SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1997
CNL INCOME FUND XVIII, LTD.
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
Florida 33-90998-01 59-3295394
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
<PAGE>
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Status of the Offering
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective August 11, 1995 (the "Registration
Statement"), CNL Income Fund XVII, Ltd. ("CNL XVII") and CNL Income Fund XVIII,
Ltd. ("CNL XVIII"), limited partnerships with the same general partners and
investment objectives, registered for sale an aggregate of $65,000,000 of units
of limited partnership interest (the "Units") (6,500,000 Units at $10 per Unit).
The first 3,000,000 Units ($30,000,000) were for CNL XVII, and the remaining
Units are for CNL XVIII. The offering of Units of CNL XVII terminated on
September 19, 1996, at which time subscriptions for an aggregate 3,000,000 Units
($30,000,000), including Units sold pursuant to the Reinvestment Plan, had been
received and 1,602 subscribers had been admitted as Limited Partners in
accordance with the Partnership Agreement of CNL XVII. Pursuant to the
registration statement, CNL XVIII's offering of Units could not commence until
the offering of Units of CNL XVII was terminated. CNL XVIII's offering commenced
on September 20, 1996. As of July 18, 1997, CNL XVIII had received subscription
proceeds of $23,290,947 (2,329,095 Units) from 1,127 Limited Partners.
As stated in the Registration Statement, including the Prospectus
which constitutes a part thereof, as supplemented and amended, the proceeds of
the offering of Units are to be used to acquire restaurant properties to be
leased primarily to operators of national and regional fast-food, family-style,
and casual dining restaurant chains (the "Properties"), to pay expenses in
connection with the offering of Units and to pay partnership organizational
costs.
Acquisition of Properties
From May 23, 1997 through July 18, 1997, CNL XVIII acquired two
Properties. The Properties are an Arby's Property (in Lexington, North Carolina)
and an IHOP Property (in Bridgeview, Illinois).
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 leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The lessee also is required to pay for special assessments, sales and
use taxes, and the cost of any renovations permitted under the lease. Upon
termination of the lease, the lessee will surrender possession of the Property
to CNL XVIII, together with any improvements made to the Property during the
term of the lease.
The following table sets forth the location of the two Properties
consisting of land and building, acquired by CNL XVIII from May 23, 1997 through
July 18, 1997, a description of the competition, and a summary of the principal
terms of the acquisition and lease of each Property.
- 1 -
<PAGE>
PROPERTY ACQUISITIONS
From May 23, 1997 through July 18, 1997
<TABLE>
<CAPTION>
Lease
Expira-
tion and Option
Property Location and Purchase Date Renewal Minimum To
Competition Price (1) Acquired Options Annual Rent (2) Percentage Rent Purchase
- --------------------- --------- -------- --------- --------------- --------------- --------
<S> <C>
ARBY'S $632,418 07/15/97 07/2017; two $63,242; for each lease during the
(the "Lexington Property") five-year increases by year, (i) 4% of seventh
Existing restaurant renewal 4.14% after the annual gross and tenth
options third lease sales minus lease
The Lexington Property is year and after (ii) the years only
located on the northeast corner every three minimum annual
of North Main Street and East years rent for such
Fourth Street, in Lexington, thereafter lease year
Davidson County, North during the
Carolina, in an area of mixed lease term
retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Lexington
Property include a local
restaurant.
IHOP $1,423,008 07/16/97 07/2017; $144,080; for each lease during the
(the "Bridgeview Property") three five- increases by year, (i) 4% of eleventh
Existing restaurant year renewal 10% after the annual gross lease year
options fifth lease sales minus and at the
The Bridgeview Property is year and after (ii) the end of the
located at the northeast every five minimum annual initial
quadrant of the intersection of years rent for such lease term
West 79th Street and Harlem thereafter lease year
Avenue, in Bridgeview, Cook during the
County, Illinois, in an area of lease term
mixed retail, commercial, and
residential development. Other
fast-food and family-style
restaurants located in
proximity to the Bridgeview
Property include a Pizza Hut, a
McDonald's, a White Castle, and
a Burger King.
</TABLE>
- 2 -
<PAGE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired is set forth
below:
Property Federal Tax Basis
--------- -----------------
Lexington Property $ 456,000
Bridgeview Property 1,144,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease.
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<PAGE>
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
CNL INCOME FUND XVIII, LTD.
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH JULY 18, 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 July 18,
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.
