FILED PURSUANT TO RULE 424(B)(3)
FILE NO. 33-90998-01
CNL INCOME FUND XVII, LTD.
AND
CNL INCOME FUND XVIII, LTD.
Supplement No. 6, dated March 20, 1997
to Prospectus, dated August 11, 1995
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated August 11, 1995.
All subscriptions referred to in this Supplement 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 Income
Fund XVII, Ltd. ("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 March 6, 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 March 6, 1997, will be reported in a subsequent Supplement.
THE OFFERING
GENERAL
On September 19, 1996, the offering of units of limited partnership
interest in CNL XVII terminated upon the receipt of subscriptions for an
aggregate of 3,000,000 units ($30,000,000). An aggregate of 1618 subscribers
were admitted as limited partners to CNL XVII in accordance with the terms of
the partnership agreement of CNL XVIII. The Offering of Units in CNL XVIII
commenced on September 20, 1996. As of October 11, 1996, CNL XVIII had received
aggregate subscriptions for 173,313 Units, representing $1,733,131 in aggregate
subscription proceeds from Limited Partners and $1,517,431 of the funds were
released from escrow (which excluded all funds received from New York and
Pennsylvania investors). As of March 6, 1997, the Partnership had sold 1,503,434
Units, representing $15,034,343 of capital contributed by 704 unaffiliated
Limited Partners.
RISK FACTORS
In addition, to certain risk factors previously disclosed, prospective
investors should consider the following risks.
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INVESTMENT RISKS
Reliance on General Partners for Management of Partnership. All
decisions with respect to the management of the Partnership will be made
exclusively by the General Partners. The Limited Partners will have no right or
power to take part in the management of the Partnership except through the
exercise of their voting rights and will be relying almost entirely on the
General Partners with respect to the management of the Partnership and the
operation of its business. Thus, no prospective investor should purchase any of
the Units offered hereby unless the prospective investor is willing to entrust
all aspects of the management of the Partnership and the operation of its
business to the General Partners. The General Partners may be removed under
certain conditions set forth in the Partnership Agreement but only subject to
payment for their interest in the residual value of Partnership assets and
release from all guarantees and other obligations incurred as General Partners.
See "Summary of Partnership Agreement" for a summary description of these voting
and removal rights. See "Management" and "Prior Performance of the General
Partners and Affiliates" for a summary of the General Partners' experience in
real estate investment and management of limited partnerships formed to acquire
restaurant properties, apartments, and office buildings, as well as in direct
management of apartments and office parks.
Risks of Payment of Management Compensation. The General Partners and
their Affiliates will perform services for the Partnership in connection with
the offer and sale of Units, the selection and acquisition of the Partnership's
Properties, and the operation of the Partnership, and will receive substantial
compensation from the Partnership in consideration of these services. In
connection with the Offering, Affiliates of the General Partners will receive
between 5% and 13.5% of the Gross Proceeds as fees (depending on the portion of
Selling Commissions and the due diligence expense reimbursement fee reallowed to
Soliciting Dealers) and a maximum of 3% of the Gross Proceeds as reimbursement
of Organizational and Offering Expenses and 0.5% in Acquisition Expenses that
they incur on behalf of the Partnership in connection with the Offering. The
Partnership may pay a substantial portion of these initial fees and expenses and
other compensation and expense reimbursements payable to the General Partners
and their Affiliates in consideration of the services which they will render to
the Partnership prior to making distributions to the Limited Partners. Such
payments could reduce the amount of cash available for investment in Properties
and for initial distributions to the Limited Partners. See "Management
Compensation" for a more complete description of expense reimbursements and fees
to be paid to the General Partners and their Affiliates in connection with their
services to the Partnership.
Possible Lack of Diversification. There can be no assurance that the
Partnership will obtain Capital Contributions equal to the maximum number of its
Units. The potential profitability of the Partnership and its ability to
diversify its investments, both geographically and by type of restaurant
Properties purchased, will be limited by the amount of funds at its disposal.
Lack of Market for Units. The Partnership is under no obligation to
repurchase Units from a Limited Partner, and it is not anticipated that there
will be a public market for the Units. It therefore may be difficult to sell
Units quickly. This investment is designed for investors with no need for
liquidity in this investment. See "Suitability Standards and How to
Subscribe--Suitability Standards." The Partnership has established a
Distribution Reinvestment Plan which, on behalf of Participants in the
Distribution Reinvestment Plan, will repurchase Units from Limited Partners who
desire to sell their Units to the extent of available funds and subject to
certain additional limitations. There of course can be no assurance that the
funds available through the Plan will be sufficient to permit the purchase of
all of the Units for which the General Partners receive repurchase requests. See
"Summary of Distribution Reinvestment Plan."
Significant Restrictions on Transferability of Units. Because the
classification of the Partnership as a "publicly traded partnership" would
significantly decrease the value of the Units, the General Partners intend to
exercise fully their right to prohibit transfers of Units under circumstances
that could cause the Partnership to be so classified. An assignee of Units may
be substituted as a Limited Partner only with the consent of the General
Partners, using assignment forms required by the General Partners, which could
affect the resale value of the Units. See "Summary of Partnership
Agreement--Restrictions on Transferability of Units." Accordingly, there can be
no assurance that Limited Partners will be able to liquidate their investments
in the event of an emergency. Therefore, Units should be purchased only for
long-term investment.
2
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Lack of Control of Property Management. The Partnership uses
"triple-net" leases and, therefore, day-to-day management of the Properties will
be the responsibility of the tenants of the Properties. In general, the
Partnership intends to enter into leasing agreements only with lessees having
substantial prior experience in the restaurant industry, but there can be no
assurance that the Partnership will be able to make such arrangements in all
cases because the Partnership had acquired only seven Properties as of March 6,
1997.
Potential Liability of Limited Partners. The Limited Partners'
liability, in general, will be limited to the amount they agree to contribute to
the capital of the Partnership plus their share of any undistributed profits and
assets. If, however, Limited Partners participate in the control of the business
of the Partnership, or permit their names to be used in the conduct of the
Partnership's business, they may become personally liable as general partners
for the Partnership's obligations. The nature of the activities constituting
"control" which are required to impose such liability on a Limited Partner is
not altogether clear. In certain cases, however, the exercise by a Limited
Partner of voting rights granted in the Partnership Agreement could be deemed to
constitute management control. Further, in the event the Partnership is unable
to meet its obligations, the Limited Partners, under applicable law, could be
obligated to (i) return, with interest, any cash wrongfully distributed which
represents a return of their Capital Contributions and (ii) repay, with
interest, any cash distributed to them which represents a return of their
Capital Contributions, pro rata in accordance with their Partnership Interests
as may required to discharge liabilities of the Partnership to creditors who
extended credit or whose claims arose during the period the returned Capital
Contributions were held by the Partnership. See Exhibit A--Form of Amended and
Restated Agreement of Limited Partnership and "Summary of Partnership
Agreement--Liability of the Limited Partners to Third Parties."
Limited Resources of General Partners. The corporate General Partner
has only nominal capitalization. The individual General Partners are general
partners in other partnerships and have certain contingent liabilities or may
incur additional liabilities in connection therewith. Should some of these
liabilities become actual, the net worth of the General Partners could be
impaired. If the net worth of the General Partners decreases significantly, the
General Partners may be unable to perform their obligations under the
Partnership Agreement and may have to devote time and attention to claims
related to such liabilities. See "Business--Financing" for a description of the
limitations on Partnership borrowing and "Management--Net Worth of General
Partners" for a description of the assets that secure the majority of the loans
relating to these contingent liabilities.
Conflicts of Interest. The Partnership will be subject to conflicts of
interest arising out of its relationship to the General Partners and their
Affiliates with respect to the acquisition, leasing and sale of properties,
joint investment with other public programs sponsored by the General Partners,
allocation by the General Partners and their Affiliates of management time
between the business of the Partnership and some or all of the 17 other CNL
Income Funds and certain programs intended to qualify as real estate investment
trusts, as to each of which the General Partners and their Affiliates have
management responsibilities, and compensation of the General Partners and
Affiliates for the services which they will provide to the Partnership. In
addition to the Partnership, the General Partners and their Affiliates have
organized and currently manage numerous other real estate investment programs
and plan to organize and manage other real estate investment programs in the
future. Some of these programs may have investment objectives similar or
identical to those of the Partnership and may acquire, operate, lease and manage
fast-food, family-style, and casual dining restaurants, including restaurants
suitable for the Partnership. The General Partners have adopted certain conflict
of interest resolution procedures and restrictions related to the allocation of
properties between investment programs, including the Partnership, however, any
such conflict could result in the acquisition by other programs of properties
which are more desirable or valuable to those of the Partnership which could
adversely affect gross revenues of the Partnership. See "Conflicts of Interest--
Prior and Future Programs" and "Conflicts of Interest--Acquisition of
Properties."
Other conflicts of interest between the Partnership and other
affiliated investment programs may arise in the leasing and sale of properties.
The leasing and operation of properties owned by other programs which are
located in the vicinity of Properties owned by the Partnership could adversely
affect the gross revenues of the Partnership. Additionally, in the unlikely
event that the Partnership and an affiliated investment program attempted at the
same time to sell similar properties in the same vicinity, the Partnership and
affiliated program potentially could compete for the same purchaser which
adversely affect the sales price for the Property or the timing of the sale of
the Property. See "Conflicts of Interest--Sale of Properties."
3
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The Partnership may invest in Joint Venture and Co-Tenancy Arrangements
with other public programs sponsored by the General Partners. A conflict of
interest between the Partnership and another public program as co- venturers or
co-tenants could potentially result in an impasse with respect to Joint Venture
and Co-Tenancy Arrangement decisions because neither party will control the
Joint Venture or Co-Tenancy Arrangement. Such an impasse could adversely affect
the revenues to the Partnership derived from the Joint Venture or Co-Tenancy
Arrangement. In order to reduce to the extent possible the potential conflicts
of interest between the Partnership and other public investment programs in
Joint Ventures and Co-Tenancy Arrangements, the General Partners have adopted
certain conditions and requirements which must be met prior to the Partnership
entering into a Joint Venture or Co-Tenancy Arrangement with another program.
See "Conflicts of Interest--Joint Investment with an Affiliated Program."
Conflicts of interest may also arise in connection with the allocation
of management time the General Partners and their Affiliates will devote to the
Partnership and its business and the compensation of the General Partners and
their Affiliates for services which they will provide to the Partnership. The
General Partners and their Affiliates currently are engaged, and in the future
will engage, in the management and operation of other investment programs and
business ventures. The General Partners and their Affiliates will devote only so
much of their time to the business of the Partnership as they, in their
judgment, determine is reasonably necessary. Especially during periods of
intense activity in other programs and ventures, such a conflict could result in
the devotion by the General Partners and their Affiliates of less time and
resources to the Partnership and its business. See "Conflicts of
Interest--Competition for Management Time."
The General Partners and their Affiliates will be engaged to perform
various services for the Partnership and will receive fees and compensation for
such services. None of the agreements for such services are the result of
arm's-length negotiations which creates the potential opportunity for the
payment of compensation in excess of that permitted by the Partnership Agreement
for the services provided and the engagement of less qualified parties to
perform such services. The General Partners believe, however, that the terms of
such arrangements are reasonable and no less favorable than those which could be
obtained from unaffiliated entities. Certain of these conflicts may be
alleviated due to the opportunity for the Limited Partners to vote to terminate
contracts with Affiliates of the General Partners and take other actions to
protect their interests. See "Conflicts of Interest--Compensation of General
Partners and Affiliates" and "Conflicts of Interest--Certain Conflict Resolution
Procedures."
REAL ESTATE RISKS
Risks Related to an Unspecified Property Offering. The Partnership has
established certain criteria for evaluating Restaurant Chains, particular
Properties and the operators of the Properties proposed for investment by the
Partnership. See "Business--Standards for Investment" and "Business--General"
for a description of these criteria and the types of Properties in which the
Partnership intends to invest. Because the Partnership had acquired only seven
Properties as of March 6, 1997 (see "Business--Property Acquisitions" for a
description), prospective investors have no information to assist them in
evaluating the merits of the additional 21 to 25 Properties expected to be
purchased or developed by the Partnership if proceeds of $35,000,000 are raised.
There is no limit on the number of restaurant Properties of a particular
Restaurant Chain which the Partnership may acquire, although the General
Partners currently do not anticipate that the Partnership will invest more than
25% of its Gross Proceeds in Properties of any one Restaurant Chain.
Risks Relating to Future Disposition of Properties. The General
Partners intend to sell the Properties within 7 to 12 years after their
acquisition or as soon thereafter as market conditions permit. There can be no
assurance that the Partnership will be able to sell its Properties so as to
return a Limited Partner's Invested Capital Contribution or to generate a profit
for the Limited Partners. Investors will receive a return of their Invested
Capital Contributions in the aggregate upon disposition of the Properties only
if the Properties are sold for more than such Invested Capital Contributions. In
the event that a purchase money obligation is taken in part payment of the sales
price of a Property, the proceeds of the Sale will be realized over a period of
years. Additionally, the General Partners may determine that it is in the best
interest of the Partnership to reinvest Net Sales Proceeds in Properties under
circumstances described in "Business--Sale of Properties," rather than
distribute such proceeds to the Partners. See "Risk Factors--Risks Relating to
Reinvestment of Net Sales Proceeds."
4
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The General Partners may not be able to control the timing of Sales due
to market conditions or the fact that certain lessees are expected to have the
right to purchase the Property from the Partnership, commencing a specified
number of years after the date of the lease. The leases also generally provide
the lessee with a right of first refusal on any proposed Sale of the Property
leased by that lessee, which could affect the value and marketability of any
Properties subject to these provisions. See "Business--Description of
Leases--Right of Lessee to Purchase." A lessee will have no obligation to
purchase the restaurant it leases.
Risks Relating to Reinvestment of Net Sales Proceeds. Upon the Sale of
a Property, the General Partners may, in some cases, determine that it is in the
best interest of the Partnership to reinvest the Net Sales Proceeds derived from
such Sale in other Properties under circumstances described in "Business--Sale
of Properties," rather than distribute such proceeds to the Partners. Any
determination to reinvest Net Sales Proceeds shall be in the discretion of the
General Partners and, upon investment, such Net Sales Proceeds will be subject
to the same or substantially similar risks generally applicable to an investment
in Properties. See "Risk Factors--Real Estate Risks." Also, it is possible that
the reinvestment of Net Sales Proceeds in additional Properties would extend the
period during which the Properties are intended to be sold (currently
anticipated by the General Partners to be 7 to 12 years after acquisition of the
Properties or as soon thereafter as market conditions permit). If the General
Partners determine that it is in the best interest of the Partnership to
reinvest Net Sales Proceeds in Properties, Net Sales Proceeds will be reinvested
only if sufficient cash also is distributed to the Partners to pay any state
income tax (at a rate reasonably assumed by the General Partners) and federal
income tax (assuming the Limited Partners' income is taxable at the maximum
federal income tax rate then applicable to individuals for capital gains)
created by the disposition.
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ESTIMATED USE OF PROCEEDS
The table set forth below summarizes certain information relating to
the anticipated use of Offering proceeds by the Partnership, assuming that no
more than 2,500,000 Units are sold (1,503,434 Units had been sold as of March 6,
1997) and assuming 3,500,000 Units are sold. While the estimated use of proceeds
set forth in this table is believed to be reasonable, this table should be
viewed only as an estimate of the use of proceeds that may be achieved.
<TABLE>
<CAPTION>
Offering of
2,500,000 Units(1) Maximum Offering
------------------- ------------------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C>
GROSS PROCEEDS TO THE PARTNERSHIP (2)............................. $25,000,000 100.0% $35,000,000 100.0%
Less:
Selling Commissions to CNL Securities Corp. (2)................ 2,125,000 8.5% 2,975,000 8.5%
Due Diligence Expense Reimbursement Fee to
CNL Securities Corp. (2)..................................... 125,000 0.5% 175,000 0.5%
Organizational and Offering Expenses (3)....................... 750,000 3.0% 875,000 2.5%
----------- ------ ----------- ------
NET PROCEEDS TO THE PARTNERSHIP................................... 22,000,000 88.0% 30,975,000 88.5%
Less:
Acquisition Fees to CNL Fund Advisors, Inc. (4)............... 1,125,000 4.5% 1,575,000 4.5%
Acquisition Expenses (5)....................................... 125,000 0.5% 175,000 0.5%
Initial Working Capital Reserve................................ (6) (6)
----------- ------ ----------- ------
CASH PAYMENT FOR PURCHASE OF PROPERTIES
BY THE PARTNERSHIP............................................. $20,750,000 83.0% $29,225,000 83.5%
=========== ====== =========== ======
</TABLE>
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FOOTNOTES:
(1) Does not include the purchase of 5,000 Units ($50,000) to be made by the
General Partners for investment. The General Partners may, but are not
required to, purchase for investment up to an additional 15,000 Units
($150,000) of the Partnership.
(2) Gross Proceeds of the Offering are calculated as if all Units are sold at
$10.00 per Unit and do not take into account any reduction in Selling
Commissions. See "The Offering--Plan of Distribution" for a description of
commission discounts available for certain large volume purchases of Units
and for purchases by registered representatives or principals of the
Managing Dealer or Soliciting Dealers. Selling Commissions are calculated
assuming that reduced commissions are not paid in connection with the
purchase of any Units. The Units are being offered to the public through
CNL Securities Corp., which will receive Selling Commissions of 8.5% on all
sales of Units and will act as Managing Dealer. The Managing Dealer is an
Affiliate of the General Partners. Other broker-dealers may be engaged as
Soliciting Dealers to sell Units and reallowed Selling Commissions of up to
8% with respect to Units which they sell. In addition, all or a portion of
the due diligence expense reimbursement fee may be reallowed to certain
Soliciting Dealers for expenses incurred by them in selling the Units,
including reimbursement for bona fide expenses incurred in connection with
due diligence activities. See "The Offering--Plan of Distribution" for a
more complete description of this fee.
(3) Organizational and Offering Expenses include legal, accounting, printing,
escrow, filing, registration, qualification, and other expenses of the
organization of the Partnership and the Offering of the Units, but exclude
Selling Commissions and the due diligence expense reimbursement fee. The
General Partners will pay all Organizational and Offering Expenses which
exceed 3% of Gross Proceeds received from the sale of the Units.
(4) Acquisition Fees include all fees and commissions paid by the Partnership
to any person or entity in connection with the selection or acquisition of
any Property, including Acquisition Fees to nonaffiliates. Acquisition Fees
do not include Acquisition Expenses.
(5) Represents that portion of Acquisition Expenses that are neither reimbursed
to the Partnership nor included in the purchase price of the Properties,
and on which rent is not received, but does not include certain Acquisition
Expenses associated with Property acquisitions that are part of the
purchase price of the Properties, that are included in the basis of the
Properties, and on which rent is received. Acquisition Expenses include any
and all expenses incurred by the Partnership, any General Partner, or any
Affiliate of any General Partner in connection with the selection or
acquisition of any Property, whether or not acquired, including, without
limitation, legal fees and expenses, travel and communication expenses,
costs of appraisals, nonrefundable option payments on property not
acquired, accounting fees and expenses, taxes, and title insurance, but
exclude Acquisition Fees. The portion of Acquisition Expenses that is
attributable to the seller of the Properties and part of the purchase price
of the Properties is anticipated to range between 1% and 2% of Gross
Proceeds.
(6) Because leases will be on a "triple-net" basis, it is not anticipated that
a permanent reserve for maintenance and repairs will be established.
However, to the extent that the Partnership has insufficient funds for such
purposes, the General Partners will contribute to the Partnership an
aggregate amount of up to 1% of the Offering proceeds available to the
Partnership for maintenance and repairs. The General Partners also may, but
are not required to, establish reserves from Offering proceeds, operating
funds, and the available proceeds of any Sales of Properties.
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MANAGEMENT COMPENSATION
FEES AND EXPENSES PAID TO THE
GENERAL PARTNERS AND THEIR AFFILIATES
Selling Commissions and Due Diligence Expense Reimbursement Fee. The
Placement Agent, CNL Securities Corp., is entitled to receive Selling
Commissions amounting to 8.5% of the Limited Partners' Capital Contributions for
services in connection with selling the Units, a substantial portion of which
will be paid as Selling Commissions to other broker-dealers. As of December 31,
1996, the Partnership had incurred $715,854 for Selling Commissions due to the
Placement Agent, $673,534 of which was reallowed to other broker-dealers. CNL
Securities Corp. also is entitled to receive a due diligence expense
reimbursement fee equal to 0.5% of the Limited Partners' Capital Contributions.
As of December 31, 1996, the Partnership had incurred $42,109 in due diligence
expense reimbursement fees due to the Placement Agent. The majority of these
fees has since been reallowed to other broker-dealers for payment of bona fide
due diligence expenses.
Acquisition Fees. CNL Fund Advisors, Inc. is entitled to receive
Acquisition Fees for services in finding, negotiating and acquiring Properties
equal to 4.5% of the Limited Partners' Capital Contributions. As of December 31,
1996, the Partnership had incurred $378,982 in Acquisition Fees payable to CNL
Fund Advisors, Inc., and are included in land and buildings on operating leases
and other assets.
Management Fees. The Partnership has entered or will enter into a
management agreement pursuant to which CNL Fund Advisors, Inc. will receive
annual management fees of one percent of the sum of gross revenues from
Properties wholly owned by the Partnership and one percent of the Partnership's
allocable share of gross operating revenues from Joint Ventures. As of December
31, 1996, the Partnership had incurred $12 in management fees.
Administrative and Other Expenses. CNL Fund Advisors, Inc. provides
accounting and administrative services (including accounting and administrative
services in connection with the Offering of Units) to the Partnership on a
day-to-day basis. As of December 31, 1996, the Partnership had incurred $147,453
in administrative and other expenses, which includes amounts incurred in
connection with the Offering and included with syndication costs.
Real Estate Disposition Fee. CNL Fund Advisors, Inc. is also entitled
to receive a deferred, subordinated real estate disposition fee, payable upon
the sale of one or more Properties based on the lesser of one-half of a
Competitive Real Estate Commission or three percent of the sales price if CNL
Fund Advisors, Inc. provides a substantial amount of services in connection with
the sale. The real estate disposition fee is payable only after the Limited
Partners receive their cumulative Limited Partners' 8% Return, plus their
Invested Capital Contributions. No real estate disposition fees had been
incurred by the Partnership as of December 31, 1996.
Reimbursement of Out-of-Pocket Expenses. CNL Fund Advisors, Inc. and
its Affiliates are entitled to receive reimbursement, at cost, for expenses they
incur for Organizational and Offering Expenses, Acquisition Expenses and
Operating Expenses. As of December 31, 1996, the Advisor and its Affiliates had
incurred $285,858, $18,036, and $893 on behalf of the Partnership for
Organizational and Offering Expenses, Acquisition Expenses, and Operating
Expenses, respectively.
CONFLICTS OF INTEREST
ACQUISITION OF PROPERTIES
The General Partners and their Affiliates regularly have opportunities
to acquire restaurant properties of a type suitable for acquisition by the
Partnership as a result of their existing relationships and past experience with
various fast-food, family-style, and casual dining restaurant chains and their
franchisees. See "Business--General." A purchaser who wishes to acquire one or
more of these properties must do so within a relatively short period of time,
occasionally at a time when the Partnership (due to insufficient funds, for
example) may be unable to make the acquisition.
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In an effort to address these situations and preserve the acquisition
opportunities for the Partnership (and other entities with which the General
Partners are affiliated), the General Partners or their Affiliates maintain
lines of credit which enable them to acquire these restaurant properties on an
interim basis. Typically, no more than 10 to 15 restaurant properties are
temporarily owned by the General Partners or their Affiliates on this interim
basis at any particular time. These restaurant properties generally will be
purchased from the General Partners or their Affiliates, at their cost, by one
or more existing or future public or private programs formed by the General
Partners or their Affiliates, potentially including the Partnership.
The General Partners and their Affiliates could experience potential
conflicts due to their ongoing business relationships with operators of
Restaurant Chains. Although unlikely, such conflicts could adversely affect the
negotiation by the General Partners of the purchase price and other terms of the
acquisition of a Property, as well as the terms of the lease of a Property.
The General Partners or their Affiliates also may be subject to
potential conflicts of interest in determining which partnership will acquire a
particular property which could result in the acquisition by other partnerships
of properties appropriate for investment by the Partnership. Such a conflict
could possibly result in the acquisition of properties by other partnerships
which are more desirable or valuable than those of the Partnership which could
adversely affect gross revenues of the Partnership. In an effort to establish
standards for resolving these potential conflicts, the General Partners have
agreed to the guidelines set forth below under "Allocations of Properties
Between CNL XVII and CNL XVIII" and "Certain Conflict Resolution Procedures,"
and in Article 11.4 of the Partnership Agreement. The General Partners have a
fiduciary obligation to act in the best interest of both the Limited Partners
and the investors in other programs with investment objectives that are similar
to those of the Partnership and will use their best efforts to assure that the
Partnership will be treated as favorably as any such other program. See
"Fiduciary Responsibility of the General Partners."
The individual General Partners are directors of Commercial Net Lease
Realty, Inc., a Maryland corporation, and CNL American Properties Fund, Inc., a
separate Maryland corporation, both of which are intended to qualify as real
estate investment trusts for federal income tax purposes (collectively, the
"REITs"). The individual General Partners also are officers of the REITs and
officers and directors of CNL Realty Advisors, Inc. and CNL Fund Advisors, Inc.,
the advisors to Commercial Net Lease Realty, Inc. and CNL American Properties
Fund, Inc., respectively. The REITs, subject to compliance with the provisions
relating to qualification as real estate investment trusts under the Code, have
authority to invest in all types of real property, similar to those to be
acquired by the Partnership, although both have the authority, unlike the
Partnership, to leverage the properties so acquired under certain circumstances
and, in the case of CNL American Properties Fund, Inc., to provide furniture,
fixture and equipment financing. At such time, if any, as either of these
entities wishes to acquire a restaurant property that also would be suitable for
acquisition by the Partnership, a conflict of interest could develop in
determining whether the Partnership or one of the REITs should acquire the
property. Such a conflict could possibly result in the acquisition of properties
by the REITs which are more desirable or valuable than those of the Partnership
which could adversely affect gross revenues of the Partnership. The General
Partners have a fiduciary duty to act in the best interest of the Limited
Partners, and the individual General Partners, as two of the directors of both
REITs, have a fiduciary duty to act in the best interest of the REITs, and each
will use his best efforts to assure that the Partnership will be treated as
favorably as the REITs in determining which entity will acquire a particular
property. See "Fiduciary Responsibility of the General Partners." Despite the
General Partners' best efforts to assure that the Partnership will be treated as
favorably as the REITs, however, it is possible that properties acquired by the
REITs could acquire certain properties of a higher quality than to those
acquired by the Partnership which could result in greater returns for investors
in the REITs.
