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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, 2000
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 0-15666
CNL INCOME FUND, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-2666264
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801-3336
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
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:
Units of limited partnership interest ($500 per Unit)
(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. [ ]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 30,000 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 for such Units. Each Unit was originally sold at $500 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
Item 1. Business
CNL Income Fund, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on November 26, 1985. 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 April 16, 1986, the
Partnership offered for sale up to $15,000,000 in limited partnership interests
(the "Units") (30,000 Units at $500 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended. The
offering terminated on December 31, 1986, as of which date the maximum offering
proceeds of $15,000,000 had been received from investors who were admitted to
the Partnership as limited partners (the "Limited Partners").
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 selected national and regional fast-food restaurant chains (the
"Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$13,284,970, and were used to acquire 20 Properties, including interests in
three Properties owned by joint ventures in which the Partnership is a
co-venturer. During the year ended December 31, 1997, the Partnership sold its
Property in Casa Grande, Arizona to a third party. In addition, during 1997,
Seventh Avenue Joint Venture, in which the Partnership owned a 50 percent
interest, sold its Property to the tenant and the Partnership received a return
of capital from the net sales proceeds. The Partnership reinvested the majority
of the net sales proceeds from the sale of the Property in Casa Grande, Arizona,
and the return of capital received from Seventh Avenue Joint Venture in a
Property in Camp Hill, Pennsylvania, and in a Property in Vancouver, Washington,
as tenants-in-common, with affiliates of the General Partners. During 1998, the
Partnership sold its Property in Kissimmee, Florida to the tenant and
distributed the majority of the net sales proceeds as a special distribution to
the Limited Partners and used the remaining net sales proceeds to pay
Partnership liabilities. During 1999, the Partnership sold its Property in Kent
Island, Maryland, to a third party and distributed the majority of the net sales
proceeds as a special distribution to the Limited Partners and distributed the
remaining net sales proceeds to pay Partnership liabilities. During 2000, the
Partnership sold its Property in Merritt Island, Florida, to a third party and
distributed the sales proceeds as a special distribution to the Limited
Partners. In addition, during 2000, the Partnership sold its Property in
Salisbury, Maryland, to a third party. The General Partners anticipate
distributing net sales proceeds to the Limited Partners in 2001. As a result of
the above transactions, as of December 31, 2000, the Partnership owned 14
Properties. The 14 Properties include interests in two Properties owned by joint
ventures in which the Partnership is a co-venturer and one Property owned with
affiliates of the General Partners as tenants-in-common. Generally, 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 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 repurchase Properties, generally at
the Property's then fair market value after a specified portion of the lease
term has elapsed. 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
or joint venture purchase options granted to certain lessees.
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration for the Merger. On
March 1, 2000, the General Partners and APF announced that they had mutually
agreed to terminate the Agreement and Plan of Merger entered into in March 1999.
The agreement to terminate the Agreement and Plan of Merger was based, in large
part, on the General Partners' concern that, in light of market conditions
relating to publicly traded real estate investment trusts, the value of the
transaction had diminished. As a result of such diminishment, the General
Partners' ability to unequivocally recommend voting for the transaction, in the
exercise of their fiduciary duties, had become questionable. The General
Partners are continuing to evaluate strategic alternatives for the Partnership,
including alternatives to provide liquidity to the Limited Partners.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
joint ventures in which the Partnership is a co-venturer provide for initial
lease terms, ranging from five to 20 years (the average being 16 years), and
expire between 2001 and 2018. Generally, the leases are on a triple-net basis,
with the lessees responsible for all repairs and maintenance, property taxes,
insurance and utilities. The leases of the Properties provide for minimum base
annual rental payments (payable in monthly installments) ranging from
approximately $16,000 to $222,800. Generally, the leases provide for percentage
rent, based on sales in excess of a specified amount, to be paid annually. In
addition, certain leases provide for increases in the annual base rent during
the lease term.
Generally, the leases of the Properties provide for two or three
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of seven of the Partnership's 14 Properties also have
been granted options to purchase Properties at the Property's then fair market
value, or pursuant to a formula based on the original cost of the Property,
after a specified portion of the lease term has elapsed. Fair market value will
be determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a percentage of the
Partnership's purchase price, if that amount is greater than the Partnership's
fair market value at the time the purchase option is exercised. Additionally,
certain leases provide the lessees the option to purchase up to a 49 percent
joint venture interest in the Property, after a specified portion of the lease
term has elapsed, at an option purchase price similar to those described above
multiplied by the percentage interest in the Property with respect to which the
option is being exercised.
The leases also provide that, in the event the Partnership wishes to
sell the Property subject to that lease, the Partnership first must offer the
lessee the right to purchase the Property on the same terms and conditions, and
for the same price, as any offer which the Partnership has received for the sale
of the Property.
Major Tenants
During 2000, Golden Corral Corporation contributed more than ten
percent of the Partnership's total rental income (including the Partnership's
share of the rental income from two Properties owned by joint ventures and one
Property owned with affiliates of the General Partners as tenants-in-common). As
of December 31, 2000, Golden Corral Corporation was the lessee under leases
relating to three restaurants. It is anticipated that based on the minimum
rental payments required by the leases, this lessee will continue to contribute
ten percent or more of the Partnership's total rental income in 2001. In
addition, two Restaurant Chains, Golden Corral Family Steakhouse Restaurants
("Golden Corral") and Wendy's Old Fashioned Hamburger Restaurants ("Wendy's"),
each accounted for more than ten percent of the Partnership's total rental
income in 2000 (including the Partnership's share of the rental income from two
Properties owned by joint ventures and one Property owned with affiliates of the
General Partners as tenants-in-common). In 2001, it is anticipated that these
two Restaurant Chains each will continue to account for more than ten percent of
the total rental income to which the Partnership is entitled under the terms of
its leases. Any failure of this lessee or these Restaurant Chains could
materially affect the Partnership's income if the Partnership is not able to
re-lease the Properties in a timely manner. As of December 31, 2000, Golden
Corral Corporation leased Properties with an aggregate carrying value in excess
of 20 percent of the total assets of the Partnership.
Joint Venture and Tenancy in Common Arrangements
The Partnership has entered into two separate joint venture
arrangements: Sand Lake Road Joint Venture and Orange Avenue Joint Venture, each
with Pembrook Properties, an unaffiliated entity, for each joint venture to
purchase and hold one Property. The joint venture arrangements for Sand Lake
Road Joint Venture and Orange Avenue Joint Venture provide for the Partnership
and its joint venture partner to share equally in all costs and benefits
associated with the joint venture. The Partnership has a 50 percent interest in
each of Sand Lake Road Joint Venture and Orange Avenue Joint Venture. The
Partnership and its joint venture partner are jointly and severally liable for
all debts, obligations and other liabilities of the joint venture.
Each joint venture has an initial term of 20 years, and, after the
expiration of the initial term, continues in existence from year to year unless
terminated at the option of either joint venturer or by an event of dissolution.
Events of dissolution include the bankruptcy, insolvency or termination of any
joint venturer, sale of the Property owned by the joint venture and mutual
agreement of the Partnership and its joint venture partner to dissolve the joint
venture.
The Partnership shares management control for each joint venture with
Pembrook Properties. The joint venture agreements restrict each venturer's
ability to sell, transfer or assign its joint venture interest without first
offering it for sale to the joint venture partner, either upon such terms and
conditions as to which the venturers may agree or, in the event the venturers
cannot agree, on the same terms and conditions as any offer from a third party
to purchase such joint venture interest.
Net cash flow from operations of each joint venture is distributed 50
percent to each joint venture partner. Any liquidation proceeds, after paying
joint venture debts and liabilities and funding reserves for contingent
liabilities, will be distributed first to the joint venture partners with
positive capital account balances in proportion to such balances until such
balances equal zero, and thereafter in proportion to each partner's percentage
interest in the joint venture.
In addition to the above joint venture agreements, the Partnership has
entered into an agreement to hold a Property in Vancouver, Washington, as
tenants-in-common, with CNL Income Fund II, Ltd., CNL Income Fund V, Ltd. and
CNL Income Fund VI, Ltd., affiliates of the General Partners. The agreement
provides for the Partnership and the affiliates to share in the profits and
losses of the Property in proportion to each co-tenant's percentage interest.
The Partnership owns a 12.17% interest in this Property. Each of the affiliates
is a limited partnership organized pursuant to the laws of the state of Florida.
The tenancy in common agreement restricts each co-tenant's ability to sell,
transfer, or assign its interest in the tenancy in common's Property without
first offering it for sale to the remaining co-tenants.
The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional property, or at times when a
suitable opportunity to purchase an additional property is not available. The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of Properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of a
Property if the proceeds are reinvested in an additional Property.
Property Management
CNL Fund Advisors, Inc., an affiliate of the General Partners, acts as
manager of the Partnership's Properties pursuant to a property management
agreement with the Partnership. Under this agreement, CNL Fund Advisors, Inc.
