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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 0-20017
CNL INCOME FUND IX, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3004138
(State or other jurisdiction of (I.R.S. Employer Identification No.
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(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 ($10 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. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 3,500,000 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 value for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
Item 1. Business
CNL Income Fund IX, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on April 16, 1990. 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 March 20, 1991, the Partnership offered
for sale up to $35,000,000 in limited partnership interests (the "Units")
(3,500,000 Units each at $10 per Unit) pursuant to a registration statement on
Form S-11 under the Securities Act of 1933, as amended. The offering terminated
on September 6, 1991, at which date the maximum offering proceeds of $35,000,000
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 national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$30,800,000, and were used to acquire 41 Properties, including 13 Properties
owned by joint ventures in which the Partnership is a co-venturer, and to
establish a working capital reserve for Partnership purposes.
During the year ended December 31, 1997, the Partnership sold its
Property in Alpharetta, Georgia, and reinvested the net sales proceeds in an
IHOP Property located in Englewood, Colorado, with an affiliate of the General
Partners, as tenants-in-common. During the year ended December 31, 1999, the
Partnership sold its Properties in Rochester, New York and Corpus Christi,
Texas, and used a portion of the net sales proceeds to reinvest in a Property in
Albany, Georgia. In addition, the Partnership reinvested a portion of the net
sales proceeds in a Property in Dublin, California and a Property in Montgomery,
Alabama, each as tenants-in-common, with affiliates of the General Partners.
During the year ended December 31, 2000, the Partnership sold its Properties in
Williamsville, New York and in Bluffton and Alliance, Ohio, and used a portion
of these net sales proceeds to invest in a Property in Libertyville, Colorado,
with an affiliate of the General Partners, as tenants-in-common.
As a result of the above transactions, as of December 31, 2000, the
Partnership owned 40 Properties. The 40 Properties include 13 Properties owned
by joint ventures in which the Partnership is a co-venturer and four Properties
owned with affiliates as tenants-in-common. The Partnership leases the
Properties generally 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 purchase 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
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. 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, the
joint ventures in which the Partnership is a co-venturer and the Properties
owned with affiliates of the General Partners as tenants-in-common, generally
provide for initial terms ranging from 8 to 20 years (the average being 16
years), and expire between 2005 and 2019. The leases are generally 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 $46,000 to $176,400. In addition, generally the
leases provide for percentage rent, based on sales in excess of a specified
amount. In addition, a majority of the leases provide that, commencing in
specified lease years (ranging from the third to the sixth lease year), the
annual base rent required under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 26 of the Partnership's 40 Properties also have been
granted options to purchase Properties at the Property's then fair market value
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 specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.
The leases also generally 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.
In August 2000, the Partnership reinvested the majority of the net
sales proceeds from the sale of the Property in Williamsville, New York, in a
Baker's Square Property in Libertyville, Illinois, with affiliates of the
General Partners. The lease terms for this Property are substantially the same
as the Partnership's other leases, as described above, as tenants-in-common, as
described below in "Joint Venture and Tenancy in Common Arrangements".
Major Tenants
During 2000, four of the Partnership's lessees (or group of affiliated
lessees), (i) Carrols Corporation, (ii) Flagstar Enterprises, Inc., (iii) Burger
King Corporation and BK Acquisition, Inc. (which are affiliated entities under
common control) (hereinafter referred to as Burger King Corp.) and (iv) Golden
Corral Corporation, each contributed more than ten percent of the Partnership's
total rental, earned and mortgage interest income (including the Partnership's
share of rental and earned income from 13 Properties owned by joint ventures and
four Properties owned as tenants-in-common). As of December 31, 2000, Carrols
Corporation was the lessee under leases relating to four restaurants, Flagstar
Enterprises, Inc. was the lessee under leases relating to five restaurants,
Burger King Corp. was the lessee under leases relating to the 13 restaurants
owned by joint ventures and 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, these four lessees or groups of
affiliated lessees each will continue to contribute more than ten percent of the
Partnership's total rental income in 2001. In addition, four Restaurant Chains,
Burger King, Hardee's, Shoney's and Golden Corral Family Steakhouse Restaurants
("Golden Corral"), each accounted for more than ten percent of the Partnership's
total rental, earned income and mortgage interest during 2000 (including the
Partnership's share of the rental income from 13 Properties owned by joint
ventures and four Properties owned as tenants-in-common). In 2001, it is
anticipated that these four 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 these lessees or
Restaurant Chains could materially affect the Partnership's income if the
Partnership is not able to re-lease the Properties in a timely manner. No single
tenant or group of affiliated tenants lease 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 the following separate joint venture
arrangements: CNL Restaurant Investments II with CNL Income Fund VII, Ltd. and
CNL Income Fund VIII, Ltd., to purchase and hold six Properties; CNL Restaurant
Investments III with CNL Income Fund X, Ltd., to purchase and hold six
Properties; and Ashland Joint Venture with CNL Income Fund X, Ltd. and CNL
Income Fund XI, Ltd., to purchase and hold one Property. Each CNL Income Fund is
an affiliate of the General Partners and is a limited partnership organized
pursuant to the laws of the State of Florida.
The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint ventures in accordance with their respective percentage interests in the
joint ventures. The Partnership has a 45.2% interest in CNL Restaurant
Investments II, a 50 percent interest in CNL Restaurant Investments III and a
27.33% interest in Ashland Joint Venture. The Partnership and its joint venture
partners are also jointly and severally liable for all debts, obligations and
other liabilities of the joint ventures.
CNL Restaurant Investments II's and CNL Restaurant Investments III's
joint venture agreements do not provide a fixed term, but continue in existence
until terminated by any of the joint venturers. Ashland Joint Venture has an
initial term of 14 years and, after the expiration of the initial term,
continues in existence from year to year unless terminated at the option of any
of the joint venturers 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 partners to dissolve the joint venture.
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 its joint venture partners, 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 CNL Restaurant Investments II, CNL
Restaurant Investments III and Ashland Joint Venture is distributed 45.2%, 50
percent and 27.33%, respectively, to the Partnership and the balance is
distributed to each of the other joint venture partners in accordance with their
respective percentage interest in the joint venture. 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 joint venture
partner's percentage interest in the joint venture.
In addition to the above joint venture arrangements, the Partnership
entered into an agreement to hold a Property in Englewood, Colorado, as
tenants-in-common with CNL Income Fund III, Ltd.; a Property in Dublin,
California, as tenants-in-common, with CNL Income Fund VI, Ltd.; and a Property
in Montgomery, Alabama, as tenants-in-common, with CNL Income Fund VII, Ltd.
Each CNL Income Fund is an affiliate of the General Partners and is a limited
partnership organized pursuant to the laws of the state of Florida. The
agreements provide for the Partnership and the affiliates to share in the
profits and losses of the Properties in proportion to each party's percentage
interest. The Partnership owns a 67 percent, 25 percent and 29 percent interest
in the Properties in Englewood, Colorado, Dublin, California, and Montgomery,
Alabama, respectively. The tenancy in common agreements restrict each
co-tenant's ability to sell, transfer, or assign its interest in the tenancy in
common's Properties without first offering them for sale to the remaining
co-tenants.
In addition, in August 2000, the Partnership entered into an agreement
to hold a Baker's Square Property in Libertyville, Illinois, as
tenants-in-common, with CNL Income Fund VIII, Ltd., a Florida limited
partnership and affiliate of the General Partners. The agreement provides for
the Partnership and the affiliates to share in the profits and losses of the
Property and net cash flow from the Property, in proportion to each
co-venturer's percentage interest. The Partnership owns a 34 percent interest in
this Property. The tenancy in common agreements restrict each co-tenant's
ability to sell, transfer, or assign its interest in the tenancy in common's
Properties without first offering them 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
the Property if the proceeds are reinvested in an additional Property.
Certain Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement. Under this agreement, CNL Fund Advisors,
Inc. is responsible for collecting rental payments, inspecting the Properties
and the tenants' books and records, assisting the Partnership in responding to
tenant inquiries and notices and providing information to the Partnership about
the status of the leases and the Properties. CNL Fund Advisors, Inc. also
assists the General Partners in negotiating the leases. For these services, the
Partnership has agreed to pay CNL Fund Advisors, Inc. an annual fee of one
percent of the sum of gross rental revenues from Properties wholly owned by the
Partnership plus the Partnership's allocable share of gross revenues of joint
ventures in which the Partnership is a co-venturer, but not in excess of
competitive fees for comparable services. Under the management agreement, the
management fee is subordinated to receipt by the Limited Partners of an
aggregate, ten percent, cumulative, 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").
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food 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 40 Properties. Of the 40
Properties, 23 are owned by the Partnership in fee simple, 13 are owned through
joint venture arrangements and four are 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 21,400
to 169,800 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 for the year ended December 31, 2000.
