424(b)(3)
No. 33-90998-01
CNL INCOME FUND XVIII, LTD.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated May 9, 1997. This Supplement replaces the Supplement dated
May 15, 1997. Capitalized terms used in this Supplement have the same meaning
as in the Prospectus unless otherwise stated herein.
All subscriptions are for the purchase of Units of CNL Income Fund
XVIII, Ltd. ("CNL XVIII"). Offers are no longer being made nor are the
General Partners accepting subscriptions for CNL XVII. THE ACQUISITION OF
UNITS OF ONE PARTNERSHIP WILL NOT ENTITLE THE INVESTOR TO ANY OWNERSHIP
INTEREST IN THE OTHER PARTNERSHIP OR ITS PROPERTIES.
Information as to proposed properties for which CNL XVIII has received
initial commitments and as to the number and types of Properties acquired by
CNL XVIII is presented as of May 22, 1997, and all references to commitments
or Property acquisitions should be read in that context. Proposed properties
for which CNL XVIII receives initial commitments, as well as property
acquisitions that occur after May 22, 1997, will be reported in a subsequent
Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of May 22, 1997, CNL XVIII had received total subscription proceeds
of $19,654,664 (1,965,466 Units) from 950 Limited Partners. As of May 22,
1997, the proceeds had been invested or committed for investment in 17
Properties and to pay Acquisition Fees and miscellaneous Acquisition Expenses.
As of May 22, 1997, CNL XVIII had incurred $884,460 in Acquisition Fees to an
Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between May 1, 1997 and May 22, 1997, CNL XVIII acquired four Properties
consisting of land and building. The Properties are a Boston Market Property
(in Timonium, Maryland), a Jack in the Box Property (in Houston, Texas), a
Golden Corral Property (in Elizabethtown, Kentucky) and an IHOP Property (in
Santa Rosa, California). For information regarding the 13 Properties acquired
by CNL XVIII prior to May 1, 1997, see the Prospectus dated May 9, 1997.
In connection with the purchase of each of these four Properties, CNL
XVIII, as lessor, entered into a long-term lease agreement with an
unaffiliated lessee. The general terms of the lease agreements are described
in the section of the Prospectus entitled "Business - Description of Leases."
For the Properties that are to be constructed, CNL XVIII has entered into
development and indemnification and put agreements with the lessee. The
general terms of these agreements are described in the section of the
Prospectus entitled "Business - Site Selection and Acquisition of Properties -
Construction and Renovation."
The following table sets forth the location of the four Properties
consisting of land and building acquired by CNL XVIII from May 1, 1997 through
May 22, 1997, a description of the competition, and a summary of the principal
terms of the acquisition and lease of each Property.
May 29, 1997 Prospectus Dated May 9, 1997
<TABLE>
PROPERTY ACQUISITIONS
From May 1, 1997 through May 22, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BOSTON MARKET $749,978 05/08/97 05/2012; five 10.38% of CNL for each lease at any time
(the "Timonium Property") (excluding five-year XVIII's total year after the after the
Restaurant to be renovated development renewal options cost to fifth lease fifth lease
costs) (3) purchase the year, (i) 4% of year
The Timonium Property is property; annual gross
located on the northeast increases by sales minus
corner of the intersection 10% after the (ii) the
of York Road and Belfast fifth lease minimum annual
Road, in Timonium, year and after rent for such
Baltimore County, Maryland, every five lease year
in an area of mixed retail, years
commercial, and residential thereafter
development. Other fast- during the
food and family-style lease term
restaurants located in
proximity to the Timonium
Property include a
McDonald's, a Burger King,
a KFC, and several local
restaurants.
JACK IN THE BOX $1,290,000 05/09/97 05/2015; four $132,225 (6); for each lease at any time
(the "Houston Property") (3)(6) five-year increases by 8% year, (i) 5% of after the
Restaurant to be renewal options after the fifth annual gross seventh
constructed lease year and sales minus lease year
after every (ii) the
The Houston Property is five years minimum annual
located on the north side thereafter rent for such
of Louetta Road, west of during the lease year (5)
State Highway 249, in lease term
Houston, Harris County,
Texas, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located
in proximity to the Houston
Property include a
McDonald's and a Subway
Sandwich Shop.
