UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-90998-01
CNL INCOME FUND XVIII, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3295394
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to Section 12(g) of
the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
<PAGE>
PART I
Item 1. Business
CNL Income Fund XVIII, Ltd. (the "Registrant" or the "Partnership") is
a limited partnership which was organized pursuant to the laws of the State of
Florida on February 10, 1995. The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners"). Beginning on September 20, 1996, the
Partnership offered for sale up to $35,000,000 of limited partnership interests
(the "Units") (3,500,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
August 11, 1995. As of December 31, 1997, the Partnership had accepted
subscriptions for 3,500,000 Units and had received subscription proceeds for
3,414,576 Units, representing $34,145,759 of capital contributed by limited
partners. The remaining proceeds of $854,241, representing the remaining 85,424
Units, were received during the period January 1, 1998 through February 6, 1998.
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food, family-style and casual dining
restaurant chains (the "Restaurant Chains"). As of December 31, 1997, net
proceeds to the Partnership from its offering of Units, after deduction of
organizational and offering expenses, totalled $30,022,641. During the year
ended December 31, 1996, the Partnership acquired two Properties. As of December
31, 1997, the Partnership had invested approximately $27,645,000 of the proceeds
described above in 22 Properties (one of which was under construction as of
December 31, 1997), and to pay acquisition fees and certain acquisition
expenses, leaving approximately $2,377,700 of net offering proceeds available
for investment in Properties. The Partnership will use the remaining net
offering proceeds, together with proceeds from the sale of Units subsequent to
December 31, 1997, to acquire additional Properties, to pay acquisition fees and
acquisition expenses and to pay expenses relating to the sale of Units. The
Properties are leased on a triple-net basis with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities.
The Partnership's primary investment objectives are to preserve,
protect and enhance Partnership capital, while providing (i) cash distributions
commencing in the initial year of Partnership operations in amounts which exceed
current taxable income (due to the fact that depreciation deductions
attributable to the Properties reduce taxable income even though depreciation is
not a cash expenditure); (ii) an anticipated minimum level of income through the
long-term rental of Properties to selected operators of certain national and
regional fast-food, family-style and casual dining restaurant chains; (iii)
additional income and protection against inflation by participation in certain
restaurant gross sales through the receipt of percentage rent payments and,
typically, automatic increases in the minimum annual rent; and (iv) capital
appreciation through the potential increase in value of the Properties.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. 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. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. In general, the General Partners plan to seek the sale of the
Properties commencing seven to 12 years after their acquisition. The Partnership
has no obligation to sell all or any portion of a Property at any particular
time, except as may be required under property purchase options granted to
certain lessees.
Description of Leases
The leases of the Properties owned by the Partnership as of December
31, 1997, provide for initial terms ranging from 15 to 26 years (the average
being 17 years) and expire between 2012 and 2023. All leases are on a triple-net
basis, with the lessees responsible for all repairs and maintenance, property
taxes, insurance and utilities. The leases for the Properties that were
operational as of December 31, 1997, provide for minimum base annual rental
payments (payable in equal monthly installments) ranging from approximately
$60,400 to $243,600. The majority
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of the leases provide for percentage rent based on sales in excess of a
specified amount. In addition, the majority of the leases provide that,
commencing in specified lease years (generally the sixth lease year), the annual
base rent required under the terms of the lease will increase.
Generally, the leases provide for two to five five-year renewal options
subject to the same terms and conditions as the initial lease. Certain lessees
also have been granted options to purchase the Properties after a specified
portion of the lease term has elapsed. The option purchase price is equal to the
Partnership's original cost of the Property (including acquisition costs), plus
a specified percentage or the Property's fair market value at the time the
purchase option is exercised, whichever is greater.
The leases also generally provide that, in the event the Partnership
wishes to sell the Properties, the Partnership first must offer the lessees the
right to purchase the Properties on the same terms and conditions, and for the
same price, as any offer which the Partnership has received for the sale of the
Properties.
Major Tenants
During 1997, five lessees of the Partnership, Golden Corral
Corporation, Foodmaker, Inc., Tiffany, L.L.C., IHOP Properties, Inc. and
Platinum Rotisserie, L.L.C., each contributed more than ten percent of the
Partnership's total rental income. As of December 31, 1997, Golden Corral
Corporation and Foodmaker, Inc. were each the lessees under leases relating to
four restaurants, Tiffany, L.L.C. was the lessee under a lease relating to one
restaurant, IHOP Properties, Inc. was the lessee under leases relating to two
restaurants and Platinum Rotisserie, L.L.C. was the lessee under a lease
relating to one restaurant. In addition, four Restaurant Chains, Golden Corral
Family Steakhouse Restaurants ("Golden Corral"), Jack in the Box, Boston Market,
and IHOP each accounted for more than ten percent of the Partnership's total
rental income for 1997. Because the Partnership's first Property was not
purchased until December 1996, the foregoing information regarding the lessees
and Restaurant Chains which contributed a significant amount of the
Partnership's total rental income during 1997, may or may not be representative
of the lessees and Restaurant Chains which will account for more than ten
percent of the Partnership's rental income during 1998 and subsequent years.
Because the Partnership has not completed its acquisition of Properties as yet,
it is not possible to determine which lessees or Restaurant Chains will
contribute more than ten percent of the Partnership's rental income during 1998
and subsequent years. In the event that certain lessees or Restaurant Chains
contribute more than ten percent of the Partnership's rental income in the
future years, any failure of such lessees or Restaurant Chains could materially
adversely affect the Partnership's income. As of December 31, 1997, no single
tenant or group of affiliated tenants lease Properties with an aggregate
carrying value, excluding acquisition fees and certain acquisition expenses, in
excess of 20 percent of the anticipated total assets of the Partnership upon
completion of the offering of Units.
Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to the management of the Partnership and its
Properties pursuant to a management agreement with the Partnership. Under this
agreement, CNL Fund Advisors, Inc. is responsible for collecting rental
payments, inspecting the Properties and the tenants' books and records,
assisting the Partnership in responding to tenant inquiries and notices and
providing information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership, plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food, family-style, and casual dining restaurant business is
characterized by intense competition. The restaurants on the Partnership's
Properties compete with independently owned restaurants, restaurants which are
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part of local or regional chains, and restaurants in other well-known national
chains, including those offering different types of food and service.
The Partnership also will be in competition with other persons and
entities both to locate suitable Properties to acquire and to locate purchasers
for its Properties. The Partnership also will compete with other financing
sources such as banks, mortgage lenders, and sale/leaseback companies for
suitable Properties and tenants.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of CNL Fund Advisors, Inc. perform
certain services for the Partnership. In addition, the General Partners have
available to them the resources and expertise of the officers and employees of
CNL Group, Inc., a diversified real estate company, and its affiliates, who may
also perform certain services for the Partnership.
Item 2. Properties
As of December 31, 1997, the Partnership owned 22 Properties, located
in 14 states. Reference is made to the Schedule of Real Estate and Accumulated
Depreciation filed with this report for a listing of the Properties and their
costs, including acquisition fees and certain acquisition expenses.
The Partnership is negotiating to acquire additional Properties, but as
of March 13, 1998, had not acquired any such Properties.
Description of Properties
Land. As of December 31, 1997, the Partnership's Property sites ranged
from approximately 27,000 to 120,400 square feet depending upon building size
and local demographic factors. Sites purchased or to be purchased by the
Partnership are or will be in locations zoned for commercial use which have been
reviewed for traffic patterns and volume.
