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 Supplements dated May
15, 1997, May 29, 1997 and July 7, 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 July 18, 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 July 18, 1997, will be reported in a subsequent Supplement.
THE OFFERING
General
The General Partners have elected to extend this Offering until August
11, 1998.
Subscription Procedures
As of July 18, 1997, CNL XVIII had received total subscription proceeds
of $23,290,947 (2,329,095 Units) from 1,127 Limited Partners. As of July 18,
1997, the proceeds had been invested or committed for investment in 19
Properties and to pay Acquisition Fees and miscellaneous Acquisition Expenses.
As of July 18, 1997, CNL XVIII had incurred $1,048,093 in Acquisition Fees to an
Affiliate of the General Partners.
BUSINESS
Property Acquisitions
Between May 1, 1997 and July 18, 1997, CNL XVIII acquired six
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), two IHOP
Properties (one in each of Santa Rosa, California, and Bridgeview, Illinois) and
an Arby's Property (in Lexington, North Carolina). 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 six 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 six Properties
consisting of land and building acquired by CNL XVIII from May 1, 1997 through
July 18, 1997, a description of the competition, and a summary of the principal
terms of the acquisition and lease of each Property.
July 22, 1997 Prospectus Dated May 9, 1997
<PAGE>
<TABLE>
<CAPTION>
PROPERTY ACQUISITIONS
From May 1, 1997 through July 18, 1997
Lease
Expira-
tion and Option
Property Location and Purchase Date Renewal Minimum To
Competition Price (1) Acquired Options Annual Rent (2) Percentage Rent Purchase
<S> <C>
BOSTON MARKET $749,978 05/08/97 05/2012; five 10.38% of CNL for each lease at any
(the "Timonium Property") (excluding five-year XVIII's total year after the time after
Restaurant to be renovated developmen renewal cost to fifth lease the fifth
t costs) options purchase the year, (i) 4% of lease year
The Timonium Property is (3) property; annual gross
located on the northeast corner increases by sales minus
of the intersection of York 10% after the (ii) the
Road and Belfast Road, in fifth lease minimum annual
Timonium, Baltimore County, year and after rent for such
Maryland, in an area of mixed every five lease year
retail, commercial, and years
residential development. Other thereafter
fast-food and family-style during the
restaurants located in lease term
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
(the "Houston Property") (3)(6) five-year increases by 8% year, (i) 5% of time after
Restaurant to be constructed renewal after the fifth annual gross the
options lease year and sales minus seventh
The Houston Property is located after every (ii) the lease year
on the north side of Louetta five years minimum annual
Road, west of State Highway thereafter rent for such
249, in Houston, Harris County, during the lease year (5)
Texas, in an area of mixed lease term
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-
<PAGE>
<CAPTION>
Lease
Expira-
tion and Option
Property Location and Purchase Date Renewal Minimum To
Competition Price (1) Acquired Options Annual Rent (2) Percentage Rent Purchase
<S> <C>
GOLDEN CORRAL $446,180 05/21/97 05/2012; four 10.75% of Total for each lease during the
(the "Elizabethtown Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be constructed closing renewal amount by which through
and options annual gross seventh
The Elizabethtown Property is development sales exceed lease
located on the east side of costs) $2,697,649 (5) years and
North Dixie Avenue, in (3) the tenth
Elizabethtown, Hardin County, through
Kentucky, in an area of mixed fifteenth
retail, commercial, and lease
residential development. Other years only
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 (7) $1,286,364 05/21/97 05/2017; $130,244; for each lease during the
(the "Santa Rosa Property") three five- increases by year, (i) 4% of eleventh
Existing restaurant year renewal 10% after the annual gross lease year
options 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 mixed lease term
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-
<PAGE>
<CAPTION>
Lease
Expira-
tion and Option
Property Location and Purchase Date Renewal Minimum To
Competition Price (1) Acquired Options Annual Rent (2) Percentage Rent Purchase
<S> <C>
ARBY'S $632,418 07/15/97 07/2017; two $63,242; for each lease during the
(the "Lexington Property") five-year increases by year, (i) 4% of seventh
Existing restaurant renewal 4.14% after the annual gross and tenth
options third lease sales minus lease
The Lexington Property is year and after (ii) the years only
located on the northeast corner every three minimum annual
of North Main Street and East years rent for such
Fourth Street, in Lexington, thereafter lease year
Davidson County, North during the
Carolina, in an area of mixed lease term
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Lexington
Property include a local
restaurant.