State Number of Properties
Alabama 5
California 1
Colorado 1
Florida 1
Georgia 2
Illinois 2
Indiana 2
Louisiana 3
Michigan 1
Minnesota 1
Mississippi 1
New Hampshire 3
New York 1
North Carolina 3
Ohio 5
South Carolina 1
Tennessee 2
Texas 5
-----
TOTAL PROPERTIES 40
=====
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
2,100 to 10,600 square feet. All buildings on Properties 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 a depreciable life of 40 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 Properties owned through tenancy
in common arrangements) for federal income tax purposes was $20,188,144 and
$20,071,339, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
Bakers Square 1
Burger King 18
Captain D's 1
Denny's 2
Golden Corral 3
Hardee's 6
IHOP 3
Johnny's 1
Shells Seafood Restaurant 1
Shoney's 4
-----
TOTAL PROPERTIES 40
=====
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 leases are generally 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%, 98%, 98%, 100%, and 100% occupied, respectively. The following is a
schedule of the average rent per Property for the years ended December 31:
2000 1999 1998 1997 1996
------------- ------------- --------------- -------------- --------------
Rental Revenues (1) $ 3,104,235 $ 3,168,448 $ 3,473,845 $3,350,655 $3,516,267
Properties (2) 40 42 41 40 40
Average Rent per
Property $ 77,606 $ 75,439 $ 84,728 $ 83,766 $ 87,907
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Properties owned through tenancy in common arrangements. Rental
revenues have been adjusted, as applicable, for any amounts for which
the Partnership has established an allowance for doubtful accounts.
(2) Excludes Properties that were vacant at December 31, and that did not
generate rental revenues during the year ended December 31.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for the next ten years and thereafter.
Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- --------------------- --------------------------
2001 -- $ -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 8 599,850 19.75%
2006 11 742,972 24.46%
2007 1 89,442 2.95%
2008 -- -- --
2009 -- -- --
2010 -- -- --
Thereafter 20 1,605,758 52.84%
---------- ------------- -------------
Total 40 $ 3,038,022 100.00%
========== ============= =============
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 2000 (see Item 1. Business -
Major Tenants) are substantially the same as those described in Item 1. Business
- - Leases.
Carrols Corporation leases four Burger King restaurants. The initial
term of each lease ranges from 14.5 to 20 years (expiring in 2011) and the
average minimum base annual rent is approximately $104,803 (ranging from
approximately $98,200 to $121,200).
Flagstar Enterprises, Inc. leases five Hardee's restaurants. The
initial term of each lease is 20 years (expiring in 2011) and the average
minimum base annual rent is approximately $65,900 (ranging from approximately
$46,000 to $83,600).
Burger King Corporation leases 13 Burger King restaurants with an
initial term of 14 years (expiring between 2005 and 2006) and the average
minimum base annual rent is approximately $103,700 (ranging from approximately
$73,800 to $134,100).
Golden Corral Corporation leases three Golden Corral restaurants with
an initial term of 15 years (expiring in 2005 and 2014) and the average minimum
base annual rent is approximately $168,450 (ranging from approximately $157,500
to $176,400).
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 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 3,408 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 may 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), may have done so pursuant to such
Plan. The General Partners had the right to prohibit transfers of Units. From
inception through December 31, 2000, the price for any Unit transferred pursuant
to the Plan was $9.50 per Unit. 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 (2)) (2) (2) $10.00 $ 9.00 $ 9.50
Second Quarter $ 8.80 $ 7.00 $ 7.19 9.55 7.98 9.00
Third Quarter 9.50 6.90 7.98 9.50 7.50 8.88
Fourth Quarter 7.40 5.80 7.11 8.10 7.20 7.73
(1) A total of 19,820 and 38,261 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 $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For each of the years ended December 31, 2000 and 1999, the Partnership
declared cash distributions in the aggregate amounts of $3,150,004 to the
Limited Partners. Distributions of $787,501 were declared at the close of each
of the Partnership's calendar quarters during 2000 and 1999 to the Limited
Partners. No amounts distributed to the Limited Partners for the years ended
December 31, 2000 and 1999, are required to be or have been treated by the
Partnership as a return of capital for purposes of calculating the Limited
Partners' return on their adjusted capital contributions. No distributions have
been made to the General Partners to date. These amounts include monthly
distributions made in arrears for the Limited Partners electing to receive such
distributions on this basis.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
(b) Not applicable.
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
-------------- --------------- -------------- --------------- ---------------
Year ended December 31:
Revenues (1) $3,174,257 $3,082,697 $3,100,685 $3,230,343 $3,404,066
Net Income (2) 1,850,780 2,385,067 2,286,698 2,937,632 2,960,299
Cash distributions
declared (3) 3,150,004 3,150,004 3,220,004 3,150,004 3,185,004
Net income per Unit (2) 0.53 0.68 0.65 0.83 0.84
Cash distributions
declared per Unit (3) 0.90 0.90 0.92 0.90 0.91
At December 31:
Total assets $28,132,613 $29,443,276 $30,099,078 $31,096,421 $31,343,847
Partners' capital 27,149,757 28,448,981 29,213,918 30,147,224 30,359,596
(1) Revenues include equity in earnings of joint ventures and adjustments
to accrued rental income as a result of a tenant filing for bankruptcy.
(2) Net income for the year ended December 31, 1998, includes $314,775 from
provision for loss on assets. Net income for the year ended December
31, 2000, 1999 and 1997, includes $730,668, from losses and $75,997 and
$199,643, from gains, respectively, on sales of assets.
(3) Distributions for the year ended December 31, 1998 includes a special
distribution to the Limited Partners of $70,000 and distributions for
the year ended December 31, 1996 includes a special distribution to the
Limited Partners of $35,000, which represented cumulative excess
operating reserves.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Partnership was organized on April 16, 1990, 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, to be leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are generally triple-net leases, with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 2000, the Partnership owned 40 Properties, either directly or indirectly
through joint venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital for the years ended
December 31, 2000, 1999, and 1998, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and interest received,
less cash paid for expenses). Cash from operations was $2,844,067, $2,868,096,
and $3,253,390, for the years ended December 31, 2000, 1999, and 1998,
respectively. The decrease in cash from operations during 2000, and 1999, each
as compared to the previous year, was primarily 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
years ended December 31, 2000, 1999, and 1998:
In February 1999, the Partnership sold its Property in Corpus Christi,
Texas, and received net sales proceeds of $1,350,000, resulting in a gain of
$56,369 for financial reporting purposes. This Property was originally acquired
by the Partnership in October 1991 and had a cost of approximately $1,319,986,
excluding acquisition fees and miscellaneous acquisition expenses; therefore,
the Partnership sold the Property for approximately $30,000 in excess of its
original purchase price. In March 1999, the Partnership reinvested the net sales
proceeds in a Property in Albany, Georgia, at an approximate cost of $1,641,200.
The transaction, relating to the sale of the Property in Corpus Christi, Texas,
and the reinvestment of the net sales proceeds in the Property in Albany,
Georgia, qualified as a like-kind exchange transaction for federal income tax
purposes.
In addition, in March 1999, the Partnership sold its Property in
Rochester, New York, and received net sales proceeds of $1,050,000, resulting in
a gain of $19,628 for financial reporting purposes. This Property was originally
acquired by the Partnership in December 1991 and had a cost of approximately
$968,814, excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold the Property for approximately $81,200 in excess
of its original purchase price. In March 1999, the Partnership reinvested a
portion of the net sales proceeds in a Property in Albany, Georgia, as described
above. In addition, in November 1999, the Partnership reinvested the remaining
net sales proceeds in a Property in Montgomery, Alabama, and a Property in
Dublin, California, each as tenants-in-common with affiliates of the General
Partners. In connection therewith, the Partnership and the affiliates entered
into agreements whereby each party will share in the profits and losses of each
Property in proportion to each party's percentage interest. As of December 31,
2000, the Partnership owned a 29 percent and a 25 percent interest,
respectively, in the Properties.
In May 2000, the Partnership sold its Property in Williamsville, New
York, to a third party for $715,000 and received net sales proceeds of $693,350,
resulting in a loss of $27,391 for financial reporting purposes. In August 2000,
the Partnership reinvested a portion of the net sales proceeds in a Property in
Libertyville, Illinois, with CNL Income Fund VIII, Ltd., a Florida limited
partnership and an affiliate of the General Partners, as tenants-in-common. In
connection therewith, the Partnership and the affiliate entered into an
agreement whereby each co-venturer will share in the profits and losses of the
Property in proportion to its applicable percentage interest. The Property was
acquired from an affiliate of the General Partners. The affiliate had purchased
and temporarily held title to the Property in order to facilitate the
acquisition of the Property by the Partnership. The purchase price paid by the
Partnership represented the costs incurred by the affiliate to acquire the
Property, including closing costs. As of December 31, 2000, the Partnership
owned a 34 percent interest in the Property.
In addition, in November 2000, the Partnership sold its Properties in
Bluffton and Alliance, Ohio, for a total of $500,000, resulting in a loss of
$703,277 for financial reporting purposes. In connection therewith, the
Partnership accepted two promissory notes in the aggregate amount of $500,000,
collateralized by a mortgage on the respective Property. The promissory notes
bear an interest rate of nine percent per annum and are being collected in 96
monthly installments of principal and interest, with balloon payments of
$184,652 and $123,102, respectively, due in December 2008.
None of the Properties owned by the Partnership, or the joint ventures
or tenancy in common arrangements in which the Partnership owns an interest, is
or may be encumbered. Under its partnership agreement, the Partnership is
prohibited from borrowing for any purpose; provided, however, that the General
Partners or their affiliates are entitled to reimbursement, at cost, for actual
expenses incurred by the General Partners or their affiliates on behalf 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 is 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
$829,338 invested in such short-term investments as compared to $936,506 at
December 31, 1999. As of December 31, 2000, the average interest rate earned on
the rental income deposited in demand deposit accounts at commercial banks was
approximately 3.11% annually. The funds remaining at December 31, 2000 will be
used towards the payment of distributions and other liabilities.
