of such
rental income.
28
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
3. Land and Buildings on Operating Leases - Continued:
--------------------------------------
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 1999:
<TABLE>
<S> <C>
2000 $ 1,914,712
2001 1,963,851
2002 2,012,331
2003 2,025,888
2004 2,025,888
Thereafter 21,763,905
-----------
$31,706,575
===========
</TABLE>
Since lease 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.
4. Net Investment in Direct Financing Leases:
-----------------------------------------
The following lists the components of the net investment in direct
financing leases at December 31:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Minimum lease payments receivable $ 3,526,271 $ 7,145,730
Estimated residual values 485,703 765,563
Less unearned income (2,171,391) (4,930,482)
----------- -----------
Net investment in direct
financing leases $ 1,840,583 $ 2,980,811
=========== ===========
</TABLE>
In December 1999, CNL/GC El Cajon Joint Venture, the Partnership's
consolidated joint venture, sold its property to the tenant, for which the
building portion had been classified as a direct financing lease. In
connection therewith, the gross investment (minimum lease payments
receivable and estimated residual value) and unearned income relating to
this property were removed from the accounts (see Note 5).
29
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
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, 1999:
<TABLE>
<S> <C>
2000 $ 218,244
2001 218,244
2002 218,244
2003 218,244
2004 218,244
Thereafter 2,435,051
-----------
$3,526,271
===========
</TABLE>
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 Ventures:
----------------------------
The Partnership owns a property in Fayetteville, North Carolina, as
tenants-in-common with an affiliate of the general partners. As of December
31, 1999, the Partnership owned a 19.56% interest in this property.
In January 1997, the Partnership acquired a 27.42% interest in a property
in Corpus Christi, Texas, and a 36.91% interest in a property in Akron,
Ohio, each as tenants-in-common, with affiliates of the general partners.
In February 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. As of December 31, 1997, the Partnership had contributed $163,964 to
the joint venture to acquire the restaurant property. As of December 31,
1999, the Partnership owned a 21 percent interest in the profits and losses
of the joint venture.
30
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
5. Investment in Joint Ventures - Continued:
----------------------------
In September 1997, the Partnership entered into a joint venture
arrangement, CNL Kingston Joint Venture, with an affiliate of the
Partnership which has the same general partners, to construct and hold one
restaurant property. As of December 31, 1999, the Partnership had
contributed $311,048 to CNL Kingston Joint Venture to fund construction
costs relating to the property owned by the joint venture. As of December
31, 1999, the Partnership owned a 60.06% interest in the profits and losses
of the joint venture.
In January 1999, the Partnership entered into a joint venture arrangement,
Ocean Shores Joint Venture, with CNL Income Fund X, Ltd., a Florida limited
partnership and affiliate of the general partners, to own and lease one
restaurant property. The Partnership contributed approximately $359,500 to
the joint venture as of December 31, 1999. The Partnership owns a 30.94%
interest in the profits and losses of the joint venture.
In January 1999, the Partnership invested in a property in Zephyrhills,
Florida as tenants-in-common with CNL Income Fund IV, Ltd., an affiliate of
the general partners. As of December 31, 1999, the Partnership contributed
approximately $168,400 for a 24 percent interest in the property.
In addition, in December 1999, CNL/GC El Cajon Joint Venture, in which the
Partnership owned an 80 percent interest, sold its property to its tenant
for $2,094,231. Due to the fact that the joint venture had recorded accrued
rental income (income the joint venture had recognized since the inception
of the lease relating to the straight-lining of future scheduled rent
increases in accordance with generally accepted accounting principles) the
joint venture wrote-off $172,496 in accrued rental income in connection
with the sale. In addition, as a result of the sale of the property, the
joint venture was dissolved in accordance with the joint venture agreement.
As a result, the Partnership received approximately $1,675,400 representing
its prorata share of the net sales proceeds received by the joint venture
and recorded a loss on dissolution of $82,914 as of December 31, 1999,
which represented the balance of unamortized costs recorded by the joint
venture.
31
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
5. Investment in Joint Ventures - Continued:
----------------------------
CNL Mansfield Joint Venture, CNL Kingston Joint Venture, Ocean Shores Joint
Venture and the Partnership and affiliates, as tenants-in-common in four
separate tenancy-in-common arrangements, each own and lease one property to
an operator of national fast-food or family-style restaurants. The
following presents the combined, condensed financial information for the
joint ventures and the properties held as tenants-in-common with affiliates
at December 31:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Land and buildings on operating leases,
less accumulated depreciation $5,363,578 $4,412,584
Net investment in direct financing lease 802,684 --
Cash 2,410 2,352
Receivables 27,737 --
Accrued rental income 215,163 134,121
Other assets -- 87
Liabilities 13,042 11,918
Partners' capital 6,398,530 4,537,226
Revenues 726,885 554,934
Net income 613,418 458,588
</TABLE>
The Partnership recognized income totalling $182,132, $140,595, and
$100,918 for the years ended December 31, 1999, 1998, and 1997 from these
joint ventures and the properties held as tenants-in-common with
affiliates.
6. 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").
32
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
6. Allocations and Distributions - Continued:
-----------------------------
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.
Net sales proceeds from the sale of a property not in liquidation of the
Partnership 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, not in liquidation of the
Partnership, is in general, allocated in the same manner as net sales
proceeds are distributable. Any loss is, in general, 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.
Generally, net sales proceeds from a liquidating sale of properties, will
be used in the following order: (i) first to pay and discharge all of the
Partnership's liabilities to creditors, (ii) second, to establish reserves
that may be deemed necessary for any anticipated or unforeseen liabilities
or obligations of the Partnership, (iii) third, to pay all of the
Partnership's liabilities, if any, to the general and limited partners,
(iv) fourth, after allocations of net income, gains and/or losses, to
distribute to the partners with positive capital accounts balances, in
proportion to such balances, up to amounts sufficient to reduce such
positive balances to zero, and (v) thereafter, any funds remaining shall
then be distributed 95 percent to the limited partners and five percent to
the general partners.
During the years ended December 31, 1999, 1998, and 1997, the Partnership
declared distributions to the limited partners of $2,400,000, $2,400,000,
and $2,287,500, respectively. No distributions have been made to the
general partners to date.
