424(b)(3)
No. 33-90998-01
CNL INCOME FUND XVII, LTD.
AND
CNL INCOME FUND XVIII, LTD.
This Supplement is part of, and should be read in conjunction with, the
Prospectus dated August 11, 1995 and the Prospectus Supplement dated March 20,
1997. This Supplement replaces the Supplement dated April 2, 1997. Capitalized
terms used in this Supplement have the same meaning as in the Prospectus unless
otherwise stated herein.
All subscriptions are for the purchase of Units of CNL Income Fund XVIII,
Ltd. ("CNL XVIII"). Offers are no longer being made nor are the General
Partners accepting subscriptions for CNL XVII. THE ACQUISITION OF UNITS OF ONE
PARTNERSHIP WILL NOT ENTITLE THE INVESTOR TO ANY OWNERSHIP INTEREST IN THE OTHER
PARTNERSHIP OR ITS PROPERTIES.
Information as to proposed properties for which CNL XVIII has received
initial commitments and as to the number and types of Properties acquired by CNL
XVIII is presented as of April 2, 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 April 2, 1997, will be reported in a subsequent Supplement.
THE OFFERING
SUBSCRIPTION PROCEDURES
As of April 2, 1997, CNL XVIII had received total subscription proceeds of
$17,224,879 (1,722,488 Units) from 796 Limited Partners. As of April 2, 1997,
CNL XVIII had invested or committed for investment approximately $11,300,000 of
such proceeds in nine Properties and to pay Acquisition Fees and miscellaneous
Acquisition Expenses, leaving approximately $3,700,000 in offering proceeds
available for investment in Properties. As of April 2, 1997, CNL XVIII had
incurred $396,138 in Acquisition Fees to an Affiliate of the General Partners.
BUSINESS
PROPERTY ACQUISITIONS
Between March 7, 1997 and April 2, 1997, CNL XVIII acquired two
Properties, including one Property consisting of land and building and one
Property consisting of building only. The Properties are a Golden Corral
Property (in Stow, Ohio) and a Black-eyed Pea Property (in Atlanta, Georgia).
For information regarding the seven Properties acquired by CNL XVIII prior to
March 7, 1997, see the Prospectus Supplement dated March 20, 1997.
In connection with the purchase of each of these two Properties, CNL
XVIII, as lessor, entered into a long-term lease agreement with an unaffiliated
lessee. The general terms of the lease agreements are described in the section
of the Prospectus entitled "Business - Description of Leases." In connection
with the acquisition of the Black-eyed Pea Property, which is building only, CNL
XVIII has also entered into a landlord estoppel agreement with the landlord of
the land and 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.
April 8, 1997 Prospectus Dated August 11, 1995
<PAGE>
The following table sets forth the location of the two Properties,
including one Property consisting of land and building and one Property
consisting of building only, acquired by CNL XVIII, from March 7, 1997 through
April 2, 1997, a description of the competition, and a summary of the principal
terms of the acquisition and lease of each Property.
<PAGE>
PROPERTY ACQUISITIONS
From March 7, 1997 through April 2, 1997
<TABLE>
<CAPTION>
Lease Expira-
Purchase Date tion and Minimum
Property Location and Competition Price (1) Acquired Renewal Options Annual Rent (2)
<S> <C>
Black-eyed Pea (3) $617,610 03/26/97 04/2023 $69,347; increases to
(the "Atlanta Property") $73,700 during the
Existing restaurant eleventh through
twentieth lease years
The Atlanta Property is located along the and $76,051 during
east side of Peachtree Road, north of 28th the twenty-first
Street Northwest, in Atlanta, Fulton County, through twenty-sixth
Georgia, in an area of mixed retail, lease years
commercial, and residential development.
Other fast-food and family-style restaurants
located in proximity to the Atlanta Property
include a Miami Subs, a Wendy's, and several
local restaurants.
Golden Corral $1,686,119 04/02/97 04/2017; two five- $189,688; increases
(the "Stow Property") year renewal by 10% after the
Existing restaurant options fifth lease year and
after every five
The Stow Property is located on the south years thereafter
side of Kent Road west of Marsh Road in during the lease term
Stow, Summit County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and family-
style restaurants located in proximity to
the Stow Property include an Applebee's, a
Wendy's, a Taco Bell, and a KFC.
</TABLE>
<TABLE>
<CAPTION>
Option
Property Location and Competition Percentage Rent To Purchase
<S> <C>
Black-eyed Pea (3) None at any time
(the "Atlanta Property") after the
Existing restaurant fifth lease
year
The Atlanta Property is located along the
east side of Peachtree Road, north of 28th
Street Northwest, in Atlanta, Fulton County,
Georgia, in an area of mixed retail,
commercial, and residential development.
