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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 0-23968
CNL INCOME FUND XIII, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3143094
(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 XIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 25, 1992. 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 31, 1993, 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 17, 1993. The offering terminated on August 26, 1993, 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
$35,324,831. The net offering proceeds were used to acquire 47 Properties,
including ten Properties consisting of only land, two Properties owned by joint
ventures in which the Partnership is a co-venturer, and one Property acquired as
tenants-in-common with affiliates of the General Partners, to pay acquisition
fees to an affiliate of the General Partners totaling $2,200,000, to pay
miscellaneous acquisition expenses and to establish a working capital reserve
for Partnership purposes. During the year ended December 31, 1996, the
Partnership sold its Property in Richmond, Virginia, consisting of land only,
and reinvested the proceeds in a Burger King Property located in Akron, Ohio,
with an affiliate of the General Partners as tenants-in-common, in 1997. In
addition, during the year ended December 31, 1997, the Partnership sold its
Property in Orlando, Florida, to a third party and reinvested the net sales
proceeds in a Chevy's Fresh Mex Property located in Miami, Florida, with an
affiliate of the General Partners as tenants-in-common. During the year ended
December 31, 1999, the Partnership sold its Jack in the Box Property in Houston,
Texas. As a result of the above transactions, as of December 31, 2000, the
Partnership owned 46 Properties. The 46 Properties include eight Properties
consisting of land only, interests in two Properties owned by joint ventures in
which the Partnership is a co-venturer and three Properties owned with
affiliates as tenants-in-common. The lessee of the eight Properties consisting
of land only, the tenant owns the buildings currently on the land and has the
right, if not in default under the lease, to remove the buildings from the land
at the end of the lease terms. The Partnership generally leases the Properties
on a triple-net basis with the lessees responsible for all repairs and
maintenance, property taxes, insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration for the Merger. On
March 1, 2000, the General Partners and APF announced that they had mutually
agreed to terminate the Agreement and Plan of Merger. The agreement to terminate
the Agreement and Plan of Merger was based, in large part, on the General
Partners' concern that, in light of market conditions relating to publicly
traded real estate investment trusts, the value of the transaction had
diminished. As a result of such diminishment, the General Partners' ability to
unequivocally recommend voting for the transaction, in the exercise of their
fiduciary duties, had become questionable. The General Partners are continuing
to evaluate strategic alternatives for the Partnership, including alternatives
to provide liquidity to the Limited Partners.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
joint ventures in which the Partnership is a co-venturer and Properties owned as
tenants-in-common with affiliates of the General Partners provide for initial
terms ranging from 5 to 20 years (the average being 19 years), and expire
between 2003 and 2018. All 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
$27,400 to $191,900. A majority of the leases provide for percentage rent, based
on sales in excess of a specified amount. In addition, the majority of the
leases provide that, commencing in specified lease years, the annual base rent
required under the terms if 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 36 of the Partnership's 46 Properties also have been
granted options to purchase Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed. Fair market value will
be determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
In addition, during 2000, the tenant of the Property in Orlando,
Florida exercised its option to extend the lease for an additional five years
beginning in May 2000. All other lease terms remained unchanged and are
substantially the same as the Partnership's other leases as described above.
Major Tenants
During 2000, three lessees of the Partnership, Flagstar Enterprises,
Inc., Long John Silver's, Inc., and Golden Corral Corporation, each contributed
more than ten percent of the Partnership's total rental and earned income
(including the Partnership's share of rental and earned income from two
Properties owned by joint ventures and three Properties owned with an affiliate
of the General Partners as tenants-in-common). As of December 31, 2000, Flagstar
Enterprises, Inc. was the lessee under leases relating to 11 restaurants, Long
John Silver's, Inc. was the lessee under leases relating to five restaurants,
and Golden Corral Corporation was the lessee under leases relating to three
restaurants. It is anticipated that, based on the minimum rental payments
required by the leases, these three lessees will each continue to contribute
more than ten percent of the Partnership's total rental and earned income in
2001. In addition, four Restaurant Chains, Long John Silver's, Hardee's, Golden
Corral Family Steakhouse Restaurants ("Golden Corral"), and Burger King, each
accounted for more than ten percent of the Partnership's total rental and earned
income during 2000 (including the Partnership's share of rental and earned
income from two Properties owned by joint ventures and three Properties owned
with affiliates of the General Partners as tenants-in-common). It is anticipated
that these four Restaurant chains each will continue to account for more than
ten percent of the Partnership's total rental and earned income under the terms
of the leases in 2001. 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: Attalla Joint Venture and Salem Joint Venture, with CNL Income
Fund XIV, Ltd., a limited partnership organized pursuant to the laws of the
state of Florida and an affiliate of the General Partners, for each joint
venture to purchase and hold one Property. The joint venture arrangements
provide for the Partnership and its joint venture partner to share in all costs
and benefits associated with the joint ventures in accordance with their
respective percentage interests in the joint ventures. The Partnership has a 50
percent interest in Attalla Joint Venture and a 27.8% interest in Salem Joint
Venture. The Partnership and its joint venture partner are also jointly and
severally liable for all debts, obligations and other liabilities of the joint
ventures.
Attalla Joint Venture and Salem Joint Venture have initial terms of 30
years and, after the expiration of the initial term, each joint venture
continues in existence from year to year unless terminated at the option of
either of the joint venturers or by an event of dissolution. Events of
dissolution include the bankruptcy, insolvency or termination of any joint
venturer, sale of the Property owned by the joint venture and mutual agreement
of the Partnership and its joint venture partners to dissolve the joint venture.
The Partnership shares management control equally with an affiliate of
the General Partners for Attalla Joint Venture and Salem 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 partner, either upon such terms and conditions as to which the
venturers may agree or, in the event the venturers cannot agree, on the same
terms and conditions as any offer from a third party to purchase such joint
venture interest.
Net cash flow from operations of Attalla Joint Venture and Salem Joint
Venture is distributed 50 percent and 27.8%, respectively, to the Partnership
and the balance is distributed to each other joint venture partner in accordance
with its percentage interest in the joint venture. Any liquidation proceeds,
after paying joint venture debts and liabilities and funding reserves for
contingent liabilities, will be distributed first to the joint venture partners
with positive capital account balances in proportion to such balances until such
balances equal zero, and thereafter in proportion to each joint venture
partner's percentage interest in the joint venture.
In addition to the above joint venture agreements, the Partnership
entered into agreements to hold an Arby's Property, as tenants-in-common, with
CNL Income Fund II, Ltd., a Burger King Property, as tenants-in-common, with CNL
Income Fund XVII, Ltd., and a Chevy's Fresh Mex Property, as tenants-in-common,
with CNL Income Fund III, Ltd., CNL Income Fund VII, Ltd., and CNL Income Fund
X, Ltd. Each of the CNL Income Funds is an affiliate of the General Partners and
is a limited partnership organized pursuant to the laws of the state of Florida.
The agreements provide for the Partnership and the affiliates to share in the
profits and losses of the Properties in proportion to each co-tenant's
percentage interest. The Partnership owns a 66.13%, 63.09%, and 47.83% interest
in these Properties, respectively. The tenancy in common agreements restrict
each party'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 parties.
The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional property, or at times when a
suitable opportunity to purchase an additional property is not available. The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of a
Property if the proceeds are reinvested in an additional Property.
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 and the Properties held as tenants-in-common with an affiliate,
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 46 Properties. Of the 46
Properties, 41 are owned by the Partnership in fee simple, two are owned through
joint venture arrangements and three are owned through tenancy in common
arrangements. 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 19,900
to 145,400 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation.
State Number of Properties
Alabama 3
Arizona 2
Arkansas 1
California 1
Colorado 1
Florida 10
Georgia 1
Indiana 1
Kansas 1
Louisiana 1
Maryland 1
North Carolina 1
Ohio 4
Pennsylvania 3
South Carolina 2
Tennessee 5
Texas 8
------
TOTAL PROPERTIES 46
======
Buildings. Each of the Properties owned by the Partnership includes a
building that is one of a Restaurant Chain's approved designs. However, the
buildings located on the eight Checkers Properties are owned by the tenant while
the land parcels are owned by the Partnership. The buildings generally are
rectangular and are constructed from various combinations of stucco, steel,
wood, brick and tile. The sizes of the building owned by the Partnership range
from approximately 1,900 to 11,500 square feet. All buildings on Properties are
freestanding and surrounded by paved parking areas. Buildings are suitable for
conversion to various uses, although modifications may be required prior to use
for other than restaurant operations. As of December 31, 2000, the Partnership
had no plans for renovation of the Properties. Depreciation expense is computed
for buildings and improvements using the straight-line method using a
depreciable life of 40 years for federal income tax purposes.
