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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January 22, 1997
CNL INCOME FUND XVIII, LTD.
(Exact Name of Registrant as Specified in Charter)
Florida 33-90998-01 59-3295394
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
400 East South Street, Suite 500 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
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Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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STATUS OF THE OFFERING
Pursuant to a registration statement on Form S-11 under the
Securities Act of 1933, as amended, effective August 11, 1995 (the
"Registration Statement"), CNL Income Fund XVII, Ltd. ("CNL XVII") and CNL
Income Fund XVIII, Ltd. ("CNL XVIII"), limited partnerships with the same
general partners and investment objectives, registered for sale an aggregate
of $65,000,000 of units of limited partnership interest (the "Units")
(6,500,000 Units at $10 per Unit). The first 3,000,000 Units ($30,000,000)
were for CNL XVII, and the remaining Units are for CNL XVIII. The offering of
Units of CNL XVII terminated on September 19, 1996, at which time
subscriptions for an aggregate 3,000,000 Units ($30,000,000), including Units
sold pursuant to the Reinvestment Plan, had been received and 1,602
subscribers had been admitted as Limited Partners in accordance with the
Partnership Agreement of CNL XVII. Pursuant to the registration statement,
CNL XVIII's offering of Units could not commence until the offering of Units
of CNL XVII was terminated. CNL XVIII's offering commenced on September 20,
1996. As of January 24, 1997, CNL XVIII had received subscription proceeds of
$10,420,664 (1,042,066 Units) from 481 Limited Partners.
As stated in the Registration Statement, including the Prospectus
which constitutes a part thereof, as supplemented and amended, the proceeds of
the offering of Units are to be used to acquire restaurant properties to be
leased primarily to operators of national and regional fast-food, family-
style, and casual dining restaurant chains (the "Properties"), to pay expenses
in connection with the offering of Units and to pay partnership organizational
costs.
ACQUISITION OF PROPERTIES
From January 9, 1997 through January 24, 1997, CNL XVIII acquired two
Properties. The Properties are a Golden Corral Property (in Galveston, Texas)
and a Boston Market Property (in Raleigh, North Carolina).
In connection with the purchase of each of these two Properties, CNL
XVIII, as lessor, entered into a long-term lease agreement with an
unaffiliated lessee. The leases are on a triple-net basis, with the lessee
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The lessee also is required to pay for special assessments, sales
and use taxes, and the cost of any renovations permitted under the lease.
Upon termination of the lease, the lessee will surrender possession of the
Property to CNL XVIII, together with any improvements made to the Property
during the term of the lease.
For the Property that is to be constructed, CNL XVIII has entered
into development and indemnification and put agreements with the lessee.
-----------------------------------------------
The following table sets forth the location of the two Properties
acquired by CNL XVIII from January 9, 1997 through January 24, 1997, a
description of the competition, and a summary of the principal terms of the
acquisition and lease of each Property.
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<PAGE>
<TABLE>
PROPERTY ACQUISITIONS
From January 9, 1997 through January 24, 1997
<CAPTION>
Lease Expira-
Property Location and Purchase Date tion and Minimum Option
Competition Price (1) Acquired Renewal Options Annual Rent (2) Percentage Rent To Purchase
- --------------------- ------------ -------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
GOLDEN CORRAL $424,883 01/22/97 01/2012; four 10.75% of Total for each lease during the
(the "Galveston Property") (excluding five-year Cost (4) year, 5% of the first
Restaurant to be closing and renewal options amount by which through
constructed development annual gross seventh
costs) (3) sales exceed lease years
The Galveston Property is $2,532,737 (5) and the
located within the tenth
southwest quadrant of the through
intersection of Seawall fifteenth
Boulevard and 61st Street, lease years
in Galveston, Galveston only
County, Texas, in an area
of mixed retail,
commercial, and
residential development.
Other fast-food and
family-style restaurants
located in proximity to
the Galveston Property
include an IHOP, a Western
Sizzling, a Shoney's, a
Jack in the Box, a
Whataburger, an Arby's,
and several local
restaurants.