(the "Advisor") 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-half of one percent of Partnership assets (valued at cost)
under management, not to exceed the lesser of one percent of gross rental
revenues or competitive fees for comparable services. Under the property
management agreement, the property management fee is subordinated to receipt by
the Limited Partners of an aggregate, ten percent, noncumulative, noncompounded
annual return on their adjusted capital contributions (the "10% Preferred
Return"), calculated in accordance with the Partnership's limited partnership
agreement (the "Partnership Agreement"). In any year in which the Limited
Partners do not receive a 10% Preferred Return, no property management fee will
be paid.
The property 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 and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of APF, the parent company 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 Financial 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, 2000, the Partnership owned 14 Properties. Of the 14
Properties, 11 are owned by the Partnership in fee simple, two are owned through
joint venture arrangements and one is owned through a tenancy in common
arrangement. See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its Partnership Agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 16,200
to 77,400 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation.
State Number of Properties
Alabama 1
Arizona 2
Florida 2
Georgia 1
Louisiana 1
Oklahoma 1
Pennsylvania 1
Texas 3
Virginia 1
Washington 1
--------------
TOTAL PROPERTIES 14
==============
Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. The buildings
generally are rectangular and are constructed from various combinations of
stucco, steel, wood, brick and tile. Building sizes range from approximately
1,900 to 7,400 square feet. All buildings on Properties acquired by the
Partnership are freestanding and surrounded by paved parking areas. Buildings
are suitable for conversion to various uses, although modifications may be
required prior to use for other than restaurant operations. As of December 31,
2000, the Partnership had no plans for renovation of the Properties.
Depreciation expense is computed for buildings and improvements using the
straight line method using depreciable lives of 18, 19, and 39 years for federal
income tax purposes.
As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including the Property owned through a
tenancy in common arrangement) for federal income tax purposes was $7,409,020
and $3,691,857, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Properties Number of Properties
Burger King 1
Chevy's Fresh Mex 1
Golden Corral 3
Ground Round 1
Pizza Hut 2
Wendy's 5
Other 1
--------------
TOTAL PROPERTIES 14
==============
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance 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.
Leases
The Partnership leases the Properties to operators of selected national
and regional fast-food Restaurant Chains. The Properties are generally leased on
a long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is 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. The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.
As of December 31, 2000, 1999, 1998, 1997 and 1996, the Properties were
100% occupied. The following is a schedule of the average annual rent per
Property for each of the years ended December 31:
2000 1999 1998 1997 1996
------------- -------------- --------------- -------------- -------------
Rental Revenues (1) $ 1,047,257 $ 1,126,114 $ 1,154,410 $1,183,568 $ 1,232,983
Properties 14 16 17 18 18
Average Rent per
Property $ 74,804 $ 70,382 $ 67,906 $ 65,754 $ 68,499
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Property owned through a tenancy in common arrangement. Rental revenues
have been adjusted, as applicable, for any amounts for which the
Partnership has established an allowance for doubtful accounts.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for each year for the next ten years and
thereafter.
Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- ------------------ --------------------------
2001 3 $ 265,419 30.95%
2002 -- -- --
2003 -- -- --
2004 1 33,600 3.92%
2005 -- --
2006 4 249,569 29.10%
2007 1 15,960 1.86%
2008 -- -- --
2009 -- -- --
2010 1 55,571 6.48%
Thereafter 4 237,566 27.69%
---------------- ------------------ ----------------
Totals 14 $ 857,685 100.00%
================ ================== ================
Leases with Major Tenant
The terms of the leases with the Partnership's major tenant as of
December 31, 2000 see Item 1. Business - Major Tenants), are substantially the
same as those described in Item 1. Business - Leases.
Golden Corral Corporation leases three Golden Corral restaurants. The
initial term of each lease is 15 years (expiring 2001) and the average minimum
base annual rent is approximately $88,500 (ranging from approximately $77,600 to
$109,300). The General Partners will seek to re-lease these Properties with
Golden Corral or another tenant, or to sell these Properties upon the expiration
of the leases.
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
(a) As of March 15, 2001, there were 1,054 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. During 2000, Limited Partners who
wished to sell their Units could have offered the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their distributions used to acquire additional Units (to the
extent Units were available for purchase), could have done so pursuant to such
Plan. The General Partners had the right to prohibit transfers of Units. From
January 1997 through April 1998, due primarily to sales of Properties in prior
years, the price paid for any Unit transferred pursuant to the Plan was $422 per
Unit. Effective with the date of sale of the Property in Kissimmee, Florida, as
described below in Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Capital Resources, the price paid for any
Unit transferred pursuant to the Plan ranged from $351.50 to $410. The price
paid for any Unit transferred other than pursuant to the Plan was subject to
negotiation by the purchaser and the selling Limited Partner. The Partnership
will not redeem or repurchase Units.
The following table reflects, for each calendar quarter, the high, low
and average sales prices for transfers of Units during 2000 and 1999 other than
pursuant to the Plan, net of commissions.
2000 (1) 1999 (1)
-------------------------------- ---------------------------------
High Low Average High Low Average
------- ------- ---------- ------- ------- ----------
First Quarter $431 $431 $431 $352 $352 $ 352
Second Quarter 370 289 329 400 381 391
Third Quarter 230 230 230 (2) (2) (2)
Fourth Quarter (2) (2) (2) 330 240 292
(1) A total of 110 and 418 Units were transferred other than pursuant to
the Plan for the years ended December 31, 2000 and 1999, respectively.
(2) No transfer of Units took place during the quarter other than pursuant
to the Plan.
The capital contribution per Unit was $500. 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, 2000 and 1999, the Partnership
declared cash distributions of $2,162,878 and $1,067,928, respectively, to the
Limited Partners. Distributions during the year ended December 31, 2000 included
$1,200,000 in a special distribution, as a result of the distribution of net
sales proceeds from the sales of Properties in Merritt Island, Florida, and Kent
Island, Maryland. This special distribution was effectively a return of a
portion of the Limited Partners' investment, although, in accordance with the
Partnership agreement, $509,695 was applied towards the 10% Preferred Return, on
a cumulative basis, and the balance of $690,305 was treated as a return of
capital for purposes of calculating the 10% Preferred Return. As a result of
this return of capital and the returns of capital in prior years, the amount of
the Limited Partners' invested capital contributions (which generally is the
Limited Partners' capital contributions, less distributions from the sale of
Properties that are considered to be a return of capital) was decreased;
therefore, the amount of the Limited Partners' invested capital contributions on
which the 10% Preferred Return is calculated was lowered accordingly. As a
result of the sale of these Properties, the Partnership's total revenue was
reduced during 2000 and is expected to remain reduced in subsequent years, while
the majority of the Partnership's operating expenses remain fixed. Therefore,
distributions of net cash flow were adjusted commencing during the quarter ended
September 30, 2000. No distributions have been made to the General Partners to
date.
As indicated in the chart below, distributions were declared at the
close of each of the Partnership's calendar quarters. This amount includes
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis.
Quarter Ended 2000 1999
------------------- ------------- ---------------
March 31 $ 266,982 $ 266,982
June 30 266,982 266,982
September 30 1,414,457 266,982
December 31 214,457 266,982
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.
(b) Not Applicable
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
------------- ------------- ------------- ------------- -------------
Year ended December 31:
Revenues (1) $1,068,154 $1,119,652 $1,153,824 $1,333,000 $1,389,308
Net income (2) 1,112,519 1,075,771 1,001,437 1,248,757 1,083,109
Cash distributions
declared (3) 2,162,878 1,067,928 1,703,468 1,264,884 1,264,884
Net income per Unit (2) 37.08 35.51 33.09 41.24 35.75
Cash distributions declared
per Unit (3) 72.10 35.60 56.78 42.16 42.16
At December 31:
Total assets $7,672,948 $8,825,685 $8,760,926 $9,500,078 $9,479,777
Partners' capital 7,284,503 8,334,862 8,327,019 9,029,050 9,045,177
(1) Revenues include equity in earnings of joint ventures.
(2) Net income for the years ended December 31, 2000, 1999, 1998, 1997 and
1996, includes $306,715, $315,649, $235,804, $233,183 and $19,000,
respectively, from gains on sale of assets. In addition, net income for
the years ended December 31, 2000 and 1999, includes lease termination
income of $35,863 and $50,000, respectively, recognized by the
Partnership as consideration for the Partnership releasing former
tenants from their obligation under the terms of their respective
leases.
(3) Distributions for the year ended December 31, 2000 and 1998 include
$1,200,000 and $586,300, respectively, as a result of the distribution
of a portion of the net sales proceeds from the sales of Properties.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Partnership was organized on November 26, 1985, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurant Properties were to be constructed, which are leased primarily to
operators of selected national and regional fast-food Restaurant Chains. The
leases are generally triple-net leases, with the lessees generally responsible
for all repairs and maintenance, property taxes, insurance and utilities. As of
December 31, 2000, the
Partnership owned 14 Properties, either directly or indirectly through
joint venture and tenancy in common arrangements.
Capital Resources
During the years ended December 31, 2000, 1999, and 1998, the
Partnership generated cash from operations (which includes cash received from
tenants, distributions from joint ventures and interest received, less cash paid
for expenses) of $881,410, $1,043,124 and $1,033,789, respectively. The decrease
in cash from operations during 2000 as compared to 1999, was primarily a result
of changes in the Partnership's working capital. The decrease in cash from
operations 1999, as compared to 1998, was primarily a result of changes in
income and expenses as described in "Results of Operations" below.