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 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 operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because all leases of the Partnership's Properties are
on a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purpose, 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.
The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses, 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 year ended
December 31, 1998, cummulative excess operating reserves, the Partnership
declared distributions to the Limited Partners of $3,150,004, $3,150,004, and
$3,220,004, for the years ended December 31, 2000, 1999, and 1998, respectively.
This represents a distribution of $0.90, $0.90, and $0.92 per Unit for the years
ended December 31, 2000, 1999, and 1998, respectively. No distributions were
made to the General Partners during the years ended December 31, 2000, 1999, and
1998. No amounts distributed to the Limited Partners for the years ended
December 31, 2000, 1999, and 1998, are required to be or have been treated by
the Partnership as a return of capital for purposes of calculating the Limited
Partners' return on their adjusted capital contributions. The Partnership
intends to continue to make distributions of cash available for distribution to
the Limited Partners on a quarterly basis.
During 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, 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 and 1999, the Partnership owed $100,846 and
$62,066, respectively, to affiliates for operating expenses and accounting and
administrative services. As of March 15, 2001, the Partnership had reimbursed
the affiliates $20,100 of such amounts. Other liabilities, including
distributions payable, decreased to $882,010 at December 31, 2000, as compared
to $932,229 at December 31, 1999. Liabilities at December 31, 2000, to the
extent they exceed cash and cash equivalents at December 31, 2000, will be paid
from future cash from operations or from anticipated future General Partners'
contributions.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the year ended December 31, 1998, the Partnership owned and
leased 27 wholly owned Properties, and during 1999, the Partnership owned and
leased 28 wholly owned Properties (including two Properties which were sold
during 1999), and during 2000, the Partnership owned and leased 26 wholly owned
Properties (including three Properties which were sold during 2000). In
addition, during 2000, 1999, and 1998, the Partnership was a co-venturer in two
separate joint ventures that each owned and leased six properties and one joint
venture that owned and leased one Property. The Partnership also owned and
leased one Property with an affiliate as tenants-in-common during 1998, and
three Properties with affiliates as tenants-in-common in 1999 and four
Properties with affiliates as tenants-in-common in 2000. As of December 31,
2000, the Partnership owned, either directly or through joint venture and
tenancy in common arrangements, 40 Properties, which are generally 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 $46,000 to $176,400. Generally, the leases provide for percentage
rent based on sales in excess of a specified amount. In addition, a majority of
the leases provide that, commencing in specified lease years (ranging from the
third to the sixth lease year), the annual base rent required under the terms of
the lease will increase. 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 $2,366,345, $2,335,381, and $2,363,610, respectively, in
rental income from operating leases (net of adjustments to accrued rental
income) and earned income from direct financing leases related to its wholly
owned Properties. The decrease in rental and earned income in 1999, as compared
to 1998, was partially due to the fact that the Partnership established an
allowance for doubtful accounts of $206,000 during 1998 relating to the Perkins
Properties in Williamsville and Rochester, New York. These two Properties were
leased by the same tenant, which was experiencing financial difficulties. No
such allowance was established during 2000 and 1999. In May 1998, the tenant of
these Properties filed for bankruptcy and rejected the lease relating to the
Property in Williamsville, New York. As a result, during 1998, the Partnership
reversed approximately $267,600 of accrued rental income relating to both
Properties. The accrued rental income was the accumulated amount of non-cash
accounting adjustments previously recorded in order to recognize future
scheduled rent increases as income evenly over the terms of the lease. The
Partnership continued receiving rental payments on the lease that was not
rejected, relating to the Property in Rochester, New York. In March 1999 and May
2000, the Partnership sold these Properties to a third party, which resulted in
an offset to the increase in rental and earned income in 2000, as compared to
1999, and contributed to the decrease in rental and earned income in 1999, as
compared to 1998. The increase in rental and earned income during 2000 was
partially due to, and the decrease during 1999 was partially offset by the fact
that in March 1999, the Partnership reinvested a portion of the net sales
proceeds from the sale of the Property in Rochester, New York, in a Property in
Albany, Georgia. In November 1999, the Partnership invested the remaining net
sales proceeds in two Properties with affiliates of the General Partners, as
tenants-in-common, as described in "Capital Resources." In August 2000, the
Partnership reinvested a portion of the net sales proceeds from the sale of the
Property in Williamsville, New York, in a Property in Libertyville, Illinois, as
tenants-in-common with affiliates of the General Partners, as described in
"Capital Resources."
In addition, the increase in rental and earned income during 2000 was
partially offset by and the decrease in rental and earned income in 1999, was
partially attributable to the fact that, during 1999, the Partnership sold the
Property located in Corpus Christi, Texas, as described above in "Capital
Resources." The increase during 2000 was partially attributable to, and the
decrease during1999 was partially offset by the fact that in March 1999, the
Partnership reinvested the net sales proceeds in a Property in Albany, Georgia,
as described in "Capital Resources."
The offset of the increase in rental and earned income during 2000, as
compared to 1999, and the decrease in rental and earned income in 1999, was also
partially due to the fact that during 2000 and 1999, the Partnership established
an allowance for doubtful accounts of approximately $54,200 and $19,500,
respectively, relating to past due rental amounts for the Property in Grand
Prairie, Texas, in accordance with the Partnership's collection policy. The
General Partners will continue to pursue collection of the past due amounts and
will recognize such amounts as income if collected. No such allowance was
established during 1998.
The decrease in rental and earned income during 1999, as compared to
1998, was also partially attributable to a decrease of approximately $69,800 and
$52,000 during 1999 and 1998, respectively, due to the fact that the leases
relating to the Burger King Properties in Shelby, North Carolina; Maple Heights,
Ohio; Watertown, New York and Carrboro, North Carolina were amended to provide
for rent reductions. Rental and earned income relating to these Properties are
expected to remain at reduced amounts as a result of these amendments.
The decrease in rental and earned income during 1999, as compared to
1998, was partially offset by an increase of approximately $6,100 for rental
amounts relating to the Partnership's Properties in Bluffton, Alliance and North
Baltimore, Ohio, during 1999. During 1994, the leases relating to these
Properties were amended to provide for the payment of reduced annual base rent
with no scheduled rent increases. In accordance with a provision in the
amendments, as a result of the former tenant assigning the leases to a new
tenant during 1998, the rents under the assigned leases reverted back to those
that were required under the original lease agreements. However, the increase
during 1999 relating to these Properties was offset by approximately $33,600,
due to the fact that the Partnership established an allowance for doubtful
accounts, in response to financial difficulties that the tenant of these
Properties is experiencing. Rental and earned income increased during 2000,
partially due to the fact that during 2000, the Partnership collected and
recognized, as income, the past due rental and other amounts relating to the two
Properties in Bluffton and Alliance, Ohio. The increase during 2000 was
partially offset by the fact that in November 2000, the Partnership sold these
two Properties, as described in "Capital Resources."
During the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $75,992, $59,287, and $79,780, respectively, in contingent
rental income. The increase in contingent rental income during 2000, as compared
to 1999 and the decrease in 1999, as compared to 1998, is primarily attributable
to an increase in 2000 and a decrease in 1999, in gross sales of certain
restaurant Properties whose leases require the payment of contingent rental
income.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership also earned $674,930, $606,337, and $596,166, respectively, in
income 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 2000, as compared to 1999, and in 1999, compared to 1998, was
primarily due to the fact that in November 1999, the Partnership reinvested a
portion of the net sales proceeds it received from the sale of the Property in
Rochester, New York, in a Property in Dublin, California, and Montgomery,
Alabama, each as tenants-in-common with affiliates of the General Partners. In
addition, in August 2000, the Partnership reinvested a portion of the net sales
proceeds it received from the sale of the Property in Williamsville, New York,
in a Property in Libertyville, Illinois, as tenants-in-common with affiliates of
the General Partners.
During the year ended December 31, 2000, four of the Partnership's
lessees (or group of affiliated lessees), Carrols Corporation, Flagstar
Enterprises, Inc., Golden Corral Corporation and Burger King Corporation, each
contributed more than ten percent of the Partnership's total rental, earned and
mortgage interest income (including the Partnership's share of rental and earned
income from 13 Properties owned by joint ventures and four Properties owned as
tenants-in-common). As of December 31, 2000, Carrols Corporation was the lessee
under leases relating to four restaurants, Flagstar Enterprises, Inc. was the
lessee under leases relating to five restaurants, Burger King Corp. was the
lessee under leases relating to the 13 restaurants owned by joint ventures and
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, these four lessees or groups of affiliated lessees each
will continue to contribute more than ten percent of the Partnership's total
rental and earned income in 2001. In addition, four Restaurant Chains, Burger
King, Hardee's, Golden Corral, and Shoney's, each accounted for more than ten
percent of the Partnership's total rental, earned and mortgage interest income
during 2000 (including the Partnership's share of the rental and earned income
from 13 Properties owned by joint ventures and four Properties owned as
tenants-in-common). It is anticipated that these four Restaurant Chains each
will continue to account for more than ten percent of the total rental and
earned income to which the Partnership is entitled under the terms of its
leases. Any failure of these lessees or Restaurant Chains could materially
affect the Partnership's income if the Partnership is not able to re-lease the
Properties in a timely manner.
