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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 0-21560
CNL INCOME FUND XI, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3078854
(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 4,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
Item 1. Business
CNL Income Fund XI, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 20, 1991. 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 18, 1992, the
Partnership offered for sale up to $40,000,000 of limited partnership interests
(the "Units") (4,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
March 12, 1992. The offering terminated on September 28, 1992, at which date the
maximum offering proceeds of $40,000,000 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
$35,200,000, and were used to acquire 39 Properties, including interests in four
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, 1996, the Partnership sold its Property in Philadelphia,
Pennsylvania. During January 1997, the Partnership reinvested the net sales
proceeds from the sale of the Property in Philadelphia, Pennsylvania in a
Black-eyed Pea Property located in Corpus Christi, Texas with an affiliate of
the General Partners as tenants-in-common. During 1998, the Partnership sold its
Property in Nashua, New Hampshire. In January 1999, the Partnership reinvested a
portion of the net sales proceeds from the sale of the Property in Nashua, New
Hampshire in a Burger King Property in Yelm, Washington. In February 1999, the
Partnership invested a portion of the remaining net sales proceeds from the sale
of the Property in Nashua, New Hampshire in a joint venture arrangement,
Portsmouth Joint Venture, with an affiliate of the General Partners. In October
1999, the Partnership invested the remaining net sales proceeds from the sale of
the Property in Nashua, New Hampshire in an IHOP Property in Round Rock, Texas
with an affiliate of the General Partners as tenants-in-common. As a result of
these transactions, as of December 31, 2000, the Partnership owned 41
Properties. The 41 Properties include five Properties owned by joint ventures in
which the Partnership is a co-venturer and two Properties owned with affiliates
of the General Partners 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.
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 property owned
with an affiliate of the General Partners as tenants-in-common provide for
initial terms ranging from 14 to 20 years (the average being 18 years) and
expire between 2006 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 $45,600 to $172,400. The majority of the leases provide for
percentage rent, based on sales in excess of a specified amount. In addition,
some of the leases provide that, commencing in specified lease years (generally
the sixth lease year), the annual base rent required under the terms of the
lease will increase.
Generally, the leases 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 29 of the Partnership's 41 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.
Major Tenants
During 2000, four lessees (or groups of affiliated lessees) of the
Partnership and its consolidated joint ventures, (i) Golden Corral Corporation,
(ii) Jack in the Box Inc., (iii) Burger King Corporation and BK Acquisition,
Inc. (which are affiliated entities under common control) (hereinafter referred
to as "Burger King Corporation"), (iv) Denny's, Inc. and Quincy's Restaurants,
Inc. (which are affiliated entities under common control of Advantica Restaurant
Group, Inc. (hereinafter referred to as ("Advantica Restaurant Group, Inc."),
each contributed more than ten percent of the Partnership's total rental and
earned income (including rental and earned income from the Partnership's
consolidated joint ventures, the Partnership's share of rental and earned income
from three Properties owned by unconsolidated joint ventures and two Properties
owned with affiliates of the General Partners as tenants-in-common). As of
December 31, 2000, Golden Corral Corporation was the lessee under leases
relating to three restaurants, Jack in the Box Inc. was the lessee under leases
relating to eight restaurants, Burger King Corporation was the lessee under
leases relating to seven restaurants, Advantica Restaurant Group, Inc. was the
lessee under leases relating to five 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, Golden Corral Family Steakhouse Restaurants
("Golden Corral"), Jack in the Box, Burger King, and Denny's, each accounted for
more than ten percent of the Partnership's total rental and earned income during
2000 (including rental and earned income from the Partnership's consolidated
joint ventures, the Partnership's share of rental and earned income from three
Properties owned by unconsolidated joint ventures and two Properties owned with
affiliate of the General Partners 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 Partnership's total rental income to which the
Partnership is entitled under the terms of the 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 two separate joint venture
arrangements with affiliated entities: Denver Joint Venture with an unaffiliated
entity to purchase and hold one Property and CNL/Airport Joint Venture with an
unaffiliated entity to purchase and hold one Property. In addition, the
Partnership has entered into the following separate joint venture arrangements:
Ashland Joint Venture with CNL Income Fund IX, Ltd. and CNL Income Fund X, Ltd.,
affiliates of the General Partners, to purchase and hold one Property; and Des
Moines Real Estate Joint Venture with CNL Income Fund VII, Ltd. and CNL Income
Fund XII, Ltd., affiliates of the General Partners, to purchase and hold one
Property. Each of the affiliates 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 an 85 percent interest in Denver Joint
Venture, a 77.33% interest in CNL/Airport Joint Venture, a 62.16% interest in
Ashland Joint Venture, and a 76.6% interest in Des Moines Real Estate 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/Airport Joint Venture, Denver Joint Venture and Des Moines Real
Estate Joint Venture each have an initial term of 20 years and Ashland Joint
Venture has an initial term of 30 years and, after the expiration of the initial
term, continue in existence from year to year unless terminated at the option of
any of the co-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 Partnership has management control of CNL/Airport Joint Venture and
Denver Joint Venture and shares management control equally with affiliates of
the General Partners for Ashland Joint Venture and Des Moines Real Estate 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/Airport Joint Venture, Denver
Joint Venture, Ashland Joint Venture and Des Moines Real Estate Joint Venture is
distributed 77.33%, 85 percent, 62.16% and 76.6%, respectively, to the
Partnership and the balance is distributed to each of the joint venture partners
in accordance with its 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, in February 1999, the Partnership entered into a joint
venture arrangement, Portsmouth Joint Venture, with CNL Income Fund XVIII, Ltd.,
a Florida limited partnership and an affiliate of the General Partners, to
purchase and hold one restaurant Property. The joint venture agreement provides
for the Partnership and its joint venture partner to share in all costs and
benefits associated with the joint venture in proportion to each partner's
percentage interest in the joint venture. The Partnership owns 42.8% interest in
the profits and losses of the joint venture.
In addition to the above joint venture agreements, in January 1997, the
Partnership entered into an agreement to hold a Black-eyed Pea Property as
tenants-in-common, with CNL Income Fund XVII, Ltd., an affiliate of the General
Partners. In October 1999, the Partnership entered into an agreement to hold an
IHOP Property as tenants-in-common, with CNL Income Fund VI, Ltd., an affiliate
of the General Partners. The agreements provide for the Partnership and the
affiliates to share in the profits and losses of the Properties in proportion to
each co-tenant's percentage interest. The Partnership owns a 72.58% and 23
percent interest, respectively, in these Properties. Each of the affiliates is a
limited partnership organized pursuant to the laws of the State of Florida. The
tenancy in common agreement restricts each co-tenant's ability to sell,
transfer, or assign its interest in the tenancy in common's Property without
first offering it for sale to the remaining co-tenant.
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 with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food 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 41 Properties. Of the 41
Properties, 34 are owned by the Partnership in fee simple, five are owned
through joint venture arrangements and two 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 18,000
to 329,000 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation.
State Number of Properties
Alabama 2
Arizona 1
California 1
Colorado 2
Connecticut 2
Florida 2
Kansas 1
Louisiana 1
Massachusetts 1
Michigan 1
Mississippi 1
New Hampshire 1
New Mexico 2
North Carolina 2
Ohio 4
Oklahoma 2
South Carolina 2
Texas 9
Virginia 2
Washington 2
--------------
TOTAL PROPERTIES 41
==============
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 11,400 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 depreciable lives of 40 years
for federal income tax purposes.