Other sources and uses of capital included the following during the
years ended December 31, 2000, 1999 and 1998.
In April 1998, the Partnership sold its Property in Kissimmee, Florida,
to the tenant for $680,000 and received net sales proceeds of $661,300,
resulting in a gain of $235,804 for financial reporting purposes. This Property
was originally acquired by the Partnership in 1987 and had a cost of
approximately $475,400, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold this Property for approximately
$185,900 in excess of its original purchase price. In connection with the sale,
the Partnership incurred a deferred, real estate disposition fee of $20,400.
Payment of the real estate disposition fee is subordinated to receipt by the
Limited Partners of their cumulative 10% Preferred Return, plus their adjusted
capital contributions. The Partnership distributed $586,300 of the net sales
proceeds received from the 1998 sale of the Property in Kissimmee, Florida as a
special distribution to the Limited Partners and used the remaining net sales
proceeds available to pay Partnership liabilities.
In October 1999, the Partnership sold its Property in Kent Island,
Maryland to a third party for $875,000 and received net sales proceeds of
approximately $820,500, resulting in a gain of $315,649 for financial reporting
purposes. This Property was originally acquired by the Partnership in 1986 and
had a cost of approximately $726,600, excluding acquisition fees and
miscellaneous acquisition expenses; therefore, the Partnership sold the Property
for approximately $93,900 in excess of its original purchase price. In
connection with the sale, the Partnership also received $50,000 from the former
tenant as consideration for the Partnership releasing the tenant from its
obligation under the terms of its lease. The Partnership used a portion of the
net sales proceeds to pay liabilities of the Partnership, including quarterly
distributions to the Limited Partners, and a portion to pay a special
distribution to the Limited Partners.
In September and November 2000, the Partnership sold its Properties in
Merritt Island, Florida and Salisbury, Maryland, for a total of approximately
$1,311,500, and received net sales proceeds totaling approximately $1,305,600,
resulting in a total gain of $306,715, for financial reporting purposes. These
Properties were originally acquired by the Partnership in 1986 and had costs
totaling approximately $1,260,300, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Properties for a total
of approximately $45,300 in excess of their original purchase prices. Also, in
connection with the sale of the Property in Salisbury, Maryland, the Partnership
received $35,863 from the former tenant as consideration for the Partnership
releasing the tenant from its obligation under the terms of the lease. In
connection with the sales, the Partnership incurred deferred, real estate
disposition fees of $39,345. Payment of the real estate disposition fees are
subordinated to receipt by the Limited Partners of their 10% Preferred Return,
plus their adjusted capital contributions. The Partnership distributed a portion
of the net sales proceeds received as a special distribution to the Limited
Partners and intends to use the remaining net sales proceeds to pay Partnership
liabilities, including quarterly distributions.
During 1999, the Partnership entered into a promissory note with the
corporate General Partner for a loan in the amount of $122,000 in connection
with the operations of the Partnership. The note was uncollateralized,
non-interest bearing and due on demand. As of December 31, 1999, the Partnership
had repaid the loan in full to the corporate General Partner. In addition,
during 2000, the Partnership entered into another promissory note with the
corporate General Partner for a loan in the amount of $70,000 in connection with
the operations of the Partnership. The note was uncollateralized, non-interest
bearing and due on demand. As of December 31, 2000, the Partnership had repaid
the loan in full to the corporate General Partner.
None of the Properties owned by the Partnership, or the joint ventures
and tenancy in common arrangements in which the Partnership owns an interest, is
or may be encumbered. Subject to certain restrictions on borrowings from the
General Partners, however, the Partnership may borrow, in the discretion of the
General Partners, for the purpose of maintaining the operations of the
Partnership. The Partnership will not encumber any of the Properties in
connection with any borrowings or advances. The Partnership will not borrow for
the purpose of returning capital to the Limited Partners. The Partnership also
will not borrow under circumstances which would make the Limited Partners liable
to creditors of the Partnership. Affiliates of the General Partners from time to
time incur certain operating expenses on behalf of the Partnership for which the
Partnership reimburses the affiliates without interest.
Currently, rental income from the Partnership's Properties and net
sales proceeds from the sale of Properties, are invested in money market
accounts or other short-term, highly liquid investments such as demand deposit
accounts at commercial banks, money market accounts and certificates of deposit
with less than a 30-day maturity date, pending the Partnership's use of such
funds to pay Partnership expenses or to make distributions to the partners. At
December 31, 2000, the Partnership had $1,019,821 invested in such short-term
investments as compared to $1,048,174 at December 31, 1999. As of December 31,
2000, the average interest rate earned by the Partnership on rental income
deposited in demand deposit accounts at commercial banks was approximately 3%
annually. The funds remaining at December 31, 2000, after payment of
distributions and other liabilities will be used to meet the Partnership's
working capital and other needs.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and generally 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 continue to generate
cash flow in excess of operating expenses.
Due to low ongoing operating expenses and ongoing cash flow, the
General Partners do not believe that working capital reserves are necessary at
this time. In addition, because the leases for the Partnership's Properties are
generally on a triple-net basis, it is not anticipated that a permanent reserve
for maintenance and repairs will be established at this time. The General
Partners may determine to establish reserves in the future. 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, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership, in which event such contributions will be
returned to the General Partners from distributions of net sales proceeds at the
same time that their initial capital contributions of $1,000 are returned.
The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based primarily on current and anticipated future cash from
operations, and for 2000 and 1998 proceeds from the sale of Properties as
described above, the Partnership declared distributions to Limited Partners of
$2,162,878, $1,067,928, and $1,703,468 for 2000, 1999 and 1998, respectively.
This represents distributions of $49.09, $35.60 and $44.45 per Unit for the
years ended December 31, 2000, 1999 and 1998, respectively. The distributions to
the Limited Partners for 2000 and 1999 were also based on loans received from
the General Partners of $70,000 and $122,000, respectively, which were
subsequently repaid, as described above in "Capital Resources." Distributions
during 2000 and 1998 included $1,200,000 and $586,300, respectively, of net
sales proceeds from the sale of the Properties in Merritt Island, Florida, Kent
Island, Maryland and Kissimmee, Florida. These special distributions were
effectively a return of a portion of the Limited Partners investment; although,
in accordance with the Partnership Agreement, $509,695 and $216,361
respectively, was applied towards the 10% Preferred Return, on a cumulative
basis, and the balances of $690,305 and $369,939, respectively, were treated as
a return of capital for purposes of calculating the 10% Preferred Return. As a
result of the sales of these Properties, the Partnership's total revenue was
reduced during 2000, 1999 and 1998 and is expected to remain reduced in
subsequent years, while the majority of the Partnership's operating expenses
remained fixed. Therefore, distributions of net cash flow were adjusted
commencing during the quarter ended September 30, 2000 and June 30, 1998,
respectively. The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.
During 2000, the general partners waived their right o receive future
distributions from the Partnership, including both distributions of operating
cash flow and distributions of liquidation proceeds, to the extent that the
cumulative amount of such distributions would exceed the balance in the general
partners' capital account as of December 31, 1999. Accordingly, the general
partners were not allocated any net income and did not receive any distributions
during the year ended December 31, 2000.
As of December 31, 2000, 1999 and 1998, the Partnership owed $2,484,
$36,327 and $41,910, respectively, to affiliates for operating expenses and
accounting and administrative services. As of March 15, 2001, the Partnership
had reimbursed the affiliates of all such amounts. In addition, as of December
31, 2000 and 1999, the Partnership owed affiliates $126,495, and $87,150,
respectively, in real estate disposition fees as a result of services rendered
in connection with the sales of two Properties in 2000 and three Properties in
previous years. The payment of such fees is deferred until the Limited Partners
have received the sum of their cumulative 10% Preferred Return and their
adjusted capital contributions. Amounts payable to other parties, including
distributions payable, decreased to $259,466, at December 31, 2000, from
$367,346 at December 31, 1999. The decrease is primarily the result of the
Partnership paying amounts accrued at December 31, 1999 relating to the proposed
and terminated Merger with APF, as described below in "Termination of Merger".
The General Partners believe that the Partnership has sufficient cash on hand to
meet its current working capital needs.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During 1998, the Partnership owned and leased 15 wholly owned
Properties (including one Property which was sold during 1998) and during 1999,
the Partnership owned and leased 14 wholly owned Properties (including one
Property which was sold during 1999). During 2000, the Partnership owned and
leased 13 wholly owned Properties (including two Properties which were sold
during 2000). During the years ended December 31, 2000, 1999 and 1998, the
Partnership was a co-venturer in two separate joint ventures that each owned and
leased one Property. In addition, during 2000, 1999 and 1998, the Partnership
owned and leased one Property, with an affiliate of the General Partners, as
tenants-in-common. As of December 31, 2000, the Partnership owned, either
directly or through joint venture arrangements, 14 Properties which are, in
general, subject to long-term, triple net leases. The leases of the Properties
provide for minimum base annual rental amounts (payable in monthly installments)
ranging from approximately $16,000 to $222,800. Generally, the leases provide
for percentage rent based on sales in excess of a specified amount. In addition,
certain leases provide for increases in the annual base rent during the lease
terms. For further description of the Partnership's leases and Properties, see
Item 1. Business - Leases and Item 2. Properties, respectively.