33
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
7. Income Taxes:
------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net income for financial reporting purposes $ 1,839,269 $ 2,394,158 $ 2,203,557
Depreciation for financial reporting purposes in
excess of (less than) depreciation for tax
reporting purposes 20,470 (1,069) 25,005
Direct financing leases recorded as operating
leases for tax reporting purposes 38,951 34,640 30,454
Equity in earnings of unconsolidated joint
ventures for financial reporting purposes in
excess of equity in earnings of
unconsolidated joint ventures for tax
reporting purposes (21,316) (13,489) (3,650)
Minority interest in timing differences of
consolidated joint venture (23,193) 23,280 217
Capitalization of transaction costs for tax
reporting purposes 84,765 14,139 --
Capitalization of administrative expenses for tax
reporting purposes -- -- 1,557
Amortization for tax reporting purposes less than
amortization for financial reporting purposes 2,501 1,539 1,667
Accrued rental income (19,488) (287,397) (293,699)
Deferred rental income (51,181) (9,208) 80,635
Rents paid in advance 14,014 (35,184) 2,993
Allowance for doubtful accounts 46,855 (13,050) 9,865
Gain on sale 74,630 -- --
Loss on Dissolution (14,866) -- --
Other (11,318) 5,680 --
----------- ----------- -----------
Net income for federal income tax purposes 1,980,093 $ 2,114,039 $ 2,058,601
=========== =========== ===========
</TABLE>
34
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
8. Related Party Transactions:
--------------------------
One of the individual general partners, James M. Seneff, Jr., is one of the
principal shareholders of CNL Holdings, Inc. The other individual general
partner, Robert A. Bourne, serves as President and Treasurer of CNL
Financial Group, a wholly owned subsidiary of CNL Holdings, Inc. CNL Fund
Advisors, Inc. (the "Advisor") was a majority owned subsidiary of CNL
Financial Group, Inc. until it merged with CNL American Properties Fund,
Inc. ("APF"), effective September 1, 1999. The individual general partners
are stockholders and directors of APF.
The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with the
Partnership. In connection therewith, the Partnership has agreed to pay the
Advisor 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 the Affiliates.
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 the Affiliates shall determine. The Partnership incurred management
fees of $25,246, $26,690, and $25,377, for the years ended December 31,
1999, 1998, and 1997, respectively.
The Advisor is also entitled to receive a deferred, subordinated real
estate disposition fee, payable upon the sale of one or more properties
based on the lesser of one-half of a competitive real estate commission or
three percent of the sales price if the Advisor provides a substantial
amount of services in connection with the sale. However, if the sales
proceeds are reinvested in a replacement property, no such real estate
disposition fees will be incurred until such replacement property is sold
and the net sales proceeds are distributed. The payment of the real estate
disposition fee is subordinated to the receipt by the limited partners of
their aggregate 18% Preferred Return, plus their adjusted capital
contributions. No deferred, subordinated real estate disposition fees have
been incurred since inception.
During the years ended December 31, 1999, 1998, and 1997, the Advisor and
its affiliates provided accounting and administrative services to the
Partnership on a day-to-day basis including services relating to the
proposed and terminated merger, as described in Note 10. The Partnership
incurred $81,811, $91,124, and $90,700 for the years ended December 31,
1999, 1998, and 1997, respectively, for such services.
35
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
8. Related Party Transactions - Continued:
--------------------------
The due to related parties at December 31, 1999 and 1998 totaled $ 23,597
and $14,448, respectively.
9. Concentration of Credit Risk:
----------------------------
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of lessees, each representing more
than ten percent of the Partnership's total rental and earned income
(including rental and earned income from the Partnership's consolidated
joint venture, the Partnership's share of rental income from the
unconsolidated joint ventures and the four properties held as
tenants-in-common with affiliates of the general partners) for each of the
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Golden Corral Corporation $439,790 $461,527 $467,275
National Restaurant Enterprises, Inc. 424,696 421,988 376,461
Phoenix Restaurant Group, Inc.
(formerly known as
DenAmerica Corp.) 386,065 432,423 427,800
Jack in the Box Inc. (formerly
known as Foodmaker, Inc.) 349,491 349,514 326,007
San Diego Food Holdings, Inc. N/A 316,038 N/A
</TABLE>
In addition, the following schedule presents total rental and earned income
from individual restaurant chains, each representing more than ten percent
of the Partnership's total rental and earned income (including rental and
earned income from the Partnership's consolidated joint venture, the
Partnership's share of total rental income from the unconsolidated joint
ventures and the four properties held as tenants-in-common with affiliates
of the general partners) for each of the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Golden Corral Family
Steakhouse Restaurants $599,869 $777,565 $680,316
Burger King 496,391 459,036 410,876
Jack in the Box 349,491 349,514 326,007
Arby's 283,884 N/A N/A
Boston Market N/A 309,576 299,744
</TABLE>
36
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
9. Concentration of Credit Risk - Continued:
----------------------------
The information denoted by N/A indicates that for each period presented,
the tenant or group of affiliated tenants, and the chain did not represent
more than ten percent of the Company's total rental, earned income and
interest income.
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 if
the Partnership is not able to re-lease the properties in a timely manner.
During 1998, the tenants of three Boston Market properties filed for
bankruptcy and in April 1999, rejected the leases relating to two
properties. While the tenant has not rejected or affirmed the remaining
lease, there can be no assurance that it will not be rejected in the
future. The lost revenues resulting from the rejection of the two leases
that were rejected and the possible rejection of the remaining lease could
have an adverse effect on the results of operations of the Partnership if
the Partnership is unable to re-lease these Properties in a timely manner.
10. Termination of Merger:
---------------------
On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which
the Partnership would be merged with and into a subsidiary of APF (the
"Merger"). Subsequent to entering into the Merger agreement, the general
partners received a number of comments from brokers who sold the
Partnership's units concerning the loss of passive income treatment in the
event the Partnership merged with APF. On June 3, 1999, the general
partners, on behalf of the Partnership, and APF agreed that it would be in
the best interests of the Partnership and APF that APF not attempt to
acquire the Partnership in the acquisition. Therefore in June 1999, APF
entered into a termination agreement with the general partners of the
Partnership.
37
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1999, 1998, and 1997
11. Subsequent Events:
-----------------
In January 2000, the Partnership reinvested the sales proceeds it received
from CNL/GC El Cajon Joint Venture in a Baker's Square property located in
Wilmette, Illinois, at an approximate cost of $1,619,100 from CNL BB Corp.,
an affiliate of the general partners. CNL BB Corp. purchased and
temporarily held title to this property in order to facilitate the
acquisition of the property by the Partnership. The purchase price paid by
the Partnership represents the costs incurred by CNL BB Corp. to acquire
and carry the property, including closing costs. In connection therewith,
the Partnership entered into a long term, triple-net lease with terms
substantially the same as its other leases.