Buildings. The Properties owned by the Partnership as of December 31,
1997, currently include or will include a building that is one of a Restaurant
Chain's approved designs. The buildings to be acquired or constructed generally
will be rectangular and constructed from various combinations of stucco, steel,
wood, brick and tile. Building sizes range from approximately 2,200 to 9,700
square feet. All buildings on Properties acquired or to be acquired by the
Partnership will be freestanding and surrounded by paved parking areas.
Buildings will be suitable for conversion to various uses, although
modifications may be required prior to use for other than restaurant operations.
Generally, a lessee is required or is expected to be required, under
the terms of its lease agreement, to make such capital expenditures as may be
reasonably necessary to refurbish buildings, premises, signs and equipment so as
to comply with the lessee's obligations, if applicable, under the franchise
agreement to reflect the current commercial image of its Restaurant Chain. These
capital expenditures are required to be paid by the lessee during the term of
the lease.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants, as of December 31, 1997 (See Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Description of Leases.
Golden Corral Corporation leases four Golden Corral restaurants. The
initial term of each lease is 15 years (expiring in 2012) and the average
minimum base annual rent is approximately $160,300 (ranging from approximately
$148,400 to $170,400).
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Foodmaker, Inc. leases four Jack in the Box restaurants. The initial
term of each lease is 18 years (expiring in 2015) and the average minimum base
annual rent is approximately $112,100 (ranging from approximately $77,900 to
$132,200).
Tiffany, L.L.C. leases one Golden Corral restaurant. The initial term
of the lease is 20 years (expiring in 2017) and the minimum base annual rent is
approximately $189,700.
IHOP Properties, Inc. leases two IHOP Restaurants. The initial term of
each lease is 20 years (expiring in 2017) and the average minimum base annual
rent is approximately $137,200 (ranging from approximately $130,200 to
$144,100).
Platinum Rotisserie, L.L.C. leases one Boston Market restaurant. The
initial term of the lease is 15 years (expiring in 2012) and the minimum base
annual rent is approximately $122,600.
Item 3. Legal Proceedings
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of March 13, 1998, there were 1,570 holders of record of the Units.
There is no public trading market for the Units, and it is not anticipated that
a public market for the Units will develop. Limited Partners who wish to sell
their Units may offer the Units for sale pursuant to the Partnership's
distribution reinvestment plan (the "Plan"), and Limited Partners who wish to
have their distributions used to acquire additional Units (to the extent Units
are available for purchase), may do so pursuant to such Plan. The General
Partners have the right to prohibit transfers of Units. Since inception, the
price to be paid for any Unit transferred pursuant to the Plan has been $10.00
per Unit. The price to be paid for any Unit transferred other than pursuant to
the Plan is subject to negotiation by the purchaser and the selling Limited
Partner. For the year ended December 31, 1997, no Units were transferred other
than pursuant to the Plan. The Partnership will not redeem or repurchase Units.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For the years ended December 31, 1997 and 1996, the Partnership
declared cash distributions of $1,310,885 and $57,846, respectively, to the
Limited Partners. No amounts distributed to partners for the years ended
December 31, 1997 and 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 adjusted capital contributions. No distributions have
been made to the General Partners to date. As indicated in the chart below,
these distributions were declared following the close of each of the
Partnership's calendar quarters following the first admission of Limited
Partners to the Partnership. These amounts include monthly distributions made in
arrears for the Limited Partners electing to receive such distributions on this
basis.
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Quarter Ended 1997 1996
------------- --------- ----------
March 31 $154,476 $ -
June 30 266,507 -
September 30 379,266 -
December 31 510,636 57,846
For the period January 1, 1996 through October 11, 1996, the
Partnership did not make any cash distributions because operations had not
commenced.
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.
Item 6. Selected Financial Data
The following selected financial data should be read in conjunction
with the financial statements and related notes in Item 8. hereof.
<TABLE>
<CAPTION>
For the Period
February 10, 1995
Year Ended Year Ended (Date of Inception)
December 31, December 31, through December 31,
1997 1996 1995
<S> <C>
Revenues $ 1,453,242 $ 31,614 $ -
Net income 1,154,760 26,910 -
Cash distributions declared (2) 1,310,885 57,846 -
Net income per Unit .51 .05 -
Cash distributions declared per Unit (2) .57 .11 -
Weighted average number of
Limited Partner Units outstanding (3) 2,279,801 503,436 -
As of December 31,
1997 1996 1995
Total assets $31,823,613 $7,240,324 $ 256,890
Total partners' capital 29,846,580 6,996,213 1,000
</TABLE>
(1) Operations did not commence until October 12, 1996, the date following
when the Partnership received the minimum offering proceeds of
$1,500,000, and such proceeds were released from escrow.
(2) Approximately 12% and 53% of cash distributions ($0.07 and $0.06 per
Unit, respectively) for the years ended December 31, 1997 and 1996,
respectively, 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.
The Partnership has not treated such amounts as a return of capital for
purposes of calculating the Limited Partners' return on their invested
capital contributions.
(3) Represents the weighted average number of Units outstanding during the
period the Partnership was operational.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Partnership was organized on February 10, 1995, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurants were to be constructed, which are leased primarily to operators of
selected national and regional fast-food, family-style and casual dining
Restaurant Chains. The leases are triple-net leases, with the lessees generally
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The Partnership's primary investment objectives are to preserve,
protect and enhance Partnership capital, while providing (i) cash distributions
commencing in the initial year of Partnership operations in amounts which exceed
current taxable income (due to the fact that depreciation deductions
attributable to the Properties reduce taxable income even though depreciation is
not a cash expenditure); (ii) an anticipated minimum level of income through the
long-term rental of Properties to selected operators of certain national and
regional fast-food, family-style and casual dining Restaurant Chains; (iii)
additional income and protection against inflation by participation in certain
restaurant gross sales through the receipt of percentage rent payments and,
typically, automatic increases in the minimum annual rent; and (iv) capital
appreciation through the potential increase in value of the Properties.
As of December 31, 1997, the Partnership owned 22 Properties, one of
which was under construction.
Liquidity and Capital Resources
On September 20, 1996, the Partnership commenced an offering to the
public of up to 3,500,000 Units of limited partnership interest pursuant to a
registration statement on Form S-11 under the Securities Act of 1933, as
amended, effective August 11, 1995. As of December 31, 1997, the Partnership had
accepted subscriptions for 3,500,000 Units and had received subscription
proceeds for 3,414,576 Units, representing $34,145,759 of capital contributed by
Limited Partners. The remaining proceeds of $854,241, representing the remaining
85,424 Units were received during the period January 1, 1998 through February 6,
1998.
As of December 31, 1997, net proceeds to the Partnership from its
offering of Units, after deduction of organizational and offering expenses,
totalled $30,022,641. During 1996, the Partnership invested or committed for
investment approximately $2,960,800 of such proceeds in two Properties and to
pay acquisition fees and certain acquisition expenses. During 1997, the
Partnership completed construction of the Property under construction in 1996
and acquired 20 additional Properties (one of which was under construction as of
December 31, 1997). As a result of the above transactions, as of December 31,
1997, the Partnership had invested approximately $27,645,000 of the net proceeds
in 22 Properties, and to pay acquisition fees and miscellaneous acquisition
expenses, leaving approximately $2,377,700 of net offering proceeds available
for investment in Properties. As of December 31, 1997, the Partnership had paid
$1,536,559 in acquisition fees to an affiliate of the General Partners.