During the years ended December 31, 2000, 1999 and 1998, the
Partnership earned $875,958, $971,726 $1,015,292, respectively, in rental income
from the Partnership's wholly owned Properties described above. The decrease in
rental income during 2000 and 1999, each as compared to the previous year, was
primarily attributable to a decrease in rental income as a result of the sale of
Properties during 2000, 1999 and 1998.
During the years ended December 31, 2000, 1999 and 1998, the
Partnership also earned $54,453, $37,537 and $22,193, respectively, in
contingent rental income. The increase in contingent rental income during 2000
and 1999, each as compared to the previous year, was attributable to an
increase, in gross sales of certain restaurant Properties, the leases of which
require the payment of contingent rent.
In addition, during the years ended December 31, 2000, 1999, and 1998,
the Partnership earned $95,658, $95,251, and $95,252, respectively, attributable
to net income earned by the two joint ventures in which the Partnership is a
co-venturer and one Property owned with affiliates of the General Partners as
tenants-in-common.
During the year ended December 31, 2000, one of the Partnership's
lessees, Golden Corral Corporation contributed more than ten percent of the
Partnership's total rental income (including the Partnership's share of the
rental income from two Properties owned by joint ventures and one Property owned
with an affiliate as tenants-in-common). As of December 31, 2000, Golden Corral
Corporation was the lessee under leases relating to three restaurants. It is
anticipated that Golden Corral Corporation will continue to contribute ten
percent or more of the Partnership's total rental income during 2001. In
addition, two Restaurant Chains, Golden Corral and Wendy's, each accounted for
more than ten percent of the Partnership's total rental income in 2000
(including the Partnership's share of the rental income from two Properties
owned by joint ventures and one Property owned with an affiliate as
tenants-in-common). It is anticipated that these two Restaurant Chains each will
continue to account for more than ten percent of the total rental income to
which the Partnership is entitled under the terms of its leases. Any failure of
this lessee or these Restaurant Chains could materially affect the Partnership's
income if the Partnership is not able to re-lease the Properties in a timely
manner. In addition, the initial lease terms relating to the three Properties
leased by Golden Corral Corporation expire in 2001 and are renewable at the
option of the tenant. In the event Golden Corral Corporation does not renew some
or all of its leases, and the General Partners are not able to re-lease the
Properties on as favorable of terms, the Partnership's income may be adversely
affected.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $42,085, $15,138 and $21,087, respectively, in interest and
other income. The increase in interest and other income during 2000, as compared
to 1999, was primarily attributable to interest income earned on the net sales
proceeds relating to the 1999 and 2000 sales of several Properties pending
distributions to the Limited Partners or payment of liabilities of the
Partnership.
Operating expenses, including depreciation and amortization expense,
were $298,213, $409,530, and $388,191, for the years ended December 31, 2000,
1999, and 1998, respectively. The decrease in operating expenses during 2000 as
compared to 1999, and the increase during 1999, as compared to 1998, was
partially attributable to the amount of transaction costs the Partnership
incurred related to the General Partners retaining financial and legal advisors
to assist them in evaluating and negotiating the proposed and terminated merger
as described below in "Termination of Merger." In addition, the decrease in
operating expenses during 2000 was partially attributable to a decrease in
depreciation expense as a result of the 2000 sales of the Properties in Merritt
Island, Florida and Salisbury, Maryland and the 1999 sale of the Property in
Kent Island, Maryland. The decrease in operating expenses during 2000, was also
partially due to the fact that during 2000, the Partnership received
reimbursement from the tenant of the Property in Mesquite, Texas for previously
incurred legal expenses.
As a result of the sales of the Properties in Merritt Island, Florida
and Salisbury, Maryland, as described above in "Capital Resources," the
Partnership recognized gains totaling $306,715 for financial reporting purposes
during 2000. In connection with the sale of the Property in Salisbury, Maryland,
the Partnership also received $35,863 as a lease termination fee from the former
tenant in consideration of the Partnership's releasing the tenant from its
obligation under the terms of the lease. As a result of the sale of the Property
in Kent Island, Maryland, as described above in "Capital Resources," the
Partnership recognized a gain of $315,649 for financial reporting purposes
during 1999. In connection with the sale, the Partnership also received $50,000
as a lease termination fee from the former tenant in consideration of the
Partnership's releasing the tenant from its obligation under the terms of the
lease. In addition, as a result of the sale of the Property in Kissimmee,
Florida, as described above in "Capital Resources," the Partnership recognized a
gain of $235,804 for financial reporting purposes during 1998.
The Partnership's leases as of December 31, 2000, are, in general,
triple-net leases and contain provisions that the General Partners believe
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 (for certain Properties) 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.
In December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. SAB 101 requires the
Partnership to defer recognition of certain percentage rental income until
certain defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
partnership's result of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 13, "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments,
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. The Statement requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement No.
133." FAS 137 deferred the effective date of FAS 133 for one year. FAS 133, as
amended, is now effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000. The partnership has reviewed both statements and has
determined that both FAS 133 and FAS 137 do not apply to the Partnership as of
December 31, 2000.
Termination of Merger
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with APF, pursuant to which the Partnership would be merged with and
into a subsidiary of APF. Under the Agreement and Plan of Merger, APF was to
issue shares of its common stock as consideration for the Merger. On March 1,
2000, the General Partners and APF announced that they had mutually agreed to
terminate the Agreement and Plan of Merger entered into in March 1999. The
agreement to terminate the Agreement and Plan of Merger was based, in large
part, on the General Partners' concern that, in light of market conditions
relating to publicly traded real estate investment trusts, the value of the
transaction had diminished. As a result of such diminishment, the General
Partners' ability to unequivocally recommend voting for the transaction, in the
exercise of their fiduciary duties, had become questionable. The General
Partners are continuing to evaluate strategic alternatives for the Partnership
including alternatives to provide liquidity to the Limited Partners.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 15
Financial Statements:
Balance Sheets 16
Statements of Income 17
Statements of Partners' Capital 18
Statements of Cash Flows 19-20
Notes to Financial Statements 21-34
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund, Ltd.
In our opinion, the financial statements listed in the index appearing under
item 14(a)(1) present fairly, in all material respects, the financial position
of CNL Income Fund, Ltd. (a Florida limited partnership) at December 31, 2000
and 1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule listed in the index appearing
under item 14(a)(2) presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related financial
statements. 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 of these statements in accordance with
auditing standards generally accepted in the United States of America, which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
February 2, 2001
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
2000 1999
------------------ ------------------
ASSETS
Land and buildings on operating leases, less
accumulated depreciation $ 5,735,013 $ 6,870,603
Investment in and due from joint ventures 804,857 822,993
Cash and cash equivalents 1,019,821 1,048,174
Receivables, less allowance for doubtful
accounts of $1,236 in 1999 45,342 18,768
Prepaid expenses 9,419 8,322
Lease costs, less accumulated amortization
of $29,375 and $26,875, respectively 20,625 23,125
Accrued rental income 37,871 33,700
------------------ ------------------
$ 7,672,948 $ 8,825,685
================== ==================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 11,770 $ 62,519
Escrowed real estate taxes payable 2,176 10,402
Distributions payable 214,457 266,982
Due to related parties 128,979 123,477
Rents paid in advance and deposits 31,063 27,443
------------------ ------------------
Total liabilities 388,445 490,823
Partners' capital 7,284,503 8,334,862
------------------ ------------------
$ 7,672,948 $ 8,825,685
================== ==================
See accompanying notes to financial statements.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
---------------- --------------- ----------------
Revenues:
Rental income from operating leases $ 875,958 $ 971,726 $ 1,015,292
Contingent rental income 54,453 37,537 22,193
Interest and other income 42,085 15,138 21,087
---------------- --------------- ----------------
972,496 1,024,401 1,058,572
---------------- --------------- ----------------
Expenses:
General operating and administrative 91,029 87,383 87,080
Professional services 4,516 32,841 17,110
Real estate taxes -- -- 3,969
State and other taxes 8,600 4,867 4,450
Depreciation and amortization 178,510 201,277 268,260
Transaction costs 15,558 83,162 7,322
---------------- --------------- ----------------
298,213 409,530 388,191
---------------- --------------- ----------------
Income Before Equity in Earnings of Joint
Ventures, Gain on Sale of Assets
and Lease Termination Income 674,283 614,871 670,381
Equity in Earnings of Joint Ventures 95,658 95,251 95,252
Gain on Sale of Assets 306,715 315,649 235,804
Lease Termination Income 35,863 50,000 --
---------------- --------------- ----------------
Net Income $1,112,519 $ 1,075,771 $ 1,001,437
================ =============== ================
Allocation of Net Income
General partners $ -- $ 10,338 $ 8,671
Limited partners 1,112,519 1,065,433 992,766
---------------- --------------- ----------------
$1,112,519 $ 1,075,771 $ 1,001,437
================ =============== ================
Net Income Per Limited Partner Unit $ 37.08 $ 35.51 $ 33.09
================ =============== ================
Weighted Average Number of
Limited Partner Units Outstanding 30,000 30,000 30,000
================ =============== ================
See accompanying notes to financial statements.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2000, 1999, and 1998
General Partners Limited Partners
