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 and the Prospectus Supplement dated August 6, 1997.
This Supplement replaces the Supplement dated August 26, 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 September 17, 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 September 17, 1997, will be reported in a subsequent
Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of September 17, 1997, CNL XVIII had received total subscription
proceeds of $27,733,249 (2,773,325 Units) from 1,292 Limited Partners. As of
September 17, 1997, the proceeds had been invested or committed for investment
in 20 Properties and to pay Acquisition Fees and miscellaneous Acquisition
Expenses. As of September 17, 1997, CNL XVIII had incurred $1,247,996 in
Acquisition Fees to an Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between July 19, 1997 and September 17, 1997, CNL XVIII acquired one
Property consisting of land and building. The Property is a Golden Corral
Property (in Destin, Florida). For information regarding the 19 Properties
acquired by CNL XVIII prior to July 19, 1997, see the Prospectus dated May 9,
1997 and the Prospectus Supplement dated August 6, 1997.
In connection with the purchase of this Property, CNL XVIII, as lessor,
entered into a long-term lease agreement with an unaffiliated lessee. The
general terms of the lease agreement is described in the section of the
Prospectus entitled "Business - Description of Leases." For this Property, which
is 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 one Property
consisting of land and building acquired by CNL XVIII from July 19, 1997 through
September 17, 1997, a description of the competition, and a summary of the
principal terms of the acquisition and lease of the Property.
SEPTEMBER 24, 1997 PROSPECTUS DATED MAY 9, 1997
<PAGE>
PROPERTY ACQUISITIONS
FROM JULY 19, 1997 THROUGH SEPTEMBER 17, 1997
<TABLE>
<CAPTION>
Lease Expiration
Property Location Purchase Date and Minimum Option
and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- ----------------- --------- -------- ---------------- --------------- --------------- -----------
<S> <C>
GOLDEN CORRAL $546,572 09/17/97 03/2013; four 10.75% of Total for each lease year, during the
(the "Destin Property") (excluding five-year renewal Cost (4) 5% of the amount first through
Restaurant to be constructed development options by which annual seventh lease
costs) (3) gross sales exceed years and the
The Destin Property is located $2,798,367 (5) tenth through
on the northeast quadrant of fifteenth lease
Highway 98 and Beach Drive, in years only
Destin, Okaloosa County,
Florida, in an area of mixed
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Destin
Property include a Burger
King, a McDonald's, and a
local restaurant.
</TABLE>
- ---------------------------------------
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of the construction Property acquired, once the
building is constructed, is set forth below:
Property Federal Tax Basis
-------- -----------------
Destin Property $1,029,000
(2) For the Destin 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 Destin
Property, as described above, interim rent equal to ten percent per
annum of the amount funded by CNL XVIII in connection with the purchase
and construction of the Property shall accrue and be payable in a
single lump sum at the time of final funding of the construction costs.
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<PAGE>
(3) The development agreement for the Property which is to be constructed
provides that construction must be completed no later than the date 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 amount set forth below:
Property Estimated Maximum Cost Estimated Final Completion Date
-------- ---------------------- -------------------------------
Destin Property $1,628,391 March 16, 1998
(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).
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<PAGE>
PENDING INVESTMENTS
As of September 17, 1997, CNL XVIII had an initial commitment to
acquire one property consisting of land and building. The acquisition of this
property 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 this property will be acquired by CNL XVIII. If acquired, the
lease of this property is 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 lease for
this property. More detailed information relating to this property and its
related lease will be provided at such time, if any, as the property is
acquired.
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<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- --------------- ------------------
<S> <C>
Ground Round 20 years; five 10.25% of CNL XVIII's (1) at any time after the
Rochester, NY five-year renewal total cost to purchase seventh lease year
Existing restaurant options the property
</TABLE>
- ---------------------------------
FOOTNOTES:
(1) For each lease year, percentage rent shall be calculated upon the
amount by which gross sales exceed a to be determined breakpoint (base
sales) as follows; 6% for an increase of 0% to 33.33% above base sales,
5.5% for an increase of 33.34% to 66.7% above base sales, and 5% for an
increase of 66.8% to 100% above base sales. For increases in gross
sales in excess of 100%, percentage rent shall decrease by .5% for
every additional 33.33% increase above base sales.
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<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH SEPTEMBER 17, 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 September
17, 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>
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)
========
</TABLE>
SEE FOOTNOTES
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<PAGE>
<TABLE>
<CAPTION>
Jack in the Box Golden Corral Boston Market Black-eyed Pea
Centerville, TX (6) Galveston, TX (7) Raleigh, NC Atlanta, GA
------------------- ----------------- ------------- ------------
<S> <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
======== ========
</TABLE>
SEE FOOTNOTES
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<PAGE>
<TABLE>
<CAPTION>
Golden Corral Boston Market On The Border Boston Market
Stow, OH San Antonio, TX San Antonio, TX Minnetonka, MN
------------- --------------- --------------- --------------
<S> <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)
--------
Estimate Taxable Operating Results $ 32,442 (5) (5) (5)
========
</TABLE>
SEE FOOTNOTES
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<PAGE>
<TABLE>
<CAPTION>
Wendy's Boston Market Jack in the Box Golden Corral
Sparta, TN Timonium, MD Houston #2, TX (6) Elizabethtown, KY (7)
---------- ------------- ------------------ ---------------------
<S> <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)
</TABLE>
SEE FOOTNOTES
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<PAGE>
<TABLE>
<CAPTION>
IHOP Arby's IHOP Golden Corral
Santa Rosa, CA (8) Lexington, NC Bridgeview, IL(8) Destin, FL (7)
------------------ ------------- ----------------- --------------
<S> <C>
Estimated Taxable Operating Results:
Base Rent (1) $ 28,547 $ 13,861 $ 31,579 (5)
Management Fees (2) (285) (139) (316) (5)
General and Administrative
Expenses (3) (1,427) (693) (1,579) (5)
-------- -------- -------
Estimated Cash Available from
Operations 26,835 13,029 29,684 (5)
Depreciation Expense (4) (4,678) (2,499) (6,267) (5)
-------- -------- --------
Estimate Taxable Operating Results $ 22,157 $ 10,530 $ 23,417 (5)
======== ======== ========
</TABLE>
SEE FOOTNOTES
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<PAGE>
Total
-----
Estimated Taxable Operating Results:
Base Rent (1) $178,360
Management Fees (2) (1,784)
General and Administrative
Expenses (3) (8,917)
-------
Estimated Cash Available from
Operations 167,659
Depreciation Expense (4) (30,419)
-------
Estimate Taxable Operating Results $137,240
========
FOOTNOTES:
(1) Represents rental income from leases for seven of the 20 Properties
acquired from inception through September 17, 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 13 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.
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<PAGE>
(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 or renovated, provide that construction or
renovation 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
Destin Property March 16, 1998
(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, Elizabethtown and Destin
Properties is the same unaffiliated lessee.
(8) The lessee of the Santa Rosa and Bridgeview Properties is the same
unaffiliated lessee.
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<PAGE>