The building under construction at December 31, 1997, became
operational in February 1998. In connection with the purchase of this Property,
the Partnership, as lessor entered into a long-term lease agreement.
As of March 13, 1998, the Partnership had sold a total of 3,500,000
Units, for an aggregate of $35,000,000 in gross offering proceeds and had
invested or committed for investment approximately $28,056,645 of such proceeds
in 22 Properties and to pay acquisition fees and certain acquisition expenses,
leaving approximately $2,746,400 in net offering proceeds available for
investment in Properties. As of March 13, 1998, the Partnership had incurred
$1,575,000 in acquisition fees to an affiliate of the General Partners.
The Partnership presently is negotiating to acquire additional
Properties, but as of March 13, 1998, had not acquired any such Properties. The
Partnership will use the remaining net offering proceeds, to acquire additional
Properties, to pay acquisition expenses and in the discretion of the General
Partners, to create operating reserves.
Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants and interest received,
less cash paid for expenses). Cash from operations was $1,361,610 and $27,146
for the years ended December 31, 1997 and 1996. The increase in cash from
operations for the year ended
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December 31, 1997, as compared to the year ended December 31, 1996, is primarily
a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.
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.
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, 1997, the Partnership had $4,143,327
invested in such short-term investments, as compared to $5,371,325 at December
31, 1996. The decrease in the amount invested in short-term investments is
primarily a result of the payment during 1997, of costs relating to the Property
that was under construction at December 31, 1996 and the acquisition of
additional Properties during 1997. The funds remaining at December 31, 1997 will
be used to pay construction costs relating to several Properties that were
incurred but unpaid at December 31, 1997, to purchase and develop additional
Properties, to pay 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 years ended December 31, 1997 and 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 $211,216, $285,858
and $196,174, respectively, for certain organizational and offering expenses. In
addition, during 1997 and 1996, affiliates incurred $134,138 and $18,036,
respectively, for certain acquisition expenses and $44,166 and $893,
respectively, for certain operating expenses. As of December 31, 1997 and 1996,
the Partnership owed $118,231 and $83,889, respectively, to related parties for
such amounts, fees and other reimbursements. As of March 13, 1998, the
Partnership had reimbursed the affiliates all such amounts. Amounts payable to
other parties, including distributions payable, increased to $1,629,719 at
December 31, 1997, as compared to $160,222 at December 31, 1996, primarily as a
result of an increase in distributions payable to Limited Partners and an
increase in construction costs payable at December 31, 1997. The General
Partners believe that the Partnership has sufficient cash on hand to meet its
current working capital needs.
Based on cash from operations, the Partnership declared distributions
to the Limited Partners of $1,310,885 and $57,846, respectively, for the years
ended December 31, 1997 and 1996 (representing distributions of $0.57 and $0.11
per Unit, respectively, 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 years ended
December 31, 1997 and 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 adjusted 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.
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 in 1998,
as rental income increases due to the acquisition of additional Properties
during 1998 and the fact that Properties acquired during 1997 will earn rental
income for a full year in 1998, as compared to a partial year in 1997.
Accordingly, the General Partners believe that the anticipated decrease in the
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Partnership's liquidity in 1998, due to its investment of the remaining net
offering proceeds in additional Properties and the payment of construction costs
relating to several Properties incurred but unpaid at December 31, 1997, will
not have an adverse effect on the Partnership's operations during 1998.
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,
because all 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. 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.
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.
The Partnership owned and leased two Properties in 1996 and 22
Properties in 1997 (including one Property which was under construction at
December 31, 1997), which are subject to long-term triple-net leases. The leases
of the Properties provide for minimum base annual rental payments (payable in
monthly installments) ranging from approximately $60,400 to $243,600. The
majority of the leases provide for percentage rent based on sales in excess of a
specified amount. In addition, the majority of the leases provide that,
commencing in specified lease years (generally the sixth lease year), the annual
base rent required under the terms of the lease will increase. For a further
description of the Partnership's leases and Properties, see Item 1. Business -
Leases and Item 2. Properties.
During the years ended December 31, 1997 and 1996, the Partnership
earned $1,290,621 and $1,373, respectively, in rental income from operating
leases and earned income from direct financing leases. The increase in rental
and earned income during 1997, as compared to 1996, is primarily attributable to
the acquisition of additional Properties subsequent to December 31, 1996.
Because the Partnership did not commence significant operations until it
received the minimum offering proceeds on October 11, 1996, and has not yet
acquired all of its Properties, Partnership revenues for the year ended December
31, 1997, represent only a portion of revenues which the Partnership is expected
to earn during the full year in which the Partnership's Properties are
operational.
During at least one of the years ended December 31, 1997 and 1996, six
lessees, or group of affiliated lessees, of the Partnership, Golden Corral
Corporation, Foodmaker, Inc., Tiffany, L.L.C., IHOP Properties, Inc., Platinum
Rotisserie, L.L.C. and Carrols Corporation each contributed more than ten
percent of the Partnership's total rental income. As of December 31, 1997,
Golden Corral Corporation and Foodmaker, Inc. were each the lessee under leases
relating to four restaurants, Tiffany, L.L.C. was the lessee under a lease
relating to one restaurant, IHOP Properties, Inc. was the lessee under leases
relating to two restaurants, Platinum Rotisserie, L.L.C. was the lessee under a
lease relating to one restaurant and Carrols Corporation was the lessee under a
lease relating to one restaurant. In addition, during at least one of the years
ended December 31, 1997 and 1996, five Restaurant Chains, Golden Corral, Jack in
the Box, Boston Market, IHOP and Burger King each accounted for more than ten
percent of the Partnership's total rental income. Because the Partnership's
first Property was not purchased until December 1996, the foregoing information
regarding the lessees and Restaurant Chains which contributed a significant
amount of the Partnership's total rental income during the years ended December
31, 1997 and 1996, may or may not be representative of the lessees and
Restaurant Chains which will account for more than ten percent of the
Partnership's rental income during 1998 and subsequent years. Because the
Partnership has not completed its acquisition of Properties as yet, it is not
possible to determine which lessees or Restaurant Chains will contribute more
than ten percent of the Partnership's total rental income during 1998 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
adversely affect the Partnership's income.
8
<PAGE>
During the years ended December 31, 1997 and 1996, the Partnership
earned $162,621 and $30,241 in interest income from investments in money market
accounts or other short-term, highly liquid investments. The increase in
interest income during 1997, as compared to 1996, is primarily attributable to
the increase in the amount of funds invested in short-term liquid investments as
a result of additional Limited Partner capital contributions during 1997. As of
December 31, 1997, the majority of these funds had been invested in Properties;
therefore, the Partnership expects interest income to decrease in 1998.
Operating expenses, including depreciation and amortization expense,
were $298,482 and $4,704 for the years ended December 31, 1997 and 1996. The
increase in operating expenses during 1997 is primarily attributable to an
increase in depreciation expenses as the result of the acquisition of additional
Properties during 1997. Operating expenses also increased during 1997, as
compared to 1996, as a result of an increase in administrative expenses
associated with operating the Partnership and its Properties and an increase in
management fees as a result of the increase in rental revenues. 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 1998 as the Partnership acquires additional Properties
and the Property under construction becomes operational.
The General Partners of the Partnership are in the process of assessing
and addressing the impact of the year 2000 on their computer package software.