38
<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 Financial Group, Inc. and their affiliates, all of
which are affiliates of the General Partners.
James M. Seneff, Jr., age 53, 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 co-venturer
in over 100 real estate ventures. These ventures have involved the financing,
acquisition, construction, and leasing of restaurants, office buildings,
apartment complexes, hotels, and other real estate. Mr. Seneff is a principal
stockholder of CNL Holdings, Inc., the parent company of CNL Financial Group,
Inc. (formerly CNL Group, Inc.), a diversified real estate company, and has
served as a director, Chairman of the Board and Chief Executive Officer of CNL
Financial Group, Inc. since its formation in 1980. Mr. Seneff has served as a
director and Chairman of the Board since inception in 1994, and served as Chief
Executive Officer from 1994 through August 1999, of CNL American Properties
Fund, Inc., a public, unlisted real estate investment trust. He also served as a
director, Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors, Inc., the advisor to CNL American Properties Fund, Inc. until it
merged with the company in September 1999. In addition, he serves as a director,
Chairman of the Board and Chief Executive Officer of CNL Health Care Properties,
Inc., as well as CNL Health Care Corp., the advisor to the company. He also
serves as director, Chairman of the Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as CNL Hospitality Corp., its advisor. Since 1992, Mr. Seneff has served
as Chairman of the Board and Chief Executive Officer of Commercial Net Lease
Realty, Inc., a public real estate investment trust that is listed on the New
York Stock Exchange. Mr. Seneff has also served as a director, Chairman of the
Board and Chief Executive Officer of the following affiliated companies since
formation: CNL Securities Corp., since 1979; CNL Investment Company, since 1990;
and CNL Institutional Advisors, a registered investment advisor for pension
plans, since 1990. Mr. Seneff formerly served as a director of First Union
National Bank of Florida, N.A., and currently serves as the Chairman of the
Board of CNLBank. Mr. Seneff 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 is Florida's principal investment advisory and money management
agency and oversees the investment of more than $60 billion of retirement funds.
Mr. Seneff received his degree in Business Administration from Florida State
University in 1968.
Robert A. Bourne, age 52, Since joining CNL Securities Corp. in 1979, Mr.
Bourne has participated as a general partner or co-venturer in over 100 real
estate ventures involved in the financing, acquisition, construction, and
leasing of restaurants, office buildings, apartment complexes, hotels, and other
real estate. Mr. Bourne is the President and Treasurer of CNL Financial Group,
Inc. (formerly CNL Group, Inc.). Mr. Bourne has served as a director since
inception in 1994, President from 1994 through February 1999, Treasurer from
February 1999 through August 1999, and Vice Chairman of the Board since February
1999 of CNL American Properties Fund, Inc., a public, unlisted real estate
investment trust. He also served in the following positions for CNL Fund
Advisors, Inc., the advisor to CNL American Properties Fund, Inc. prior to its
merger with CNL American Properties Fund, Inc.: director from 1994 through
August 1999, Treasurer from July 1998 through August 1999, President from 1994
through September 1997, and Vice Chairman of the Board from September 1997
through August 1999. Mr. Bourne is a director and President of CNL Health Care
Properties, Inc., as well as a director and President of CNL Health Care Corp.,
the advisor to the company. He is also a director, Vice Chairman of the Board
and President of CNL Hospitality Properties, Inc., a public, unlisted real
estate investment trust, as well as CNL Hospitality Corp., its advisor. Mr.
Bourne also serves as a director of CNLBank. He has served as a director since
1992, Vice Chairman
39
<PAGE>
of the Board since February 1996, Secretary and Treasurer from February 1996
through 1997, and President from July 1992 through February 1996, of Commercial
Net Lease Realty Inc., a public real estate investment trust listed on the New
York Stock Exchange. Mr. Bourne holds the following positions for these
affiliates of CNL Financial Group, Inc.: director, President and Treasurer of
CNL Investment Company; director, President, Treasurer, and Registered Principal
of CNL Securities Corp., a subsidiary of CNL Investment Company and director,
President, Treasurer, and Chief Investment Officer of CNL Institutional
Advisors, Inc., a registered investment advisor for pension plans. Mr. Bourne
began his career as a certified public accountant employed by Coopers & Lybrand,
Certified Public Accountants, from 1971 through 1978, where he attained the
position of tax manager in 1975. Mr. Bourne graduated from Florida State
University in 1970 where he received a B.A. in Accounting, with honors.
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. provides certain management services in connection
with the Partnership and its Properties. 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 450 South Orange Avenue, Orlando, Florida 32801.
CNL Fund Advisors, Inc. was a majority owned subsidiary of CNL Financial Group,
Inc., until its merger effective September 1, 1999. On September 1, 1999, CNL
American Properties Fund, Inc. acquired CNL Fund Advisors, Inc. and was
organized to perform property acquisition, property management and other
services.
CNL Financial Group, Inc., which was the parent company of CNL Fund
Advisors, Inc. through August 1999, was organized in 1980 under the laws of the
State of Florida. CNL Financial Group, Inc. is a diversified real estate company
which provides a wide range of real estate, development and financial services
to companies in the United States through the activities of its subsidiaries.
These activities are primarily focused on the franchised restaurant and
hospitality industries. 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 Financial Group, Inc. Mr. Seneff and his wife own all of the
outstanding shares of CNL Holdings, Inc., the Parent company of CNL Financial
Group, Inc.
The following persons serve as operating officers of CNL Financial 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 Financial Group, Inc. and its affiliated companies.
Curtis B. McWilliams, age 44, joined CNL Financial Group, Inc. in April
1997 and served as an Executive Vice President through August 1999. He serves as
Chief Executive Officer of CNL American Properties Fund, Inc. and CNL Fund
Advisors, Inc. In addition, Mr. McWilliams served as President of CNL Fund
Advisors, Inc. and as President of the Restaurant and Financial Services Groups
within CNL Financial Group, Inc. through August 1999. Mr. McWilliams served as
President of CNL American Properties Fund, Inc. from February 1999 through
August 1999 and previously served as Executive Vice President from February 1998
through February 1999. From September 1983 through March 1997, Mr. McWilliams
was employed by Merrill Lynch & Co., most recently as Chairman of Merrill
Lynch's Private Advisory Services until March 1997. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Masters
of Business Administration with a concentration in finance from the University
of Chicago in 1983.