BOSTON MARKET $1,225,686 01/23/97 01/2012; five $122,569; for each lease at any time
(the "Raleigh Property") (excluding five-year increases to year after the after the
Existing restaurant closing renewal 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 Shopping $141,567 during (ii) the
Center, which is located the sixth minimum annual
at the northeast quadrant through tenth rent for such
of the intersection of lease years, lease year
Falls of the Neuse Road and $155,785
and Old Wake Forest Road, during the
in Raleigh, Wake County, eleventh
North Carolina, in an area through
of mixed retail, fifteenth lease
commercial, and years
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.
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</TABLE>
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FOOTNOTES:
(1) The estimated federal income tax basis of the depreciable portion (the
building portion) of each of the Properties acquired, and for the
construction Property, once the building is constructed, is set forth
below:
Property Federal Tax Basis
-------- -----------------
Galveston Property $1,003,000
Raleigh Property 483,000
(2) Minimum annual rent for each of the Properties became payable on the
effective date of the lease, except as indicated below. For the
Galveston Property, 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 Galveston Property, as
described above, "interim rent" equal to ten percent per annum of the
amount funded by CNL XVIII in connection with the purchase and
construction of the Property shall accrue and shall be payable in a
single lump sum on the date minimum annual rent becomes payable for this
Property.
(3) The development agreement for the Property which is to be constructed,
provides that construction must be completed no later than the date set
forth below. The maximum cost to CNL XVIII (including the purchase
price of the land, (if applicable), development costs (if applicable),
and closing and acquisition costs) is not expected to, but may, exceed
the amount set forth below:
Estimated Final
Property Estimated Maximum Cost Completion Date
-------- ---------------------- ---------------
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).
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PRO FORMA ESTIMATE OF TAXABLE INCOME OF
CNL INCOME FUND XVIII, LTD.
GENERATED FROM THE OPERATIONS OF PROPERTIES ACQUIRED FROM JANUARY 9, 1997
THROUGH JANUARY 24, 1997
FOR A 12-MONTH PERIOD (UNAUDITED)
The following schedule represents pro forma unaudited estimates of
taxable income of each Property acquired by CNL XVIII from January 9, 1997
through January 24, 1997, for the 12-month period commencing on the date of
the inception of the respective lease on such Property. The schedule should
be read in light of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of CNL XVIII for any period in the future. These estimates were prepared on
the basis described in the accompanying notes which should be read in
conjunction herewith. No single lessee or group of affiliated lessees lease
Properties with an aggregate purchase price in excess of 20% of the expected
total net offering proceeds of CNL XVIII.
Golden Corral Boston Market
Galveston, TX (5) Raleigh, NC Total
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Pro Forma Estimate
of Taxable Income:
Base Rent (1) $148,364 $122,569 $270,933
Management Fees (2) (1,484) (1,226) (2,710)
General and Admini-
strative Expenses (3) (7,418) (6,128) (13,546)
-------- -------- --------
Estimated Cash Available
from Operations 139,462 115,215 254,677
Depreciation Expense (4) (25,084) (12,065) (37,149)
-------- -------- --------
Pro Forma Estimate of
Taxable Income of
CNL XVIII $114,378 $103,150 $217,528
======== ======== ========
See Footnotes
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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.
(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 agreement for the Property which is to be constructed,
provides that construction must be completed no later than the date set
forth below:
Property Estimated Final Completion Date
-------- -------------------------------
Galveston Property July 21, 1997
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
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Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
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Not applicable.
ITEM 5. OTHER EVENTS.
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Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S GENERAL PARTNERS.
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Not applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
- ------ EXHIBITS.
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<PAGE>
INDEX TO PRO FORMA FINANCIAL STATEMENTS
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Page
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CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
Pro Forma Financial Information (unaudited):
Pro Forma Balance Sheet as of September 30, 1996 9
Notes to Pro Forma Balance Sheet as of September 30, 1996 10
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PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Balance Sheet of CNL Income Fund XVIII, Ltd.