----------------------------------- ---------------------------------------------------------------------
Accumulated Accumulated Syndication
Contributions Earnings Contributions Distributions Earnings Costs Total
---------------- ---------------- --------------- --------------- -------------- ------------ --------
Balance, December 31, 1997 $ 193,400 $ 128,359 $ 13,314,525 $(15,958,846) $ 13,014,752 $(1,663,140)$9,029,050
Distributions to limited
partners ($56.78 per
limited partner unit) -- -- (369,939 ) (1,333,529) -- -- (1,703,468)
Net income -- 8,671 -- -- 992,766 -- 1,001,437
---------- ---------------- --------------- --------------- -------------- ---------- ----------
Balance, December 31, 1998 $ 193,400 137,030 12,944,586 (17,292,375) 14,007,518 (1,663,140) 327,019
Distributions to limited
partners ($35.60 per
limited partner unit) -- -- -- (1,067,928) -- -- (1,067,928)
Net income -- 10,338 -- -- 1,065,433 -- 1,075,771
---------- ---------------- --------------- ---------------- ------------- ------------ ---------
Balance, December 31, 1999 193,400 147,368 12,944,586 (18,360,303) 15,072,951 (1,663,140)$8,334,862
Distributions to limited
partners ($72.10 per
limited partner unit) -- -- (690,305) (1,472,573) -- -- (2,162,878)
Net income -- -- -- -- 1,112,519 -- 1,112,519
---------- ---------------- --------------- ---------------- ----------- ------------ --------
Balance, December 31, 2000 $ 193,400 $ 147,368 $ 12,254,281 $ (19,832,876) $16,185,470 (1,663,14 $7,284,503
========== ================ =============== ============== ========== =========== ==========
See accompanying notes to financial statements.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31,
2000 1999 1998
--------------- --------------- ---------------
Increase (Decrease) in Cash and Cash Equivalents:
Cash Flows from Operating Activities:
Cash received from tenants $ 925,069 $1,134,569 $1,030,115
Distributions from joint venture 113,794 113,637 113,770
Cash paid for expenses (199,315 ) (216,695 ) (131,054 )
Interest received 41,862 11,613 20,958
--------------- --------------- ---------------
Net cash provided by operating activities 881,410 1,043,124 1,033,789
--------------- --------------- ---------------
Cash Flows from Investing Activities:
Proceeds from sale of assets 1,305,640 820,457 661,300
Decrease in restricted cash -- -- 126,009
--------------- --------------- ---------------
Net cash provided by investing
activities 1,305,640 820,457 787,309
--------------- --------------- ---------------
Cash Flows from Financing Activities:
Proceeds from loan from corporate general
partner 70,000 122,000 --
Repayment of loan from corporate general
partner (70,000 ) (122,000 ) --
Distributions to limited partners (2,215,403 ) (1,067,928 ) (1,752,707 )
--------------- --------------- ---------------
Net cash used in financing activities (2,215,403 ) (1,067,928 ) (1,752,707 )
--------------- --------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents
(28,353 ) 795,653 68,391
Cash and Cash Equivalents at Beginning of Year 1,048,174 252,521 184,130
--------------- --------------- ---------------
Cash and Cash Equivalents at End of Year $1,019,821 $1,048,174 $ 252,521
=============== =============== ===============
See accompanying notes to financial statements.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Years Ended December 31,
2000 1999 1998
--------------- --------------- --------------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net Income $1,112,519 $1,075,771 $1,001,437
--------------- --------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 176,010 198,777 206,181
Amortization 2,500 2,500 62,079
Equity in earnings of joint
ventures, net of distributions 18,136 18,386 18,518
Gain on sale of assets (306,715 ) (315,649 ) (235,804 )
Decrease (increase) in receivables (26,574 ) 12,191 (6,380 )
Increase in prepaid expenses (1,097 ) (2,859 ) (474 )
Increase in accrued rental income (4,171 ) (2,909 ) (3,486 )
Decrease in accounts payable and
accrued expenses (58,975 ) 71,161 (1,569 )
Decrease in due to
related parties (33,843 ) (5,583 ) (7,081 )
Increase (decrease) in rents paid in
advance and deposits 3,620 (8,662 ) 368
--------------- --------------- --------------
Total adjustments (231,109 ) (32,647 ) 32,352
--------------- --------------- --------------
Net Cash Provided by Operating Activities $ 881,410 $1,043,124 $1,033,789
=============== =============== ==============
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Deferred real estate disposition fee
incurred and unpaid at end of year $ 39,345 $ -- $ 20,400
=============== =============== ==============
Distributions declared and unpaid at
December 31 $ 214,457 $ 266,982 $ 266,982
=============== =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies:
-------------------------------
Organization and Nature of Business - CNL Income Fund, 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 restaurant chains.
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 generally leased to unrelated
third parties on a triple-net basis, whereby the tenant is generally
responsible for all operating expenses relating to the property,
including property taxes, insurance, maintenance and repairs. The
leases are accounted for using the operating method. Under the
operating method, land and building leases are recorded at cost,
revenue is recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30 years.
When scheduled rentals vary during the lease term, income is recognized
on a straight-line basis so as to produce a constant periodic rent over
the lease term commencing on the date the property is placed in
service.
Accrued rental income represents the aggregate amount of income
recognized on a straight-line basis in excess of scheduled rental
payments to date. Whenever a tenant defaults under the terms of its
lease or events or changes in circumstances indicate that the tenant
will not lease the property through the end of the lease term, the
Partnership either creates an allowance or reverses the cumulative
accrued rental income balance.
When the properties are sold, the related cost and accumulated
depreciation plus any accrued rental income, are removed from the
accounts and gains or losses from sales will be reflected in income.
The general partners of the Partnership review the 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
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
carrying cost of the individual property. If an impairment is
indicated, the assets are adjusted to their fair value. Although the
general partners have made their best estimate of these factors based
on current conditions, it is reasonably possible that changes could
occur in the near term which could adversely affect the general
partners' best estimate of net cash flows expected to be generated from
its properties and the need for asset impairment write downs.
When the collection of amounts recorded as rental or other income is
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables,
and to decrease rental or other income or increase bad debt expense for
the current period, although the Partnership continues to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and the allowance for
doubtful accounts are decreased accordingly.
Investment in Joint Ventures - The Partnership's investments in Sand
Lake Road Joint Venture and Orange Avenue Joint Venture, which are
joint venture arrangements with an unaffiliated entity, are accounted
for using the equity method since the Partnership shares control of
these joint ventures with the unaffiliated entity. The Partnership's
investment in the property in Vancouver, Washington, held as
tenants-in-common with affiliates of the General Partners, is accounted
for using the equity method since the Partnership shares control with
affiliates which have the same general partners.
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.
Lease Costs - Lease incentive costs and brokerage and legal fees
associated with negotiating new leases are amortized over the terms of
the new leases using the straight-line method.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
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.
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. The more significant areas requiring
the use of management estimates relate to the allowance for doubtful
accounts and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
Reclassification- Certain items in the prior years' financial
statements have been reclassified to conform to 2000 presentation.
These reclassifications had no effect on partners capital or net
income.
Staff Accounting Bulleting No. 101 ("SAB 101")
In December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. SAB 101
requires the Partnership to defer recognition of certain percentage
rental income until certain defined thresholds are met. The Partnership
adopted SAB 101 beginning January 1, 2000. Implementation of SAB 101
did not have a material impact on the partnership's result of
operations.
Statement of Financial Accounting Standards No 133 ("FAS 133") and
Statement of Financial Accounting Standards No. 137 ("FAS 137")
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 13, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement CNL INCOME FUND, LTD. (A Florida Limited Partnership)
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair
value. In June 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities Deferral of the Effective
Date of FASB Statement No. 133, an amendment of FASB Statement No.
133." FAS 137 deferred the effective date of FAS 133 for one year. FAS
133, as amended, is now effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The partnership has reviewed both
statements and has determined that both FAS 133 and FAS 137 do not
apply to the Partnership as of December 31, 2000.
2. Leases:
------
The Partnership leases its land and buildings primarily to operators of
national and regional fast-food restaurants. The leases are accounted
for under the provisions of Statement of Financial Accounting Standards
No. 13, "Accounting for Leases." The leases have been classified as
operating leases. Substantially all leases are for 15 to 20 years and
provide for minimum and contingent rentals. In addition, the tenant
generally pays all property taxes and assessments, fully maintains the
interior and exterior of the building and carries insurance coverage
for public liability, property damage, fire and extended coverage. The
lease options generally allow tenants to renew the leases for two or
three 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.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases:
--------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
----------------- -----------------
Land $ 3,107,282 $ 3,619,063
Buildings 4,618,604 5,454,223
----------------- -----------------
7,725,886 9,073,286
Less accumulated depreciation (1,990,873 ) (2,202,683 )
----------------- -----------------
$ 5,735,013 $ 6,870,603
================= =================
During the year ended December 31, 1998, the Partnership sold its
property in Kissimmee, Florida for $680,000 and received net sales
proceeds of $661,300, resulting in a gain of $235,804 for financial
reporting purposes. This property was originally acquired by the
Partnership in 1987 and had a cost of approximately $475,400, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold this property for approximately $185,900 in excess of
its original purchase price. In connection with the sale, the
Partnership incurred a deferred, subordinated, real estate disposition
fee of $20,400 (see Note 7).
