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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 0-23974
CNL INCOME FUND XIV, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3143096
(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 4,500,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market 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 XIV, 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 August 27, 1993, the
Partnership offered for sale up to $45,000,000 of limited partnership interests
(the "Units") (4,500,000 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 February 22, 1994, at which date the
maximum proceeds of $45,000,000 had been received from investors who were
admitted to the Partnership as limited partners ("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
$39,606,055 and were used to acquire 54 Properties, including 18 Properties
consisting of land only and four Properties owned by joint ventures in which the
Partnership is a co-venturer, to pay acquisition fees totaling $2,475,000 to an
affiliate of the General Partners and to establish a working capital reserve for
Partnership purposes.
During the year ended December 31, 1995, the tenant of the Checkers
Property in Knoxville, Tennessee, and the Checkers Property in Dallas, Texas,
exercised its option in accordance with the lease agreements to substitute two
other Properties for these Properties. The Partnership sold the Knoxville and
Dallas Properties to the tenant and used the net sales proceeds to acquire two
Checkers Properties in Coral Springs and St. Petersburg, Florida. During 1996,
Wood-Ridge Real Estate Joint Venture, a joint venture in which the Partnership
is a co-venturer with an affiliate of the General Partners, sold its two
Properties to the tenant. The joint venture reinvested the majority of the net
sales proceeds in four Boston Market Properties (one of which consisted of only
land) and one Golden Corral Property during 1996, and a Taco Bell Property in
Anniston, Alabama, in 1997. During the year ended December 31, 1997, the Port of
Palm Bay took possession of the Property in Riviera Beach, Florida through a
total right of way taking. In addition, in 1997, the Partnership entered into a
joint venture arrangement, CNL Kingston Joint Venture, with affiliates of the
General Partners. During the year ended December 31, 1998, the Partnership sold
one Property in Madison, Alabama and two Properties in Richmond, Virginia, and
reinvested the proceeds, along with the proceeds from the right of way taking in
December 1997 of the Property in Riviera Beach, Florida, in a Property in
Fayetteville, North Carolina, and in a joint venture arrangement, Melbourne
Joint Venture, with an affiliate of the General Partners. During 1999, the
Partnership sold one Property in each of Houston, Texas; Kansas City, Missouri;
Stockbridge, Georgia; and Shelby, North Carolina, and reinvested the majority of
the net sales proceeds in two joint venture arrangements, Bossier City Joint
Venture and Duluth Joint Venture, with affiliates of the General Partners.
During 2000, the Partnership reinvested the majority of the net sales proceeds
it received from the sale of the Property in Houston, Texas, in a Baker's Square
Property located in Niles, Illinois, as tenants-in-common with CNL Income Fund
VI, Ltd., an affiliate of the General Partners and a Florida limited
partnership. In addition, during 2000, the Partnership sold its Property in
Columbus, Ohio and reinvested the net sales proceeds in a Property in Bristol,
Virginia.
As a result of the above transactions, as of December 31, 2000, the
Partnership owned 56 Properties. The 56 Properties include 13 wholly owned
Properties consisting of land only and interests in 12 Properties owned by joint
ventures in which the Partnership is a co-venturer and one Property held as
tenants-in-common with an affiliate of the General Partners. The lessee of the
13 wholly owned Properties consisting of only land 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 Properties are
generally leased on a triple-net basis with the lessees responsible for all
repairs and maintenance, property taxes, insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration for the Merger. On
March 1, 2000, the General Partners and APF announced that they had mutually
agreed to terminate the Agreement and Plan of Merger. The agreement to terminate
the Agreement and Plan of Merger was based, in large part, on the General
Partners' concern that, in light of market conditions relating to publicly
traded real estate investment trusts, the value of the transaction had
diminished. As a result of such diminishment, the General Partners' ability to
unequivocally recommend voting for the transaction, in the exercise of their
fiduciary duties, had become questionable.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership, the
joint ventures in which the Partnership is a co-venturer and the Property held
as tenants-in-common with an affiliate of the General Partners provide for
initial terms ranging from 10 to 20 years (the average being approximately 18
years) and expire between 2008 and 2019. The leases are, in general, 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 $12,000 to $203,600. The 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 (generally the sixth or ninth lease year), the annual base rent required
under the terms of the lease will increase.