During the years ended December 31, 2000, 1999 and 1998, the
Partnership earned $56,990, $81,692 and $61,129, respectively, in interest and
other income. The decrease in interest and other income during 2000 as compared
to 1999, and the increase during 1999 as compared to 1998, was primarily
attributable to the increase in interest income related to the amount of funds
invested in cash and cash equivalents due to the disposition of Properties
pending reinvestment in an additional Property and tenancy in common
arrangements.
Operating expenses, including depreciation and amortization expense,
were $592,809, $773,627, and $499,212, for the years ended December 31, 2000,
1999 and 1998, respectively. The decrease in operating expenses during 2000, and
the increase in operating expenses during 1999, was primarily due to the amount
of transaction costs the Partnership incurred relating to the General Partners
retaining financial and legal advisors to assist them in evaluating and
negotiating the proposed and terminated Merger with APF, as described below in
"Termination of Merger."
The increase in operating expenses during 1999 was also partially due
to an increase in depreciation expense as a result of the acquisition of the
Property in Albany, Georgia in March 1999 and the reclassification of two leases
from direct financing leases to operating leases during 1998.
Operating expenses were also higher during 1999, as compared to 2000
and 1998, due to an increase in legal fees, insurance and real estate tax
expense incurred in connection with the tenant of the Property in Williamsville,
New York filing for bankruptcy, rejecting the lease, and ceasing rental
payments. Between March 1999 and May 2000, the Partnership sold these two
Properties; therefore, the Partnership will not incur such expenses related to
these Properties in the future.
During the year ended December 31, 1998, the Partnership recorded a
provision for loss on assets of $314,775 for financial reporting purposes
relating to the Properties in Williamsville and Rochester, New York. The loss
represented the difference between each Property's carrying value at December
31, 1998, and the estimated net realizable value at December 31, 1998 for each
Property. These Properties were sold in 1999 and 2000, as described below. No
such allowance was established during the years ended December 31, 2000 and
1999.
As a result of the sales of the Properties in Bluffton and Alliance,
Ohio and Williamsville, New York, during 2000, and the sales of the Properties
in Rochester, New York and Corpus Christi, Texas, during 1999, as described
above in "Capital Resources," the Partnership recognized a loss of $730,668 and
a gain of $75,997 for financial reporting purposes for the years ended December
31, 2000 and 1999, respectively. These Properties were sold in 1999 and 2000, as
described below. No Properties were sold during 1998.
The Partnership's leases as of December 31, 2000, in general, are
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 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 results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "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. 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Partnership accepted two promissory notes in conjunction with the
sale of two Properties. The General Partners believe that the estimated fair
value of the mortgage note at December 31, 2000 approximated the outstanding
principal amount. The Partnership is exposed to equity loss in the event of
changes in interest rates. The following table presents the expected cash flows
of principal that are sensitive to these changes.
Mortgage Note
Fixed Rate
------------------
2001 $ 21,937
2002 18,584
2003 20,328
2004 22,235
2005 24,320
Thereafter 392,596
----------------
$ 500,000
================
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 16
Financial Statements:
Balance Sheets 17
Statements of Income 18
Statements of Partners' Capital 19
Statements of Cash Flows 20-21
Notes to Financial Statements 22-37
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund IX, 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 IX, 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 schedules listed in the index appearing
under item 14(a)(2) present 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 schedules are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements and financial statement schedules 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 IX, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
2000 1999
--------------------- --------------------
ASSETS
Land and buildings on operating leases, less accumulated
depreciation and allowance for loss on assets
$ 13,663,075 $ 14,692,716
Net investment in direct financing leases 4,047,190 5,319,764
Investment in joint ventures 7,525,414 7,169,101
Mortgage notes receivable 503,838 --
Cash and cash equivalents 829,338 936,506
Receivables, less allowance for doubtful accounts of
$82,596, and $55,896, respectively
311,662 108,238
Due from related parties 8,835 --
Prepaid expenses 21,994 21,447
Lease costs, less accumulated amortization of $4,577 and
$3,077, respectively 10,423 11,923
Accrued rental income 1,210,844 1,183,581
--------------------- ------------------------
$ 28,132,613 $ 29,443,276
===================== ========================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 33,029 $ 107,139
Escrowed real estate taxes payable 7,868 8,116
Distributions payable 787,501 787,501
Due to related parties 100,846 62,066
Rents paid in advance and deposits 53,612 29,473
--------------------- ------------------------
Total liabilities 982,856 994,295
Partners' capital 27,149,757 28,448,981
--------------------- ------------------------
$ 28,132,613 $ 29,443,276
===================== ========================
See accompanying notes to financial statements.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year ended December 31,
2000 1999 1998
--------------- ---------------- ---------------
Revenues:
Rental income from operating leases $ 1,859,266 $ 1,615,198 $ 1,804,248
Adjustments to accrued rental income -- -- (267,600)
Earned income from direct financing leases 507,079 720,183 826,962
Contingent rental income 75,992 59,287 79,780
Interest and other income 56,990 81,692 61,129
--------------- ---------------- ---------------
2,499,327 2,476,360 2,504,519
--------------- ---------------- ---------------
Expenses:
General operating and administrative 166,250 166,844 142,996
Professional services 35,938 51,336 43,685
Bad debt expense -- -- 5,133
Real estate taxes 23,160 29,069 6,247
State and other taxes 22,725 27,021 14,337
Depreciation and amortization 312,196 318,248 267,773
Transaction costs 32,540 181,109 19,041
--------------- ---------------- ---------------
592,809 773,627 499,212
--------------- ---------------- ---------------
Income Before Equity in Earnings of Joint Ventures, Gain
(Loss) on Sale of Assets and Provision for Loss on Assets 1,906,518 1,702,733 2,005,307
Equity in Earnings of Joint Ventures 674,930 606,337 596,166
Gain (Loss) on Sale of Assets (730,668 ) 75,997 --
Provision for Loss on Assets -- -- (314,775)
--------------- ---------------- ---------------
Net Income $ 1,850,780 $ 2,385,067 $ 2,286,698
=============== ================ ===============
Allocation of Net Income:
General partners $ -- $ 23,654 $
23,991
Limited partners 1,850,780 2,361,413 2,262,707
--------------- ---------------- ---------------
$ 1,850,780 $ 2,385,067 $ 2,286,698
=============== ================ ===============
Net Income Per Limited Partner Unit $ 0.53 $ 0.68 $
0.65
=============== ================ ===============
Weighted Average Number of Limited Partner Units
Outstanding 3,500,000 3,500,000 3,500,000
=============== ================ ===============
See accompanying notes to financial statements.
CNL INCOME FUND IX, 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 $1,000 $189,772 $ 35,000,000 $(19,840,587) $18,987,039 $ (4,190,000 $30,147,224
Distributions to limited
partners ($0.92 per limited
partner unit) -- -- -- (3,220,004) -- -- (3,220,004)
Net income -- 23,991 -- -- 2,262,707 -- 2,286,698
-------- ----------- -------------- ------------- ----------- ------------ ---------
Balance, December 31, 1998 1,000 213,763 35,000,000 (23,060,591) 21,249,746 (4,190,000) 29,213,918
Distributions to limited
partners ($0.90 per limited
partner unit) -- -- -- (3,150,004) -- -- (3,150,004)
Net income -- 23,654 -- -- 2,361,413 -- 2,385,067
-------- ------------- ------------- ------------- ----------- ----------- -----------
Balance, December 31, 1999 1,000 237,417 35,000,000 (26,210,595) 23,611,159 (4,190,000) 28,448,981
Distributions to limited
partners ($0.90 per limited
partner unit) -- -- -- (3,150,004) -- -- (3,150,004)
Net income -- -- -- -- 1,850,780 -- 1,850,780
-------- ------------- ------------- ------------- ----------- ------------- ---------
Balance, December 31, 2000 $1,000 $ 237,417 $ 35,000,000 $(29,360,599) $25,461,939 $ (4,190,000) $27,149,757
======== ============= ============= ============= =========== ============== ===========
See accompanying notes to financial statements.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Year Ended December 31,
2000 1999 1998
--------------- --------------- --------------
Increase (Decrease) in Cash and Cash Equivalents:
Cash Flows from Operating Activities:
Cash received from tenants $ 2,323,462 $ 2,388,494 $ 2,695,934
Distributions from joint ventures 804,363 738,371 738,544
Cash paid for expenses (319,486 ) (325,027 ) (223,753 )
Interest received 35,728 66,258 42,665
--------------- --------------- --------------
Net cash provided by operating activities 2,844,067 2,868,096 3,253,390
--------------- --------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 693,350 2,400,000 --
Purchase of land and building -- (1,641,211 ) --
Investment in joint ventures (494,581 ) (827,754 ) --
Other -- -- 3,605
--------------- --------------- --------------
Net cash provided by (used in) investing
activities 198,769 (68,965 ) 3,605
--------------- --------------- --------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,150,004 ) (3,150,004 ) (3,220,004)
--------------- --------------- --------------
Net cash used in financing activities (3,150,004 ) (3,150,004 ) (3,220,004)
--------------- --------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents (107,168 ) (350,873 ) 36,991
Cash and Cash Equivalents at Beginning of Year 936,506 1,287,379 1,250,388
--------------- --------------- --------------
Cash and Cash Equivalents at End of Year $ 829,338 $ 936,506 $ 1,287,379
=============== =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended December 31:
2000 1999 1998
------------ ------------- ------------
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Net income $ 1,850,780 $ 2,385,067 $ 2,286,698
------------ ------------- ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 310,696 316,748 266,273
Amortization 1,500 1,500 1,500
Equity in earnings of joint ventures, net of
distributions 138,268 132,034 142,378
Gain on sale of land and buildings (75,997 ) --
Bad debt expense -- -- 5,133
Provision for loss on assets 730,668 -- 314,775
Increase in interest receivable (3,838 ) -- --
Decrease (increase) in due from related parties (8,835 ) -- --
Increase in receivables (205,220 ) (14,669 ) (2,568 )
Decrease (increase) in prepaid expenses (547 ) (18,262 ) 739
Decrease in net investment in direct financing
leases 69,297 61,066 92,647
Decrease (increase) in accrued rental income (27,263 ) (28,526 ) 209,852
Increase (decrease) in accounts payable and
accrued expenses (74,358 ) 105,130 (39,956 )
Increase in due to related parties 38,780 37,879 19,568
Increase (decrease) in rents paid in advance
and 24,139 (33,874 ) (43,649 )
deposits
------------ ------------- ------------
Total adjustments 993,287 483,029 966,692
------------ ------------- ------------
Net Cash Provided by Operating Activities $ 2,844,067 $ 2,868,096 $ 3,253,390
============ ============= ============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Mortgage notes accepted in exchange for sale of $ 500,000 $ -- $ --
assets
============ ============= ============
Distributions declared and unpaid at December 31 $ 787,501 $ 787,501 $ 787,501
============ ============= ============
See accomapnying notes to financial statements.