("CNL XVIII") gives effect to (i) the subscriptions for 60,676 units
($606,760) of limited partnership interest (the "Units") pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended, effective August 11, 1995, which had been received and were being
held in escrow as of September 30, 1996, (ii) the receipt of $9,813,904 in
gross offering proceeds from the sale of 981,390 additional Units during the
period October 1, 1996 through January 24, 1997, and the release of the
$606,760 previously held in escrow as of September 30, 1996, and (iii) the
application of such funds to purchase seven properties, five of which are
under construction, and to pay offering expenses, acquisition fees, and
miscellaneous acquisition expenses, all as reflected in the pro forma
adjustments described in the related notes. The Pro Forma Balance Sheet as of
September 30, 1996, includes the transactions described in (i) above, from its
historical balance sheet, adjusted to give effect to the transactions in (ii)
and (iii) above, as if they had occurred on September 30, 1996.
No Pro Forma Statement of Income is presented due to the facts that (i)
CNL XVIII did not commence operations until October 12, 1996 (the date
following when CNL XVIII received its minimum offering proceeds and the funds
were released from escrow) and (ii) the properties owned by CNL XVIII as of
January 24, 1997, did not have previous rental histories.
This pro forma financial information is presented for informational
purposes only and does not purport to be indicative of CNL XVIII's financial
results or condition if the various events and transactions reflected therein
had occurred on the dates, or been in effect during the periods, indicated.
This pro forma financial information should not be viewed as predictive of CNL
XVIII's financial results or conditions in the future.
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CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
Pro Forma
ASSETS Historical Adjustments Pro Forma
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Land and building on
operating leases $ - $8,547,527 (a) $8,547,527
Cash and cash equivalents 730 446,713 (a) 447,443
Organization costs 10,000 10,000
Deferred syndication costs 504,079 (504,079)(b) -
Other assets 27,324 2,040 (a) 29,364
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$ 542,133 $8,492,201 $9,034,334
========== ========== ==========
LIABILITIES AND
PARTNERS' CAPITAL
Accounts payable $ 8,505 $ (8,505)(a) $ -
Due to related parties 532,628 (532,628)(a) -
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Total liabilities 541,133 (541,133) -
Partners' capital 1,000 9,537,413 (a)
(504,079)(b) 9,034,334
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$ 542,133 $8,492,201 $9,034,334
========== ========== ==========
See accompanying notes to unaudited pro forma balance sheet.
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CNL INCOME FUND XVIII, LTD.
(A FLORIDA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
Pro Forma Balance Sheet:
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(a) Represents gross proceeds of $9,813,904 from the sale of 981,390 Units
during the period October 1, 1996 through January 24, 1997, and the
release of $606,760 held in escrow as of September 30, 1996, used (i) to
acquire seven properties for $8,107,941, (ii) to pay acquisition fees of
$468,930, ($27,304 of which was accrued as due to related parties at
September 30, 1996, $439,586 of which was allocated to the seven
properties acquired and $2,040 of which was classified as other assets
and will be allocated to future properties) and (iii) to pay selling
commissions and offering expenses (syndication costs) of $1,387,080
which have been netted against partners' capital, and organization costs
of $10,000 (a total of $513,829 of which had been incurred as of
September 30, 1996) leaving $446,713 in additional cash and cash
equivalents available for future investment.
The pro forma adjustments to land and buildings on operating leases as a
result of the above transactions were as follows:
Estimated Acquisition
purchase price fees
(including allocated
closing costs) to property Total
-------------- ----------- ----------
Golden Corral in
Houston, TX $1,565,433 $ 84,872 $1,650,305
Burger King in
Kinston, NC 875,000 47,440 922,440
Jack in the Box
in Echo Park, CA 1,257,223 68,163 1,325,386
Jack in the Box
in Henderson-
ville, 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
---------- ---------- ----------
$8,107,941 $ 439,586 $8,547,527
========== ========== ==========
(b) Represents reclassification of deferred syndication costs totalling
$504,079 at September 30, 1996, to syndication costs which have been
netted against partners' capital.
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ITEM 8. CHANGE IN FISCAL YEAR.
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Not applicable.
EXHIBITS
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf
by the undersigned thereunto duly authorized.
CNL INCOME FUND XVIII, LTD.
Dated: February 4, 1997 By: /s/ Robert A. Bourne
ROBERT A. BOURNE, General Partner