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<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
- 4 -
<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
- 5 -
<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
- 6 -
<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
- 7 -
<PAGE>
<TABLE>
<CAPTION>
IHOP Arby's IHOP
Santa Rosa, CA (8) Lexington, NC Bridgeview, IL(8) Total
------------------ ------------- ----------------- -------
<S> <C>
Estimated Taxable
Operating Results:
Base Rent (1) $ 28,547 $ 13,861 $ 31,579 $178,360
Management Fees (2) (285) (139) (316) (1,784)
General and Administrative
Expenses (3) (1,427) (693) (1,579) (8,917)
-------- -------- ------- -------
Estimated Cash Available from
Operations 26,835 13,029 29,684 167,659
Depreciation Expense (4) (4,678) (2,499) (6,267) (30,419)
-------- -------- -------- --------
Estimate Taxable Operating Results $ 22,157 $ 10,530 $ 23,417 $137,240
======== ======== ======== ========
</TABLE>
FOOTNOTES:
(1) Represents rental income from leases for seven of the 19 Properties
acquired from inception through July 18, 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 12 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.
(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.
- 8 -
<PAGE>
(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 or renovated, provide that construction or
renovation 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
Elizabethtown Property November 17, 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, Galveston and Elizabethtown Properties is
the same unaffiliated lessee.
(8) The lessee of the Santa Rosa and Bridgeview Properties is the same
unaffiliated lessee.
- 9 -
<PAGE>
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Not applicable.
Item 6. Resignation of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- 10 -
<PAGE>
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 March 31, 1997 13
Pro Forma Statement of Income for the year ended March 31, 1997 14
Pro Forma Statement of Income for the year ended December 31, 1996 15
Notes to Pro Forma Financial Statements for the quarter ended
March 31, 1997 and the year ended December 31, 1996 16
- 11 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet of CNL Income Fund XVIII, Ltd.
("CNL XVIII") gives effect to (i) property acquisition transactions from
inception through March 31, 1997, including the receipt of $16,736,878 in gross
offering proceeds from the sale of 1,673,688 units 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, and the
application of such funds to acquire eight properties, five of which were under
construction at March 31, 1997, and to pay organizational and offering expenses,
acquisition fees, and miscellaneous acquisition expenses, (ii) the receipt of
$6,554,069 in gross offering proceeds from the sale of 655,407 additional Units
during the period April 1, 1997 through July 18, 1997, (iii) the assumed future
sales of 202,422 Units, resulting in the receipt of $2,024,218 in gross offering
proceeds through May 22, 1997, and (iv) the application of such funds and
$6,079,177 of cash and cash equivalents at March 31, 1997, to purchase 11
additional properties during the period April 1, 1997 through July 18, 1997 (six
of which are under construction and consist of land and building, one property
which is under construction and consists of building only and four properties
which consist of land and building), to pay additional construction costs for
the five properties under construction at March 31, 1997, 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 March 31, 1997, includes the transactions described in
(i) above, from its historical balance sheet, adjusted to give effect to the
transactions in (ii), (iii) and (iv) above, as if they had occurred on March 31,
1997.
The Pro Forma Statements of Income for the quarter ended March 31, 1997
and the year ended December 31, 1996, include the historical operating results
of the properties described in (i) above from the dates of their acquisitions.
No pro forma adjustments have been made to the Pro Forma Statements of Income
for the properties owned by CNL XVIII as of July 18, 1997, due to the fact that
these properties did not have a previous rental history.
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 CNL
XVIII's financial results or conditions in the future.