-2-
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
GOLDEN CORRAL $446,180 05/21/97 05/2012; four 10.75% of Total for each lease during the
(the "Elizabethtown (excluding five-year Cost (4) year, 5% of the first
Property") closing and renewal options amount by which through
Restaurant to be development annual gross seventh
constructed costs) (3) sales exceed lease years
$2,697,649 (5) and the
The Elizabethtown Property tenth
is located on the east side through
of North Dixie Avenue, in fifteenth
Elizabethtown, Hardin lease years
County, Kentucky, in an only
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the
Elizabethtown Property
include a Steak N Shake, a
Dairy Queen, an Arby's, a
Bob Evans, a Captain D's, a
Fazoli's, a Hardee's, a
McDonald's, a Taco Bell,
and a Lee's Famous Recipe
Country Chicken.
IHOP $1,286,364 05/21/97 05/2017; three $130,244; for each lease during the
(the "Santa Rosa Property") five-year increases by year, (i) 4% of eleventh
Existing restaurant renewal options 10% after the annual gross lease year
fifth lease sales minus and at the
The Santa Rosa Property is year and after (ii) the end of the
located on the northwest every five minimum annual initial
quadrant of Fulton Road and years rent for such lease term
Guerneville Road, in Santa thereafter lease year
Rosa, Sonoma County, during the
California, in an area of lease term
mixed retail, commercial,
and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Santa Rosa
Property include a Taco
Bell, a McDonald's, and
several local restaurants.
-3-
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Timonium Property $ 454,000
Houston Property 622,000
Elizabethtown Property 1,077,000
Santa Rosa Property 854,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the
Timonium Property, minimum annual rent will become due and payable on
the date the tenant receives from the landlord its final funding of the
construction costs. For the Elizabethtown Property, minimum annual rent
will become due and payable on the earlier of (i) 180 days after
execution of the lease, (ii) the date the certificate of occupancy for
the restaurant is issued, or (iii) the date the restaurant opens for
business to the public. During the period commencing with the effective
date of the lease to the date minimum annual rent becomes payable for
the Timonium and Elizabethtown Properties, as described above, interim
rent equal to a specified rate per annum (ranging from 10% to 10.38%) of
the amount funded by CNL XVIII in connection with the purchase and
construction of the Properties shall accrue and be payable in a single
lump sum at the time of final funding of the construction costs.
(3) The development agreements for the Properties which are to be
constructed provide that construction must be completed no later than
the dates set forth below. The maximum cost to CNL XVIII (including the
purchase price of the land (if applicable), development costs (if
applicable), and closing and acquisition costs) is not expected to, but
may, exceed the amounts set forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
Timonium Property $1,140,100 November 4, 1997
Houston Property 1,290,000 November 5, 1997
Elizabethtown Property 1,572,176 November 17, 1997
(4) The "Total Cost" is equal to the sum of (i) the purchase price of the
Property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(5) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(6) CNL XVIII paid for all construction costs in advance at closing;
therefore, minimum annual rent was determined on the date acquired and
is not expected to change.
-4-
PENDING INVESTMENTS
As of May 22, 1997, CNL XVIII had initial commitments to acquire four
properties, consisting of land and building. The acquisition of each of these
properties is subject to the fulfillment of certain conditions, including, but
not limited to, a satisfactory environmental survey and property appraisal.
There can be no assurance that any or all of the conditions will be satisfied
or, if satisfied, that one or more of these properties will be acquired by CNL
XVIII. If acquired, the leases of all four of these properties are expected
to be entered into on substantially the same terms described in the Prospectus
in the section entitled "Business - Description of Leases."
Set forth below are summarized terms expected to apply to the leases for
each of the properties. More detailed information relating to a property and
its related lease will be provided at such time, if any, as the property is
acquired.
-5-
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Boston Market 15 years; five five-year 10.38% of CNL XVIII's for each lease year at any time after
Charlotte, NC renewal options total cost to purchase after the fifth lease the fifth lease
Existing restaurant the property; year, (i) 5% of year
increases by 10% after annual gross sales
the fifth lease year minus (ii) the
and after every five minimum annual rent
years thereafter for such lease year
during the lease term
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Reno, NV renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 4% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such lease year
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Walker, MI renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 4% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such lease year
Popeyes (2) 20 years; two five-year 11.75% of Total Cost for each lease year, at any time after
Macon, GA renewal options (1); increases by 10% (i) 6% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year
renovated year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
</TABLE>
FOOTNOTES:
(1) The "Total Cost" is equal to the sum of (i) the purchase price of the
property, (ii) closing costs, and (iii) actual development costs
incurred under the development agreement.
