SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 26, 1997
CNL INCOME FUND XVIII, LTD.
(Exact Name of Registrant as Specified in Charter)
Florida 33-90998-01 59-3295394
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
STATUS OF THE OFFERING
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective August 11, 1995 (the
"Registration Statement"), CNL Income Fund XVII, Ltd. ("CNL XVII") and CNL
Income Fund XVIII, Ltd. ("CNL XVIII"), limited partnerships with the same
general partners and investment objectives, registered for sale an aggregate
of $65,000,000 of units of limited partnership interest (the "Units")
(6,500,000 Units at $10 per Unit). The first 3,000,000 Units ($30,000,000)
were for CNL XVII, and the remaining Units are for CNL XVIII. The offering of
Units of CNL XVII terminated on September 19, 1996, at which time
subscriptions for an aggregate 3,000,000 Units ($30,000,000), including Units
sold pursuant to the Reinvestment Plan, had been received and 1,602
subscribers had been admitted as Limited Partners in accordance with the
Partnership Agreement of CNL XVII. Pursuant to the registration statement,
CNL XVIII's offering of Units could not commence until the offering of Units
of CNL XVII was terminated. CNL XVIII's offering commenced on September 20,
1996. As of April 2, 1997, CNL XVIII had received subscription proceeds of
$17,224,879 (1,722,488 Units) from 796 Limited Partners.
As stated in the Registration Statement, including the Prospectus
which constitutes a part thereof, as supplemented and amended, the proceeds of
the offering of Units are to be used to acquire restaurant properties to be
leased primarily to operators of national and regional fast-food, family-
style, and casual dining restaurant chains (the "Properties"), to pay expenses
in connection with the offering of Units and to pay partnership organizational
costs.
ACQUISITION OF PROPERTIES
From January 25, 1997 through April 2, 1997, CNL XVIII acquired two
Properties. The Properties are a Golden Corral Property (in Stow, Ohio) and a
Black-eyed Pea Property (in Atlanta, Georgia).
In connection with the purchase of each of these two Properties, CNL
XVIII, as lessor, entered into a long-term lease agreement with an
unaffiliated lessee. The leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The lessee also is required to pay for special assessments, sales
and use taxes, and the cost of any renovations permitted under the lease.
Upon termination of the lease, the lessee will surrender possession of the
Property to CNL XVIII, together with any improvements made to the Property
during the term of the lease.
In connection with the acquisition of the Black-eyed Pea Property,
which is building only, CNL XVIII has also entered into a landlord estoppel
agreement with the landlord of the land and a collateral assignment of the
ground lease with the lessee in order to provide CNL XVIII with certain rights
with respect to the land on which the building is located.
----------------------------------------
The following table sets forth the location of the two Properties,
including one Property consisting of land and building and one Property
consisting of building only, acquired by CNL XVIII from January 25, 1997
through April 2, 1997, a description of the competition, and a summary of the
principal terms of the acquisition and lease of each Property.
-1-
<TABLE>
PROPERTY ACQUISITIONS
From January 25, 1997 through April 2, 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>
BLACK-EYED PEA (3) $617,610 03/26/97 04/2023 $69,347; None at any time
(the "Atlanta Property") increases to after the
Existing restaurant $73,700 during fifth lease
the eleventh year
The Atlanta Property is through
located along the east twentieth lease
side of Peachtree Road, years and
north of 28th Street $76,051 during
Northwest, in Atlanta, the twenty-
Fulton County, Georgia, in first through
an area of mixed retail, twenty-sixth
commercial, and lease years
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Atlanta Property
include a Miami Subs, a
Wendy's, and several local
restaurants.
GOLDEN CORRAL $1,686,119 04/02/97 04/2017; two $189,688; for each lease at any time
(the "Stow Property") five-year increases by year, (i) 5% of after the
Existing restaurant renewal options 10% after the annual gross seventh
fifth lease sales minus lease year
The Stow Property is year and after (ii) the
located on the south side every five minimum annual
of Kent Road west of Marsh years rent for such
Road in Stow, Summit thereafter lease year
County, Ohio, in an area during the
of mixed retail, lease term
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Stow Property include
an Applebee's, a Wendy's,
a Taco Bell, and a KFC.
</TABLE>
-2-
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired is set forth below:
Property Federal Tax Basis
-------- -----------------
Atlanta Property $ 650,000
Stow Property 1,273,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease.