As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership (including its consolidated joint venture) and the
unconsolidated joint ventures (including the Property owned through a tenancy in
common arrangement) for federal income tax purposes was $32,534,882 and
$8,814,831, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
Black-eyed Pea 1
Burger King 12
Denny's 7
Golden Corral 3
Gooney Bird's Sports Grill 1
Hardee's 4
IHOP 1
Jack in the Box 8
KFC 1
Quincy's 1
Sagebrush Restaurant 1
Taco Bell 1
--------------
TOTAL PROPERTIES 41
==============
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.
At December 31, 2000, 1999, 1998, 1997, and 1996, all of the Properties
were occupied. The following is a schedule of the average rent per Property for
each of the years ended with December 31:
2000 1999 1998 1997 1996
-------------- ------------- ------------- -------------- -------------
Rental Revenues (1) $ 3,914,520 $4,087,385 $ 4,064,778 $4,071,074 $4,033,108
Properties 41 41 38 39 38
Average Rent per Property $ 95,476 $ 99,692 $ 106,968 $ 104,387 $ 106,134
(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.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for next the ten years and thereafter.
Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
--------------- ---------------- -------------------- --------------------
2001 -- $ -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 -- -- --
2006 7 587,590 15.13%
2007 3 498,758 12.84%
2008 -- -- --
2009 -- -- --
2010 9 845,034 21.76%
Thereafter 22 1,953,386 50.27%
---------- ------------- -------------
Total 41 $ 3,884,768 100.00%
========== ============= =============
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.
Golden Corral Corporation leases three Golden Corral restaurants with
an initial terms of 15 years (expiring in 2007) and average minimum base annual
rent of approximately $166,300 (ranging from approximately $157,300 to
$172,400).
Jack in the Box Inc. leases eight Jack in the Box restaurants with an
initial term of 18 years (expiring in 2010) and the average minimum base annual
rent is approximately $87,500 (ranging from approximately $63,600 to $103,400).
Burger King Corporation leases seven Burger King restaurants with an
initial term of 14 years (expiring in 2006) and average minimum base annual rent
of approximately $90,500 (ranging from approximately $73,200 to $121,900).
Advantica Restaurant Group, Inc. leases two Denny's restaurants, one
Quincy's restaurant, one Sagebrush restaurant, and one Gooney Bird's Sports
Grill restaurant with an initial term of 20 years (expiring in 2012) and the
average minimum base annual rent is approximately $89,200 (ranging from
approximately $67,700 to $116,000).
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 3,191 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 paid 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) (2) (2) (2)
Second Quarter $9.00 $ 6.57 $ 8.11 (2) (2) (2)
Third Quarter 8.33 7.24 8.07 $8.37 $7.80 $8.14
Fourth Quarter 7.35 7.33 7.34 9.10 6.83 8.10
(1) A total of 17,956 and 12,220 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 of $3,500,024 to the Limited Partners. Distributions
of $875,006 were declared at the close of each of the Partnership's calendar
quarter during 2000 and 1999 to the Limited Partners. No amounts distributed to
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.
As indicated in the chart below, these distributions were declared at the close
of each of the Partnership's calendar quarters. 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) $3,864,056 $4,037,268 $4,067,454 $3,998,538 $3,976,787
Net income (2) 3,094,463 3,141,774 3,809,404 3,295,079 3,464,705
Cash distributions
declared (3) 3,500,024 3,500,024 3,660,024 3,500,024 3,540,024
Net income per Unit
(2) 0.77 0.78 0.94 0.82 0.86
Cash distributions
declared per Unit (3) 0.88 0.88 0.92 0.88 0.89
At December 31:
Total assets $35,227,373 $35,792,092 $36,103,592 $35,785,538 $36,003,045
Partners' capital 33,693,801 34,099,362 34,457,612 34,308,232 34,513,177
(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of consolidated joint ventures.
(2) Net income for the years ended December 31, 1998 and 1996, includes
$461,861 and $213,685, respectively, from gains on sale of assets.
(3) Distributions for the year ended December 31, 1998, include special
distributions to the Limited Partners of $40,000 and $120,000 declared
during the quarters ended March 31, and December 31, respectively,
which represented cumulative excess operating reserves. Distributions
for the year ended December 31, 1996, include a special distribution to
the Limited Partners of $40,000, which represented cumulative excess
operating reserves.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Partnership was organized on August 20, 1991, to acquire for cash,
either directly or through joint venture arrangements, both newly constructed
and existing restaurant Properties, as well as land upon which restaurant
Properties were to be constructed, which are leased primarily to operators of
selected national and regional fast-food and family-style Restaurant Chains. The
leases are triple-net leases, with the lessees generally responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of December
31, 2000, the Partnership owned 41 Properties, either directly or 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 $3,417,750, $3,747,973,
and $3,894,062 for the years ended December 31, 2000, 1999, and 1998,
respectively. The decrease during 2000, as compared to 1999, was primarily a
result of changes in the Partnership's working capital and changes in income and
expenses, as described in "Results of Operations." The decrease during 1999, as
compared to 1998, was primarily a result of changes in income and expenses as
described in "Results of Operations" below.
Other sources and uses of capital included the following during the
years ended December 31, 2000, 1999, and 1998.
In October 1998, the Partnership sold its Property in Nashua, New
Hampshire, for $1,748,000 and received net sales proceeds of $1,630,296,
resulting in a gain of $461,861 for financial reporting purposes. This Property
was originally acquired by the Partnership in 1992, and had a cost of
approximately $1,302,414, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold the Property for
approximately $327,900 in excess of its original purchase price. In January
1999, the Partnership reinvested a portion of the net sales proceeds it received
from the sale of the property in Nashua, New Hampshire in a Burger King property
located in Yelm, Washington, at an approximate cost of $1,032,000. In addition,
in February 1999, the Partnership reinvested approximately $247,000 of the
remaining net sales proceeds from the sale of the Property in Nashua, New
Hampshire in a joint venture arrangement, Portsmouth Joint Venture, to purchase
and hold one property. The Partnerships co-venture partner is CNL Income Fund
XVIII, Ltd., a Florida limited partnership and an affiliate of the General
Partners. The Partnership had a 42.8% interest in the profits and losses of the
joint venture as of December 31, 2000.
In October 1999, the Partnership invested approximately $320,200 in an
IHOP Property located in Round Rock, Texas with CNL Income Fund VI, Ltd., a
Florida limited partnership and affiliate of the General Partners, as
tenants-in-common. In connection therewith, the Partnership and its 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. As
of December 31, 2000, the Partnership owned a 23 percent interest in this
Property.