John T. Walker, age 41, serves as President and Chief Operating Officer of
CNL American Properties Fund, Inc. and CNL Fund Advisors, Inc. He served as
Executive Vice President of CNL American Properties Fund, Inc. from January 1996
through August 1999, as Chief Operating Officer since March 1995 through August
1999, and previously served as Senior Vice President from December 1994 through
August 1999. In addition, Mr. Walker has served as Executive Vice President of
CNL Fund Advisors, Inc. since January 1996 through August 1999, Chief Operating
Officer from April 1995 through August 1999, and previously served as Senior
Vice President from November 1994 through January 1996. In addition, Mr. Walker
previously served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Advisors, Inc. As of September 1, 1999, Mr. Walker
serves as President for CNL American Properties Fund, Inc. From May 1992 to May
1994, Mr. Walker, a certified public accountant, was Executive Vice President
for Finance and Administration and Chief Financial Officer of Z Music, Inc., a
cable television network (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
40
<PAGE>
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
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 51, Ms. Rose served as Secretary of CNL American
Properties Fund, Inc., a public, unlisted real estate investment trust, from
1994 through August 1999, and served as Treasurer from 1994 through February
1999. She also served as Treasurer of CNL Fund Advisors, Inc., from 1994 through
July 1998, and served as Secretary and a director from 1994 through August 1999,
at which point it merged with CNL American Properties Fund, Inc. In addition,
she is Secretary and Treasurer of CNL Health Care Properties, Inc., and serves
as Secretary of its subsidiaries. In addition, she serves as Secretary,
Treasurer and a director of CNL Health Care Corp., the advisor. to the company.
Ms. Rose also serves as Secretary and Treasurer of CNL Hospitality Properties,
Inc., a public, unlisted real estate investment trust, as Secretary, Treasurer
and a director of CNL Hospitality Corp., its Advisor, and as Secretary of the
subsidiaries of the company. Ms. Rose served as Secretary and Treasurer of
Commercial Net Lease Realty, Inc., a public real estate investment trust listed
on the New York Stock Exchange, from 1992 to February 1996, and as Secretary and
a director of CNL Realty Advisors, Inc., its advisor, from its inception in 1991
through 1997. She also served as Treasurer of CNL Realty Advisors, Inc. from
1991 through February 1996. Ms. Rose, a certified public accountant, has served
as Secretary of CNL Financial Group, Inc. (formerly CNL Group, Inc.) since 1987,
served as Controller from 1987 to 1993 and has served as Chief Financial Officer
since 1993. She also serves as Secretary of the subsidiaries of CNL Financial
Group, Inc. and holds various other offices in the subsidiaries. In addition,
she serves as Secretary for approximately 50 additional corporations affiliated
with CNL Financial Group, Inc. and its subsidiaries. Ms. Rose oversees the tax
and legal compliance for over 375 corporations, partnerships and joint ventures,
and the accounting and financial reporting for over 200 entities. 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. She was licensed as a
certified public accountant in 1979.
Jeanne A. Wall, age 41, Ms. Wall served as Executive Vice President of CNL
American Properties Fund, Inc., a public, unlisted real estate investment trust,
from 1994 through August 1999, and as Executive Vice President of CNL Fund
Advisors, Inc., its advisor, from 1994 through August 1999, at which point it
merged with CNL American Properties Fund, Inc. Ms. Wall also serves as Executive
Vice President of CNL Health Care Properties, Inc. and CNL Health Care Corp.,
the Advisor to the Company. Ms. Wall also serves as Executive Vice President of
CNL Hospitality Properties, Inc., a public, unlisted real estate investment
trust, and serves as Executive Vice President and a director of CNL Hospitality
Corp., its advisor. She also serves as a director for CNLBank. Ms. Wall serves
as Executive Vice President of CNL Financial Group, Inc. (formerly CNL Group,
Inc.). Ms. Wall has served as Chief Operating Officer of CNL Investment Company
and of CNL Securities Corp. since 1994 and has served as Executive Vice
President of CNL Investment Company since January 1991. In 1984, Ms. Wall joined
CNL Securities Corp. and in 1985, became Vice President. In 1987, she became a
Senior Vice President and in July 1997, became Executive 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 product development, communications and
investor services for programs offered through participating brokers. Ms. Wall
also served as Senior Vice President of CNL Institutional Advisors Inc., a
registered investment advisor, from 1990 to 1993. Ms. Wall served as Vice
President of Commercial Net Lease Realty, Inc., a public real estate investment
trust listed on the New York Stock Exchange, from 1992 through 1997, and served
as Vice President of CNL Realty Advisors, Inc. from its inception in 1991
through 1997. Ms. Wall currently serves as a trustee on the Board of the
Investment Program Association, is a member of the Corporate Advisory Council
for the International Association for Financial Planning and is a member of IWF,
International Women's Forum. In addition, she previously served on the Direct
Participation Program committee for the National Association of Securities
Dealers, Inc. Ms. Wall holds a B.A. in Business Administration from Linfield
College and is a registered principal of CNL Securities Corp.
Steven D. Shackelford, age 36, a certified public accountant, serves as
Senior Vice President, Chief Financial Officer, and Secretary of CNL American
Properties Fund, Inc. and CNL Fund Advisors, Inc. He served as Chief Financial
Officer of CNL American Properties Fund, Inc. from January 1997 and as Chief
Financial Officer of CNL Fund Advisors, Inc. since September 1996 through August
1999. From March 1995 to July 1996, Mr. Shackelford 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 audit senior from 1986 to 1992 in the
Orlando, Florida office of Price
41
<PAGE>
Waterhouse. Mr. Shackelford received a B.A. in Accounting, with honors, and a
Masters of Business Administration from Florida State University.
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 15, 2000, 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 15, 2000, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
<S> <C> <C>
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
====
</TABLE>
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
42
<PAGE>
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, 1999, 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, 1999
- --------------------------------- -------------------------------------- ------------------------------
<S> <C> <C>
Reimbursement to affiliates for Operating expenses are reimbursed at Operating expenses incurred
operating expenses the lower of cost or 90 percent of on behalf of the Partnership:
the prevailing rate at which $66,301
comparable services could have been
obtained in the same geographic Accounting and administrative
area. Affiliates of the General services: $81,811
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 One percent of the sum of gross $25,246
affiliates revenues (excluding noncash and
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 the affiliates.