ALLOCATION OF PROPERTIES BETWEEN CNL XVII AND CNL XVIII
CNL XVII, which offered its units as part of the aggregate offering by
CNL XVII and CNL XVIII (of which this Offering is a part), but prior to the
offer by CNL XVIII of its Units, and CNL XVIII each will acquire its own
separate portfolio of Properties. In selecting Properties for acquisition by
either CNL XVII or CNL XVIII, the General Partners will consider the factors
discussed throughout this Prospectus, with particular emphasis on those
described in the sections entitled "Business--General," "Business--Site
Selection and Acquisition of Properties," "Business--Standards for Investment,"
and "Investment Objectives and Policies."
8
<PAGE>
CNL XVII and CNL XVIII could compete with each other for suitable
Properties to the extent, if any, that both partnerships have funds available
for investment in Properties at a particular time. Such a conflict could
possibly result in the acquisition of properties by CNL XVII which are more
desirable or valuable than those of the Partnership which could adversely affect
gross revenues of the Partnership. Accordingly, the General Partners have
instituted certain procedures (described below), in addition to those procedures
described in "Certain Conflict Resolution Procedures" below for resolution of
potential conflicts between the Partnership and the General Partners or other
Affiliates.
In general, CNL XVIII will acquire Properties following such time as
substantially all of the net offering proceeds available to CNL XVII have been
invested or committed for investment. Thereafter, Properties will be acquired by
CNL XVIII until the net Offering proceeds available to it have been fully
invested or committed for investment. If the General Partners determine that a
Property is not suitable for CNL XVII, however, the General Partners may cause
CNL XVIII to acquire the Property at a time when CNL XVII has uncommitted net
offering proceeds. The General Partners will determine the suitability of a
particular Property for CNL XVII based on such factors as the amount of the
proposed investment, the amount of funds available to CNL XVII, the effect of
the acquisition on the diversification of the investments of CNL XVII and on the
diversification of the lessees of its Properties (which also may affect the need
for CNL XVII to prepare or produce audited financial statements for a Property
or a lessee), and the anticipated cash flow of CNL XVII and CNL XVIII.
In addition to the factors listed above, the General Partners intend to
apply two additional standards if necessary or advisable in order to resolve
potential conflicts relating to allocations of Properties between CNL XVII and
CNL XVIII. First, the Partnership generally will not acquire a Property if, as a
result, more than 20% of its Gross Proceeds would be invested in Properties that
would be leased to a single lessee or a group of affiliated lessees. Second, the
General Partners expect that the Partnership's Properties will be located in
various states and regions throughout the United States and, in general, the
Partnership will not acquire a Property if, as a result, more than 30% of its
Gross Proceeds would be invested in Properties located in a single state. The
General Partners have undertaken to supplement this Prospectus during the
Offering period to disclose the acquisition of a Property at such time as the
General Partners believe that a reasonable probability exists that the Property
will be acquired by the Partnership.
As of March 6, 1997, CNL XVII had purchased 26 properties for an
aggregate of approximately $25,900,000. CNL XVII substantially completed its
acquisition of properties during December 1996, and as of March 6, 1997,
approximately 98% of the net offering proceeds available to CNL XVII had been
invested or committed for investment in properties.
SALES OF PROPERTIES
A conflict also could arise in connection with the General Partners'
determination as to whether or not to sell a Property, since the interests of
the General Partners and the Limited Partners are likely to differ as a result
of their distinct financial and tax positions and the compensation to which the
General Partners or their Affiliates may be entitled upon the Sale of a
Property. See "Management Compensation" for a description of these compensation
arrangements. This conflict could result in a disposition of a Property at a
time and pursuant to terms which may be less favorable to the Limited Partners.
However, the General Partners have a fiduciary obligation to act in the best
interests of the Limited Partner and will use their best efforts to do so. In
the unlikely event that the Partnership and another program managed by the
General Partners attempted to sell similar properties at the same time, a
conflict could arise since the two programs potentially could compete with each
other for a suitable purchaser. Such a conflict may adversely affect the sales
price for the Property or the timing of the sale of the Property which in turn
could delay or reduce distributions to the Limited Partners. In order to resolve
this potential conflict, the General Partners have agreed not to sell any of the
Partnership's Properties contemporaneously with a property owned by another
program managed by the General Partners if the two properties are part of the
same Restaurant Chain and are within a three-mile radius of each other, unless
the General Partners are able to locate a suitable purchaser for each property.
9
<PAGE>
JOINT INVESTMENT WITH AN AFFILIATED PROGRAM
The Partnership may invest in Joint Ventures and Co-Tenancy
Arrangements with another public program sponsored by the General Partners whose
securities were, are, or will be offered to the public pursuant to a
registration statement filed under the Securities Act of 1933, as amended, to
purchase and hold Properties for investment if all of the following conditions
are met: (i) the two programs have substantially identical investment
objectives, (ii) there are no duplicate management or other fees, (iii)
compensation to the General Partners and their Affiliates is substantially the
same in each program, (iv) each program has a right of first refusal to buy the
Property held in the Joint Venture or Co-Tenancy Arrangement, at the Property's
fair market value as determined by an independent appraisal, if the other
program has the right to sell such Property, and (v) each program's investment
is on substantially the same terms and conditions. There may be a potential risk
of impasse in Joint Venture or Co- Tenancy Arrangement decisions since neither
program will control the Joint Venture or Co-Tenancy Arrangement. Although
either program will have the effective right to buy the Property from the
co-venturer or co-tenant by purchasing the co-venturer's or co-tenant's interest
in the Joint Venture or Co-Tenancy Arrangement, it may not have the resources to
do so at the time of the sale.
COMPETITION FOR MANAGEMENT TIME
The General Partners and their Affiliates currently are engaged, and in
the future will engage, in the management of other business entities and
properties and in other business activities. They will devote only as much of
their time to the business of the Partnership as they, in their judgment,
determine is reasonably required. The General Partners and their Affiliates may
experience conflicts of interest in allocating management time, services, and
functions among the various existing partnerships in which one or more of them
serve as general partners (including the Partnership and 17 other public
partnerships with investment objectives similar to those of the Partnership),
any investor programs (public or private) which the General Partners or their
Affiliates may organize in the future, and any other business ventures in which
the General Partners or their Affiliates are or may become involved. Especially
during periods of intense activity in other programs and ventures, such a
conflict could possibly result in the devotion by the General Partners and their
Affiliates of less time and resources to the Partnership and the operation of
its business.
COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
The General Partners and their Affiliates will be engaged to perform
various services for the Partnership and will receive fees and compensation for
such services. None of the agreements for such services are the result of
arm's-length negotiations which creates the potential opportunity for the
payment of compensation in excess of that permitted by the Partnership Agreement
for the services provided and the engagement of less qualified parties to
perform such services. The General Partners believe, however, that the terms of
such arrangements are reasonable and no less favorable than those which could be
obtained from unaffiliated entities. The timing and nature of these fees and
compensation could create a conflict between the interests of the General
Partners and those of the Limited Partners in connection with the engagement of
CNL Fund Advisors, Inc. as manager of the Partnership's Properties or the
proposed disposition of one or more Properties. See "Management Compensation."
Certain of these conflicts may be alleviated in part due to the opportunity for
the Limited Partners to vote to terminate contracts with Affiliates of the
General Partners and take other actions to protect their interests. See
"Conflicts of Interest--Certain Conflict Resolution Procedures."
BUSINESS
GENERAL
The Partnership purchases existing fast-food, family-style, and casual
dining restaurant Properties, including land and buildings, as well as
Properties upon which such restaurants are to be constructed, the land
underlying the restaurant building, with the building owned by the lessee or a
third party, and the building only with the land owned by a third party. The
Properties, which typically will be freestanding and will be located across the
United States, will be leased on a "triple-net" basis to operators of certain
national and regional fast-food, family-style, and casual
10
<PAGE>
dining Restaurant Chains to be selected by the General Partners. Properties
purchased by the Partnership are expected to be leased under arrangements
requiring base annual rent equal to a specified percentage of the Partnership's
cost of purchasing a particular Property, with automatic rent increases, as well
as percentage rent based on gross sales. See "Description of Leases--Computation
of Lease Payments" below.
It is expected that the Partnership will invest in Properties of
selected Restaurant Chains that are national and regional restaurant chains,
primarily fast-food, family-style, and casual dining chains. Fast-food
restaurants feature quality food and quick service, which often includes
drive-through service, and offer a variety of menu items such as hamburgers,
steaks, seafood, chili, pizza, pasta dishes, chicken, hot and cold sandwiches,
and salads. Family- style restaurants feature services that generally are
associated with full-service restaurants, such as full table service,
cooked-to-order foods, but at more moderate prices and three meal a day service.
The casual-dining segment features a variety of popular contemporary foods, full
table service, moderate prices, and surroundings that are appealing to families.
The casual-dining segment of the restaurant industry, like the family-style
segment, features services that generally are associated with the full-service
restaurant category. According to forecasts appearing in the January 1, 1997
issue of Restaurants and Institutions, it is projected that the casual dining
segment of full-service restaurant sales will experience 3.8% real growth in
sales this year, with sales predicted to reach $49 billion. The top 15 casual
dining chains by sales have a total of 2,977 restaurants throughout the United
States.
The restaurant industry is one of the largest industries in the United
States in volume of sales and number of employees (approximately 9 million
persons) and includes fast-food outlets, cafeterias, lunchrooms, convenience
stores, family-style restaurants, casual dining facilities, full-service
restaurants, and contract and industrial feeders. By the year 2000, food service
sales are expected to exceed $392 billion. Industry publications project that
restaurant industry sales will increase from $173.7 billion in 1985 to $320
billion in 1997. Restaurant industry sales for 1996 are projected to be $307.6
billion. In 1996, nominal growth, which is comprised of real growth and
inflationary growth, was 4.6% and is estimated to be 4.2% in 1997. Real growth
of the restaurant industry in 1996 was 1.7%; however, according to the National
Restaurant Association, fast-food restaurants should outpace the industry
average for real growth, with a projected 2.5% increase over 1996. Sales in this
segment of the restaurant industry are projected to be $103.5 billion for 1997.
The Partnership invests in the fast-food, family-style, and casual
dining segments of the restaurant industry, the most rapidly growing segments in
recent years. According to the National Restaurant Association, 51% of adults
eat at a quick-service restaurant and 42% of adults patronize a
moderately-priced family restaurant at least once each week. In addition, the
National Restaurant Association indicates that Americans spend approximately 43
cents of every food dollar on dining away from home. Surveys published in
Restaurant Business indicate that families with children choose quick-service
restaurants four out of every five times they dine out. Additionally, according
to The Wall Street Journal (May 11, 1992) the average American spends $19,791 on
fast-food in a lifetime. Further, according to Nation's Restaurant News, the 100
largest restaurant chains are posting an average of 7.2% growth in their
systemwide sales figures for 1995. Casual-theme dining concepts are among the
chains showing the strongest growth. In 1995, the sandwich segment experienced
sales growth of 6.98% over 1994 figures, and, the casual dining segment
experienced systemwide sales growth of 12.99% in 1995. The General Partners
believe that these growth trends will continue, particularly in the fast-food,
family-style, and casual dining segments of the industry, and the Partnership
will have the opportunity to participate in these segments through the ownership
of Properties leased to operators of fast-food, family-style, and casual dining
Restaurant Chains.
The fast-food, family-style, and casual dining segments of the
restaurant industry have demonstrated their ability to adapt to changes in
consumer preferences, such as health and dietary issues, decreases in the
disposable income of consumers, and environmental awareness, through various
innovative techniques, including special value pricing and promotions, increased
advertising, menu changes featuring low-calorie, low-cholesterol menu items, and
new packaging and energy conservation techniques.
11
<PAGE>
The table set forth below provides information with respect to certain
Restaurant Chains in which Affiliates of the General Partners (consisting of a
listed public REIT, an unlisted public REIT, 17 public partnerships and 8
private partnerships) have invested, as of September 30, 1996:
Approximate Aggregate
Dollars Invested Percentage of Number of
Restaurant Chain by Affiliates Dollars Invested Prior Programs
- ---------------- ---------------- ---------------- --------------
Golden Corral $119,305,000 16.8% 25
Burger King 96,468,000 13.6% 24
Denny's 90,327,000 12.7% 20
Jack in the Box 67,501,000 9.5% 14
Hardee's 58,599,000 8.2% 13
Shoney's 33,517,000 4.7% 12
Long John Silver's 32,029,000 4.5% 6
Wendy's 28,705,000 4.0% 15
TGI Friday's 21,508,000 3.0% 8
Checkers 21,263,000 3.0% 7
Perkins 16,311,000 2.3% 9
Boston Market 16,164,000 2.3% 3
Pizza Hut 13,916,000 2.0% 8
KFC 13,642,000 1.9% 10
Popeyes 9,990,000 1.4% 8
Taco Bell 6,428,000 0.9% 5
Arby's 4,765,000 0.7% 5
Ponderosa 3,210,000 0.5% 3
PROPERTY ACQUISITIONS
From inception through March 6, 1997, CNL XVIII undertook negotiations
to purchase 13 Properties of which seven Properties were purchased. These 13
Properties are two Boston Market Properties (one in each of Charlotte and
Raleigh, North Carolina); one Burger King Property (in Kinston, North Carolina);
three Golden Corral Properties (one in each of Houston and Galveston, Texas; and
Stow, Ohio); four Jack in the Box Properties (one in each of Echo Park,
California; Henderson, Nevada; and Centerville and Houston, Texas); one
Black-eyed Pea Property (in Atlanta, Georgia); one IHOP Property (in Santa Rosa,
California); and one On The Border Property (in San Antonio, Texas). Between
December 27, 1996 and March 6, 1997, CNL XVIII acquired seven of the 13
Properties.
In connection with the purchase of each of these seven Properties, CNL
XVIII, as lessor, entered into a long-term lease agreement with an affiliated
lessee. The general terms of the lease agreements are described in
"Business--Description of Leases." The leases also generally provide that, in
the event CNL XVIII desires to sell a Property, the lessee, or in some instances
an Affiliate of the lessee, has a right of first refusal to purchase the
Property on the same terms offered by a bona fide offeror. Unless otherwise
noted, the lessee will have an option to purchase the Property during the
specified years of the lease at a purchase price equal to the greater of (i) the
fair market value of the Property at the date of the exercise of the option, or
(ii) the purchase price of the Property, including all development and certain
acquisition costs incurred in connection therewith, if any, plus a specified
percentage (generally 20%) of the sum of such purchase price and such costs.
For Properties that are to be constructed, CNL XVIII has entered into
development, indemnification and put agreements with the lessees. The general
terms of these agreements are described in "Business--Site Selection and
Acquisition of Properties--Construction and Renovation." Generally, the payment
by the lessee of all amounts due to CNL XVIII and the performance by the lessee
under the lease, development agreements, and related agreements is guaranteed
unconditionally by individuals with substantial net worth.
12
<PAGE>
The acquisition of each of the remaining six Properties for which CNL
XVIII had received initial commitments as of March 6, 1997, 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
six of these Properties are expected to be entered into on substantially the
same terms described in "Business--Description of Leases" and 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.
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:
13
<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
- -------- --------------- ------------------- ---------------
<S><C>
Black-eyed Pea (2) 26 years 11.23% of CNL XVIII's None (3)
Atlanta, GA total cost to purchase
Existing restaurant the building
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
Golden Corral 20 years; two five-year 11.25% of CNL XVIII's for each lease year, at any time after
Stow, OH renewal options total cost to purchase (i) 5% of annual the seventh lease
Existing restaurant the property gross sales minus year
(ii) the minimum
annual rent for such
lease year
IHOP 20 years; three five- 10.125% of CNL XVIII's for each lease year, during the eleventh
Santa Rosa, CA year renewal options total cost to purchase (i) 4% of annual lease year and at
Existing restaurant the property; gross sales minus the end of the
increases by 10% after (ii) the minimum initial lease term
the fifth lease year annual rent for such
and after every five lease year
years thereafter
during the lease term
Jack in the Box 18 years; four five-year 10.25% of Total Cost for each lease year, at any time after
Houston, TX renewal options (1); increases by 8% (i) 5% of annual the seventh lease
Restaurant to be after the fifth lease gross sales minus year (4)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
On The Border (5) (6); three five-year 13.64% of Total Cost for each lease year, at any time after
San Antonio, TX renewal options (1); (7) (i) 4% of annual the tenth lease
Restaurant to be gross sales minus year
constructed (ii) the minimum
annual rent for such
lease year<PAGE>
</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.
(2) CNL XVIII anticipates owning the building only for this property. CNL
XVIII will not own the underlying land; although, CNL XVIII anticipates
entering into a landlord estoppel agreement with the landlord of the land
and a collateral assignment of the ground lease with the lessee in order
to provide CNL XVIII with certain rights with respect to the land on which
the building is located.
(3) CNL XVIII anticipates conveying the building to the tenant at the end of
the lease term for $1.
(4) In the event CNL XVIII purchases the property directly from the lessee,
the lessee will have no option to purchase the property.
(5) The Company anticipates owning the building only for this property. CNL
XVIII will not own the underlying land; although, CNL XVIII anticipates
entering into a tri-party agreement with the lessee and the landlord of
the land in order to provide CNL XVIII with certain rights with respect to
the land on which the building is located.
(6) The lease term shall expire upon the earlier of (i) the date 15 years from
the date of closing, (ii) the expiration of the original term of the
ground lease, or (iii) the earlier termination of the ground lease.
(7) Base rent shall increase after every five years during the lease term by
the lesser of (i) 10% of the minimum base rent during the preceding year
or (ii) 150% of the change in the Consumer Price Index.
The following table sets forth the location of the seven Properties acquired
by CNL XVIII from inception through March 6, 1997, a description of the
competition, and a summary of the principal terms of the acquisition and lease
of each Property:
PROPERTY ACQUISITIONS
From inception through March 6, 1997
<TABLE>
<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>
BURGER KING $875,000 12/27/96 12/2016; four $89,688; for each lease during the
(the "Kinston Property") five-year renewal increases by 5% year, (i) 6% of eighth, ninth,
Existing restaurant options after the fifth annual gross tenth,
lease year and sales minus eleventh and
The Kinston Property is by 10% after the (ii) the twelfth lease
located at the northwest tenth lease year minimum annual years only
quadrant of the and after every rent for such
intersection of North five years lease year
Heritage Street and thereafter
Phillips Street, in during the lease
Kinston, Lenoir County, term
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 (8) $579,704 12/27/96 12/2011; four 10.75% of Total for each lease during the
(the "Houston Property") (excluding five-year renewal Cost (4) year, 5% of the first through
Restaurant to be closing and 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
located at the southeast lease years
quadrant of the 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>
<TABLE>
<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>
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 renewal increases by 8% year, (i) 5% of
Property") closing options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(6) after every five (ii) the
years thereafter minimum annual
The Echo Park Property during the lease rent for such
is located on the term lease year (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 renewal increases by 8% year, (i) 5% of
Property") closing options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(6) after every five (ii) the
years thereafter minimum annual
The Henderson Property during the lease rent for such
is located within the term lease year (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.
</TABLE>
<TABLE>
<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>
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 renewal increases by 8% year, (i) 5% of
Property") closing options after the fifth annual gross
Restaurant to be costs) lease year and sales minus
constructed (3)(6) after every five (ii) the
years thereafter minimum annual
The Centerville Property during the lease rent for such
is located within the term lease year (5)
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.
GOLDEN CORRAL (8) $424,883 01/22/97 01/2012; four 10.75% of Total for each lease during the
(the "Galveston (excluding five-year renewal Cost (4) year, 5% of the first through
Property") closing and options amount by which seventh lease
Restaurant to be development annual gross years and the
constructed costs) (3) sales exceed tenth through
$2,532,737 (5) fifteenth
The Galveston Property lease years
is located within the 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.
</TABLE>
<TABLE>
<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>
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 renewal increases to year after the after the
Existing restaurant closing options $132,497 during fifth lease fifth lease
costs) the third year, (i) 5% of year
The Raleigh Property is through fifth annual gross
located on a pad site in lease years, sales minus
the Falls Center $141,567 during (ii) the
Shopping Center, which the sixth minimum annual
is located at the through tenth rent for such
northeast quadrant of lease years, and lease year
the intersection of $155,785 during
Falls of the Neuse Road the eleventh
and Old Wake Forest through
Road, in Raleigh, Wake fifteenth lease
County, North Carolina, years
in an area of mixed
retail, commercial, and
residential 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
20
<PAGE>
(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 Estimated Final
Property 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.
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<PAGE>
SALE OF PROPERTIES
The Partnership generally will hold its Properties until the General
Partners determine either that their Sale or other disposition is advantageous
in view of the Partnership's investment objectives, or that such objectives will
not be met. The General Partners intend to sell the Properties 7 to 12 years
after their acquisition or as soon thereafter as market conditions permit. In
deciding whether to sell Properties, the General Partners will consider factors
such as potential capital appreciation, Net Cash Flow, and federal income tax
considerations. See "Federal Income Tax Considerations--Sale of the Properties."
The terms of certain leases, however, may require the Partnership to sell a
Property if the lessee exercises its option to purchase a Property after a
specified portion of the lease term has elapsed. See "Business--Description of
Leases--Right of Lessee to Purchase." The Partnership will have no obligation to
sell all or any portion of a Property at any particular time, except as may be
required under property or joint venture purchase options granted to certain
lessees.
In connection with any Sale of a Property, the General Partners do not
anticipate that any reinvestment of Net Sales Proceeds in Properties will take
place. However, in some cases the General Partners may determine that it is in
the best interest of the Partnership to reinvest the Net Sales Proceeds derived
from such Sale in other Properties rather than distribute such proceeds to the
Partners. In determining whether to reinvest Net Sales Proceeds, the General
Partners will consider, in addition to the general factors considered when
acquiring a Property (See "Business--Selection and Acquisition of Properties"),
various factors, including, but not limited to, the following factors:
o the anticipated timing of the receipt of the Net Sales
Proceeds and whether or not the Partnership is still within
the anticipated 7 to 12 year holding period,
o the potential impact on anticipated future Net Cash Flow from
continuing operations which the distribution of such Net Sales
Proceeds would have, including but not limited to, the effect
on future distributions of Net Cash Flow and the impact on
anticipated future operating expenses as a percentage of
operating revenues (due to the fact that certain operating
expenses are fixed in nature and would not decrease with the
Sale of a Property),
o the anticipated gain on the Sale of the Property and whether
or not it will result in a significant tax to the investors if
distributed, and
o whether or not there is a prospective acquisition opportunity
where the Net Sales Proceeds could be reinvested which the
General Partners believe would increase future Net Cash Flow
or diversify the Partnership's portfolio.
In the event the General Partners determine to reinvest Net Sales
Proceeds from the Sale of a Property, upon investment, such Net Sales Proceeds
will be subject to the same or substantially similar risks generally applicable
to an investment in Properties. See "Risk Factors--Real Estate Risks." Also, it
is possible that the reinvestment of Net Sales Proceeds in other Properties will
extend the period during which the Properties are intended to be sold (currently
anticipated by the General Partners to be 7 to 12 years after acquisition of the
Properties or as soon thereafter as market conditions permit).
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<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain financial information for CNL
XVIII, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements included in Exhibit B to this Prospectus.
<TABLE>
<CAPTION>
For the Period February 10,
Year Ended 1995 (date of inception)
December 31, through December 31,
1996 1995
--------------- ---------------------------
<S> <C>
Revenues $ 31,614 $ -
Net income 26,910 -
Cash distributions declared (2) 57,846 -
Net income per Unit .05 -
Cash distributions declared per Unit (2) .11 -
Weighted average number of
Limited Partner Units outstanding (3) 503,436 -
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C>
Total assets $7,240,324 $ 256,890
Total partners' capital 6,996,213 1,000
</TABLE>
(1) Operations did not commence until October 12, 1996, the date following
when CNL XVIII received the minimum offering proceeds of $1,500,000,
and such proceeds were released from escrow.
(2) Approximately 53% of cash distributions ($0.06 per Unit) for the year
ended December 31, 1996, represents a return of capital in accordance
with generally accepted accounting principles ("GAAP"). Cash
distributions treated as a return of capital on a GAAP basis represent
the amount of cash distributions in excess of accumulated net income on
a GAAP basis. CNL XVIII has not treated such amount as a return of
capital for purposes of calculating the Limited Partners' Invested
Capital Contributions and the Limited Partners' 8% Return, as described
in the Form of Amended and Restated Agreement of Limited Partnership
included as Exhibit A to the Prospectus.
(3) Represents the weighted average number of Units outstanding during the
period CNL XVIII was operational.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OF THE PARTNERSHIP
GENERAL
The Partnership is a Florida limited partnership that was organized on
February 10, 1995, to acquire Properties for cash, either directly or through
Joint Venture arrangements, to be leased primarily to operators of selected
Restaurant Chains. The leases will be "triple-net leases", with the lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. Since leases will be entered into on a "triple-net" basis, the
Partnership does not expect, although it has the right, to maintain a reserve
for operating expenses. The Partnership's Properties will not be readily
marketable and their value may be affected by general market conditions.
Nevertheless, the General Partners believe that Partnership capital and revenues
will be sufficient to fund the Part- nership's anticipated investments, proposed
operations, and cash distributions to the Limited Partners.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Offering commenced on September 20, 1996. As of December 31, 1996,
the Partnership had sold 842,182 Units, representing $8,421,815 of capital
contributed by Limited Partners. Based on the General Partners' experience with
17 prior CNL Income Fund offerings (each of which sold the entire amount of
units offered for purchase), the Partnership anticipates significant additional
sales of Units prior to the termination of the Offering. The General Partners
have elected to extend the Offering to a date not later than August 11, 1997.
As of December 31, 1996, net proceeds to the Partnership from its
offering of Units, after deduction of Organizational and Offering Expenses,
totalled $7,016,149. Of this amount, the Partnership had invested or committed
for investment approximately $2,960,800 of such proceeds in two Properties (one
of which was under construction as of December 31, 1996), and to pay Acquisition
Fees and certain Acquisition Expenses, leaving approximately $4,055,400 of
Offering proceeds available for investment in Properties.
In connection with the Property under construction acquired by the
Partnership as of December 31, 1996, the Partnership has entered into a
development agreement with the tenant which provides terms and specifications
for the construction of a building that the tenant has agreed to lease. The
agreement provides a maximum amount of development costs (including the purchase
price of the land and closing costs) to be paid by the Partnership. The maximum
development costs the Partnership has agreed to pay is approximately $1,684,600,
of which approximately $579,700 in land and other costs had been incurred as of
December 31, 1996. The building currently under construction is expected to be
operational by June 1997. In connection with the purchase of this Property, the
Partnership, as lessor entered into a long-term lease agreement.
As of March 6, 1997, the Partnership had sold a total of 1,503,434
Units, for an aggregate of $15,034,343 in gross Offering proceeds and had
invested or committed for investment approximately $8,900,000 of such proceeds
in seven Properties, five of which were under construction at March 6, 1997, and
to pay Acquisition Fees and certain Acquisition Expenses, leaving approximately
$4,100,000 in net Offering proceeds available for investment in Properties. As
of March 6, 1997, the Partnership had incurred $676,545 in Acquisition Fees to
an Affiliate of the General Partners.
