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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 2002
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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
0-19141
---------------------------------------
CNL Income Fund V, Ltd.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2922869
- ---------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
- ---------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for 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 _________
CONTENTS
Part I Page
----
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Part II
Other Information 12
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
2002 2001
------------------ -------------------
ASSETS
Land and buildings on operating leases, net $ 6,478,935 $ 7,799,714
Net investment in direct financing leases 1,213,084 1,228,690
Real estate held for sale -- 630,820
Investment in joint ventures 1,930,087 1,930,836
Cash and cash equivalents 1,635,715 313,783
Receivables, less allowance for doubtful accounts
of $35,317 in 2001 23,761 48,750
Accrued rental income 340,810 349,296
Other assets 5,452 4,165
------------------ -------------------
$ 11,627,844 $ 12,306,054
================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 8,938 $ 10,873
Real estate taxes payable 8,915 9,496
Distributions payable 1,362,501 430,258
Due to related parties 209,082 118,585
Rents paid in advance and deposits 10,289 4,583
------------------ -------------------
Total liabilities 1,599,725 573,795
Partners' capital 10,028,119 11,732,259
------------------ -------------------
$ 11,627,844 $ 12,306,054
================== ===================
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
------------- ------------- --------------- -------------
Revenues:
Rental income from operating leases $ 228,152 $ 235,606 $ 452,680 $ 477,452
Earned income from direct financing leases 33,224 30,583 66,647 71,272
Contingent rental income 6,870 19,436 16,906 20,347
Interest and other income 3,666 22,976 8,613 96,847
------------- ------------- --------------- -------------
271,912 308,601 544,846 665,918
------------- ------------- --------------- -------------
Expenses:
General operating and administrative 47,291 59,240 109,817 146,142
Property expenses 17,803 12,456 20,260 27,098
State and other taxes 4,813 -- 9,805 2,473
Depreciation and amortization 44,620 53,733 89,239 107,431
Provision for write-down of assets -- 89,003 -- 89,003
------------- ------------- --------------- -------------
114,527 214,432 229,121 372,147
------------- ------------- --------------- -------------
Income Before Gain on Sale of Assets and Equity in
Earnings of Joint Ventures 157,385 94,169 315,725 293,771
Gain on Sale of Assets -- -- 571,759 171,130
Equity in Earnings of Joint Ventures 46,534 34,041 97,235 69,347
------------- ------------- --------------- -------------
Income from Continuing Operations 203,919 128,210 984,719 534,248
------------- ------------- --------------- -------------
Discontinued Operations (Note 4):
Income (loss) from discontinued operations, net (2,238 ) 24,586 (7,353 ) 48,757
Gain on disposal of discontinued operations, net 193,496 -- 193,496 --
------------- ------------- --------------- -------------
191,258 24,586 186,143 48,757
------------- ------------- --------------- -------------
Net Income $ 395,177 $ 152,796 $ 1,170,862 $ 583,005
============= ============= =============== =============
Income Per Limited Partner Unit
Continuing Operations $ 4.08 $ 2.56 $ 19.69 $ 10.69
Discontinued Operations 3.82 0.50 3.73 0.97
------------- ------------- --------------- -------------
Total $ 7.90 $ 3.06 $ 23.42 $ 11.66
============= ============= =============== =============
Weighted Average Number of Limited Partner
Units Outstanding 50,000 50,000 50,000 50,000
============= ============= =============== =============
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
2002 2001
------------------- ------------------
General partners:
Beginning balance $ 514,026 $ 514,026
Net income -- --
------------------- ------------------
514,026 514,026
------------------- ------------------
Limited partners:
Beginning balance 11,218,233 13,743,292
Net income 1,170,862 945,973