During the year ended December 31, 1999, the Partnership sold its
property in Kent Island, Maryland for $875,000 and received net sales
proceeds of approximately $820,500, resulting in a gain of $315,649 for
financial reporting purposes. This property was originally acquired by
the Partnership in 1986 and had a cost of approximately $726,600,
excluding acquisition fees and miscellaneous acquisition expenses;
therefore the Partnership sold the property for approximately $93,900
in excess of its original purchase price. In connection with the sale,
the Partnership also received $50,000 from the former tenant in
consideration of the Partnership releasing the tenant from its
obligation under the terms of its lease.
During 2000, the Partnership sold two properties, one in each of
Merritt Island, Florida and Salisbury, Maryland, for a total of
approximately $1,311,500 and received total net sales proceeds of
approximately $1,305,600, resulting in a total gain of $306,715 for
financial reporting purposes. These properties were originally acquired
by the Partnership in 1986 and had costs totaling approximately
$1,260,300, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued:
--------------------------------------------------
the properties for approximately $45,300 in excess of their original
purchase price. In connection with the sales, the Partnership incurred
deferred, subordinated, real estate disposition fees of $39,345 (see
Note 7), and received $35,863 from the former tenant of the Salisbury,
Maryland property in consideration of the Partnership releasing the
tenant from its obligation under the terms of its lease.
Certain leases provide for escalating guaranteed minimum rents
throughout the lease terms. 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, 2000, 1999 and 1998, the Partnership
recognized $4,171, $2,909 and $3,486, respectively, of such income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 724,677
2002 492,115
2003 492,411
2004 461,935
2005 461,431
Thereafter 3,057,321
----------------
$ 5,689,890
================
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 terms. 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 the tenant's gross sales.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Investment in Joint Ventures:
-----------------------------
As of December 31, 2000, the Partnership had a 50 percent interest in
the profits and losses of Orange Avenue Joint Venture and Sand Lake
Road Joint Venture, and owned a 12.17% interest in a property in
Vancouver, Washington, with affiliates of the general partners. These
joint ventures, and the tenancy-in-common with affiliates of the
general partners, as tenants-in-common, each owns and leases one
property to an operator of national fast-food or family-style
restaurant. The following presents the combined, condensed financial
information for the joint ventures and the property held as
tenants-in-common with affiliates at December 31:
2000 1999
--------------- -------------
Land and buildings on operating
leases, less accumulated
depreciation $3,106,804 $3,184,085
Cash 513 11,384
Prepaid expenses 227 301
Accrued rental income 69,133 46,110
Liabilities 913 12,102
Partners' capital 3,175,764 3,229,778
Revenues 420,947 420,003
Net income 341,488 340,215
The Partnership recognized income totaling $95,658, $95,251 and
$95,252, for the years ended December 31, 2000, 1999 and 1998,
respectively, from these joint ventures.
5. Allocations and Distributions:
-----------------------------
From inception through December 31, 1999, all net income and net losses
of the Partnership, excluding gains and losses from the sale of
properties, were allocated 99 percent to the limited partners and one
percent to the general partners. From inception through December 31,
1999, distributions of net cash flow were made 99 percent to the
limited partners and one percent to the general partners; provided,
however, that the one percent of net cash flow to be distributed to the
general partners was subordinated to receipt by the limited partners of
an aggregate, ten percent, noncumulative, noncompounded annual return
on their adjusted capital contributions (the "10% Preferred Return").
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Allocations and Distributions - Continued:
-----------------------------------------
From inception through December 31, 1999, generally, net sales proceeds
from the sale of properties not in liquidation of the Partnership, to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their cumulative 10%
Preferred Return, plus the return of their adjusted capital
contributions. The general partners then received, to the extent
previously subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds were distributed 95 percent
to the limited partners and five percent to the general partners. Any
gain from the sale of a property not in liquidation of the Partnership
was, in general, allocated in the same manner as net sales proceeds are
distributable. Any loss from the sale of a property was, in general,
allocated first, on a pro rata basis, to partners with positive
balances in their capital accounts; and thereafter, 95 percent to the
limited partners and five percent to the general partners.
Generally, net sales proceeds from a liquidating sale of properties,
will be used in the following order: (i) first to pay and discharge all
of the Partnership's liabilities to creditors, (ii) second, to
establish reserves that may be deemed necessary for any anticipated or
unforeseen liabilities or obligations of the Partnership, (iii) third,
to pay all of the Partnership's liabilities, if any, to the general and
limited partners, (iv) fourth, after allocations of net income, gains
and/or losses, to distribute to the partners with positive capital
account balances, in proportion to such balances, up to amounts
sufficient to reduce such positive balances to zero, and (v)
thereafter, any funds remaining shall then be distributed 95 percent to
the limited partners and five percent to the general partners.
Effective January 2000, the general partners waived their right to
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2000.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Allocations and Distributions - Continued:
During the years ended December 31, 2000, 1999, and 1998, the
Partnership declared distributions to the limited partners of
$2,162,878, $1,067,928, and $1,703,468, respectively. Distributions for
the year ended December 31, 2000, included $1,200,000 in a special
distribution, as a result of the distribution of net sales proceeds
from the sales of the properties in Merritt Island, Florida and Kent
Island, Maryland. This special distribution was effectively a return of
a portion of the limited partners' investment, although in accordance
with the partnership agreement, $509,695 was applied toward the limited
partners' 10% Preferred Return and the balance of $690,305 was treated
as a return of capital for purposes of calculating the limited
partners' 10% Preferred Return. Distributions for the year ended
December 31, 1998, included $586,300 in a special distribution, as a
result of the distribution of net sales proceeds from the sale of the
property in Kissimmee, Florida. This special distribution was
effectively a return of a portion of the limited partners' investment,
although, in accordance with the Partnership agreement, $216,361 was
applied toward the limited partners' 10% Preferred Return and the
balance of $369,939 was treated as a return of capital for purposes of
calculating the limited partners' 10% Preferred Return. As a result of
the returns of capital in 2000 and 1998, the amount of the limited
partners' invested capital contributions (which generally is the
limited partners' capital contributions, less distributions from the
sale of a property that are considered to be a return of capital) was
decreased; therefore, the amount of the limited partners' invested
capital contributions on which the 10% Preferred Return is calculated
was lowered accordingly. As a result of the sales of the properties,
the Partnership's total revenue was reduced, while the majority of the
Partnership's operating expenses remained fixed. Therefore,
distributions of net cash flow were adjusted during the quarters ended
June 30, 1998 and September 30, 2000. No distributions have been made
to the general partners to date.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
6. Income Taxes:
------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
2000 1999 1998
------------ ------------- -------------
Net income for financial reporting purposes $ 1,112,519 $ 1,075,771 $ 1,001,437
Depreciation for tax reporting purposes in
excess of depreciation for financial
reporting purposes (67,844 ) (79,392 ) (87,967 )
Gain on sale of assets for tax reporting
purposes in excess of gain for
financial reporting purposes 226,810 159,469 58,632
Equity in earnings of joint ventures for
financial reporting purposes in
excess of equity in earnings of joint
ventures for tax reporting purposes (14,938 ) (5,649 ) 49,058
Capitalization (Deduction) of transaction
costs for tax reporting purposes (90,484 ) 83,162 7,322
Accrued rental income (4,171 ) (2,909 ) (3,486 )
Rents paid in advance 3,620 (8,662 ) 368
Allowance for doubtful accounts (1,236 ) 1,236 (3,091 )
------------ ------------- -------------
Net income for federal income tax purposes $1,164,276 $ 1,223,026 $ 1,022,273
============ ============= =============
7. Related Party Transactions:
--------------------------
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc. CNL Fund Advisors, Inc. (the "Advisor") was a majority owned
subsidiary of CNL Financial Group, Inc. until it merged with CNL
American Properties Fund, Inc. ("APF"), effective September 1, 1999.
The individual general partners are stockholders and directors of APF.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Related Party Transactions - Continued:
--------------------------------------
The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with
the Partnership. In connection therewith, the Partnership has agreed to
pay the Advisor an annual, noncumulative, subordinated property
management fee of one-half of one percent of the Partnership assets
under management (valued at cost) annually. The property management fee
is limited to one percent of the sum of gross operating revenues from
properties wholly owned by the Partnership and the Partnership's
allocable share of gross operating revenues from joint ventures or
competitive fees for comparable services. In addition, these fees will
be incurred and will be payable only after the limited partners receive
their aggregate, noncumulative 10% Preferred Return. Due to the fact
that these fees are noncumulative, if the limited partners do not
receive their 10% Preferred Return in any particular year, no
management fees will be due or payable for such year. As a result of
such threshold, no management fees were incurred during the years ended
December 31, 2000, 1999, and 1998.