<PAGE>
IHOP (7) $1,423,008 07/16/97 07/2017; $144,080; for each lease during the
(the "Bridgeview Property") three five- increases by year, (i) 4% of eleventh
Existing restaurant year renewal 10% after the annual gross lease year
options fifth lease sales minus and at the
The Bridgeview Property is year and after (ii) the end of the
located at the northeast every five minimum annual initial
quadrant of the intersection of years rent for such lease term
West 79th Street and Harlem thereafter lease year
Avenue, in Bridgeview, Cook during the
County, Illinois, in an area of lease term
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Bridgeview
Property include a Pizza Hut, a
McDonald's, a White Castle, and
a Burger King.
</TABLE>
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<PAGE>
- -------------------------------------
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
Lexington Property 456,000
Bridgeview Property 1,144,000
(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 or renovated provide that construction or renovation 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 Estimated Final
Property 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).
- 5 -
<PAGE>
(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.
(7) The lessee of the Santa Rosa and Bridgeview Properties is the same
unaffiliated lessee.
- 6 -
<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH JULY 18, 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 July 18,
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
- 7 -
<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
- 8 -
<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
- 9 -
<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
- 10 -
<PAGE>
<TABLE>
<CAPTION>
IHOP Arby's IHOP
Santa Rosa, CA (8) Lexington, NC Bridgeview, IL(8) Total
------------------ ------------- ----------------- ----------
<S> <C>
Estimated Taxable Operating Results:
Base Rent (1) $ 28,547 $ 13,861 $ 31,579 $178,360
Management Fees (2) (285) (139) (316) (1,784)
General and Administrative
Expenses (3) (1,427) (693) (1,579) (8,917)
-------- -------- -------- --------
Estimated Cash Available from
Operations 26,835 13,029 29,684 167,659
Depreciation Expense (4) (4,678) (2,499) (6,267) (30,419)
-------- -------- -------- --------
Estimate Taxable Operating Results $ 22,157 $ 10,530 $ 23,417 $137,240
======== ======== ======== ========
</TABLE>
- --------------------------------------
FOOTNOTES:
(1) Represents rental income from leases for seven of the 19 Properties
acquired from inception through July 18, 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 -
<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
(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.
(8) The lessee of the Santa Rosa and Bridgeview Properties is the same
unaffiliated lessee.
- 12 -
<PAGE>
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 March 31, 1997 15
Pro Forma Statement of Income for the quarter ended March 31, 1997 16
Pro Forma Statement of Income for the year ended December 31, 1996 17
Notes to Pro Forma Financial Statements for the quarter ended
March 31, 1997 and the year ended December 31, 1996 18
- 13 -
<PAGE>
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 March 31, 1997, including the receipt of $16,736,878 in gross
offering proceeds from the sale of 1,673,688 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 eight properties, five of which were under
construction at March 31, 1997, and to pay organizational and offering expenses,
acquisition fees, and miscellaneous acquisition expenses, (ii) the receipt of
$2,917,786 in gross offering proceeds from the sale of 291,778 additional Units
during the period April 1, 1997 through May 22, 1997, (iii) the assumed future
sales of 329,033 Units, resulting in the receipt of $3,290,334 in gross offering
proceeds through May 22, 1997, and (iv) the application of such funds and
$6,079,177 of cash and cash equivalents at March 31, 1997, to purchase nine
additional properties during the period April 1, 1997 through May 22, 1997 (six
of which are under construction and consist of land and building, one property
which is under construction and consists of building only and two properties
which consist of land and building), to pay additional construction costs for
the five properties under construction at March 31, 1997, 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 March 31, 1997, includes the transactions described in
(i) above, from its historical balance sheet, adjusted to give effect to the
transactions in (ii), (iii) and (iv) above, as if they had occurred on March 31,
1997.