Distributions ($57.50 and $69.42 per
limited partner unit, respectively) (2,875,002 ) (3,471,032 )
------------------- ------------------
9,514,093 11,218,233
------------------- ------------------
Total partners' capital $ 10,028,119 $ 11,732,259
=================== ==================
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2002 2001
---------------- ----------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $ 514,883 $ 779,437
---------------- ----------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 2,749,808 300,386
Collections on mortgage note receivable -- 987,881
---------------- ----------------
Net cash provided by investing activities 2,749,808 1,288,267
---------------- ----------------
Cash Flows from Financing Activities:
Distributions to limited partners (1,942,759 ) (2,617,758 )
---------------- ----------------
Net cash used in financing activities (1,942,759 ) (2,617,758 )
---------------- ----------------
Net Increase (Decrease) in Cash and Cash Equivalents 1,321,932 (550,054 )
Cash and Cash Equivalents at Beginning of Period 313,783 1,137,958
---------------- ----------------
Cash and Cash Equivalents at End of Period $ 1,635,715 $ 587,904
================ ================
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Deferred real estate disposition fees incurred
and unpaid at end of period $ 83,430 $ 9,750
================ ================
Distributions declared and unpaid at end of
period $ 1,362,501 $ 430,258
================ ================
See accompanying notes to condensed financial statements.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the six months ended June 30, 2002, may not be indicative of the
results that may be expected for the year ending December 31, 2002.
Amounts as of December 31, 2001, included in the financial statements,
have been derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund V, Ltd. (the "Partnership") for the year ended December 31,
2001.
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement requires that a
long-lived asset be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be
recoverable. The carrying amount of a long-lived asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset.
The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when
the carrying amount of a long-lived asset exceeds its fair value. If an
impairment is recognized, the adjusted carrying amount of a long-lived
asset is its new cost basis. The statement also requires that the
results of operations of a component of an entity that either has been
disposed of or is classified as held for sale be reported as a
discontinued operation if the disposal activity was initiated
subsequent to the adoption of the Standard.
2. Reclassification:
Certain items in the prior year's financial statements have been
reclassified to conform to 2002 presentation. These reclassifications
had no effect on total partners' capital or net income.
3. Land and Buildings on Operating Leases:
During the six months ended June 30, 2002, the Partnership sold its
Properties in Huron, Ohio; West Lebanon, New Hampshire and Bountiful,
Utah for an aggregate sales price of $1,931,000, and received net sales
proceeds aggregating approximately $1,844,900. The Partnership recorded
gains aggregating approximately $571,700 relating to the sale of the
properties in West Lebanon, New Hampshire and Bountiful, Utah. Due to
the fact that the Partnership had recorded provisions for write-down of
assets in previous years, no gain or loss was recorded in 2002 relating
to the property in Huron, Ohio. In connection with these sales, the
Partnership incurred deferred, subordinated, real estate disposition
fees of $57,930 (see Note 6).
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
4. Discontinued Operations:
In June 2002, the Partnership sold its property in Lawrenceville,
Georgia to the tenant for $850,000 and received net sales proceeds of
$821,500 resulting in a gain on disposal of discontinued operations of
approximately $193,500. In connection with the sale, the Partnership
incurred a deferred, subordinated, real estate disposition fee of
$25,500 (see Note 6). The financial results for this property are
reflected as Discontinued Operations in the accompanying financial
statements.