The Advisor is also entitled to receive a deferred, subordinated real
estate disposition fee, payable upon the sale of one or more properties
based on the lesser of one-half of a competitive real estate commission
or three percent of the sales price if the Advisor provides a
substantial amount of services in connection with the sale. However, if
the net sales proceeds are reinvested in a replacement property, no
such real estate disposition fees will be incurred until such
replacement property is sold and the net sales proceeds are
distributed. Payment of the real estate disposition fee is subordinated
to the receipt by the limited partners of their aggregate 10% Preferred
Return on a cumulative basis, plus their adjusted capital
contributions. For the years ended December 31, 2000 and 1998, the
Partnership incurred $39,345 and $20,400, respectively, in a deferred,
subordinated real estate disposition fee as a result of the sale of
three properties (see Note 3). No deferred, subordinated real estate
disposition fees were incurred for the year ended December 31, 1999.
During the years ended December 31, 2000, 1999, and 1998, the Advisor
and their affiliates provided accounting and administrative services to
the Partnership on a day-to-day basis including services relating to
the proposed and terminated merger. The Partnership incurred $60,102,
$70,060, and $63,981 for the years ended December 31, 2000, 1999, and
1998, respectively, for such services.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Related Party Transactions - Continued:
---------------------------------------
The due to related parties consisted of the following at December 31:
2000 1999
-------------- -------------
Due to the Advisor and its affiliates:
Deferred, subordinated real
estate disposition fee $126,495 $ 87,150
Expenditures incurred on
behalf of the Partnership -- 29,044
Accounting and
administrative services 2,484 7,283
-------------- -------------
$128,979 $ 123,477
============== =============
The deferred, subordinated real estate disposition fees will not be
paid until after the limited partners have received their cumulative
10% Preferred Return, plus their adjusted capital contributions.
8. Concentration of Credit Risk:
----------------------------
The following schedule presents total rental income from individual
lessees, each representing more than ten percent of the Partnership's
total rental income (including the Partnership's share of rental income
from joint ventures and the property held as tenants-in-common with
affiliates of the general partners) for each of the years ended
December 31:
2000 1999 1998
-------------- -------------- ---------------
Golden Corral Corporation $352,128 $433,228 $452,653
Wendy's International, Inc. N/A 171,340 N/A
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. Concentration of Credit Risk - Continued:
----------------------------------------
In addition, the following schedule presents total rental income from
individual restaurant chains, each representing more than ten percent
of the Partnership's total rental income (including the Partnership's
share of rental income from joint ventures and the property held as
tenant-in-common with an affiliate of the general partners) for each of
the years ended December 31:
2000 1999 1998
-------------- -------------- -------------
Golden Corral Family
Steakhouse Restaurants $ 352,128 $ 433,228 $ 452,653
Wendy's Old Fashioned
Hamburger Restaurants 374,416 353,612 352,330
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 if the Partnership is not able to re-lease the
properties in a timely manner.
The information denoted by N/A indicates that for each period
presented, the tenant did not represent more than ten percent of the
Partnership's total rental income.
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each full quarter during they years ended December 31, 2000
and 1999:
2000 Quarter First Second Third Fourth Year
--------------------- -------------- -------------- --------------- ------------- ---------------
Revenues (1) $ 272,734 $262,682 $ 264,165 $268,573 $1,068,154
Net Income 163,802 178,388 456,906 313,423 1,112,519
Net income per
limited partner
unit 5.41 5.89 15.12 10.66 37.08
1999 Quarter First Second Third Fourth Year
-------------- -------------- --------------- ------------- ---------------
Revenues (1) $ 259,154 $275,616 $ 273,988 $310,894 $1,119,652
Net Income 145,909 171,391 175,584 582,887 1,075,771
Net income per
limited partner
unit 4.82 5.66 5.79 19.24 35.51
(1) Revenues include equity in earnings of joint ventures.
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 Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. 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
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in June
2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group, Inc. (formerly CNL Group, Inc.), a diversified real estate company, and
has served as a director, Chairman of the Board and Chief Executive Officer of
CNL Financial Group, Inc. since its formation in 1980. CNL Financial Group, Inc.
is the parent company, either directly or indirectly through subsidiaries, of
CNL Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. Mr. Seneff also serves as a Director, Chairman
of the Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust, as well as, CNL Hospitality
Corp., its advisor. In addition, he serves as a Director, Chairman of the Board
and Chief Executive Officer of CNL Retirement Properties, Inc., a public,
unlisted real estate investment trust and its advisor, CNL Retirement Corp.
Since 1992, Mr. Seneff has also served as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net Lease Realty, Inc., a public real
estate investment trust that is listed on the New York Stock Exchange. Mr.
Seneff has also served as a Director, Chairman of the Board and Chief Executive
Officer of CNL Securities Corp. since 1979; CNL Investment Company since 1990;
and CNL Institutional Advisors, Inc., a registered investment advisor for
pension plans, since 1990. Mr. Seneff formerly served as a Director of First
Union National Bank of Florida, N.A., and currently serves as the Chairman of
the Board of CNL Bank. 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. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as Treasurer
from February 1999 through August 1999 and from May 1994 through December 1994.
He also served in various executive positions with the Advisor prior to its
merger with APF including, President from 1994 through September 1997, and
Director from 1994 through August 1999. Mr. Bourne serves as President and
Treasurer of CNL Financial Group, Inc. (formerly CNL Group, Inc.); Director,
Vice Chairman of the Board and President of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director and
President of CNL Hospitality Corp., its advisor. In addition, Mr. Bourne serves
as Director and President of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director and President of its
advisor, CNL Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank.
He has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997, and
President from July 1992 through February 1996, of Commercial Net Lease Realty,
Inc., a public real estate investment trust listed on the New York Stock
Exchange. Mr. Bourne also serves as Director, President and Treasurer for
various affiliates of CNL Financial Group, Inc. including, CNL Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager in 1975.
Mr. Bourne graduated from Florida State University in 1970 where he received a
B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master of
Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a subsidiary
of APF from December 1999 until December 2000. Previously, he served as
Executive Vice President of APF from January 1996 to September 1999. Mr. Walker
joined the Advisor in September 1994, as Senior Vice President responsible for
Research and Development. He served as the Chief Operating Officer of the
Advisor from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with APF. Mr.
Walker also served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.) from
1997 to October 1998. 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 Bachelor of Science degree in Accountancy and
is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to
Executive Vice President and Chief Financial Officer of APF in July 2000. He
served as Senior Vice President and Chief Financial Officer of APF since January
1997. Mr. Shackelford also served as Secretary and Treasurer of APF since
September 1999. He also served as Chief Financial Officer of the Advisor from
September 1996 to September 1999. From March 1995 to July 1996, Mr. Shackelford
was a senior manager in the national office of Price Waterhouse LLP 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 was a manager
in the Paris, France office of Price Waterhouse, serving several multi-national
clients. Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of Arts degree in Accounting, with honors, and a Master of Business
Administration degree from Florida State University and is a certified public
accountant.
Section 16(a) Beneficial Ownership Reporting Compliance
Each of James M. Seneff, Jr. and Robert A. Bourne untimely filed one
Form 4 relating to one transaction during the year ended December 31, 2000.
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 15, 2001, 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 15, 2001, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
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, 2000, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- ------------------------------------ ---------------------------------- ------------------------------
Reimbursement to affiliates for Operating expenses are Accounting and
operating expenses reimbursed at the lower of cost administra-tive services:
or 90 percent of the prevailing $60,102
rate at which comparable
services could have been
obtained in the same geographic
area. If the General Partners
or their affiliates loan funds
to the Partnership, the General
Partners or their affiliates
will be reimbursed for the
interest and fees charged to
them by unaffiliated lenders for
such loans. Affiliates of the
General Partners from time to
time incur certain operating
expenses on behalf of the
Partnership for which the
Partnership reimburses the
affiliates without interest.
Annual, subordinated property One-half of one percent per year $-0-
management fee to affiliates of Partnership assets under
management (valued at cost),
subordinated to certain minimum
returns to the Limited
Partners. The property
management fee will not exceed
the lesser of one percent of
gross operating revenues or
competitive fees for comparable
services. Due to the fact that
these fees are non-cumulative,
if the Limited Partners do not
receive their 10% Preferred
Return in any particular year,
no property management fees will
be due or payable for such year.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- ------------------------------------ ---------------------------------- ------------------------------
Deferred, subordinated real estate A deferred, subordinated real $39,345
disposition fee payable to estate disposition fee, payable
affiliates 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 affiliates of the
General Partners provide 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. However, if the net
sales proceeds are reinvested in
a replacement Property, no such
real estate disposition fee will
be incurred until such
replacement Property is sold and
the net sales proceeds are
distributed.
General Partners' deferred, A deferred, subordinated share $-0-
subordinated share of Partnership equal to one percent of
net cash flow Partnership distributions of net
cash flow, subordinated to
certain minimum returns to the
Limited Partners.