All of 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 the
affiliates shall determine.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1999
- --------------------------------- -------------------------------------- ------------------------------
<S> <C> <C>
Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates. 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 affiliates of the General
Partners provide 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 equal $-0-
subordinated share of to five percent of Partnership
Part-nership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to five percent of Partnership
Part-nership net sales proceeds distributions of such net sales
from a sale or sales not in proceeds, subordinated to certain
liquidation of the Partnership minimum returns to the Limited
Partners
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 1999
- --------------------------------- -------------------------------------- ------------------------------
<S> <C> <C>
General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales pro-ceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following order or
priority: (i) first, to pay all debts and
liabilities of the Partnership and to
establish reserves; (ii) second, to
Partners with positive capital account
balances, determined after the allocation
of net income, net loss, gain and loss,
in proportion to such balances, up to
amounts sufficient to reduce such
balances to zero; and (iii) thereafter,
95% to the Limited Partners and 5% to the
General Partners.
</TABLE>
45
<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 Certified Public Accountants
Balance Sheets at December 31, 1999 and 1998
Statements of Income for the year ended December 31, 1999, 1998, and
1997
Statements of Partners' Capital for the year ended December 31, 1999,
1998, and 1997.
Statements of Cash Flows for the year ended December 31, 1999, 1998,
and 1997
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at December
31, 1999
Notes to Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1999
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 XVIII, Ltd. (Filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, 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.)
**4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-90998-01 on Form S-11 and
incorporated herein by reference.)
**4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, 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.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc.
relating to the Distribution Reinvestment Plans (Filed as
Exhibit 4.4 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
46
<PAGE>
**8.3 Opinion of Baker & Hostetler regarding certain material
issues relating to the Distribution Reinvestment Plan of CNL
Income Fund XVII, Ltd. (Filed as Exhibit 8.3 to Amendment
No. Three to the Registrant's Registration Statement on Form
S-11, No. 33-90998, incorporated herein by reference.)
**10.1 Management Agreement between CNL Income Fund XVIII, Ltd. and
CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
March 20, 1997, and incorporated herein by reference.)
**10.2 Form of Joint Venture Agreement for Joint Ventures with
Unaffiliated Entities (Filed as Exhibit 10.2 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.3 Form of Joint Venture Agreement for Joint Ventures with
Affiliated Programs (Filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.4 Form of Development Agreement (Filed as Exhibit 10.5 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.5 Form of Indemnification and Put Agreement (Filed as Exhibit
10.6 to the Registrant's Registration Statement on Form
S-11, No. 33-90998, incorporated herein by reference.)
**10.6 Form of Unconditional Guarantee of Payment and Performance
(Filed as Exhibit 10.7 to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated herein by
reference.)
**10.7 Form of Lease Agreement for Existing Restaurant (Filed as
Exhibit 10.8 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
**10.8 Form of Lease Agreement for Restaurant to be Constructed
(Filed as Exhibit 10.9 to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated herein by
reference.)
**10.9 Form of Premises Lease for Golden Corral Restaurant (Filed
as Exhibit 10.10 to the Registrant's Registration Statement
on Form S-11, No. 33-90998, incorporated herein by
reference.)
**10.10 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc.
relating to the Distribution Reinvestment Plans (Filed as
Exhibit 4.4 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
**10.11 Form of Cotenancy Agreement with Unaffiliated Entity (Filed
as Exhibit 10.12 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.12 Form of Cotenancy Agreement with Affiliated Entity (Filed as
Exhibit 10.13 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
47
<PAGE>
**10.13 Form of Registered Investor Advisor Agreement (Filed as
Exhibit 10.14 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
(b) The Registrant filed no reports on Form 8-K during the period October
1, 1999 through December 31, 1999.
**previously filed
48
<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 28th day of
March, 2000.
CNL INCOME FUND XVII, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
--------------------
ROBERT A. BOURNE, 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> <C>
/s/ Robert A. Bourne President, Treasurer and Director (Principal March 28, 2000
- ------------------------ Financial and Accounting Officer)
Robert A. Bourne
/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 28, 2000
- ------------------------ (Principal 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, 1999
<TABLE>
<CAPTION>
Initial Cost
---------------------------
Encum- Buildings and
brances Land Improvements
---------- ----------- -------------
<S> <C> <C> <C>
Properties the Partnership
has Invested in Under
Under Operating Leases:
Arby's Restaurants:
Muncie, Indiana -- $ 242,759 $ --
Schertz, Texas -- 348,245 470,577
Plainfield, Indiana -- 296,025 557,809
Boston Market Restaurants:
Houston, Texas -- 373,112 477,383
Long Beach, California -- 661,696 --
Inglewood, California (h) -- 327,924 535,518
Burger King Restaurants:
Harvey, Illinois -- 489,340 734,010
Chicago Ridge, Illinois -- 771,965 --
Lyons, Illinois -- 887,767 --
Denny's Restaurants:
Kentwood, Michigan -- 287,732 626,865
Mesquite, Nevada -- 373,077 --
Pensacola, Florida -- 305,509 670,990
Fazoli's Restaurant:
Warner Robins, Georgia -- 300,481 --
Golden Corral Family
Steakhouse Restaurants:
Orange Park, Florida -- 711,838 1,162,406
Aiken, South Carolina (g) -- 508,790 --
Weatherford, Texas (g) -- 345,926 --
Jack in the Box Restaurants:
Dinuba, California -- 324,970 --