The operating results of discontinued operations are as follows:
Quarter Ended June 30, Six Months Ended June 30,
2002 2001 2002 2001
------------- -------------- ------------- --------------
Rental revenues $ 365 $ 27,713 $ -- $ 55,427
Other income 1,100 1,247 1,100 2,078
Expenses (3,703 ) (4,374 ) (8,453 ) (8,748 )
Gain on disposal of assets 193,496 -- 193,496 --
------------- -------------- ------------- --------------
Income (loss) from discontinued
operations $ 191,258 $ 24,586 $ 186,143 $ 48,757
============= ============== ============= ==============
5. Concentration of Credit Risk:
The following schedule presents total rental revenues and mortgage
interest income from individual lessees, or affiliated groups of
lessees, each representing more than 10% of the Partnership's total
rental revenues and mortgage interest income (including the Partnership
share of total rental revenues from unconsolidated joint ventures and
the properties held as tenants-in-common with affiliates of the general
partners) for each of the six months ended June 30:
2002 2001
-------------- ---------------
Slaymaker Group, Inc. $ 90,111 $ 90,885
IHOP Properties, Inc. 69,727 N/A
Golden Corral Corporation 66,076 97,756
In addition, the following schedule presents total rental revenues and
mortgage interest income from individual restaurant chains, each
representing more than 10% of the Partnership's total rental revenues
and mortgage interest income (including the Partnership's share of
total rental revenues from joint ventures and the properties held as
tenants-in-common with affiliates of the general partners) for each of
the six months ended June 30:
2002 2001
--------------- -----------
Golden Corral Family Steakhouse $ 94,949 $ 97,756
Tony Roma's 90,111 90,885
IHOP 69,727 N/A
Arby's 65,192 N/A
The information denoted by N/A indicates that for each period
presented, the tenant or the chain did not represent more than 10% of
the Partnership's total rental revenues.
CNL INCOME FUND V, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
5. Concentration of Credit Risk - Continued:
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains, could significantly impact the results of operations
of the Partnership if the Partnership is not able to re-lease the
properties in a timely manner.
6. Related Party Transactions:
An affiliate of the Partnership is 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
affiliate 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. The payment of the real estate disposition
fee is subordinated to receipt by the limited partners of their
aggregate 10% preferred return, plus their adjusted capital
contributions. During the six months ended June 30, 2002, the
Partnership incurred deferred, subordinated, real estate disposition
fees of $83,430 as a result of the sale of four properties (see Notes 3
and 4).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund V, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on August 17, 1988, to acquire for cash, either
directly or through joint venture and tenancy in common arrangements, both newly
constructed and existing restaurants, as well as land upon which restaurants
were to be constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains (collectively, the
"Properties"). The leases generally are triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of June 30, 2001, the Partnership owned 16 Properties directly and
owned four Properties indirectly through joint venture or tenancy in common
arrangements. As of June 30, 2002, the Partnership owned 12 Properties directly.
In addition, the Partnership owned four Properties indirectly through joint
venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 2002 and 2001 was cash from operating activities (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operating activities
was $514,883 and $779,437 for the six months ended June 30, 2002 and 2001,
respectively. The decrease in cash from operating activities for the six months
ended June 30, 2002 was a result of changes in income and expenses, as described
in "Results of Operations" below, and changes in the Partnership's working
capital.
Other sources and uses of capital included the following during the six
months ended June 30, 2002.
During the six months ended June 30, 2002, the Partnership sold its
Properties in Huron, Ohio; West Lebanon, New Hampshire and Bountiful, Utah for
an aggregate sales price of $1,931,000 and received net sales proceeds
aggregating approximately $1,844,900. The Partnership recorded gains aggregating
approximately $571,700 relating to the sale of the Properties in West Lebanon,
New Hampshire and Bountiful, Utah. Due to the fact that the Partnership had
recorded provisions for write-down of assets in previous years, no gain or loss
was recorded relating to the Property in Huron, Ohio. In addition, in June 2002,
the Partnership sold its Property in Lawrenceville, Georgia to the tenant for
$850,000 and received net sales proceeds of $821,500 resulting in a gain on
disposal of discontinued operations of approximately $193,500 during the quarter
and six months ended June 30, 2002. The Partnership distributed the majority of
the net sales proceeds to pay special distributions to the limited partners, as
described below, and used the remaining funds to pay Partnership liabilities.
The Partnership anticipates that its distributions will be sufficient to enable
the limited partners to pay federal and state income taxes, if any (at a level
reasonably assumed by the general partners), resulting from the sale.