As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including the Properties owned through
tenancy in common arrangements) for federal income tax purposes was $32,593,862
and $4,767,863, respectively.
The following table lists the Properties owned by the Partnership as of December
31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
Arby's 2
Burger King 5
Checkers 8
Chevy's Fresh Mex 1
Denny's 3
Golden Corral 3
Hardee's 11
Jack in the Box 4
Lion's Choice 1
Long John Silver's 5
Quincy's 1
Steak-N-Shake 1
Wendy's 1
-----
TOTAL PROPERTIES 46
=====
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, 1997, and 1996, the Properties were fully
occupied. At December 31, 1998, the Properties were 98% occupied. The following
is a schedule of the average rent per Property for the years ended December 31:
2000 1999 1998 1997 1996
- --------------------------------- -------------- ------------- -------------- ------------- -------------
Rental Revenues (1) $3,753,973 $3,727,854 $3,482,136 $3,822,053 $3,778,319
Properties (2) 46 46 47 47 46
Average Rent Per Property $ 81,608 $ 81,040 $ 74,088 $ 81,320 $ 82,137
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Properties owned through tenancy in common arrangements. Rental
revenues have been adjusted, as applicable, for any amounts for which
the Partnership has established an allowance for doubtful accounts.
(2) Excludes Properties that were vacant at December 31, and did not
generate rental revenues during the year ended December 31.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for the next ten years and thereafter.
Percentage of
Number Annual Rental Gross Annual
Expiration Year of Leases Revenues Rental Income
- -------------------- ----------------- ------------------- ------------------
2001 -- $ -- --
2002 -- -- --
2003 1 34,260 0.98%
2004 -- -- --
2005 1 34,800 0.99%
2006 -- -- --
2007 1 37,763 1.08%
2008 2 347,428 9.87%
2009 2 247,783 7.04%
2010 2 130,099 3.70%
Thereafter 37 2,687,971 76.34%
--------- ---------------- -----------------
Total 46 $ 3,520,104 100.00%
========= ================ =================
Leases with Major Tenants. The terms 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.
Flagstar Enterprises, Inc. leases 11 Hardee's restaurants. The initial
term of each lease is 20 years (expiring in 2013) and the average minimum base
annual rent is approximately $58,700 (ranging from approximately $48,800 to
$65,700).
Long John Silver's, Inc. leases five Long John Silver's restaurants.
The initial term for four of the leases is 20 years (expiring in 2013) and the
initial term of the fifth lease, which the Partnership assumed from an
unrelated, third party in connection with the acquisition of the related
Property, is five years (expiring in 2005). The General Partners will seek to
re-lease this Property, or to sell the Property upon the expiration of the
lease. The average minimum base annual rent is approximately $73,300 (ranging
from approximately $34,800 to $102,700).
Golden Corral Corporation leases three Golden Corral restaurants. The
initial term of each lease is 15 years (expiring between 2008 and 2009) and the
average minimum base annual rent is approximately $177,900 (ranging from
approximately $168,600 to $186,200).
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 3,054 holders of record of the Units. There
is no public trading market for the Units, and it is not anticipated that a
public market for the Units will develop. During 2000, Limited Partners who
wished to sell their Units 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 ranged from $8.67 to $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.
2000 (1) 1999(1)
-------------------------------------- -----------------------------------
High Low Average High Low Average
---------- ---------- ---------- ------- -------- ----------
First Quarter $ 8.30 $ 8.30 $ 8.30 (2) (2) (2)
Second Quarter 7.06 7.06 7.06 $ 7.70 $7.70 $ 7.70
Third Quarter 7.76 7.31 7.56 9.50 7.00 8.17
Fourth Quarter 7.00 5.75 6.80 7.69 7.26 7.48
(1) A total of 12,800 and 9,750 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 $3,400,008 to the Limited Partners.
Distributions of $850,002 were declared at the close of each of the
Partnership's calendar quarters during 2000 and 1999 to the Limited
Partners. These amounts include monthly distributions made in arrears
for the Limited Partners electing to receive such distributions on this
basis. No amounts distributed to the Limited Partners for the years
ended December 31, 2000 and 1999 are required to be or have been
treated by the Partnership as a return of capital for purposes of
calculating the Limited Partners' return on their adjusted capital
contributions. No distributions have been made to the General Partners
to date.
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) $3,766,477 $ 3,719,734 $3,482,210 $3,832,470 $3,795,754
Net income (2) 3,089,297 2,681,165 2,495,855 3,035,627 3,231,815
Cash distributions declared 3,400,008 3,400,008 3,400,008 3,400,008 3,400,008
Net income per Unit (2) 0.77 0.66 0.62 0.75 0.80
Cash distributions
declared per Unit 0.85 0.85 0.85 0.85 0.85
At December 31:
Total assets $33,848,645 $34,337,261 $34,687,493 $35,523,590 $35,945,070
Partners' capital 32,719,849 33,030,560 33,749,403 34,653,556 35,017,937
(1) Revenues include equity in earnings of joint ventures and adjustments
to accrued rental income due to the tenant of certain Properties filing
for bankruptcy.
(2) Net income for the year ended December 31, 1999, includes a loss on
removal of building in connection with renovation of $352,285 and a
gain on sale of land and buildings of $176,159. Net income for the year
ended December 31, 1998 includes a provision for loss on building of
$297,885. Net income for the year ended December 31, 1997, includes a
loss on sale of land and direct financing lease of $48,538. Net income
for the year ended December 31, 1996, includes a gain on sale of land
of $82,855.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on September 25, 1992, 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 and to be leased primarily to
operators of selected national and regional fast-food and family-style
Restaurant Chains. The leases are generally triple-net leases, with the lessee
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 2000, the Partnership owned 46 Properties,
either directly or through joint venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital is 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
$3,360,034, $3,312,989, and $3,277,301, for the years ended December 31, 2000,
1999, and 1998, respectively. The increase in cash from operations during 2000
and 1999, each as compared to the prior year, was primarily a result of changes
in income and expenses as described in "Results of Operations" below and changes
in the Partnership's working capital.
Other sources and uses of capital included the following during the
years ended December 31, 2000, 1999, and 1998:
In November 1998, the Partnership entered into a new lease for the
Property in Tampa, Florida, with a new tenant to operate the Property as a
Steak-n-Shake restaurant. In connection with the new lease agreement, the
Partnership agreed to renovate the Property; therefore, during the year ended
1999, the old building located on the Property was removed. As a result, the
undepreciated cost of the building of $352,285 was charged to net income for
financial reporting purposes. During 1999, a new building had been constructed
and was operational. In connection with the new lease, the Partnership funded
approximately $537,400 in construction costs for the new building. The
Partnership used a portion of the net sales proceeds from the sale of the
Property in Houston, Texas, to pay such costs, as described below.
In May 1999, the Partnership entered into a new lease for the Property
in Philadelphia, Pennsylvania with the new tenant to operate the Property as an
Arby's restaurant. In connection therewith, the Partnership funded a total of
approximately $325,900 in renovation costs, of which approximately $87,600 was
incurred during the year ended December 31, 2000. The Partnership used a portion
of the net sales proceeds from the sale of the Property in Houston, Texas, to
pay such costs, as described below.
In July 1999, the Partnership sold its Property in Houston, Texas to a
third party for $1,073,887 and received net sales proceeds of $1,059,498,
resulting in a gain of $176,159 for financial reporting purposes. The Property
was originally acquired by the Partnership in August 1993 at a cost of
approximately $861,300, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold the Property for approximately
$198,200 in excess of its original purchase price. The Partnership used the
majority of the net sales proceeds to pay for the construction and renovation
costs described above and to pay Partnership liabilities. The Partnership
distributed amounts sufficient to enable the Limited Partners to pay federal and
state income taxes, if any (at a level reasonably assumed by the General
Partners), resulting from the sale.
