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. 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 12, 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 12, 1997, will be reported in a subsequent
Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of May 12, 1997, CNL XVIII had received total subscription proceeds
of $19,205,754 (1,920,575 Units) from 931 Limited Partners. As of May 12,
1997, CNL XVIII had invested or committed for investment approximately all
such proceeds in 15 Properties and to pay Acquisition Fees and miscellaneous
Acquisition Expenses. As of May 12, 1997, CNL XVIII had incurred $864,259 in
Acquisition Fees to an Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between May 1, 1997 and May 12, 1997, CNL XVIII acquired two Properties
consisting of land and building. The Properties are a Boston Market Property
(in Timonium, Maryland) and a Jack in the Box Property (in Houston, Texas).
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 two 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."
In connection with the purchase of these Properties, which are to be
constructed, the Company 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 two Properties
consisting of land and building acquired by CNL XVIII from May 1, 1997 through
May 12, 1997, a description of the competition, and a summary of the principal
terms of the acquisition and lease of each Property.
May 15, 1997 Prospectus Dated May 9, 1997
<TABLE>
PROPERTY ACQUISITIONS
From May 1, 1997 through May 12, 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 development renewal options cost to fifth lease fifth lease
renovated costs) (3) purchase the year, (i) 4% of year
property; annual gross
The Timonium Property is increases by sales minus
located on the northeast 10% after the (ii) the
corner of the fifth lease minimum annual
intersection of York Road year and after rent for such
and Belfast Road, in every five lease year
Timonium, Baltimore years
County, Maryland, in an thereafter
area of mixed retail, during the
commercial, and lease term
residential development.
Other fast-food and
family-style 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.
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</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
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. Minimum annual
rent for the Timonium Property will become due and payable on the date
the tenant receives from the landlord its final funding of the
construction costs. During the period commencing with the effective
date of the lease to the date minimum annual rent becomes payable for
the Timonium Property, as described above, interim rent equal to 10.38%
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.
(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
(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.
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PENDING INVESTMENTS
As of May 1, 1997, CNL XVIII had initial commitments to acquire six
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 six 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.
-4-
<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
Golden Corral 15 years; four five-year 10.75% of Total Cost for each lease year, during the first
Elizabethtown, KY renewal options (1) 5% of the amount by through seventh
Restaurant to be which annual gross lease years and the
constructed sales exceed a to be tenth through
determined breakpoint fifteenth lease
years only
IHOP 20 years; three five- 10.125% of CNL XVIII's for each lease year, during the eleventh
Santa Rosa, CA year renewal options total cost to purchase (i) 4% of annual lease year and at
Existing restaurant the property; gross sales minus the end of the
increases by 10% after (ii) the minimum initial lease term
the fifth lease year annual rent for such
and after every five lease year
years thereafter
during the lease term
Popeyes 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
-5-
</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.
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STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION THROUGH MAY 12, 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 12,
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
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<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)
--------
Estimate Taxable Operating Results $ 32,442 (5) (5) (5)
========
See Footnotes
-9-
<CAPTION>
Wendy's Boston Market Jack in the Box
Sparta, TN Timonium, MD Houston #2, TX (6) Total
---------- ------------- ------------------ ---------
<S> <C> <C> <C> <C>
Estimated Taxable Operating Results:
Base Rent (1) (5) (5) (5) $104,373
Management Fees (2) (5) (5) (5) (1,044)
General and Administrative
Expenses (3) (5) (5) (5) (5,218)
--------
Estimated Cash Available from
Operations (5) (5) (5) 98,111
Depreciation Expense (4) (5) (5) (5) (16,975)
--------
Estimate Taxable Operating Results (5) (5) (5) $ 81,136
========
</TABLE>
FOOTNOTES:
(1) Represents rental income from leases for four of the 15 Properties
acquired from inception through May 12, 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 eleven 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.
-10-
(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
(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 and Galveston Properties is the same
unaffiliated lessee.
-11-