The hardware and built-in software are believed to be year 2000 compliant.
Accordingly, the General Partners do not expect this matter to materially impact
how the Partnership conducts business nor its current or future results of
operations or financial position.
The Partnership's leases as of December 31, 1997, 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 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.
Item 8. Financial Statements and Supplementary Data
9
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Accountants 11
Financial Statements:
Balance Sheets 12
Statements of Income 13
Statements of Partners' Capital 14
Statements of Cash Flows 15
Notes to Financial Statements 17
10
<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) listed in Item 14(a)
of this Form 10-K. 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, 1997 and 1996, and the results of its operations and its cash
flows for the year ended December 31, 1997 and 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 4, 1998
11
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS 1997 1996
------ ----------- -------
Land and buildings on operating leases,
less accumulated depreciation $21,311,062 $1,530,768
Net investment in direct financing
leases 6,004,878 -
Cash and cash equivalents 4,143,327 5,371,325
Receivables 68,000 3,711
Organization costs, less accumulated
amortization of $2,411 and $411 7,589 9,589
Accrued rental income 128,225 146
Other assets 160,532 324,785
----------- ----------
$31,823,613 $7,240,324
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 10,456 $ 104,514
Accrued construction
costs payable 1,108,627 -
Distributions payable 510,636 55,708
Due to related parties 118,231 83,889
Rents paid in advance 28,277 -
Deferred rental income 200,806 -
----------- ---------
Total liabilities 1,977,033 244,111
Partners' capital 29,846,580 6,996,213
----------- ----------
$31,823,613 $7,240,324
=========== ==========
See accompanying notes to financial statements.
12
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1997 1996 1995
------------- ------------ ------------
<S> <C>
Revenues:
Rental income from
operating leases $ 950,316 $ 1,373 $ -
Earned income from direct
financing leases 340,305 - -
Interest and other income 162,621 30,241 -
---------- ---------- ---------
1,453,242 31,614 -
---------- ---------- ---------
Expenses:
General operating and
administrative 123,708 3,980 -
Professional services 20,429 - -
Management fees to related
party 11,842 12 -
State and other taxes 424 - -
Depreciation and amortization 142,079 712 -
---------- ---------- ---------
298,482 4,704 -
---------- ---------- ---------
Net Income $1,154,760 $ 26,910 $ -
========== ========== =========
Allocation of Net Income:
General partners $ (1,421) $ (7) $ -
Limited partners 1,156,181 26,917 -
---------- ---------- ---------
$1,154,760 $ 26,910 $ -
========== ========== =========
Net Income per Limited Partner
Unit $ 0.51 $ 0.05 $ -
========== ========== =========
Weighted Average Number of
Limited Partner Units
Outstanding 2,279,801 503,436 -
========== ========== =========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1997 and 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
Contributions from
limited partners - - 25,723,944 - - - 25,723,944
Distributions to limited
partners ($0.57 per
limited partner unit) - - - (1,310,885) - - (1,310,885)
Syndication costs - - - - - (2,717,452) (2,717,452)
Net income - (1,421) - - 1,156,181 - 1,154,760
------- ------- ----------- ----------- ---------- ----------- -----------
Balance, December 31, 1997 $ 1,000 $(1,428) $34,145,759 $(1,368,731) $1,183,098 $(4,113,118) $29,846,580
======= ======= =========== =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ -------------
<S> <C>
Increase (Decrease) in Cash
and Cash Equivalents:
Cash Flows From Operating
Activities:
Cash received from
tenants $ 1,353,968 $ - $ -
Interest received 161,826 30,241 -
Cash paid for expenses (154,038) (3,095) -
------------ ------------ ----------
Net cash provided by
operating activities 1,361,756 27,146 -
------------ ------------ ----------
Cash Flows From Investing
Activities:
Additions to land and
buildings on
operating leases (18,581,999) (1,533,446) -
Investment in direct
financing leases (5,962,087) - -
Increase in other
assets - (276,848) -
Other 107 (107) (20)
------------ ------------ -----------
Net cash used in
investing activities (24,543,979) (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 (396,548) (497,420) -
Contributions from
general partners - - 1,000
Contributions from
limited partners 25,723,944 8,498,815 -
Distributions to
limited partners (855,957) (2,138) -
Payment of syndication
costs (2,450,214) (845,657) -
Other (67,000) - -
------------ ------------ ----------
Net cash provided
by financing
activities 21,954,225 7,153,600 1,000
------------ ------------ -----------
Net Increase (Decrease) in
Cash and Cash Equivalents (1,227,998) 5,370,345 980
Cash and Cash Equivalents at
Beginning of Period 5,371,325 980 -
------------ ------------ ----------
Cash and Cash Equivalents at
End of Period $ 4,143,327 $ 5,371,325 $ 980
============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ -------------
<S> <C>
Reconciliation of Net Income
to Net Cash Provided by
Operating Activities:
Net income $ 1,154,760 $ 26,910 $ -
------------ ------------ ------------
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 140,079 301 -
Amortization 2,000 411 -
Increase in receivables (66,771) (1,227) -
Decrease in net
investment in direct
financing leases 28,084 - -
Increase in accrued
rental income (128,079) (146) -
Increase in accounts
payable 398 57 -
Increase in due to
related parties,
excluding acquisition,
organization and
syndication costs paid
on behalf of the
Partnership 2,202 820 -
Increase in rents paid in
advance 28,277 - -
Increase in deferred
rental income 200,806 - -
Other - 20 -
------------ ------------ ------------
Total adjustments 206,996 236 -
------------ ------------ ------------
Net Cash Provided by Operating
Activities $ 1,361,756 $ 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 $ 134,138 $ 18,036 $ -
Organization costs - - 10,000
Syndication costs 211,216 285,858 186,174
------------ ------------ -------------
$ 345,354 $ 303,894 $ 196,174
============ ============ =============
Distributions declared
and unpaid at
December 31 $ 510,636 $ 55,708 $ -
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997 and 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 were to be
constructed, which are 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 3,414,576 units ($34,145,759) of limited
partnership interest had been sold as of December 31, 1997.
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 direct financing or operating methods. Such methods are
described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's net
investment in the leases.
17
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
Operating method - Land and building leases accounted for
using the operating method 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 (including rental payments, if
any, required during the construction of a property) 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.
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. In contrast, deferred
rental income represents the aggregate amount of scheduled
rental payments to date (including rental payments due during
construction and prior to the property being placed in
service) in excess of income recognized on a straight-line
basis over the lease term commencing on the date the property
is placed in service.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, 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, the
assets are adjusted to the fair value.
18
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
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.
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 5).
Rents Paid in Advance - Rents paid in advance by lessees for future
periods are deferred upon receipt and are recognized as revenues during
the period in which the rental income is earned. Rents paid in advance
include "interim rent" payments required to be paid under the terms of
certain leases for construction properties equal to a pre-determined
rate times the amount funded by the Partnership during the period
commencing with the effective date of the lease to the date minimum
annual rent becomes payable. Once minimum annual rent
19
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
1. Significant Accounting Policies - Continued:
becomes payable, the "interim rent" payments are amortized and recorded
as income either (i) over the lease term so as to produce a constant
periodic rate of return for leases accounted for using the direct
financing method, or (ii) over the lease term using the straight-line
method for leases accounted for using the operating method, whichever
is applicable.
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.
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to 1997 presentation.
These reclassifications had no effect on partners' capital or net
income.