During the period January 1, 1997 through March 6, 1997, the
Partnership acquired five additional Properties (four of which are under
construction) for cash, at a total cost of approximately $4,735,600, excluding
certain closing and development costs. In connection with the four Properties
under construction, the Partnership has agreed to pay development costs
(including the purchase prices of the land and closing costs) of approximately
$4,565,200, of which approximately $3,509,900 in land and other costs had been
paid by the Partnership as of March 6, 1997. The buildings are expected to be
operational by July 1997. In connection with the acquisition of each of these
Properties, the Partnership entered into a long-term, triple-net lease.
The Partnership presently is negotiating to acquire additional
Properties, but as of March 6, 1997, had not acquired any such Properties. The
Partnership will use the remaining net Offering proceeds, together with proceeds
from the sale of Units subsequent to March 6, 1997, to acquire additional
Properties, to pay Acquisition Fees and Acquisition Expenses and to pay expenses
relating to the sale of Units. The number of Properties to be acquired will
depend upon the amount of net Offering proceeds (gross proceeds less fees and
expenses of the offering) available to the Partnership.
None of the Properties owned or to be acquired by the Partnership is or
may be encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners or under arrangements that
would make the Limited Partners liable to creditors of the Partnership. The
General Partners further have represented that they will use their reasonable
efforts to structure any borrowing so that it will not constitute "acquisition
indebtedness" for federal income tax purposes and also will limit the
Partnership's outstanding indebtedness to three percent of the aggregate
adjusted tax basis of its Properties. Affiliates of the General Partners from
time to time incur certain expenses on behalf of the Partnership for which the
Partnership reimburses the Affiliates without interest.
24
<PAGE>
Until Properties are acquired by the Partnership, all Partnership
proceeds are held in short-term, highly liquid investments which the General
Partners believe to have appropriate safety of principal. This investment
strategy provides high liquidity in order to facilitate the Partnership's use of
these funds to acquire Properties at such time as Properties suitable for
acquisition are located. At December 31, 1996, the Partnership had $5,371,325
invested in such short-term investments, as compared to $980 at December 31,
1995. The increase in the amount invested in short-term investments reflects
subscription proceeds derived from the sale of Units during the year ended
December 31, 1996. These funds will be used to pay costs relating to the
Property under construction at December 31, 1996, to purchase and develop
additional Properties, to pay syndication and acquisition costs, to pay
distributions, to meet the Partnership's working capital and other needs and, in
the General Partners' discretion, to create cash reserves.
During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, Affiliates of the General
Partners incurred on behalf of the Partnership $285,858 and $196,174,
respectively, for certain Organizational and Offering Expenses. In addition,
during 1996, Affiliates incurred $18,036 for certain Acquisition Expenses and
$893 for certain operating expenses. As of December 31, 1996 and 1995, the
Partnership owed $83,889 and $233,760, respectively, to Affiliates for such
amounts, fees and other reimbursements. Amounts payable to other parties,
including distributions payable, increased to $160,222 at December 31, 1996, as
compared to $22,130 at December 31, 1995, primarily as a result of incurring
additional Organizational and Offering Expenses during 1996 and accruing
distributions payable to limited partners as of December 31, 1996. The General
Partners believe that the Partnership has sufficient cash on hand to meet its
current working capital needs.
During the year ended December 31, 1996, the Partnership generated cash
from operations (which includes interest received, less cash paid for expenses)
of $27,146. Cash from operations is expected to increase significantly in 1997
as (i) the Partnership invests its net Offering proceeds in additional
Properties, (ii) the Property that was owned, but under construction, as of
December 31, 1996, becomes operational and (iii) the existing Property,
purchased on December 27, 1996, is operational for a full year. Based on current
and anticipated future cash from operations, the Partnership declared
distributions to the Limited Partners of $57,846 for the year ended December 31,
1996 (representing distributions of $0.11 per Unit based on the weighted average
number of Units outstanding during the period the Partnership was operational).
No amounts distributed or to be distributed to the Limited Partners for the year
ended December 31, 1996, are required to be or have been treated by the
Partnership as a return of capital for purposes of calculating the Limited
Partners' return on their Invested Capital Contributions. The Partnership
intends to continue to make distributions of cash available for distribution to
the Limited Partners on a quarterly basis, although some Limited Partners, in
accordance with their election, receive monthly distributions, for an annual
fee.
The General Partners have obtained contingent liability and property
coverage for the Partnership. This insurance policy is intended to reduce the
Partnership's exposure in the unlikely event a tenant's insurance policy lapses
or is insufficient to cover a claim relating to the Property; therefore, the
General Partners believe that the Properties the Partnership owned as of
December 31, 1996, are adequately covered by insurance. The Partnership's
investment strategy of acquiring Properties for cash and leasing them under
triple-net leases to operators who generally meet specified financial standards
minimizes the Partnership's operating expenses. The General Partners believe
that the leases will generate cash flow in excess of operating expenses.
Partnership Net Income is expected to increase throughout 1997, as rental income
increases, due to (i) the acquisition of additional Properties, (ii) the
Property under construction at December 31, 1996 becoming operational and (iii)
the existing Property, purchased on December 27, 1996, being operational for a
full year. Accordingly, the General Partners believe that the anticipated
decrease in the Partnership's liquidity in 1997, due to its investment of net
Offering proceeds in additional Properties and the payment of construction costs
for the Property under construction at December 31, 1996, will not have an
adverse effect on the Partnership's operations during 1997.
Due to low operating expenses, ongoing cash flow from rental income
obtained from Properties after they are acquired and the fact that the
Partnership will not enter into a commitment to purchase a Property until
sufficient cash is available for such purchase, the General Partners do not
believe that working capital reserves are necessary at this time. In addition,
due to the fact that both of the leases for the Partnership's Properties are on
a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs is necessary at this time. To the extent, however, that
the Partnership has insufficient funds for such purposes, the General Partners
will contribute to the Partnership an aggregate amount of up to one percent of
the offering proceeds for maintenance and repairs.
25
<PAGE>
The General Partners have the right to cause the Partnership to maintain
reserves if, in their discretion, they determine such reserves are required to
meet the Partnership's working capital needs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
The General Partners are not aware of any material trends, favorable or
unfavorable, in either capital resources or the outlook for long-term cash
generation, nor do they expect any material changes in the availability and
relative cost of such capital resources, other than as referred to in this
Prospectus.
RESULTS OF OPERATIONS
No significant operations commenced until the Partnership received and
released from escrow the minimum Offering proceeds of $1,500,000 on October 11,
1996.
As of December 31, 1996, the Partnership had purchased two Properties
(one of which was under construction), and entered into lease agreements with
Carrols Corporation relating to the existing Property and Golden Corral
Corporation relating to the Property under construction at December 31, 1996.
The lease agreement entered into for the existing Property provides for minimum
base annual rental payments (payable in equal monthly installments) of
approximately $89,700 and provides for percentage rent equal to the amount by
which six percent of annual gross sales of the restaurant exceeds the minimum
annual rent for such lease year. The lease agreement entered into for the
Property under construction, provides for estimated minimum base annual rental
payments (payable in equal monthly installments) of approximately $170,300 and
provides for percentage rent equal to the amount by which five percent of annual
gross sales of the restaurant exceeds a specified amount. In addition, the lease
relating to the existing Property provides that, commencing in the sixth lease
year, the annual base rent required under the terms of the lease will increase
by five percent and commencing in the eleventh lease year and every five years
thereafter, the annual base rent required will increase by ten percent. In
accordance with the lease agreement relating to the Property under construction,
rent will commence the earlier of (i) the date a certificate of occupancy for
the premises is received, (ii) the date the restaurant opens for business, or
(iii) June 25, 1997. The Partnership earned $1,373 in rental income during the
year ended December 31, 1996, attributable to the existing Property purchased on
December 27, 1996. For further description of the Partnership's leases and
Properties owned as of December 31, 1996, see "Business - Property
Acquisitions."
Due to the fact that as of December 31, 1996, the Partnership had only
acquired two Properties and the Partnership anticipates acquiring additional
Properties, it is not possible to determine which lessees or Restaurant Chains
will contribute more than ten percent of the Partnership's rental income during
1997 and subsequent years. In the event that certain lessees or Restaurant
Chains contribute more than ten percent of the Partnership's rental income in
future years, any failure of such lessees or Restaurant Chains could materially
effect the Partnership's income.
During the year ended December 31, 1996, the Partnership earned $30,241
in interest income from investments in money market accounts or other
short-term, highly liquid investments. As net offering proceeds are invested in
additional Properties, the Property under construction becomes operational, and
the existing Property acquired during 1996 becomes operational for a full year,
the percentage of total income representing interest income is expected to
decrease.
Operating expenses, including depreciation and amortization expense,
were $4,704 for the year ended December 31, 1996. The dollar amount of operating
expenses is expected to increase, and the amount of general operating and
administrative expenses as a percentage of total revenues is expected to
decrease, in 1997 as the Partnership acquires additional Properties.
The Partnership's leases as of December 31, 1996, and the leases the
Partnership expects to enter into, are or are expected to be on a triple-net
basis and contain provisions that management believes will mitigate the adverse
effect of inflation. Such provisions include clauses requiring the payment of
percentage rent based on certain restaurant sales above a specified level and/or
automatic increases in base rent at specified times during the term of
26
<PAGE>
the lease. Management expects that increases in restaurant sales volumes due to
inflation and real sales growth should result in an increase in rental income
over time. Continued inflation also may cause capital appreciation of the
Partnership's Properties. Inflation and changing prices, however, also may have
an adverse impact on the sales of the restaurants and on potential capital
appreciation of the Properties.
The General Partners are not aware of any known trends or
uncertainties, other than national economic conditions, which have had or which
may reasonably be expected to have a material impact, favorable or unfavorable,
on revenues or income from the acquisition and operations of real properties,
other than those referred to in this Prospectus.
There currently are no material changes being considered in the
objectives and policies of the Partnership as set forth in this Prospectus.
This information contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Partnership believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Partnership's actual results could differ materially from those
set forth in the forward-looking statements. Certain factors that might cause
such a difference include the following: changes in general economic conditions,
changes in local real estate conditions, continued availability of proceeds from
the Partnership's offering, the ability of the Partnership to locate suitable
tenants for its Properties and the ability of tenants to make payments under
their respective leases.
MANAGEMENT
The following is a description of the individual General Partners, the
corporate General Partner, CNL Fund Advisors, Inc. (which provides certain
management services to the Partnership), CNL Group, Inc. (the parent company of
both CNL Fund Advisors, Inc. and the Managing Dealer, CNL Securities Corp.), and
certain employees of CNL Group, Inc. or its subsidiaries.
INDIVIDUAL GENERAL PARTNERS
James M. Seneff, Jr., age 50, is a principal stockholder of CNL Group,
Inc., a diversified real estate company, and has served as its Chairman of the
Board of Directors, director and Chief Executive Officer since its formation in
1980. CNL Group, Inc. is the parent company of CNL Securities Corp., CNL
Investment Company, CNL Fund Advisors, Inc., CNL Real Estate Advisors, Inc., and
prior to its merger with CNL Fund Advisors, Inc., effective January 1, 1996, CNL
Income Fund Advisors, Inc. Mr. Seneff is Chief Executive Officer, and has been a
director and registered principal of CNL Securities Corp., which serves as the
Managing Dealer in the Partnership's offering of Units, since its formation in
1979. Mr. Seneff also has held the position of President and a director of CNL
Management Company, a registered investment advisor, since its formation in
1976, has served as Chief Executive Officer and Chairman of the Board of CNL
Investment Company, and Chief Executive Officer and Chairman of the Board of
Commercial Net Lease Realty, Inc. since 1992, has served as the Chairman of the
Board and the Chief Executive Officer of CNL Realty Advisors, Inc. since its
inception in 1991, served as Chairman of the Board and Chief Executive Officer
of CNL Income Fund Advisors, Inc. since its inception in 1994 through December
31, 1995, has served as Chairman of the Board and Chief Executive Officer of CNL
Fund Advisors, Inc. since its inception in 1994, and has held the position of
Chief Executive Officer and a director of CNL Institutional Advisors, Inc., a
registered investment advisor, since its inception in 1990. In addition, Mr.
Seneff has served as Chairman of the Board and Chief Executive Officer of CNL
American Properties Fund, Inc. since 1994, and has served as Chairman of the
Board and Chief Executive Officer of CNL American Realty Fund, Inc. since 1996
and of CNL Real Estate Advisors, Inc. since January 1997. Mr. Seneff previously
served on the Florida State Commission on Ethics and is a former member and past
Chairman of the State of Florida Investment Advisory Council, which recommends
to the Florida Board of Administration investments for various Florida employee
retirement funds. The Florida Board of Administration, Florida's principal
investment advisory and money management agency, oversees the investment of more
than $40 billion of retirement funds. Since 1971, Mr. Seneff has been active in
the acquisition, development and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
joint venturer in over 100 real estate ventures involved in the
27
<PAGE>
financing, acquisition, construction and rental of office buildings, apartment
complexes, restaurants, hotels and other real estate. Included in these real
estate ventures are approximately 65 privately offered real estate limited
partnerships in which Mr. Seneff, directly or through an affiliated entity,
serves or has served as a general partner. Also included are CNL Income Fund,
Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV,
Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII,
Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income Fund X,
Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL Income Fund XIII,
Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL Income Fund XVI,
Ltd., and CNL Income Fund XVII, Ltd. (the "CNL Income Fund Partnerships"),
public real estate limited partnerships with investment objectives similar to
those of the Partnership, in which Mr. Seneff serves as a general partner. Mr.
Seneff received his degree in Business Administration from Florida State
University in 1968. See "Conflicts of Interest."
Robert A. Bourne, age 49, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.
(the Managing Dealer of the Offering), President and a director of CNL
Investment Company, CNL Fund Advisors, Inc., and prior to its merger with CNL
Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors, Inc.,
and President, Chief Investment Officer and a director of CNL Institutional
Advisors, Inc., a registered investment advisor. Mr. Bourne also has served as a
director since 1992, as President from July 1992 to February 1996, and since
February 1996, as Vice Chairman of the Board of Directors, Secretary and
Treasurer of Commercial Net Lease Realty, Inc. In addition, Mr. Bourne has
served as a director since its inception in 1991, as President from 1991 to
February 1996, as Secretary from February 1996 to July 1996, and since February
1996, as Treasurer and Vice Chairman of CNL Realty Advisors, Inc. In addition,
Mr. Bourne has served as President and a director of CNL American Properties
Fund, Inc. since 1994, and has served as President and a director of CNL
American Realty Fund, Inc. since 1996 and of CNL Real Estate Advisors, Inc since
January 1997. Upon graduation from Florida State University in 1970, where he
received a B.A. in Accounting, with honors, Mr. Bourne worked as a certified
public accountant and, from September 1971 through December 1978, was employed
by Coopers & Lybrand, Certified Public Accountants, where he held the position
of tax manager beginning in 1975. From January 1979 until June 1982, Mr. Bourne
was a partner in the accounting firm of Cross & Bourne and from July 1982
through January 1987, he was a partner in the accounting firm of Bourne & Rose,
P.A., Certified Public Accountants. Mr. Bourne, who joined CNL Securities Corp.
in 1979, has participated as a general partner or joint venturer in over 100
real estate ventures involved in the financing, acquisition, construction and
rental of office buildings, apartment complexes, restaurants, hotels and other
real estate. Included in these real estate ventures are approximately 64
privately offered real estate limited partnerships in which Mr. Bourne, directly
or through an affiliated entity, serves or has served as a general partner. Also
included are the CNL Income Fund Partnerships, public real estate limited
partnerships with investment objectives similar to those of the Partnership, in
which Mr. Bourne serves as a general partner. See "Conflicts of Interest."
CORPORATE GENERAL PARTNER
CNL Realty Corporation is a corporation organized on November 26, 1985,
under the laws of the State of Florida. Its sole directors and shareholders are
James M. Seneff, Jr. and Robert A. Bourne, the individual General Partners. CNL
Realty Corporation was organized to serve as the corporate general partner of
real estate limited partnerships, such as the Partnership, organized by one or
both of the individual General Partners. CNL Realty Corporation currently serves
as the corporate general partner of the CNL Income Fund Partnerships. See
Exhibit B--Financial Information, for the most recent audited financial
statements of CNL Realty Corporation.
CNL FUND ADVISORS, INC.
CNL Fund Advisors, Inc., which will provide certain advisory and
property management services in connection with the Partnership and its
Properties, is a corporation organized in 1994 under the laws of the State of
Florida. Its principal office is located at 400 East South Street, Suite 500,
Orlando, Florida 32801. CNL Fund Advisors, Inc. is a wholly owned subsidiary of
CNL Group, Inc., a diversified real estate company, and was organized to perform
the property acquisition, property management, and other services described
herein. With respect to 16 of the 17 prior CNL Income Fund Partnerships, such
services were provided by CNL Income Fund Advisors, Inc., a wholly owned
subsidiary of CNL Group, Inc., which subsidiary was merged into CNL Fund
Advisors, Inc.
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<PAGE>
CNL GROUP, INC.
CNL Group, Inc., which is the parent company of the Managing Dealer,
CNL Securities Corp., and CNL Fund Advisors, Inc., is a diversified real estate
corporation organized in 1980 under the laws of the State of Florida. Other
subsidiaries and affiliates of CNL Group, Inc. include a property development
and management company, two investment advisory companies, and seven
corporations organized as strategic business units. James M. Seneff, Jr., an
individual General Partner of the Partnership, is the Chairman of the Board,
Chief Executive Officer, and a director of CNL Group, Inc. Mr. Seneff and his
wife own all of the outstanding shares of CNL Group, Inc.
The following persons serve as operating officers of CNL Group, Inc. or
its affiliates or subsidiaries in the discretion of the Boards of Directors of
those companies, but, except as specifically indicated, do not serve as members
of the Boards of Directors of those entities. The Boards of Directors have the
responsibility for creating and implementing the policies of CNL Group, Inc. and
its affiliated companies.
John T. Walker, age 38, joined CNL Group, Inc. in September 1994, as
Senior Vice President, responsible for Research and Development. He currently
serves as the Chief Operating Officer and Executive Vice President of CNL Fund
Advisors, Inc. and CNL American Properties Fund, Inc. and serves as Executive
Vice President of CNL American Realty Fund, Inc. and CNL Real Estate Advisors,
Inc. From May 1992 to May 1994, he was Executive Vice President for Finance and
Administration and Chief Financial Officer of Z Music, Inc., a cable television
network which was subsequently acquired by Gaylord Entertainment, where he was
responsible for overall financial and administrative management and planning.
From January 1990 through April 1992, Mr. Walker was Chief Financial Officer of
the First Baptist Church in Orlando, Florida. From April 1984 through December
1989, he was a partner in the accounting firm of Chastang, Ferrell & Walker,
P.A., where he was the partner in charge of audit and consulting services, and
from 1981 to 1984, Mr. Walker was a Senior Consultant/Audit Senior at Price
Waterhouse. Mr. Walker is a Cum Laude graduate of Wake Forest University with a
B.S. in Accountancy and is a certified public accountant.
Lynn E. Rose, age 48, a certified public accountant, has served as
Chief Financial Officer of CNL Group, Inc. since December 1993, has served as
Secretary of CNL Group, Inc. since 1987, and served as Controller of CNL Group,
Inc. from 1987 until December 1993. In addition, Ms. Rose has served as Chief
Financial Officer and Secretary of CNL Securities Corp. since July 1994. She
has served as Chief Operating Officer, Vice President and Secretary of CNL
Corporate Services, Inc. since November 1994. Ms. Rose also has served as Chief
Financial Officer and Secretary of CNL Institutional Advisors, Inc. since its
inception in 1990, a director of CNL Realty Advisors, Inc. since its inception
in 1991, as Secretary of CNL Realty Advisors, Inc. since its inception in 1991
(excluding February 1996 to July 1996), Treasurer of CNL Realty Advisors, Inc.
from 1991 to February 1996, Secretary and Treasurer of Commercial Net Lease
Realty, Inc. from 1992 to February 1996, Secretary of CNL Income Fund Advisors,
Inc. since its inception in 1994 to December 1995, and a director, Secretary and
Treasurer of CNL Fund Advisors, Inc. since 1994 and has served as a director,
Secretary and Treasurer of CNL Real Estate Advisors, Inc. since 1996. Ms. Rose
also has served as Secretary and Treasurer of CNL American Properties Fund, Inc.
since 1994, and has served as Secretary and Treasurer of CNL American Realty
Fund, Inc. since 1996. Ms. Rose also currently serves as Secretary for
approximately 50 additional corporations. Ms. Rose oversees the management
information services, administration, legal compliance, accounting, tenant
compliance, and reporting for over 250 corporations, partnerships, and joint
ventures. Prior to joining CNL, Ms. Rose was a partner with Robert A. Bourne in
the accounting firm of Bourne & Rose, P.A., Certified Public Accountants. Ms.
Rose holds a B.A. in Sociology from the University of Central Florida and is a
registered financial and operations principal of CNL Securities Corp. She was
licensed as a certified public accountant in 1979.
Jeanne A. Wall, age 38, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and
previously served as Executive Vice President of CNL Investment Company since
January 1991. In 1984, Ms. Wall joined CNL Securities Corp. as its Partnership
Administrator. In 1985, Ms. Wall became Vice President of CNL Securities Corp.
and, in 1987, she became a Senior Vice President of CNL Securities Corp. In this
capacity, Ms. Wall serves as national marketing and sales director and oversees
the national marketing plan for the CNL investment programs. In addition, Ms.
Wall oversees the partnership administration and investor services for programs
offered through participating brokers. Ms. Wall also has served as Senior Vice
President of CNL Institutional Advisors, Inc., a registered investment advisor,
from 1990 to 1993,
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<PAGE>
as Vice President of CNL Realty Advisors, Inc. since its inception in 1991, as
Vice President of Commercial Net Lease Realty, Inc. since 1992, as Executive
Vice President of CNL Income Fund Advisors, Inc. from its inception in 1994 to
December 1995, as Executive Vice President of CNL Fund Advisors, Inc. since
1994, and as Executive Vice President of CNL American Properties Fund, Inc.
since 1994. In addition, Ms. Wall has served as Executive Vice President of CNL
Real Estate Advisors, Inc. since January 1997 and as Executive Vice President of
CNL American Realty Fund, Inc. since 1996. Ms. Wall holds a B.A. in Business
Administration from Linfield College and is a registered principal of CNL
Securities Corp. Ms. Wall currently serves as a trustee on the board of the
Investment Program Association and on the Direct Participation Program committee
for the National Association of Securities Dealers (NASD).
Steven D. Shackelford, age 33, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996. Mr. Shackelford joined CNL Group,
Inc. in September 1996. He also currently serves as the Chief Financial Officer
of CNL American Properties Fund, Inc. From March 1995 to July 1996, he was a
senior manager in the national office of Price Waterhouse where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he served as a
manager in the Price Waterhouse, Paris, France office serving several
multinational clients. Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the Orlando, Florida office of Price Waterhouse. Mr Shackelford
received a B.A. in Accounting, with honors, and a Masters of Business
Administration from Florida State University and is a certified public
accountant.
PRIOR PERFORMANCE OF THE GENERAL PARTNERS AND AFFILIATES
The information presented in this section represents the historical
experience of certain real estate programs organized by the General Partners.
INVESTORS IN THE PARTNERSHIP SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE
RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN SUCH PRIOR REAL
ESTATE PROGRAMS. INVESTORS WHO PURCHASE INTERESTS IN THE PARTNERSHIP WILL NOT
THEREBY ACQUIRE ANY OWNERSHIP INTEREST IN ANY PROGRAMS TO WHICH THE FOLLOWING
INFORMATION RELATES.
The General Partners of the Partnership are Robert A. Bourne, James M.
Seneff, Jr., and CNL Realty Corporation. Messrs. Bourne and Seneff, individually
or with others, have served as general partners of 84 and 85 real estate limited
partnerships, respectively, including the 17 prior CNL Income Fund Partnerships
and as officers and directors of a real estate investment trust, CNL American
Properties Fund, Inc., listed in the table below. None of these entities has
been audited by the IRS. Of course, there is no guarantee that the Partnership
will not be audited. Based on an analysis of the operating results of the prior
programs, the General Partners believe that each of such programs has met or is
meeting its principal investment objectives in a timely manner.
CNL Realty Corporation, which was organized as a Florida corporation in
November 1985 and whose sole stockholders are Messrs. Bourne and Seneff,
currently serves as the corporate general partner with Messrs. Bourne and Seneff
as individual general partners of 17 prior CNL Income Fund Partnerships, all of
which were organized to invest in fast-food and family-style restaurant
properties and have investment objectives similar to those of the Partnership.
In addition, Messrs. Bourne and Seneff currently serve as directors and officers
of CNL American Properties Fund, Inc. an unlisted public REIT, which was
organized to invest in fast-food, family-style and casual dining restaurant
properties, mortgage loans and secured equipment leases and has investment
objectives similar to those of the Partnership. As of December 31, 1996, these
17 partnerships and CNL American Properties Fund, Inc. had raised a total of
$719,247,149 from a total of 54,652 investors, and had invested in 760
fast-food, family-style or casual dining restaurant properties.
30
<PAGE>
<TABLE>
<CAPTION>
Date 90% of Net
Proceeds Fully
Maximum Invested or
Name of Offering Number of Committed for
Entity Amount (1) Date Closed Units Sold Investment (2)
- --------- ---------- ----------- ---------- --------------
<S> <C>
CNL Income $15,000,000 December 31, 1986 30,000 December 1986
Fund, Ltd. (30,000 units)
CNL Income $25,000,000 August 21, 1987 50,000 November 1987
Fund II, Ltd. (50,000 units)
CNL Income $25,000,000 April 29, 1988 50,000 June 1988
Fund III, Ltd. (50,000 units)
CNL Income $30,000,000 December 6, 1988 60,000 February 1989
Fund IV, Ltd. (60,000 units)
CNL Income $25,000,000 June 7, 1989 50,000 December 1989
Fund V, Ltd. (50,000 units)
CNL Income $35,000,000 January 19, 1990 70,000 May 1990
Fund VI, Ltd. (70,000 units)
CNL Income $30,000,000 August 1, 1990 30,000,000 January 1991
Fund VII, Ltd. (30,000,000 units)
CNL Income $35,000,000 March 7, 1991 35,000,000 September 1991
Fund VIII, Ltd. (35,000,000 units)
CNL Income $35,000,000 September 6, 1991 3,500,000 November 1991
Fund IX, Ltd. (3,500,000 units)
CNL Income $40,000,000 March 18, 1992 4,000,000 June 1992
Fund X, Ltd. (4,000,000 units)
CNL Income $40,000,000 September 28, 1992 4,000,000 September 1992
Fund XI, Ltd. (4,000,000 units)
CNL Income $45,000,000 March 15, 1993 4,500,000 July 1993
Fund XII, Ltd. (4,500,000 units)
CNL Income $40,000,000 August 26, 1993 4,000,000 August 1993
Fund XIII, Ltd. (4,000,000 units)
CNL Income $45,000,000 February 22, 1994 4,500,000 May 1994
Fund XIV, Ltd. (4,500,000 units)
CNL Income $40,000,000 September 1, 1994 4,000,000 December 1994
Fund XV, Ltd. (4,000,000 units)
CNL Income $45,000,000 June 12, 1995 4,500,000 August 1995
Fund XVI, Ltd. (4,500,000 units)
CNL Income $30,000,000 September 19, 1996 3,000,000 (3)
Fund XVII, Ltd. (3,000,000 units)
CNL American $165,000,000 (4) (4) (4)
Properties Fund, (16,500,000 shares)
Inc. (5)
</TABLE>
31
<PAGE>
- ------------------------------------
(1) The amount stated includes the exercise by the general partners of each
Partnership of their option to increase by $5,000,000 the maximum size
of the offering of CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL
Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund VI,
Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund X, Ltd., CNL Income
Fund XII, Ltd., CNL Income Fund XIV, Ltd., and CNL Income Fund XVI,
Ltd.