Currently, rental income from the Partnership's Properties and any net
sales proceeds held by the Partnership 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 90-day maturity date, pending the Partnership's use of such funds to pay
Partnership expenses and to make distributions to the partners. At June 30,
2002, the Partnership had $1,635,715 invested in such short-term investments, as
compared to $313,783 at December 31, 2001. The increase in cash and cash
equivalents at June 30, 2002, was primarily a result of the Partnership holding
the net sales proceeds it received from the sale of the Properties described
above, pending distribution to the limited partners. The funds remaining after
the payment of distributions to the limited partners and other liabilities will
be used to meet the Partnership's working capital 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 leasing them under triple-net leases to operators who 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.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and anticipated future cash from operations, and for the six
months ended June 30, 2002 and 2001, net sales proceeds from the sale of several
Properties, the Partnership declared distributions to the limited partners of
$2,875,002 and $2,610,516 for the six months ended June 30, 2002 and 2001,
respectively, ($1,362,501 and $430,258 for the quarters ended June 30, 2002 and
2001, respectively.) This represents distributions of $57.50 and $52.21 per unit
for the six months ended June 30, 2002 and 2001, respectively ($27.25 and $8.61
per unit for the quarters ended June 30, 2002 and 2001, respectively). The
distribution for the six months ended June 30, 2002 included $2,150,000 in a
special distribution, as a result of the distribution of net sales proceeds from
the 2002 sale of several Properties, as described in "Capital Resources." The
distribution for the six months ended June 30, 2001, included $1,750,000 in a
special distribution, as a result of the distribution of net sales proceeds from
the sale of the Property in Daleville, Indiana and the payoff of the promissory
notes accepted in connection with the sale of the Properties in Myrtle Beach,
South Carolina and St. Cloud, Florida. These special distributions during the
six months ended June 30, 2002 and 2001, were effectively a return of a portion
of the limited partners' investment, although in accordance with the partnership
agreement, $979,322 and $1,336,152, respectively, were applied toward the
limited partners' 10% Preferred Return and the balance of $1,170,678 and
$413,848, respectively, were treated as a return of capital for purposes of
calculating the limited partners' 10% Preferred Return. As a result of the
return of capital, 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 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 six months ended June 30, 2002 and 2001. No
distributions were made to the general partners for the quarters and six months
ended June 30, 2002 and 2001. The Partnership intends to continue to make
distributions of cash available for distribution to the limited partners on a
quarterly basis.
Total liabilities of the Partnership were $1,599,725 at June 30, 2002,
as compared to $573,795 at December 31, 2001, primarily as a result of the
Partnership accruing a special distribution of net sales proceeds of $1,000,000
from the sale of the Partnership's Properties payable to the limited partners at
June 30, 2002. The increase was also partially attributable to an increase in
amounts due to related parties and rents paid in advance and deposits. The
general partners believe that the Partnership has sufficient cash on hand to
meet current working capital needs.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
Total rental revenues were $519,327 for the six months ended June 30,
2002, as compared to $548,724 in the comparable period of 2001, of which
$261,376 and $266,189 were earned during the second quarter of 2002 and 2001,
respectively. Rental revenues decreased during the quarter and six months ended
June 30, 2002 as compared to the same periods in 2001, due to the sale of
Properties during 2002, as described in "Capital Resources." The Partnership
used the net sales proceeds from the sale of these Properties to pay liabilities
of the Partnership and to make distributions to the limited partners.
For the six months ended June 30, 2002 and 2001, the Partnership also
earned contingent rental income of $16,906 and $20,347, respectively, of which
$6,870 and $19,436 were earned during the quarters ended June 30, 2002 and 2001,
respectively. The decrease in contingent rental income earned during the quarter
and six months ended June 30, 2002, as compared to the same periods of 2001, was
attributable to a decrease in gross sales of certain restaurant Properties, the
leases of which require the payment of contingent rent.