LaPorte, Texas -- 355,929 --
El Dorado, California -- 617,416 --
Popeyes Famous Fried
Chicken Restaurant:
Warner Robins, Georgia -- 260,514 --
Wendy's Old Fashioned
Hamburgers Restaurants:
Knoxville, Tennessee -- 332,003 --
Livingston, Tennessee -- 261,701 --
---------- ----------- -----------
$ 9,384,719 $ 5,235,558
========== =========== ===========
<CAPTION>
Costs Capitalized
Subsequent to Gross Amount at Which
Acquisition Carried at Close of Period (b)
---------- ----------- ---------------------------------------
Improve- Carrying Buildings and
ments Costs Land Improvements Total
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Properties the Partnership
has Invested in Under
Under Operating Leases:
Arby's Restaurants:
Muncie, Indiana $ -- $ -- $ 242,759 $ (d) $ 242,759
Schertz, Texas -- -- 348,245 470,577 818,822
Plainfield, Indiana -- -- 296,025 557,809 853,834
Boston Market Restaurants:
Houston, Texas -- -- 373,112 477,383 850,495
Long Beach, California 217,883 -- 661,696 217,883 879,579
Inglewood, California (h) -- 327,924 535,518 863,442
Burger King Restaurants:
Harvey, Illinois -- 489,340 734,010 1,223,350
Chicago Ridge, Illinois 699,556 -- 771,965 699,556 1,471,521
Lyons, Illinois 597,381 -- 887,767 597,381 1,485,148
Denny's Restaurants:
Kentwood, Michigan -- -- 287,732 626,865 914,597
Mesquite, Nevada -- -- 373,077 (d) 373,077
Pensacola, Florida -- -- 305,509 670,990 976,499
Fazoli's Restaurant:
Warner Robins, Georgia 421,898 -- 300,481 421,898 722,379
Golden Corral Family
Steakhouse Restaurants:
Orange Park, Florida -- -- 711,838 1,162,406 1,874,244
Aiken, South Carolina (g) 862,570 -- 508,790 862,570 1,371,360
Weatherford, Texas (g) 691,222 -- 345,926 691,222 1,037,148
Jack in the Box Restaurants:
Dinuba, California 509,982 -- 324,970 509,982 834,952
LaPorte, Texas 560,485 -- 355,929 560,485 916,414
El Dorado, California 548,187 -- 617,416 548,187 1,165,603
Popeyes Famous Fried
Chicken Restaurant:
Warner Robins, Georgia 330,101 -- 260,514 330,101 590,615
Wendy's Old Fashioned
Hamburgers Restaurants:
Knoxville, Tennessee 489,610 -- 332,003 489,610 821,613
Livingston, Tennessee -- -- 261,701 (d) 261,701
----------- ---------- ---------- ----------- -----------
$ 5,928,875 -- $9,384,719 $11,164,433 $20,549,152
=========== ========== ========== =========== ===========
<CAPTION>
Life on Which
Depreciation in
Date Latest Income
Accumulated of Con- Date Statement is
Depreciation struction Acquired Computed
------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Properties the Partnership
has Invested in Under
Under Operating Leases:
Arby's Restaurants:
Muncie, Indiana $ (e) 1995 03/96 (e)
Schertz, Texas 55,416 1996 06/96 (c)
Plainfield, Indiana 59,245 1996 10/96 (c)
Boston Market Restaurants:
Houston, Texas 56,218 1996 06/96 (c)
Long Beach, California 22,326 1996 12/96 (c)
Inglewood, California (h) 28,121 1996 06/98 (c)
Burger King Restaurants:
Harvey, Illinois 93,494 1996 03/96 (c)
Chicago Ridge, Illinois 84,841 1996 03/96 (c)
Lyons, Illinois 52,751 1997 11/96 (c)
Denny's Restaurants:
Kentwood, Michigan 79,102 1980 03/96 (c)
Mesquite, Nevada (e) 1996 12/95 (e)
Pensacola, Florida 76,122 1996 08/96 (c)
Fazoli's Restaurant:
Warner Robins, Georgia 44,425 1996 08/96 (c)
Golden Corral Family
Steakhouse Restaurants:
Orange Park, Florida 148,167 1996 03/96 (c)
Aiken, South Carolina (g) 102,231 1996 04/96 (c)
Weatherford, Texas (g) 76,737 1996 03/96 (c)
Jack in the Box Restaurants:
Dinuba, California 56,925 1996 05/96 (c)
LaPorte, Texas 61,182 1996 07/96 (c)
El Dorado, California 59,637 1996 07/96 (c)
Popeyes Famous Fried
Chicken Restaurant:
Warner Robins, Georgia 35,181 1996 08/96 (c)
Wendy's Old Fashioned
Hamburgers Restaurants:
Knoxville, Tennessee 55,844 1996 05/96 (c)
Livingston, Tennessee (e) 1996 06/96 (e)
----------
$1,247,965
==========
</TABLE>
F-1
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION -CONTINUED
December 31, 1999
<TABLE>
<CAPTION>
Initial Cost
---------------------------
Encum- Buildings and
brances Land Improvements
---------- ----------- -------------
<S> <C> <C> <C>
Arby's Restaurant:
Muncie, Indiana -- -- $ 629,847
Denny's Restaurant:
Mesquite, Nevada -- -- --
Wendy's Old Fashioned
Hamburgers Restaurant:
Livingston, Tennessee -- -- --
----------- -----------
-- -- 629,847
=========== ===========
Property in Which the Partner-
ship has a 19.56% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Boston Market Restaurant:
Fayetteville, North Carolina -- $ 377,800 $ 587,700
=========== ===========
Property in Which the Partner-
ship has a 27.42% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Black-eyed Pea Restaurant:
Corpus Christi, Texas (f) -- $ 715,052 $ 726,004
=========== ===========
Property in Which the Partner-
ship has a 36.91% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Burger King Restaurant:
Akron, Ohio (f) -- $ 355,594 $ 517,030
=========== ===========
<CAPTION>
Costs Capitalized
Subsequent to Gross Amount at Which
Acquisition Carried at Close of Period (b)
---------- ----------- ---------------------------------------
Improve- Carrying Buildings and
ments Costs Land Improvements Total
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Arby's Restaurant:
Muncie, Indiana -- -- -- (d) (d)
Denny's Restaurant:
Mesquite, Nevada 857,390 -- -- (d) (d)
Wendy's Old Fashioned
Hamburgers Restaurant:
Livingston, Tennessee 455,575 -- -- (d) (d)
---------- ----------- -----------
$1,312,965
========== =========== ===========
Property in Which the Partner-
ship has a 19.56% 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
========== =========== =========== =========== ==========
Property in Which the Partner-
ship has a 27.42% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Black-eyed Pea Restaurant:
Corpus Christi, Texas (f) -- -- $ 715,052 $ 726,004 $1,441,056
========== =========== =========== =========== ==========
Property in Which the Partner-
ship has a 36.91% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Burger King Restaurant:
Akron, Ohio (f) -- -- $ 355,594 $ 517,030 $ 872,624
========== =========== =========== =========== ==========
<CAPTION>
Life on Which
Depreciation in
Date Latest Income
Accumulated of Con- Date Statement is
Depreciation struction Acquired Computed
------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Arby's Restaurant:
Muncie, Indiana (e) 1995 03/96 (e)
Denny's Restaurant:
Mesquite, Nevada (e) 1996 12/95 (e)
Wendy's Old Fashioned
Hamburgers Restaurant:
Livingston, Tennessee (e) 1996 06/96 (e)
Property in Which the Partner-
ship has a 19.56% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Boston Market Restaurant:
Fayetteville, North Carolina $ 63,538 1996 10/96 (c)
===========
Property in Which the Partner-