(2) For a description of the property acquisitions by these programs during
the last ten years, see the table set forth on the following page.
(3) As of December 31, 1996, CNL Income Fund XVII, Ltd. had purchased 24
properties for approximately $23,753,600, representing an investment of
90% of net proceeds received.
(4) As of December 31, 1996, CNL American Properties Fund, Inc., which was
offering a maximum of 15,000,000 shares of common stock ($150,000,000),
excluding 1,500,000 shares ($15,000,000) available to investors
participating in the reinvestment plan, had received subscriptions
totalling $139,247,149 (13,924,715 shares), including $591,765 (59,177
shares) through the reinvestment plan. As of such date, CNL American
Properties Fund, Inc. had purchased 94 properties. On February 6, 1997,
the initial offering closed upon receipt of subscriptions totalling
$150,591,765 (15,059,177 shares), including $591,765 (59,177 shares)
through the reinvestment plan.
(5) Following the completion of the initial offering on February 6, 1997,
CNL American Properties Fund, Inc. commenced a subsequent offering of
up to 27,500,000 shares ($275,000,000) of common stock.
As of December 31, 1996, Mr. Seneff and Mr. Bourne, directly or through
affiliated entities, also had served as joint general partners of 65 nonpublic
real estate limited partnerships. The offerings of 63 of these 65 nonpublic
limited partnerships had terminated as of December 31, 1996. These 63
partnerships raised a total of $164,419,266 from approximately 4,111 investors,
and purchased, directly or through participation in a joint venture or limited
partnership, interests in a total of 200 projects as of December 31, 1996. These
200 projects consist of 19 apartment projects (comprising 11% of the total
amount raised by all 63 partnerships), 13 office buildings (comprising 5% of the
total amount raised by all 63 partnerships), 154 fast-food, family-style, or
casual dining restaurant property and business investments (comprising 69% of
the total amount raised by all 63 partnerships), one condominium development
(comprising .5% of the total amount raised by all 63 partnerships), four
hotels/motels (comprising 5% of the total amount raised by all 63 partnerships),
seven commercial/retail properties (comprising 9% of the total amount raised by
all 63 partnerships), and two tracts of undeveloped land (comprising .5% of the
total amount raised by all 63 partnerships). The offering of the two remaining
nonpublic limited partnerships (offerings aggregating $16,550,000) had raised
$4,675,000 from 95 investors (approximately 58.6% of the total offering amount)
as of December 31, 1996.
Mr. Bourne also has served, without Mr. Seneff, as a general partner of
one additional nonpublic real estate limited partnership program which raised a
total of $600,000 from 13 investors and purchased, through participation in a
limited partnership, one apartment building located in Georgia with a purchase
price of $1,712,000.
Mr. Seneff also has served, without Mr. Bourne, as a general partner of
two additional nonpublic real estate limited partnerships which raised a total
of $240,000 from 12 investors and purchased two office buildings with an
aggregate purchase price of $928,390. Both of the office buildings are located
in Florida.
Of the 83 real estate limited partnerships whose offerings had closed
as of December 31, 1996 (including 17 CNL Income Fund limited partnerships) in
which Mr. Seneff and/or Mr. Bourne serve or have served as general partners in
the past ten years, 35 invested in restaurant properties leased on a
"triple-net" basis, including six which
32
<PAGE>
also invested in franchised restaurant businesses (accounting for approximately
93% of the total amount raised by all 83 real estate limited partnerships).
The following table sets forth summary information, as of December 31,
1996 regarding property acquisitions during the nine preceding years by the 17
limited partnerships that, either individually or through a joint venture or
partnership arrangement, acquired properties (or intend to acquire properties)
and that have investment objectives similar to those of the Partnership and by a
real estate investment trust, CNL American Properties Fund, Inc.
<TABLE>
<CAPTION>
Name of Type of Method of Type of
Entity Property Location Financing Program
- ----------- --------- -------- --------- -------
<S> <C>
CNL Income 20 fast-food or AL, AZ, CA, FL, All cash Public
Fund, Ltd. family-style GA, LA, MD, OK,
restaurants TX, VA
CNL Income 43 fast-food or AL, AZ, CO, FL, All cash Public
Fund II, Ltd. family-style GA, IL, IN, LA, MI,
restaurants MN, MO, NC, NM,
OH, TX, WY
CNL Income 32 fast-food or AZ, CA, FL, GA, All cash Public
Fund III, Ltd. family-style IA, IL, IN, KS, KY,
restaurants MD, MI, MN, MO,
NE, OK, TX
CNL Income 44 fast-food or AL, DC, FL, GA, All cash Public
Fund IV, Ltd. family-style IL, IN, KS, MA,
restaurants MD, MI, MS, NC,
OH, PA, TN, TX,
VA
CNL Income 30 fast-food or FL, GA, IL, IN, MI, All cash Public
Fund V, Ltd. family-style NH, NY, OH, SC,
restaurants TN, TX, UT, WA
CNL Income 46 fast-food or AR, AZ, FL, IN, All cash Public
Fund VI, Ltd. family-style MA, MI, MN, NC,
restaurants NE, NM, NY, OH,
OK, PA, TN, TX,
VA, WY
CNL Income 46 fast-food or AZ, CO, FL, GA, All cash Public
Fund VII, Ltd. family-style IN, LA, MI, MN,
restaurants OH, SC, TN, TX,
UT, WA
CNL Income 40 fast-food or AZ, FL, IN, LA, All cash Public
Fund VIII, Ltd. family-style MI, MN, NC, NY,
restaurants OH, TN, TX, VA
33
<PAGE>
CNL Income 41 fast-food or AL, FL, GA, IL, IN, All cash Public
Fund IX, Ltd. family-style LA, MI, MN, MS,
restaurants NC, NH, NY, OH,
SC, TN, TX
CNL Income 49 fast-food or AL, CA, CO, FL, All cash Public
Fund X, Ltd. family-style ID, IL, LA, MI,
restaurants MO, MT, NC, NH,
NM, NY, OH, PA,
SC, TN, TX
CNL Income 39 fast-food or AL, AZ, CA, CO, All cash Public
Fund XI, Ltd. family-style CT, FL, KS, LA,
restaurants MA, MI, MS, NC,
NH, NM, OH, OK,
PA, SC, TX, VA,
WA
CNL Income 49 fast-food or AL, AZ, CA, FL, All cash Public
Fund XII, Ltd. family-style GA, LA, MO, MS,
restaurants NC, NM, OH, SC,
TN, TX, WA
CNL Income 48 fast-food or AL, AR, AZ, CA, All cash Public
Fund XIII, Ltd. family-style CO, FL, GA, IN,
restaurants KS, LA, MD, NC,
OH, PA, SC, TN,
TX, VA
CNL Income 61 fast-food or AL, AZ, CO, FL, All cash Public
Fund XIV, Ltd. family-style GA, KS, LA, MN,
restaurants MO, MS, NC, NJ,
NV, OH, SC, TN,
TX, VA
CNL Income 53 fast-food or CA, FL, GA, KS, All cash Public
Fund XV, Ltd. family-style KY, MN, MO, MS,
restaurants NC, NJ, NM, OH,
OK, PA, SC, TN,
TX, VA
CNL Income 44 fast-food or AZ, CA, CO, DC, All cash Public
Fund XVI, Ltd. family-style FL, GA, ID, IN, KS,
restaurants MN, MO, NC, NM,
NV, OH, TN, TX,
UT, WI
NL Income 24 fast-food, family- CA, FL, GA, IL, IN, All cash Public
Fund XVII, Ltd. style, or casual MI, NC, NV, OH,
dining restaurants SC, TN, TX
CNL American 94 fast-food, family- CA, CT, DE, FL, All cash Public
Properties Fund, Inc. style, or casual GA, IA, IL, IN, MI,
dining restaurants MN, MO, NE, NJ,
NM, OH, OK, OR,
TN, TX, WV
</TABLE>
34
<PAGE>
- ------------------------------------
A more detailed description of the acquisitions by the prior public
programs sponsored by the individual General Partners is set forth in prior
performance Table VI, included as Exhibit 99 to Part II of the registration
statement filed with the Securities and Exchange Commission for this Offering. A
copy of Table VI is available to investors from the General Partners upon
request, free of charge. In addition, upon request to the General Partners, the
General Partners will provide, without charge, a copy of the most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission for CNL
Income Fund, Ltd., CNL Income Fund II, Ltd., CNL Income Fund III, Ltd., CNL
Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL
Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL
Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV, Ltd., CNL
Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd.,
and CNL American Properties Fund, Inc., as well as a copy, for a reasonable fee,
of the exhibits filed with such reports.
In order to provide potential purchasers of Units with information to
enable them to evaluate the prior experience of the General Partners as general
partners of public real estate limited partnerships, including those set forth
in the foregoing table, certain financial and other information concerning those
limited partnerships with similar investment objectives in which the General
Partners are general partners is provided in the Prior Performance Tables
included as Exhibit C. Information about the previous public partnerships, the
offerings of which were fully subscribed between October 1991 and September
1996, is included therein. Potential investors are encouraged to examine the
Prior Performance Tables attached as Exhibit C (in Table III), which include
information as to the operating results of these prior public partnerships, for
more detailed information concerning the experience of the individual General
Partners.
INVESTMENT OBJECTIVES AND POLICIES
CERTAIN INVESTMENT LIMITATIONS
The Partnership will not: (i) issue Units in exchange for property or
otherwise than pursuant to the terms of this Offering; (ii) issue senior
securities; (iii) make loans to the General Partners or their Affiliates; (iv)
underwrite the securities of other issuers; (v) invest in the securities of
other issuers, including junior trust deeds or other similar obligations
(provided, however, that the Partnership may invest Partnership funds
temporarily in short-term, highly liquid investments, with appropriate safety of
principal, may accept purchase money mortgages secured by a first mortgage on a
Property in connection with the Sale of a Property , and may enter into Joint
Ventures to acquire Properties to be leased primarily to operators of selected
Restaurant Chains); (vi) operate in such a manner as to be classified as an
"investment company" for purposes of the Investment Company Act of 1940; (vii)
redeem or repurchase Units (except that the Partnership may implement the
Distribution Reinvestment Plan); (viii) invest in real estate mortgages; (ix)
purchase or own equipment unless the General Partners determine that it is in
the best interests of the Partnership in order to preserve the asset values of
the Properties; (x) engage in the purchase and sale (or turnover) of investments
(provided, however, that the Partnership may invest Partnership funds in
Properties and, temporarily, in short-term, highly liquid investments, with
appropriate safety of principal, may accept purchase money mortgages secured by
a first mortgage on a Property in connection with the Sale of a Property, and
may enter into Joint Ventures to acquire Properties to be leased primarily to
operators of selected Restaurant Chains); (xi) offer securities in exchange for
property; or (xiii) purchase or lease any Property from, or sell or lease any
Property to, the General Partners or their Affiliates, except for a purchase of
Property which such persons have temporarily purchased to facilitate acquisition
of such Property as described in "Business--Site Selection and Acquisition of
Properties--Interim Acquisitions."
BORROWING POLICIES
The Partnership and any general partnership or Joint Venture in which
the Partnership becomes a partner or joint venturer will acquire Properties
without borrowing. The General Partners do not anticipate that the Partnership
will borrow for any reason and do not intend to cause the Partnership to do so.
Subject to certain
35
<PAGE>
restrictions on borrowing, however, the Partnership may borrow funds but will
not encumber any of the Properties in connection with any such borrowing. The
Partnership will not borrow for the purpose of returning capital to the Limited
Partners or under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners have represented that they
will limit the Partnership's outstanding indebtedness to 3% of the aggregate
adjusted tax basis of its Properties and that they will use their reasonable
efforts to structure any borrowing so that it will not constitute "acquisition
indebtedness" (as discussed in "Federal Income Tax Considerations--Qualified
Plan Investors").
ALLOCATIONS AND DISTRIBUTIONS
DISTRIBUTIONS OF NET SALES PROCEEDS
Except as described below, Net Sales Proceeds from a Sale or Sales not
in liquidation of the Partnership, after creation of any reserves, will be
distributed in the following order of priority: (i) first, 100% to the Limited
Partners in an amount equal to their aggregate Limited Partners' 8% Return (an
annual, noncompounded return on the Invested Capital Contributions of the
Limited Partners equal to 8% per annum, which is cumulative when computed or
paid from Net Sales Proceeds); (ii) second, 100% to the Limited Partners in an
amount equal to their Invested Capital Contributions; (iii) third, 100% to the
General Partners until the General Partners have received an amount equal to the
sum of their Capital Contributions plus an amount equal to 5% of all prior and
current distributions of Net Cash Flow, reduced by any prior distributions to
the General Partners of Net Cash Flow and of Net Sales Proceeds pursuant to this
subparagraph (iii); and (iv) thereafter, 95% to the Limited Partners and 5% to
the General Partners. Therefore, payment of the Limited Partners' 8% Return is
not guaranteed. See Article 9.3(b) of the Partnership Agreement.
In connection with any Sale of a Property, the General Partners do not
anticipate that any reinvestment of Net Sales Proceeds in Properties will take
place. However, in some cases the General Partners may determine that it is in
the best interest of the Partnership to reinvest the Net Sales Proceeds derived
from such Sale in other Properties rather than distribute such proceeds to the
Partners. In determining whether to reinvest Net Sales Proceeds, the General
Partners will consider, in addition to the general factors considered when
acquiring a Property (See "Business--Selection and Acquisition of Properties"),
various factors, including, but not limited to, the following factors:
o the anticipated timing of the receipt of the Net Sales
Proceeds and whether or not the Partnership is still within
the anticipated 7 to 12 year holding period,
o the potential impact on anticipated future Net Cash Flow from
continuing operations which the distribution of such Net Sales
Proceeds would have, including but not limited to, the effect
on future distributions of Net Cash Flow and the impact on
anticipated future operating expenses as a percentage of
operating revenues (due to the fact that certain operating
expenses are fixed in nature and would not decrease with the
Sale of a Property),
o the anticipated gain on the Sale of the Property and whether
or not it will result in a significant tax to the investors if
distributed, and
o whether or not there is a prospective acquisition opportunity
where the Net Sales Proceeds could be reinvested which the
General Partners believe would increase future Net Cash Flow
or diversify the Partnership's portfolio.
In the event the General Partners determine to reinvest Net Sales
Proceeds from the Sale of a Property, upon investment, such Net Sales Proceeds
will be subject to the same or substantially similar risks generally applicable
to an investment in Properties. See "Risk Factors--Real Estate Risks." Also, it
is possible that the reinvestment of Net Sales Proceeds in other Properties will
extend the period during which the Properties are intended to be sold
36
<PAGE>
(currently anticipated by the General Partners to be 7 to 12 years after
acquisition of the Properties or as soon thereafter as market conditions
permit).
Distributions of Net Sales Proceeds from a Sale or Sales of
substantially all of the Partnership's assets are designed to provide Limited
Partners with their aggregate Limited Partners' 8% Return, to return their
Invested Capital Contributions, and, after providing the General Partners with a
return of their Capital Contributions and a 5% interest in all Net Cash Flow
distributions (to the extent not previously distributed to them), to provide
Limited Partners an aggregate 95% interest in distributions of remaining Net
Sales Proceeds. Specifically, Net Sales Proceeds from such a Sale or Sales will
be distributed in the following order of priority: (i) first, to pay all debts
and liabilities of the Partnership and to establish reserves; (ii) second, to
Partners with positive Capital Account balances, determined after the allocation
of Net Income, Net Loss, Gain and Loss described below, in proportion to such
balances, up to amounts sufficient to reduce such balances to zero; and (iii)
thereafter, 95% to the Limited Partners and 5% to the General Partners.
Therefore, payment of the Limited Partners' 8% Return is not guaranteed. See
Article 18.2 of the Partnership Agreement.
SUMMARY OF PARTNERSHIP AGREEMENT
MANAGEMENT OF THE PARTNERSHIP
The management, operation, and control of the Partnership and all of
its business and affairs will rest exclusively with the General Partners. The
vote of a majority of the General Partners will control. Limited Partners
holding a majority of the outstanding Units may remove one or more of the
General Partners, provided that written notice of the removal of a General
Partner, setting forth the reasons for such removal and the date upon which the
removal is to become effective, shall be served upon such General Partner,
either by certified or registered mail, return receipt requested, or by personal
service. Any removal of the last remaining General Partner shall be effective
only on the earlier of (i) such date as a substituted General Partner shall have
been admitted to the Partnership in accordance with the terms of the Partnership
Agreement or (ii) a date 90 days after the date on which Limited Partners
holding the required majority in interest shall have voted for such removal of
the General Partner. Upon the effective date of the removal of a General
Partner, he or it shall cease to be a General Partner, and any loans made by
such General Partner or his or its Affiliates to the Partnership in accordance
with the provisions of the Partnership Agreement shall be repaid as
expeditiously as possible. Additionally, if the business of the Partnership is
to be continued following the removal of a General Partner, then (i) the
Partnership shall purchase the General Partner's Partnership Interest at a price
determined in accordance with the terms of Article 15.5 of the Partnership
Agreement, and (ii) if no substituted General Partner is elected in the place of
any removed General Partner, those persons or entities who are General Partners
following such removal shall use their best efforts to release such removed
General Partner (and his or its Affiliates, if applicable) from personal
liability on any existing or future Partnership borrowing, if any.
RESTRICTIONS ON TRANSFERABILITY OF UNITS
Subject to the conditions on transfer in Article Fourteen of the
Partnership Agreement, Limited Partners shall have the right to transfer their
Units. The investment in Units is designed, however, as a long-term investment
for persons who have no need for liquidity in this investment. For example, the
General Partners have retained the right to prohibit transfers of Units,
including transfers of economic interests, if the General Partners determine
that such transfers could increase the likelihood that the Partnership would be
treated as a "publicly traded partnership." Because the characterization of the
Partnership as a "publicly traded partnership" would significantly decrease the
value of the Units, the General Partners intend to exercise fully their right to
prohibit transfers of Units under these circumstances. See "Federal Income Tax
Considerations--Publicly Traded Partnerships" and Article Fourteen of the
Partnership Agreement. In the case of any permitted transfer of an economic
interest, the substitution of the transferee as a Limited Partner in the
Partnership will be subject to the prior written consent of the General
Partners. The assignment must be documented with original signatures on forms
supplied by the General Partners. Other conditions on transfers Units by Limited
Partners are as follows: (i) a duly executed and acknowledged counterpart of the
instrument making the transfer, signed by both the transferor and the
transferee, with such instrument evidencing the written acceptance by the
transferee of all of the terms and provisions of the Partnership Agreement
37
<PAGE>
and containing a representation by the transferor that such transfer was made in
accordance with all applicable laws and regulations shall have been filed with
the Partnership; (ii) the transferor and the transferee shall have executed such
documents and performed such acts as the General Partners may request in
connection with the transfer; (iii) no transfer will be permitted if, based upon
information provided by the Partnership, counsel for the Partnership or the
General Partners is of the view that there is a substantial risk that such
transfer would result in the Partnership being considered to have terminated
within the meaning of Section 708 of the Code; (iv) Units shall not be
transferred to a minor or an incompetent except by will or intestate succession;
(v) no transfer will be recognized for any purpose whatsoever if, after such
transfer, the transferor or the transferee will hold an interest representing a
Capital Contribution of less than $2,500 ($1,000, or such greater amounts as may
be required by applicable state law, in the case of transfers by an individual
retirement account, Keogh or pension plan), unless such transfer represents the
transfer of the entire Partnership Interest of the transferor; (vi) transfers to
a foreign persons for purposes of U.S. federal income taxation may be prohibited
by the General Partners; and (vii) purported transfers of Units, or any
beneficial interest therein, will be void if, as a result of such transfer, the
Partnership would violate the safe harbors of section 7704 of the Code and the
regulations issued thereunder.
FEDERAL INCOME TAX CONSIDERATIONS
INTEREST ON UNDERPAYMENT OF TAXES
If it is finally determined that a taxpayer has underpaid tax for any
taxable year, the taxpayer must pay the amount of underpayment plus interest on
the underpayment and certain penalties from the date the tax originally was due.
The rate of interest is compounded daily and is adjusted quarterly. For the
period January 1, 1997 through March 31, 1997, the interest rate is 9%.
THE OFFERING
GENERAL
On September 19, 1996, the offering of units of limited partnership
interest in CNL XVII terminated upon the receipt of subscriptions for an
aggregate of 3,000,000 units ($30,000,000). An aggregate of 1618 subscribers
were admitted as limited partners to CNL XVII in accordance with the terms of
the partnership agreement of CNL XVIII. The Offering of Units in CNL XVIII
commenced on September 20, 1996. As of October 11, 1996, CNL XVIII had received
aggregate subscriptions for 173,313 Units, representing $1,733,131 in aggregate
subscription proceeds from Limited Partners and $1,517,431 of the funds were
released from escrow (which excluded all funds received from New York and
Pennsylvania investors). As of March 6, 1997, the Partnership had sold 1,503,434
Units, representing $15,034,343 of capital contributed by 704 unaffiliated
Limited Partners.
A maximum of 3,500,000 Units are being offered at a purchase price of
$10.00 each. A minimum purchase of 250 Units (or a minimum purchase of 100 Units
in the case of most IRAs and Keogh and pension plans) is required. Nebraska
investors, however, as well as any investor who wishes to receive monthly
distributions, must make a minimum investment of 500 Units ($5,000). IRAs and
Keogh and pension plans must make a minimum investment of at least 100 Units
(except for Iowa tax-exempt investors who must make a minimum investment of 300
Units, or $3,000, and Minnesota IRAs, which must make a minimum purchase of 200
Units, or $2,000). Investors making the required minimum investment may make
additional purchases in increments of one Unit. Maine investors, however, may
not purchase additional Units in amounts less than the applicable minimum
investment except at the time of the initial subscription or with respect to
Units purchased pursuant to the Distribution Reinvestment Plan. See "Suitability
Standards and How to Subscribe--How to Subscribe." The General Partners or their
Affiliates may purchase up to 15,000 Units ($150,000) of the Partnership for
their own accounts for investment purposes and not with a view towards
distribution, on the same terms and conditions as other investors, and will
purchase a minimum of 5,000 Units ($50,000) of the Partnership.
The General Partners have elected to extend the Offering to a date not
later than August 11, 1997.
38
<PAGE>
PLAN OF DISTRIBUTION
The Units will be offered to the public on a "best efforts" basis
(which means that no one is guaranteeing that any minimum amount will be sold)
through the Soliciting Dealers, who will be members of the National Association
of Securities Dealers, Inc. (the "NASD") and CNL Securities Corp., which will
act as Managing Dealer. Both of the individual General Partners are Affiliates
and licensed principals of the Managing Dealer, and the corporate General
Partner is an Affiliate of the Managing Dealer. The Soliciting Dealers will use
their best efforts during the Offering period to find eligible persons who
desire to subscribe for the purchase of Units from the Partnership.
The maximum Offering is 3,500,000 Units ($35,000,000).
Prior to a subscriber's admission to the Partnership as a Limited
Partner, funds paid by such subscriber will be deposited in an interest-bearing
escrow account with SouthTrust Asset Management Company of Florida, N.A. The
Partnership, within 30 days after the date a subscriber is admitted to the
Partnership as a Limited Partner, will pay to such subscriber the interest
(generally calculated on a daily basis) actually earned on such subscriber's
funds. Interest will be payable only to those subscribers whose funds have been
held in escrow by such bank for at least 20 days. Limited Partners otherwise
will not be entitled to interest earned on Partnership funds or to receive
interest on their Capital Contributions. See "Escrow Arrangements" below.
In order to provide for the orderly closing of the Offering, the
Managing Dealer may institute a system pursuant to which it will accept
reservations to purchase Units provided all subscription materials with respect
to the purchase of such Units are received by the Managing Dealer within five to
ten business days after making the reservation.
Subject to the provisions for reduced Selling Commissions described
below, the Partnership will pay the Managing Dealer an aggregate of 8.5% of the
Gross Proceeds to the Partnership as Selling Commissions. The Managing Dealer
may reallow fees of up to 8% to the Soliciting Dealers with respect to Units
sold by them. In addition, the Partnership will pay the Managing Dealer, as an
expense allowance, a due diligence expense reimbursement fee equal to 0.5% of
Gross Proceeds. The Managing Dealer, in its sole discretion, may reallow to any
Soliciting Dealer all or any portion of this fee based on such factors as the
number of Units sold by such Soliciting Dealer, the assistance, if any, of such
Soliciting Dealer in marketing the Offering, and bona fide due diligence
expenses incurred. Limited Partners who elect to participate in the Distribution
Reinvestment Plan will be charged Selling Commissions on Units purchased for
their accounts on the same basis as investors who do not purchase Units pursuant
to the Distribution Reinvestment Plan until the Offering has terminated. After
the Offering has terminated, no Selling Commissions will be paid for Units
purchased pursuant to the Distribution Reinvestment Plan.
Although it is not the intent of the Partnership, the Partnership, the
General Partners, or their Affiliates may provide incentive items for registered
representatives of the Managing Dealer and the Soliciting Dealers, which in no
event shall exceed an aggregate of $100 per annum per participating salesperson.
In the event other incentives are provided to registered representatives of the
Managing Dealer or the Soliciting Dealers, they will be paid only in cash, and
such payments will be made only to the Managing Dealer or the Soliciting Dealers
rather than to their registered representatives. Any such sales incentive
program must first have been submitted for review by the NASD, and must comply
with Section 5(f) of Appendix F to Section 34 of its Rules of Fair Practice.
Costs incurred in connection with such sales incentive programs, if any, will be
considered underwriting compensation.