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. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners. The Partnership will not
borrow under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners further have represented that
they will use their reasonable efforts to structure any borrowing so that it
will not constitute "acquisition indebtedness" for federal income tax purposes
and also will limit the Partnership's outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. Affiliates of the General
Partners from time to time incur certain operating expenses on behalf of the
Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, rental income from the Partnership's Properties and net
sales proceeds from the sale of Properties pending reinvestment in addition
Properties, are invested in money market accounts or other short-term highly
liquid investments such as demand deposit accounts at commercial banks, money
market accounts and certificates of deposit with less than a 30-day maturity
date, pending the Partnership's use of such funds to pay Partnership expenses or
to make distributions to partners. At December 31, 2000, the Partnership had
$1,519,141 invested in such short-term investments (including certificates of
deposit in the amount of $500,000) as compared to $1,656,500 at December 31,
1999. As of December 31, 2000, the average interest rate earned by the
Partnership on the rental income deposited in demand deposit accounts at
commercial banks was approximately 3.85% annually. The funds remaining at
December 31, 2000, after payment of distributions and other liabilities, will be
used to meet the Partnership's working capital and other needs.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and 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
generally 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 purposes, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based on cash from operations, and for the year ended December 31,
2000, anticipated future cash from operations, and for the year ended December
31, 1998, cumulative excess operating reserves, the Partnership declared
distributions to the Limited Partners of $3,500,024, $3,500,024, and $3,660,024
for the years ended December 31, 2000, 1999, and 1998, respectively. This
represents a distribution of $0.88, $0.88, and $0.92 per Unit for the years
ended December 31, 2000, 1999, and 1998, respectively. 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 $22,502 and
$70,600, respectively, to affiliates for operating expenses, accounting and
administrative services, and management fees. As of March 15, 2001, the
Partnership had reimbursed the affiliates all such amounts. Other liabilities,
including distributions payable, decreased to $1,001,263 at December 31, 2000,
from $1,112,323 at December 31, 1999. The decrease was primarily due to the
Partnership payment amounts related to the proposed Merger with APF that were
accrued at December 31, 1999. The General Partners believe that the Partnership
has sufficient cash on hand to meet its current working capital needs.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During the year ended December 31, 1998, the Partnership and its
consolidated joint ventures, owned and leased 37 wholly owned Properties
(including one Property in Columbus, Ohio exchanged for one Property in Danbury,
Connecticut and one Property in Nashua, New Hampshire, which was sold in October
1998). During the years ended December 31, 1999 and 2000, the Partnership and
its consolidated joint ventures owned and leased 36 wholly owned Properties. In
addition, during 1998, 1999, and 2000, the Partnership and its consolidated
joint ventures was a co-venturer in two separate joint ventures that each owned
and leased one Property, and the Partnership owned and leased one Property with
an affiliate as tenants-in-common. In addition, during 2000, the Partnership and
its consolidated joint ventures owned and leased one additional Property with an
affiliate of the General Partners, as tenants-in-common. As of December 31,
2000, the Partnership owned, either directly or through joint venture
arrangements, 41 Properties which are, in general, subject to long-term,
triple-net leases. The leases of the Properties provide for minimum base annual
rental amounts (payable in monthly installments) ranging from approximately
$45,600 to $172,400. The majority of the leases provide for percentage rent
based on sales in excess of a specified amount. In addition, some of the leases
provide that, commencing in specified lease years (generally the sixth lease
year), the annual base rent required under the terms of the lease will increase.
For 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 and its consolidated joint ventures, earned $3,370,086, $3,522,254,
and $3,537,605, respectively, in rental income from operating leases and earned
income from direct financing leases (net of adjustments to accrued rental
income). Rental and earned income decreased during 2000, as compared to 1999,
primarily as a result of the Partnership establishing an allowance for doubtful
accounts of approximately $107,700 for past due rental amounts relating to the
Properties in Avon, Colorado and Abilene, Texas, in accordance with the
Partnership's collection policy. In addition, the Partnership reserved
approximately $60,490 in accrued rental income relating to the Properties in
Avon, Colorado and Abilene, Texas. 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 term of the
lease. The General Partners are continuing to pursue collection of these amounts
and will recognize such amounts as income if collected. No such allowance was
recorded in 1999 and 1998.
Rental and earned income decreased during 1999, as compared to 1998,
primarily as a result of the Partnership establishing an allowance for doubtful
accounts of approximately $11,100 for past due rental amounts relating to the
Properties in Kent and Wadsworth, Ohio in accordance with the Partnership's
collection policy. The decrease in rental and earned income during 2000 was
partially offset by the fact that during 2000, the Partnership collected and
recognized as income these past due rental amounts.
For the years ended December 31, 2000, 1999 and 1998, the Partnership
also earned $216,339, $237,751, and $243,115, respectively, in contingent rental
income. The decrease in contingent rental income during 2000, as compared to
1999, was due to the fact that during 2000, the Partnership established an
allowance for doubtful accounts of approximately $21,000 relating to past due
contingent rental amounts for the Properties in Dayton, Ohio and Roswell, New
Mexico, respectively, in accordance with the Partnership's collection policy. No
such allowance was established during 1999 or 1998. The General Partners are
continuing to pursue collection of these amounts and will recognize such amounts
as income if collected. The decrease in contingent rental income during 1999, as
compared to 1998, was primarily due to a decrease in gross sales of certain
restaurant Properties whose leases require the payment of contingent rental
income.
In addition, for the years ended December 31, 2000, 1999 and 1998, the
Partnership earned $256,056, $259,676, and $215,501, respectively, attributable
to net income earned by unconsolidated joint ventures in which the Partnership
is a co-venturer. Net income earned by unconsolidated joint ventures increased
during 1999, as compared to 1998, as a result of the fact that in February and
October 1999, the Partnership reinvested a portion of the net sales proceeds
from the 1998 sale of the Property in Nashua, New Hampshire in Portsmouth Joint
Venture and in an IHOP Property in Round Rock, Texas with an affiliate of the
General Partners as tenants-in-common, as described above in "Capital
Resources."
During the year ended December 31, 2000, four lessees (or groups of
affiliated lessees) of the Partnership and its consolidated joint ventures,
Golden Corral Corporation, Jack in the Box Inc., Burger King Corporation, and
Advantica Restaurant Group, Inc., each contributed more than ten percent of the
Partnership's total rental income (including rental and earned income from the
Partnership's consolidated joint ventures, the Partnership's share of rental and
earned income from three Properties owned by unconsolidated joint ventures and
two Properties owned with affiliates of the General Partners as
tenants-in-common). As of December 31, 2000, Golden Corral Corporation was the
lessee under leases relating to three restaurants, Jack in the Box Inc. was the
lessee under leases relating to eight restaurants, Burger King Corporation was
the lessee under leases relating to seven restaurants, Advantica Restaurant
Group, Inc. was the lessee under leases relating to five restaurants. It is
anticipated that, based on the minimum rental payments required by the leases,
these four tenants each will continue to contribute more than ten percent of the
Partnership's total rental and earned income during 2001. In addition, during
the year ended December 31, 2000, four Restaurant Chains, Golden Corral, Jack in
the Box, Burger King, and Denny's, each accounted for more than ten percent of
the Partnership's total rental and earned income (including rental and earned
income from the Partnership's consolidated joint ventures and the Partnership's
share of rental and earned income from three Properties owned by unconsolidated
joint ventures and two Properties owned with affiliates of the General Partners
as tenants-in-common). In 2001, it is anticipated that these 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.
In addition, for the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $89,181, $84,648, and $139,707, respectively, in interest and
other income. Interest and other income was higher during 1998, as compared to
1999, primarily due to the Partnership collecting and recognizing $60,000 in
other income in May 1998, as a result of executing an amendment to a purchase
and sale agreement with a third party to extend the closing date for the Burger
King Property located in Nashua, New Hampshire. In accordance with the terms of
the amendment, the Partnership was deemed to have earned the $60,000 upon
execution of the amendment to extend the closing date of this Property. This
Property was sold in October 1998, as described above in "Capital Resources."
