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, January 6, 1997 and January 14,
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 24, 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 24, 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 24, 1997, CNL XVIII had received total subscription proceeds of
$10,420,664 (1,042,066 Units) from 481 Limited Partners. As of January 24,
1997, CNL XVIII had invested or committed for investment approximately
$8,600,000 of such proceeds in seven Properties and to pay Acquisition Fees
and miscellaneous Acquisition Expenses, leaving approximately $450,000 in
offering proceeds available for investment in Properties. As of January 24,
1997, CNL XVIII had incurred $468,930 in Acquisition Fees to an Affiliate of
the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Since inception, CNL XVIII has acquired seven Properties. The
Properties are a Burger King Property (in Kinston, North Carolina), two Golden
Corral Properties (one in each of Houston and Galveston, Texas), three Jack in
the Box Properties (one in each of Echo Park, California, Henderson, Nevada,
and Centerville, Texas) and a Boston Market Property (in Raleigh, North
Carolina).
In connection with the purchase of each of these seven 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."
January 29, 1997 Prospectus Dated August 11, 1995
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."
As of January 24, 1997, CNL XVIII had initial commitments to acquire one
additional property. The acquisition of this property 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 this property will be acquired by CNL XVIII. If acquired, the
lease of this property is 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 lease for
this property. 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
</TABLE>
The following table sets forth the location of the seven Properties
acquired by CNL XVIII from inception through January 24, 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 24, 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 Property") five-year increases by 5% year, (i) 6% of eighth, ninth,
Existing restaurant renewal options after the fifth annual gross tenth, eleventh
lease year and sales minus and twelfth
The Kinston Property is by 10% after (ii) the lease years
located at the northwest the tenth lease minimum annual only
quadrant of the year and after rent for such
intersection of North every five lease year
Heritage Street and years
Phillips Street, in thereafter
Kinston, Lenoir County, during the
North Carolina, in an area lease term
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 (8) $579,704 12/27/96 12/2011; four 10.75% of Total for each lease during the
(the "Houston Property") (excluding five-year Cost (4) year, 5% of the first through
Restaurant to be closing and renewal options amount by which seventh lease
constructed development annual gross years and the
costs) (3) sales exceed tenth through
The Houston Property is $2,899,152 (5) fifteenth lease
located at the southeast years only
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 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)(6) 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 (5)
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 (7) $1,067,175 01/07/97 01/2015; four $109,385 (6); 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)(6) 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 (5)
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 (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) lease year and sales minus
constructed (3)(6) after every (ii) the
five years minimum annual
The Centerville Property is thereafter rent for such
located within the during the lease year (5)
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.
GOLDEN CORRAL (8) $424,883 01/22/97 01/2012; four 10.75% of Total for each lease during the
(the "Galveston Property") (excluding five-year Cost (4) year, 5% of the first through
Restaurant to be closing and renewal options amount by which seventh lease
constructed development annual gross years and the
costs) (3) sales exceed tenth through
The Galveston Property is $2,532,737 (5) fifteenth lease
located within the years only
southwest quadrant of the
intersection of Seawall
Boulevard and 61st Street,
in Galveston, Galveston
County, Texas, in an area
of mixed retail,
commercial, and residential
development. Other fast-
food and family-style
restaurants located in
proximity to the Galveston
Property include an IHOP, a
Western Sizzling, a
Shoney's, a Jack in the
Box, a Whataburger, an
Arby's, and several local
restaurants.
BOSTON MARKET $1,225,686 01/23/97 01/2012; five $122,569; for each lease at any time
(the "Raleigh Property") (excluding five-year increases to year after the after the fifth
Existing restaurant closing renewal options $132,497 during fifth lease lease year
costs) the third year, (i) 5% of
The Raleigh Property is through fifth annual gross
located on a pad site in lease years, sales minus
the Falls Center Shopping $141,567 during (ii) the
Center, which is located at the sixth minimum annual
the northeast quadrant of through tenth rent for such
the intersection of Falls lease years, lease year
of the Neuse Road and Old and $155,785
Wake Forest Road, in during the
Raleigh, Wake County, North eleventh
Carolina, in an area of through
mixed retail, commercial, fifteenth lease
and residential years
development. Other fast-
food and family-style
restaurants located in
proximity to the Raleigh
Property include a
Bojangles, three Pizza
Huts, a Red Lobster, a
Burger King, two Wendy's,
four Subway Sandwich Shops,
two Golden Corrals, two
Hardees, two KFCs, a Taco
Bell Express, three
McDonald's, a Ryan's Family
Steakhouse, a Pizza Inn, a
Denny's, a Sizzler, 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
Galveston Property 1,003,000
Raleigh Property 483,000
(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
and Galveston Properties, 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 and Galveston
Properties, 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 1,258,223 July 6, 1997
Henderson Property 1,067,175 July 6, 1997
Centerville Property 759,658 July 7, 1997
Galveston Property 1,480,132 July 21, 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.
(8) The lessee of the Houston and Galveston 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 INCEPTION
THROUGH JANUARY 24, 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 24, 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>
Burger King Golden Corral Jack in the Box Jack in the Box
Kinston, NC Houston, TX (5)(7) 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 Golden Corral Boston Market
Centerville, TX (5)(6) Galveston, TX (5)(7) Raleigh, NC Total
---------------------- -------------------- ------------- ---------
<S> <C> <C> <C> <C>
Pro Forma Estimate
of Taxable Income:
Base Rent (1) $ 77,865 $148,364 $122,569 $ 847,188
Management Fees (2) (779) (1,484) (1,226) (8,473)
General and Administrative
Expenses (3) (3,893) (7,418) (6,128) (42,357)
-------- -------- -------- ---------
Estimated Cash Available from
Operations 73,193 139,462 115,215 796,358
Depreciation Expense (4) (13,489) (25,084) (12,065) (125,115)
-------- -------- -------- ---------
Pro Forma Estimate of Taxable
Income of CNL XVIII $ 59,704 $114,378 $103,150 $ 671,243
======== ======== ======== =========
</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
Galveston Property July 21, 1997
(6) The lessee of the Echo Park, Henderson and Centerville Properties is the
same unaffiliated lessee.
(7) The lessee of the Houston and Galveston 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 15
Notes to Pro Forma Balance Sheet as of September 30, 1996 16
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
Hendersonville, 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.