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." Some of the Partnership's
leases are classified as operating leases and some of the leases have
been classified as direct financing leases. For the leases classified
as direct financing leases, the building portions of the property
leases are accounted for as direct financing leases while the land
portions of the majority of the leases are operating leases. The leases
have initial terms of 15 to 26 years and provide for minimum and
contingent rentals. 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
20
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
2. Leases - Continued:
damage, fire and extended coverage. The lease options generally allow
the tenants to renew the leases for two to five successive five-year
periods subject to the same terms and conditions as the initial lease.
Most 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:
1997 1996
----------- -----------
Land $10,812,849 $ 852,578
Building 9,476,977 659,134
----------- -----------
20,289,826 1,511,712
Less accumulated
depreciation (140,380) (301)
----------- -----------
20,149,446 1,511,411
Construction in progress 1,161,616 19,357
----------- -----------
$21,311,062 $ 1,530,768
=========== ===========
Generally, the leases provide for escalating guaranteed minimum rents
throughout the lease term. Income from these scheduled rent increases
is recognized on a straight-line basis over the terms of the leases.
For the years ended December 31, 1997 and 1996, the Partnership
recognized $128,079 and $146, respectively, of such rental income.
The following is a schedule of the future minimum lease payments to be
received on the noncancellable operating leases at December 31, 1997:
1998 $ 1,840,935
1999 1,855,422
2000 1,857,340
2001 1,858,867
2002 1,934,126
Thereafter 23,592,272
-----------
$32,938,962
21
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
3. Land and Buildings on Operating Leases - Continued:
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
leases based on a percentage of tenant's gross sales.
4. Net Investment in Direct Financing Leases:
The following lists the components of the net investment in direct
financing leases at December 31:
1997 1996
----------- ----------
Minimum lease payments
receivable $13,241,374 $ -
Estimated residual
values 1,773,526 -
Less unearned income (9,010,022) -
----------- ----------
Net investment in
direct financing
leases $ 6,004,878 $ -
=========== ==========
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1997:
1998 $ 677,167
1999 677,167
2000 677,167
2001 677,167
2002 683,170
Thereafter 9,849,536
-----------
$13,241,374
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (See Note 3).
22
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
5. 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 $2,717,452 and
$1,395,666 for the years ended December 31, 1997 and 1996,
respectively. 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.
6. 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").
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.
23
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
6. Allocations and Distributions - Continued:
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.
During the years ended December 31, 1997 and 1996, the Partnership
declared distributions to the limited partners of $1,310,885 and
$57,846. No distributions have been made to the general partners to
date.
24
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
7. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31, 1997 and 1996 and the period February 10, 1995 (date
of inception) through December 31, 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -------
<S> <C>
Net income for
financial reporting
purposes $1,154,760 $ 26,910 $ -
Depreciation for tax
reporting purposes
in excess of
depreciation for
financial reporting
purposes (45,009) (386) -
Direct financing leases
recorded as operating
leases for tax
reporting purposes 28,084 - -
Capitalization of admin-
strative expenses for
tax reporting purposes - 3,662
Accrued rental income (128,079) (146) -
Deferred rental income 281,415 -
Rents paid in advance 28,277 - -
Amortization for
financial reporting
purposes (less than)
in excess of amortiza-
tion for tax reporting
purposes (732) 183 -
Other 34 - -
---------- ---------- ---------
Net income for federal
income tax purposes $1,318,750 $ 30,223 $ -
========== ========== =========
</TABLE>
25
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
8. 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. James M. Seneff, Jr.
is director and chief executive officer of CNL Securities Corp. and is
director, chairman of the board of directors and chief executive
officer of CNL Fund Advisors, Inc. The other individual general
partner, Robert A. Bourne, is director and president of CNL Securities
Corp., is director, vice chairman of the board of directors and
treasurer of CNL Fund Advisors, Inc. and served as president of CNL
Fund Advisors, Inc through October 1997.
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. For
the years ended December 31, 1997 and 1996, the Partnership incurred
$2,186,535 and $715,854, respectively, as syndication costs for such
fees, of which $2,050,986 and $673,534, respectively, was or will be
reallowed 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. For the years ended
December 31, 1997 and 1996, the Partnership incurred $128,620 and
$42,109, respectively, of such fees. The majority of these fees were
reallowed to other broker-dealers for payment of bona fide due
diligence expenses.
CNL Fund Advisors, Inc. is 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. For the years ended December
31, 1997 and 1996, the Partnership incurred $1,157,577 and $378,982,
respectively, of such fees. Such fees are included in land and
buildings, net investment in direct financing leases and other assets.
26
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
8. Related Party Transactions - Continued:
The Partnership and CNL Fund Advisors, Inc. have entered into a
management agreement pursuant to which CNL Fund Advisors, Inc. receives
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 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. For the
years ended December 31, 1997 and 1996, the Partnership incurred
$11,842 and $12, respectively, for such management fees.
During the years ended December 31, 1997 and 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 years ended December 31, 1997 and 1996, and
the period February 10, 1995 (date of inception) through December 31,
1995, the expenses incurred for these services were classified as
follows:
1997 1996 1995
-------- -------- -------
Syndication costs $212,279 $106,887 $ 37,586
General operating
and administrative
expenses 98,207 2,980 -
-------- -------- -------
$310,486 $109,867 $ 37,586
======== ======== ========
27
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
8. Related Party Transactions - Continued:
The due to related parties consisted of the following at December 31:
1997 1996
-------- ------
Due to CNL Securities
Corp.:
Commissions $ 79,069 $ 44,186
Marketing support and
due diligence expense
reimbursement fee 5,191 2,599
-------- --------
84,260 46,785
-------- --------
Due to CNL Fund Advisors,
Inc. and its affiliates:
Expenditures incurred
on behalf of the
Partnership 1,737 2,788
Acquisition fees 29,757 23,392
Accounting and admini-
strative services 1,921 10,912
Management fees 556 12
-------- --------
33,971 37,104
-------- --------
$118,231 $ 83,889
======== ========
28
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, each representing more than ten percent of the
Partnership's total rental and earned income for at least one of the
periods ended:
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
through
December 31, December 31, December 31,
1997 1996 1995
<S> <C>
Golden Corral Corp. $241,395 $ - $ -
Foodmaker, Inc. 240,261 - -
Tiffany, L.L.C. 154,153 - -
IHOP Properties, Inc. 152,343 - -
Platinum Rotisserie,
L.L.C. 133,591 - -
Carrols Corporation 100,312 1,373 -
</TABLE>
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income for at
least one of the periods ended:
<TABLE>
<CAPTION>
February 10,
1995 (Date
of Inception)
through
December 31, December 31, December 31,
1997 1996 1995
<S> <C>
Golden Corral $395,548 $ - $ -
Jack in the Box 240,261 - -
Boston Market 231,489 - -
IHOP 152,343 - -
Burger King 100,312 1,373 -
</TABLE>
29
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 1997 and 1996 and the Period
February 10, 1995 (Date of Inception)
through December 31, 1995
9. Concentration of Credit Risk - Continued:
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership. However, the general partners believe that the risk
of such a default is reduced due to the essential or important nature
of these properties for the ongoing operations of the lessees.
10. Subsequent Events:
During the period January 1, 1997 through February 4, 1998, the
Partnership received capital contributions for an additional 74,408
units ($744,077) of limited partnership interest.