CNL INCOME FUND IX, 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 IX, 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 and family-style 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 generally - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
generally on a triple-net basis, whereby the tenant is responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's
investment in the leases.
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals 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.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
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
circumstance indicate that the tenant will not lease the
property through the end of the lease term, the Partnership
either reserves or reverses the cumulative accrued rental
income balance.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, will be removed from
the accounts and gains or losses from sales will be reflected in
income. The general partners of the Partnership review properties for
impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through
operations. The general partners determine whether an impairment in
value has occurred by comparing the estimated future undiscounted cash
flows, including the residual value of the property, with the carrying
cost of the individual property. If an impairment is indicated, the
assets are adjusted to the fair value. 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' 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 continued to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.
Investment in Joint Ventures - The Partnership's investments in three
joint ventures and properties in Englewood, Colorado; Dublin,
California; Montgomery, Alabama and Libertyville, Illinois for which
the properties are held as tenants-in-common with affiliates, are
accounted for using the equity method since the Partnership shares
control with affiliates which have the same general partners.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value. Cash accounts
maintained on behalf of the Partnership in demand deposits at
commercial banks and money market funds may exceed federally insured
levels; however, the Partnership has not experienced any losses in such
accounts.
Lease Costs - Lease costs associated with negotiating a new lease are
amortized over the term of the new lease using the straight-line
method.
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.
Staff Accounting Bulletin 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
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
1, 2000. Implementation of SAB 101 did not have a material impact on
the Partnership results 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. 133, "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.
2. Leases:
------
The Partnership leases its land and buildings to operators of national
and regional fast-food and family-style restaurants. The leases are
accounted for under the provisions of Statement of Financial Accounting
Standards No. 13, "Accounting for Leases." Some of the leases have been
classified as operating leases and some of the leases have been
classified as direct financing leases. For the leases classified as
direct financing leases, the building portions of the property leases
are accounted for as direct financing leases while a majority of the
land portion of these leases are 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 to five successive five-year periods
subject to the same terms and conditions as the initial lease. Most
leases also allow the tenant to purchase the property at fair market
value after a specified portion of the lease has elapsed.
CNL INCOME FUND IX, 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 $ 7,116,309 $ 7,465,608
Buildings 8,729,293 9,378,821
------------------- --------------------
15,845,602 16,844,429
Less accumulated depreciation (2,182,527) (1,902,345)
------------------- --------------------
13,663,075 14,942,084
Less allowance for loss on assets -- (249,368)
------------------- --------------------
$ 13,663,075 $ 14,692,716
=================== ====================
During February and March 1999, the Partnership sold its properties in
Corpus Christi, Texas and Rochester, New York, respectively, and
received net sales proceeds of $1,350,000 and $1,050,000, respectively,
resulting in a gain of $56,369 and $19,628, respectively, for financial
reporting purposes (see Note 4). These properties were originally
acquired by the Partnership in 1991 and 1992 and had a total cost of
approximately $2,288,800, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the properties
for a total of approximately $111,200 in excess of their original
purchase prices. In March 1999, the Partnership reinvested a portion of
these net sales proceeds in a Golden Corral property located in Albany,
Georgia, at an approximate cost of $1,641,200. In addition, in November
1999, the Partnership reinvested a portion of the net sales proceeds in
two properties held as tenants-in-common with affiliates of the general
partners (see Note 5).
At December 31, 1998, the Partnership recorded a provision for loss on
buildings in the amount of $249,368 for financial reporting purposes
relating to the Perkins property in Williamsville, New York which
represented the difference between the property's carrying value and
the current estimate of net realizable value of the property at
December 31, 1998. The tenant of this property filed for bankruptcy and
discontinued the payment of rents. In May 2000, the Partnership sold
its Property in Williamsville, New York, to a third party for $715,000
and received net sales proceeds of $693,350, resulting in a loss of
$27,391 for financial reporting purposes. In August 2000, the
Partnership reinvested approximately $494,600 of the net sales proceeds
it received from this sale in a property in Libertyville, Illinois,
with CNL Income Fund VIII, Ltd., a
CNL INCOME FUND IX, 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:
--------------------------------------------------
Florida limited partnership and affiliate of the general partners, as
tenants-in-common for a 34 percent interest in the property (see Note
6).
Some leases provide for escalating guaranteed minimum rents throughout
the lease term. Income from these scheduled rent increases is
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 2000 and 1999, the Partnership recognized
income of $27,263, and $26,847, respectively, and for the year ended
December 31,1998, the Partnership recognized a loss of $209,852 (net of
$267,600 in reversals), of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 1,719,797
2002 1,814,486
2003 1,822,986
2004 1,822,986
2005 1,822,986
Thereafter 6,777,512
----------------
$15,780,753
================
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 IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases:
------------------------------------------
The following lists the components of the net investment in direct
financing leases at December 31:
2000 1999
----------------- ------------------
Minimum lease payments receivable $ 6,612,819 $ 9,613,462
Estimated residual values 1,440,810 1,929,582
Less unearned income (4,006,439) (6,223,280)
----------------- ------------------
Net investment in direct financing leases $ 4,047,190 $ 5,319,764
================= ==================
As of December 31, 1998, the Partnership had recorded an allowance of
$65,407 for impairment in the carrying value of the Property in
Rochester, New York, due to the tenant filing for bankruptcy. The
allowance represented the difference between the carrying value of the
property at December 31, 1998 and the estimated net realizable value
for the property. In March 1999, the Partnership sold the property and
received net sales proceeds of $1,050,000 and recorded a gain of
$19,628 for financial reporting purposes, resulting in a total net loss
of approximately $45,800. The building portion of this property had
been classified as a direct financing lease. In connection therewith,
the gross investment (minimum lease payments receivable and the
estimated residual value), unearned income and the allowance for
impairment in carrying value relating to the building, were removed
from the accounts and the gain from the sale of the property was
reflected in income (see Note 3).
In November 2000, the Partnership sold its properties in Bluffton and
Alliance, Ohio, to a unrelated third party, resulting in a loss of
$703,277 for financial reporting purposes. In connection therewith, the
Partnership accepted a mortgage note in the amount of $500,000 (see
Note 6).
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases - Continued:
-----------------------------------------------------
The following is a schedule of future minimum lease payments to be
received on the direct financing leases at December 31, 2000:
2001 $ 578,910
2002 603,230
2003 603,230
2004 603,230
2005 603,230
Thereafter 3,620,989
-----------------
$6,612,819
=================
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3).
5. Investment in Joint Ventures:
-----------------------------
The Partnership has a 45.2%, 50 percent and 27.33% interest in the
profits and losses of CNL Restaurant Investments II, CNL Restaurant
Investments III and Ashland Joint Venture, respectively. The remaining
interests in these joint ventures are held by affiliates of the
Partnership which have the same general partners. The Partnership also
owns a 67 percent interest in a property in Englewood, Colorado, as
tenants-in-common with an affiliate of the general partners.