(2) CNL XVIII anticipates acquiring an interest in Macon Joint Venture with
an Affiliate of the General Partners. Based upon anticipated renovation
costs for the Property, CNL XVIII expects to own an approximate 26
percent interest in the Macon Joint Venture upon completion of
renovation.
-6-
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH MAY 22, 1997
FOR THE PERIOD OCTOBER 12, 1996 (THE DATE OPERATIONS COMMENCED)
THROUGH DECEMBER 31, 1996 (UNAUDITED)
The following statement presents unaudited estimated taxable operating
results of each Property acquired by CNL XVIII from inception through May 22,
1997. The statement presents estimated taxable operating results for each
Property that was operational as if the Property had been acquired and
operational on October 12, 1996 (the date CNL XVIII commenced operations)
through December 31, 1996. The statement should be read in light of the
accompanying footnotes.
These estimates do not purport to present actual or expected operations
of CNL XVIII for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties with an aggregate purchase price in excess of 20% of the expected
total net offering proceeds of CNL XVIII.
<TABLE>
<CAPTION>
Burger King Golden Corral Jack in the Box Jack in the Box
Kinston, NC Houston #1, TX (7) Echo Park, CA (6) Henderson, NV (6)
----------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Estimated Taxable Operating
Results:
Base Rent (1) $ 19,862 (5) (5) (5)
Management Fees (2) (199) (5) (5) (5)
General and Administrative
Expenses (3) (993) (5) (5) (5)
--------
Estimated Cash Available from
Operations 18,670 (5) (5) (5)
Depreciation Expense (4) (3,660) (5) (5) (5)
--------
Estimated Taxable Operating
Results $ 15,010 (5) (5) (5)
========
See Footnotes
-7-
<CAPTION>
Jack in the Box Golden Corral Boston Market Black-eyed Pea
Centerville, TX (6) Galveston, TX (7) Raleigh, NC Atlanta, GA
------------------- ----------------- ------------- --------------
<S> <C> <C> <C> <C>
Estimated Taxable Operating
Results:
Base Rent (1) (5) (5) $ 27,144 $ 15,358
Management Fees (2) (5) (5) (271) (154)
General and Administrative
Expenses (3) (5) (5) (1,357) (768)
-------- --------
Estimated Cash Available from
Operations (5) (5) 25,516 14,436
Depreciation Expense (4) (5) (5) (2,672) (3,596)
-------- --------
Estimated Taxable Operating
Results (5) (5) $ 22,844 $ 10,840
======== ========
See Footnotes
-8-
<CAPTION>
Golden Corral Boston Market On The Border Boston Market
Stow, OH San Antonio, TX San Antonio, TX Minnetonka, MN
------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Estimated Taxable Operating
Results:
Base Rent (1) $42,009 (5) (5) (5)
Management Fees (2) (420) (5) (5) (5)
General and Administrative
Expenses (3) (2,100) (5) (5) (5)
--------
Estimated Cash Available
from Operations 39,489 (5) (5) (5)
Depreciation Expense (4) (7,047) (5) (5) (5)
--------
Estimated Taxable Operating
Results $ 32,442 (5) (5) (5)
========
See Footnotes
-9-
<CAPTION>
Wendy's Boston Market Jack in the Box Golden Corral
Sparta, TN Timonium, MD Houston #2, TX (6) Elizabethtown, KY (7)
---------- ------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Estimated Taxable Operating
Results:
Base Rent (1) (5) (5) (5) (5)
Management Fees (2) (5) (5) (5) (5)
General and Administrative
Expenses (3) (5) (5) (5) (5)
Estimated Cash Available from
Operations (5) (5) (5) (5)
Depreciation Expense (4) (5) (5) (5) (5)
Estimate Taxable Operating
Results (5) (5) (5) (5)
See Footnotes
-10-
<CAPTION>
IHOP
Santa Rosa, CA Total
-------------- ---------
<S> <C> <C>
Estimated Taxable Operating
Results:
Base Rent (1) $ 28,547 $132,920
Management Fees (2) (285) (1,329)
General and Administrative
Expenses (3) (1,427) (6,645)
-------- --------
Estimated Cash Available from
Operations 26,835 124,946
Depreciation Expense (4) (4,678) (21,653)
-------- --------
Estimate Taxable Operating Results $ 22,157 $103,293
======== ========
</TABLE>
FOOTNOTES:
(1) Represents rental income from leases for five of the 17 Properties
acquired from inception through May 22, 1997, which were operational at
the time acquired by CNL XVIII, for the period commencing October 12,
1996 (the date CNL XVIII commenced operations) through December 31,
1996. The 12 Properties acquired by CNL XVIII that are under
construction are not presented due to the fact that they were not
operational for the period presented.
