424(b)(3)
No. 33-90998-01
CNL INCOME FUND XVII, LTD.
AND
CNL INCOME FUND XVIII, LTD.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated August 11, 1995. This Supplement replaces the Supplements
dated October 16, 1996, December 20, 1996 and January 6, 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 January 8, 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 January 8, 1997, will be reported in a
subsequent Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of October 11, 1996, CNL XVIII had received aggregate subscription
proceeds of $1,733,131, which exceeded the minimum offering amount of
$1,500,000, and $1,517,431 of the funds (which excluded all funds received
from New York and Pennsylvania investors) were released from escrow. As of
January 8, 1997, CNL XVIII had received total subscription proceeds of
$9,184,108 (918,411 Units) from 427 Limited Partners. As of January 8, 1997,
CNL XVIII had invested or committed for investment approximately $5,900,000 of
such proceeds in five Properties and to pay Acquisition Fees and miscellaneous
Acquisition Expenses, leaving approximately $2,000,000 in offering proceeds
available for investment in Properties. As of January 8, 1997, CNL XVIII had
incurred $413,285 in Acquisition Fees to an Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Since inception, CNL XVIII has acquired five Properties. The Properties
are a Burger King Property (in Kinston, North Carolina), a Golden Corral
Property (in Houston, Texas) and 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 five 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."
January 14, 1997 Prospectus Dated August 11, 1995<PAGE>
As of January 8, 1997, CNL XVIII had initial commitments to acquire
three additional properties. 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 three 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.
<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% of CNL XVIII's for each lease year at any time after
Raleigh, NC renewal options total cost to purchase after the fifth lease the fifth lease
Existing restaurant the property; year, (i) 5% of year
increases to 10.81% of annual gross sales
total cost during the minus (ii) the
third through fifth minimum annual rent
lease years, 11.55% of for such lease year
total cost during the
sixth through tenth
lease years, and
12.71% of total cost
during the eleventh
through fifteenth
lease years
Golden Corral 15 years; four five-year 10.75% of Total Cost for each lease year, during the first
Galveston, TX 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
</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.
The following table sets forth the location of the five Properties
acquired by CNL XVIII from inception 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 inception 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>
BURGER KING $875,000 12/27/96 12/2016; four $89,688; for each lease during the
(the "Kinston five-year increases by 5% year, (i) 6% of eighth, ninth,
Property") renewal options after the fifth annual gross tenth, eleventh
Existing restaurant lease year and sales minus (ii) and twelfth
by 10% after the the minimum lease years only
The Kinston Property is tenth lease year annual rent for
located at the and after every such lease year
northwest quadrant of five years
the intersection of thereafter
North Heritage Street during the lease
and Phillips Street, in term
Kinston, Lenoir County,
North Carolina, in an
area of mixed retail,
commercial, and
residential
development. Other
fast-food and family-
style restaurants
located in proximity to
the Kinston Property
include a Hardee's, a
Golden Corral, a KFC,
two Pizza Huts, and a
local restaurant.
GOLDEN CORRAL $579,704 12/27/96 12/2011; four 10.75% of Total for each lease during the first
(the "Houston (excluding five-year Cost (4) year, 5% of the through seventh
Property") closing and renewal options amount by which lease years and
Restaurant to be development annual gross the tenth
constructed costs) (3) sales exceed through
$2,899,152 (5) fifteenth lease
The Houston Property is years only
located at the
southeast quadrant of
the intersection of
Highway 290 and
Hollister Road, in
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 Burger King,
a Taco Bell, a
Fuddrucker's, an
Outback Steakhouse, a
Shoney's, a Red
Lobster, a Whataburger,
and several local
restaurants.