In November 1999, the Partnership used a portion of the net proceeds
from the sales of properties in Corpus Christi, Texas and Rochester,
New York to acquire a 25 percent interest in an IHOP property in
Dublin, California with CNL Income Fund VI, Ltd., a Florida limited
partnership and affiliate of the general partners, and a 29 percent
interest in an IHOP property in Montgomery, Alabama, with CNL Income
Fund VII, Ltd., also a Florida limited partnership and affiliate of the
general partners, as tenants-in-common. In connection therewith, the
Partnership and the affiliate entered into an agreement whereby each
co-venturer will share in the profits and losses of the property in
proportion to its applicable percentage interest.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
In August 2000, the Partnership reinvested a majority of the net sales
proceeds from the sale of the property in Williamsville, New York in a
property in Libertyville, Illinois, with CNL Income Fund VIII, Ltd., a
Florida limited partnership and affiliate of the general partners, as
tenants-in-common. In connection therewith, the Partnership and the
affiliate entered into an agreement whereby each co-venturer will share
in the profits and losses of the Property in proportion to its
applicable percentage interest. The property was acquired from CNL BB
Corp., an affiliate of the general partners (see Note 9). The affiliate
had purchased and temporarily held title to the property in order to
facilitate the acquisition of the property by the Partnership. The
purchase price paid by the Partnership represented the costs incurred
by the affiliate to acquire the property, including closing costs. As
of December 31, 2000, the Partnership owned a 34 percent interest in
this property.
CNL Restaurant Investments II and CNL Restaurant Investments III each
own and lease six properties to an operator of national fast-food
restaurants and Ashland Joint Venture owns and leases one property to
an operator of national fast-food restaurants. The Partnership and
affiliates, as tenants-in-common own, and lease four properties to
operators of national family-style restaurants. The following presents
the joint ventures' combined, condensed financial information at
December 31:
2000 1999
----------------- ------------------
Land and buildings on operating
leases, less accumulated
depreciation $ 15,138,593 $14,054,203
Net investment in direct
financing leases 1,885,089 1,910,711
Cash 114,664 122,661
Receivables 7,965 53,584
Prepaid expenses 33,515 22,155
Accrued rental income 143,221 67,411
Liabilities 74,621 116,326
Partners' capital 17,248,426 16,114,399
Revenues 1,933,389 1,626,728
Net income 1,520,163 1,256,254
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
The Partnership recognized income totaling $674,930, $606,337, and
$596,166, for the years ended December 31, 2000, 1999, and 1998,
respectively, from these joint ventures.
6. Mortgage Notes Receivable:
In connection with the sale of its properties in Bluffton and Alliance,
Ohio during 2000, the Partnership accepted promissory notes in the
principal sum of $300,000 and $200,000, respectively, collateralized by
a mortgage on the respective property. The promissory notes bear
interest at a rate of nine percent per annum and are being collected in
96 equal monthly installments (which include principal and interest) of
$3,043 and $2,029, respectively, with balloon payments of $184,652 and
$123,102, respectively, due in December 2008.
The mortgage notes receivable consisted of the following at December
31:
2000 1999
-------------- -------------
Principal balance $ 500,000 $ --
Accrued interest receivable 3,838 --
-------------- -------------
$ 503,838 $ --
============== =============
The general partners believe that the estimated fair values of mortgage
notes receivable at December 31, 2000, approximate the outstanding
principal amount based on estimated current rates at which similar
loans would be made to borrowers with similar credit and for similar
maturities.
7. Allocations and Distributions:
-----------------------------
From inception through December 31, 1999, generally, 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
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Allocations and Distributions - Continued:
-----------------------------------------
receipt by the limited partners of an aggregate, ten percent,
cumulative, noncompounded annual return on their adjusted capital
contributions (the "10% Preferred Return").
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 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, 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
accounts 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 1, 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 partner 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 IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Allocations and Distributions - Continued:
-----------------------------------------
During the years ended December 31, 2000, 1999, and 1998, the
Partnership declared distributions to the limited partners of
$3,150,004, $3,150,004, and $3,220,004, respectively. No distributions
have been made to the general partners to date.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. 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 $ 1,850,780 $ 2,385,067 $ 2,286,698
Depreciation for tax reporting purposes in
excess of depreciation for financial
reporting purposes (36,818 ) (44,433 ) (97,473)
Direct financing leases recorded as operating
leases for tax reporting purposes 69,297 62,969 92,647
Gain on sale of land and buildings for
financial reporting purposes in excess
of gain for tax reporting purposes (30,636 ) (63,807 ) --
Equity in earnings of joint ventures for tax
reporting purposes in excess of (less than)
equity in earnings of joint ventures for (18,522 ) 62,547 8,256
financial reporting purposes
Capitalization (deduction) of transaction costs
for tax reporting purposes (200,150 ) 181,109 19,041
Accrued rental income (27,263 ) (26,847 ) 209,852
Rents paid in advance 24,139 (33,374 ) (44,149)
Allowance for loss on assets -- -- 314,775
Allowance for doubtful accounts 26,700 (150,154 ) 97,736
---------------- ----------------- ----------------
Net income for federal income tax purposes $ 1,657,527 $ 2,373,077 $ 2,887,383
================ ================= ================
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. 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.
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 agreed to pay
the Advisor an annual, noncumulative, subordinated management fee of
one percent of the sum of gross revenues from properties wholly owned
by the Partnership and the Partnership's allocable share of gross
revenues from joint ventures, but not in excess of competitive fees for
comparable services. These fees are incurred and are payable only after
the limited partners receive their 10% Preferred Return. Due to the
fact that these fees are noncumulative, if the limited partners have
not received 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. 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. No
deferred, subordinated real estate disposition fees have been incurred
since inception.
During the years ended December 31, 2000, 1999, and 1998, the Advisor
and its affiliate 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
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Related Party Transactions - Continued:
--------------------------------------
incurred $88,741, $116,167, and $94,808 for the years ended December
31, 2000, 1999, and 1998, respectively, for such services.
During 2000, the Partnership acquired a 34 percent interest in a
property from CNL BB Corp., an affiliate of the general partners, for
which the property had a total purchase price of approximately
$1,454,600. The property acquired during 2000 is being held as
tenants-in-common, with CNL Income Fund VIII, Ltd. ("CNL VIII"), a
Florida limited partnership, an affiliate of the general partners (see
Note 3). CNL BB Corp. had purchased and temporarily held title to this
property in order to facilitate the acquisition of the property by the
Partnership and CNL VIII as tenants-in-common. The total purchase price
paid by the Partnership and CNL VIII represented the costs incurred by
CNL BB Corp. to acquire and carry the property, including closing
costs. In accordance with the Statement of Policy of Real Estate
programs for the North American Securities Administrators Association,
Inc., all income, expenses, profits and losses generated by or
associated with the property, or interests therein, purchased from an
affiliate in which the affiliate has acted as an interim owner, are
treated as belonging to the Partnership and CNL VIII, as
tenants-in-common. For the year ended December 31, 2000, other income
includes $394 of such amounts.
The amount due to related parties at December 31, 2000 and 1999,
totaled $100,846 and $62,066, respectively.
10. Concentration of Credit Risk:
-----------------------------
The following schedule presents total rental, earned and mortgage
interest income from individual lessees, each representing more than
ten percent of the Partnership's total rental, earned and mortgage
interest income (including the Partnership's share of total rental and
earned income from joint ventures and properties held as
tenants-in-common with affiliates) for each of the years ended December
31:
2000 1999 1998
-------------- ------------ ---------
Burger King Corp. $637,301 $648,960 $ 647,953
Golden Corral Corp. 548,289 486,531 360,555
Flagstar Enterprises, Inc. 363,872 365,630 367,211
Carrols Corp. 320,890 328,051 388,121
Shoney's, Inc. N/A N/A 557,000
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
10. Concentration of Credit Risk - Continued:
-----------------------------------------
In addition, the following schedule presents total rental, earned and
mortgage interest income from individual restaurant chains, each
representing more than ten percent of the Partnership's total rental,
earned and mortgage interest income (including the Partnership's share
of total rental and earned income from joint ventures and properties
held as tenants-in-common with affiliate) for each of the years ended
December 31:
2000 1999 1998
------------- ------------- -------------
Burger King $1,062,122 $1,086,287 $1,143,522
Golden Corral Family
Steakhouse Restaurant 548,289 486,531 360,555
Shoney's 505,821 659,426 805,729
Hardee's 433,587 436,081 438,324
The information denoted by N/A indicates that for each period
presented, the tenant and the chains did not represent more than ten
percent of the Partnership's total rental, earned and mortgage interest
income.
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.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
11. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2000 and
1999.
2000 Quarter First Second Third Fourth Year
------------------------ -------------- ------------- ------------- -------------- --------------
Revenue (1) $739,762 $768,311 $688,589 $977,595 $ 3,174,257
Net income 505,916 584,089 547,575 213,200 1,850,780
Net income per
limited partner
unit 0.14 0.17 0.15 0.07 0.53
1999 Quarter First Second Third Fourth Year
------------------------ -------------- ------------- ------------- -------------- --------------
Revenue (1) $751,136 $770,068 $762,672 $798,821 $ 3,082,697
Net income 632,462 542,572 567,366 642,667 2,385,067
Net income per
limited partner
unit 0.18 0.15 0.16 0.19 0.68
(1) Revenues include equity in earnings of unconsolidated joint
ventures and adjustments to accrued rental income as a result of a
tenant filing for bankruptcy.
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.