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 Properties is invested in
money market accounts or other short-term highly liquid investments such as
demand deposit accounts at commercial banks, money market accounts and
certificates of deposit with less than a 30-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses or to make
distributions to partners. At December 31, 2000, the Partnership had $818,231
invested in such short-term investments as compared to $945,802 at December 31,
1999. The decrease in cash and cash equivalents during the year ended December
31, 2000, was primarily the result of the Partnership using a portion of sales
proceeds from the sale of a Property in Houston, Texas to pay for renovation
costs relating to the Property in Philadelphia, Pennsylvania. As of December 31,
2000, the average interest rate earned on the rental income deposited in demand
deposit accounts at commercial banks was approximately 2.12% annually. The funds
remaining at December 31, 2000, will be used towards the payment of
distributions and other liabilities.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and generally leasing them under triple-net leases to operators who generally
meet specified financial standards minimizes the Partnership's operating
expenses. The General Partners believe that the leases will continue to generate
cash flow in excess of operating expenses.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because all leases of the Partnership's Properties are
on a triple-net basis, it is not anticipated that a permanent reserve for
maintenance and repairs will be established at this time. To the extent,
however, that the Partnership has insufficient funds for such purposes, the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs. The General
Partners have the right to cause the Partnership to maintain additional reserves
if, in their discretion, they determine such reserves are required to meet the
Partnership's working capital needs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
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 current and future anticipated cash from operations, the
Partnership declared distributions to the Limited Partners of $3,400,008 for
each of the years ended December 31, 2000, 1999, and 1998. This represents
distributions of $0.85 per Unit for each of the years ended December 31, 2000,
1999, and 1998. No distributions were made to the General partners during the
years ended December 31, 2000, 1999 and 1998. No amounts distributed to the
Limited Partners for the years ended December 31, 2000, 1999, and 1998, are
required to be or have been treated by the Partnership as a return of capital
for purposes of calculating the Limited Partners' return on their adjusted
capital contributions. The Partnership intends to continue to make distributions
of cash available for distribution to the Limited Partners on a quarterly basis.
During 2000, the general partners waived their right to receive future
distributions form 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 $132,671 and
$69,234, respectively, to related parties for such amounts as accounting and
administrative services and management fees. As of March 15, 2001, the
Partnership had reimbursed the affiliates $35,449 of such amounts. Other
liabilities, including distributions payable, increased to $996,125 at December
31, 2000, from $1,237,467 at December 31, 1999. The decrease in other
liabilities is partially attributable to the Partnership paying transaction
costs that were accrued at December 31, 1999 relating to the proposed merger
with APF, as described in "Termination of Merger." The decrease in other
liabilities is also partially attributable to the Partnership paying
construction costs relating to the Property in Philadelphia, Pennsylvania, as
described above in "Capital Resources." Total liabilities at December 31, 2000,
to the extent they exceed cash and cash equivalents, will be paid from
anticipated future cash from operations.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During 1999 and 1998, the Partnership owned and leased 42 wholly owned
Properties (including one Property in Houston, Texas, which was sold in July
1999), and during 2000, the Partnership owned and leased 41 wholly owned
Properties. During 1998, 1999, and 2000, the Partnership was a co-venturer in
two separate joint ventures that each owned and leased one Property. In
addition, during 1998, 1999, and 2000, the Partnership owned and leased three
Properties with affiliates of the General Partners as tenants-in-common. As of
December 31, 2000, the Partnership owned, either directly, as tenants-in-common
with affiliates or through joint venture arrangements, 46 Properties which are
generally subject to long-term, triple-net leases. The leases of the Properties
provide for minimum base annual rental amounts (payable in monthly installments)
ranging from approximately $27,400 to $191,900. A majority of the leases provide
for percentage rent based on sales in excess of a specified amount. In addition,
the majority of the leases provide that, commencing in specified lease years,
the annual base rent required under the terms of the lease will increase. For
further description of the Partnership's leases and Properties, see Item 1.
Business - Leases and Item 2. Properties, respectively.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $3,186,560, $3,162,395, and $2,862,491, respectively, in
rental income from operating leases (net of adjustments to accrued rental
income) and earned income from direct financing leases from its wholly owned
Properties. The increase in rental income during 2000 and 1999, each as compared
to the previous year, was partially attributable to an increase in rental income
as a result of the Partnership re-leasing several Properties affected by the
bankruptcy of Long John Silvers, Inc. that occurred during 1998. The increase in
rental and earned income during 1999, as compared to 1998, was partially offset
by a decrease of approximately $149,600, due to the fact that in June 1998, Long
John Silver's, Inc. filed for bankruptcy and rejected the leases relating to
three of the eight Properties it leased and ceased making rental payments on the
three rejected leases. In conjunction with the three rejected leases, during the
year ended December 31, 1998, the Partnership reversed approximately $307,400 of
accrued rental income previously recorded. 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. No such amounts were reversed during 1999 or 2000. In August
1999, Long John Silver's, Inc. assumed and affirmed its five remaining leases,
and the Partnership has continued receiving rental payments relating to these
five leases.
The increase in rental and earned income during 2000 and 1999, each as
compared to the previous year, was partially offset by a reduction in rental and
earned income as a result of the sale of the Property in Houston, Texas, as
described above in "Capital Resources."
The increase in rental and earned income during 2000, was also
partially offset by the fact that the Partnership reserved approximately $51,600
of accrued rental income amounts relating to two Denny's Properties due to
financial difficulties the tenant experienced. 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.
For the years ended December 31, 2000, 1999, and 1998, the Partnership
also earned $277,246, $273,136, and $326,906, respectively, in contingent rental
income. Contingent rental income was higher during the year ended December 31,
1998, as compared to 1999, due to the fact that actual contingent rental amounts
as received in 1998, relating to 1997 restaurant sales exceeded estimated
contingent rental amounts accrued as receivables at December 31, 1997.
Contingent rental income was also higher during 1998 as the result of the gross
sales of four restaurant Properties meeting the threshold during 1998, under the
terms of their leases requiring payment of contingent rental income.
During the year ended December 31, 2000, three of the Partnership's
lessees, Flagstar Enterprises, Inc., Long John Silver's, Inc., and Golden Corral
Corporation, each contributed more than ten percent of the Partnership's total
rental and earned income (including the Partnership's share of rental and earned
income from two Properties owned by joint ventures and three Properties owned
with affiliates of the General Partners as tenants-in-common). As of December
31, 2000, Flagstar Enterprises, Inc. was the lessee under leases relating to 11
restaurants, Long John Silver's, Inc. was the lessee under leases relating to
five restaurants, and Golden Corral Corporation was the lessee under leases
relating to three restaurants. During 1998, Long John Silver's, Inc. filed for
bankruptcy, as described above. It is anticipated that based on the minimum
rental payments required by the leases, each of the lessees 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, Long John Silver's, Hardee's, Golden Corral, and Burger King,
each accounted for more than ten percent of the Partnership's total rental and
earned income (including the Partnership's share of rental and earned income
from two Properties owned by joint ventures and three Properties owned with
affiliates of the General Partners as tenants-in-common). It is anticipated that
these four Restaurant chains each will continue to account for more than ten
percent of the total rental and earned income under the terms of its leases in
2001. 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.
Operating expenses, including depreciation and amortization expense,
were $677,180, $862,443, and $688,470 for the years ended December 31, 2000,
1999, and 1998, respectively. The decrease during 2000, as compared to 1999, and
the increase in operating expenses during 1999, as compared to 1998, was
primarily due to the amount of transaction costs the Partnership incurred
related to the General Partners retaining financial and legal advisors to assist
them in evaluating and negotiating the proposed and terminated merger with APF,
as described below in "Termination of Merger."
The decrease in operating expenses during 2000, as compared to 1999,
was also partially attributable to the fact that during 2000, the Partnership
received reimbursement from Long John Silver's, Inc. for amounts previously
incurred by the Partnership as expenses.
In addition, the decrease during 2000 was partially attributable to,
and the increase during 1999, was partially offset by, a decrease in
depreciation expense due to the 1999 sale of the Property in Houston, Texas, as
described above.
During 1999, the Partnership entered into a new lease for its Property
in Tampa, Florida, with a Steak-n-Shake operator. In connection with the new
lease, the Partnership agreed to renovate the Property; therefore, the old
building located on the Property was removed. As a result, the Partnership
removed the remaining undepreciated cost of the building from its accounts
resulting in a loss of $352,285 for financial reporting purposes during the year
ended December 31, 1999.
In addition, as a result of the sale of the Property in Houston, Texas,
during 1999, as described above in "Capital Resources," the Partnership
recognized a gain of $176,159 for financial reporting purposes. No properties
were sold during 2000 and 1998.
During the year ended December 31, 1998, the Partnership recorded a
provision for loss on assets in the amount of $297,885 for financial purposes
relating to one of the Properties for which Long John Silver's, Inc. rejected
the lease. The allowance represented the difference between the Property's
carrying value at December 31, 1998 and the estimated net realizable value at
December 31, 1998 for the Property. No such allowance was established during the
years ended December 31, 2000 and 1999.