39
<PAGE>
A registered principal or representative of the Managing Dealer or a
Soliciting Dealer, may purchase Units net of 8% commissions, at a per Unit
purchase price of $9.20. In addition, Soliciting Dealers, in their sole
discretion, may elect not to accept any Selling Commissions offered by the
Partnership for Units that they sell. In that event, such Units shall be sold to
the investor net of all Selling Commissions, at a per Unit purchase price of
$9.20. In connection with purchases of certain minimum numbers of Units, the
amount of Selling Commissions otherwise payable to the Managing Dealer or a
Soliciting Dealer, shall be reduced in accordance with the following schedule:
Reallowed Commissions on
Sales Per Unit
Dollar Amount ------------------------
of Units Purchase Price
Purchased Per Unit Percent Dollar Amount
------------- -------------- ------- -------------
$10 -- $249,990 $10.00 8.0% $0.80
$250,000 -- $499,990 $9.80 6.0% $0.60
$500,000 -- $999,990 $9.60 4.0% $0.40
$1,000,000 -- $1,499,990 $9.50 3.0% $0.30
$1,500,000 or more $9.40 2.0% $0.20
For example, if an investor purchases 100,000 Units, the investor could
pay as little as $950,000 rather than $1,000,000 for the Units, in which event
the Selling Commissions on the sale of such Units would be $35,000 ($0.35 per
Unit). The net proceeds to the Partnership will not be affected by such
discounts.
Any such reduction in Selling Commissions will be credited to the
"purchaser," as defined below, by reducing the total purchase price otherwise
payable by the "purchaser." The net proceeds to the Partnership will not be
affected by the volume discount.
Subscriptions for Units of CNL XVIII may be combined for the purpose of
determining the volume discounts in the case of subscriptions made by any
"purchaser," provided all such Units are purchased through the same Soliciting
Dealer or through the Managing Dealer. The volume discount will be prorated
among the separate subscribers considered to be a single "purchaser." Units
purchased pursuant to the Distribution Reinvestment Plan on behalf of a
Participant in the Distribution Reinvestment Plan will not be combined with
other subscriptions for Units by the investor in determining the volume discount
to which such investor may be entitled. See "Summary of Distribution
Reinvestment Plan." Further, subscriptions for Units will not be combined for
purposes of the volume discount in the case of subscriptions by any "purchaser"
who subscribes for additional Units subsequent to the purchaser's initial
purchase of Units.
Any request to combine more than one subscription must be made in
writing in a form satisfactory to the General Partners and must set forth the
basis for such request. Any such request will be subject to verification by the
Managing Dealer that all of such subscriptions were made by a single
"purchaser." If a "purchaser" does not reduce the per Unit purchase price, the
excess purchase price over the discounted purchase price will be returned to the
actual separate subscribers for Units.
For purposes of such volume discounts, "purchaser" includes (i) an
individual, his or her spouse, and their children under the age of 21, who
purchase the Units for his or her or their own accounts, and all pension or
trust funds established by each such individual; (ii) a corporation,
partnership, association, joint-stock company, trust fund, or any organized
group of persons, whether incorporated or not (provided that the entities
described in this clause (ii) must have been in existence for at least six
months before purchasing the Units and must have formed such group for a purpose
other than to purchase the Units at a discount); (iii) an employee's trust,
pension, profit-sharing, or other employee benefit plan qualified under section
401 of the Code; and (iv) all pension, trust, or other funds maintained by a
given bank. In addition, the General Partners, in their sole discretion, may
aggregate and combine separate subscriptions for Units received during the
Offering period from (i) the Managing Dealer or the same Soliciting Dealer, (ii)
investors whose accounts are managed by a single investment adviser registered
under the Investment Advisers Act of 1940, (iii) investors over whose accounts a
designated bank, insurance company, trust company, or other entity exercises
discretionary investment responsibility, or (iv) a single corporation,
partnership, trust association, or other organized group of persons, whether
incorporated or not, and whether such subscriptions
40
<PAGE>
are by or for the benefit of such corporation, partnership, trust association,
or group. Except as provided in this paragraph, subscriptions will not be
cumulated, combined, or aggregated.
Any reduction in commissions will reduce the effective purchase price
per Unit to the investor involved but will not alter the net proceeds payable to
the Partnership as a result of such sale.
All investors will be deemed to have contributed the same amount per
Unit to the Partnership whether or not the investor receives a volume discount.
Accordingly, for purposes of Partnership allocations, as well as distributions
of Net Cash Flow and Net Sales Proceeds, investors qualifying for volume
discounts will receive higher returns on their investments in the Partnership as
compared to investors who do not qualify for such discounts.
In connection with the sale of Units, certain registered principals or
representatives of the Managing Dealer may perform wholesaling functions for
which they will receive compensation payable by the Managing Dealer in an
aggregate amount not in excess of one percent of Gross Proceeds. In addition,
the General Partners and their Affiliates, including the Managing Dealer and its
registered principals or representatives, may incur due diligence fees and other
expenses, including expenses related to sales seminars and wholesaling
activities, a portion of which may be paid by the Partnership. Any such expenses
paid by the Partnership are estimated not to exceed $34,300 in the event
3,500,000 Units ($35,000,000) are sold. In no event, however, will the total
underwriting compensation payable to the Managing Dealer, Soliciting Dealer, or
persons performing wholesaling functions, whether characterized as Selling
Commissions, expense reimbursements, sales incentives, or otherwise, exceed 10%
of Gross Proceeds, plus a maximum of 0.5% for reimbursement of bona fide due
diligence expenses.
The Managing Dealer and the Soliciting Dealers severally will indemnify
the Partnership, the General Partners, and their Affiliates, officers and
directors against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
SUBSCRIPTION PROCEDURES
In order to purchase Units, the subscriber must complete and execute
the Subscription Agreement. Any subscription for Units must be accompanied by
cash or a check payable to "SouthTrust Asset Management Company of Florida,
N.A., Escrow Agent" (or to the Partnership after subscription funds are released
from escrow), in the amount of $10.00 per Unit. See "Escrow Arrangements" below.
Certain Soliciting Dealers who have "net capital," as defined in the applicable
federal securities regulations, of $250,000 or more may instruct their customers
to make their checks for Units subscribed for payable directly to the Soliciting
Dealer. In such case, the Soliciting Dealer will issue a check made payable to
the order of the Partnership for the aggregate amount of the subscription
proceeds.
Each subscription will be accepted or rejected by the General Partners
within 30 days after its receipt. If a subscription is rejected, the funds will
be returned to the subscriber within ten business days after the date of such
rejection, without interest and without deduction. A form of the Subscription
Agreement is set forth as Exhibit E to this Prospectus. A subscription may not
be revoked or withdrawn by the subscriber. The subscription price of each Unit
is payable in full upon execution of the Subscription Agreement.
By executing the Subscription Agreement, the subscribers agree to all
of the terms of the Partnership Agreement, including the grant to the General
Partners of a power of attorney under certain circumstances. The General
Partners and each Soliciting Dealer who sells Units on behalf of the Partnership
have the responsibility to make every reasonable effort to determine that the
purchase of Units is suitable and appropriate for an investor. In making this
determination, the Soliciting Dealers will rely on relevant information provided
by the investor, including information as to the investor's age, investment
objectives, investment experience, income, net worth, financial situation, other
investments, and any other pertinent information. Each investor should be aware
that determining suitability is the responsibility of the Soliciting Dealer.
Certain Soliciting Dealers may permit investors to subscribe for Units
by telephonic order to the Soliciting Dealer. There are no additional fees
associated with telephonic orders. Representatives of Soliciting Dealers who
accept telephonic orders may execute the Subscription Agreement on behalf of
those investors who place such orders.
41
<PAGE>
Investors, however, who are residents of Florida, Iowa, Maine, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, North
Carolina, Oregon, South Dakota, Tennessee, or Washington, must complete and sign
the Subscription Agreement in order to subscribe for Units and, therefore, may
not subscribe for Units by telephone. Representatives of Soliciting Dealers who
accept telephonic orders will execute the Subscription Agreement on behalf of
investors who place such orders. All investors who telephonically subscribe for
Units will receive, with confirmation of their subscription, a second copy of
the Prospectus.
Residents of California, Oklahoma, and Texas who telephonically
subscribe for Units will have the right to rescind such subscriptions within ten
days from receipt of the confirmation. Such investors who do not rescind their
subscriptions within such ten-day period shall be deemed to have assented to all
of the terms and conditions of the Subscription Agreement and the Partnership
Agreement, including, but not limited to, the power of attorney therein.
Investors who have questions or who wish to place orders for Units by
telephone or to participate in the Distribution Reinvestment Plan should contact
their Soliciting Dealer. Certain Soliciting Dealers do not permit telephonic
subscriptions or participation in the Distribution Reinvestment Plan. See
"Summary of Distribution Reinvestment Plan." The form of Subscription Agreement
for certain Soliciting Dealers who do not permit telephonic subscriptions or
participation in the Distribution Reinvestment Plan differs slightly from the
form attached hereto as Exhibit E, primarily in that it will eliminate one or
both of these options.
Investors who wish to establish an IRA for the purpose of investing
solely in Units may do so by so indicating on the Subscription Agreement,
appointing Franklin Bank, N.A., an unaffiliated bank, to act as their IRS
custodian. The custodian will not have the authority to vote any of the Units
held in any IRA except in accordance with written instructions from the
beneficiary of the IRA, although it will hold the Units on behalf of that
beneficiary and make distributions and, at the direction and in the discretion
of the beneficiary, investments in Units or in other securities issued by
Affiliates of the General Partners. The custodian will not have the authority at
any time to make investments through any such IRA on behalf of the beneficiary
if the investment do not constitute Units or other securities issued by
Affiliates of the General Partners. The investors will not be required to pay
any initial or annual fees in connection with any such IRA. The fees for
establishing and maintaining all such IRAs will be paid by the General Partners
initially and annually up to an aggregate amount of $5,000, and by the
Partnership above such amount. In determining whether to use the IRA option made
available by the Partnership and the General Partners, investors should consider
the impact of the withholding rules under Section 3405 and, more importantly,
the limitation on tax-free rollovers under Section 408(d)(3)(E) that limits an
individual from making a tax-free rollover of any amounts received from any IRA
or group of IRAs more than once during a one-year period, and whether direct
transfers ameliorate the impact of such rules and limitations.
Investors should not purchase Units unless such investors believe that
they are in a financial position appropriate to enable them to realize to a
significant extent the benefits described in the Prospectus, have adequate means
for providing for their current needs and personal contingencies, have
sufficient net worth and income to sustain the risks inherent in the investment,
including limited liquidity of the investment, and believe the investment is
otherwise suitable. In addition, each investor should be aware that none of the
Partnership, the General Partners, or any Affiliates, agents, or representatives
of the Partnership or the General Partners are authorized to make any
representations or warranties on behalf of the Partnership other than those
contained in the Prospectus or specified by the investors in the Subscription
Agreement.
Subscribers will be admitted as Limited Partners not later than the
last day of the calendar month following acceptance of their subscriptions.
ESCROW ARRANGEMENTS
Subscription proceeds will be received in trust and deposited in a
separate account with SouthTrust Asset Management Company of Florida, N.A., 135
W. Central Blvd., Suite 1200, Orlando, Florida 32801 (the "Bank").
The Escrow Agreement between the General Partners and the Bank provides
that escrowed funds will be invested by the Bank in an interest-bearing account
with the power of investment in short-term, highly liquid U.S.
42
<PAGE>
Government securities or in other short-term, highly liquid investments with
appropriate safety of principal. Such subscription funds will be released
periodically (at least once per month) upon admission of Limited Partners to the
Partnership.
The interest, if any, earned on subscription proceeds prior to their
release from escrow, within 30 days after the date a subscriber is admitted to
the Partnership as a Limited Partner, will be distributed to such subscriber.
Interest will be payable only to those subscribers whose funds have been held in
escrow by the Bank for at least 20 days. Limited Partners will not otherwise be
entitled to interest earned on Partnership funds or to receive interest on their
Capital Contributions.
SUPPLEMENTAL SALES MATERIAL
In addition to this Prospectus, the Partnership may use certain sales
materials in connection with this Offering, although only when accompanied or
preceded by the delivery of this Prospectus. No sales material may be used
unless it has first been approved in writing by the General Partners. As of the
date of this Prospectus, it is anticipated that the following sales material
will be authorized for use by the Partnership in connection with this Offering:
(i) a brochure entitled CNL Income Fund XVII, Ltd. and CNL Income Fund XVIII,
Ltd.; (ii) a brochure describing CNL Group, Inc. and its affiliated entities;
(iii) a fact sheet describing the general features of the Partnership; (iv) a
cover letter transmitting the Prospectus; (v) a summary description of the
Offering; (vi) a slide and computer presentation; (vii) broker updates; (viii)
an audio cassette presentation; (ix) a video presentation; (x) a script for
telephonic marketing; (xi) seminar advertisements and invitations; and (xii)
certain third-party articles. Units are being offered only through this
Prospectus. All such materials will be used only by registered broker-dealers
who are members of the National Association of Securities Dealers, Inc. The
Partnership also may respond to specific questions from Soliciting Dealers and
prospective investors. Additional materials relating to the Offering may be made
available to Soliciting Dealers for their internal use.
EXPERTS
The audited financial statements of the Partnership, as of December 31,
1996 and 1995, and for the year ended December 31, 1996 and the period February
10, 1995 (date of inception) through December 31, 1995, and the audited balance
sheet of the corporate General Partner, as of December 31, 1995, included in
this Prospectus, have been included herein in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Partnership has filed with the Securities and Exchange Commission
(the "Commission"), Washington, D.C., a Registration Statement on Form S-11, as
amended, with respect to the Units offered hereby. This Prospectus, which is
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Partnership and the Units offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules filed as a part thereof. Statements contained herein concerning the
provisions of any document are not necessarily complete and in each instance
reference is made to the copy of such document filed as an exhibit or schedule
to the Registration Statement, each such statement being qualified in all
respects by reference to such exhibit or schedule.
The Registration Statement, together with its exhibits and schedules,
may be inspected, without charge, at the Commission's principal office at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the following
regional offices of the Commission: Room 1400, 75 Park Place, New York, New York
10007, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661-2511. Copies of such material may also be obtained from
the Commission upon payment of prescribed fees.
43
<PAGE>
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, which includes the Partnership. The address
of such site is http://www.sec.gov.
44
<PAGE>
EXHIBIT B
FINANCIAL STATEMENTS OF
CNL INCOME FUND XVIII, LTD.
AND
CNL REALTY CORPORATION
<PAGE>
INDEX TO UPDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
Pro Forma Financial Information (unaudited):
Pro Forma Balance Sheet as of December 31, 1996 B-2
Pro Forma Statement of Income for the year ended December 31, 1996 B-3
Notes to Pro Forma Financial Statements as of December 31, 1996 B-4
Audited Financial Statements:
Report of Independent Accountants B-5
Balance Sheets as of December 31, 1996 and 1995 B-6
Statements of Income for the year ended December 31, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995 B-7
Statements of Partners' Capital for the year ended December 31, 1996 and the
period February 10, 1995 (date of inception) through December 31, 1995 B-8
Statements of Cash Flows for the year ended December 31, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995 B-9
Notes to Financial Statements for the year ended December 31, 1996 and the period
February 10, 1995 (date of inception) through December 31, 1995 B-11
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 1996 B-22
Notes to Schedule III - Real Estate and Accumulated Depreciation as
of December 31, 1996 B-24
CNL REALTY CORPORATION
Financial Statements:
Report of Independent Accountants B-25
Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995 B-26
Notes to Balance Sheets as of September 30, 1996 and December 31, 1995 B-27
</TABLE>
<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 December 31, 1996, including the receipt of $8,421,815 in
gross offering proceeds from the sale of 842,182 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 two properties, one of which was under
construction at December 31, 1996, and to pay organizational and offering
expenses, acquisition fees, and miscellaneous acquisition expenses, (ii) the
receipt of $6,612,528 in gross offering proceeds from the sale of 661,252
additional Units during the period January 1, 1997 through March 6, 1997, and
(iii) the application of such funds and $1,120,984 of cash and cash equivalents
at December 31, 1996, to purchase five additional properties during the period
January 1, 1997 through March 6, 1997, four of which are under construction, to
pay additional construction costs for the property under construction at
December 31, 1996, 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
December 31, 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 December 31, 1996.
The Pro Forma Statement of Income for the year ended December 31, 1996,
includes 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 Statement of Income for the properties owned by CNL XVIII
as of March 6, 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.
B-1
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership
DECEMBER 31, 1996
UNAUDITED PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------ ---------- ----------- ---------
<S> <C>
Land and building on
operating leases, less
accumulated depreciation $1,530,768 $7,013,955 (a) $ 8,544,723
Cash and cash equivalents 5,371,325 (1,120,984)(a) 4,250,341
Receivables 3,711 3,711
Organization costs, less
accumulated amortization 9,589 9,589
Other assets 324,931 (63,154)(a) 261,777
---------- ---------- -----------
$7,240,324 $5,829,817 $13,070,141
========== ========== ===========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 104,514 $ (104,514)(a) $ -
Distributions payable 55,708 55,708
Due to related parties 83,889 (83,069)(a) 820
---------- ---------- -----------
Total liabilities 244,111 (187,583) 56,528
Partners' capital 6,996,213 6,017,400 (a) 13,013,613
---------- ---------- -----------
$7,240,324 $5,829,817 $13,070,141
========== ========== ===========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
B-2
<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.
B-3
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1996
Pro Forma Balance Sheet:
(a) Represents gross proceeds of $6,612,528 from the sale of 661,252 Units
during the period January 1, 1997 through March 6, 1997, and $1,120,984
of cash and cash equivalents at December 31, 1996, used (i) to acquire
five properties for $5,667,508, (ii) to fund estimated construction
costs of $985,729 relating to the property under construction at
December 31, 1996, (iii) to pay acquisition fees and other costs of
$330,112 ($6,508 of which was accrued as accounts payable at December
31, 1996 and $26,040 of which was accrued as due to related parties at
December 31, 1996) and reclassify from other assets $63,154 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 $750,163 ($98,006 of which was accrued
as accounts payable at December 31, 1996 and $57,029 of which was
accrued as due to related parties at December 31, 1996), 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>
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
Golden Corral in Galveston, TX 1,359,566 73,711 1,433,277
Boston Market in Raleigh, NC 1,225,886 66,463 1,292,349
One property under construction at
December 31, 1996 985,729 53,444 1,039,173
---------- ---------- ----------
$6,653,237 $ 360,718 $7,013,955
========== ========== ==========
</TABLE>
B-4
<PAGE>
Report of Independent Accountants
To the Partners
CNL Income Fund XVIII, Ltd.
We have audited the financial statements and the financial statement schedule of
CNL Income Fund XVIII, Ltd. (a Florida limited partnership) as of December 31,
1996 and the period February 10, 1995 (date of inception) through December 31,
1995. These financial statements and financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CNL Income Fund XVIII, Ltd. as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the year ended December 31, 1996 and the period February 10, 1995
(date of inception) through December 31, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
/s/ Coopers & Lybrand
Orlando, Florida
February 3, 1997
B-5
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS 1996 1995
------ ---------- -------
Land and buildings on operating leases,
less accumulated depreciation $1,530,768 $ -
Cash and cash equivalents 5,371,325 980
Receivables 3,711 -
Organization costs, less accumulated
amortization of $411 in 1996 9,589 10,000
Deferred syndication costs - 245,890
Other assets 324,931 20
---------- ----------
$7,240,324 $ 256,890
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 104,514 $ 22,130
Distributions payable 55,708 -
Due to related parties 83,889 233,760
---------- ----------
Total liabilities 244,111 255,890
Commitment (Note 9)
Partners' capital 6,996,213 1,000
---------- ----------
$7,240,324 $ 256,890
========== ==========
See accompanying notes to financial statements.
B-6
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ --------
Revenues:
Rental income from operating
lease $ 1,373 $ -
Interest income 30,241 -
-------- -------
31,614 -
-------- -------
Expenses:
General operating and admini-
strative 3,980 -
Management fee to related party 12 -
Depreciation and amortization 712 -
-------- -------
4,704 -
-------- -------
Net Income $ 26,910 $ -
======== =======
Allocation of Net Income:
General partners $ (7) $ -
Limited partners 26,917 -
-------- -------
$ 26,910 $ -
======== =======
Net Income Per Limited Partner
Unit $ 0.05 $ -
======== =======
Weighted Average Number of Limited
Partner Units Outstanding 503,436 -
======== =======
See accompanying notes to financial statements.
B-7
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
<TABLE>
<CAPTION>
General Partners Limited Partners
----------------- ----------------------
Accumu- Accumu-
Contri- lated Contri- Distri- lated Syndication
butions Losses butions butions Earnings Costs Total
------- -------- ----------- ----------- ---------- ----------- --------
<S> <C>
Balance, February 10, 1995
(Date of Inception) $ - $ - $ - $ - $ - $ - $ -
Contributions from
general partners 1,000 - - - - - 1,000
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1995 1,000 - - - - - 1,000
Contributions from
limited partners - - 8,421,815 - - - 8,421,815
Distributions to limited
partners ($0.11 per
limited partner unit) - - - (57,846) - - (57,846)
Syndication costs - - - - - (1,395,666) (1,395,666)
Net income - (7) - - 26,917 - 26,910
------ ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1996 $1,000 $ (7) $ 8,421,815 $ (57,846) $ 26,917 $(1,395,666) $ 6,996,213
====== ======= =========== =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
B-8
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ --------
<S> <C>
Increase (Decrease) in Cash and Cash
Equivalents:
Cash Flows From Operating Activities:
Interest received $ 30,241 $ -
Cash paid for expenses (3,095) -
----------- ----------
Net cash provided by (used in)
operating activities 27,146 -
----------- ----------
Cash Flows From Investing Activities:
Additions to land and buildings on
operating leases (1,533,446) -
Increase in other assets (276,848) -
Other (107) (20)
----------- -----------
Net cash used in investing
activities (1,810,401) (20)
----------- -----------
Cash Flows From Financing Activities:
Reimbursement of acquisition,
organization and syndication
costs paid by related parties on
behalf of the Partnership (497,420) -
Contributions from general partners - 1,000
Contributions from limited partners 8,498,815 -
Distributions to limited partners (2,138) -
Payment of syndication costs (845,657) -
----------- ----------
Net cash provided by financing
activities 7,153,600 1,000
----------- -----------
Net Increase in Cash and Cash Equivalents 5,370,345 980
Cash and Cash Equivalents at Beginning
of Period 980 -
----------- ----------
Cash and Cash Equivalents at End of Period $ 5,371,325 $ 980
=========== ===========
</TABLE>
See accompanying notes to financial statements.
B-9
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
February 10,
1995 (Date
of Inception)
Year Ended through
December 31, December 31,
1996 1995
------------ --------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $ 26,910 $ -
----------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 301 -
Amortization 411 -
Increase in receivables (1,227) -
Increase in accounts payable 57 -
Increase in due to related
parties, excluding reimbursement
of acquisition, organization
and syndication costs paid on
behalf of the Partnership 820 -
Other (126) -
----------- ----------
Total adjustments 236 -
----------- ----------
Net Cash Provided by Operating Activities $ 27,146 $ -
=========== ==========
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Related parties paid certain acquisition,
organization and syndication costs
on behalf of the Partnership as follows:
Acquisition costs $ 18,036 $ -
Organization costs - 10,000
Syndication costs 285,858 186,174
----------- -----------
$ 303,894 $ 196,174
=========== ===========
Distributions declared and unpaid at
December 31 $ 55,708 $ -
=========== ==========
See accompanying notes to financial statements.
B-10
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies:
Organization and Nature of Business - CNL Income Fund XVIII, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants are to be
constructed, to be leased primarily to operators of national and
regional fast-food, family-style and casual dining restaurant chains.
Under the terms of a registration statement filed with the Securities
and Exchange Commission, the Partnership is authorized to sell a
maximum of 3,500,000 units ($35,000,000) of limited partnership
interest. A total of 842,182 units ($8,421,815) of limited partnership
interest had been sold as of December 31, 1996.
The Partnership was a development stage enterprise from February 10,
1995 through October 11, 1996. Since operations had not begun,
activities through October 11, 1996, were devoted to organization of
the Partnership.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
the Corporate General Partner. The general partners have
responsibility for managing the day-to-day operations of the
Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using the operating method. Under the operating method, land and
building are recorded at cost, revenue is recognized as rentals are
earned and depreciation is charged to operations as incurred. Buildings
are depreciated on the straight-line method over their estimated useful
lives of 30 years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce a
constant periodic rent over the lease term commencing on the date the
property is placed in service.
B-11
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
When the properties are sold, the related cost and accumulated
depreciation, plus any accrued rental income, will be removed from the
accounts and gains or losses from sales will be reflected in income.
The general partners of the Partnership review properties for
impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through
operations. The general partners determine whether an impairment in
value has occurred by comparing the estimated future undiscounted cash
flows, including the residual value of the property, with the carrying
cost of the individual property. If an impairment is indicated, a loss
will be recorded for the amount by which the carrying value of the
asset exceeds its fair market value.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts. The Partnership limits investment of
temporary cash investments to financial institutions with high credit
standing; therefore, the Partnership believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Organization Costs - Organization costs are amortized over five years
using the straight-line method upon commencement of operations.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
B-12
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
Additionally, for tax purposes, syndication costs are included in
Partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment (Note 4).
Weighted Average Number of Limited Partner Units Outstanding Net income
and distributions per limited partner unit are calculated based upon
the weighted average number of units of limited partnership interest
outstanding during the period the Partnership was operational.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
New Accounting Standard - Effective January 1, 1996, the Partnership
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long- Lived Assets and for Long-Lived
Assets to Be Disposed Of." The statement requires that an entity review
long-lived assets and certain identifiable intangibles, to be held and
used, for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
Adoption of this standard had no material effect on the Partnership's
financial position.
B-13
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
2. Leases:
The Partnership leases its land and buildings to operators of national
and regional fast-food and family-style restaurants. The leases are
accounted for under the provisions of Statement of Financial Accounting
Standards No. 13, "Accounting for Leases." As of December 31, 1996, the
Partnership's leases were classified as operating leases. The leases
have initial terms of 15 to 20 years and provide for minimum and
contingent rentals. One of the leases provides for scheduled rent
increases over the term of the lease. In addition, the tenant pays all
property taxes and assessments, fully maintains the interior and
exterior of the building and carries insurance coverage for public
liability, property damage, fire and extended coverage. The lease
options allow the tenants to renew the leases for four successive
five-year periods subject to the same terms and conditions as the
initial lease. The leases also allow the tenant to purchase the
property at fair market value after a specified portion of the lease
has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
1996 1995
---------- -------
Land $ 852,578 $ -
Building 659,134 -
---------- ---------
1,511,712 -
Less accumulated
depreciation (301) -
---------- ---------
1,511,411 -
Construction in progress 19,357 -
---------- ---------
$1,530,768 $ -
========== =========
B-14
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
3. Land and Buildings on Operating Leases - Continued:
The following is a schedule of the future minimum lease payments to be
received on the noncancellable operating lease for the property that
was operational as of December 31, 1996:
1997 $ 89,688
1998 89,688
1999 89,688
2000 89,688
2001 89,688
Thereafter 1,556,851
----------
$2,005,291
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease term. In addition, this table does not include
any amounts for future contingent rentals which may be received on the
lease based on a percentage of tenant's gross sales. The amounts also
do not include minimum lease payments that will become due when the
property under development is completed (see Note 9).