(2) The Properties are managed pursuant to a management agreement between
CNL XVIII and an Affiliate of the General Partners, pursuant to which
the Affiliate receives an annual management fee in an amount equal to
one percent of the gross revenues that CNL XVIII earns from its
Properties. See "Management Compensation."
(3) Estimated at five percent of gross rental income based on the previous
experience of Affiliates of the General Partners with 17 public limited
partnerships which own properties similar to that owned by CNL XVIII.
(4) The estimated federal tax basis of the depreciable portion (the building
portion) of the Properties has been depreciated on the straight-line
method over 40 years.
-11-
(5) This Property is under construction and therefore was not operational
for the period presented. The development agreements for the Properties
which are to be constructed, provide that construction must be completed
no later than the dates set forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Houston #1 Property June 25, 1997
Echo Park Property July 6, 1997
Henderson Property July 6, 1997
Centerville Property July 7, 1997
Galveston Property July 21, 1997
San Antonio #1 Property October 13, 1997
San Antonio #2 Property October 14, 1997
Minnetonka Property October 26, 1997
Sparta Property August 28, 1997
Timonium Property November 4, 1997
Houston #2 Property November 5, 1997
Elizabethtown Property November 17, 1997
(6) The lessee of the Echo Park, Henderson, Centerville and Houston #2
Properties is the same unaffiliated lessee.
(7) The lessee of the Houston #1, Galveston and Elizabethtown Properties is
the same unaffiliated lessee.
-12-
INDEX TO PRO FORMA FINANCIAL STATEMENTS
Page
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Pro Forma Financial Information (unaudited):
Pro Forma Balance Sheet as of December 31, 1996 15
Pro Forma Statement of Income for the year ended
December 31, 1996 16
Notes to Pro Forma Financial Statements as of
December 31, 1996 17
-13-
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet of CNL Income Fund XVIII, Ltd.
("CNL XVIII") gives effect to (i) property acquisition transactions from
inception through December 31, 1996, including the receipt of $8,421,815 in
gross offering proceeds from the sale of 842,182 units of limited partnership
interest (the "Units") pursuant to a registration statement on Form S-11 under
the Securities Act of 1933, as amended, effective August 11, 1995, and the
application of such funds to acquire two properties, one of which was under
construction at December 31, 1996, and to pay organizational and offering
expenses, acquisition fees, and miscellaneous acquisition expenses, (ii) the
receipt of $10,783,939 in gross offering proceeds from the sale of 1,078,393
additional Units during the period January 1, 1997 through May 12, 1997, and
(iii) the application of such funds and $5,371,325 of cash and cash
equivalents at December 31, 1996, to purchase 13 additional properties during
the period January 1, 1997 through May 12, 1997, (nine of which are under
construction and consist of land and building, one property which is under
construction and consists of building only, two properties which consist of
land and building and one property which consists of building only), to pay
additional construction costs for the property under construction at December
31, 1996, and to pay offering expenses, acquisition fees, and miscellaneous
acquisition expenses, all as reflected in the pro forma adjustments described
in the related notes. The Pro Forma Balance Sheet as of December 31, 1996,
includes the transactions described in (i) above, from its historical balance
sheet, adjusted to give effect to the transactions in (ii) and (iii) above, as
if they had occurred on December 31, 1996.
The Pro Forma Statement of Income for the year ended December 31, 1996,
includes the historical operating results of the properties described in (i)
above from the dates of their acquisitions. No pro forma adjustments have
been made to the Pro Forma Statement of Income for the properties owned by CNL
XVIII as of May 12, 1997, due to the fact that these properties did not have a
previous rental history.
This pro forma financial information is presented for informational
purposes only and does not purport to be indicative of CNL XVIII's financial
results or condition if the various events and transactions reflected therein
had occurred on the dates, or been in effect during the periods, indicated.
This pro forma financial information should not be viewed as predictive of CNL
XVIII's financial results or conditions in the future.