30
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Group, Inc. and their
affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 51, 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 served 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 through December 31, 1997, at which time CNL Realty Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., 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 a director, 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 a director,
Chairman of the Board and Chief Executive Officer of CNL American Properties
Fund, Inc. since 1994, and has served as a director, 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 $60 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 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.
31
<PAGE>
Robert A. Bourne, age 50, is President and Treasurer of CNL Group,
Inc., President, a director and a registered principal of CNL Securities Corp.,
President and a director of CNL Investment Company, and prior to its merger with
CNL Fund Advisors, Inc., effective January 1, 1996, CNL Income Fund Advisors,
Inc., and Chief Investment Officer, Vice Chairman of the Board of Directors, a
director and Treasurer of CNL Institutional Advisors, Inc., a registered
investment advisor. Mr. Bourne served as President of CNL Institutional
Advisors, Inc. from the date of its inception through June 30, 1997 and served
as President of CNL Fund Advisors, Inc. from the date of its inception through
October 1997. Mr. Bourne currently serves as Vice Chairman of the Board of
Directors and as Treasurer of CNL Fund Advisors, Inc. Mr. Bourne also has served
as a director since 1992, as President from July 1992 to February 1996, as
Secretary and Treasurer from February 1996 through December 1997, and since
February 1996, served as Vice Chairman of the Board of Directors 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, served as Treasurer
and Vice Chairman of CNL Realty Advisors, Inc. through December 31, 1997, at
which time CNL Realty Advisors, Inc. merged with Commercial Net Lease Realty,
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.
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.
CNL Fund Advisors, Inc. provides certain management services in
connection with the Partnership and its Properties. CNL Fund Advisors, Inc. is a
corporation organized in 1994 under the laws of the State of Florida, and its
principal office is located at 400 East South Street, 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 property
acquisition, property management and other services.
CNL Group, Inc., which is the parent company of CNL Fund Advisors,
Inc., was organized in 1980 under the laws of the State of Florida. CNL Group,
Inc. is a diversified real estate company which provides a wide range of real
estate, development and financial services to companies in the United States
through the activities of its subsidiaries. These activities are primarily
focused on the franchised restaurant and hospitality industries. 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.
32
<PAGE>
Curtis B. McWilliams, age 42, joined CNL Fund Advisors, Inc. in April
1997 and currently serves as President of CNL Fund Advisors, Inc. and as
Executive Vice President of CNL American Properties Fund, Inc. In addition, Mr.
McWilliams serves as Executive Vice President of CNL Group, Inc. and as
President of CNL Financial Services, Inc. and certain other subsidiaries of CNL
Group, Inc. From September 1983 through March 1997, Mr. McWilliams was employed
by Merrill Lynch. From January 1991 to August 1996, Mr. McWilliams was a
managing director in the corporate banking group of Merrill Lynch's investment
banking division. During this time, he was a senior relationship manager with
Merrill Lynch and as such was responsible for a number of the firm's larger
clients. From February 1990 to February 1993, he also served as co-head of one
of the Industrial Banking Groups within Merrill Lynch's investment banking
division and had administrative responsibility for a group of bankers and client
relationships, including the firm's transportation group. From September 1996 to
March 1997, Mr. McWilliams served as Chairman of Merrill Lynch's Private
Advisory Services. Mr. McWilliams received a B.S.E. in Chemical Engineering from
Princeton University in 1977 and a Masters of Business Administration with a
concentration in finance from the University of Chicago in 1983.
John T. Walker, age 39, is 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. Mr. Walker joined CNL Fund Advisors, Inc. in
September 1994, as Senior Vice President, responsible for Research and
Development. 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 49, 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, served as a director and Secretary of CNL Realty Advisors, Inc. since its
inception in 1991 through December 31, 1997, at which time CNL Realty Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., 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
January 1997. 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 300 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. She was licensed as a certified public accountant in 1979.
33
<PAGE>
Jeanne A. Wall, age 39, has served as Chief Operating Officer of CNL
Investment Company and of CNL Securities Corp. since November 1994 and has
served as Executive Vice President of CNL Investment Company since January 1991.
In 1984, Ms. Wall joined CNL Securities Corp. In 1985, Ms. Wall became Vice
President of CNL Securities Corp., in 1987, she became Senior Vice President and
in July 1997, she became Executive 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 product development, partnership administration and
investor services for programs offered through participating brokers, and
corporate communications for CNL Group, Inc. and Affiliates. Ms. Wall also has
served as Senior Vice President of CNL Institutional Advisors, Inc., a
registered investment advisor, from 1990 to 1993, as Vice President of CNL
Realty Advisors, Inc. since its inception in 1991 through 1997, as Vice
President of Commercial Net Lease Realty, Inc. from 1992 through 1997, 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 34, has served as Chief Financial Officer of
CNL Fund Advisors, Inc. since September 1996 and as Chief Financial Officer of
CNL American Properties Fund, Inc. since January 1997. Mr. Shackelford joined
CNL Fund Advisors, Inc. in September 1996. 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 audit 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.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 13, 1998, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 13, 1998, the beneficial
ownership interests of the General Partners in the Registrant.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Partner Beneficial Ownership Percent of Class
<S> <C>
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
----
100%
Limited Partnership Interests James M. Seneff, Jr. 2,500 Units 0.07%
Robert A. Bourne 2,500 Units 0.07%
-----
0.14%
</TABLE>
34
<PAGE>
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above. There are no arrangements
which at a subsequent date may result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 1997, exclusive of any distributions to which the General
Partners or their affiliates may be entitled in the event they purchase Units.
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Incurred
Type of Compensation For the Year Ended
and Recipient Method of Computation December 31, 1997
----------------------- --------------------- -------------------
<S> <C>
Selling commissions to CNL Commissions of 8.5% per Unit on $2,186,535, of which $2,050,986
Securities Corp., as managing all Units sold, up to eight percent was reallowed to other broker-
dealer of the Partnership's of which may be reallowed to dealers
offering of Units other dealers with respect to Units
sold by such dealers.
Due diligence expense reim- Fee equal to 0.5% of gross $128,620, the majority of which
bursement fee to CNL Securities offering proceeds, a portion of was reallowed to other broker-
Corp. which may be reallowed to other dealers for the payment of bona
dealers and from which all due fide due diligence expenses were
diligence expenses will be paid. paid.
Reimbursement to General Actual expenses incurred, except $423,495
Partners and their affiliates for that the General Partners will pay
organizational and offering all such expenses in excess of
expenses incurred in connection three percent of the gross offering
with the Partnership's offering of proceeds.
Units
Acquisition fees and expenses to Fees equal to 4.5% of gross Acquisition fees: $1,157,577
CNL Fund Advisors, Inc. offering proceeds to CNL Fund
Advisors, Inc., plus reimburse- Acquisition expenses:
ment to the General Partners and $134,138
their affiliates for expenses
actually incurred.
Reimbursement to CNL Fund Operating expenses are reimbursed Operating expenses incurred
Advisors, Inc. and affiliates for at the lower of cost or 90 percent on behalf of the Partnership:
operating expenses of the prevailing rate at which $44,166
comparable services could have
been obtained in the same Accounting and administra-
geographic area. Affiliates of the tive services: $98,207
General Partners from time to time
incur certain operating expenses on
behalf of the Partnership for which the
Partnership reimburses the affiliates
without interest.