Generally, the leases of the Properties provide for two to five
five-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 42 of the Partnership's 56 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 for the 13 wholly owned Properties consisting of only land
are substantially the same as those described above except that the leases
relate solely to the land associated with the Property, with the tenant owning
the buildings currently on the land and having the right, if not in default
under the lease, to remove the buildings from the land at the end of the lease
term.
In January 2000, the Partnership reinvested the majority of the net
sales proceeds it received from the sale of the Property in Houston, Texas, in a
Property located in Niles, Illinois with CNL Income Fund VI, Ltd., a Florida
limited partnership and affiliate of the General Partners, as tenants-in-common,
as described below in "Joint Venture and Tenancy in Common Arrangements." The
lease terms for this Property are substantially the same as the Partnership's
other leases, as described above.
In December 2000, the Partnership reinvested the net sales proceeds
from the sale of its Property in Columbus, Ohio in a Property in Bristol,
Virginia. The lease terms for this Property are substantially the same as the
Partnership's other leases, as described above.
In October 2000, the lease relating to the Property in Raleigh, North
Carolina held by Wood-Ridge Real Estate Joint Venture was amended to provide for
a reduction in rents and an extension of the lease term. All other lease terms
remained unchanged. However, the General Partners do not anticipate that any
decrease in rental income relating to this amendment would have a material
adverse affect on the Partnership's financial position or results of operations.
In October 2000, Elias Brothers Restaurants, Inc. filed for bankruptcy
and rejected the one lease it had with the Partnership relating to a Big Boy
Property in Akron, Ohio and ceased making rental payments on this lease. The
Partnership will not recognize rental and earned income from the vacant Property
until a new tenant for the Property is located or until the Property is sold and
the proceeds from such sale are reinvested in an additional Property. The lost
revenues resulting from the vacant Property, as described above, could have an
adverse effect on the results of operations of the Partnership, if the
Partnership is not able to re-lease the Property in a timely manner. The General
Partners are currently seeking either a new tenant or a purchaser for the vacant
Property.
Major Tenants
During 2000, four lessees of the Partnership, Flagstar Enterprises,
Inc., Jack in the Box Inc., Checkers Drive-In Restaurants, 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 Properties owned by joint ventures and a Property held as
tenants-in-common with an affiliate). As of December 31, 2000, Flagstar
Enterprises, Inc. was the lessee under leases relating to six restaurants, Jack
in the Box Inc. was the lessee under leases relating to six restaurants,
Checkers Drive-In Restaurants, Inc. was the lessee under leases relating to 13
restaurants, and Golden Corral Corporation was the lessee under leases relating
to five restaurants. It is anticipated that, based on the minimum rental
payments required by the leases, that these four lessees will each continue to
contribute more than ten percent of the Partnership's total rental and earned
income in 2001. In addition, five Restaurant Chains, Hardee's, Denny's, Jack in
the Box, Checkers, and Golden Corral Family Steakhouse Restaurants ("Golden
Corral"), 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 Properties owned by joint ventures and a Property
held as tenants-in-common with an affiliate). In 2001, it is anticipated that
these five Restaurant Chains each will continue to account for more than ten
percent of the total rental and earned income to which the Partnership is
entitled under the terms of the leases. Any failure of these lessees or
Restaurant Chains could materially affect the Partnership's income if the
Partnership is not able to re-lease the Properties in a timely manner. As of
December 31, 2000, Golden Corral Corporation leased Properties with an aggregate
carrying value in excess of 20 percent of the total assets of the Partnership.