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 reimbursed at Accounting and
operating expenses the lower of cost or 90 percent of administra-tive services:
the prevailing rate at which $88,741
comparable services could have been
obtained in the same geographic
area. 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 manage- One percent of the sum of gross $-0-
ment fee to affiliates operating revenues from Properties
wholly owned by the Partnership plus
the Partnership's allocable share of
gross revenues of joint ventures in
which the Partnership is a
co-venturer, subordinated to certain
minimum returns to the Limited
Partners. The management fee will
not exceed competitive fees for
comparable services. Due to the
fact that these fees are
noncumulative, if the Limited
Partners have not received their 10%
Preferred Return in any particular
year, no 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 A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates 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 equal $-0-
subordinated share of to one percent of Partnership
Partnership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to five percent of Partnership
Partnership net sales proceeds distributions of such net sales
from a sale or sales not in proceeds, subordinated to certain
liquidation of the Partnership 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 proceeds $-0-
Partnership net sales 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 Schedules
Schedule II -Valuation and Qualifying Accounts for the years
ended December 31, 2000, 1999 and 1998
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2000
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2000
Schedule IV - Mortgage Loans on Real Estate 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 Affidavit and Certificate of Limited Partnership of
CNL Income Fund IX, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund IX, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-35049 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund IX, Ltd. (Included as Exhibit 4.6
to Post-Effective Amendment No. 1 to Registration
Statement No. 33-35049 on Form S-11 and incorporated
herein by reference.)
10.1 Management Agreement between CNL Income Fund IX, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on March 17, 1998, 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.)
(b) The Registrant filed no reports on Form 8-K during the period October
1, 2000 through December 31, 2000.
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 28th day of
March, 2001.
CNL INCOME FUND IX, 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 28, 2001
- ------------------------------------
Robert A. Bourne (Principal Financial and Accounting
Officer)
/s/ James M. Seneff, Jr. Chief Executive Officer and Director March 28, 2001
- ------------------------------------
James M. Seneff, Jr. (Principal Executive Officer)
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
Additions Deductions
--------------------------------- -------------------------------
Collected
or Deter-
Balance at Charged to Charged to Deemed mined to Balance
Beginning Costs and Other Uncollec- be Col- at End
Year Description of Year Expenses Accounts tible lectible of Year
- ---------- ----------------- -------------- --------------- ---------------- ------------- ------------ ------------
1998 Allowance for
doubtful
accounts (a) $ 108,316 $ -- $ 164,929 (b) $ 1,220 (c) $65,973 $ 206,052
============== =============== ================ ============= ============ ===========
1999 Allowance for
doubtful
accounts (a) $ 206,052 $ -- $ 55,896 (b) $206,052 (c) $ -- $ 55,896
============== =============== ================ ============= ============ ===========
2000 Allowance for
doubtful
accounts (a) $ 55,896 $ -- $ 44,281 (b) $ -- (c) $ 17,581 $ 82,596
============== =============== ================ ============= ============ ============
(a) Deducted from receivables and accrued rental income on the balance sheet.
(b) Reduction of rental and other income.
(c) Amounts written off as uncollectible.
CNL INCOME FUND IX, 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 Parnership has
Invested in Under
Operating Leases:
Burger King Restaurants:
Shelby, North Carolina - $289,663 $554,268 - -
Maple Heights, Ohio - 430,563 454,823 - -
Suwanee, Georgia - 437,658 - - -
Watertown, New York - 360,181 529,594 - -
Carrboro, North Carolina - 406,768 523,067 - -
Denny's Restaurants:
Grand Prairie, Texas - 240,876 96,580 161,889 -
North Baltimore, Ohio - 133,187 - - -
Golden Corral Family
Steakhouse Restaurants:
Brownsville, Texas - 518,605 988,611 - -
Tyler, Texas - 652,103 982,353 - -
Albany, Georgia - 564,576 1,076,633 - -
Hardee's Restaurants:
Farragut, Tennessee - 308,269 455,341 - -
Greenville, South Carolin- 310,545 511,438 - -
Shell's Seafood Restaurants:
Copley Township, Ohio - 361,412 552,301 - -
Shoney's Restaurants:
Windcrest, Texas - 445,983 670,370 - -
Wildwood, Florida - 420,416 - - -
Bedford, Indiana - 262,103 - - -
Grenada, Mississippi - 335,001 454,723 - -
Huntsville, Alabama (g) - 638,400 717,302 - -
------------ ------------ ---------- ---------
$7,116,309 $8,567,404 $161,889 -
============ ============ ========== =========
Properties of Joint Venture in
Which the Partnership has a
45.2% Interest and has
Invested in Under Operating
Leases:
Burger King Restaurants:
Columbus, Ohio - $345,696 $651,985 - -
San Antonio, Texas - 350,479 623,615 - -
Pontiac, Michigan - 277,192 982,200 - -
Raceland, Louisiana - 174,019 986,879 - -
New Castle, Indiana - 264,239 662,265 - -
Hastings, Minnesota - 155,553 657,159 - -
------------ ------------ ---------- ---------
$1,567,178 $4,564,103 - -
============ ============ ========== =========
Properties of Joint Venture in
Which the Partnership has a
50% Interest and has Invested
in Under Operating Leases:
Burger King Restaurants:
Greensboro, North Carolin- $338,800 $650,109 - -
Metairie, Louisiana - 429,883 342,455 - -
Lafayette, Louisiana - 350,932 773,129 - -
Nashua, New Hampshire - 514,815 838,536 - -
Pontiac, Illinois - 203,095 719,226 - -
Dover, New Hampshire - 406,259 998,023 - -
------------ ------------ ---------- ---------
$2,243,784 $4,321,478 - -
============ ============ ========== =========
Property of Joint Venture in Which
the Parntership has a 27.33%
Interest and has Invested in
Under Operating Lease:
Burger King Restaurant
Ashland, New Hampshire - $293,478 $997,104 - -
============ ============ ========== =========
Property in Which the Partnership
has a 67% Interest as
Tenants-in-Common and has
Invested in Under an Operating
Lease:
IHOP Restaurant:
Englewood Colorado - $552,590 - - -
============ ============ ========== =========
Property in Which the Partnership
has a 25% Interest as Tenants
-in-Common and has Invested in
Under an Operating Lease:
IHOP Restaurant:
Dublin, California - $670,899 $879,237 - -
============ ============ ========== =========
Property in Which the Partnership
has a 29% Interest as Tenants
-in-Common and has Invested in
Under an Operating Lease:
IHOP Restaurant:
Montgomery, Alabama - $584,126 - - -
============ ============ ========== =========
Property in Which the Partnership
has a 34% Interest as Tenants
-in-Common and has Invested in
Under an Operating Lease:
Baker's Square
Libertyville, Illino-s $624,626 $830,023 - -
============ ============ ========== =========
Properties the Partnership has
Invested in Under Direct
Financing Leases:
Burger King Restaurants:
Suwanee, Georgia - - $330,541 - -
Denny's Restaurants:
N. Baltimore, Ohio - - 308,155 - -
Hardee's Restaurants:
Millbrook, Alabama - 125,703 541,865 - -
Greenville, Tennessee - 127,449 402,926 - -
Wooster, Ohio - 137,427 537,227 - -
Auburn, Alabama - 85,890 364,269 - -
Shoney's Restaurants:
Wildwood, Florida - - 846,903 - -
Bedford, Indiana - - 540,604 - -
------------ ------------ ---------- ---------
$476,469 $3,872,490 - -
============ ============ ========== =========
Property in Which the Partnership
has a 67% Interest as Tenants-
in-Common and has Invested In
Under Direct Financing Leases:
IHOP Restaurant
Englewood, Colorado - - $1,008,839 - -
============ ============ ========== =========
Property in Which the Partnership
has a 29% Interest as Tenants-
in-Common and has Invested In
Under Direct Financing Leases:
IHOP Restaurant
Montgomery, Alabama - - $933,873 - -
============ ============ ========== =========
Life on Which
Gross Amount at Which Depreciation in
Carried at Close of Period (c) Date Latest Income
- -------------------------------------------
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ------------- ------------ ------------ ----------- ------- ------- -------------
$289,663 $554,268 $843,931 $58,672 1985 05/91 (j)
430,563 454,823 885,386 145,211 1980 06/91 (b)
437,658 (f) 437,658 (d) 1991 11/91 (d)
360,181 529,594 889,775 161,297 1986 11/91 (b)
406,768 523,067 929,835 55,370 1983 12/96 (i) (j)
240,876 258,469 499,345 79,387 1991 08/91 (b)
133,187 (f) 133,187 (d) 1986 11/91 (d)
518,605 988,611 1,507,216 314,369 1990 06/91 (b)
652,103 982,353 1,634,456 312,379 1990 06/91 (b)
564,576 1,076,633 1,641,209 64,926 1998 03/99 (b)
308,269 455,341 763,610 140,095 1991 10/91 (b)
310,545 511,438 821,983 156,794 1991 10/91 (b)
361,412 552,301 913,713 122,923 1991 12/91 (h)
445,983 670,370 1,116,353 209,804 1991 08/91 (b)
420,416 (f) 420,416 (d) 1991 08/91 (d)
262,103 (f) 262,103 (d) 1991 08/91 (d)
335,001 454,723 789,724 140,279 1991 09/91 (b)
638,400 717,302 1,355,702 221,021 1989 10/91 (b)
- ------------- ------------ ------------ -----------
$7,116,309 $8,729,293 $15,845,602 $2,182,527
============= ============ ============ ===========
$345,696 $651,985 $997,681 $201,311 1986 09/91 (b)
350,479 623,615 974,094 192,552 1986 09/91 (b)
277,192 982,200 1,259,392 303,271 1987 09/91 (b)
174,019 986,879 1,160,898 304,716 1988 09/91 (b)