Operating expenses, including depreciation and amortization expense,
were $769,593, $895,494, and $719,911, for the years ended December 31, 2000,
1999, and 1998, respectively. The decrease in operating expenses during 2000,
and the increase during 1999, was primarily a result of the amount of
transactions 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."
As a result of the sale of the Property in Nashua, New Hampshire, as
described above in "Capital Resources," the Partnership recognized a gain of
$461,861 for financial reporting purposes for the year ended December 31, 1998.
No Properties were sold during the years ended December 31, 2000 and 1999.
The Partnership's leases as of December 31, 2000, are, in general,
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Management expects that increases in restaurant
sales volumes due to inflation and real sales growth should result in an
increase in rental income 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
Not applicable.
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 15
Financial Statements:
Balance Sheets 16
Statements of Income 17
Statements of Partners' Capital 18
Statements of Cash Flows 19-20
Notes to Financial Statements 21-35
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund XI, 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 XI, 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 XI, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
2000 1999
------------------- ---------------------
ASSETS
Land and buildings on operating leases, less
accumulated depreciation $ 21,168,411 $ 21,595,007
Net investment in direct financing leases 7,247,865 7,372,041
Investment in joint ventures 3,072,991 3,077,302
Cash and cash equivalents 1,006,620 1,656,500
Certificates of deposit 512,521 --
Receivables, less allowance for doubtful
accounts of $139,456 and $11,646,
respectively 228,988 175,500
Prepaid expenses 13,149 14,115
Accrued rental income, less allowance for
doubtful accounts of $60,490 in 2000 1,854,804 1,779,603
Other assets 122,024 122,024
------------------- ---------------------
$ 35,227,373 $ 35,792,092
=================== =====================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 37,812 $ 121,191
Accrued and escrowed real estate taxes
payable 8,667 13,646
Distributions payable 875,006 875,006
Due to related parties 22,502 70,600
Rents paid in advance and deposits 79,778 102,480
------------------- ---------------------
Total liabilities 1,023,765 1,182,923
Minority interest 509,807 509,807
Partners' capital 33,693,801 34,099,362
------------------- ---------------------
$ 35,227,373 $ 35,792,092
=================== =====================
See accompanying notes to financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
----------------- --------------- ---------------
Revenues:
Rental income from operating leases $ 2,517,422 $ 2,575,492 $ 2,644,418
Adjustments to accrued rental income (60,490 ) -- --
Earned income from direct financing leases 913,154 946,762 893,187
Contingent rental income 216,339 237,751 243,115
Interest and other income 89,181 84,648 139,707
---------------
----------------- ---------------
3,675,606 3,844,653 3,920,427
----------------- --------------- ---------------
Expenses:
General operating and administrative 175,737 161,584 154,434
Professional services 49,636 35,021 34,140
Management fees to related parties 39,227 39,836 39,393
Real estate taxes -- -- 2,858
State and other taxes 50,596 31,728 24,262
Depreciation and amortization 426,596 426,584 443,936
Transaction costs 27,801 200,741 20,888
----------------- --------------- ---------------
769,593 895,494 719,911
----------------- --------------- ---------------
Income Before Minority Interest in Income
of Consolidated Joint Ventures, Equity in
Earnings of Unconsolidated Joint Ventures and
Gain on Sale of Assets 2,906,013 2,949,159 3,200,516
Minority Interest in Income of Consolidated
Joint Ventures (67,606 ) (67,061 ) (68,474 )
Equity in Earnings of Unconsolidated Joint
Ventures 256,056 259,676 215,501
Gain on Sale of Assets -- -- 461,861
----------------- --------------- ---------------
Net Income $ 3,094,463 $ 3,141,774 $ 3,809,404
================= =============== ===============
Allocation of Net Income
General partners $ -- $ 31,418 $ 34,815
Limited partners 3,094,463 3,110,356 3,774,589
----------------- --------------- ---------------
$ 3,094,463 $ 3,141,774 $ 3,809,404
================= =============== ===============
Net Income Per Limited Partner Unit $ 0.77 $ 0.78 $ 0.94
================= =============== ===============
Weighted Average Number of
Limited Partner Units Outstanding 4,000,000 4,000,000 4,000,000
================= =============== ===============
See accompanying notes to financial statements.
CNL INCOME FUND XI, 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 $ 175,232 $ 40,000,000 (18,555,110) $ 17,477,110 $ (4,790,000) $34,308,232
Distributions to limited
partners ($0.92 per
limited partner unit) -- -- -- (3,660,024) -- -- (3,660,024)
Net income -- 34,815 -- -- 3,774,589 -- 3,809,404
------------- ------------- ------------- ------------- -------------- ------------ -----------
Balance, December 31, 1998 1,000 210,047 40,000,000 (22,215,134) 21,251,699 (4,790,000) 34,457,612
Distributions to limited
partners ($0.88 per
limited partner unit) -- -- -- (3,500,024) -- -- (3,500,024)
Net income -- 31,418 -- -- 3,110,356 -- 3,141,774
------------- ------------- ------------- ------------- -------------- ------------ -----------
Balance, December 31, 1999 1,000 241,465 40,000,000 (25,715,158) 24,362,055 (4,790,000) 34,099,362
Distributions to limited
partners ($0.88 per
limited partner unit) -- -- -- (3,500,024) -- -- (3,500,024)
Net income -- -- -- -- 3,094,463 -- 3,094,463
------------- ------------- ------------- ------------- -------------- ------------ -----------
Balance, December 31, 2000 $ 1,000 $ 241,465 $ 40,000,000 (29,215,182) $ 27,456,518 $ (4,790,000) $33,693,801
============= ============= ============= -============ ============== ============ ===========
See accompanying notes to financial statements.
CNL INCOME FUND XI, 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 $ 3,574,593 $ 3,724,492 $ 3,826,352
Distributions from unconsolidated joint
ventures 260,367 271,442 262,843
Cash paid for expenses (476,893 ) (322,962 ) (247,138 )
Interest received 59,683 75,001 52,005
---------------- --------------- ---------------
Net cash provided by operating
Activities 3,417,750 3,747,973 3,894,062
---------------- --------------- ---------------
Cash Flows from Investing Activities:
Additions to assets on operating leases -- (337,806 ) --
Investment in direct financing leases -- (694,610 ) --
Proceeds from sale of land and buildings -- -- 1,630,296
Investment in joint ventures -- (567,455) (1,169 )
Decrease (increase) in restricted cash -- 1,630,296 (1,630,296 )
Increase in certificate of deposit (500,000 ) -- --
---------------- --------------- ---------------
Net cash provided by (used in) investing
activities (500,000 ) 30,425 (1,169 )
---------------- --------------- ---------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,500,024 ) (3,620,024 ) (3,540,024 )
Distributions to holders of minority interest (67,606 ) (61,114 ) (66,015 )
----------------
--------------- ---------------
Net cash used in financing activities (3,567,630 ) (3,681,138 ) (3,606,039 )
---------------- --------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents (649,880 ) 97,260 286,854
Cash and Cash Equivalents at Beginning of Year 1,656,500 1,559,240 1,272,386
---------------- --------------- ---------------
Cash and Cash Equivalents at End of Year $ 1,006,620 $ 1,656,500 $ 1,559,240
================ =============== ===============
See accompanying notes to financial statements.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Years Ended December 31,
2000 1999 1998
--------------- --------------- --------------
Reconciliation of Net Income to Net Cash Provided
by Operating Activities:
Net Income $ 3,094,463 $ 3,141,774 $ 3,809,404
--------------- --------------- --------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 426,596 426,584 443,936
Gain on sale of assets -- -- (461,861 )
Minority interests in income of
consolidated joint ventures 67,606 67,061 68,474
Equity in earnings of unconsolidated joint
ventures, net of distributions 4,311 11,766 47,342
Increase in receivables (66,009 ) (32,549 ) (23,376 )
Decrease (increase) in prepaid expenses 966 (1,780 ) 1,028
Decrease in net investment in direct
financing leases 124,176 108,855 90,236
Increase in accrued rental income (75,201 ) (134,541 ) (127,336 )
Increase (decrease) in accounts payable
and accrued expenses (88,358 ) 105,238 3,681
Increase (decrease) in due to related
parties (48,098 ) 45,154 18,798
Increase (decrease) in rents paid in
advance and deposits (22,702 ) 10,411 23,736
--------------- --------------- --------------
Total adjustments 323,287 606,199 84,658
--------------- --------------- --------------
Net Cash Provided by Operating Activities $ 3,417,750 $ 3,747,973 $ 3,894,062
=============== =============== ==============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Land and building under operating lease
exchanged for land and building under
operating lease $ -- $ -- $ 718,930
=============== =============== ==============
Distributions declared and unpaid at
December 31 $ 875,006 $ 875,006 $ 995,006
=============== =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND XI, 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 XI, 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 Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using 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) (Note 4). Unearned income is deferred and
amortized to income over the lease terms so as to produce a
constant periodic rate of return on the Partnership's net
investment in the leases.
