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 and the Prospectus Supplement dated August 6, 1997.
This Supplement replaces the Supplement dated August 26, 1997 and September 24,
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 October 22, 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 October 22, 1997, will be reported in a subsequent Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of October 22, 1997, CNL XVIII had received total subscription
proceeds of $29,805,669 (2,980,567 Units) from 1,388 Limited Partners. As of
October 22, 1997, the Company had invested or committed for investment
approximately $25,400,000 of such proceeds in 21 Properties and to pay
Acquisition Fees and miscellaneous Acquisition Expenses leaving approximately
$694,000 in offering proceeds available for investment in Properties. As of
October 22, 1997, CNL XVIII had incurred $1,341,255 in Acquisition Fees to an
Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between July 19, 1997 and October 22, 1997, CNL XVIII acquired two
Properties consisting of land and building. The Properties are a Golden Corral
Property (in Destin, Florida) and a Ground Round Property (in Rochester, New
York). For information regarding the 19 Properties acquired by CNL XVIII prior
to July 19, 1997, see the Prospectus dated May 9, 1997 and the Prospectus
Supplement dated August 6, 1997.
In connection with the purchase of these Properties, CNL XVIII, as
lessor, entered into long-term lease agreements with unaffiliated lessees. The
general terms of the lease agreements are described in the section of the
Prospectus entitled "Business - Description of Leases." For the Destin Property,
which 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."
The following table sets forth the location of the two Properties
consisting of land and building acquired by CNL XVIII from July 19, 1997 through
October 22, 1997, a description of the competition, and a summary of the
principal terms of the acquisition and lease of each Property.
October 24, 1997 Prospectus Dated May 9, 1997
<PAGE>
PROPERTY ACQUISITIONS
From July 19, 1997 through October 22, 1997
PROPERTY: Golden Corral
(the "Destin Property")
Restaurant to be constructed
Location and Competition: The Destin Property is located on the
northeast quadrant of Highway 98 and Beach Drive, in Destin, Okaloosa
County, Florida, in an area of mixed retail, commercial, and
residential development. Other fast-food and family-style restaurants
located in proximity to the Destin Property include a Burger King, a
McDonald's, and a local restaurant.
Purchase Price (1): $546,572 (excluding development costs) (3)
Date Acquired: 09/17/97
Lease Expiration and Renewal Options: 03/2013; four five-year renewal
options
Minimum Annual Rent (2): 10.75% of Total Cost (4)
Percentage Rent: for each lease year, 5% of the amount by which annual
gross sales exceed $2,798,367 (5)
Option To Purchase: during the first through seventh lease years and
the tenth through fifteenth lease years only
PROPERTY: Ground Round
(the "Rochester Property")
Existing restaurant
Location and Competition: The Rochester Property is located on the
south side of Buffalo Road, west of Pixley Road, southeast of
Interstate 490, in Rochester, Monroe County, New York, in an area of
mixed retail, commercial, and residential development. Other fast-food
and family-style restaurants located in proximity to the Rochester
Property include a Perkins, a Denny's, a Burger King, a Wendy's, and
several local restaurants.
Purchase Price (1) : $1,045,455
Date Acquired: 10/20/97
Lease Expiration and Renewal Options: 10/2017; five five-year renewal
options
Minimum Annual Rent (2): $107,159
Percentage Rent: (6)
Option To Purchase: at any time after the seventh lease year
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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
Destin Property $1,029,000
Rochester Property 579,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the Destin
Property, minimum annual rent will become due and payable on the
earlier of (i) 180 days after execution of the lease, (ii) the date the
certificate of occupancy for the restaurant is issued, or (iii) the
date the restaurant opens for business to the public. During the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable for the Destin 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 be payable in a single lump sum at the time
of final funding of the construction costs.
(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>
Destin Property $1,628,391 March 16, 1998
</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).
(6) For each lease year, percentage rent shall be calculated upon the
amount by which gross sales exceed a to be determined breakpoint (base
sales) as follows; 6% for an increase of 0% to 33.33% above base sales,
5.5% for an increase of 33.34% to 66.7% above base sales, and 5% for an
increase of 66.8% to 100% above base sales. For increases in gross
sales in excess of 100%, percentage rent shall decrease by .5% for
every additional 33.33% increase above base sales.
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<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH OCTOBER 22, 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 October
22, 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>
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)
========
</TABLE>
See Footnotes
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<PAGE>
<TABLE>
<CAPTION>
Jack in the Box Golden Corral Boston Market Black-eyed Pea
Centerville, TX (6) Galveston, TX (7) Raleigh, NC Atlanta, GA
------------------- ----------------- ------------- ------------
<S> <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
======== ========
</TABLE>
See Footnotes
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<PAGE>
<TABLE>
<CAPTION>
Golden Corral Boston Market On The Border Boston Market
Stow, OH San Antonio, TX San Antonio, TX Minnetonka, MN
<S> <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)
========
</TABLE>
See Footnotes
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<PAGE>
<TABLE>
<CAPTION>
Wendy's Boston Market Jack in the Box Golden Corral
Sparta, TN Timonium, MD Houston #2, TX (6) Elizabethtown, KY (7)
---------- ------------- ------------------ ---------------------
<S> <C>
Estimated Taxable Operating Results:
Base Rent (1) (5) (5) (5) (5)
Management Fees (2) (5) (5) (5) (5)
General and Administrative
Expenses (3) (5) (5) (5) (5)
Estimated Cash Available from
Operations (5) (5) (5) (5)
Depreciation Expense (4) (5) (5) (5) (5)
Estimate Taxable Operating Results (5) (5) (5) (5)
</TABLE>
See Footnotes
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<PAGE>
<TABLE>
<CAPTION>
IHOP Arby's IHOP Golden Corral
Santa Rosa, CA (8) Lexington, NC Bridgeview, IL(8) Destin, FL (7)
------------------ ------------- ----------------- --------------
<S> <C>
Estimated Taxable Operating Results:
Base Rent (1) $ 28,547 $ 13,861 $ 31,579 (5)
Management Fees (2) (285) (139) (316) (5)
General and Administrative
Expenses (3) (1,427) (693) (1,579) (5)
-------- -------- -------
Estimated Cash Available from
Operations 26,835 13,029 29,684 (5)
Depreciation Expense (4) (4,678) (2,499) (6,267) (5)
-------- -------- --------
Estimate Taxable Operating Results $ 22,157 $ 10,530 $ 23,417 (5)
======== ======== ========
</TABLE>
See Footnotes
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<PAGE>
<TABLE>
<CAPTION>
Ground Round
Rochester, NY Total
------------- -----
<S> <C>
Estimated Taxable Operating Results:
Base Rent (1) $107,159 $285,519
Management Fees (2) (1,072) (2,856)
General and Administrative
Expenses (3) (5,358) (14,275)
-------- --------
Estimated Cash Available from
Operations 100,729 268,388
Depreciation Expense (4) (14,478) (44,897)
-------- --------
Estimate Taxable Operating Results $ 86,251 $223,491
======== ========
</TABLE>
- -------------------------------------
FOOTNOTES:
(1) Represents rental income from leases for eight of the 21 Properties
acquired from inception through October 22, 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 13 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.
(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
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<PAGE>
Property Estimated Final Completion Date
-------- -------------------------------
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
Elizabethtown Property November 17, 1997
Destin Property March 16, 1998
(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, Galveston, Elizabethtown and Destin
Properties is the same unaffiliated lessee.
(8) The lessee of the Santa Rosa and Bridgeview Properties is the same
unaffiliated lessee.
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