The Partnership's leases as of December 31, 2000, are generally
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 based 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's result 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 XIII, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 14
Financial Statements:
Balance Sheets 15
Statements of Income 16
Statements of Partners' Capital 17
Statements of Cash Flows 18-19
Notes to Financial Statements 20-33
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund XIII, 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 XIII, 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 XIII, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31,
2000 1999
----------------------- ----------------------
ASSETS
Land and buildings on operating leases, less accumulated
depreciation and allowance
for loss on assets $ 21,157,116 $ 22,162,826
Net investment in direct financing leases 7,449,706 7,042,118
Investment in joint ventures 2,434,759 2,445,549
Cash and cash equivalents 818,231 945,802
Receivables, less allowance for doubtful accounts
of $5,674 in 2000 243,086 135,432
Prepaid expenses 31,227 15,963
Lease costs, less accumulated amortization of $3,593 and $1,789 in
2000 and 1999, respectively 32,157 33,961
Accrued rental income, less allowance for doubtful
accounts of $51,618 in 2000 1,682,363 1,555,610
----------------------- ----------------------
$ 33,848,645 $ 34,337,261
======================= ======================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 38,373 $ 144,227
Accrued construction costs -- 194,743
Escrowed real estate taxes payable -- 2,176
Distributions payable 850,002 850,002
Due to related parties 132,671 69,234
Rents paid in advance and deposits 107,750 46,319
------------------------- ----------------------
Total liabilities 1,128,796 1,306,701
Partners' capital 32,719,849 33,030,560
----------------------- --------------------
$ 33,848,645 $ 34,337,261
======================= ======================
See accompanying notes to condensed financial statements.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
---------------- ---------------- --------------
Revenues
Rental income from operating leases $ 2,401,921 $ 2,367,931 $ 2,404,934
Adjustments to accrued rental income (51,618) -- (307,405)
Earned income from direct financing leases 836,257 794,464 764,962
Contingent rental income 277,246 273,136 326,906
Interest and other income 58,327 42,045 49,321
---------------- ---------------- --------------
3,522,133 3,477,576 3,238,718
---------------- ---------------- --------------
Expenses:
General operating and administrative 165,389 152,089 150,239
Professional services 33,202 51,773 26,869
Management fees to related parties 36,142 36,152 35,257
Real estate taxes -- 7,877 13,989
State and other taxes 21,731 23,362 16,172
Depreciation and amortization 385,470 399,174 422,653
Transaction costs 35,246 192,016 23,291
---------------- ---------------- --------------
677,180 862,443 688,470
---------------- ---------------- --------------
Income Before Equity in Earnings of Joint Ventures, Gain on
Sale of Assets, Loss on Removal of Building in Connection
with Renovation and Provision for Loss on Assets 2,844,953 2,615,133 2,550,248
Equity in Earnings of Joint Ventures 244,344 242,158 243,492
Gain on Sale of Assets -- 176,159 --
Loss on Removal of Building in Connection with Renovation -- (352,285) --
Provision for Loss on Assets -- -- (297,885)
---------------- ---------------- --------------
Net Income $ 3,089,297 $ 2,681,165 $ 2,495,855
================ ================ ==============
Allocation of Net Income:
General partners $ -- $ 28,060 $ 26,667
Limited partners 3,089,297 2,653,105 2,469,188
---------------- ---------------- --------------
$ 3,089,297 $ 2,681,165 $ 2,495,855
Net Income Per Limited Partner Unit $ 0.77 $ 0.66 0.62
================ ================ ==============
Weighted Average Number of Limited Partner Units Outstanding 4,000,000 4,000,000 4,000,000
================ ================ ==============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2000, 1999 and 1998
General Partners
--------------------------------------
Accumulated
Contributions Earnings
------------------- -----------------
Balance, December 31, 1997 $ 1,000 $ 136,207
Distributions to limited
partners ($0.85 per
limited partner unit) -- --
Net income -- 26,667
------------------- -----------------
Balance, December 31, 1998 1,000 162,874
Distributions to limited
partners ($0.85 per
limited partner unit) -- --
Net income -- 28,060
------------------- -----------------
Balance, December 31, 1999 1,000 190,934
Distributions to limited
partners ($0.85 per
limited partner unit) -- --
Net income -- --
------------------- -----------------
Balance, December 31, 2000 $ 1,000 $ 190,934
=================== =================
Limited Partners
- --------------------------------------------------------------------------- ---------------
Accumulated Syndication
Contributions Distributions Earnings Costs Total
- ------------------ ----------------- ------------------ ---------------- ---------------
$ 40,000,000 $ (14,328,400) $ 13,509,918 $ (4,665,169) $ 34,653,556
-- (3,400,008) -- -- (3,400,008)
-- -- 2,469,188 -- 2,495,855
- ------------------ ----------------- ------------------ ---------------- ---------------
40,000,000 (17,728,408) 15,979,106 (4,665,169) 33,749,403
-- (3,400,008) -- -- (3,400,008)
-- -- 2,653,105 -- 2,681,165
- ------------------ ----------------- ------------------ ---------------- ---------------
40,000,000 (21,128,416) 18,632,211 (4,665,169) 33,030,560
-- (3,400,008) -- -- (3,400,008)
-- -- 3,089,297 -- 3,089,297
- ------------------ ----------------- ------------------ ---------------- ---------------
$ 40,000,000 $ (24,528,424) $ 21,721,508 $ (4,665,169) $ 32,719,849
================== ================= ================== ================ ===============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XIII, 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 $ 3,404,302 $ 3,342,666 $ 3,235,985
Distributions from joint ventures 254,957 247,710 250,270
Cash paid for expenses (329,070) (314,517) (245,273)
Interest received 29,845 37,130 36,319
------------------ ------------------ --------------------
Net cash provided by operating
activities 3,360,034 3,312,989 3,277,301
------------------ ------------------ --------------------
Cash Flows from Investing Activities:
Proceeds from sale of assets -- 1,059,498 --
Additions to land and buildings (87,597) (238,257) --
Investment in direct financing leases -- (537,404) --
Investment in joint ventures -- -- (539)
Payment of lease costs -- (17,875) (17,875)
------------------ ------------------ --------------------
Net cash provided by (used in)
investing activities (87,597) 265,962 (18,414)
------------------ ------------------ --------------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,400,008) (3,400,008) (3,400,008)
------------------ ------------------ --------------------
Net cash used in financing activities (3,400,008) (3,400,008) (3,400,008)
------------------ ------------------ --------------------
Net Increase (decrease) in Cash and Cash Equivalents (127,571) 178,943 (141,121)
Cash and Cash Equivalents at Beginning of Year 945,802 766,859 907,980
------------------ ------------------ --------------------
Cash and Cash Equivalents at End of Year $ 818,231 $ 945,802 $ 766,859
================== ================== ====================
See accompanying notes to financial statements.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
STATEMENT OF CASH FLOWS - CONTINUED
Year Ended December 31,
2000 1999 1998
----------------- ----------------- -----------------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities
Net income $ 3,089,297 $ 2,681,165 $ 2,495,855
----------------- ----------------- -----------------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 383,489 397,150 421,840
Amortization 1,981 2,024 637
Equity in earnings of joint
ventures, net of distributions 10,613 5,552 6,954
Loss on removal of building in
connection with renovation -- 352,285 --
Gain on sale of assets -- (176,159 ) --
Provision for loss on assets -- -- 297,885
Increase in receivables (107,654 ) (10,493 ) (97,173 )
Decrease in net investment in
direct financing leases 107,487 90,732 82,115
Decrease (increase) in
prepaid expenses (15,264 ) (7,510 ) 1,915
Increase in accrued rental income
(126,753 ) (195,625 ) (783 )
Increase (decrease) in
accounts payable (108,030 ) 135,412 3,320
Increase in due to related parties
63,437 46,705 15,738
Increase (decrease) in rents paid
in advance and deposits 61,431 (8,249 ) 48,998
----------------- ----------------- -----------------
Total adjustments 270,737 631,824 781,446
----------------- ----------------- -----------------
Net Cash Provided by Operating
Activities $ 3,360,034 $ 3,312,989 $ 3,277,301
================= ================= =================
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid at
December 31 $ 850,002 $ 850,002 $ 850,002
================= ================= =================
See accompanying notes to condensed financial statements
CNL INCOME FUND XIII, 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 XIII, 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
generally on a triple-net basis, whereby the tenant is responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodical 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 XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
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 their fair value. Although the general partners have made
their best estimate of these factors based on current conditions, it is
reasonably possible that changes could occur in the near term which
could adversely affect the general partners' best estimate of net cash
flows expected to be generated from its properties and the need for
asset impairment write downs.
When the collection of amounts recorded as rental or other income is
considered to be doubtful, an adjustment is made to increase the
allowance for doubtful accounts, which is netted against receivables,
and to decrease rental or other income or increase bad debt expense for
the current period, although the Partnership continues to pursue
collection of such amounts. If amounts are subsequently determined to
be uncollectible, the corresponding receivable and allowance for
doubtful accounts are decreased accordingly.
