Filed Pursuant to Rule 424(b)(3)
File 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 and December 20, 1996. 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 December 30, 1996, 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 December 30, 1996, 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 December
30, 1996, CNL XVIII had received total subscription proceeds of $8,383,815
(838,382 Units) from 396 Limited Partners. As of December 30, 1996, CNL XVIII
had invested or committed for investment approximately $2,800,000 of such
proceeds in two Properties and to pay Acquisition Fees and miscellaneous
Acquisition Expenses, leaving approximately $4,400,000 in offering proceeds
available for investment in Properties. As of December 30, 1996, CNL XVIII had
incurred $377,272 in Acquisition Fees to an Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Since inception, CNL XVIII acquired two Properties. The Properties are
a Burger King Property (in Kinston, North Carolina) and a Golden Corral Property
(in Houston, Texas).
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."
For the Property that is 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 6, 1997 Prospectus Dated August 11, 1995
<PAGE>
As of December 30, 1996, CNL XVIII had initial commitments to acquire
five 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 five 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.
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<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
<S> <C>
Boston Market 15 years; five five- 10.38% of CNL for each lease at any time
Charlotte, NC year renewal options XVIII's total cost year after the after the fifth
Existing to purchase the fifth lease year, lease year
restaurant property; (i) 5% of annual
increases by 10% gross sales minus
after the fifth (ii) the minimum
lease year and annual rent for
after every five such lease year
years thereafter
during the lease
term
Boston Market 15 years; five five- 10% of CNL XVIII's for each lease at any time
Raleigh, NC year renewal options total cost to year after the after the fifth
Existing purchase the fifth lease year, lease year
restaurant property; (i) 5% of annual
increases to gross sales minus
10.81% of total (ii) the minimum
cost during the annual rent for
third through such lease year
fifth lease years,
11.55% of total
cost during the
sixth through
tenth lease years,
and 12.71% of
total cost during
the eleventh
through fifteenth
lease years
Jack in the Box 18 years; four five- 10.25% of Total for each lease at any time
Centerville, TX year renewal options Cost (1); year, (i) 5% of after the
Restaurant to be increases by 8% annual gross seventh lease
constructed after the fifth sales minus (ii) year (2)
lease year and the minimum
after every five annual rent for
years thereafter such lease year
during the lease
term
Jack in the Box 18 years; four five- 10.25% of Total for each lease at any time
Echo Park, CA year renewal options Cost (1); year, (i) 5% of after the
Restaurant to be increases by 8% after the fifth annual gross seventh lease
constructed lease year and sales minus (ii) year (2)
after every five the minimum
years thereafter annual rent for
during the lease such lease year
term
Jack in the Box 18 years; four five- 10.25% of Total for each lease at any time
Henderson, NV year renewal options Cost (1); year, (i) 5% of after the
Restaurant to be increases by 8% annual gross seventh lease
constructed after the fifth sales minus (ii) year (2)
lease year and the minimum
after every five annual rent for
years thereafter such lease year
during the lease
term
</TABLE>
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<PAGE>
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.
(2) In the event CNL XVIII purchases the property directly from the lessee,
the lessee will have no option to purchase the property.
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<PAGE>
The following table sets forth the location of the two Properties
acquired by CNL XVIII from inception through December 30, 1996, a description of
the competition, and a summary of the principal terms of the acquisition and
lease of each Property.
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<PAGE>
PROPERTY ACQUISITIONS
From inception through December 30, 1996
<TABLE>
<CAPTION>
Lease Expira-
Property Location Purchase Date tion and Minimum Option
and Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
<S> <C>
Burger King $875,000 12/27/96 12/2016; $89,688; for each during the eighth,
(the "Kinston Property") (excluding four five- increases by lease year, ninth, tenth,
Existing restaurant closing year 5% after the (i) 6% of eleventh and
costs) renewal fifth lease annual gross twelfth lease
The Kinston Property is options year and by sales minus years only
located at the northwest 10% after (ii) the
quadrant of the the tenth minimum
intersection of North lease year annual rent
Heritage Street and and after for such
Phillips Street, in every five lease year
Kinston, Lenoir County, years
North Carolina, in an area thereafter
of mixed retail, during the
commercial, and lease term
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; 10.75% of for each during the
(the "Houston Property") (excluding four five- Total Cost lease year, first
Restaurant to be closing year (4) 5% of the through
constructed and renewal amount by seventh lease
development options which annual years and the
The Houston Property is costs) (3) gross sales tenth through
located at the southeast exceed fifteenth lease
quadrant of the $2,899,152 (5) years only
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.
</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 the
construction Property, once the building is constructed, is set forth
below:
Property Federal Tax Basis
Kinston Property $ 742,000
Houston Property 1,058,000
(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 become payable for the Houston Property, "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 agreement for the Property which is to be constructed,
provides that construction must be completed no later than the date 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 amount set forth below:
<TABLE>
<CAPTION>
Property Estimated Maximum Cost Estimated Final Completion Date
<S> <C>
Houston Property $1,684,643 June 25, 1997
</TABLE>
(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).
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<PAGE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM INCEPTION
THROUGH DECEMBER 30, 1996
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
December 30, 1996, 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>
Burger King Golden Corral
Kinston, NC Houston, TX (5) Total
<S> <C>
Pro Forma Estimate
of Taxable Income:
Base Rent (1) $ 89,688 $170,349 $260,037
Management Fees (2) (897) (1,703) (2,600)
General and Administrative
Expenses (3) (4,484) (8,517) (13,001)
-------- -------- --------
Estimated Cash Available from
Operations 84,307 160,129 244,436
Depreciation Expense (4) (18,554) (26,460) (45,014)
-------- -------- --------
Pro Forma Estimate of Taxable
Income of CNL XVIII $ 65,753 $133,669 $199,422
======== ======== ========
</TABLE>
See Footnotes
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<PAGE>
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 agreement for the Property which is to be constructed,
provides that construction must be completed no later than the date set
forth below:
Property Estimated Final Completion Date
Houston Property June 25, 1997
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