General Partners' deferred, A deferred, subordinated share $-0-
subordinated share of Partnership equal to five percent of
net sales proceeds from a sale or Partnership distributions of
sales not in liquidation of the such net sales proceeds,
Partnership subordinated to certain minimum
returns to the Limited Partners.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- ------------------------------------ ---------------------------------- ------------------------------
General Partners' share of Distributions of net sales $-0-
Partnership net sales proceeds proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following
order or priority: (i) first,
to pay all debts and liabilities
of the Partnership and to
establish reserves; (ii) second,
to Partners with positive
capital account balances,
determined after the allocation
of net income, net loss, gain
and loss, in proportion to such
balances, up to amounts
sufficient to reduce such
balances to zero; and (iii)
thereafter, 95% to the Limited
Partners and 5% to the General
Partners.
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 Certified Public Accountants
Balance Sheets at December 31, 2000 and 1999
Statements of Income for the years ended December 31, 2000,
1999, and 1998
Statements of Partners' Capital for the years ended December
31, 2000, 1999, and 1998
Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998
Notes to Financial Statements
2. Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2000
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2000
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 Certificate of Limited Partnership of CNL Income Fund,
Ltd., as amended. (Included as Exhibit 3.1 to Amendment
No. 1 to Registration Statement No. 33-2850 on Form S-11
and incorporated herein by reference.)
3.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund, Ltd. (Included as Exhibit
3.2 to Form 10-K filed with the Securities and Exchange
Commission on March 27, 1998, and incorporated herein by
reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund,
Ltd., as amended. (Included as Exhibit 4.1 to Amendment
No. 1 to Registration Statement No. 33-2850 on Form S-11
and incorporated herein by reference.)
4.2 Form of Amended and Restated Certificate and Agreement of
Limited Partnership of CNL Income Fund, Ltd. (Included as
Exhibit 3.2 to Form 10-K filed with the Securities and
Exchange Commission on March 27, 1998, and incorporated
herein by reference.)
10.1 Property Management Agreement. (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on March 27, 1998, and incorporated herein by
reference.)
10.2 Assignment of Property Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995, and
incorporated herein by reference.)
10.3 Assignment of Property Management Agreement from CNL
Income Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on March 29, 1996, and
incorporated herein by reference.)
(b) The Registrant filed no reports on Form 8-K during the period from
October 1, 2000 through December 31, 2000.
(c) Not applicable.
(d) Other Financial Information
The Partnership is required to file audited financial information of
one of its tenants (Golden Corral Corporation) as a result of this
tenant leasing more than 20 percent of the Partnership's total assets
for the year ended December 31, 2000. Golden Corral Corporation is a
privately-held company and its financial information is not available
to the Partnership to include in this filing. The Partnership will file
this financial information under cover of a Form 10-K/A as soon as it
is available.
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 29th day of
March, 2001.
CNL INCOME FUND, 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.
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.
Signature Title Date
/s/ Robert A. Bourne President, Treasurer and Director March 29, 2001
- ---------------------------
Robert A. Bourne (Principal Financial and Accounting
Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 29, 2001
- ---------------------------
James M. Seneff, Jr. (Principal Executive Officer)
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Costs Capitalized
Subsequent To
Initial Cost Acquisition
------------------------ ------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
---------- ------------ ----------- --------- -------
Properties the Partnership
has Invested in:
Golden Corral Family
Steakhouse Restaurants:
Virginia Beach, Virginia - $340,125 $580,432 - -
Jasper, Alabama - 220,665 473,818 - -
Eunice, Louisiana - 186,009 477,947 - -
Ground Round Restaurant:
Camp Hill, Pennsylvania - 331,962 531,174 - -
Pizza Hut Restaurant:
Bowie, Texas - 29,683 106,042 10,897 -
Wendy's Old Fashioned
Hamburger Restaurants:
Mesa, Arizona - 440,339 328,579 - -
Oklahoma City, Oklahoma - 278,878 393,423 20,000 -
Stockbridge, Georgia - 282,482 363,008 - -
Mesquite, Texas - 443,956 456,983 - -
Payson, Arizona - 391,076 427,218 - -
Other:
Angleton, Texas - 162,107 447,511 1,572 -
------------ ----------- --------- -------
$3,107,282 $4,586,135 $32,469 -
============ =========== ========= =======
Properties of Joint Ventures in
Which the Partnership has
a 50% Interest:
Burger King Restaurant:
Orlando, Florida - $291,159 $695,033 - -
Pizza Hut Restaurant:
Orlando, Florida - 206,575 234,064 - -
------------ ----------- --------- -------
$497,734 $929,097 - -
============ =========== ========= =======
Property in Which the Partnership
has a 12.17% Interest as
Tenants-in-Common and has
Invested in Under an Operating
Lease:
Chevy's Fresh Mex Restaurant:
Vancouver, Washington - $875,659 $1,389,366 - -
============ =========== ========= =======
Gross Amount at Which Life on Which
Carried at Close of Period (c) Depreciation in
- -------------------------------------- Date Latest Income
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ------------ ----------- ----------- ---------- ------ ------- ------------
$340,125 $580,432 $920,557 $275,705 1986 10/86 (b)
220,665 473,818 694,483 222,431 1986 12/86 (b)
186,009 477,947 663,956 223,042 1987 01/87 (b)
331,962 531,174 863,136 56,640 1983 10/97 (b)
29,683 116,939 146,622 50,838 1976 12/87 (b)
440,339 328,579 768,918 157,900 1986 08/86 (b)
278,878 413,423 692,301 196,249 1986 08/86 (b)
282,482 363,008 645,490 174,446 1986 08/86 (b)
443,956 456,983 900,939 218,336 1986 09/86 (b)
391,076 427,218 818,294 200,555 1986 12/86 (b)
162,107 449,083 611,190 214,731 1986 09/86 (b)
- ------------ ----------- ----------- ----------
$3,107,282 $4,618,604 $7,725,886 $1,990,873
============ =========== =========== ==========
$291,159 $695,033 $986,192 $332,210 1986 11/86 (b)
206,575 234,064 440,639 113,781 1986 06/86 (b)
- ------------ ----------- ----------- ----------
$497,734 $929,097 $1,426,831 $445,991
============ =========== =========== ==========
$875,659 $1,389,366 $2,265,025 $139,061 1994 12/97 (b)
============ =========== =========== ==========
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
(a) Transactions in real estate and accumulated depreciation during 2000,
1999, and 1998, are summarized as follows:
Accumulated
Cost Depreciation
----------------- ------------------
Properties the Partnership has Invested in:
Balance, December 31, 1997 $ 10,358,378 $ 2,172,913
Disposition (506,563 (101,467)
Depreciation expense -- 206,181
Balance, December 31, 1998 9,851,815 2,277,627
Disposition (778,529 (273,721)
Depreciation expense -- 198,777
Balance, December 31, 1999 9,073,286 2,202,683
Dispositions (1,347,400) (387,820)
Depreciation expense -- 176,010
Balance, December 31, 2000 $ 7,725,886 $ 1,990,873
Property of Joint Ventures in Which the
Partnership has a 50% Interest:
Balance, December 31, 1997 $ 1,426,831 $ 352,955
Depreciation expense -- 31,096
Balance, December 31, 1998 1,426,831 384,051
Depreciation expense -- 30,971
Balance, December 31, 1999 1,426,831 415,022
Depreciation expense -- 30,969
Balance, December 31, 2000 $ 1,426,831 $ 445,991
CNL INCOME FUND, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
Property in Which the Partnership has a 12.17%
Interest as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1997 $ 2,265,025 $ 127
Depreciation expense -- 46,310
Balance, December 31, 1998 2,265,025 46,437
Depreciation expense -- 46,312
Balance, December 31, 1999 2,265,025 92,749
Depreciation expense -- 46,312
Balance, December 31, 2000 $ 2,265,025 $ 139,061
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures for federal income tax purposes was
$7,409,420 and $3,691,857, respectively. All of the leases are treated
as operating leases for federal income tax purposes.
EXHIBITS
i
EXHIBIT INDEX
Exhibit Number
3.1 Certificate of Limited Partnership of CNL Income Fund, Ltd.,
as amended. (Included as Exhibit 3.1 to Amendment No. 1 to
Registration Statement No. 33-2850 on Form S-11 and
incorporated herein by reference.)
3.2 Amended and Restated Certificate and Agreement of Limited
Partnership of CNL Income Fund, Ltd. (Included as Exhibit 3.2
to Form 10-K filed with the Securities and Exchange Commission
on March 27, 1998, and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund, Ltd.,
as amended. (Included as Exhibit 4.1 to Amendment No. 1 to
Registration Statement No. 33-2850 on Form S-11 and
incorporated herein by reference.)
4.2 Form of Amended and Restated Certificate and Agreement of
Limited Partnership of CNL Income Fund, Ltd. (Included as
Exhibit 3.2 to Form 10-K filed with the Securities and
Exchange Commission on March 27, 1998, and incorporated herein
by reference.)
10.1 Property Management Agreement. (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange Commission on
March 27, 1998, and incorporated herein by reference.)
10.2 Assignment of Property Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc. (Included
as Exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated herein
by reference.)
10.3 Assignment of Property Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on March 29, 1996, and incorporated herein
by reference.)