4. Syndication Costs:
Syndication costs consisting of legal fees, commissions, the due
diligence expense reimbursement fee, printing and other expenses
incurred in connection with the offering totalled $1,395,666 for the
year ended December 31, 1996. These offering expenses were charged to
the limited partners' capital accounts to reflect the net capital
proceeds of the offering. All organizational and offering expenses, as
defined in the Partnership's prospectus, which exceed three percent of
the total gross proceeds received from the sale of units of the
Partnership will be paid or reimbursed by the general partners and will
not be the responsibility of the Partnership.
B-15
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
5. Allocations and Distributions:
Generally, distributions of net cash flow, as defined in the limited
partnership agreement of the Partnership, are made 95 percent to the
limited partners and five percent to the general partners; provided,
however, that for any particular year, the five percent of net cash
flow to be distributed to the general partners will be subordinated to
receipt by the limited partners in that year of an eight percent
noncumulative, noncompounded return on their aggregate invested capital
contributions (the "Limited Partners' 8% Return"). During the year
ended December 31, 1996, the Partnership declared distributions to the
limited partners of $57,846. No distributions have been made to the
general partners to date.
Generally, net income (determined without regard to any depreciation
and amortization deductions and gains and losses from the sale of
properties) is allocated between the limited partners and the general
partners first, in an amount not to exceed the net cash flow
distributed to the partners attributable to such year in the same
proportions as such net cash flow is distributed; and thereafter, 99
percent to the limited partners and one percent to the general
partners. All deductions for depreciation and amortization are
allocated 99 percent to the limited partners and one percent to the
general partners.
Net sales proceeds from the sale of a property generally will be
distributed first to the limited partners in an amount sufficient to
provide them with the return of their invested capital contributions,
plus their cumulative Limited Partners' 8% Return. The general partners
will then receive a return of their capital contributions and, to the
extent previously subordinated and unpaid, a five percent interest in
all net cash flow distributions. Any remaining net sales proceeds will
be distributed 95 percent to the limited partners and five percent to
the general partners.
Any gain from the sale of a property will be, in general, allocated in
the same manner as net sales proceeds are distributable. Any loss will
be allocated first, on a pro rata basis to the partners with positive
balances in their capital accounts; and thereafter, 95 percent to the
limited partners and five percent to the general partners.
B-16
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
6. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the year
ended December 31, 1996 and the period February 10, 1995 (date of
inception) through December 31, 1995:
1996 1995
-------- ------
Net income for financial
reporting purposes $ 26,910 $ -
Depreciation for tax
reporting purposes
in excess of depreci-
ation for financial
reporting purposes (386) -
Capitalization of admini-
strative expenses for
tax reporting purposes 3,662 -
Accrued rental income (146) -
Amortization for financial
reporting purposes in
excess of amortization
for tax reporting purposes 183 -
-------- -------
Net income for federal
income tax purposes $ 30,223 $ -
======== =======
B-17
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
7. Related Party Transactions:
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Group, Inc., the parent company of
CNL Securities Corp. and CNL Fund Advisors, Inc. The other individual
general partner, Robert A. Bourne, is the president of CNL Securities
Corp. and CNL Fund Advisors, Inc.
CNL Securities Corp. is entitled to receive selling commissions
amounting to 8.5% of the total amount raised from the sale of units of
limited partnership interest for services in connection with the
formation of the Partnership and the offering of units, a substantial
portion of which is paid as commissions to other broker-dealers. As of
December 31, 1996, the Partnership had incurred $715,854 as syndication
costs for such fees, of which $673,534 was or will be paid as
commissions to other broker-dealers.
In addition, CNL Securities Corp. is entitled to receive a due
diligence expense reimbursement fee equal to 0.5% of the total amount
raised from the sale of units of limited partnership interest, a
portion of which may be reallowed to other broker-dealers and from
which all due diligence expenses will be paid. As of December 31, 1996,
the Partnership had incurred $42,109, of such fees, the majority of
which was reallowed to other broker-dealers and from which all bona
fide due diligence expenses were or will be paid.
CNL Fund Advisors, Inc. will be entitled to receive acquisition fees
for services in finding, negotiating and acquiring properties on behalf
of the Partnership equal to 4.5% of the total amount raised from the
sale of units of limited partnership interest. As of December 31, 1996,
the Partnership had incurred $378,982 of such fees. Such fees are
included in land and buildings on operating leases and other assets.
The Partnership and CNL Fund Advisors, Inc. have entered into a
management agreement pursuant to which CNL Fund Advisors, Inc. will
receive annual management fees of one percent of the sum of gross
revenues from properties wholly owned by the Partnership and the
Partnership's allocable share of gross revenues from joint ventures.
The management fee, which will not exceed fees which are competitive
for similar services in the same geographic area, may or may not be
taken, in whole or
B-18
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
7. Related Party Transactions - Continued:
in part as to any year, in the sole discretion of CNL Fund Advisors,
Inc. All or any portion of the management fee not taken as to any
fiscal year shall be deferred without interest and may be taken in such
other fiscal year as CNL Fund Advisors, Inc. shall determine. As of
December 31, 1996, the Partnership had incurred $12 for such management
fees.
During the year ended December 31, 1996 and the period February 10,
1995 (date of inception) through December 31, 1995, CNL Fund Advisors,
Inc. and its affiliates provided accounting and administrative services
to the Partnership (including accounting and administrative services in
connection with the offering of units) on a day-to-day basis. For the
year ended December 31, 1996 and the period February 10, 1995 (date of
inception) through December 31, 1995, the expenses incurred for these
services were classified as follows:
1996 1995
-------- ------
Syndication costs $106,887 $ 37,586
General operating and
administrative expenses 2,980 -
-------- -------
$109,867 $ 37,586
======== ========
B-19
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
7. Related Party Transactions - Continued:
The due to related parties consisted of the following at December 31:
1996 1995
-------- ------
Due to CNL Securities Corp.:
Commissions $ 44,186 $ -
Marketing support and due
diligence expense reim-
bursement fee 2,599 -
-------- -------
46,785 -
-------- -------
Due to CNL Fund Advisors, Inc.
and its affiliates:
Expenditures incurred
on behalf of the
Partnership 2,788 196,174
Acquisition fees 23,392 -
Accounting and admini-
strative services 10,912 37,586
Management fees 12 -
-------- -------
37,104 233,760
-------- --------
$ 83,889 $233,760
======== ========
8. Concentration of Credit Risk:
Rental income due from Carrols Corporation, which operates a Burger
King restaurant, represented all of the Partnership's rental income for
the year ended December 31, 1996. The percentage of total rental income
contributed by this lessee and restaurant chain will decrease as
additional properties are acquired and leased in 1997 and subsequent
years and the property under construction at December 31, 1996 becomes
operational.
9. Commitment:
The Partnership has entered into a development agreement with a tenant
which provides terms and specifications for the construction of the
building that the tenant has agreed to lease. The agreement provides a
maximum amount of development costs (including the purchase price of
the land and closing costs) to be paid by the Partnership. The
aggregate maximum
B-20
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Year Ended December 31, 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Commitment - Continued:
development costs the Partnership has agreed to pay is approximately
$1,684,600, of which approximately $579,700 in land and other costs had
been incurred as of December 31, 1996. The building under construction
is currently expected to be operational by June 1997. The lease
agreement for this property has substantially the same terms as those
described in Note 2.
10. Subsequent Events:
During the period January 1, 1997 through February 3, 1997, the
Partnership received capital contributions for an additional 273,094
units ($2,730,941) of limited partnership interest.
In addition, during the period January 1, 1997 through February 3,
1997, the Partnership acquired five additional properties for cash, at
a total cost of approximately $4,735,600 (excluding certain closing and
development costs). In connection with the four properties under
construction, the Partnership has agreed to pay development costs
(including the purchase prices of the land and closing costs) of
approximately $4,565,200, of which approximately $3,509,900 in land and
other costs had been paid by the Partnership as of February 3, 1997.
The buildings are expected to be operational by July 1997. In
connection with the acquisition of each of these properties, the
Partnership entered into a long-term, triple-net lease. The leases
range from 15 to 18 years and provide for renewal options of four to
five five-year periods. In addition, the leases provide for the payment
of minimum annual rent (payable monthly) ranging from approximately
$77,900 to $148,400 and the payment of percentage rent based on sales
in excess of a specified amount.
B-21
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
---------------------------- To Acquisition
Buildings ----------------------
Encum- and Improve- Carrying
brances Land Improvements ments Costs
------- ---- ------------ -------- --------
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurant:
Kinston, North Carolina - $ 260,802 $ 659,134 $ - $ -
Golden Corral Family
Steakhouse Restaurant:
Houston, Texas - 591,776 - 19,357 -
---------- ---------- ---------- -------
$ 852,578 $ 659,134 $ 19,357 $ -
========== ========== ========== =======
</TABLE>
B-22
<PAGE>
<TABLE>
<CAPTION>
Life
Gross Amount at Which Carried on Which
at Close of Period Depreciation
----------------------------- in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
$ 260,802 $ 659,134 $ 919,936 $ 301 1994 12/96 (d)
591,776 19,357 611,133 - (c) 12/96 (e)
---------- ---------- ---------- -------
$ 852,578 $ 678,491 $1,531,069 $ 301
========== ========== ========== =======
B-23
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996
are summarized as follows:
Accumulated
Cost (b) Depreciation
-------- ------------
Properties the Partnership
has Invested in Under
Operating Leases:
Balance, December 31, 1995 $ - $ -
Acquisitions 1,531,069 -
Depreciation expense - 301
----------- -----------
Balance, December 31, 1996 $ 1,531,069 $ 301
=========== ===========
(b) Cost for federal income tax purposes is the same as cost for
financial reporting purposes. The leases are treated as operating
leases for federal income tax purposes.
(c) Scheduled for completion in 1997.
(d) Depreciation expense is computed for buildings based upon estimated
lives of 30 years.
(e) Property was not placed in service as of December 31, 1996;
therefore, no depreciation was taken.
B-24
<PAGE>
Report of Independent Public Accountants
To the Stockholders
CNL Realty Corporation
We have audited the accompanying balance sheet of CNL Realty
Corporation as of December 31, 1995. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of CNL Realty Corporation as of
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Orlando, Florida
February 15, 1996
B-25
<PAGE>
CNL REALTY CORPORATION
BALANCE SHEETS
September 30,
1996 December 31,
ASSETS (Unaudited) 1995
------------- ------------
Cash $ 213 $ 49
Investment in CNL Income
Fund Partnerships 1,233,369 1,018,346
---------- ----------
$1,233,582 $1,018,395
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Loans payable to stockholders $ 70,030 991,524
Loan payable to CNL Group, Inc. 1,171,248 -
Other payables to related parties 2,422 3,522
---------- ----------
Total liabilities 1,243,700 995,046
---------- ----------
Commitments and contingencies
(Note 5)
Stockholders' equity:
Common stock, $1 par value,
7,500 shares authorized,
1,000 shares issued and
outstanding 1,000 1,000
Retained earnings (Accumulated
deficit) (11,118) 22,349
---------- ----------
(10,118) 23,349
---------- ----------
$1,233,582 $1,018,395
========== ==========
See accompanying notes to balance sheets.
B-26
<PAGE>
CNL REALTY CORPORATION
NOTES TO BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Information with respect to September 30, 1996 is
unaudited)
1. Organization and Significant Accounting Policy:
Organization - CNL Realty Corporation (the "Company") was incorporated
on November 26, 1985, under the laws of the State of Florida. The
Company is a general partner in CNL Income Fund, Ltd., CNL Income Fund
II, Ltd., CNL Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL
Income Fund V, Ltd., CNL Income Fund VI, Ltd., CNL Income Fund VII,
Ltd., CNL Income Fund VIII, Ltd., CNL Income Fund IX, Ltd., CNL Income
Fund X, Ltd., CNL Income Fund XI, Ltd., CNL Income Fund XII, Ltd., CNL
Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd., CNL Income Fund XV,
Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd. and CNL
Income Fund XVIII, Ltd. (collectively, the "CNL Income Fund
Partnerships"), all of which were formed to acquire existing restaurant
properties, as well as properties upon which restaurants will be
constructed, to be leased primarily to operators of national and
regional fast-food, family-style and casual dining restaurant chains.
The other general partners in the CNL Income Fund Partnerships are
James M. Seneff, Jr. and Robert A. Bourne.
Use of Estimates - The Company's management has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
2. Investment in CNL Income Fund Partnerships:
The Company accounts for its general partner interests in the CNL
Income Fund Partnerships under the equity method. The terms of the
limited partnership agreements of each of the CNL Income Fund
Partnerships are similar. Each agreement provides that allocations and
distributions among the general partners will be in such amounts as the
general partners agree among themselves. The general partners have
agreed that ten percent of their one percent interest in the CNL Income
Fund Partnerships will be allocated to CNL Realty Corporation.
B-27
<PAGE>
CNL REALTY CORPORATION
NOTES TO BALANCE SHEETS - CONTINUED
September 30, 1996 and December 31, 1995
(Information with respect to September 30, 1996 is unaudited)
2. Investment in CNL Income Fund Partnerships - Continued:
The following table presents combined, summarized financial information
relating to the CNL Income Fund Partnerships at:
September 30,
1996 December 31,
(Unaudited) 1995
------------- -------------
Total assets $508,709,317 $486,778,595
Total liabilities 19,253,590 16,318,645
Limited partners'
equity 486,220,565 467,736,550
General partners'
equity:
CNL Realty
Corporation 1,233,369 1,018,346
Other 2,001,793 1,705,054
The Company had made total capital contributions of $1,012,905 and
$830,905 to the CNL Income Fund Partnerships as of September 30, 1996
and December 31, 1995, respectively.
In January 1996, the Company entered into two promissory notes which
provide for loans to certain of the CNL Income Fund Partnerships in the
aggregate amount of $112,500 in connection with the operations of the
CNL Income Fund Partnerships. The loans were uncollateralized, bore
interest at a rate of prime plus 0.25% per annum and were due on
demand. The outstanding balance of these loans, including interest of
approximately $860, was repaid to the Company as of September 30, 1996.
In addition, in April and July 1996, the Company entered into several
promissory notes which provide for loans to certain of the CNL Income
Fund Partnerships in the aggregate amounts of $151,900 and $254,000,
respectively, in connection with the operations of the CNL Income Fund
Partnerships. These loans were uncollateralized, non-interest bearing
and due on demand. These loans were repaid to the Company as of
September 30, 1996.
3. Income Taxes:
Effective January 1988, the Company made an election to be governed by
Subchapter S of the Internal Revenue Code. Taxable income is reported
by the stockholders on their individual income tax returns.
B-28
<PAGE>
CNL REALTY CORPORATION
NOTES TO BALANCE SHEETS - CONTINUED
September 30, 1996 and December 31, 1995
(Information with respect to September 30, 1996 is unaudited)
4. Related Parties:
The Company and its stockholders have entered into two promissory notes
which provide for loans to the Company in the aggregate amount of
$1,500,000. The notes are uncol- lateralized and bear interest at rates
in accordance with the applicable federal rate prescribed by the
Internal Revenue Service. At September 30, 1996 and December 31, 1995,
the blended applicable federal rate was 5.77% and 6.58%, respectively.
Principal and interest are payable on demand or December 31, 1996,
whichever comes first.
The following presents the outstanding balances under these notes,
including accrued interest, at:
September 30,
1996 December 31,
(Unaudited) 1995
------------ ------------
James M. Seneff, Jr $ 35,015 $495,762
Robert A. Bourne 35,015 495,762
-------- --------
$ 70,030 $991,524
======== ========
In April 1996, the Company entered into a promissory note with CNL
Group, Inc., an affiliate of the Company, which provides for loans to
the Company in the aggregate amount of up to $500,000. In September
1996, the promissory note was amended to provide for loans to the
Company in the aggregate amount of up to $1,500,000. The note is
uncollateralized and bears interest at a rate of prime plus one percent
per annum. Principal and interest are payable on demand or December 31,
1997, whichever comes first. The loan payable to CNL Group, Inc. of
$1,171,248 includes accrued interest of $10,349 at September 30, 1996.
Affiliates of the stockholders provide accounting and administrative
services to the Company on a day-to-day basis. Other payables to
related parties at September 30, 1996 and December 31, 1995 of $2,422
and $3,522, respectively, represent amounts for such services and for
operating expenses that affiliates have paid on behalf of the Company.
B-29
<PAGE>
CNL REALTY CORPORATION
NOTES TO BALANCE SHEETS - CONTINUED
September 30, 1996 and December 31, 1995
(Information with respect to September 30, 1996 is unaudited)
5. Commitments and Contingencies:
As one of the general partners in the CNL Income Fund Partnerships, the
Company will share in the liability for organizational and offering
expenses which exceed three percent of the gross offering proceeds.
Further, the general partners have agreed to contribute up to one
percent of the gross offering proceeds for partnership property
maintenance and repairs to the extent that the CNL Income Fund
Partnerships have insufficient funds for such purposes.
6. Subsequent Events:
In October 1996, the Company received additional advances under the
loan from CNL Group, Inc. totalling $430,000 in connection with the
promissory note described in Note 4. As of November 14, 1996, the
Company had repaid $239,000 of such amounts advanced.
In connection therewith, in October 1996, the Company entered into
three promissory notes which provide for loans to certain of the CNL
Income Fund Partnerships in the aggregate amount of $430,000 in
connection with the operations of the CNL Income Fund Partnerships. The
loans are uncollateralized, non-interest bearing and are due on demand.
As of November 14, 1996, $271,000 of these amounts had been repaid to
the Company.
In addition, in November 1996, the Company repaid the stockholders
$32,000 of amounts advanced under the promissory notes described in
Note 4.
7. Basis of Presentation of Unaudited Financial Statements:
In the opinion of management of the Company, the unaudited balance
sheet contains all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the Company's financial position
as of September 30, 1996.
B-30
<PAGE>
EXHIBIT C
PRIOR PERFORMANCE TABLES
<PAGE>
EXHIBIT C
PRIOR PERFORMANCE TABLES
The information in this Exhibit C contains certain relevant summary
information concerning prior public partnerships sponsored by the individual
General Partners and their Affiliates which have investment objectives similar
to the Partnership (the "Prior Public Partnerships").
A more detailed description of the acquisitions by the Prior Public
Partnerships is set forth in Part II of the registration statement filed with
the Securities and Exchange Commission for this Offering and is available from
the General Partners upon request, without charge. In addition, upon request to
the General Partners, the General Partners will provide, without charge, a copy
of the most recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission for CNL Income Fund, Ltd., CNL Income Fund II, Ltd., CNL
Income Fund III, Ltd., CNL Income Fund IV, Ltd., CNL Income Fund V, Ltd., CNL
Income Fund VI, Ltd., CNL Income Fund VII, Ltd., CNL Income Fund VIII, Ltd., CNL
Income Fund IX, Ltd., CNL Income Fund X, Ltd., CNL Income Fund XI, Ltd., CNL
Income Fund XII, Ltd., CNL Income Fund XIII, Ltd., CNL Income Fund XIV, Ltd.,
CNL Income Fund XV, Ltd., CNL Income Fund XVI, Ltd., CNL Income Fund XVII, Ltd.
and CNL Income Fund XVIII, Ltd., as well as a copy, for a reasonable fee, of the
exhibits filed with such reports.
The investment objectives of the Prior Public Partnerships, which are
substantially the same as those of the Partnership, generally include
preservation and protection of partnership capital, the potential for increased
income and protection against inflation, potential for capital appreciation, and
partially tax-sheltered cash distributions, all through investment in restaurant
properties.
INVESTORS SHOULD NOT CONSTRUE INCLUSION OF THE FOLLOWING TABLES AS
IMPLYING THAT THE PARTNERSHIP WILL HAVE RESULTS COMPARABLE TO THOSE REFLECTED IN
SUCH TABLES. DISTRIBUTABLE CASH FLOW, FEDERAL INCOME TAX DEDUCTIONS, OR OTHER
FACTORS COULD BE SUBSTANTIALLY DIFFERENT. INVESTORS SHOULD NOTE THAT, BY
ACQUIRING UNITS IN THE PARTNERSHIP, THEY WILL NOT BE ACQUIRING ANY INTEREST IN
ANY PRIOR PUBLIC PARTNERSHIPS.
Description of Tables
The following Tables are included herein:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to Sponsor
Table III - Operating Results of Prior Programs
Table V - Sales or Disposal of Properties
Unless otherwise indicated in the Tables, all information contained in
the Tables is as of June 30, 1996. The following is a brief description of the
Tables:
Table I - Experience in Raising and Investing Funds
Table I presents information on a percentage basis showing the
experience of the individual General Partners and their Affiliates in raising
and investing funds for the Prior Public Partnerships, the offerings of which
were fully subscribed between October 1991 and September 1996.
The Table sets forth information on the offering expenses incurred and
amounts available for investment expressed as a percentage of total dollars
raised. The Table also shows the percentage of property acquisition cost
leveraged, the date the offering commenced, and the time required to raise funds
for investment.
Table II - Compensation to Sponsor
Table II provides information, on a total dollar basis, regarding
amounts and types of compensation paid to the general partners of the Prior
Public Partnerships.
The Table indicates the total offering proceeds and the portion of such
offering proceeds paid or to be paid to the General Partners and their
Affiliates in connection with the Prior Public Partnerships, the offerings of
which were fully subscribed between October 1991 and September 1996. The Table
also shows the amounts paid to the General Partners and their Affiliates from
cash generated from operations and from cash generated from sales or refinancing
by each of the Prior Public Partnerships on a cumulative basis commencing with
inception and ending June 30, 1996.
C-1
<PAGE>
Table III - Operating Results of Prior Programs
Table III presents a summary of operating results for the period from
inception through June 30, 1996, of the Prior Public Partnerships, the offerings
of which were fully subscribed between October 1991 and September 1996.
The Table includes a summary of income or loss of the Prior Public
Partnerships which are presented on the basis of generally accepted accounting
principles ("GAAP"). The Table also shows cash generated from operations, which
represents the cash generated from operations of the properties of the Prior
Public Partnerships, as distinguished from cash generated from other sources
(special items). The section of the Table entitled "Special Items" provides
information relating to cash generated from or used by items which are not
directly related to the operations of the properties of the Prior Public
Partnerships, but rather are related to items of a partnership nature. These
items include proceeds from capital contributions of limited partners, and
disbursements made from these sources of funds, such as syndication and
organizational costs, acquisition of the properties and other costs which are
related more to the organization of the partnership and the acquisition of
properties than to the actual operations of the partnerships.
The Table also presents information pertaining to investment income,
returns of capital on a GAAP basis, cash distributions from operations, sales
and refinancing proceeds expressed in total dollar amounts as well as
distributions and tax results on a per $1,000 investment basis.
Table IV - Results of Completed Programs
Table IV is omitted from this Exhibit C because none of the General
Partners or their Affiliates has been involved in completed public programs
which had investment objectives similar to those of the Partnership.
Table V - Sales or Disposal of Properties
Table V provides information regarding the sale or disposal of
properties owned by the Prior Public Partnerships between October 1991 and June
1996.
The Table includes the selling price of the property, the cost of the
property, the date acquired and the date of sale.
C-2
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
</TABLE>
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income
Fund X, Fund XI, Fund XII, Fund XIII, Fund XIV,
Ltd. Ltd. Ltd. Ltd. Ltd.
----------- ----------- ----------- ----------- -----------
<S> <C>
Dollar amount offered $40,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000
=========== =========== =========== =========== ===========
Dollar amount raised 100.0% 100.0% 100.0% 100.0% 100.0%
----------- ----------- ----------- ----------- -----------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5) (8.5) (8.5) (8.5)
Organizational expenses (3.0) (3.0) (3.0) (3.0) (3.0)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5) (0.5) (0.5) (0.5)
----------- ----------- ----------- ----------- -----------
(12.0) (12.0) (12.0) (12.0) (12.0)
----------- ----------- ----------- ----------- -----------
Reserve for operations -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Percent available for
investment 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== ===========
Acquisition costs:
Cash down payment 83.0% 83.0% 83.0% 82.5% 82.5%
Acquisition fees paid
to affiliates 5.0 5.0 5.0 5.5 5.5
Loan costs -- -- -- -- --
----------- ----------- ----------- ----------- ----------
Total acquisition costs 88.0% 88.0% 88.0% 88.0% 88.0%
=========== =========== =========== =========== ===========
Percent leveraged
(mortgage financing
divided by total
acquisition costs) -- -- -- -- --
Date offering began 9/09/91 3/18/92 9/29/92 3/31/93 8/27/93
Length of offering (in
months) 6 6 6 5 6
Months to invest 90% of
amount available for
investment measured
from date of offering 7 6 11 10 11
</TABLE>
C-3
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(continued)
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income
Fund XV, Fund XVI, Fund XVII, Fund XVIII,
Ltd. Ltd. Ltd. Ltd.
----------- ----------- ---------- -----------
(Note 1) (Note 1)
<S> <C>
Dollar amount offered $40,000,000 $45,000,000
=========== ===========
Dollar amount raised 100.0% 100.0%
----------- -----------
Less offering expenses:
Selling commissions
and discounts (8.5) (8.5)
Organizational expenses (3.0) (3.0)
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated
entities) (0.5) (0.5)
----------- -----------
(12.0) (12.0)
----------- -----------
Reserve for operations -- --
----------- ----------
Percent available for
investment 88.0% 88.0%
=========== ===========
Acquisition costs:
Cash down payment 82.5% 82.5%
Acquisition fees paid
to affiliates 5.5 5.5
Loan costs -- --
----------- ----------
Total acquisition costs 88.0% 88.0%
=========== ===========
Percent leveraged
(mortgage financing
divided by total
acquisition costs) -- --
Date offering began 2/23/94 9/02/94
Length of offering (in
months) 6 9
Months to invest 90% of
amount available for
investment measured
from date of offering 10 11
</TABLE>
Note 1: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. and CNL Income Fund XVIII, Ltd. each registered for sale
$30,000,000 of units of limited partnership interest (the "Units"). The
offering of Units of CNL Income Fund XVII, Ltd. commenced September 2,
1995. Pursuant to the Registration Statement, the offering of Units of
CNL Income Fund XVIII, Ltd. could not commence until the offering of
Units of CNL Income Fund XVII, Ltd. had terminated. CNL Income Fund
XVII, Ltd. terminated its offering of Units on September 19, 1996, at
which time subscriptions for an aggregate 3,000,000 Units ($30,000,000)
had been received. Upon the termination of the offering of Units of
CNL Income Fund XVII, Ltd., CNL Income Fund XVIII, Ltd. commenced its
offering to the public of 3,500,000 Units ($35,000,000).