Joint Venture and Tenancy in Common Arrangements
The Partnership has entered into the following joint venture
arrangements: Attalla Joint Venture and Salem Joint Venture, each with CNL
Income Fund XIII, Ltd.; CNL Kingston Joint Venture with CNL Income Fund XVII,
Ltd.; Melbourne Joint Venture with CNL Income Fund VI, Ltd.; Bossier City Joint
Venture with CNL Income Fund VIII, Ltd. and CNL Income Fund XII, Ltd.; Duluth
Joint Venture with CNL Income Fund VII, Ltd., and Wood-Ridge Real Estate Joint
Venture, with CNL Income Fund XV, Ltd. Each of the CNL Income Funds is an
affiliate of the General Partners. The affiliates are limited partnerships
organized pursuant to the laws of the state of Florida. Attalla Joint Venture,
Salem Joint Venture, Kingston Joint Venture, Melbourne Joint Venture, Bossier
City Joint Venture and Duluth Joint Venture were formed to purchase or construct
and hold one restaurant Property each. Wood-Ridge Real Estate Joint Venture, was
formed to purchase and hold six Properties.
The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint ventures in accordance with their respective percentage interests in the
joint ventures. The Partnership has a 50 percent interest in Attalla Joint
Venture, a 72.2% interest in Salem Joint Venture, a 39.94% interest in CNL
Kingston Joint Venture, a 50 percent interest in Melbourne Joint Venture, an 11
percent interest in Bossier City Joint Venture, a 44 percent interest in Duluth
Joint Venture, and a 50 percent interest in Wood-Ridge Real Estate Joint
Venture. The Partnership and its joint venture partners are also jointly and
severally liable for all debts, obligations and other liabilities of the joint
ventures.
Wood-Ridge Real Estate Joint Venture, Attalla Joint Venture, Salem
Joint Venture, Bossier City Joint Venture and Duluth Joint Venture each have an
initial term of 30 years and CNL Kingston Joint Venture and Melbourne Joint
Venture each have an initial term of 20 years and, after the expiration of the
initial term, continues in existence from year to year unless terminated at the
option of either 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 unless agreed to by
mutual agreement of the Partnership and its joint venture partners to reinvest
the sales proceeds in replacement Properties, and by mutual agreement of the
Partnership and its joint venture partners to dissolve the joint venture.
The Partnership shares management control equally with affiliates of
the General Partners for each 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, Wood-Ridge Real
Estate Joint Venture, Salem Joint Venture, CNL Kingston Joint Venture, Melbourne
Joint Venture, Bossier City Joint Venture, and Duluth Joint Venture is
distributed 50 percent, 50 percent, 72.2%, 39.94%, 50 percent, 11 percent, and
44 percent, respectively, to the Partnership and the balance is distributed to
each of the other joint venture partners. 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, in January 2000, the
Partnership entered into an agreement to hold a Baker's Square Property as
tenants-in-common with CNL Income Fund VI, Ltd., a Florida limited partnership
and an affiliate of the General Partners. The agreement provides for the
Partnership and the affiliate to share in the profits and losses of the Property
in proportion to each co-venturer's percentage interest. The Partnership owns an
approximate 26 percent interest in this Property.
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 had agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of APF, the parent company of CNL
Fund Advisors, Inc., perform certain services for the Partnership. In addition,
the General Partners have available to them the resources and expertise of the
officers and employees of CNL Financial Group, Inc. (formerly CNL 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 56 Properties. Of the 56
Properties, 43 are owned by the Partnership in fee simple and 12 are owned
through joint venture arrangements and one is owned with an affiliate as
tenants-in-common. 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 15,900
to 100,100 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 4
Arizona 3
Colorado 1
Florida 9
Georgia 5
Illinois 1
Kansas 2
Louisiana 2
Minnesota 1
Mississippi 1
North Carolina 7
Nevada 1
Ohio 4
South Carolina 1
Tennessee 5
Texas 8
Virginia 1
-------
TOTAL PROPERTIES 56
=======
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 13 Checkers Properties owned by the Partnership are
owned by the tenants. The buildings generally are rectangular and are
constructed from various combinations of stucco, steel, wood, brick and tile.