==========================================================================================================================
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Incurred
Type of Compensation For the Year Ended
and Recipient Method of Computation December 31, 1997
----------------------- --------------------- -------------------
<S> <C>
Annual management fee to CNL One percent of the sum of gross $11,842
Fund Advisors, Inc. revenues (excluding noncash lease
accounting adjustments) from Properties
wholly owned by the Partnership plus
the Partnership's allocable share of
gross revenues of joint ventures in
which the Partnership is a co-venturer.
The management fee, which will not
exceed competi-tive fees for comparable
services in the same geographic area,
may or may not be taken, in whole or 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.
Deferred, subordinated real estate A deferred, subordinated real $ - 0 -
disposition fee payable to CNL estate disposition fee, payable
Fund Advisors, Inc. upon sale of one or more
Properties, in an amount equal to the
lesser of (i) one-half of a competitive
real estate commission, or (ii) three
percent of the sales price of such
Property or Properties. Payment of such
fee shall be made only if CNL Fund
Advisors, Inc. provides a substantial
amount of services in connection with
the sale of a Property or Properties
and shall be subordinated to certain
minimum returns to the limited
partners.
General Partners' deferred, sub- A deferred, subordinated share $ - 0 -
ordinated share of Partnership net equal to five percent of
cash flow Partnership distributions of net
cash flow, subordinated to certain
minimum returns to the limited
partners.
==========================================================================================================================
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Incurred
Type of Compensation For the Year Ended
and Recipient Method of Computation December 31, 1997
----------------------- --------------------- -------------------
<S> <C>
General Partners' deferred, sub- A deferred, subordinated share $ - 0 -
ordinated share of Partnership net equal to five percent of
sales proceeds from a sale or Partnership distributions of such
sales net sales proceeds, subordinated to
certain minimum returns to the
limited partners.
==========================================================================================================================
</TABLE>
37
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Accountants
Balance Sheets at December 31, 1997 and 1996
Statements of Income for the years ended December 31, 1997 and
1996 and the period February 10, 1995 (date of inception)
through December 31, 1995
Statements of Partners' Capital for the years ended December
31, 1997 and 1996 and the period February 10, 1995 (date of
inception) through December 31, 1995
Statements of Cash Flows for the years ended December 31, 1997
and 1996 and the period February 10, 1995 (date of inception)
through December 31, 1995
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1997
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1997
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
**3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVIII, Ltd. (Filed as Exhibit 3.2 to
the Registrant's Registration Statement on Form S-11,
No. 33-90998, incorporated herein by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XVIII, Ltd. (Included as Exhibit
4.2 to Form 10-K filed with the Securities and
Exchange Commission on March 21, 1996, and
incorporated herein by reference.)
**4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-90998-01 on Form
S-11 and incorporated herein by reference.)
**4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XVIII, Ltd. (Included as Exhibit
4.2 to Form 10-K filed with the Securities and
Exchange Commission on March 21, 1996, and
incorporated herein by reference.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd.
and MMS Escrow and Transfer Agency, Inc. and between
CNL Income Fund XVIII, Ltd. and MMS Escrow and
Transfer Agency, Inc. relating to the Distribution
Reinvestment Plans (Filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
38
<PAGE>
**8.4 Opinion of Baker & Hostetler regarding certain
material issues relating to the Distribution
Reinvestment Plan of CNL Income Fund XVIII, Ltd.
(Filed as Exhibit 8.4 to Amendment No. Three to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.1 Management Agreement between CNL Income Fund XVIII,
Ltd. and CNL Fund Advisors, Inc. (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on March 20, 1997, and
incorporated herein by reference.)
**10.2 Form of Joint Venture Agreement for Joint Ventures
with Unaffiliated Entities (Filed as Exhibit 10.2 to
the Registrant's Registration Statement on Form S-11,
No. 33-90998, incorporated herein by reference.)
**10.3 Form of Joint Venture Agreement for Joint Ventures
with Affiliated Programs (Filed as Exhibit 10.3 to
the Registrant's Registration Statement on Form S-11,
No. 33-90998, incorporated herein by reference.)
**10.4 Form of Development Agreement (Filed as Exhibit 10.5
to the Registrant's Registration Statement on Form
S-11, No. 33-90998, incorporated herein by
reference.)
**10.5 Form of Indemnification and Put Agreement (Filed as
Exhibit 10.6 to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated
herein by reference.)
**10.6 Form of Unconditional Guarantee of Payment and
Performance (Filed as Exhibit 10.7 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.7 Form of Lease Agreement for Existing Restaurant
(Filed as Exhibit 10.8 to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.8 Form of Lease Agreement for Restaurant to be
Constructed (Filed as Exhibit 10.9 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.9 Form of Premises Lease for Golden Corral Restaurant
(Filed as Exhibit 10.10 to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.10 Form of Agreement between CNL Income Fund XVII, Ltd.
and MMS Escrow and Transfer Agency, Inc. and between
CNL Income Fund XVIII, Ltd. and MMS Escrow and
Transfer Agency, Inc. relating to the Distribution
Reinvestment Plans (Filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.11 Form of Cotenancy Agreement with Unaffiliated Entity
(Filed as Exhibit 10.12 to Amendment No. One to the
Registrant's Registration Statement on Form S-11, No.
33- 90998, incorporated herein by reference.)
**10.12 Form of Cotenancy Agreement with Affiliated Entity
(Filed as Exhibit 10.13 to Amendment No. One to the
Registrant's Registration Statement on Form S-11, No.
33- 90998, incorporated herein by reference.)
39
<PAGE>
**10.13 Form of Registered Investor Advisor Agreement (Filed
as Exhibit 10.14 to Amendment No. One to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
(b) The Registrant filed no reports on Form 8-K during the period
October 1, 1997 through December 31, 1997.
**previously filed
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 26th day of
March, 1998.
CNL INCOME FUND XVIII, LTD.
By: CNL REALTY CORPORATION
General Partner
/s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE, President
By: ROBERT A. BOURNE
General Partner
/s/ Robert A. Bourne
----------------------------
ROBERT A. BOURNE
By: JAMES M. SENEFF, JR.
General Partner
/s/ James M. Seneff, Jr.