Investment in Joint Ventures - The Partnership accounts for its
interests in Attalla Joint Venture and Salem Joint Venture, and a
property in Arvada, Colorado, a property in Akron, Ohio, and a property
in Miami, Florida, for which each property is held as tenants-in-common
with affiliates, using the equity method since the Partnership shares
control with affiliates which have the same general partners.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
--------------------------------------------
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts.
Lease Costs - Lease incentive costs and brokerage and legal fees
associated with negotiating new leases are amortized over the term of
the new lease using the straight-line method.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. The more significant areas requiring
the use of management estimates relate to the allowance for doubtful
accounts and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
Staff Accounting Bulleting No. 101 ("SAB 101") - In December 1999, the
Securities and Exchange Commission released SAB 101, which provides the
staff's view in applying generally accepted accounting principles to
selected revenue recognition issues. SAB 101 requires the Partnership
to defer recognition of certain percentage rental income until certain
defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material
impact on the partnership's result of operations.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
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 or 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 15 to 20 years and provide for minimum
and contingent rentals. In addition, the tenant pays all property taxes
and assessments, fully maintains the interior and exterior of the
building and carries insurance coverage for public liability, property
damage, fire and extended coverage. The lease options generally allow
tenants to renew the leases for two to five successive five-year
periods subject to the same terms and conditions as the initial lease.
Most leases also allow the tenant to purchase the property at fair
market value after a specified portion of the lease has elapsed.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases:
--------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
-------------------- --------------------
Land $ 12,374,488 $ 12,374,488
Buildings 11,532,370 12,037,209
-------------------- --------------------
23,906,858 24,411,697
Less accumulated depreciation (2,749,742) (2,383,986)
-------------------- --------------------
21,157,116 22,027,711
Construction in progress -- 433,000
-------------------- --------------------
21,157,116 22,460,711
Less allowance for loss on assets -- (297,885)
-------------------- --------------------
$ 21,157,116 $ 22,162,826
==================== ====================
In November 1998, the Partnership entered into a new lease for the
property in Tampa, Florida with a new tenant to operate the property as
a Steak-n-Shake restaurant. In connection with the new lease agreement,
the Partnership agreed to renovate the property. In connection with
such renovation, during 1999, the old building located on the property
was removed. As a result, the undepreciated cost of the old building
was removed from the Partnership's accounts resulting in a loss of
$352,285 for financial reporting purposes. As of December 31, 1999, the
new building had been constructed and was operational. The building
portion of the new lease is classified as a direct financing lease (see
Note 4).
In May 1999, the Partnership entered into a new lease for the property
in Philadelphia, Pennsylvania, with a new tenant to operate the
property as an Arby's restaurant. In connection therewith, the
Partnership funded a total of approximately $325,900 in renovation
costs, of which approximately $87,600 and $238,300 were incurred during
2000 and 1999, respectively. The portion of the lease relating to the
building portion of the property is classified as a direct financing
lease (see Note 4).
In July 1999, the Partnership sold its property in Houston, Texas to a
third party for $1,073,887 and received net sales proceeds of
$1,059,498, resulting in a gain of $176,159 for financial reporting
purposes. This property was originally acquired by the Partnership in
August 1993 and had a cost of approximately $861,300, excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold the property for approximately $198,200 in excess of
its original purchase price.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases:
--------------------------------------
Generally, the leases provide for escalating guaranteed minimum rents
throughout the lease term. Income from these scheduled rent increases
is recognized on a straight-line basis over the terms of the leases.
For the years ended December 31, 2000, 1999, and 1998, the Partnership
recognized $126,763 (net of $51,618 in reserves), $195,625, and $783
(net of $307,405 in reversals), respectively, of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 2,246,103
2002 2,252,910
2003 2,273,467
2004 2,368,797
2005 2,384,729
Thereafter 16,785,427
--------------------
$ 28,311,433
====================
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
$ 13,545,749 $ 13,431,946
Estimated residual values 2,555,822 2,462,765
Less unearned income (8,651,865) (8,852,593)
----------------- --------------
Net investment in direct financing
leases $ 7,499,706 $ 7,042,118
================ ==============
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases- Continued:
----------------------------------------------------
In addition, in November 1998, the Partnership entered into a new lease
with a new tenant for the property in Tampa, Florida, to operate the
restaurant as a Steak-n-Shake. In connection with this new lease,
during 1999, the Partnership funded approximately $537,400 in
construction costs for the new building. In accordance with the
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases", the Partnership recorded the building portion of these
properties as net investment in direct financing lease (see Note 3). In
connection with the new lease for the property in Philadelphia,
Pennsylvania, and in accordance with the Statement of Financial
Accounting Standards No. 13, "Accounting for Leases," the Partnership
recorded the portion of the lease relating to the building portion of
the property as a direct financing lease (see Note 3).
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2000:
2001 $ 947,658
2002 965,493
2003 966,035
2004 971,998
2005 971,998
Thereafter 8,722,567
----------------
$13,545,749
================
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 50 percent and a 27.8% interest in the profits
and losses of Attalla Joint Venture and Salem Joint Venture,
respectively. The remaining interests in these joint ventures are held
by affiliates of the Partnership which have the same general partners.
The Partnership also owns properties in Arvada, Colorado; Akron, Ohio;
and Miami, Florida; each as tenants-in-common with affiliates of the
general partners. As of December 31, 2000, the Partnership owned a
66.13%, 63.09% and 47.83% interest, respectively, in the properties.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
Attalla Joint Venture, Salem Joint Venture and the Partnership and
affiliates, as tenants-in-common in three separate tenancy-in-common
arrangements, each own and lease one property to an operator of
national fast-food or family-style restaurants.
The following presents the combined, condensed financial information
for the joint ventures and the properties held as tenants-in-common
with affiliates at December 31:
2000 1999
-------------------- ---------------------
Land and buildings on operating
leases, less accumulated
depreciation $ 4,009,712 $ 4,092,068
Net investment in direct financing lease 351,555 356,513
Cash 50,579 18,620
Receivables -- 16,553
Prepaid expenses 474 1,254
Accrued rental income 318,016 256,070
Liabilities 29,459 17,370
Partners' capital 4,700,877 4,723,708
Revenues 568,987 567,352
Net income 476,978 474,195
The Partnership recognized income totaling $244,344, $242,158, and
$243,492 for the years ended December 31, 2000, 1999, and 1998,
respectively, from these joint ventures and the properties held as
tenants-in-common with affiliates.
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").
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
6. Allocations and Distributions - Continued:
-----------------------------------------
From inception through December 31, 1999, generally, net sales proceeds
from the sales 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 a 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 sale of properties, in liquidation
of the Partnership 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 the partners with
positive capital account balances, in proportion to such balances, up
to amounts sufficient to reduce such positive balances to zero, and (v)
thereafter, any funds remaining shall then be distributed 95 percent to
the limited partners and five percent to the general partners.
Effective January 1, 2000, the general partners waived their rightto
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partner in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2000.
During each of the years ended December 31, 2000, 1999, and 1998, the
Partnership declared distributions to the limited partners of
$3,400,008. No distributions have been made to the general partners to
date.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, 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 $ 3,089,297 $ 2,681,165 $ 2,495,855
Depreciation for tax reporting purposes in excess of
depreciation for financial reporting purposes (95,523) (76,982) (59,127)
Direct financing leases recorded as operating leases for
tax reporting purposes 107,487 90,732 82,115
Capitalization (deduction) of transaction costs for tax
reporting purposes (215,307) 192,016 23,291
Equity in earning of joint ventures for tax reporting
purposes less than equity in earnings of joint
ventures for financial reporting purposes (14,242) (25,801) (27,118)
Gain on sale of property for financial reporting
purposes deferred for tax reporting purposes -- 36,702 --
Loss on sale of property for financial reporting
purposes in excess of loss for tax reporting -- 352,285 --
purposes
Allowance for loss on building -- -- 297,885
Allowance for doubtful accounts 5,674 (532) 532
Accrued rental income (126,753) (195,625) (783)
Rents paid in advance 61,431 (8,249) 38,165
---------------- ---------------- ----------------
Net income for federal income tax purposes $ 2,812,064 $ 3,045,711 $ 2,850,815
================ ================ ================
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
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
the Advisor a 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 Advisor. All or any portion of the management fee not taken as to
any fiscal year shall be deferred without interest and may be taken in
such other fiscal year as the Advisor shall determine. The Partnership
incurred management fees of $36,142, $36,152, and $35,257 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 net sales proceeds are reinvested in a replacement
property, no such real estate disposition fees will be incurred until
such replacement property is sold and the net sales proceeds are
distributed. The payment of the real estate disposition fee is
subordinated to the receipt by the limited partners of their aggregate
Limited Partners' 10% Return plus their invested capital contributions.