C-4
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL Income CNL Income
Fund X, Fund XI, Fund XII, Fund XIII, Fund XIV,
Ltd. Ltd. Ltd. Ltd. Ltd.
----------- ----------- ----------- ----------- -----------
<S> <C>
Date offering commenced 9/09/91 3/18/92 9/29/92 3/31/93 8/27/93
Dollar amount raised $40,000,000 $40,000,000 $45,000,000 $40,000,000 $45,000,000
=========== =========== =========== =========== ===========
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,400,000 3,400,000 3,825,000 3,400,000 3,825,000
Real estate commissions - - - - -
Acquisition fees 2,000,000 2,000,000 2,250,000 2,200,000 2,475,000
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 200,000 200,000 225,000 200,000 225,000
----------- ----------- ----------- ----------- -----------
Total amount paid to sponsor 5,600,000 5,600,000 6,300,000 5,800,000 6,525,000
=========== =========== =========== =========== ===========
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1996 (6 Months) 1,877,818 1,866,649 1,986,907 1,701,335 1,857,023
1995 3,603,470 3,758,271 3,928,473 3,482,461 3,823,939
1994 3,828,234 3,574,474 3,933,486 3,232,046 2,897,432
1993 3,499,905 3,434,512 3,320,549 1,148,550 329,957
1992 3,141,123 1,525,462 63,401 - -
1991 204,240 - - - -
1990 - - - - -
1989 - - - - -
1988 - - - - -
1987 - - - - -
1986 - - - - -
1985 - - - - -
1984 - - - - -
1983 - - - - -
1982 - - - - -
1981 - - - - -
1980 - - - - -
1979 - - - - -
1978 - - - - -
Amount paid to sponsor from
operations (administrative,
accounting and management
fees):
1996 (6 Months) 55,272 55,339 55,932 53,682 57,121
1995 76,108 106,086 109,111 103,083 114,095
1994 42,741 76,533 84,524 83,046 84,801
1993 38,999 78,926 73,789 27,003 8,220
1992 39,505 30,237 2,031 - -
1991 2,834 - - - -
1990 - - - - -
1989 - - - - -
1988 - - - - -
1987 - - - - -
1986 - - - - -
1985 - - - - -
1984 - - - - -
1983 - - - - -
1982 - - - - -
1981 - - - - -
1980 - - - - -
1979 - - - - -
1978 - - - - -
Dollar amount of property
sales and refinancing
before deducting payments
to sponsor:
Cash 1,057,386 - 1,640,000 286,411 696,012
Notes - - - - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - - - - -
Incentive fees - - - - -
Other - - - - -
</TABLE>
C-5
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
(continued)
<TABLE>
<CAPTION>
CNL Income CNL Income CNL Income CNL CNL Income
Fund XV, Fund XVI, Fund XVII, Fund XVIII,
Ltd. Ltd. Ltd. Ltd.
----------- ---------- -------------- -----------
(Note 2) (Note 2)
<S> <C>
Date offering commenced 2/23/94 9/02/94
Dollar amount raised $40,000,000 $45,000,000
=========== ===========
Amount paid to sponsor from
proceeds of offering:
Selling commissions and
discounts 3,400,000 3,825,000
Real estate commissions - -
Acquisition fees 2,200,000 2,475,000
Marketing support and
due diligence expense
reimbursement fees
(includes amounts
reallowed to
unaffiliated entities) 200,000 225,000
----------- ----------
Total amount paid to sponsor 5,800,000 6,525,000
=========== ==========
Dollar amount of cash generated
from operations before
deducting payments to
sponsor:
1996 (6 Months) 1,741,150 1,936,583
1995 3,361,477 2,619,840
1994 1,154,454 212,171
1993 - -
1992 - -
1991 - -
1990 - -
1989 - -
1988 - -
1987 - -
1986 - -
1985 - -
1984 - -
1983 - -
1982 - -
1981 - -
1980 - -
1979 - -
1978 - -
Amount paid to sponsor from
operations (administrative,
accounting and management
fees):
1996 (6 Months) 53,223 74,887
1995 122,107 138,445
1994 37,620 7,023
1993 - -
1992 - -
1991 - -
1990 - -
1989 - -
1988 - -
1987 - -
1986 - -
1985 - -
1984 - -
1983 - -
1982 - -
1981 - -
1980 - -
1979 - -
1978 - -
Dollar amount of property
sales and refinancing
before deducting payments
to sponsor:
Cash 811,706 775,000
Notes - -
Amount paid to sponsors
from property sales and
refinancing:
Real estate commissions - -
Incentive fees - -
Other - -
</TABLE>
Note 1: During the year ended December 31, 1995, CNL Income Fund X, Ltd.
received proceeds of $7,200 for a small parcel of land as a result of
an easement relating to a certain property.
Note 2: Pursuant to a Registration Statement on Form S-11 under the Securities
Act of 1933, as amended, effective August 11, 1995, CNL Income Fund
XVII, Ltd. and CNL Income Fund XVIII, Ltd. each registered for sale
$30,000,000 of units of limited partnership interest (the "Units"). The
offering of Units of CNL Income Fund XVII, Ltd. commenced September 2,
1995. Pursuant to the Registration Statement, the offering of Units of
CNL Income Fund XVIII, Ltd. could not commence until the offering of
Units of CNL Income Fund XVII, Ltd. had terminated. As of June 30,
1996, CNL Income Fund XVII, Ltd. was in the offering stage; therefore,
CNL Income Fund XVIII, Ltd. had not commenced its offering of Units. As
of June 30, 1996, CNL Income Fund XVII, Ltd. had sold 2,113,286 Units,
representing $21,132,863 of capital contributed by limited partners,
and 13 properties had been acquired. From commencement of the offering
through June 30, 1996, total selling commissions and discounts were
$1,796,293, due diligence expense reimbursement fees were $105,665, and
acquisition fees were $950,978, for a total amount paid to sponsor of
$2,852,936. CNL Income Fund XVII, Ltd. had cash generated from
operations for the period November 3, 1995 (the date funds were
originally released from escrow) through June 30, 1996, of $266,033.
CNL Income Fund XVII, Ltd. made payments of $47,754 to the sponsor from
operations for this period. CNL Income Fund XVII, Ltd. terminated its
offering of Units on September 19, 1996, at which time subscriptions
for an aggregate 3,000,000 Units ($30,000,000) had been received. Upon
the termination of the offering of Units of CNL Income Fund XVII, Ltd.,
CNL Income Fund XVIII, Ltd. commenced its offering to the public of
3,500,000 Units ($35,000,000).
C-6
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND X, LTD.
<TABLE>
<CAPTION>
1990
(Note 1) 1991 1992 1993
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 80,723 $ 2,985,620 $ 3,729,533
Equity in earnings of unconsolidated
joint venture 0 0 184,425 273,564
Profit from sale of properties 0 0 0 0
Interest income 0 77,424 149,051 35,072
Less: Operating expenses 0 (7,078) (147,094) (178,294)
Interest expense 0 0 0 0
Depreciation and amortization 0 (5,603) (261,058) (215,143)
Minority interest in income of
consolidated joint venture 0 0 (4,902) (8,159)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 145,466 2,906,042 3,636,573
============ ============ ============ ============
Taxable income
- from operations 0 187,164 2,652,037 2,936,325
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 5) 0 201,406 3,101,618 3,460,906
Cash generated from sales (Note 4) 0 0 0 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 201,406 3,101,618 3,460,906
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (163,012) (2,760,446) (2,659,655)
- from sale of properties 0 0 0 0
- from cash flow from prior period 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 38,394 341,172 801,251
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 19,972,663 20,027,337 0
General partners' capital
contributions 1,000 0 0 0
Organization costs 0 (10,000) 0 0
Syndication costs 0 (1,942,339) (1,880,824) 0
Acquisition of land and buildings 0 (7,317,942) (12,095,378) (316)
Investment in direct financing
leases 0 (3,024,796) (8,018,153) (46,364)
Investment in joint ventures 0 0 (3,687,069) 0
Return of capital from joint
ventures 0 0 0 0
Deposit received for sale of land
and building 0 0 0 0
Increase in other assets (78) (482,466) 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund X, Ltd. by
related parties 0 (815,938) (313,196) (544)
Distributions to holder of minority
interest 0 0 (5,729) (5,543)
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 922 6,417,576 (5,631,840) 748,484
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 70 73
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-7
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND X, LTD.
(continued)
<TABLE>
<CAPTION>
6 Months
1994 1995 1996
------------ ------------ -------------
<S> <C>
Gross revenue $ 3,710,792 $ 3,544,446 $ 1,763,069
Equity in earnings of unconsolidated
joint venture 271,512 267,799 134,133
Profit from sale of properties 0 67,214 0
Interest income 46,456 72,600 30,695
Less: Operating expenses (138,507) (189,230) (116,253)
Interest expense 0 0 0
Depreciation and amortization (208,941) (201,696) (95,126)
Minority interest in income of
consolidated joint venture (8,471) (9,066) (3,986)
------------ ------------ ------------
Net income - GAAP basis 3,672,841 3,552,067 1,712,532
============ ============ ============
Taxable income
- from operations 3,212,304 2,956,800 1,447,328
============ ============ ============
- from gain on sale 0 50,819 0
============ ============ ============
Cash generated from operations
(Notes 2 and 5) 3,785,493 3,527,362 1,822,546
Cash generated from sales (Note 4) 0 1,057,386 0
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 3,785,493 4,584,748 1,822,546
Less: Cash distributions to investors
(Note 6)
- from operating cash flow (3,500,017) (3,527,362) (1,822,546)
- from sale of properties 0 0 0
- from cash flow from prior period 0 (172,641) (17,454)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 285,476 884,745 (17,454)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0 0
General partners' capital
contributions 0 0 0
Organization costs 0 0 0
Syndication costs 0 0 0
Acquisition of land and buildings 0 (359,506) (978)
Investment in direct financing
leases 0 (566,097) (1,542)
Investment in joint ventures 0 0 (129,503)
Return of capital from joint
ventures 0 0 0
Deposit received for sale of land
and building 0 69,000 0
Increase in other assets 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund X, Ltd. by
related parties 0 0 0
Distributions to holder of minority
interest (7,909) (7,998) (3,677)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 277,567 20,144 (153,154)
============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 80 73 36
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 1 0
============ ============ ============
</TABLE>
C-8
<PAGE>
TABLE III - CNL INCOME FUND X, LTD. (continued)
<TABLE>
<CAPTION>
1990
(Note 1) 1991 1992 1993
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 13 73 66
- from capital gain 0 0 0 0
- from investment income from
prior period 0 0 0 0
- from return of capital (Note 3) 0 2 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 0 15 73 66
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 15 73 66
- from cash flow from prior
period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on cash basis
(Note 6) 0 15 73 66
============ ============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 7 and 8) 0.00% 5.75% 7.38% 8.75%
Total cumulative cash distributions
per $1,000 investment from inception 0 15 88 154
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) N/A 100% 100% 100%
</TABLE>
C-9
<PAGE>
TABLE III - CNL INCOME FUND X, LTD. (continued)
<TABLE>
<CAPTION>
6 Months
1994 1995 1996
------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 88 87 42
- from capital gain 0 2 0
- from investment income from
prior period 0 4 4
- from return of capital (Note 3) 0 0 0
------------ ------------ ------------
Total distributions on GAAP basis
(Note 6) 88 93 46
============ ============ ============
Source (on cash basis)
- from sales 0 0 0
- from refinancing 0 0 0
- from operations 88 88 46
- from cash flow from prior
period 0 5 0
------------ ------------ ------------
Total distributions on cash basis
(Note 6) 88 93 46
============ ============ ============
Total cash distributions as a
percentage of original $1,000
investment (Notes 7 and 8) 9.06% 9.03% 9.00%
Total cumulative cash distributions
per $1,000 investment from inception 242 335 381
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 4) 100% 99% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund X, Ltd. ("CNL X") and CNL
Income Fund IX, Ltd. each registered for sale $35,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund IX, Ltd. commenced March 20, 1991. Pursuant to the
registration statement, CNL X's offering of Units could not commence
until the offering of Units of CNL Income Fund IX, Ltd. was terminated.
CNL Income Fund IX, Ltd. terminated its offering of Units on September
6, 1991, at which time the maximum offering proceeds of $35,000,000 had
been received. Upon the termination of the offering of Units of CNL
Income Fund IX, Ltd., CNL X commenced its offering of Units.
Activities through September 24, 1991, were devoted to organization of
the partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund X, Ltd. has not treated this amount as a return of capital for any
other purpose.
Note 4: In August 1995, CNL Income Fund X, Ltd. sold one of its properties and
received net sales proceeds of $1,050,186. In September 1995, the
partnership reinvested $928,122 in an additional property. In addition,
in January 1996, the partnership reinvested the remaining net sales
proceeds in an additional property as tenants-in-common with affiliates
of the general partners.
Note 5: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund X, Ltd.
Note 6: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 7: On December 31, 1994 and December 31, 1995, CNL Income Fund X, Ltd.
declared a special distribution of cumulative excess operating reserves
equal to .25% and .10%, respectively, of the total invested capital.
Accordingly, the total yield for 1994 and 1995 was 9.06% and 9.03%,
respectively.
Note 8: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 9: Certain data for columns representing less than 12 months have been
annualized.
C-10
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XI, LTD.
<TABLE>
<CAPTION>
1991
(Note 1) 1992 1993
------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 1,269,086 $ 3,831,648
Equity in earnings of unconsolidated
joint ventures 0 33,367 121,059
Profit from sale of properties 0 0 0
Interest income 0 150,535 24,258
Less: Operating expenses 0 (63,390) (206,987)
Interest expense 0 0 0
Depreciation and amortization 0 (180,631) (469,127)
Minority interests in income of
consolidated joint ventures 0 (23,529) (68,399)
------------ ------------ ------------
Net income - GAAP basis 0 1,185,438 3,232,452
============ ============ ============
Taxable income
- from operations 0 1,295,104 2,855,026
============ ============ ============
- from gain on sale 0 0 0
============ ============ ============
Cash generated from operations
(Notes 2 and 4) 0 1,495,225 3,355,586
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,495,225 3,355,586
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (1,205,030) (2,495,002)
- from sale of properties 0 0 0
- from cash flow from prior period 0 0 0
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 290,195 860,584
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 40,000,000 0
General partners' capital
contributions 1,000 0 0
Minority interests' capital
contributions 0 426,367 0
Organization costs 0 (10,000) 0
Syndication costs 0 (3,922,875) 0
Acquisition of land and buildings 0 (26,428,556) (276,157)
Investment in direct financing
leases 0 (6,716,561) (276,206)
Investment in joint ventures 0 (1,658,925) (772)
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XI, Ltd. by
related parties 0 (1,011,487) (900)
Increase in other assets 0 (122,024) 0
Distributions to holders of minority
interests 0 (17,467) (51,562)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 828,667 254,987
============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 45 71
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 0 0
============ ============ ============
</TABLE>
C-11
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XI, LTD.
(continued)
<TABLE>
<CAPTION>
6 Months
1994 1995 1996
------------ ------------ ------------
<S> <C>
Gross revenue $ 3,852,107 $ 3,820,990 $ 1,905,317
Equity in earnings of unconsolidated
joint ventures 119,370 118,384 56,598
Profit from sale of properties 0 0 0
Interest income 30,894 51,192 24,214
Less: Operating expenses (179,717) (237,126) (148,842)
Interest expense 0 0 0
Depreciation and amortization (481,226) (481,226) (240,613)
Minority interests in income of
consolidated joint ventures (68,936) (70,038) (34,437)
------------ ---------- -----------
Net income - GAAP basis 3,272,492 3,202,176 1,562,237
============ ========== ===========
Taxable income
- from operations 2,947,445 2,985,221 1,414,282
============ ========== ==========
- from gain on sale 0 0 0
============ ========== ==========
Cash generated from operations
(Notes 2 and 4) 3,497,941 3,652,185 1,811,310
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
------------ ---------- ----------
Cash generated from operations, sales
and refinancing 3,497,941 3,652,185 1,811,310
Less: Cash distributions to investors
(Note 5)
- from operating cash flow (3,400,001) (3,500,023) (1,790,012)
- from sale of properties 0 0 0
- from cash flow from prior period 0 0 0
------------ ---------- ----------
Cash generated (deficiency) after cash
distributions 97,940 152,162 21,298
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 0 0
General partners' capital
contributions 0 0 0
Minority interests' capital
contributions 0 0 0
Organization costs 0 0 0
Syndication costs 0 0 0
Acquisition of land and buildings 0 0 0
Investment in direct financing
leases 0 0 0
Investment in joint ventures 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XI, Ltd. by
related parties 0 0 0
Increase in other assets 0 0 0
Distributions to holders of minority
interests (57,641) (54,227) (27,839)
------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 40,299 97,935 (6,541)
============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 73 74 35
============ ============ ============
- from recapture 0 0 0
============ ============ ============
Capital gain (loss) 0 0 0
============ ============ ============
</TABLE>
C-12
<PAGE>
TABLE III - CNL INCOME FUND XI, LTD. (continued)
<TABLE>
<CAPTION>
1991 6 Months
(Note 1) 1992 1993 1994 1995 1996
------------ ----------- ------------ ------------ ------------ ----------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 41 62 81 79 39
- from capital gain 0 0 0 0 0 0
- from investment income from
prior period 0 0 0 4 9 5
- from return of capital (Note 3) 0 1 0 0 0 1
------------ ----------- ------------ ------------ ------------ ----------
Total distributions on GAAP basis
(Note 5) 0 42 62 85 88 45
============ =========== ============ ============ ============ ==========
Source (on cash basis)
- from sales 0 0 0 0 0 0
- from refinancing 0 0 0 0 0 0
- from operations 0 42 62 85 88 45
- from cash flow from prior
period 0 0 0 0 0 0
------------ ----------- ------------ ------------ ------------ ----------
Total distributions on cash basis
(Note 5) 0 42 62 85 88 45
============ =========== ============ ============ ============ ==========
Total cash distributions as a
percentage of original $1,000
investment (Notes 6 and 7) 0.00% 6.17% 8.31% 8.56% 8.78% 8.75%
Total cumulative cash distributions
per $1,000 investment from inception 0 42 104 189 277 322
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to the offering of Units by CNL
Income Fund XI, Ltd. became effective on March 12, 1992. Activities
through April 22, 1992, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund XI, Ltd. has not treated this amount as a return of capital for
any other purpose.
Note 4: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XI, Ltd.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: On December 31, 1995, CNL Income Fund XI, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .10% of
the total invested capital. Accordingly, the total yield for 1995 was
8.78%.
Note 7: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 8: Certain data for columns representing less than 12 months have been
annualized.
C-13
<PAGE>
C-14
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XII, LTD.
<TABLE>
<CAPTION>
1991 6 Months
(Note 1) 1992 1993 1994 1995 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 25,133 $ 3,374,640 $ 4,397,881 $ 4,404,792 $ 2,171,212
Equity in earnings of joint ventures 0 46 49,604 85,252 81,582 55,297
Profit (Loss) from sale of properties 0 0 0 0 0 (15,355)
Interest income (Note 7) 0 45,228 190,082 65,447 84,197 49,199
Less: Operating expenses 0 (7,211) (193,804) (192,951) (228,404) (150,511)
Interest expense 0 0 0 0 0 0
Depreciation and amortization 0 (3,997) (286,293) (327,795) (327,795) (156,420)
------------ ------------ ------------ ------------ ---------- ----------
Net income - GAAP basis 0 59,199 3,134,229 4,027,834 4,014,372 1,953,422
============ ============ ============ ============ ========== ==========
Taxable income
- from operations 0 58,543 2,749,072 3,301,005 3,262,046 1,591,118
============ ============ ============ ============ ========== ==========
- from gain (loss) on sale 0 0 0 0 0 (66,395)
============ ============ ============ ============ ========== ==========
Cash generated from operations
(Notes 2 and 5) 0 61,370 3,246,760 3,848,962 3,819,362 1,930,975
Cash generated from sales (Note 7) 0 0 0 0 0 1,640,000
Cash generated from refinancing 0 0 0 0 0 0
------------ ------------ ------------ ------------ ---------- ----------
Cash generated from operations, sales
and refinancing 0 61,370 3,246,760 3,848,962 3,819,362 3,570,975
Less: Cash distributions to investors
(Note 6)
- from operating cash flow 0 (61,370) (1,972,769) (3,768,754) (3,819,362) (1,930,975)
- from sale of properties 0 0 0 0 0 0
- from return of capital (Note 4) 0 (60,867) 0 0 0 0
- from cash flow from prior period 0 0 0 0 (5,645) (26,529)
------------ ------------ ------------ ------------ ---------- ----------
Cash generated (deficiency) after cash
distributions 0 (60,867) 1,273,991 80,208 (5,645) 1,613,471
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 21,543,270 23,456,730 0 0 0
General partners' capital
contributions 1,000 0 0 0 0 0
Organization costs 0 (10,000) 0 0 0 0
Syndication costs 0 (2,066,937) (2,277,637) 0 0 0
Acquisition of land and buildings 0 (7,536,009) (15,472,737) (230) 0 0
Investment in direct financing
leases 0 (2,503,050) (11,875,100) (591) 0 0
Loan to tenant of joint venture,
net of repayments 0 0 (207,189) 6,400 7,008 3,774
Investment in joint ventures 0 (372,045) (468,771) (4,400) 0 (1,655,928)
Increase in restricted cash 0 0 0 0 0 0
Reimbursement of syndication and
acquisition costs paid on behalf
of CNL Income Fund XII, Ltd. by
related parties 0 (704,923) (432,749) 0 0 0
Increase in other assets 0 (654,497) 0 0 0 0
Other 0 0 0 973 0 0
------------ ------------ ------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 7,634,942 (6,003,462) 82,360 1,363 (38,683)
============ ============ ============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 5 64 73 72 35
============ ============ ============ ============ ============ ============
- from recapture 0 0 0 0 0 0
============ ============ ============ ============ ============ ============
Capital gain (loss) 0 0 0 0 0 (1)
============ ============ ============ ============ ============ ============
</TABLE>
C-15
<PAGE>
C-16
<PAGE>
TABLE III - CNL INCOME FUND XII, LTD. (continued)
<TABLE>
<CAPTION>
1991 6 Months
(Note 1) 1992 1993 1994 1995 1996
----------- ------------ ------------ ------------ ------------ ----------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 5 46 84 85 44
- from capital gain 0 0 0 0 0 0
- from investment income from
prior period 0 0 0 0 0 0
- from return of capital (Note 3) 0 7 0 0 0 0
----------- ------------ ------------ ------------ ------------ ----------
Total distributions on GAAP basis
(Note 6) 0 12 46 84 85 44
=========== ============ ============ ============ ============ ==========
Source (on cash basis)
- from sales 0 0 0 0 0 0
- from refinancing 0 0 0 0 0 0
- from operations 0 6 46 84 85 43
- from return of capital (Note 4) 0 6 0 0 0 0
- from cash flow from prior period 0 0 0 0 0 1
----------- ------------ ------------ ------------ ------------ ----------
Total distributions on cash basis
(Note 6) 0 12 46 84 85 44
=========== ============ ============ ============ ============ ==========
Total cash distributions as a
percentage of original $1,000
investment (Notes 8 and 9) 0.00% 5.00% 6.75% 8.50% 8.53% 8.50%
Total cumulative cash distributions
per $1,000 investment from inception 0 12 58 142 227 271
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XII, Ltd. ("CNL XII") and CNL
Income Fund XI, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XI, Ltd. commenced March 12, 1992. Pursuant to the
registration statement, CNL XII could not commence until the offering
of Units of CNL Income Fund XI, Ltd. was terminated. CNL Income Fund
XI, Ltd. terminated its offering of Units on September 28, 1992, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XI, Ltd., CNL XII commenced its offering of Units. Activities
through October 8, 1992, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash distributions presented above as a return of capital on a GAAP
basis represent the amount of cash distributions in excess of
accumulated net income on a GAAP basis. Accumulated net income includes
deductions for depreciation and amortization expense and income from
certain non-cash items. This amount is not required to be presented as
a return of capital except for purposes of this table, and CNL Income
Fund XII, Ltd. has not treated this amount as a return of capital for
any other purpose.
Note 4: CNL Income Fund XII, Ltd. makes its distributions in the current period
rather than in arrears based on estimated operating results. In cases
where distributions exceed cash from operations in the current period,
once finally determined, subsequent distributions are lowered
accordingly in order to avoid any return of capital. This amount is not
required to be presented as a return of capital except for purposes of
this table, and CNL Income Fund XII, Ltd. has not treated this amount
as a return of capital for any other purpose.
Note 5: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XII, Ltd.
Note 6: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
C-17
<PAGE>
Note 7: In April 1996, CNL Income Fund XII, Ltd. sold one of its properties to
an unrelated third party for $1,640,000. As a result of this
transaction, CNL Income Fund XII, Ltd. recognized a loss of $15,355 for
financial reporting purposes primarily due to acquisition fees and
miscellaneous acquisition expenses CNL Income Fund XII, Ltd. had
allocated to this property. In May 1996, CNL Income Fund XII, Ltd.
reinvested the proceeds from this sale, along with additional funds,
for a total of $1,655,928 in Middleburg Joint Venture.
Note 8: On December 31, 1995, CNL Income Fund XII, Ltd. declared a special
distribution of cumulative excess operating reserves equal to .10% of
the total invested capital. Accordingly, the total yield for 1995 was
8.53%.
Note 9: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 6 above)
Note 10: Certain data for columns representing less than 12 months have been
annualized.
C-18
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XIII, LTD.