The sizes of the buildings owned by the Partnership range from approximately
2,100 to 11,400 square feet. All buildings on Properties are freestanding and
surrounded by paved parking areas. Buildings are suitable for conversion to
various uses, although modifications may be required prior to use for other than
restaurant operations. As of December 31, 2000, the Partnership had no plans for
renovation of the Properties. Depreciation expense is computed for buildings and
improvements using the straight-line method using depreciable lives of 40 years
for federal income tax purposes.
As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures for federal income tax purposes was
$32,470,424 and $10,824,175, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
5 & Diner 1
Bakers Square 1
Bennigan's 1
Big Boy 1
Boston Market 2
Burger King 1
Checkers 13
Denny's 5
El Ranchito Restaurant 1
Golden Corral 5
Hardee's 6
IHOP 1
Jack in the Box 6
LeeAnn Chin Chinese Cuisine 1
Long John Silver's 5
Razzleberries 1
Roadhouse Grill 1
Taco Bell 2
Other 2
-------
TOTAL PROPERTIES 56
=======
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, and 1998, 96 percent, 98 percent, and 93
percent, respectively, of the Properties were occupied. At December 31, 1997 and
1996, all of the Properties were occupied. The following is a schedule of the
average rent per Property for each of the years ended December 31:
2000 1999 1998 1997 1996
------------- ------------- --------------- -------------- --------------
Rental Revenues (1) $ 4,006,450 $ 4,190,352 $ 3,805,764 $4,283,030 $4,347,586
Properties (2) 54 55 57 58 57
Average Rent per
Property $ 74,194 $ 76,188 $ 66,768 $ 73,845 $ 76,273
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Property owned through a tenancy in common arrangement. Rental revenues
have been adjusted, as applicable, for any amounts for which the
Partnership has established an allowance for doubtful accounts.
(2) Excludes Properties that were vacant and generated no revenue.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for the next ten years and thereafter.
Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- ----------------- --------------------------
2001 -- $ -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 -- -- --
2006 -- -- --
2007 -- -- --
2008 3 400,940 11.30%
2009 2 207,738 5.85%
2010 -- -- --
Thereafter 49 2,940,578 82.85%
---------- ----------------- -------------
Total (1) 54 $ 3,549,256 100.00%
========== ================= =============
(1) Excludes two Properties which were vacant at December 31, 2000.
Leases with Major Tenants. The terms of each of the leases with the
Partnership's major tenants as of December 31, 2000 (see Item 1. Business -
Major Tenants), are substantially the same as those described in Item 1.
Business - Leases.
Flagstar Enterprises, Inc. leases six Hardee's restaurants. The initial
term of each lease is 20 years (expiring in 2013) and the average minimum base
annual rent is approximately $69,500 (ranging from approximately $59,100 to
$81,800).
Jack in the Box Inc. leases six Jack in the Box restaurants. The
initial term of each lease is 18 years (expiring in 2011) and the average
minimum base annual rent is approximately $83,600 (ranging from approximately
$62,200 to $99,900).
Checkers Drive-In Restaurants, Inc. leases 13 Checkers restaurants. The
initial term of each lease is 20 years (expiring between 2014 and 2015) and the
average minimum base annual rent is approximately $34,800 (ranging from
approximately $18,900 to $54,500). The tenant owns the buildings currently on
the land and has the right, if not in default under the leases, to remove the
buildings from the land at the end of the lease term.
In addition, Golden Corral Corporation leases five Golden Corral
restaurants. The initial term of each lease is 15 years (expiring between 2008
and 2016) and the average minimum base annual rent is approximately $166,200
(ranging from approximately $127,400 to $203,600).