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 XI, 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, are removed from the
accounts and gains or losses from sales are 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 accrued rental income, and to decrease rental or other income or
increase bad debt expense for the current period, although the
Partnership continues to pursue collection of such amounts. If amounts
are subsequently determined to be uncollectible, the corresponding
receivable and allowance for doubtful accounts are decreased
accordingly.
Investment in Joint Ventures - The Partnership accounts for its 85
percent interest in Denver Joint Venture and its 77.33% interest in
CNL/Airport Joint Venture using the consolidation method. Minority
interests represent the minority joint venture partners' proportionate
share of equity in the Partnership's consolidated joint ventures. All
significant intercompany accounts and transactions have been
eliminated.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
The Partnership's investments in Ashland Joint Venture, Des Moines Real
Estate Joint Venture and Portsmouth Joint Venture and the properties in
Corpus Christi, Texas and Round Rock, Texas, for which the properties
are held as tenants-in-common, are accounted for using the equity
method since the Partnership shares control with affiliates which have
the same General Partners.
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts.
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 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.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
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 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 are
classified as operating leases and some of the leases have been
classified as direct financing leases. For the leases classified as
direct financing leases, the building portions of the property leases
are accounted for as direct financing leases while the land portions of
the majority of these leases are operating leases. Substantially all
leases are for 14 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
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
2. Leases - Continued:
the leases for two to five successive five-year periods subject to the
same terms and conditions as the initial lease. Most leases also allow
the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
-------------------- --------------------
Land $ 11,945,232 $ 11,945,232
Buildings 12,666,144 12,666,144
-------------------- --------------------
24,611,376 24,611,376
Less accumulated depreciation (3,442,965 ) (3,016,369 )
-------------------- --------------------
$ 21,168,411 $ 21,595,007
==================== ====================
In January 1999, the Partnership reinvested approximately $1,032,400 of
the net sales proceeds it received from the 1998 sale of the property
in Nashua, New Hampshire in a Burger King property located in Yelm,
Washington. In accordance with statement of Financial Accounting
Standards No. 13, "Accounting for Leases," the land portion of this
property was classified as an operating lease while the building
portion was classified as a capital lease.
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, 1999, and 1998, the Partnership
recognized $75,201 (net of $60,490 in reserves), $134,541, and
$127,336, respectively, of such rental income.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued:
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $2,458,158
2002 2,509,343
2003 2,667,353
2004 2,686,267
2005 2,696,910
Thereafter 11,936,587
-----------------
$24,954,618
=================
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.
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 $ 13,388,037 $ 14,452,917
Estimated residual values 2,439,551 2,439,551
Less unearned income (8,579,723 ) (9,520,427 )
----------------- -----------------
Net investment in direct
financing leases $ 7,247,865 $ 7,372,041
================= =================
CNL INCOME FUND XI, 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 $1,064,880
2002 1,076,079
2003 1,096,183
2004 1,096,183
2005 1,096,183
Thereafter 7,958,529
----------------
$13,388,037
================
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 62.16% and a 76.6% interest in the profits and
losses of Ashland Joint Venture and Des Moines Real Estate Joint
Venture, respectively. The remaining interests in these joint ventures
are held by affiliates of the Partnership which have the same General
Partners. In addition, the Partnership owns a Black-eyed Pea property
in Corpus Christi, Texas, as tenants-in-common with CNL Income Fund
XVII, Ltd., a Florida limited partnership and affiliate of the General
Partners. As of December 31, 2000, the Partnership owned a 72.58%
interest in this property.
In February 1999, the Partnership reinvested a portion of the net sales
proceeds it received from the 1998 sale of the property in Nashua, New
Hampshire in a joint venture arrangement, Portsmouth Joint Venture,
with CNL Income Fund XVIII, Ltd., a Florida limited partnership and an
affiliate of the General Partners, to purchase and hold one restaurant
property. As of December 31, 2000, the Partnership had contributed
approximately $247,300 to the joint venture and owned a 42.8% interest
in the profits and losses of this joint venture.
CNL INCOME FUND XI, 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 October 1999, the Partnership used a portion of the net sales
proceeds from the 1998 sale of the property in Nashua, New Hampshire to
invest in a property in Round Rock, Texas, with CNL Income Fund VI,
Ltd., a Florida limited partnership and affiliate of the General
Partners as tenants-in-common. As of December 31, 2000, the Partnership
had contributed approximately $320,200 for a 23 percent interest in the
property.
Ashland Joint Venture, Des Moines Real Estate Joint Venture, Portsmouth
Joint Venture and the Partnership and affiliates, as tenants-in-common
in two separate tenants-in-common arrangements, each own and lease one
property to an operator of national fast-food 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 $ 4,878,318 $ 4,985,690
Net investment in direct financing
lease 317,357 320,961
Cash 7,282 12,029
Receivables, less allowance for
doubtful accounts 68,094 56,211
Prepaid expenses 8,799 4,921
Accrued rental income 234,524 173,367
Liabilities 786 17,300
Partners' capital 5,513,588 5,535,879
Revenues 597,784 503,686
Net income 470,408 402,007
The Partnership recognized income totalling $256,056, $259,676, and
$215,501, for the years ended December 31, 2000, 1999, and 1998,
respectively, from these joint ventures.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
6. 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 receipt by the limited partners of
an aggregate, ten percent, cumulative, noncompounded annual return on
their invested capital contributions (the "Limited Partners' 10%
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 Limited Partners'
10% Return, plus the return of their adjusted capital contributions.
The general partners then received, to the extent previously
subordinated and unpaid, a one percent interest in all prior
distributions of net cash flow and a return of their capital
contributions. Any remaining sales proceeds were distributed 95 percent
to the limited partners and five percent to the general partners. Any
gain from the sale of a property not in liquidation of the Partnership
was, in general, allocated in the same manner as net sales proceeds are
distributable. Any loss from the sale of a property was, in general,
allocated first, on a pro rata basis, to partners with positive
balances in their capital accounts; and thereafter, 95 percent to the
limited partners and five percent to the general partners.