<TABLE>
<CAPTION>
1992 6 Months
(Note 1) 1993 1994 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 966,564 $ 3,558,447 $ 3,806,944 $ 1,773,791
Equity in earnings of joint ventures 0 1,305 43,386 98,520 52,525
Profit (Loss) from sale of properties
(Note 4) 0 0 0 (29,560) 0
Interest income 0 181,568 77,379 51,410 18,430
Less: Operating expenses 0 (59,390) (183,311) (214,705) (173,194)
Interest expense 0 0 0 0 0
Depreciation and amortization 0 (148,170) (378,269) (393,435) (196,717)
------------ ------------ ------------ ------------ ------------
Net income - GAAP basis 0 941,877 3,117,632 3,319,174 1,474,835
============ ============ ============ ============ ============
Taxable income
- from operations 0 978,535 2,703,252 2,920,859 1,427,419
============ ============ ============ ============ ============
- from gain (loss) on sale 0 0 0 0 0
============ ============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,121,547 3,149,000 3,379,378 1,647,653
Cash generated from sales (Note 4) 0 0 0 286,411 0
Cash generated from refinancing 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,121,547 3,149,000 3,665,789 1,647,653
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (528,364) (2,800,004) (3,350,014) (1,647,653)
- from sale of properties 0 0 0 0 0
- from cash flow from prior period 0 0 0 0 (52,351)
------------ ------------ ------------ ------------ ------------
Cash generated (deficiency) after
cash distributions 0 593,183 348,996 315,775 (52,351)
Special items (not including sales
and refinancing):
Limited partners' capital
contributions 0 40,000,000 0 0 0
General partners' capital
contributions 1,000 0 0 0 0
Syndication costs 0 (3,932,017) (181) 0 0
Acquisition of land and buildings 0 (19,691,630) (5,764,308) (336,116) 0
Investment in direct financing leases 0 (6,760,624) (1,365,075) 0 0
Investment in joint ventures 0 (314,998) (545,139) (140,052) 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIII, Ltd. by related parties 0 (799,980) (25,036) (3,074) 0
Increase in other assets 0 (454,909) 9,226 0 0
Other 0 0 0 954 0
------------ ------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 8,639,025 (7,341,517) (162,513) (52,351)
============ ============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 67 72 35
============ ============ ============ ============ ============
- from recapture 0 0 0 0 0
============ ============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0 0
============ ============ ============ ============ ============
</TABLE>
C-19
<PAGE>
C-20
<PAGE>
TABLE III - CNL INCOME FUND XIII, LTD. (continued)
<TABLE>
<CAPTION>
1992 6 Months
(Note 1) 1993 1994 1995 1996
------------ ------------ ------------ -------- -----------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 18 70 82 37
- from capital gain 0 0 0 0 0
- from investment income from prior
period 0 0 0 2 6
------------ ------------ ------------ ------------ -----------
Total distributions on GAAP basis (Note 5) 0 18 70 84 43
============ ============ ============ ============ ===========
Source (on cash basis)
- from sales 0 0 0 0 0
- from refinancing 0 0 0 0 0
- from operations 0 18 70 84 41
- from cash flow from prior period 0 0 0 0 2
------------ ------------ ------------ ------------ -----------
Total distributions on cash basis (Note 5) 0 18 70 84 43
============ ============ ============ ============ ===========
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 5.33% 7.56% 8.44% 8.50%
Total cumulative cash distributions per
$1,000 investment from inception 0 18 88 172 215
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100% 100%
</TABLE>
Note 1: The registration statement relating to the offering of Units by CNL
Income Fund XIII, Ltd. became effective on March 17, 1993. Activities
through April 15, 1993, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XIII, Ltd.
Note 4: During 1995, the partnership sold one of its properties to a tenant for
its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used
to acquire an additional property. As a result of this transaction,
the partnership recognized a loss for financial reporting purposes of
$29,560 primarily due to acquisition fees and miscellaneous acquisition
expenses the partnership had allocated to the property and due to the
accrued rental income relating to future scheduled rent increases that
the partnership had recorded and reversed at the time of sale.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996, are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-21
<PAGE>
C-22
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XIV, LTD.
<TABLE>
<CAPTION>
1992 6 Months
(Note 1) 1993 1994 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 256,234 $ 3,135,716 $ 4,017,266 $ 1,987,463
Equity in earnings of joint ventures 0 1,305 35,480 338,717 177,099
Profit (Loss) from sale of properties
(Note 4) 0 0 0 (66,518) 0
Interest income 0 27,874 200,499 50,724 21,659
Less: Operating expenses 0 (14,049) (181,980) (248,840) (138,978)
Interest expense 0 0 0 0 0
Depreciation and amortization 0 (28,918) (257,640) (340,112) (170,044)
------------ ------------ ------------ ------------ ------------
Net income - GAAP basis 0 242,446 2,932,075 3,751,237 1,877,199
============ ============ ============ ============ ============
Taxable income
- from operations 0 278,845 2,482,240 3,162,165 1,570,651
============ ============ ============ ============ ============
- from gain on sale 0 0 0 0 0
============ ============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 321,737 2,812,631 3,709,844 1,799,902
Cash generated from sales (Note 4) 0 0 0 696,012 0
Cash generated from refinancing 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Cash generated from operations, sales 1,799,902
and refinancing 0 321,737 2,812,631 4,405,856
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (9,050) (2,229,952) (3,543,751) (1,799,902)
- from sale of properties 0 0 0 0 0
- from cash flow from prior period 0 0 0 0 (56,358)
------------ ------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 312,687 582,679 862,105 (56,358)
Special items (not including sales and
refinancing):
Limited partners' capital
contributions 0 28,785,100 16,214,900 0 0
General partners' capital
contributions 1,000 0 0 0 0
Syndication costs 0 (2,771,892) (1,618,477) 0 0
Acquisition of land and buildings 0 (13,758,004) (11,859,237) (964,073) 0
Investment in direct financing leases 0 (4,187,268) (5,561,748) (75,352) 0
Investment in joint ventures 0 (315,209) (1,561,988) (1,087,218) 0
Return of capital from joint venture 0 0 0 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XIV, Ltd. by related parties 0 (706,215) (376,738) (577) 0
Increase in other assets 0 (444,267) 0 0 0
Other 0 0 0 5,530 0
------------ ------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 1,000 6,914,932 (4,180,609) (1,259,585) (56,358)
============ ============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER
$1,000 INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 16 56 70 35
============ ============ ============ ============ ============
- from recapture 0 0 0 0 0
============ ============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0 0
============ ============ ============ ============ ============
</TABLE>
C-23
<PAGE>
C-24
<PAGE>
TABLE III - CNL INCOME FUND XIV, LTD. (continued)
<TABLE>
<CAPTION>
1992 6 Months
(Note 1) 1993 1994 1995 1996
------------ ------------ ------------ ------------ ---------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 51 79 41
- from capital gain 0 0 0 0 0
- from return of capital 0 0 0 0 0
------------ ------------ ------------ ------------ ---------
Total distributions on GAAP basis (Note 5) 0 1 51 79 41
============ ============ ============ ============ =========
Source (on cash basis)
- from sales 0 0 0 0 0
- from refinancing 0 0 0 0 0
- from operations 0 1 51 79 40
- from cash flow from prior period 0 0 0 0 1
------------ ------------ ------------ ------------ ---------
Total distributions on cash basis (Note 5) 0 1 51 79 41
============ ============ ============ ============ =========
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 4.50% 6.50% 8.06% 8.25%
Total cumulative cash distributions
per $1,000 investment from inception 0 1 52 131 172
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100% 100%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XIV, Ltd. ("CNL XIV") and CNL
Income Fund XIII, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XIII, Ltd. commenced March 17, 1993. Pursuant to the
registration statement, CNL XIV could not commence until the offering
of Units of CNL Income Fund XIII, Ltd. was terminated. CNL Income Fund
XIII, Ltd. terminated its offering of Units on August 26, 1993, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XIII, Ltd., CNL XIV commenced its offering of Units. Activities
through September 13, 1993, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint ventures, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XIV, Ltd.
Note 4: During 1995, the partnership sold two of its properties to a tenant for
its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The net sales proceeds were used
to acquire two additional properties. As a result of these
transactions, the partnership recognized a loss for financial reporting
purposes of $66,518 primarily due to acquisition fees and miscellaneous
acquisition expenses the partnership had allocated to the property and
due to the accrued rental income relating to future scheduled rent
increases that the partnership had recorded and reversed at the time of
sale.
Note 5: As a result of the partnership's change in investor services agents in
1993, distributions are now declared at the end of each quarter and
paid in the following quarter. Since this table generally presents
distributions on a cash basis (rather than amounts declared),
distributions on a cash basis for 1993 only reflect payments for three
quarters. Distributions declared for the quarters ended December 31,
1993, 1994 and 1995, are reflected in the 1994, 1995 and 1996 columns,
respectively, for distributions on a cash basis due to the payment of
such distributions in January 1994, 1995 and 1996, respectively. As a
result of 1994, 1995 and 1996 distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-25
<PAGE>
C-26
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XV, LTD.
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 1,143,586 $ 3,546,320 $ 1,799,609
Equity in earnings of joint venture 0 8,372 280,606 144,539
Profit (Loss) from sale of properties
(Note 4) 0 0 (71,023) 0
Interest income 0 167,734 88,059 21,155
Less: Operating expenses 0 (62,926) (228,319) (138,719)
Interest expense 0 0 0 0
Depreciation and amortization 0 (70,848) (243,175) (124,093)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 1,185,918 3,372,468 1,702,491
============ ============ ============ ============
Taxable income
- from operations 0 1,026,715 2,861,912 1,399,634
============ ============ ============ ============
- from gain on sale 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 1,116,834 3,239,370 1,687,927
Cash generated from sales (Note 4) 0 0 811,706 0
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 1,116,834 4,051,076 1,687,927
Less: Cash distributions to investors
(Note 5)
- from operating cash flow 0 (635,944) (2,650,003) (1,600,000)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 480,890 1,401,073 87,927
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0 40,000,000 0 0
General partners' capital contra-
bunions 1,000 0 0 0
Syndication costs 0 (3,892,003) 0 0
Acquisition of land and buildings 0 (22,152,379) (1,625,601) 0
Investment in direct financing
leases 0 (6,792,806) (2,412,973) 0
Investment in joint venture 0 (1,564,762) (720,552) (145,526)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XV, Ltd. by related parties 0 (1,098,197) (23,507) 0
Increase in other assets 0 (187,757) 0 0
Other (38) (6,118) 25,150 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 962 4,786,868 (3,356,410) (57,599)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 33 71 35
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 4) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-27
<PAGE>
TABLE III - CNL INCOME FUND XV, LTD. (continued)
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 21 66 40
- from capital gain 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 5) 0 21 66 40
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 21 66 40
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 5) 0 21 66 40
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 5.00% 7.25% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 0 21 87 127
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100% 100% 100%
Note 1: The registration statement relating to this offering of Units of CNL
Income Fund XV, Ltd. became effective February 23, 1994. Activities
through March 23, 1994, were devoted to organization of the partnership
and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
plus distributions from joint venture, less cash paid for expenses,
plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XV, Ltd.
Note 4: During 1995, the partnership sold three of its properties to a tenant
for its original purchase price, excluding acquisition fees and
miscellaneous acquisition expenses. The majority of the net sales
proceeds were used to acquire additional properties. As a result of
these transactions, the partnership recognized a loss for financial
reporting purposes of $71,023 primarily due to acquisition fees and
miscellaneous acquisition expenses the partnership had allocated to the
three properties and due to the accrued rental income relating to
future scheduled rent increases that the partnership had recorded and
reversed at the time of sale.
Note 5: Distributions declared for the quarters ended December 31, 1994 and
1995 are reflected in the 1995 and 1996 columns, respectively, due to
the payment of such distributions in January 1995 and 1996,
respectively. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-28
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XVI, LTD.
</TABLE>
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ ------------
<S> <C>
Gross revenue $ 0 $ 186,257 $ 2,702,504 $ 2,143,589
Profit from sale of properties (Note 5) 0 0 0 124,305
Interest income 0 21,478 321,137 43,562
Less: Operating expenses 0 (10,700) (274,595) (148,823)
Interest expense 0 0 0 0
Depreciation and amortization 0 (9,458) (318,205) (270,831)
------------ ------------ ------------ ------------
Net income - GAAP basis 0 187,577 2,430,841 1,891,802
============ ============ ============ ============
Taxable income
- from operations 0 189,864 2,139,382 1,550,241
============ ============ ============ ============
- from gain on sale (Note 5) 0 0 0 0
============ ============ ============ ============
Cash generated from operations
(Notes 2 and 3) 0 205,148 2,481,395 1,861,696
Cash generated from sales (Note 5) 0 0 0 775,000
Cash generated from refinancing 0 0 0 0
------------ ------------ ------------ ------------
Cash generated from operations, sales
and refinancing 0 205,148 2,481,395 2,636,696
Less: Cash distributions to investors
(Note 4)
- from operating cash flow 0 (2,845) (1,798,921) (1,631,251)
- from sale of properties 0 0 0 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions 0 202,303 682,474 1,005,445
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 0 20,174,172 24,825,828 0
General partners' capital contra-
bunions 1,000 0 0 0
Syndication costs 0 (1,929,465) (2,452,743) 0
Acquisition of land and buildings 0 (13,170,132) (16,012,458) (2,392,562)
Investment in direct financing
leases 0 (975,853) (5,595,236) (382,372)
Increase in restricted cash 0 0 0 (775,000)
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVI, Ltd. by related parties 0 (854,154) (405,569) 0
Collection of overpayment of acquit-
cyton and syndication costs paid
by related parties on behalf of the
partnership 0 0 0 1,204
Increase in other assets 0 (443,625) (58,720) 0
Other (36) (20,714) 20,714 0
------------ ------------ ------------ ------------
Cash generated (deficiency) after cash
distributions and special items 964 2,982,532 1,004,290 (2,543,285)
============ ============ ============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 0 17 53 34
============ ============ ============ ============
- from recapture 0 0 0 0
============ ============ ============ ============
Capital gain (loss) (Note 5) 0 0 0 0
============ ============ ============ ============
</TABLE>
C-29
<PAGE>
TABLE III - CNL INCOME FUND XVI, LTD. (continued)
<TABLE>
<CAPTION>
1993 6 Months
(Note 1) 1994 1995 1996
------------ ------------ ------------ --------
<S> <C>
Cash distributions to investors
Source (on GAAP basis)
- from investment income 0 1 45 33
- from capital gain 0 0 0 3
- from investment income from
prior period 0 0 0 0
------------ ------------ ------------ ------------
Total distributions on GAAP basis (Note 4) 0 1 45 36
============ ============ ============ ============
Source (on cash basis)
- from sales 0 0 0 0
- from refinancing 0 0 0 0
- from operations 0 1 45 36
------------ ------------ ------------ ------------
Total distributions on cash basis (Note 4) 0 1 45 36
============ ============ ============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 6) 0.00% 4.50% 6.00% 8.00%
Total cumulative cash distributions per
$1,000 investment from inception 0 1 46 82
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) (Note 5) N/A 100% 100% 98%
</TABLE>
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVI, Ltd. ("CNL XVI") and CNL
Income Fund XV, Ltd. each registered for sale $40,000,000 units of
limited partnership interests ("Units"). The offering of Units of CNL
Income Fund XV, Ltd. commenced February 23, 1994. Pursuant to the
registration statement, CNL XVI could not commence until the offering
of Units of CNL Income Fund XV, Ltd. was terminated. CNL Income Fund
XV, Ltd. terminated its offering of Units on September 1, 1994, at
which time the maximum offering proceeds of $40,000,000 had been
received. Upon the termination of the offering of Units of CNL Income
Fund XV, Ltd., CNL XVI commenced its offering of Units. Activities
through September 22, 1994, were devoted to organization of the
partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XVI, Ltd.
Note 4: Distributions declared for the quarters ended December 31, 1994 and
1995 are reflected in the 1995 and 1996 columns, respectively, due to
the payment of such distributions in January 1995 and 1996,
respectively. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of December 31, 1994 and
1995, and June 30, 1996 are not included in the 1994, 1995 and 1996
totals, respectively.
Note 5: In April 1996, CNL Income Fund XVI, Ltd. sold one of its properties for
$775,000, resulting in a gain for financial reporting purposes of
$124,305. As of June 30, 1996, the net sales proceeds of $775,000,
plus accrued interest of $3,526, were being held in an interest-bearing
escrow account. The general partners believe that the sale of this
property will qualify as a like-kind exchange transaction in accordance
with Section 1031 of the Internal Revenue Code. As a result, no gain
or loss was recognized for federal income tax purposes. The remaining
net sales proceeds are expected to be invested in an additional
property or used for other Partnership purposes.
Note 6: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 5 above)
Note 7: Certain data for columns representing less than 12 months have been
annualized.
C-30
<PAGE>
TABLE III
Operating Results of Prior Programs CNL
INCOME FUND XVII, LTD.
1995 6 Months
(Note 1) 1996
------------ ------------
Gross revenue $ 0 $ 264,636
Profit from sale of properties 0 0
Interest income 12,153 102,696
Less: Operating expenses (3,493) (68,597)
Interest expense 0 0
Depreciation and amortization (309) (32,931)
------------ ------------
Net income - GAAP basis 8,351 265,804
============ ============
Taxable income
- from operations 12,153 254,708
============ ============
- from gain on sale 0 0
============ ============
Cash generated from operations
(Notes 2 and 3) 9,012 257,021
Cash generated from sales 0 0
Cash generated from refinancing 0 0
------------ ------------
Cash generated from operations, sales
and refinancing 9,012 257,021
Less: Cash distributions to investors
(Note 4)
- from operating cash flow (1,199) (142,120)
- from sale of properties 0 0
------------ ------------
Cash generated (deficiency) after cash
distributions 7,813 114,901
Special items (not including sales and
refinancing):
Limited partners' capital contra-
bunions 5,696,921 15,435,942
General partners' capital contra-
bunions 1,000 0
Syndication costs (604,348) (1,544,293)
Acquisition of land and buildings (332,928) (10,087,458)
Investment in direct financing
leases 0 (1,258,674)
Increase in restricted cash 0 0
Reimbursement of organization,
syndication and acquisition costs
paid on behalf of CNL Income Fund
XVII, Ltd. by related parties (347,907) (339,105)
Increase in other assets (221,282) (65,775)
Other (410) 0
------------ ------------
Cash generated (deficiency) after cash
distributions and special items 4,198,859 2,255,538
============ ============
TAX AND DISTRIBUTION DATA PER $1,000
INVESTED
Federal income tax results:
Ordinary income (loss)
- from operations 36 194
============ ============
- from recapture 0 0
============ ============
Capital gain (loss) 0 0
============ ============
C-31
<PAGE>
TABLE III - CNL INCOME FUND XVII, LTD. (continued)
1995 6 Months
(Note 1) 1996
------------ ------------
Cash distributions to investors
Source (on GAAP basis)
- from investment income 4 108
- from capital gain 0 0
- from investment income from
prior period 0 0
------------ ------------
Total distributions on GAAP basis (Note 4) 0 108
============ ============
Source (on cash basis)
- from sales 0 0
- from refinancing 0 0
- from operations 4 108
------------ ------------
Total distributions on cash basis (Note 4) 4 108
============ ============
Total cash distributions as a percentage
of original $1,000 investment (Note 5) 0.00% 5.17%
Total cumulative cash distributions per
$1,000 investment from inception 4 112
Amount (in percentage terms) remaining
invested in program properties at the
end of each year (period) presented
(original total acquisition cost of
properties retained, divided by original
total acquisition cost of all properties
in program) N/A 100%
Note 1: Pursuant to a registration statement on Form S-11 under the Securities
Act of 1933, as amended, CNL Income Fund XVII, Ltd. ("CNL XVII") and
CNL Income Fund XVIII, Ltd. each registered for sale $30,000,000 units
of limited partnership interests ("Units"). The offering of Units of
CNL Income Fund XVII, Ltd. commenced September 2, 1995. Pursuant to
the registration statement, CNL XVIII could not commence until the
offering of Units of CNL Income Fund XVII, Ltd. was terminated. CNL
Income Fund XVII, Ltd. terminated its offering of Units on September
19, 1996, at which time subscriptions for the maximum offering proceeds
of $30,000,000 had been received. Upon the termination of the offering
of Units of CNL Income Fund XVII, Ltd., CNL XVIII commenced its
offering of Units. Activities through September 30, 1996, were devoted
to organization of the partnership and operations had not begun.
Note 2: Cash generated from operations includes cash received from tenants,
less cash paid for expenses, plus interest received.
Note 3: Cash generated from operations per this table agrees to cash generated
from operations per the statement of cash flows included in the
financial statements of CNL Income Fund XVII, Ltd.
Note 4: Distributions declared for the quarter ended December 31, 1995 are
reflected in the 1996 column due to the payment of such distributions
in January 1996. As a result of distributions being presented on a cash
basis, distributions declared and unpaid as of June 30, 1996 are not
included in the 1996 totals.
Note 5: Total cash distributions as a percentage of original $1,000 investment
are calculated based on actual distributions declared for the period.
(See Note 4 above)
Note 6: Certain data for columns representing less than 12 months have been
annualized.
C-32
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
=========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
----------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
=========================================================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA 02/05/87 06/12/92 $1,169,021 0 0 0 $1,169,021
Wendy's -
Fairfield, CA 07/01/87 10/03/94 1,018,490 0 0 0 1,018,490
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 05/29/87 07/21/93 746,800 0 0 0 746,800
Pizza Hut -
Graham, TX 08/24/87 07/28/94 261,628 0 0 0 261,628
Golden Corral -
Medina, OH 11/18/87 11/30/94 626,582 0 0 0 626,582
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 03/22/89 04/27/94 712,000 0 0 0 712,000
Burger King -
Hastings, MI 08/12/88 12/15/95 518,650 0 0 0 518,650
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 02/28/90 08/25/95 0 0 1,040,000 0 1,040,000
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 11/02/89 05/24/94 791,211 0 0 0 791,211
Hardee's -
Heber Springs, AR 02/13/90 05/24/94 638,270 0 0 0 638,270
Hardee's -
Little Canada, MN 11/28/89 06/29/95 899,503 0 0 0 899,503
</TABLE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
(continued)
<TABLE>
<CAPTION>
===================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
===================================================================================
<S> <C>
CNL Income Fund, Ltd.:
Burger King -
San Dimas, CA 0 $955,000 $955,000 $214,021
Wendy's -
Fairfield, CA 0 861,500 861,500 156,990
CNL Income Fund II, Ltd.:
Golden Corral -
Salisbury, NC 0 642,800 642,800 104,000
Pizza Hut -
Graham, TX 0 205,500 205,500 56,128
Golden Corral -
Medina, OH 0 743,000 743,000 (116,418)
CNL Income Fund IV, Ltd.:
Taco Bell -
York, PA 0 616,501 616,501 95,499
Burger King -
Hastings, MI 0 419,936 419,936 98,714
CNL Income Fund V, Ltd.:
Perkins -
Myrtle Beach, SC (2) 0 986,418 986,418 53,582
CNL Income Fund VI, Ltd.:
Hardee's -
Batesville, AR 0 605,500 605,500 185,711
Hardee's -
Heber Springs, AR 0 532,893 532,893 105,377
Hardee's -
Little Canada, MN 0 821,692 821,692 77,811
</TABLE>
C-33
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
==========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
-----------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
==========================================================================================================
<S> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 06/14/90 05/19/92 700,000 0 0 0 700,000
Hardee's -
St. Paul, MN 08/09/90 05/24/94 869,036 0 0 0 869,036
Perkins -
Florence, SC (3) 08/28/90 08/25/95 0 0 1,160,000 0 1,160,000
Church's Fried Chicken -
Jacksonville, FL (4) 04/30/90 12/01/95 0 0 240,000 0 240,000
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 03/16/91 07/31/95 1,184,865 0 0 0 1,184,865
Church's Fried Chicken -
Jacksonville, FL (4) 09/28/90 12/01/95 0 0 240,000 0 240,000
Church's Fried Chicken -
Jacksonville, FL (5) 09/28/90 12/01/95 0 0 220,000 0 220,000
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 03/04/92 08/11/95 1,050,186 0 0 0 1,050,186
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 12/28/92 04/10/96 1,640,000 0 0 0 1,640,000
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 03/31/94 04/24/95 286,411 0 0 0 286,411
</TABLE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
(continued)
<TABLE>
<CAPTION>
=================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
=================================================================================
<S> <C>
CNL Income Fund VII, Ltd.:
Taco Bell -
Kearns, UT 0 560,202 560,202 139,798
Hardee's -
St. Paul, MN 0 742,333 742,333 126,703
Perkins -
Florence, SC (3) 0 1,084,905 1,084,905 75,095
Church's Fried Chicken -
Jacksonville, FL (4) 0 233,728 233,728 6,272
CNL Income Fund VIII, Ltd.:
Denny's -
Ocoee, FL 0 949,199 949,199 235,666
Church's Fried Chicken -
Jacksonville, FL (4) 0 238,153 238,153 1,847
Church's Fried Chicken -
Jacksonville, FL (5) 0 215,845 215,845 4,155
CNL Income Fund X, Ltd.:
Shoney's -
Denver, CO 0 987,679 987,679 62,507
CNL Income Fund XII, Ltd.:
Golden Corral -
Houston, TX 0 1,636,643 1,636,643 3,357
CNL Income Fund XIII, Ltd.:
Checkers -
Houston, TX 0 286,411 286,411 0
</TABLE>
C-34
<PAGE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
<TABLE>
<CAPTION>
===========================================================================================================
Selling Price, Net of
Closing Costs and GAAP Adjustments
------------------------------------------------
Purchase
Cash money Adjustments
received Mortgage mortgage resulting
net of balance taken from
Date Date of closing at time back by application
Property Acquired Sale costs of sale program of GAAP Total
===========================================================================================================
<S> <C>
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 03/31/94 03/01/95 339,031 0 0 0 339,031
Checkers -
Dallas, TX 03/31/94 03/01/95 356,981 0 0 0 356,981
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 05/27/94 03/01/95 263,221 0 0 0 263,221
Checkers -
Leavenworth, KS 06/22/94 03/01/95 259,600 0 0 0 259,600
Checkers -
Knoxville, TN 07/08/94 03/01/95 288,885 0 0 0 288,885
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 06/24/95 04/24/96 775,000 0 0 0 775,000
</TABLE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
(continued)
<TABLE>
<CAPTION>
====================================================================================
Cost of Properties
Including Closing and
Soft Costs
--------------------------------
Excess
Total (deficiency)
acquisition of property
cost, capital operating cash
Original improvements receipts over
mortgage closing and cash
Property financing soft costs (1) Total expenditures
====================================================================================
<S> <C>
CNL Income Fund XIV, Ltd.:
Checkers -
Knoxville, TN 0 339,031 339,031 0
Checkers -
Dallas, TX 0 356,981 356,981 0
CNL Income Fund XV, Ltd.:
Checkers -
Knoxville, TN 0 263,221 263,221 0
Checkers -
Leavenworth, KS 0 259,600 259,600 0
Checkers -
Knoxville, TN 0 288,885 288,885 0
CNL Income Fund XVI, Ltd.:
Long John Silver's -
Appleton, WI 0 613,838 613,838 161,162
</TABLE>
(1) Amounts shown do not include pro rata share of original offering costs or
acquisition fees.
(2) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,006,004 in July 2000.
(3) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.25% per annum and provides
for a balloon payment of $1,106,657 in July 2000.
(4) Amounts shown are face value and do not represent discounted current value.
Each mortgage note bears interest at a rate of 10.00% per annum and
provides for a balloon payment of $218,252 in December 2005.
(5) Amount shown is face value and does not represent discounted current value.
The mortgage note bears interest at a rate of 10.00% per annum and provides
for a balloon payment of $200,324 in December 2005.
C-35
<PAGE>
EXHIBIT F
PRO FORMA ESTIMATE OF TAXABLE INCOME
<PAGE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM INCEPTION
THROUGH MARCH 6, 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
March 6, 1997, for the 12-month period commencing on the date of the incep-
tion 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>
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
======== ======== ======== ========
</TABLE>
See Footnotes
F-1
<PAGE>
<TABLE>
<CAPTION>
Jack in the Box Golden Corral Boston Market
Centerville, TX (5)(6) Galveston, TX (5)(7) Raleigh, NC Total
---------------------- -------------------- ------------- -------
<S> <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.
F-2