JACK IN THE BOX (7) $1,258,223 01/07/97 01/2015; four $128,968 (6); for each lease None
(the "Echo Park (excluding five-year increases by 8% year, (i) 5% of
Property") closing renewal options after the fifth annual gross
Restaurant to be costs) (3)(6) lease year and sales minus (ii)
constructed after every five the minimum
years thereafter annual rent for
The Echo Park Property during the lease such lease year
is located on the term (5)
northeast corner of
Effie Street and
Glendale Boulevard, in
Los 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 (7) $1,067,175 01/07/97 01/2015; four $109,385 (6); for each lease None
(the "Henderson (excluding five-year increases by 8% year, (i) 5% of
Property") closing renewal options after the fifth annual gross
Restaurant to be costs) (3)(6) lease year and sales minus (ii)
constructed after every five the minimum
years thereafter annual rent for
The Henderson Property during the lease such lease year
is located within the term (5)
eastern quadrant of the
intersection of South
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 (7) $759,658 01/08/97 01/2015; four $77,865 (6); 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) (3)(6) lease year and sales minus (ii)
constructed after every five the minimum
years thereafter annual rent for
The Centerville during the lease such lease year
Property is located term (5)
within the northwest
quadrant of the
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
-------- -----------------
Kinston Property $ 661,000
Houston Property 1,058,000
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, except as indicated below. For the Houston
Property, minimum annual rent will become due and payable on the earlier
of (i) the date the certificate of occupancy for the restaurant is
issued, (ii) the date the restaurant opens for business to the public or
(iii) 180 days after execution of the lease. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Houston 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 shall be payable in a single lump sum on
the date minimum annual rent becomes payable for this Property.
(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
-------- ---------------------- ---------------
Houston Property $1,684,643 June 25, 1997
Echo Park Property (6) July 6, 1997
Henderson Property (6) July 6, 1997
Centerville Property (6) July 7, 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.
(7) The lessee of the Echo Park, Henderson and Centerville Properties is the
same unaffiliated lessee.
<TABLE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM INCEPTION
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 inception 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.
<CAPTION>
Burger King Golden Corral Jack in the Box Jack in the Box
Kinston, NC Houston, TX (5) Echo Park, CA (5)(6) Henderson, NV (5)(6)
----------- --------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable Income:
Base Rent (1) $ 89,688 $170,349 $128,968 $109,385
Management Fees (2) (897) (1,703) (1,290) (1,094)
General and Administrative
Expenses (3) (4,484) (8,517) (6,448) (5,469)
-------- -------- -------- --------
Estimated Cash Available from
Operations 84,307 160,129 121,230 102,822
Depreciation Expense (4) (16,525) (26,460) (16,377) (15,115)
-------- -------- -------- --------
Pro Forma Estimate of Taxable
Income of CNL XVIII $ 67,782 $133,669 $104,853 $ 87,707
======== ======== ======== ========
See Footnotes
</TABLE>
<TABLE>
<CAPTION>
Jack in the Box
Centerville, TX (5)(6) Total
---------------------- --------
<S> <C> <C>
Pro Forma Estimate
of Taxable Income:
Base Rent (1) $ 77,865 $576,255
Management Fees (2) (779) (5,763)
General and Administrative
Expenses (3) (3,893) (28,811)
-------- --------
Estimated Cash Available from
Operations 73,193 541,681
Depreciation Expense (4) (13,489) (87,966)
-------- --------
Pro Forma Estimate of Taxable
Income of CNL XVIII $ 59,704 $453,715
======== ========
</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. 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.
(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
-------- -------------------------------
Houston Property June 25, 1997
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.
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 September 30, 1996 13
Notes to Pro Forma Balance Sheet as of September 30, 1996 14
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 $7,777,055 in
gross offering proceeds from the sale of 777,706 additional Units during the
period October 1, 1996 through December 30, 1996, 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 two properties, one of which is 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
December 30, 1996, 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 $ - $2,572,745 (a) $2,572,745
Cash and cash equivalents 730 4,352,347 (a) 4,353,077
Organization costs 10,000 10,000
Deferred syndication costs 504,079 (504,079)(b) -
Other assets 27,324 217,655 (a) 244,979
---------- ---------- ----------
$ 542,133 $6,638,668 $7,180,801
========== ========== ==========
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 7,683,880 (a)
(504,079)(b) 7,180,801
---------- ---------- ----------
$ 542,133 $6,638,668 $7,180,801
========== ========== ==========
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 $7,777,055 from the sale of 777,706 Units
during the period October 1, 1996 through December 30, 1996 and the
release of $606,760 held in escrow as of September 30, 1996, used (i) to
acquire two properties for $2,440,433, (ii) to pay acquisition fees of
$377,271, ($27,304 of which was accrued as due to related parties at
September 30, 1996, $132,312 of which was allocated to the two
properties acquired and $217,655 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 $1,203,764,
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 $4,352,347 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
---------- ---------- ----------
$2,440,433 $ 132,312 $2,572,745
========== ========== ==========
(b) Represents reclassification of deferred syndication costs totalling
$504,079 at September 30, 1996, to syndication costs which have been
netted against partners' capital.