Generally, net sales proceeds from a liquidating sale of properties,
will be used in the following order: (i) first to pay and discharge all
of the Partnership's liabilities to creditors, (ii) second, to
establish reserves that may be deemed necessary for any anticipated or
unforeseen liabilities or obligations of the Partnership, (iii) third,
to pay all of the Partnership's liabilities, if any, to the general and
limited partners, (iv) fourth, after allocations of net income, gains
and/or losses, to distribute to the partners with positive capital
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.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1997, and 1998
6. Allocations and Distributions - Continued:
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 partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2000.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership declared distributions to the limited partners of
$3,500,024, $3,500,024, and $3,660,024, respectively. No distributions
have been made to the general partners to date.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1997, and 1998
7. Income Taxes:
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
2000 1999 1998
-------------- -------------- ---------------
Net income for financial reporting purposes $ 3,094,463 $ 3,141,774 $ 3,809,404
Depreciation for tax reporting purposes less than
(in excess of) depreciation for financial
reporting purposes (68,371 ) (67,657 ) 2,899
Gain on sale of land and building for financial
reporting purposes less than (in excess of)
of -- 429,196 (461,861 )
gain for tax reporting purposes
Direct financing leases recorded as operating
leases for tax reporting purposes 124,176 108,856 90,236
Equity in earnings of unconsolidated joint
ventures for financial reporting purposes (in
excess of) less than equity in earnings of
unconsolidated joint ventures for tax
reporting purposes 9,949 (5,731 ) (5,906 )
Capitalization (deduction) of transaction costs
for (221,629 ) 200,741 20,888
tax reporting purposes
Accrued rental income (75,201 ) (134,541 ) (127,336 )
Rents paid in advance (22,702 ) 10,411 23,236
Allowance for doubtful accounts 127,810 5,826 5,820
Minority interests in timing differences of
consolidated joint ventures 11,888 8,663 (44,316 )
-------------- -------------- ---------------
Net income for federal income tax purposes $ 2,980,383 $ 3,697,538 $ 3,313,064
============== ============== ===============
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. 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
certain Advisor 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.
The management fee, which will not exceed fees which are competitive
for similar services in the same geographic area, may or may not be
taken, in whole or in part as to any year, in the sole discretion of
the Affiliate. The Partnership incurred management fees of $39,227,
$39,836, and $39,393, for the years ended December 31, 2000, 1999, and
1998, respectively.
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 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 the
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.
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. Related Party Transactions - Continued:
During the years ended December 31, 2000, 1999, and 1998, the Advisor
and it affiliates provided accounting and administrative services to
the Partnership on a day-to-day basis including services relating to
the proposed and terminated merger. The Partnership incurred $101,316,
$130,332, and $101,423 for the years ended December 31, 2000, 1999, and
1998, respectively, for such services.
The due to related parties at December 31, 2000 and 1999, totaled
$27,502 and $70,600 $25,446, respectively.
9. Concentration of Credit Risk:
The following schedule presents total rental and earned income from
individual lessees, each representing more than ten percent of the
Partnership's total rental and earned income (including the
Partnership's share of rental and earned income from the unconsolidated
joint ventures and the properties held as tenants-in-common with
affiliates of the General Partners), for each of the years ended
December 31:
2000 1999 1998
--------------- --------------- ---------------
Jack in the Box $768,032 $ 768,032 $ 768,032
Burger King Corporation and
BK Acquisition, Inc. 604,484 621,726 695,427
Golden Corral Corporation 580,241 570,815 564,104
Phoenix Restaurant Group, Inc. N/A 530,465 536,779
Advantica Restaurant Group,
Inc. 465,892 470,022 473,726
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Concentration of Credit Risk - Continued:
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from the unconsolidated joint ventures and the properties held as
tenants-in-common with affiliates of the General Partners), for each of
the years ended December 31:
2000 1999 1998
---------------- ----------------- -----------------
Burger King $1,128,752 $1,144,865 $1,144,250
Jack in the Box 768,032 768,032 768,032
Denny's 642,085 889,658 898,908
Golden Corral Family
Steakhouse Restaurants 580,241 570,815 564,103
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 and earned 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 XI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
10. 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) $940,178 $835,218 $958,207 $1,130,453 $3,864,056
Net income 679,557 617,036 769,298 1,028,572 3,094,463
Net income per
limited partner
unit 0.17 0.15 0.19 0.26 0.77
1999 Quarter First Second Third Fourth Year
------------------------ -------------- ------------- ------------- --------------- --------------
Revenue (1) $961,797 $989,949 $997,059 $ 1,088,463 $4,037,268
Net income 729,321 747,069 773,066 892,318 3,141,774
Net income per
limited partner
unit 0.18 0.18 0.19 0.22 0.78
(1) Revenues include equity in earnings of unconsolidated joint ventures
and minority interest in income of consolidated joint ventures.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in June
2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group, Inc. (formerly CNL Group, Inc.), a diversified real estate company, and
has served as a director, Chairman of the Board and Chief Executive Officer of
CNL Financial Group, Inc. since its formation in 1980. CNL Financial Group, Inc.
is the parent company, either directly or indirectly through subsidiaries, of
CNL Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. Mr. Seneff also serves as a Director, Chairman
of the Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust, as well as, CNL Hospitality
Corp., its advisor. In addition, he serves as a Director, Chairman of the Board
and Chief Executive Officer of CNL Retirement Properties, Inc., a public,
unlisted real estate investment trust and its advisor, CNL Retirement Corp.
Since 1992, Mr. Seneff has also served as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net Lease Realty, Inc., a public real
estate investment trust that is listed on the New York Stock Exchange. Mr.
Seneff has also served as a Director, Chairman of the Board and Chief Executive
Officer of CNL Securities Corp. since 1979; CNL Investment Company since 1990;
and CNL Institutional Advisors, Inc., a registered investment advisor for
pension plans, since 1990. Mr. Seneff formerly served as a Director of First
Union National Bank of Florida, N.A., and currently serves as the Chairman of
the Board of CNL Bank. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as Treasurer
from February 1999 through August 1999 and from May 1994 through December 1994.
He also served in various executive positions with the Advisor prior to its
merger with APF including, President from 1994 through September 1997, and
Director from 1994 through August 1999. Mr. Bourne serves as President and
Treasurer of CNL Financial Group, Inc. (formerly CNL Group, Inc.); Director,
Vice Chairman of the Board and President of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director and
President of CNL Hospitality Corp., its advisor. In addition, Mr. Bourne serves
as Director and President of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director and President of its
advisor, CNL Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank.
He has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997, and
President from July 1992 through February 1996, of Commercial Net Lease Realty,
Inc., a public real estate investment trust listed on the New York Stock
Exchange. Mr. Bourne also serves as Director, President and Treasurer for
various affiliates of CNL Financial Group, Inc. including, CNL Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager in 1975.
Mr. Bourne graduated from Florida State University in 1970 where he received a
B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master of
Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a subsidiary
of APF from December 1999 until December 2000. Previously, he served as
Executive Vice President of APF from January 1996 to September 1999. Mr. Walker
joined the Advisor in September 1994, as Senior Vice President responsible for
Research and Development. He served as the Chief Operating Officer of the
Advisor from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with APF. Mr.