Other fast-food and family-style restaurants
located in proximity to the Atlanta Property
include a Miami Subs, a Wendy's, and several
local restaurants.
Golden Corral for each lease year, at any time
(the "Stow Property") (i) 5% of annual after the
Existing restaurant gross sales minus seventh lease
(ii) the minimum year
The Stow Property is located on the south annual rent for such
side of Kent Road west of Marsh Road in lease year
Stow, Summit County, Ohio, in an area of
mixed retail, commercial, and residential
development. Other fast-food and family-
style restaurants located in proximity to
the Stow Property include an Applebee's, a
Wendy's, a Taco Bell, and a KFC.
</TABLE>
<PAGE>
FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired is set forth below:
Property Federal Tax Basis
Atlanta Property $ 650,000
Stow Property 1,273,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease.
(3) CNL XVIII owns the building only for this Property. CNL XVIII does not
own the underlying land; although, CNL XVIII has entered 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.
<PAGE>
PENDING INVESTMENTS
As of April 2, 1997, CNL XVIII had initial commitments to acquire eight
properties, consisting of land and building. The acquisition of each of these
properties is subject to the fulfillment of certain conditions, including, but
not limited to, a satisfactory environmental survey and property appraisal.
There can be no assurance that any or all of the conditions will be satisfied
or, if satisfied, that one or more of these properties will be acquired by CNL
XVIII. If acquired, the leases of all eight of these properties are expected to
be entered into on substantially the same terms described in the Prospectus in
the section entitled "Business - Description of Leases," except as described
below.
In connection with the On The Border property in San Antonio, Texas, CNL
XVIII anticipates owning only the building and not the underlying land.
However, 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.
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.
<PAGE>
<TABLE>
<CAPTION>
Lease Term and
Property Renewal Options Minimum Annual Rent Percentage Rent Option to Purchase
<S> <C>
Boston Market 15 years; five five-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
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Minnetonka, MN renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 5% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such lease year
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
Reno, Nevada renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 4% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term minimum annual rent
for such lease year
Boston Market 15 years; five five-year 10.38% of Total Cost for each lease year at any time after
San Antonio, TX renewal options (1); increases by 10% after the fifth lease the fifth lease
Restaurant to be after the fifth lease year, (i) 4% of year
constructed year and after every annual gross sales
five years thereafter minus (ii) the
during the lease term 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 (2)
constructed year and after every (ii) the minimum
five years thereafter annual rent for such
during the lease term lease year
<PAGE>
On The Border (3) (4); three five-year 13.64% of Total Cost for each lease year, at any time after
San Antonio, TX renewal options (1); (5) (i) 4% of annual the tenth lease
Restaurant to be gross sales minus year
constructed (ii) the minimum
annual rent for such
lease year
Wendy's 20 years; two five-year 10.25% of Total Cost for each lease year, at any time after
Sparta, TN renewal options (1) (i) 7% of annual the seventh lease
Restaurant to be gross sales minus year
constructed (ii) the minimum
annual rent for such
lease year
</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) In the event CNL XVIII purchases the property directly from the lessee,
the lessee will have no option to purchase the property.
(3) 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.
(4) 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.
(5) 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.
<PAGE>
PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM
MARCH 7, 1997 THROUGH APRIL 2, 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 March 7, 1997 through April
2, 1997, for the 12-month period commencing on the date of the inception of the
respective lease on such Property. The schedule should be read in light of the
accompanying footnotes.
These estimates do not purport to present actual or expected operations of
CNL XVIII for any period in the future. These estimates were prepared on the
basis described in the accompanying notes which should be read in conjunction
herewith. No single lessee or group of affiliated lessees lease Properties with
an aggregate purchase price in excess of 20% of the expected total net offering
proceeds of CNL XVIII.
<TABLE>
<CAPTION>
Black-eyed Pea Golden Corral
Atlanta, GA Stow, OH Total
<S> <C>
Pro Forma Estimate
of Taxable Income:
Base Rent (1) $ 69,347 $189,688 $259,035
Management Fees (2) (693) (1,897) (2,590)
General and Administrative
Expenses (3) (3,467) (9,484) (12,951)
-------- ------- -------
Estimated Cash Available from
Operations 65,187 178,307 243,494
Depreciation Expense (4) (16,238) (31,819) (48,057)
-------- ------- -------
Pro Forma Estimate of Taxable
Income of CNL XVIII $ 48,949 $146,488 $195,437
======== ======== ========
</TABLE>
See Footnotes
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.