(3) CNL XVIII owns the building only for this Property. CNL XVIII does not
own the underlying land; although, CNL XVIII has entered into a landlord
estoppel agreement with the landlord of the land and a collateral
assignment of the ground lease with the lessee in order to provide CNL
XVIII with certain rights with respect to the land on which the building
is located.
-3-
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 25, 1997
THROUGH APRIL 2, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of taxable income of each Property
acquired by CNL XVIII from January 25, 1997 through April 2, 1997, for the 12-month period commencing on the
date of the inception of the respective lease on such Property. The schedule 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.
<CAPTION>
Black-eyed Pea Golden Corral
Atlanta, GA Stow, OH Total
-------------- ------------- --------
<S> <C> <C> <C>
Pro Forma Estimate of Taxable Income:
Base Rent (1) $ 69,347 $189,688 $259,035
Management Fees (2) (693) (1,897) (2,590)
General and Administrative Expenses (3) (3,467) (9,484) (12,951)
-------- -------- --------
Estimated Cash Available from Operations 65,187 178,307 243,494
Depreciation Expense (4) (16,238) (31,819) (48,057)
-------- -------- --------
Pro Forma Estimate of Taxable Income of
CNL XVIII $ 48,949 $146,488 $195,437
======== ======== ========
See Footnotes
-4-
</TABLE>
FOOTNOTES:
(1) Base rent does not include percentage rents which become due if
specified levels of gross receipts are achieved.
(2) The Properties will be managed pursuant to a management agreement
between CNL XVIII and an affiliate of the General Partners, pursuant to
which the affiliate will receive an annual management fee in an amount
equal to one percent of the gross revenues that CNL XVIII earns from its
Properties.
(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.
-5-
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S GENERAL PARTNERS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
-6-
INDEX TO PRO FORMA FINANCIAL STATEMENTS<PAGE>
Page
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Pro Forma Financial Information (unaudited):
Pro Forma Balance Sheet as of December 31, 1996 9
Pro Forma Statement of Income for the year ended
December 31, 1996 10
Notes to Pro Forma Financial Statements as of
December 31, 1996 11
-7-
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 $8,803,064 in gross offering proceeds from the sale of 880,306
additional Units during the period January 1, 1997 through April 2, 1997, and
(iii) the application of such funds and $1,511,143 of cash and cash
equivalents at December 31, 1996, to purchase seven additional properties
during the period January 1, 1997 through April 2, 1997, (four of which are
under construction and consist of land and building, 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 April 2, 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.
-8-
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 $ 7,500,540 (a) $ 9,031,308
Net investment in direct financing
leases (b) - 1,922,272 1,922,272
Cash and cash equivalents 5,371,325 (1,511,143)(a) 3,860,182
Receivables 3,711 3,711
Organization costs, less
accumulated amortization 9,589 9,589
Other assets 324,931 (88,464)(a) 236,467
---------- ----------- -----------
$7,240,324 $ 7,823,205 $15,063,529
========== =========== ===========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 104,514 $ (104,514)(a) $ -
Distributions payable 55,708 55,708
Due to related parties 83,889 (83,069)(a) 820
---------- ----------- -----------
Total liabilities 244,111 (187,583) 56,528
Partners' capital 6,996,213 8,010,788 (a) 15,007,001
---------- ----------- -----------
$7,240,324 $ 7,823,205 $15,063,529
========== =========== ===========
See accompanying notes to unaudited pro forma
financial statements.
-9-
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.
-10-
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 $8,803,064 from the sale of 880,306 Units
during the period January 1, 1997 through April 2, 1997, and $1,511,143
of cash and cash equivalents at December 31, 1996, used (i) to acquire
seven properties for $7,952,481, (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
$428,686 ($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 $88,464 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 $947,311 ($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
One property under construction at
December 31, 1996 985,729 53,444 1,039,173
---------- ---------- ----------
$8,938,210 $ 484,602 $9,422,812
========== ========== ==========
Adjustment classified as follows:
Land and buildings on operating leases $7,500,540
Net investment in direct financing leases 1,922,272
----------
$9,422,812
==========
</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.
-11-
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
EXHIBITS
None.
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf
by the undersigned thereunto duly authorized.
CNL INCOME FUND XVIII, LTD.
Dated: April 16, 1997 By: /s/ Robert A. Bourne
---------------------------------
ROBERT A. BOURNE, General Partner