No deferred, subordinated real estate disposition fees have been
incurred since inception.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
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 its affiliates provided accounting and administrative services to
the Partnership on a day-to-day basis including services relating to
the proposed and terminated merger. For the years ended December 31,
2000, 1999, and 1998, the expenses incurred for these services were
$99,772, $121,160, and $98,719, respectively.
The amount due to related parties at December 31, 2000 and 1999 totaled
$132,671 and $69,234, 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 total rental and earned income from 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
--------------- --------------- ----------------
Flagstar Enterprises, Inc. $ 644,467 $ 647,065 $ 649,525
Golden Corral Corp. 548,540 530,686 542,900
Long John Silver's, Inc. 415,012 423,498 571,066
Jack in the Box Inc. (formerly
Foodmaker, Inc.) N/A 413,069 458,690
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 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
--------------- --------------- ----------------
Hardee's $ 644,467 $ 647,065 $ 649,525
Golden Corral Family Steakhouse Restaurants 548,540 530,686 542,900
Burger King 454,645 465,469 497,670
Long John Silver's 415,012 423,498 571,066
Jack in the Box N/A 413,069 458,690
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
9. Concentration of Credit Risk-Continued:
--------------------------------------
The information denoted by N/A indicates that for each period
presented, the tenant and the chain 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 of America, and the Partnership's lessees
operate a variety of restaurant concepts, default by any lessee or
restaurant chain contributing more than ten percent of the
Partnership's revenues 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.
In June 1998, Long John Silver's, Inc. filed for bankruptcy and
rejected the leases relating to three of its eight leases and ceased
making rental payments to the Partnership on the rejected leases.
During 1999, the Partnership re-leased the three Properties with
rejected leases to three new tenants. In addition, in August 1999, Long
John Silver's, Inc. assumed and affirmed its five remaining leases, and
the Partnership has continued receiving rental payments relating to
these five leases.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
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) $926,862 $912,896 $944,979 $981,740 $ 3,766,477
Net income 685,941 728,592 774,105 900,659 3,089,297
Net income per
limited partner
unit 0.17 0.18 0.19 0.23 0.77
1999 Quarter First Second Third Fourth Year
------------------------ -------------- ------------- ------------- -------------- --------------
Revenue (1) $896,995 $933,384 $937,251 $952,104 $ 3,719,734
Net income 668,003 346,783 902,399 763,980 2,681,165
Net income per
limited partner
unit 0.17 0.09 0.22 0.19 0.66
(1) Revenues include equity in earnings of joint ventures and
adjustments to accrued rental income due to the tenant of certain
Properties filing for bankruptcy.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in
June 2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL
Financial Group, Inc. (formerly CNL Group, Inc.), a diversified real estate
company, and has served as a director, Chairman of the Board and Chief
Executive Officer of CNL Financial Group, Inc. since its formation in 1980. CNL
Financial Group, Inc. is the parent company, either directly or indirectly
through subsidiaries, of CNL Real Estate Services, Inc., CNL Capital Markets,
Inc., CNL Investment Company and CNL Securities Corp. Mr. Seneff also serves as
a Director, Chairman of the Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., a public, unlisted real estate investment trust,
as well as, CNL Hospitality Corp., its advisor. In addition, he serves as a
Director, Chairman of the Board and Chief Executive Officer of CNL Retirement
Properties, Inc., a public, unlisted real estate investment trust and its
advisor, CNL Retirement Corp. Since 1992, Mr. Seneff has also served as a
Director, Chairman of the Board and Chief Executive Officer of Commercial Net
Lease Realty, Inc., a public real estate investment trust that is listed on the
New York Stock Exchange. Mr. Seneff has also served as a Director, Chairman of
the Board and Chief Executive Officer of CNL Securities Corp. since 1979; CNL
Investment Company since 1990; and CNL Institutional Advisors, Inc., a
registered investment advisor for pension plans, since 1990. Mr. Seneff
formerly served as a Director of First Union National Bank of Florida, N.A.,
and currently serves as the Chairman of the Board of CNL Bank. Mr. Seneff
previously served on the Florida State Commission on Ethics and is a former
member and past Chairman of the State of Florida Investment Advisory Council,
which recommends to the Florida Board of Administration investments for various
Florida employee retirement funds. The Florida Board of Administration,
Florida's principal investment advisory and money management agency, oversees
the investment of more than $60 billion of retirement funds. Mr. Seneff
received his degree in Business Administration from Florida State University in
1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as
Treasurer from February 1999 through August 1999 and from May 1994 through
December 1994. He also served in various executive positions with the Advisor
prior to its merger with APF including, President from 1994 through September
1997, and Director from 1994 through August 1999. Mr. Bourne serves as
President and Treasurer of CNL Financial Group, Inc. (formerly CNL Group,
Inc.); Director, Vice Chairman of the Board and President of CNL Hospitality
Properties, Inc., a public, unlisted real estate investment trust; as well as,
Director and President of CNL Hospitality Corp., its advisor. In addition, Mr.
Bourne serves as Director and President of CNL Retirement Properties, Inc., a
public, unlisted real estate investment trust; as well as, a Director and
President of its advisor, CNL Retirement Corp. Mr. Bourne also serves as a
Director of CNL Bank. He has served as a Director since 1992, Vice Chairman of
the Board since February 1996, Secretary and Treasurer from February 1996
through 1997, and President from July 1992 through February 1996, of Commercial
Net Lease Realty, Inc., a public real estate investment trust listed on the New
York Stock Exchange. Mr. Bourne also serves as Director, President and
Treasurer for various affiliates of CNL Financial Group, Inc. including, CNL
Investment Company, CNL Securities Corp. and CNL Institutional Advisors, Inc.,
a registered investment advisor for pension plans. Mr. Bourne began his career
as a certified public accountant employed by Coopers & Lybrand, Certified
Public Accountants, from 1971 through 1978, where he attained the position of
Tax Manager in 1975. Mr. Bourne graduated from Florida State University in 1970
where he received a B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master
of Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a
subsidiary of APF from December 1999 until December 2000. Previously, he served
as Executive Vice President of APF from January 1996 to September 1999. Mr.
Walker joined the Advisor in September 1994, as Senior Vice President
responsible for Research and Development. He served as the Chief Operating
Officer of the Advisor from April 1995 until September 1999 and as Executive
Vice President from January 1996 until September 1999, at which time it merged
with APF. Mr. Walker also served as Executive Vice President of CNL Hospitality
Properties, Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors,
Inc.) from 1997 to October 1998. From May 1992 to May 1994, he was Executive
Vice President for Finance and Administration and Chief Financial Officer of Z
Music, Inc., a cable television network which was subsequently acquired by
Gaylord Entertainment, where he was responsible for overall financial and
administrative management and planning. From January 1990 through April 1992,
Mr. Walker was Chief Financial Officer of the First Baptist Church in Orlando,
Florida. From April 1984 through December 1989, he was a partner in the
accounting firm of Chastang, Ferrell & Walker, P.A., where he was the partner
in charge of audit and consulting services, and from 1981 to 1984, Mr. Walker
was a Senior Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum
laude graduate of Wake Forest University with a Bachelor of Science degree in
Accountancy and is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to
Executive Vice President and Chief Financial Officer of APF in July 2000. He
served as Senior Vice President and Chief Financial Officer of APF since
January 1997. Mr. Shackelford also served as Secretary and Treasurer of APF
since September 1999. He also served as Chief Financial Officer of the Advisor
from September 1996 to September 1999. From March 1995 to July 1996, Mr.