----------------------------
JAMES M. SENEFF, JR.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
==========================================================================================================================
Signature Title Date
<S> <C>
/s/ Robert A. Bourne President, Treasurer and Director March 26, 1998
- ---------------------------------------- (Principal Financial and
Robert A. Bourne Accounting Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer, March 26, 1998
- ---------------------------------------- Chairman and Director (Principal
James M. Seneff, Jr. Executive Officer)
==========================================================================================================================
</TABLE>
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Properties the Partnership
has Invested in Under
Operating Leases:
Arby's Restaurant:
Lexington, North Carolina $ - $ 210,369 $ - $ - $ -
Boston Market Restaurants:
Raleigh, North Carolina - 700,361 597,806 - -
Timonium, Maryland - 768,286 - 429,011 -
San Antonio, Texas - 676,288 - 225,926 -
Minnetonka, Minnesota - 574,291 - - -
Burger King Restaurant:
Kinston, North Carolina - 261,805 661,670 - -
Chevy's Fresh Mex Restaurant:
Mesa, Arizona - 1,027,746 1,596,063 - -
Golden Corral Family
Steakhouse Restaurants:
Houston, Texas - 888,446 - 765,352 -
Stow, Ohio - 489,090 - - -
Galveston, Texas - 686,534 - 751,467 -
Elizabethtown, Kentucky - 488,082 - 1,041,209 -
Destin, Florida - 563,723 - 1,161,616 -
Ground Round Restaurant:
Rochester, New York - 525,130 582,038 - -
IHOP Restaurant:
Santa Rosa, California - 499,771 - - -
Jack in the Box Restaurants:
Centerville, Texas - 261,222 - 541,645 -
Echo Park, California - 672,867 - 657,618 -
Henderson, Nevada - 521,361 - 606,942 -
Houston, Texas - 776,237 - 587,970 -
Wendy's Restaurant:
Sparta, Tennessee - 221,240 - 432,260 -
-------- ----------- ----------- ---------- ------
$ - $10,812,849 $ 3,437,577 $7,201,016 $ -
======== =========== =========== ========== ======
Properties the Partnership
has Invested in Under
Direct Financing Leases:
Arby's Restaurant:
Lexington, North Carolina - $ - $ 457,680 $ - $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
$ 210,369 (f) $ 210,369 $ - 1997 07/97 (d)
700,361 597,806 1,298,167 18,758 1994 01/97 (b)
768,286 429,011 1,197,297 6,659 1997 05/97 (b)
676,288 225,926 902,214 2,798 1997 04/97 (b)
574,291 (f) 574,291 - 1997 04/97 (d)
261,805 661,670 923,475 22,358 1994 12/96 (b)
1,027,746 1,596,063 2,623,809 146 1994 12/97 (b)
888,446 765,352 1,653,798 19,115 1997 12/96 (b)
489,090 (f) 489,090 - 1997 04/97 (d)
686,534 751,467 1,438,001 15,504 1997 01/97 (b)
488,082 1,041,209 1,529,291 6,830 1997 05/97 (b)
563,723 1,161,616 1,725,339 (h) (g) 09/97 (h)
525,130 582,038 1,107,168 3,871 1981 10/97 (b)
499,771 (f) 499,771 - 1997 05/97 (d)
261,222 541,645 802,867 12,680 1997 01/97 (b)
672,867 657,618 1,330,485 11,260 1997 01/97 (b)
521,361 606,942 1,128,303 10,171 1997 01/97 (b)
776,237 587,970 1,364,207 5,276 1997 05/97 (b)
221,240 432,260 653,500 4,954 1997 04/97 (b)
----------- ------------ ----------- ------------
$10,812,849 $ 10,638,593 $21,451,442 $ 140,380
=========== ============ =========== ============
$ - (f) $ (f) (d) 1997 07/97 (d)
</TABLE>
F-1
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent
Initial Cost To Acquisition
Buildings
Encum- and Improve- Carrying
brances Land Improvements ments Costs
<S> <C>
Black-eyed Pea Restaurant
Atlanta, Georgia - - - 652,012 -
Golden Corral Family
Steakhouse Restaurant:
Stow, Ohio - - 1,279,131 - -
IHOP Restaurants:
Bridgeview, Illinois - 353,714 1,149,532 - -
Santa Rosa, California - - 856,829 - -
On the Border Restaurant:
San Antonio, Texas - - - 1,284,064 -
------- ----------- ----------- ---------- -------
$ - $ 353,714 $ 3,743,172 $1,936,076 $ -
======= =========== =========== ========== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------ ----------- ------------ --------- -------- ----------
<S> <C>
- (f) (f) (d) 1991 03/97 (d)
- (f) (f) (d) 1997 04/97 (d)
(f) (f) (f) (d) 1972 07/97 (e)
- (f) (f) (d) 1994 05/97 (d)
- (f) (f) (d) 1997 04/97 (d)
</TABLE>
F-2
<PAGE>
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
(a) Transactions in real estate and accumulated depreciation during 1997
and 1996 are summarized as follows:
<TABLE>
<CAPTION>
Accumulated
Cost (b) Depreciation
<S> <C>
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
Acquisitions 19,920,373 -
Depreciation expense - 140,079
----------- -----------
Balance, December 31, 1997 $21,451,442 $ 140,380
=========== ===========
</TABLE>
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 1997, the aggregate cost of the Properties owned
by the Partnership for federal income tax purposes was $26,322,788.
All of the leases are treated as operating leases for federal income
tax purposes.
(d) For financial reporting purposes, the portion of the lease relating
to the building has been recorded as a direct financing leases. The
cost of the building has been included in net investment in direct
financing leases; therefore, depreciation is not applicable.
(e) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land
and building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(f) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(g) Scheduled for completion in 1998.
(h) Property was not placed in service as of December 31, 1997;
therefore, no depreciation was taken.
F-3
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
Exhibit Number Page
**3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-90998-01 on Form S-11 and incorporated herein
by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-90998-01 on Form S-11 and incorporated herein
by reference.)
**4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating
to the Distribution Reinvestment Plans (Filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**8.4 Opinion of Baker & Hostetler regarding certain material issues
relating to the Distribution Reinvestment Plan of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 8.4 to Amendment No. Three
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.1 Management Agreement between CNL Income Fund XVIII, Ltd. and
CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 20,
1997, and incorporated herein by reference.)
**10.2 Form of Joint Venture Agreement for Joint Ventures with
Unaffiliated Entities (Filed as Exhibit 10.2 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.3 Form of Joint Venture Agreement for Joint Ventures with
Affiliated Programs (Filed as Exhibit 10.3 to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**10.4 Form of Development Agreement (Filed as Exhibit 10.5 to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.5 Form of Indemnification and Put Agreement (Filed as Exhibit
10.6 to the Registrant's Registration Statement on Form S-11,
No. 33-90998, incorporated herein by reference.)
**10.6 Form of Unconditional Guarantee of Payment and Performance
(Filed as Exhibit 10.7 to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated herein by
reference.)
i
<PAGE>
**10.7 Form of Lease Agreement for Existing Restaurant (Filed as
Exhibit 10.8 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
**10.8 Form of Lease Agreement for Restaurant to be Constructed
(Filed as Exhibit 10.9 to the Registrant's Registration
Statement on Form S-11, No. 33-90998, incorporated herein by
reference.)
**10.9 Form of Premises Lease for Golden Corral Restaurant (Filed as
Exhibit 10.10 to the Registrant's Registration Statement on
Form S-11, No. 33-90998, incorporated herein by reference.)
**10.10 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating
to the Distribution Reinvestment Plans (Filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.11 Form of Cotenancy Agreement with Unaffiliated Entity (Filed as
Exhibit 10.12 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33- 90998,
incorporated herein by reference.)
**10.12 Form of Cotenancy Agreement with Affiliated Entity (Filed as
Exhibit 10.13 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33- 90998,
incorporated herein by reference.)
**10.13 Form of Registered Investor Advisor Agreement (Filed as
Exhibit 10.14 to Amendment No. One to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
27 Financial Data Schedule (Filed herewith.)
**previously filed
ii
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of CNL Income Fund XVIII, Ltd. at December 31, 1997, and its statement of
income for the year then ended and is qualified in its entirety by reference to
the Form 10K of CNL Income Fund XVIII, Ltd. for the year ended December 31,
1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,143,327
<SECURITIES> 0
<RECEIVABLES> 68,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,451,442
<DEPRECIATION> 140,380
<TOTAL-ASSETS> 31,823,613
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,846,580
<TOTAL-LIABILITY-AND-EQUITY> 31,823,613
<SALES> 0
<TOTAL-REVENUES> 1,453,242
<CGS> 0
<TOTAL-COSTS> 298,482
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,154,760
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,154,760
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,154,760
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Due to the nature of its industry, CNL Income Fund XVIII, Ltd. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