Walker also served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.) from
1997 to October 1998. From May 1992 to May 1994, he was Executive Vice President
for Finance and Administration and Chief Financial Officer of Z Music, Inc., a
cable television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management and planning. From January 1990 through April 1992, Mr. Walker was
Chief Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum laude graduate
of Wake Forest University with a Bachelor of Science degree in Accountancy and
is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to
Executive Vice President and Chief Financial Officer of APF in July 2000. He
served as Senior Vice President and Chief Financial Officer of APF since January
1997. Mr. Shackelford also served as Secretary and Treasurer of APF since
September 1999. He also served as Chief Financial Officer of the Advisor from
September 1996 to September 1999. From March 1995 to July 1996, Mr. Shackelford
was a senior manager in the national office of Price Waterhouse LLP where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he was a manager
in the Paris, France office of Price Waterhouse, serving several multi-national
clients. Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of Arts degree in Accounting, with honors, and a Master of Business
Administration degree from Florida State University and is a certified public
accountant.
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
The following table sets forth, as of March 15, 2001, the beneficial
ownership interest of each person known to the Registrant to be a beneficial
owner of more than five percent of the Units.
Name and Address of Number of Percent
Title of Class Beneficial Owner Units of Class
----------------------------------- ---------------------------------- -------------- -------------
Units of Limited Partnership Public School Retirement 210,290 5.26
Interest System of the City of St. Louis
1 Mercantile Center,
Ste. 2607
St. Louis, MO 63101
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 administra-
operating expenses the lower of cost or 90 percent of tive services: $101,316
the prevailing rate at which
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, management fee to One percent of the sum of gross $39,227
affiliates revenues from Properties wholly
owned by the Partnership plus the
Partnership's allocable share gross
revenues of joint ventures in which
the Partnership is co-venturer. The
management fee, which will not
exceed competitive fees for
comparable fees for comparable
services in the same geographic
area, may or may not be taken, in
whole or in part as to any year, in
the sole discretion of affiliates.
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
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 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
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 XI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-43278 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XI, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, and incorporated herein
by reference.)
10.1 Management Agreement between CNL Income Fund XI, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on April 15, 1993, 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 XI, 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 XI, 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 of Costs and Other Uncollec- be Col- at End
Year Description Year Expenses Accounts tible lectible of Year
- ---------- ----------------- ---------------- ------------- -------------- ------------- ------------- ------------
1998 Allowance for
doubtful
accounts (a) $ -- $ -- $ 5,820 (b) $ -- $ -- $ 5,820
================ ============= ============== ============= ============= ============
1999 Allowance for
doubtful
accounts (a) $ 5,820 $ -- $ 11,646 (b) $ 62 (c) $ 5,758 $ 11,646
================ ============= ============== ============= ============= ============
2000 Allowance for
doubtful
accounts (a) $ 11,646 $ -- $ 222,143 (b) $ -- $ 33,841 $ 199,948
================ ============= ============== ============= ============= ============
(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.
Costs Capitalized
Subsequent To
Initial Cost Acquisition
-------------------------- ---------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
---------- ------------ ------------ ------------ -------
Properties the Partnership
has Invested in Under
Operating Leases:
Burger King Restaurants:
Amesbury, Massachusetts - $359,458 $791,913 - -
Bloomfield, Connecticut - 266,685 555,656 - -
East Detroit, Michigan - 305,813 508,386 - -
Gonzales, Louisiana - 362,073 575,454 - -
Denver, Colorado - 438,756 - - -
Columbus, Ohio - 399,679 363,795 - -
Dayton, Ohio - 472,964 441,860 - -
Lawrence, Kansas - 321,505 411,353 - -
Roswell, New Mexico - 205,379 461,219 - -
Danbury, Connecticut (h) - 220,496 498,434 - -
Yelm, Washington - 337,806 - - -
Denny's Restaurants:
Orlando, Florida - 627,065 - - -
Abilene, Texas - 274,220 - - -
Wadsworth, Ohio - 187,368 - - -
Avon, Colorado - 755,815 - 569,297 -
Ocean Springs, Mississippi - 303,267 - - -
Golden Corral Family
Steakhouse Restaurants:
McAllen, Texas - 649,484 947,085 - -
Midwest City, Oklahoma - 506,420 975,640 - -
Oklahoma City, Oklahoma- 650,655 975,170 - -
Hardee's Restaurants:
Dothan, Alabama - 275,791 - - -
Huntersville, North Carolin- 308,894 - - -
North Augusta, South Caroli-a 201,056 - - -
Jack in the Box Restaurants:
Houston, Texas - 475,618 447,374 - -
Houston, Texas - 350,115 607,530 - -
Houston, Texas - 362,591 582,149 - -
Kingswood, Texas - 373,894 544,539 - -
Rockwall, Texas - 348,497 652,932 - -
Sacramento, California - 500,623 524,823 - -
Show Low, Arizona - 185,602 503,343 - -
KFC Restaurant:
Deming, New Mexico - 150,455 - - -
Quincy's Restaurants:
Lynchburg, Virginia - 359,532 - - -
Sebring, Florida - 407,656 728,192 - -
------------ ------------ ------------ -------
$11,945,232 $12,096,847 $569,297 -
============ ============ ============ =======
Property of Joint Venture in Which the Partnership has a 76.6% Interest and has
Invested in Under an Operating Lease:
Jack in the Box Restaurant:
Des Moines, Washington - $322,726 $791,658 - -
============ ============ ============ =======
Property of Joint Venture in Which the Partnership has a 62.16% Interest and has
Invested in Under an Operating Lease:
Burger King Restaurant:
Ashland, New Hampshire - $293,478 $997,104 - -
============ ============ ============ =======
Property in Which the Partnership has a 72.58% Interest as Tenants- in-Common
and has Invested in Under an Operating Lease:
Black-eyed Pea Restaurant:
Corpus Christi, Texas - $715,052 $726,005 - -
============ ============ ============ =======
Property in Which the Partnership has a 23% Interest as Tenants- in-Common and
has Invested in Under an Operating Lease:
IHOP Restaurant
Round Rock, Texas - $685,578 $706,459 - -
============ ============ ============ =======
Property of Joint Venture in Which the Partnership has a 42.8% Interest and has
Invested in Under an Operating Lease:
Taco Bell Restaurant
Portsmouth, Virginia - $254,045 - - -
============ ============ ============ =======
Properties the Partnership has
Invested in Under Direct
Financing Leases:
Burger King Restaurants:
Denver, Colorado - - - $403,692 -
Yelm, Washington - - 694,610 - -
Denny's Restaurants:
Orlando, Florida - - - 696,187 -
Abilene, Texas - - - 534,519 -
Kent, Ohio - 101,488 421,645 - -
Cullman, Alabama - 191,016 577,043 - -
Ocean Springs, Mississippi - - 324,225 - -
Wadsworth, Ohio - - 264,861 - -