Shackelford was a senior manager in the national office of Price Waterhouse LLP
where he was responsible for advising foreign clients seeking to raise capital
and a public listing in the United States. From August 1992 to March 1995, he
was a manager in the Paris, France office of Price Waterhouse, serving several
multi-national clients. Mr. Shackelford was an audit staff and senior from 1986
to 1992 in the Orlando, Florida office of Price Waterhouse. Mr. Shackelford
received a Bachelor of Arts degree in Accounting, with honors, and a Master of
Business Administration degree from Florida State University and is a certified
public accountant.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 15, 2001, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 15, 2001, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2000, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------
Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and
operating expenses the lower of cost or 90 percent of administrative services:
the prevailing rate at which $99,772
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 $36,142
affiliates 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 and the property owned
with an affiliate as
tenants-in-common. The management
fee, which will not exceed
competitive 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 of
the General Partners. All or any
portion of the management fee not
taken as to any fiscal year shall be
deferred without interest and may be
taken in such other fiscal year as
the affiliates shall determine.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------
Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates of one or more Properties, in an
amount equal to the lesser of (i)
one-half of a competitive real
estate commission, or (ii) three
percent of the sales price of such
Property or Properties. Payment of
such fee shall be made only if
affiliates of the General Partners
provide a substantial amount of
services in connection with the sale
of a Property or Properties and
shall be subordinated to certain
minimum returns to the Limited
Partners. However, if the net sales
proceeds are reinvested in a
replacement Property, no such real
estate disposition fee will be
incurred until such replacement
Property is sold and the net sales
proceeds are distributed.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to one percent of Partnership
Partnership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to five percent of Partnership
Partnership net sales proceeds distributions of such net sales
from a sale or sales not in proceeds, subordinated to certain
liquidation of the Partnership minimum returns to the Limited
Partners.
Amount Incurred
Type of Compensation For the Year
And Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------
General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following order
or priority: (i) first, to pay all
debts and liabilities of the
Partnership and to establish
reserves; (ii) second, to Partners
with positive capital account
balances, determined after the
allocation of net income, net loss,
gain and loss, in proportion to such
balances, up to amounts sufficient
to reduce such balances to zero; and
(iii) thereafter, 95% to the Limited
Partners and 5% to the General
Partners.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Certified Public Accountants
Balance Sheets at December 31, 2000 and 1999
Statements of Income for the years ended December 31, 2000,
1999, and 1998
Statements of Partners' Capital for the years ended December
31, 2000, 1999, and 1998
Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998
Notes to Financial Statements
2. Financial Statement Schedules
Schedule 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 XIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIII, Ltd. (Included as Exhibit 3.2
to Registration Statement No. 33-53672-01 on Form
S-11 and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XIII, Ltd. (Included as Exhibit
4.2 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, incorporated
herein by reference.)
10.1 Management Agreement between CNL Income Fund XIII,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on March 31, 1994, and
incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
(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 XIII, 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 XIII, LTD.
(A Florida Limited Partnership)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999 and 1998
Additions Deductions
--------------------------------- --------------------------------
Collected
or Deter-
Balance at Charged to Charged to Deemed mined to Balance
Beginning Costs and Other Uncollec- be Col- at End
Year Description of Year Expenses Accounts tible lectible of Year
- ---------- ----------------- -------------- --------------- ---------------- ------------- -------------- -----------
1998 Allowance for
doubtful
accounts (a) $ -- $ -- $ 532 (b) $ -- (c) $ -- $ 532
============== =============== ================ ============= ============== ===========
1999 Allowance for
doubtful
accounts (a) $ 532 $ -- $ -- (b) $ -- (c) $ 532 $ --
============== =============== ================ ============= ============== ===========
2000 Allowance for
doubtful
accounts (a) $ -- $ -- $ 172,975 (b) $ -- (c) $ 115,683 $ 57,292
============== =============== ================ ============= ============== ===========
(a) Deducted from receivables and accrued rental income on the balance
sheet.
(b) Reduction of rental, earned 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:
Arby's Restaurant:
Philadelphia, Pennsylvania (j- 274,580 - - -
Burger King Restaurants:
Cincinnati, Ohio - $256,901 $669,537 - -
Dayton, Ohio - 211,835 771,616 - -
Lafayette, Indiana - 247,183 723,304 - -
Pineville, Louisiana - 174,843 618,815 - -
Checkers Drive-In Restaurants:
Houston, Texas - 445,389 - - -
Port Richey, Florida - 380,055 - - -
Pensacola, Florida - 280,409 - - -
Orlando, Florida - 424,323 - - -
Boca Raton, Florida - 501,416 - - -
Venice, Florida - 374,675 - - -
Woodstock, Georgia - 386,638 - - -
Lakeland, Florida - 326,175 - - -
Denny's Restaurants:
Peoria, Arizona - 460,107 - - -
Mesa, Arizona - 530,494 - 540,983 -
Golden Corral Family
Steakhouse Restaurants:
Dallas, Texas - 611,589 1,071,838 - -
San Antonio, Texas - 625,527 964,122 - -
Panama City, Florida - 617,016 - 1,103,437 -
Hardee's Restaurants:
Ashland, Alabama - 197,336 417,418 - -
Bloomingdale, Tennessee - 160,149 424,977 - -
Blytheville, Arkansas - 164,004 - - -
Chapin, South Carolina - 218,639 460,364 - -
Kingsport, Tennessee - 204,516 - - -
Opelika, Alabama - 240,363 412,621 - -
Spartanburg, South Carolina - 226,815 431,574 - -
Jack in the Box Restaurants:
Sacramento, California - 323,929 601,054 - -
Houston, Texas - 315,842 590,708 - -
Arlington, Texas - 404,752 592,173 - -
Lions Choice Restaurant:
Overland Park, Kansas - 452,691 - - -
Long John Silver's Restaurants:
Penn Hills, Pennsylvania (k) - 292,370 356,444 - -
Arlington, Texas - 362,939 - - -
Johnstown, Pennsylvania - 254,412 - - -
Orlando, Florida - 299,696 139,676 - -
Austin, Texas - 463,937 - - -
Steak -n- Shake Restaurant:
Tampa, Florida - 372,748 - - -
Wendy's Old Fashioned Hamburger
Restaurant:
Salisbury, Maryland - 290,195 641,709 - -
----------- ----------- ---------- -------
$12,374,488 $9,887,950 $1,644,420 -
=========== =========== ========== =======
Property of Joint Venture in Which
the Partnership has a 50% Interest
and has Invested in Under an
Operating Lease:
Hardee's Restaurant:
Attalla, Alabama - $196,274 $434,428 - -
=========== =========== ========== =======
Property in Which the Partnership
has a 66.13% Interest as Tenants-
In-Common and has Invested in
Under an Operating Lease:
Arby's Restaurant:
Arvada, Colorado - $260,439 $545,126 - -
=========== =========== ========== =======
Property of Joint Venture in Which
the Partnership has a 27.8%
Interest and has Invested in Under
an Operating Lease:
Denny's Restaurant:
Salem, Ohio - $131,762 - - -
=========== =========== ========== =======
Property in Which the Partnership
has a 63.09% Interest as Tenants-
In-Common and has Invested in
Under an Operating Lease:
Burger King Restaurant:
Akron, Ohio (h) - $355,595 $517,030 - -
=========== =========== ========== =======
Property in Which the Partnership
has a 47.83% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:
Chevy's Fresh Mex Restaurant:
Smithfield, North Carolina - $976,357 $974,016 - -
=========== =========== ========== =======
Properties the Partnership has
Invested in Under Direct
Financing Leases
Arby's Restaurant
Philadelphia, Pennsylvania - - $515,075 - -
Denny's Restaurant
Peoria, Arizona - - - $613,090 -
Hardee's Restaurants
Blytheville, Arkansas - - 450,014 - -
Huntingdon, Tennessee - 100,836 427,932 - -
Kingsport, Tennessee - - 484,785 - -
Parsons, Tennessee - 101,332 409,671 - -
Trenton, Tennessee - 147,232 442,640 - -
Jack in the Box Restaurant:
Cleburne, Texas - 145,890 496,797 - -
Lion's Choice Restaurant:
Overland Park, Kansas - - 611,694 - -
Long John Silver's Restaurants:
Arlington, Texas - - 449,369 - -
Johnstown, Pennsylvania - - - 427,552 -
Austin, Texas - - 517,109 - -
Quincy's Restaurant:
Mount Airy, North Carolina - 212,852 827,991 - -
Steak-n-Shake Restaurant:
Tampa, Florida - - - 537,404 -
----------- ----------- ---------- -------
$708,142 $5,633,077 $1,578,046 -
=========== =========== ========== =======
Property of Joint Venture in
Which the Partnership has a
27.8% Interest and has Invested