-14-
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- --------------- -----------
Land and building on operating
leases, less accumulated
depreciation $1,530,768 $11,853,945 (a) $13,384,713
Net investment in direct
financing leases (b) - 3,795,084 (a) 3,795,084
Cash and cash equivalents 5,371,325 (5,371,325)(a) -
Receivables 3,711 3,711
Organization costs, less
accumulated amortization 9,589 9,589
Other assets 324,931 (319,530)(a) 5,401
---------- ----------- -----------
$7,240,324 $ 9,958,174 $17,198,498
========== =========== ===========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 104,514 $ (104,514)(a) $ -
Construction costs payable - 332,373 (a) 332,373
Distributions payable 55,708 55,708
Due to related parties 83,889 (83,069)(a) 820
---------- ----------- -----------
Total liabilities 244,111 (144,790) 388,901
Partners' capital 6,996,213 9,813,384 (a) 16,809,597
---------- ----------- -----------
$7,240,324 $ 9,958,174 $17,198,498
========== =========== ===========
See accompanying notes to unaudited pro forma
financial statements.
-15-
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues:
Rental income from operating lease $ 1,373 $ - $ 1,373
Interest income 30,241 - 30,241
------- ------- -------
31,614 - 31,614
------- ------- -------
Expenses:
General operating and administrative 3,980 - 3,980
Management fee to related party 12 - 12
Depreciation and amortization 712 - 712
------- ------- -------
4,704 - 4,704
------- ------- -------
Net Income $26,910 $ - $26,910
======= ======= =======
Net Income Per Limited Partner Unit $ 0.05 $ 0.05
======= =======
Weighted Average Number of Units
Outstanding 503,436 503,436
======= =======
See accompanying notes to unaudited pro forma
financial statements.
-16-
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1996
Pro Forma Balance Sheet:
(a) Represents gross proceeds of $10,783,939 from the sale of 1,078,393
Units during the period January 1, 1997 through May 12, 1997, and
$5,371,325 of cash and cash equivalents at December 31, 1996, used
(i) to acquire 13 properties for $13,858,493 ($332,373 of which was
accrued as construction costs payable as of May 12, 1997), (ii) to fund
estimated construction costs of $985,729 relating to the property under
construction at December 31, 1996, (iii) to pay acquisition fees and
other costs of $517,825 ($6,508 of which was accrued as accounts payable
at December 31, 1996 and $26,040 of which was accrued as due to related
parties at December 31, 1996) and reclassify from other assets $319,530
of acquisition fees and other costs previously incurred relating to the
acquired properties, and (iv) to pay selling commissions and offering
expenses (syndication costs) of $1,125,590 ($98,006 of which was accrued
as accounts payable at December 31, 1996 and $57,029 of which was
accrued as due to related parties at December 31, 1996), which have been
netted against partners' capital.
The pro forma adjustments to land and buildings on operating leases as a
result of the above transactions were as follows:
<TABLE>
<CAPTION>
Estimated purchase
price (including
construction and Acquisition
closing costs) and fees
additional con- allocated
struction costs to property Total
------------------ ----------- -----------
<S> <C> <C> <C>
Jack in the Box in Echo Park, CA $ 1,257,223 $ 68,163 $ 1,325,386
Jack in the Box in Hendersonville, NV 1,066,175 57,805 1,123,980
Jack in the Box in Centerville, TX 758,658 41,132 799,790
Golden Corral in Galveston, TX 1,359,566 73,711 1,433,277
Boston Market in Raleigh, NC 1,225,886 66,463 1,292,349
Black-eyed Pea in Atlanta, GA 616,110 33,404 649,514
Golden Corral in Stow, OH 1,668,863 90,480 1,759,343
Boston Market in San Antonio, TX 851,302 46,154 897,456
On The Border in San Antonio, TX 1,186,744 64,342 1,251,086
Boston Market in Minnetonka, MN 815,065 44,190 859,255
Wendy's in Sparta, TN 633,967 34,372 668,339
Boston Market in Timonium, MD 1,129,934 61,261 1,191,195
Jack in the Box in Houston, TX 1,289,000 69,886 1,358,886
One property under construction at
December 31, 1996 985,729 53,444 1,039,173
----------- ----------- -----------
$14,844,222 $ 804,807 $15,649,029
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $11,853,945
Net investment in direct financing leases 3,795,084
-----------
$15,649,029
===========
</TABLE>
(b) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated as
direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
-17-