During the six months ended June 30, 2002 and 2001, the Partnership
also earned $8,613 and $96,847, respectively, in interest and other income of
which $3,666 and $22,976 were earned during the quarters ended June 30, 2002 and
2001, respectively. Interest and other income were higher during the quarter and
six months ended June 30, 2001 due to the fact that in February 2001, the
Partnership received $150,000 as satisfaction for outstanding receivable amounts
of which approximately $57,600 was received in consideration for the Partnership
releasing the tenant of the Property in Huron, Ohio from its obligations under
the lease, which the Partnership recorded as other income. The tenant terminated
its lease and ceased restaurant operations.
During the quarter and six months ended June 30, 2002, three lessees of
the Partnership, Golden Corral Corporation, Slaymaker Group, Inc., and IHOP
Properties, Inc., each contributed more than 10% of the Partnership's total
rental revenues (including the Partnership's share of the rental revenues from
Properties owned by unconsolidated joint ventures and Properties owned with
affiliates of the general partners as tenants-in-common). It is anticipated
that, based on the minimum rental payments required by the leases, these three
lessees will continue to contribute more than 10% of the Partnership's total
rental revenues. In addition, during the quarter and six months ended June 30,
2002, four Restaurant Chains, Golden Corral, Tony Roma's Famous for Ribs
Restaurants, IHOP and Arby's, each accounted for more than 10% of the
Partnership's total rental revenues during 2002 (including the Partnership's
share of the rental revenues from Properties owned by unconsolidated joint
ventures and Properties owned with affiliates of the general partners as
tenants-in-common). It is anticipated that these four Restaurant Chains each
will continue to account for more than 10% of the total rental revenues to which
the Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains will materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner.
During the six months ended June 30, 2002 and 2001, the Partnership
earned $97,235 and $69,347, respectively, $46,534 and $34,041 of which was
earned during the quarters ended June 30, 2002 and 2001, respectively,
attributable to net income earned by joint ventures in which the Partnership is
a co-venturer. The increase in net income earned by joint ventures during the
quarter and six months ended June 30, 2002, as compared to the same periods in
2001, was primarily attributable to the fact that the Partnership and CNL Income
Fund II, Ltd., as tenants-in-common, re-leased the Property in Mesa, Arizona, to
a new tenant in September 2001 with terms substantially the same as the
Partnership's other leases. The former tenant of the Property, in which the
Partnership owns an approximate 42% interest with an affiliate of the general
partners, as tenants-in-common, had filed for bankruptcy in 1998 and in June
2000 had rejected the lease.
Operating expenses, including depreciation expense and provision for
write-down of assets, were $229,121 and $372,147 for the six months ended June
30, 2002 and 2001, respectively, of which $114,527 and $214,432 were incurred
during the quarters ended June 30, 2002 and 2001, respectively. Operating
expenses were higher during 2001 due to the fact that the Partnership recorded a
provision for write-down of assets of approximately $89,000 relating to its
Property in Huron, Ohio. The tenant for this Property terminated its lease due
to financial difficulties and vacated the Property. The provision represented
the difference between the net carrying value of the Property and the fair value
at June 30, 2001. In addition, operating expenses were higher during the quarter
and six months ended June 30, 2001 due to the fact that the Partnership incurred
certain expenses, such as repairs and maintenance, insurance and real estate
taxes, as a result of the tenant of the Property in West Lebanon, New Hampshire
defaulting under the terms of its lease. In January 2002, the Partnership sold
the Property and will not incur such expenses relating to this Property in the
future.
The decrease in operating expenses during the quarter and six months
ended June 30, 2002, as compared to the same periods of 2001, was primarily due
to a decrease in the costs incurred for administrative expenses for servicing
the Partnership and its Properties and to lower depreciation expense during 2002
as a result of the sale of four Properties, as described above.