in Under Direct Financing Lease:
Denny's Restaurant:
Salem, Ohio - - $371,836 - -
=========== =========== ========== =======
Gross Amount at Which Life on Which
Carried at Close of Period (c) Depreciation in
------------------------------------------ Date Latest Income
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
------------ ------------ ------------ ---------- ------- ------- ------------
274,580 (f) 274,580 - 1993 07/93 (d)
$256,901 $669,537 $926,438 $165,703 1988 07/93 (b)
211,835 771,616 983,451 190,966 1988 07/93 (b)
247,183 723,304 970,487 179,009 1989 07/93 (b)
174,843 618,815 793,658 153,150 1990 07/93 (b)
445,389 - 445,389 (g) - 03/94 (g)
380,055 - 380,055 (g) - 03/94 (g)
280,409 - 280,409 (g) - 03/94 (g)
424,323 - 424,323 (g) - 03/94 (g)
501,416 - 501,416 (g) - 03/94 (g)
374,675 - 374,675 (g) - 03/94 (g)
386,638 - 386,638 (g) - 10/94 (g)
326,175 - 326,175 (g) - 04/95 (g)
460,107 (f) 460,107 - 1994 10/93 (d)
530,494 540,983 1,071,477 119,733 1994 12/93 (b)
611,589 1,071,838 1,683,427 272,413 1991 05/93 (b)
625,527 964,122 1,589,649 243,804 1993 06/93 (b)
617,016 1,103,437 1,720,453 249,986 1994 11/93 (b)
197,336 417,418 614,754 103,306 1992 07/93 (b)
160,149 424,977 585,126 105,177 1992 07/93 (b)
164,004 (f) 164,004 - 1991 07/93 (d)
218,639 460,364 679,003 113,935 1993 07/93 (b)
204,516 (f) 204,516 - 1992 07/93 (d)
240,363 412,621 652,984 102,119 1992 07/93 (b)
226,815 431,574 658,389 106,810 1993 07/93 (b)
323,929 601,054 924,983 150,401 1992 06/93 (b)
315,842 590,708 906,550 146,247 1993 07/93 (b)
404,752 592,173 996,925 146,556 1993 08/93 (b)
452,691 (f) 452,691 - 1993 12/93 (d)
292,370 356,444 648,814 18,627 1993 07/93 (k)
362,939 (f) 362,939 - 1993 08/93 (d)
254,412 (f) 254,412 - 1993 08/93 (d)
299,696 139,676 439,372 33,255 1983 11/93 (b)
463,937 (f) 463,937 - 1993 12/93 (d)
372,748 (f) 372,748 - 1994 12/93 (d)
290,195 641,709 931,904 148,545 1993 01/94 (b)
------------ ------------ ------------ ----------
$12,374,488 $11,532,370 $23,906,858 $2,749,742
============ ============ ============ ==========
$196,274 $434,428 $630,702 $102,080 1993 11/93 (b)
============ ============ ============ ==========
$260,439 $545,126 $805,565 $114,052 1994 09/94 (b)
============ ============ ============ ==========
$131,762 (f) $131,762 - 1991 03/95 (d)
============ ============ ============ ==========
$355,595 $517,030 $872,625 $67,691 1970 01/97 (b)
============ ============ ============ ==========
$976,357 $974,016 $1,950,373 $97,492 1995 12/97 (b)
============ ============ ============ ==========
- (f) (f) (d) 1993 07/93 (d)
- (f) (f) (d) 1994 10/93 (d)
- (f) (f) (d) 1991 07/93 (d)
(f) (f) (f) (e) 1992 07/93 (e)
- (f) (f) (d) 1992 07/93 (d)
(f) (f) (f) (e) 1992 07/93 (e)
(f) (f) (f) (e) 1992 07/93 (e)
(f) (f) (f) (e) 1988 11/93 (e)
- (f) (f) (d) 1993 12/93 (d)
- (f) (f) (d) 1993 08/93 (d)
- (f) (f) (d) 1993 08/93 (d)
- (f) (f) (d) 1993 12/93 (d)
(f) (f) (f) (e) 1992 07/93 (e)
- (f) (f) (d) 1994 12/93 (d)
- (f) (f) (d) 1991 03/95 (d)
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE 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 $ 24,485,938 $ 1,697,320
Reclassified from net investment in direct financing lease 864,929 (11,536 )
Depreciation Expense -- 421,840
------------------ -------------------
Balance, December 31, 1998 25,350,867 2,107,624
Disposition (935,524 ) (112,983 )
Reclassified from net investment in direct financing lease 356,444 --
Reclassified to net investment in direct financing lease (360,090 ) (7,805 )
Depreciation expense -- 397,150
------------------ -------------------
Balance, December 31, 1999 24,411,697 2,383,986
Reclassified to net investment in direct financing lease (504,839 ) (17,733 )
Depreciation expense -- 383,489
------------------ -------------------
Balance, December 31, 2000 $ 23,906,858 $ 2,749,742
================== ===================
Property of Joint Venture in Which the Partnership has a 50%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1997 $ 630,702 $ 58,638
Depreciation expense -- 14,480
------------------ -------------------
Balance, December 31, 1998 630,702 73,118
Depreciation expense -- 14,481
------------------ -------------------
Balance, December 31, 1999 630,702 87,599
Depreciation expense -- 14,481
------------------ -------------------
Balance, December 31, 2000 $ 630,702 $ 102,080
================== ===================
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Cost Accumulated
Depreciation
---------------- -----------------
Property in Which the Partnership has a 66.13% Interest as
Tenants-in-Common and has Invested in Under an Operating
Lease:
Balance, December 31, 1997 $ 805,565 $ 59,541
Depreciation expense -- 18,171
---------------- -----------------
Balance, December 31, 1998 805,565 77,712
Depreciation expense -- 18,170
---------------- -----------------
Balance, December 31, 1999 805,565 95,882
Depreciation expense -- 18,170
---------------- -----------------
Balance, December 31, 2000 $ 805,565 $ 114,052
================ =================
Property of Joint Venture in Which the Partnership has a
27.8% Interest and has Invested in Under a Direct
Financing Lease:
Balance, December 31, 1997 $ 131,762 $ --
Depreciation expense (d) -- --
---------------- -----------------
Balance, December 31, 1998 131,762 --
Depreciation expense (d) -- --
---------------- -----------------
Balance, December 31, 1999 131,762 --
Depreciation expense (d) -- --
---------------- -----------------
Balance, December 31, 2000 $ 131,762 $ --
================ =================
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Cost Accumulated
Depreciation
---------------- -----------------
Property in Which the
Partnership has a 63.09%
Interest as
Tenants-In-Common and has
Invested in Under an
Operating Lease:
Balance, December 31, 1997 $ 872,625 $ 15,898
Depreciation expense -- 17,323
---------------- -----------------
Balance, December 31, 1998 872,625 33,221
Depreciation expense -- 17,235
---------------- -----------------
Balance, December 31, 1999 872,625 50,456
Depreciation expense -- 17,235
---------------- -----------------
Balance, December 31, 2000 $ 872,625 $ 67,691
================ =================
Property in Which the
Partnership has a 47.83%
Interest as
Tenants-In-Common has
invested in Under an
Operating Lease:
Balance, December 31, 1997 $ 1,950,373 $ 89
Depreciation expense -- 32,467
---------------- -----------------
Balance, December 31, 1998 1,950,373 32,556
Depreciation expense -- 32,466
---------------- -----------------
Balance, December 31, 1999 1,950,373 65,022
Depreciation expense -- 32,470
---------------- -----------------
Balance, December 31, 2000 $ 1,950,373 $ 97,492
================ =================
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(c) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including the Property owned as
tenants-in-common) for federal income tax purposes was $32,593,862 and
$4,767,863, 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.
CNL INCOME FUND XIII, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
(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 the 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 building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(h) During the year ended December 31, 1997, the Partnership and an
affiliate as tenants-in-common, purchased land and building from CNL BB
Corp., an affiliate of the General Partners, for an aggregate cost of
$872,625.
(i) Effective June 1998, the lease for this Property was terminated,
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value and
will be depreciated over its remaining estimated life of approximately
26 years.
(j) For financial reporting purposes, the undepreciated cost of the
Property in Philadelphia, Pennsylvania was reduced to its estimated net
realizable value due to an impairment in value. The Partnership
recognized the impairment by recording an allowance for loss on assets
in the amount of $297,885 at December 31, 1998. The impairment at
December 31, 1998 represented the difference between the Property's
carrying value and the General Partners' estimate of the net realizable
value of the Property based on an anticipated sales price of this
Property to an interested and unrelated third party. The cost of the
Property presented on this schedule is the gross amount at which the
Property was carried at December 31, 2000, excluding the allowance for
loss on building. Effective May 1999, the Partnership entered into a
new lease and converted the building to a new concept, resulting in the
reclassification of the building portion of the lease as a direct
financing lease.
(k) Effective October 1999, the lease for this Property was amended
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value and
depreciated over its remaining estimated life of approximately 24
years.
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XIII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-53672-01 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XIII, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-53672-01 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XIII, Ltd. (Included as Exhibit 4.2 to
Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XIII, Ltd.
and CNL Investment Company (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994, and incorporated herein by
reference.)
10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated
herein by reference.)
10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated
herein by reference.)