FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
33-90998-01
CNL Income Fund XVIII, Ltd.
(Exact name of registrant as specified in its charter)
Florida 59-3295394
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -----------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
<PAGE>
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Partners' Capital 2
Notes to Condensed Financial Statements 3-4
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 5-7
Part II
Other Information 8
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Development Stage Florida Limited Partnership)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
--------- --------
<S> <C>
Cash $ 730 $ 980
Prepaid expenses 20 20
Organization costs 10,000 10,000
Deferred syndication costs 344,375 245,890
-------- --------
$355,125 $256,890
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 593 $ 22,130
Due to related parties 353,532 233,760
-------- --------
Total liabilities 354,125 255,890
Partners' capital 1,000 1,000
-------- --------
$355,125 $256,890
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Development Stage Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended June 30, 1996 and the
Period February 10, 1995 (Date of Inception)
through December 31, 1995
<TABLE>
<CAPTION>
Number of
Units of
Limited
Partnership Limited General
Interest Issued Partners Partners Total
<S> <C>
Balance,
February 10, 1995
(Date of Inception) - $ - $ - $ -
Cash contributions
on February 22,
1995, for general
partners' interest - - 1,000 1,000
------ ------ ------ ------
Balance,
December 31, 1995 - - 1,000 1,000
Cash contributions - - - -
------ ------ ------ ------
Balance, June 30,
1996 - $ - $1,000 $1,000
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Development Stage Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended June 30, 1996 and 1995
and Six Months Ended June 30, 1996 and the
Period February 10, 1995 (Date of Inception)
through March 31, 1995
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Amounts as of
December 31, 1995, included in the financial statements, have been
derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XVIII, Ltd. (the "Partnership") for the year ended December
31, 1995.
As of June 30, 1996, the Partnership was a development stage enterprise
and operations had not begun.
2. Deferred Syndication Costs:
At June 30, 1996 and December 31, 1995, syndication costs consisting of
legal fees, printing and other expenses which were incurred in
connection with the offering totalled $344,375 and $245,890,
respectively. These syndication costs have been treated as deferred
costs and, once the Partnership's offering commences, will be charged
to the limited partners' capital accounts to reflect the net capital
proceeds of the offering. All organizational and offering expenses, as
defined in the Partnership's prospectus, which exceed three percent of
the total gross proceeds received from the sale of units of the
Partnership will be paid by the general partners and will not be the
responsibility of the Partnership.
3. Related Party Transactions:
During the six months ended June 30, 1996, CNL Fund Advisors, Inc. and
its affiliates provided accounting and administrative services to the
Partnership, primarily in connection with the registration of the
offering, totalling $6,605, which are included in deferred syndication
costs.
3
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Development Stage Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended June 30, 1996 and 1995
and Six Months Ended June 30, 1996 and the
Period February 10, 1995 (Date of Inception)
through March 31, 1995
3. Related Party Transactions - Continued:
The amount due to related parties at June 30, 1996 and December 31,
1995, of $353,532 and $233,760, respectively, represents amounts due to
CNL Fund Advisors, Inc. and its affiliates for organizational and
offering expenses incurred on behalf of the Partnership and for
accounting and administrative services. In the event the minimum
offering proceeds are not received by the Partnership, the Partnership
will have no obligation to repay such amounts.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CNL Income Fund XVIII, Ltd. (the "Partnership") is a Florida limited
partnership that 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 restaurants are to be
constructed (the "Properties"), to be leased primarily to operators of selected
national and regional fast-food, family-style and casual dining restaurant
chains. The leases will be triple-net leases, with the lessee generally
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The Partnership's primary investment objectives are to preserve,
protect and enhance Partnership capital, while providing (i) cash distributions
commencing in the initial year of Partnership operations in amounts which exceed
current taxable income (due to the fact that depreciation deductions
attributable to the Properties reduce taxable income even though depreciation is
not a cash expenditure); (ii) an anticipated minimum level of income through the
long-term rental of Properties to selected operators of certain national and
regional fast-food, family-style and casual dining restaurant chains; (iii)
additional income and protection against inflation by participation in certain
restaurant gross sales through the receipt of percentage rent payments and,
typically, automatic increases in the minimum annual rent; and (iv) capital
appreciation through the potential increase in value of the Properties.
Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, the Partnership and CNL
Income Fund XVII, Ltd. ("CNL XVII") registered for sale an aggregate of
$65,000,000 of limited partnership interest (the "Units") (3,000,000 Units for
CNL XVII and 3,500,000 Units for the Partnership at $10 per Unit). The offering
of Units of CNL XVII commenced September 2, 1995. Pursuant to the registration
statement, the Partnership's offering of Units will not commence until the
offering of Units of CNL XVII has terminated. As of June 30, 1996, CNL XVII was
in the offering stage; therefore, the Partnership had not commenced its offering
of Units. In accordance with the Partnership's prospectus, the general partners
have elected to extend the offering of Units of both CNL XVII and the
Partnership until a date no later than August 11, 1997.
As of June 30, 1996, the Partnership had not acquired any Properties
and will not acquire any Properties until its offering of Units commences and
the minimum offering proceeds of $1,500,000 are received and released from
escrow. Therefore, as of June 30, 1996, the Partnership had no operating
history.
5
<PAGE>
Liquidity and Capital Resources
As of June 30, 1996, the Partnership had not commenced its offering of
Units. The general partners' aggregate capital contributions of $1,000 are the
Partnership's sole source of capital until the Partnership commences its
offering of Units.
At June 30, 1996, the Partnership's total assets were $355,125 and
$256,890, respectively. The increase in total assets reflects organizational and
offering expenses incurred and recorded as deferred syndication costs during the
six months ended June 30, 1996.
During the six months ended June 30, 1996, affiliates of the general
partners incurred on behalf of the Partnership $113,166 for certain
organizational and offering expenses. As of June 30, 1996, the Partnership owed
$353,532 to related parties for such amounts and for accounting and
administrative services. In the event the minimum offering proceeds are not
received by the Partnership, the Partnership will have no obligation to repay
such amounts. Further, the general partners have agreed to pay all
organizational and offering expenses in excess of three percent of the gross
offering proceeds.
The Partnership will utilize its net proceeds from its offering to
purchase Properties. The Partnership expects to acquire Properties entirely for
cash. As of July 31, 1996, the Partnership had not entered into any arrangements
creating a reasonable probability that a Property would be acquired by the
Partnership. The number of Properties to be acquired will depend upon the amount
of net offering proceeds (gross proceeds less fees and expenses of the offering)
available to the Partnership.
The general partners expect that the cash to be generated from
operations of all Properties, once they are acquired, will be adequate to pay
operating expenses and provide distributions to partners. Distributions to the
limited partners of the Partnership are expected to commence not later than the
close of the first full calendar quarter after the first release of funds from
escrow to the Partnership, and will be paid quarterly thereafter. There can be
no assurance, however, as to the date on which distributions will commence or
the amount of any distributions.
Due to anticipated low operating expenses, rental income expected to be
obtained from Properties after they are acquired and the fact that the
Partnership will not enter into a commitment to purchase a Property until
sufficient cash is available for such purchase, the general partners do not
believe that working capital reserves will be necessary at this time. 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.
6
<PAGE>
Results of Operations
No significant operations had commenced as of July 31, 1996, because
the Partnership was in its development stage.
7
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Defaults upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) No reports on Form 8-K were filed during the
quarter ended June 30, 1996.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 9th day of August, 1996.
CNL INCOME FUND XVIII, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVIII, Ltd. at June 30, 1996, and its statement of
income for the six months then ended and is qualified in its entirety by
reference to the Form 10-Q of CNL Income Fund XVIII, Ltd. for the six months
ended June 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 730
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 355,125
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,000
<TOTAL-LIABILITY-AND-EQUITY> 355,125
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XVIII, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for
current assets and current liabilities.
</FN>
</TABLE>
