SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January 7, 1997
CNL INCOME FUND XVIII, LTD.
(Exact Name of Registrant as Specified in Charter)
Florida 33-90998-01 59-3295394
(State or other juris- (Commission File Number) (IRS Employer
diction 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 January 8, 1997, CNL XVIII had received subscription proceeds of
$9,184,108 (918,411 Units) from 427 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 December 31, 1996 through January 8, 1997, CNL XVIII acquired
three Properties. The Properties are three Jack in the Box Properties (one in
each of Echo Park, California; Henderson, Nevada; and Centerville, Texas).
In connection with the purchase of each of these three 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.
For each of these three Properties that is to be constructed, CNL
XVIII has entered into development and indemnification and put agreements with
the lessee.
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The following table sets forth the location of the three Properties
acquired by CNL XVIII from December 31, 1996 through January 8, 1997, a
description of the competition, and a summary of the principal terms of the
acquisition and lease of each Property.
<TABLE>
PROPERTY ACQUISITIONS
From December 31, 1996 through January 8, 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>
JACK IN THE BOX (6) $1,258,223 01/07/97 01/2015; four $128,968 (5); for each lease None
(the "Echo Park Property") (excluding five-year increases by 8% year, (i) 5% of
Restaurant to be closing renewal options after the fifth annual gross
constructed costs) lease year and sales minus
(3)(5) after every (ii) the
The Echo Park Property is five years minimum annual
located on the northeast thereafter rent for such
corner of Effie Street and during the lease year (4)
Glendale Boulevard, in Los lease term
Angeles, Los Angeles
County, California, in an
area of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Echo Park
Property include a KFC and
a McDonald's.
JACK IN THE BOX (6) $1,067,175 01/07/97 01/2015; four $109,385 (5); for each lease None
(the "Henderson Property") (excluding five-year increases by 8% year, (i) 5% of
Restaurant to be closing renewal options after the fifth annual gross
constructed costs) lease year and sales minus
(3)(5) after every (ii) the
The Henderson Property is five years minimum annual
located within the eastern thereafter rent for such
quadrant of the during the lease year (4)
intersection of South lease term
Boulder Highway and Texas
Avenue, in Henderson, Clark
County, Nevada, in an area
of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Henderson
Property include an Arby's,
a Domino's Pizza, a KFC, a
McDonald's, a Pizza Hut, a
Sizzler, a Sonic Drive-In,
a Taco Bell, and several
local restaurants.
JACK IN THE BOX (6) $759,658 01/08/97 01/2015; four $77,865 (5); for each lease None
(the "Centerville (excluding five-year increases by 8% year, (i) 5% of
Property") closing renewal options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(5) after every (ii) the
five years minimum annual
The Centerville Property is thereafter rent for such
located within the during the lease year (4)
northwest quadrant of the lease term
intersection of Highway 45
and State Highway 7, in
Centerville, Leon County,
Texas, in an area of mixed
retail, commercial, and
residential development.
Other fast-food and family-
style restaurants located
in proximity to the
Centerville Property
include a Dairy Queen and
several local restaurants.
</TABLE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for the
construction Properties, once the buildings are constructed, is set
forth below:
Property Federal Tax Basis
-------- -----------------
Echo Park Property $655,000
Henderson Property 605,000
Centerville Property 540,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease.
(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
-------- ---------------------- ---------------
Echo Park Property $1,258,223 July 6, 1997
Henderson Property 1,067,175 July 6, 1997
Centerville Property 759,658 July 7, 1997
(4) Percentage rent shall be calculated on a calendar year basis (January 1
to December 31).
(5) 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.
(6) The lessee of the Echo Park, Henderson and Centerville Properties is the
same unaffiliated lessee.
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM DECEMBER 31, 1996
THROUGH JANUARY 8, 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 December 31, 1996
through January 8, 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.
<TABLE>
<CAPTION>
Jack in the Box Jack in the Box Jack in the Box
Echo Park, CA (5)(6) Henderson, NV (5)(6) Centerville, TX (5)(6) Total
-------------------- -------------------- ---------------------- --------
<S> <C> <C> <C> <C>
Pro Forma Estimate of
Taxable Income:
Base Rent (1) $128,968 $109,385 $ 77,865 $316,218
Management Fees (2) (1,290) (1,094) (779) (3,163)
General and Admini-
strative Expenses (3) (6,448) (5,469) (3,893) (15,810)
-------- -------- -------- --------
Estimated Cash Available
from Operations 121,230 102,822 73,193 297,245
Depreciation Expense (4) (16,377) (15,115) (13,489) (44,981)
-------- -------- -------- --------
Pro Forma Estimate of
Taxable Income of
CNL XVIII $104,853 $ 87,707 $ 59,704 $252,264
======== ======== ======== ========
See Footnotes
</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) 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
-------- -------------------------------
Echo Park Property July 6, 1997
Henderson Property July 6, 1997
Centerville Property July 7, 1997
(6) The lessee of the Echo Park, Henderson and Centerville Properties is the
same unaffiliated lessee.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
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Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
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Not applicable.