Hardee's Restaurants:
Dothan, Alabama - - 407,368 - -
Laurens, South Carolina (g)- 170,905 537,361 - -
Huntersville, North Carolin- - 465,665 - -
North Augusta, South Caroli-a - 457,712 - -
Old Fort, North Carolina - 100,413 457,747 - -
KFC Restaurant:
Deming, New Mexico - - - 389,033 -
Quincy's Restaurant:
Lynchburg, Virginia - - 648,972 - -
------------ ------------ -------
------------
$563,822 $5,257,209 $2,023,431 -
============ ============ ============ =======
Property of Joint Venture in Which the Partnership has a 42.8% Interest and has
Invested in Under a Direct Financing Lease:
Taco Bell Restaurant:
Portsmouth, Virginia - - $323,725 - -
============ ============ ============ =======
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 structionAcquired Computed
- ------------- ------------- ------------ ----------- -------- -------- -------------
$359,458 $791,913 $1,151,371 $224,629 1982 06/92 (b)
266,685 555,656 822,341 157,614 1990 06/92 (b)
305,813 508,386 814,199 144,205 1987 06/92 (b)
362,073 575,454 937,527 163,229 1989 06/92 (b)
438,756 (f) 438,756 - 1992 06/92 (d)
399,679 363,795 763,474 101,065 1982 09/92 (b)
472,964 441,860 914,824 121,622 1987 09/92 (b)
321,505 411,353 732,858 113,225 1982 09/92 (b)
205,379 461,219 666,598 126,951 1986 09/92 (b)
220,496 498,434 718,930 47,240 1983 09/98 (b)
337,806 (f) 337,806 - 1997 01/99 (d)
627,065 (f) 627,065 - 1992 06/92 (d)
274,220 (f) 274,220 - 1992 07/92 (d)
187,368 (f) 187,368 - 1992 09/92 (d)
755,815 569,297 1,325,112 150,461 1993 09/92 (b)
303,267 (f) 303,267 - 1992 09/92 (d)
649,484 947,085 1,596,569 269,595 1992 06/92 (b)
506,420 975,640 1,482,060 277,723 1992 06/92 (b)
650,655 975,170 1,625,825 280,350 1992 05/92 (b)
275,791 (f) 275,791 - 1992 09/92 (d)
308,894 (f) 308,894 - 1992 09/92 (d)
201,056 (f) 201,056 - 1992 09/92 (d)
475,618 447,374 922,992 123,304 1992 09/92 (b)
350,115 607,530 957,645 167,445 1992 09/92 (b)
362,591 582,149 944,740 160,450 1992 09/92 (b)
373,894 544,539 918,433 150,084 1992 09/92 (b)
348,497 652,932 1,001,429 179,958 1992 09/92 (b)
500,623 524,823 1,025,446 144,650 1992 09/92 (b)
185,602 503,343 688,945 138,730 1992 09/92 (b)
150,455 (f) 150,455 - 1993 09/92 (d)
359,532 (f) 359,532 - 1992 09/92 (d)
407,656 728,192 1,135,848 200,435 1992 09/92 (b)
- ------------- ------------- ------------ -----------
$11,945,232 $12,666,144 $24,611,376 $3,442,965
============= ============= ============ ===========
$322,726 $791,658 $1,114,384 $216,673 1992 10/92 (b)
============= ============= ============ ===========
$293,478 $997,104 $1,290,582 $274,270 1987 10/92 (b)
============= ============= ============ ===========
$715,052 $726,005 $1,441,057 $95,051 1992 01/97 (b)
============= ============= ============ ===========
$685,578 $706,459 $1,392,037 $27,793 1998 10/99 (b)
============= ============= ============ ===========
$254,045 (f) $254,045 (d) 1997 02/99 (d)
============= ============
- (f) (f) (d) 1992 06/92 (d)
- (f) (f) (d) 1997 01/99 (d)
- (f) (f) (d) 1992 06/92 (d)
- (f) (f) (d) 1992 07/92 (d)
(f) (f) (f) (e) 1987 07/92 (e)
(f) (f) (f) (e) 1992 09/92 (e)
- (f) (f) (d) 1992 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
(f) (f) (f) (e) 1992 09/92 (e)
- (f) (f) (d) 1992 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
(f) (f) (f) (e) 1992 09/92 (e)
- (f) (f) (d) 1993 09/92 (d)
- (f) (f) (d) 1992 09/92 (d)
- -------------
-
=============
(f) (f) (f) (d) 1997 02/99 (d)
CNL INCOME FUND XI, 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 $ 26,016,146 $ 2,455,129
Dispositions (2,461,506 ) (309,280 )
Acquisitions 718,930 --
Depreciation expense -- 443,936
---------------- -------------------
Balance, December 31, 1998 24,273,570 2,589,785
Acquisitions 337,806 --
Depreciation expense -- 426,584
---------------- -------------------
Balance, December 31, 1999 24,611,376 3,016,369
Depreciation expense -- 426,596
---------------- -----------------
Balance, December 31, 2000 $ 24,611,376 $ 3,442,965
================ =================
Property of Joint Venture in Which the Partnership has
a 76.6% Interest and has Invested in Under an
Operating Lease:
Balance, December 1997 $ 1,114,384 $ 137,506
Depreciation expense -- 26,389
---------------- -----------------
Balance, December 31, 1998 1,114,384 163,895
Depreciation expense -- 26,389
---------------- -----------------
Balance, December 31, 1999 1,114,384 190,284
Depreciation expense -- 26,389
---------------- -----------------
Balance, December 31, 2000 $ 1,114,384 $ 216,673
================ =================
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- -------------------
Property of Joint Venture in Which the Partnership has
62.16% Interest and has Invested in Under
Operating Leases:
Balance, December 31, 1997 $ 1,290,582 $ 174,562
Depreciation expense -- 33,236
---------------- -----------------
Balance, December 31, 1998 1,290,582 207,798
Depreciation expense -- 33,236
---------------- -----------------
Balance, December 31, 1999 1,290,582 241,034
Depreciation expense -- 33,236
---------------- -----------------
Balance, December 31, 2000 $ 1,290,582 $ 274,270
================ =================
Property in Which the Partnership has a 72.58%
Interest as Tenants-in-Common and has Invested
in Under an Operating Lease:
Balance, December 31, 1997 $ 1,441,057 $ 22,448
Depreciation expense -- 24,201
---------------- -----------------
Balance, December 31, 1998 1,441,057 46,649
Depreciation expense -- 24,201
---------------- -----------------
Balance, December 31, 1999 1,441,057 70,850
Depreciation expense -- 24,201
---------------- -----------------
Balance, December 31, 2000 $ 1,441,057 $ 95,051
================ =================
Property in Which the Partnership has a 23% Interest
as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisitions 1,392,037 --
Depreciation expense -- 4,247
---------------- -----------------
Balance, December 31, 1999 1,392,037 4,247
Depreciation expense -- 23,546
---------------- -----------------
Balance, December 31, 2000 $ 1,392,037 $ 27,793
================ =================
CNL INCOME FUND XI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- -----------------
Property of Joint Venture in Which the Partnership has
a 42.8% Interest and has Invested in Under
an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisitions 254,045 --
Depreciation expense (d) -- --
---------------- -----------------
Balance, December 31, 1999 254,045 --
Depreciation expense (d) -- --
---------------- -----------------
Balance, December 31, 2000 $ 254,045 $ --
================ =================
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and its consolidated joint ventures, and the
unconsolidated joint ventures for federal income tax purposes was
$32,534,882 and $8,814,831, 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 restaurant on this Property was converted from a Denny's restaurant
to a Hardee's restaurant during 1994.
(h) This Property was exchanged for a Burger King Property previously owned
and located in Columbus, Ohio during 1998.
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XI, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-43278 on Form S-11 and incorporated herein by
reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XI, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-43278 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XI, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on April 15,
1993, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XI, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on April 15,
1993, 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.)