ship has a 27.42% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Black-eyed Pea Restaurant:
Corpus Christi, Texas (f) $ 70,848 1992 01/97 (c)
===========
Property in Which the Partner-
ship has a 36.91% Interest
as Tenants-in-Common and
has Invested in Under an
Operating Lease:
Burger King Restaurant:
Akron, Ohio (f) $ 50,456 1970 01/97 (c)
===========
</TABLE>
F-2
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Parnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
December 31, 1999
<TABLE>
<CAPTION>
Initial Cost
---------------------------
Encum- Buildings and
brances Land Improvements
---------- ----------- -------------
<S> <C> <C> <C>
Property of Joint Venture in
Which the Partnership has
a 21% Interest and has
Invested in Under an
Operating Lease:
Jack in the Box Restaurant:
Mansfield, Texas -- $ 297,295 $ 482,914
=========== ===========
Property of Joint Venture in
Which the Partnership has
a 60.06% Interest and has
Invested in Under an
Operating Lease:
Taco Bell Restaurant:
Kingston, Tennessee -- $ 189,452 $ 328,444
=========== ===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and has
Invested in Under an
Operating Lease:
Burger King Restaurant:
Ocean Shores, WA -- $ 351,015 --
=========== ===========
Property in which the Partnership
has a 24% Interest as
Tenants-in-Common and has
invested in Under an Operating
Lease:
Arby's Restaurant:
Zephyrhills, FL -- $ 260,146 $ 441,434
=========== ===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and
has Invested in Under a
Direct Financing Lease:
Burger King Restaurant:
Ocean Shores, WA -- -- $ 810,902
=========== ===========
<CAPTION>
Costs Capitalized
Subsequent to Gross Amount at Which
Acquisition Carried at Close of Period (b)
---------- ----------- ---------------------------------------
Improve- Carrying Buildings and
ments Costs Land Improvements Total
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Property of Joint Venture in
Which the Partnership has
a 21% Interest and has
Invested in Under an
Operating Lease:
Jack in the Box Restaurant:
Mansfield, Texas -- -- $ 297,295 $ 482,914 $ 780,209
========== =========== =========== ============ ===========
Property of Joint Venture in
Which the Partnership has
a 60.06% Interest and has
Invested in Under an
Operating Lease:
Taco Bell Restaurant:
Kingston, Tennessee -- -- $ 189,452 $ 328,444 $ 517,896
========== =========== =========== ============ ===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and has
Invested in Under an
Operating Lease:
Burger King Restaurant:
Ocean Shores, WA -- -- $ 351,015 (d) $ 351,015
========== =========== =========== ============ ===========
Property in which the Partnership
has a 24% Interest as
Tenants-in-Common and has
invested in Under an Operating
Lease:
Arby's Restaurant:
Zephyrhills, FL -- -- $ 260,146 $ 441,434 $ 701,580
========== =========== =========== ============ ===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and
has Invested in Under a
Direct Financing Lease:
Burger King Restaurant:
Ocean Shores, WA -- -- -- (d) (d)
========== =========== =========== ============ ===========
<CAPTION>
Life on Which
Depreciation in
Date Latest Income
Accumulated of Con- Date Statement is
Depreciation struction Acquired Computed
------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Property of Joint Venture in
Which the Partnership has
a 21% Interest and has
Invested in Under an
Operating Lease:
Jack in the Box Restaurant:
Mansfield, Texas $ 45,060 1997 02/97 (c)
===========
Property of Joint Venture in
Which the Partnership has
a 60.06% Interest and has
Invested in Under an
Operating Lease:
Taco Bell Restaurant:
Kingston, Tennessee $ 22,868 1997 09/97 (c)
===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and has
Invested in Under an
Operating Lease:
Burger King Restaurant:
Ocean Shores, WA (e) 1998 01/99 (e)
===========
Property in which the Partnership
has a 24% Interest as
Tenants-in-Common and has
invested in Under an Operating
Lease:
Arby's Restaurant:
Zephyrhills, FL $ 13,532 1990 01/99 (c)
===========
Property of Joint Venture in
Which the Partnership has
a 30.94% Interest and
has Invested in Under a
Direct Financing Lease:
Burger King Restaurant:
Ocean Shores, WA (e) 1998 01/99 (e)
===========
</TABLE>
F-3
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
(a) Transactions in real estate and accumulated depreciation during 1999, 1998,
and 1997 are summarized as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
------------ ------------
<S> <C> <C>
Properties the Partnership has Invested
in Under Operating Leases:
Balance, December 31, 1996 $ 21,541,029 $ 176,995
Acquisitions 341,810 --
Depreciation expense -- 376,973
------------ ------------
Balance, December 31, 1997 21,882,839 553,968
Acquisitions 499,431 --
Dispositions (858,323) (36,214)
Depreciation expense -- 358,063
------------ ------------
Balance, December 31, 1998 21,523,947 875,817
Dispositions (974,793) --
Depreciation expense -- 372,148
------------ ------------
Balance, December 31, 1999 $ 20,549,154 $ 1,247,965
============ ============
Property in Which the Partnership has an 19.56%
Interest as Tenants-in-Common and has
Invested in Under an Operating Lease:
Balance, December 31, 1996 $ 965,500 $ 4,768
Depreciation expense -- 19,590
------------ ------------
Balance, December 31, 1997 965,500 24,358
Depreciation expense -- 19,590
------------ ------------
Balance, December 31, 1998 965,500 43,948
Depreciation expense -- 19,590
------------ ------------
Balance, December 31, 1999 $ 965,500 $ 63,538
============ ============
</TABLE>
F-4
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
---------- ------------
<S> <C> <C>
Property in Which the Partnership has a 27.42% Interest
as Tenant-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1996 $ -- $ --
Acquisition 1,441,056 --
Depreciation expense -- 22,448
---------- ----------
Balance, December 31, 1997 1,441,056 22,448
Depreciation expense -- 24,200
---------- ----------
Balance, December 31, 1998 1,441,056 46,648
Depreciation expense -- 24,200
---------- ----------
Balance, December 31, 1999 $1,441,056 $ 70,848
========== ==========
Property in Which the Partnership has a 36.91% Interest
as Tenant-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1996 $ -- $ --
Acquisition 872,624 --
Depreciation expense -- 15,988
---------- ----------
Balance, December 31, 1997 872,624 15,988
Depreciation expense -- 17,234
---------- ----------
Balance, December 31, 1998 872,624 33,222
Depreciation expense -- 17,234
---------- ----------
Balance, December 31, 1999 $ 872,624 $ 50,456
========== ==========
Property of Joint Venture in Which the Partnership has a
25% Interest and has Invested in Under an Operating
Lease:
Balance, December 31, 1996 $ -- $ --
Acquisition 780,209 --
Depreciation expense -- 12,866
---------- ----------
Balance, December 31, 1997 780,209 12,866
Depreciation expense -- 16,097
---------- ----------
Balance, December 31, 1998 780,209 28,963
Depreciation expense -- 16,097
---------- ----------
Balance, December 31, 1999 $ 780,209 $ 45,060
========== ==========
</TABLE>
F-5
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
-------- ------------
<S> <C> <C>
Property of Joint Venture in which the Partnership has a
60.06% Interest and has Invested in under an
Operating Lease:
Balance, December 31, 1996 $ -- $ --
Acquisition 512,925 --
Depreciation expense -- 983
-------- --------
Balance, December 31, 1997 512,925 983
Acquisition 4,971 --
Depreciation expense -- 10,937
-------- --------
Balance, December 31, 1998 517,896 11,920
Depreciation expense -- 10,948
-------- --------
Balance, December 31, 1999 $517,896 $ 22,868
======== ========
Property of Joint Ventures in which the Partnership has
a 30.94%% Interest and has Invested in under an
Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisitions 351,015 --
Depreciation expense (e) -- --
-------- --------
Balance, December 31, 1999 $351,015 $ --
======== ========
Property of Joint Ventures in which the Partnership has
a 24% Interest as Tenants-in-Common and has
Invested in under an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisitions 701,580 --
Depreciation expense -- 13,532
-------- --------
Balance, December 31, 1999 $701,580 $ 13,532
======== ========
</TABLE>
(b) As of December 31, 1999, the aggregate cost of the Properties owned by the
Partnership and the joint venture for federal income tax purposes was
$22,500,782 and $6,439,782, respectively. All of the leases are treated as
operating leases for federal income tax purposes.
(c) Depreciation expense is computed for buildings and improvements based upon
estimated lives of 30 years.
(d) 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-6
<PAGE>
CNL INCOME FUND XVII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 1999
(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 years ended December 31, 1997 and 1996, the Partnership
purchased land and buildings from affiliates of the Partnership for
aggregate costs of approximately $718,932 and $1,667,100, respectively.
Such amounts are included in land and buildings on operating leases, net
investment in direct financing leases, investment in joint ventures and
other assets at December 31, 1999.
(g) During the year ended December 31, 1998, the Partnership received
reimbursements from the developer of the property upon final reconciliation
of total construction costs. In connection therewith, the land and building
value was adjusted accordingly.
(h) This property was exchanged for a Boston Market previously owned and
located in Troy, Ohio, during 1998.
F-7
<PAGE>
EXHIBIT INDEX
Exhibit Number
- --------------
**3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 3.1 to the Registrant's
Registration Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, 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.)
**4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed 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 XVIII, 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.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating to
the Distribution Reinvestment Plans (Filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**8.3 Opinion of Baker & Hostetler regarding certain material issues
relating to the Distribution Reinvestment Plan of CNL Income Fund
XVII, Ltd. (Filed as Exhibit 8.3 to Amendment No. Three to the
Registrant's Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.1 Management Agreement between CNL Income Fund XVIII, 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.)
**10.2 Form of Joint Venture Agreement for Joint Ventures with
Unaffiliated Entities (Filed as Exhibit 10.2 to the Registrant's
Registration Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**10.3 Form of Joint Venture Agreement for Joint Ventures with
Affiliated Programs (Filed as Exhibit 10.3 to the Registrant's
Registration Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**10.4 Form of Development Agreement (Filed as Exhibit 10.5 to the
Registrant's Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.5 Form of Indemnification and Put Agreement (Filed as Exhibit 10.6
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.6 Form of Unconditional Guarantee of Payment and Performance (Filed
as Exhibit 10.7 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
**10.7 Form of Lease Agreement for Existing Restaurant (Filed as Exhibit
10.8 to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.8 Form of Lease Agreement for Restaurant to be Constructed (Filed
as Exhibit 10.9 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
<PAGE>
**10.9 Form of Premises Lease for Golden Corral Restaurant (Filed as
Exhibit 10.10 to the Registrant's Registration Statement on Form
S-11, No. 33-90998, incorporated herein by reference.)
**10.10 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating to
the Distribution Reinvestment Plans (Filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.11 Form of Cotenancy Agreement with Unaffiliated Entity (Filed as
Exhibit 10.12 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**10.12 Form of Cotenancy Agreement with Affiliated Entity (Filed as
Exhibit 10.13 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**10.13 Form of Registered Investor Advisor Agreement (Filed as Exhibit
10.14 to Amendment No. One to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated herein by
reference.)
27 Financial Data Schedule (Filed herewith.)
**previously filed
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVII, Ltd. at December 31, 1999, and its statement of
income for the twelve months then ended and is qualified in its entirety by
reference to the Form 10-K of CNL Income Fund XVII, Ltd. for the twelve months
ended December 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,644,465
<SECURITIES> 0
<RECEIVABLES> 125,824
<ALLOWANCES> 48,138
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 20,549,154
<DEPRECIATION> 1,247,967
<TOTAL-ASSETS> 26,561,963
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,669,630
<TOTAL-LIABILITY-AND-EQUITY> 26,561,963
<SALES> 0
<TOTAL-REVENUES> 2,460,623
<CGS> 0
<TOTAL-COSTS> 688,478
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 633
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,839,269
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,839,269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,839,269
<EPS-BASIC> 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>