ITEM 5. OTHER EVENTS.
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Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S GENERAL PARTNERS.
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Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
- ------ EXHIBITS.
INDEX TO PRO FORMA FINANCIAL STATEMENTS
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Page
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CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Pro Forma Financial Information (unaudited):
Pro Forma Balance Sheet as of September 30, 1996 10
Notes to Pro Forma Balance Sheet as of September 30, 1996 11
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet of CNL Income Fund XVIII, Ltd.
("CNL XVIII") gives effect to (i) the subscriptions for 60,676 units
($606,760) 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, which had been received and were being
held in escrow as of September 30, 1996, (ii) the receipt of $8,577,348 in
gross offering proceeds from the sale of 857,735 additional Units during the
period October 1, 1996 through January 8, 1997, and the release of the
$606,760 previously held in escrow as of September 30, 1996, and (iii) the
application of such funds to purchase five properties, four of which are under
construction, 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
September 30, 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 September 30, 1996.
No Pro Forma Statement of Income is presented due to the facts that (i)
CNL XVIII did not commence operations until October 12, 1996 (the date
following when CNL XVIII received its minimum offering proceeds and the funds
were released from escrow) and (ii) the properties owned by CNL XVIII as of
January 8, 1997, did not have previous rental histories.
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 the
CNL XVIII's financial results or conditions in the future.
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- -------------- ----------
Land and building on
operating leases $ - $5,821,901 (a) $5,821,901
Cash and cash equivalents 730 1,962,544 (a) 1,963,274
Organization costs 10,000 10,000
Deferred syndication costs 504,079 (504,079)(b) -
Other assets 27,324 86,569 (a) 113,893
---------- ---------- ----------
$ 542,133 $7,366,935 $7,909,068
========== ========== ==========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 8,505 $ (8,505)(a) $ -
Due to related parties 532,628 (532,628)(a) -
---------- ---------- ----------
Total liabilities 541,133 (541,133) -
Partners' capital 1,000 8,412,147 (a)
(504,079)(b) 7,909,068
---------- ---------- ----------
$ 542,133 $7,366,935 $7,909,068
========== ========== ==========
See accompanying notes to unaudited pro forma balance sheet.
CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
Pro Forma Balance Sheet:
- -----------------------
(a) Represents gross proceeds of $8,577,348 from the sale of 857,735 Units
during the period October 1, 1996 through January 8, 1997, and the
release of $606,760 held in escrow as of September 30, 1996, used (i) to
acquire five properties for $5,522,489, (ii) to pay acquisition fees of
$413,285, ($27,304 of which was accrued as due to related parties at
September 30, 1996, $299,412 of which was allocated to the five
properties acquired and $86,569 of which was classified as other assets
and will be allocated to future properties) and (iii) to pay selling
commissions and offering expenses (syndication costs) of $1,275,790
which have been netted against partners' capital, and organization costs
of $10,000 (a total of $513,829 of which had been incurred as of
September 30, 1996) leaving $1,962,544 in additional cash and cash
equivalents available for future investment.
The pro forma adjustments to land and buildings on operating leases as a
result of the above transactions were as follows:
Estimated Acquisition
purchase price fees
(including allocated
closing costs) to property Total
-------------- ----------- ----------
Golden Corral in
Houston, TX $1,565,433 $ 84,872 $1,650,305
Burger King in
Kinston, NC 875,000 47,440 922,440
Jack in the Box
in Echo Park, CA 1,257,223 68,163 1,325,386
Jack in the Box
in Henderson-
ville, NV 1,066,175 57,805 1,123,980
Jack in the Box
in Centerville, TX 758,658 41,132 799,790
---------- ---------- ----------
$5,522,489 $ 299,412 $5,821,901
========== ========== ==========
(b) Represents reclassification of deferred syndication costs totalling
$504,079 at September 30, 1996, to syndication costs which have been
netted against partners' capital.
ITEM 8. CHANGE IN FISCAL YEAR.
- ------
Not applicable.
EXHIBITS
None.
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: January 20, 1997 By: /s/ Robert A. Bourne
------------------------------
ROBERT A. BOURNE, General Partner