- 12 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C>
Land and buildings on operating
leases, less accumulated
depreciation $ 8,231,628 $ 7,871,708 (a) $16,103,336
Net investment in direct
financing leases (b) 651,984 5,494,962 (a) 6,146,946
Cash and cash equivalents 6,079,177 (6,079,177)(a) -
Receivables 78,257 78,257
Prepaid expenses 900 900
Organization costs, less
accumulated amortization 9,089 9,089
Accrued rental income 6,504 6,504
Other assets 363,240 (301,406)(a) 61,834
----------- ----------- -----------
$15,420,779 $ 6,986,087 $22,406,866
=========== =========== ===========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 70,480 $ 70,480
Accrued construction costs
payable 686,342 $ (686,342)(a) -
Distributions payable 154,476 154,476
Due to related parties 141,104 (133,812)(a) 7,292
Rents paid in advance 118,189 118,189
----------- ----------- -----------
Total liabilities 1,170,591 (820,154) 350,437
Partners' capital 14,250,188 7,806,241 (a) 22,056,429
----------- ----------- -----------
$15,420,779 $ 6,986,087 $22,406,866
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
- 13 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA STATEMENT OF INCOME
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C>
Revenues:
Rental income from operating
leases $ 52,230 $ - $ 52,230
Earned income from direct
financing leases 1,113 - 1,113
Interest income 42,871 - 42,871
--------- --------- ---------
96,214 - 96,214
--------- --------- ---------
Expenses:
General operating and
administrative 16,685 - 16,685
Professional services 5,896 - 5,896
Management fees to related party 1,212 - 1,212
State and other taxes 416 - 416
Depreciation and amortization 9,828 - 9,828
--------- --------- ---------
34,037 - 34,037
--------- --------- ---------
Net Income $ 62,177 $ - $ 62,177
========= ========= =========
Net Income Per Limited Partner
Unit $ 0.05 $ 0.05
========= =========
Weighted Average Number of Units
Outstanding 1,252,970 1,252,970
========= =========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
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<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
--------- ----------- ---------
<S> <C>
Revenues:
Rental income from operating lease $ 1,373 $ - $ 1,373
Interest income 30,241 - 30,241
------- ------- -------
31,614 - 31,614
------- ------- -------
Expenses:
General operating and administrative 3,980 - 3,980
Management fee to related party 12 - 12
Depreciation and amortization 712 - 712
------- ------- -------
4,704 - 4,704
------- ------- -------
Net Income $26,910 $ - $26,910
======= ======= =======
Net Income Per Limited Partner
Unit $ 0.05 $ 0.05
======= =======
Weighted Average Number of Units
Outstanding 503,436 503,436
======= =======
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
- 15 -
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1997 AND THE
YEAR ENDED DECEMBER 31, 1996
Pro Forma Balance Sheet:
(a) Represents gross proceeds of $6,554,069 from the sale of 655,407 Units
during the period April 1, 1997 through July 18, 1997, the assumed
future sales of 202,422 Units, resulting in the receipt of $2,024,218
in gross offering proceeds through July 18, 1997, and $6,079,177 of
cash and cash equivalents at March 31, 1997, used (i) to acquire 11
properties for $12,360,344, (ii) to fund estimated construction costs
of $1,005,240 ($686,342 of which was accrued as construction costs
payable at March 31, 1997) relating to the five properties under
construction at March 31, 1997, (iii) to pay acquisition fees and other
costs of $435,639 ($49,617 of which was accrued as due to related
parties at March 31, 1997) and reclassify from other assets $301,406 of
acquisition fees and other costs previously incurred relating to the
acquired properties, and (iv) to pay selling commissions and offering
expenses (syndication costs) of $856,241 ($84,195 of which was accrued
as due to related parties at March 31, 1997), which have been netted
against partners' capital.
The pro forma adjustments to land and buildings on operating leases as
a result of the above transactions were as follows:
<TABLE>
<CAPTION>
Estimated purchase
price (including
construction and Acquisition
closing costs) and fees
additional con- allocated
struction costs to property Total
------------------ ------------- -----
<S> <C>
Golden Corral in Stow, OH $ 1,668,863 $ 90,480 $ 1,759,343
Boston Market in San Antonio, TX 851,302 46,154 897,456
On The Border in San Antonio, TX 1,186,744 64,342 1,251,086
Boston Market in Minnetonka, MN 815,065 44,190 859,255
Wendy's in Sparta, TN 633,967 34,372 668,339
Boston Market in Timonium, MD 1,129,934 61,261 1,191,195
Jack in the Box in Houston, TX 1,289,000 69,886 1,358,886
Golden Corral in Elizabethtown, KY 1,453,059 78,780 1,531,839
IHOP in Santa Rosa, CA 1,282,215 69,518 1,351,733
Arby's in Lexington, NC 631,418 34,233 665,651
IHOP in Bridgeview, IL 1,418,777 76,922 1,495,699
Five properties under construction at
March 31, 1997 318,898 17,290 336,188
----------- ----------- -----------
$12,679,242 $ 687,428 $13,366,670
=========== =========== ===========
Adjustment classified as follows:
Land and buildings on operating leases $ 7,871,708
Net investment in direct financing leases 5,494,962
-----------
$13,366,670
===========
</TABLE>
(b) In accordance with generally accepted accounting principles, leases in
which the present value of future minimum lease payments equals or
exceeds 90 percent of the value of the related properties are treated
as direct financing leases rather than as land and buildings. The
categorization of the leases has no effect on rental revenues received.
- 16 -
<PAGE>
EXHIBITS
None.
- 17 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL INCOME FUND XVIII, LTD.
Dated: July 30, 1997 By: /s/ Robert A. Bourne
---------------------
ROBERT A. BOURNE,
General Partner