As a result of the sale of the Properties in West Lebanon, New
Hampshire and Bountiful, Utah, during the six months ended June 30, 2002, the
Partnership recognized gains of $571,759. In connection with the sale of its
Properties in Myrtle Beach, South Carolina and St. Cloud, Florida during 1995
and 1996, respectively, the Partnership recognized gains of $136,034 during the
six months ended June 30, 2001. The Partnership recorded the sales of the
Properties using the installment sales method. As such, the gains on the sales
were deferred, and were recognized as income proportionately as payments under
the mortgage notes were collected. The gains recognized during 2001 were due to
the fact that during the six months ended June 30, 2001 the Partnership
collected the outstanding balances of the mortgage note collaterized by these
Properties. In addition, as a result of the sale of the Property in Daleville,
Indiana, the Partnership recognized a gain of $35,096, during the six months
ended June 30, 2001.
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement requires that a long-lived asset
be tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds its fair value. If an impairment
is recognized, the adjusted carrying amount of a long-lived asset is its new
cost basis. The statement also requires that the results of operations of a
component of an entity that either has been disposed of or is classified as held
for sale be reported as a discontinued operation if the disposal activity was
initiated subsequent to the adoption of the Standard.
In June 2002, the Partnership sold its Property in Lawrenceville,
Georgia to the tenant and recognized a gain on disposal of discontinued
operations of $193,496, as described above in "Capital Resources." The
Partnership used the proceeds to pay distributions to the limited partners.
During the six months ended June 30, 2002 and 2001, the Partnership recognized,
in connection with this Property, net rental income (loss) from discontinued
operations (rental revenues less Property related expenses) amounting to
($7,353) and $48,757, respectively, of which ($2,238) and $24,586 were earned
during the quarters ended June 30, 2002 and 2001, respectively.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
------------------
Item 2. Changes in Securities. Inapplicable.
----------------------
Item 3. Default upon Senior Securities. Inapplicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
----------------------------------------------------
Item 5. Other Information. Inapplicable.
------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
3.1 Amended and Restated Affidavit and Certificate of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 3.1 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
4.1 Amended and Restated Affidavit and Certificate of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 3.1 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
4.2 Amended and Restated Certificate and Agreement of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 4.2 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein
by reference.)
10.2 Assignment of 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 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 April 1, 1996,
and incorporated herein by reference.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 9, 2001, and
incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Filed
herewith.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 7th day of August, 2002
CNL INCOME FUND V, LTD.
By: CNL REALTY CORPORATION
General Partner
By:/s/ James M. Seneff, Jr.
--------------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Robert A. Bourne
--------------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund V, Ltd. (the
"Partnership"), has executed this certification in connection with the filing
with the Securities and Exchange Commission of the Partnership's Quarterly
Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The
undersigned hereby certifies that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: August 7, 2002 /s/ James M. Seneff, Jr.
---------------- -----------------------------------
Name: James M. Seneff, Jr.
Title: Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Robert A. Bourne, the President and Treasurer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund V, Ltd. (the
"Partnership"), has executed this certification in connection with the filing
with the Securities and Exchange Commission of the Partnership's Quarterly
Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The
undersigned hereby certifies that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: August 7, 2002 /s/ Robert A. Bourne
------------------ -----------------------------------
Name: Robert A. Bourne
Title: President and Treasurer
EXHIBIT INDEX
Exhibit Number
3.1 Amended and Restated Affidavit and Certificate of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 3.1 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
4.1 Amended and Restated Affidavit and Certificate of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 3.1 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
4.2 Amended and Restated Certificate and Agreement of
Limited Partnership of CNL Income Fund V, Ltd.
(Included as Exhibit 4.2 to Form 10-K filed with the
Securities and Exchange Commission on March 31, 1994,
and incorporated herein by reference.)
10.1 Management Agreement (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein
by reference.)
10.2 Assignment of 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 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 April 1, 1996,
and incorporated herein by reference.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 9, 2001, and
incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Filed
herewith.)