264,239 662,265 926,504 204,485 1988 09/91 (b)
155,553 657,159 812,712 202,908 1990 09/91 (b)
- ------------- ------------ ------------ -----------
$1,567,178 $4,564,103 $6,131,281 $1,409,243
============= ============ ============ ===========
$338,800 $650,109 $988,909 $189,808 1990 03/92 (b)
429,883 342,455 772,338 99,984 1990 03/92 (b)
350,932 773,129 1,124,061 225,725 1989 03/92 (b)
514,815 838,536 1,353,351 244,822 1987 03/92 (b)
203,095 719,226 922,321 209,988 1988 03/92 (b)
406,259 998,023 1,404,282 291,386 1987 03/92 (b)
- ------------- ------------ ------------ -----------
$2,243,784 $4,321,478 $6,565,262 $1,261,713
============= ============ ============ ===========
$293,478 $997,104 $1,290,582 $274,273 1987 10/92 (b)
============= ============ ============ ===========
$552,590 (f) $552,590 (d) 1996 07/97 (d)
============= ============
$670,899 $879,237 $1,550,136 $33,276 1998 11/99 (b)
============= ============ ============ ===========
$584,126 (f) $584,126 (d) 1998 11/99 (d)
============= ============
$624,626 $830,023 $1,454,649 $11,528 2000 08/00 (b)
============= ============ ============ ===========
- (f) (f) (d) 1991 11/91 (d)
- (f) (f) (d) 1986 11/91 (d)
(f) (f) (f) (e) 1991 10/91 (e)
(f) (f) (f) (e) 1991 10/91 (e)
(f) (f) (f) (e) 1991 10/91 (e)
(f) (f) (f) (e) 1991 10/91 (e)
- (f) (f) (d) 1991 08/91 (d)
- (f) (f) (d) 1991 08/91 (d)
- (f) (f) (d) 1996 07/97 (d)
=============
- (f) (f) (d) 1998 11/99 (d)
=============
CNL INCOME FUND IX, 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 Under Operating Leases:
Balance, December 31, 1997 $ 15,660,881 $ 1,497,770
Reclassified to operating lease 1,726,862 --
Reclassified to capital lease (361,010 ) (52,855 )
-- 266,272
Depreciation expense
---------------- -----------------
Balance, December 31, 1998 17,026,733 1,711,187
Acquisition 1,641,209 --
Dispositions (1,823,513 ) (125,590 )
Depreciation expense -- 316,748
---------------- -----------------
Balance, December 31, 1999 16,844,429 1,902,345
Dispositions (998,827 ) (30,514 )
Depreciation expense -- 310,696
---------------- -----------------
Balance, December 31, 2000 $ 15,845,602 $ 2,182,527
================ =================
Property of Joint Venture in Which the Partnership
has a 45.2% Interest and has Invested in Under an
Operating Lease:
Balance, December 31, 1997 $ 6,131,281 $ 952,834
Depreciation expense -- 152,137
---------------- -----------------
Balance, December, 31, 1998 6,131,281 1,104,971
Depreciation expense -- 152,136
---------------- -----------------
Balance, December 31, 1999 6,131,281 1,257,107
Depreciation expense -- 152,136
---------------- -----------------
Balance, December 31, 2000 $ 6,131,281 $ 1,409,243
================ =================
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- ----------------
Properties of Joint Venture in Which the
Partnership has a 50% Interest and has Invested in
Under Operating Leases:
Balance, December 31, 1997 $ 6,565,262 $ 829,565
Depreciation expense -- 144,048
---------------- ----------------
Balance, December 31, 1998 6,565,262 973,613
Depreciation expense -- 144,050
---------------- ----------------
Balance, December 31, 1999 6,565,262 1,117,663
Depreciation expense -- 144,050
---------------- ----------------
Balance, December 31, 2000 $ 6,565,262 $ 1,261,713
================ ================
Property of Joint Venture in Which the Partnership
has a 27.33% Interest and has Invested in Under an
Operating Lease:
Balance, December 31, 1997 $ 1,290,582 $ 174,562
Depreciation expense -- 33,237
---------------- ----------------
Balance, December 31, 1998 1,290,582 207,799
Depreciation expense -- 33,237
---------------- ----------------
Balance, December 31, 1999 1,290,582 241,036
Depreciation expense -- 33,237
---------------- ----------------
Balance, December 31, 2000 $ 1,290,582 $ 274,273
================ ================
Property in Which the Partnership has a 67%
Interest as Tenants-in-Common and has Invested in Under
a Operating Lease:
Balance, December 31, 1997 $ 552,590 $ --
Depreciation expense (d) -- --
---------------- ----------------
Balance, December 31, 1998 552,590 --
Depreciation expense (d) -- --
---------------- ----------------
Balance, December 31, 1999 552,590 --
Depreciation expense (d) -- --
---------------- ----------------
Balance, December 31, 2000 $ 552,590 $ --
================ ================
CNL INCOME FUND IX, 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 25%
Interest as Tenants-in-Common and has Invested in
Under a Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisition 1,550,136 --
Depreciation expense -- 3,968
---------------- ----------------
Balance, December 31, 1999 1,550,136 3,968
Depreciation expense -- 29,308
---------------- ----------------
Balance December 31, 2000 $ 1,550,136 $ 33,276
================ ================
Property in Which the Partnership has a 29%
Interest as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisition 584,126 --
Depreciation expense (d) -- --
---------------- ----------------
Balance, December 31, 1999 584,126 --
Depreciation expense (d) -- --
---------------- ----------------
Balance, December 31, 2000 $ 584,126 $ --
================ ================
Property in Which the Partnership has a 34%
Interest as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1999 $ -- $ --
Acquisition 1,454,649 --
Depreciation expense -- 11,528
---------------- ----------------
Balance, December 31, 2000 $ 1,454,649 $ 11,528
================ ================
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
(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
$20,188,144 and $20,071,339, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
(d) For financial reporting purposes, the portion of the lease relating to
the building has been recorded as a direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(e) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(f) For financial reporting purposes, certain components of the lease
relating to land and building have been recorded as a direct financing
lease. Accordingly, costs relating to these components of this lease
are not shown.
(g) The Huntsville, Alabama Property contains a Shoney's restaurant and a
Captain D's restaurant, both of which are operated by the same lessee
pursuant to one lease agreement.
(h) Effective January 1, 1995, the lease for this Property was terminated,
resulting in the reclassification of the building portion of the lease
to an operating lease. The building was recorded at net book value as
of January 1, 1995, and will be depreciated over its remaining
estimated life of approximately 27 years. During 1997, the Partnership
re-leased this Property to Shells Seafood Restaurants.
(i) This Property was exchanged for a Burger King Property previously owned
and located in Woodmere, Ohio, during 1996.
(j) Effective August 1, 1998, the lease for this property was amended,
resulting in the reclassification of the building portion of the lease
to an operating lease. The building was recorded at net book value as
of August 1, 1998, and will be depreciated over its remaining estimated
life of approximately 22 years.
(k) Effective September 30, 1998, the lease for this property was
terminated, resulting in the reclassification of the building portion
of the lease to an operating lease. The building was recorded at net
book value at September 30, 1998, and will be depreciated over its
remaining estimated life of approximately 23 years.
(l) During the year ended December 31, 2000, the Partnership and an
affiliate, as tenants-in-common, purchased land and building from CNL
BB Corp., an affiliate of the General Partners, for an aggregate cost
of approximately $1,454,600.
CNL INCOME FUND IX, LTD.
(A Florida Limited Partnership)
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 2000
Principal
Amount
of Loans
Subject to
Carrying Delinquent
Final Periodic Face Amount of Principal or
Interest Maturity Payment Prior Amount of Mortgages Description
Rate Date Terms Liens Mortgages (1) Interest
----------- ---------------- ----------- ------------ --------------- --------------- --------------
Denny's-
Alliance, OH
First Mortgage 9.00% December 2008 (2) $ -- $ 200,000 $ 201,535 $ --
============ =============== =============== ==============
Denny's-
Bluffton, OH
First Mortgage 9.00% December 2008 (3) $ -- $ 300,000 $ 302,303 $ --
============ =============== =============== ==============
(1) Carrying amount consists of outstanding principal plus accrued
interest. The tax carrying value of the notes are $503,838.
(2) Monthly payments of principal and interest at an annual rate
of 9.00% with a balloon payment at maturity of $123,102.
(3) Monthly payments of principal and interest at an annual rate
of 9.00%, with a balloon payment at maturity of $184,652.
(4) The changes in the carrying amounts are summarized as follows:
2000 1999 1998
------------- ---------------- ----------------
Balance at beginning of period $ -- $ -- $ --
New mortgage loan 500,000 -- --
Interest earned 3,838 -- --
Collection of principal and interest -- -- --
------------- ---------------- ----------------
Balance at end of period $ 503,838 $ -- $ --
============= ================ ================
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund IX, Ltd. (Included as Exhibit 3.1 to Registration
Statement No. 33-35049 on Form S-11 and incorporated herein by
reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund IX, Ltd. (Included as Exhibit 3.1 to Registration
Statement No. 33-35049 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund IX, Ltd. (Included as Exhibit 4.6 to
Post-Effective Amendment No. 1 to Registration Statement No.
33-35049 on Form S-11 and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund IX, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 17,
1998, 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.)