The Pro Forma Statements of Income for the quarter ended March 31, 1997
and the year ended December 31, 1996, include 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 Statements of Income
for the properties owned by CNL XVIII as of May 22, 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 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
----------- ----------- -----------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 8,231,628 $ 7,206,057 (a) $15,437,685
Net investment in direct
financing leases (b) 651,984 3,999,263 (a) 4,651,247
Cash and cash equivalents 6,079,177 (6,079,177)(a) -
Receivables 78,257 78,257
Prepaid expenses 900 900
Organization costs, less
accumulated amortization 9,089 9,089
Accrued rental income 6,504 6,504
Other assets 363,240 (296,908)(a) 66,332
----------- ----------- -----------
$15,420,779 $ 4,829,235 $20,250,014
=========== =========== ===========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 70,480 $ 70,480
Accrued construction costs
payable 686,342 $ (686,342)(a) -
Distributions payable 154,476 154,476
Due to related parties 141,104 (133,812)(a) 7,292
Rents paid in advance 118,189 118,189
----------- ----------- -----------
Total liabilities 1,170,591 (820,154) 350,437
Partners' capital 14,250,188 5,649,389 (a) 19,899,577
----------- ----------- -----------
$15,420,779 $ 4,829,235 $20,250,014
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma
financial statements.
- 15 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA STATEMENT OF INCOME
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- ---------
<S> <C>
Revenues:
Rental income from operating
leases $ 52,230 $ - $ 52,230
Earned income from direct
financing leases 1,113 - 1,113
Interest income 42,871 - 42,871
----------- ----------- ---------
96,214 - 96,214
----------- ----------- ---------
Expenses:
General operating and
administrative 16,685 - 16,685
Professional services 5,896 - 5,896
Management fees to related party 1,212 - 1,212
State and other taxes 416 - 416
Depreciation and amortization 9,828 - 9,828
----------- ----------- ---------
34,037 - 34,037
----------- ----------- ---------
Net Income $ 62,177 $ - $ 62,177
=========== =========== =========
Net Income Per Limited Partner
Unit $ 0.05 $ 0.05
=========== =========
Weighted Average Number of Units
Outstanding 1,252,970 1,252,970
=========== =========
</TABLE>
See accompanying notes to unaudited pro forma
financial statements.
- 16 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C>
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
========== =========
</TABLE>
See accompanying notes to unaudited pro forma
financial statements.
- 17 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE
YEAR ENDED DECEMBER 31, 1996
Pro Forma Balance Sheet:
(a) Represents gross proceeds of $2,917,786 from the sale of 291,778 Units
during the period April 1, 1997 through May 22, 1997, the assumed
future sales of 329,033 Units, resulting in the receipt of $3,290,334
in gross offering proceeds through May 22, 1997, and $6,079,177 of cash
and cash equivalents at March 31, 1997, used (i) to acquire nine
properties for $10,310,149, (ii) to fund estimated construction costs
of $1,005,240 ($686,342 of which was accrued as construction costs
payable at March 31, 1997) relating to the five properties under
construction at March 31, 1997, (iii) to pay acquisition fees and other
costs of $328,982 ($49,617 of which was accrued as due to related
parties at March 31, 1997) and reclassify from other assets $296,908 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 $642,926 ($84,195 of which was accrued
as due to related parties at March 31, 1997), 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>
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
Golden Corral in Elizabethtown, KY 1,453,059 78,780 1,531,839
IHOP in Santa Rosa, CA 1,282,215 69,518 1,351,733
Five properties under construction at
March 31, 1997 318,898 17,290 336,188
------------- ----------- -----------
$10,629,047 $ 576,273 $11,205,320
============= =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $ 7,206,057
Net investment in direct financing leases 3,999,263
-----------
$11,205,320
===========
</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.
- 18 -
<PAGE>