Item 3. Legal Proceedings
Neither the Partnership, nor its General Partners or any affiliate of
the General Partners, nor any of their respective properties, is a party to 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 3,011 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 have 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 $8.51 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, net of commissions.
2000(1) 1999(1)
------------------------ --------- -- ---------- -- ----------- -------- --- ---------- --- -----------
--------- -- ---------- -- ----------- -------- --- ---------- --- -----------
High Low Average High Low Average
------------------------ --------- ---------- ----------- -------- ---------- -----------
--------- ---------- ----------- -------- ---------- -----------
First Quarter $7.40 $ 7.35 $ 7.38 (2) (2) (2)
------------------------
------------------------
Second Quarter 9.00 6.20 8.14 $8.62 $ 8.62 $ 8.62
------------------------
Third Quarter 6.74 6.12 6.66 8.29 7.17 7.76
------------------------
Fourth Quarter 7.36 6.53 6.96 8.41 7.56 7.88
(1) A total of 24,980 and 16,664 Units were transferred other than pursuant
to the Plan for the years ended December 31, 2000 and 1999,
respectively.
(2) No transfers 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 $3,712,520 to the Limited Partners. Distributions
of $928,130 were declared at the close of each of the calendar quarters during
2000 and 1999. No amounts distributed to partners for the years ended December
31, 2000 and 1999, are required to be or have been treated by the Partnership as
a return of capital for purposes of calculating the Limited Partners' return on
their adjusted capital contributions. No distributions have been made to the
General Partners to date. These amounts include monthly distributions made in
arrears for the Limited Partners electing to receive such distributions on this
basis.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
(b) Not applicable.
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
--------------- -------------- -------------- --------------- ----------------
--------------- -------------- -------------- --------------- ----------------
Year ended December
31:
- --------------------------
- --------------------------
Revenues (1) $4,107,737 $4,191,709 $3,831,810 $4,268,693 $ 4,503,039
- --------------------------
Net income (2) 3,191,638 3,071,122 3,199,087 3,665,940 3,916,329
- --------------------------
Cash distributions
declared 3,712,520 3,712,520 3,712,520 3,712,520 3,712,522
- --------------------------
Net income per Unit
(2) 0.71 0.68 0.70 0.81 0.86
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Cash distributions
declared per Unit 0.83 0.83 0.83 0.83 0.83
- --------------------------
- --------------------------
At December 31:
- --------------------------
Total assets $39,632,587 $40,072,897 $40,538,159 $40,984,624 $ 41,045,849
- --------------------------
Partners' capital 38,313,444 38,834,326 39,475,724 39,989,157 40,035,737
(1) Revenues include equity in earnings of the joint ventures and
adjustments to accrued rental income due to the tenants of certain
Properties filing for bankruptcy.
(2) Net income for the year ended December 31, 2000 includes $75,930 from a
loss on a sale of assets and $98,822 for a provision for loss on
assets. Net income for the year ended December 31, 1999 includes
$37,369 from gains on the sales of assets, $182,089 from losses on
sales of assets and $27,211 for a provision for loss on assets. Net
income for the year ended December 31, 1998 includes $37,155 for a
provision for loss on assets and $112,206 from gains on sales of
assets.
The above selected financial data should be read in conjunction with
the financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on 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, which are 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
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of December 31, 2000, the Partnership owned 56 Properties, either
directly or indirectly through joint venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital for the years ended
December 31, 2000, 1999, and 1998, was cash from operations (which includes cash
received from tenants, distributions from joint ventures and tenancy in common
and interest received, less cash paid for expenses). Cash from operations was
$3,840,163, $3,545,471, and $3,514,544 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 previous year, was primarily a result of
changes in income and expenses as described in "Results of Operations" below and
changes in the Partnership's working capital during each of the respective
years.
Other sources and uses of capital included the following during the
years ended December 31, 2000, 1999, and 1998.
In January 1998, the Partnership sold its Property in Madison, Alabama
and two Properties in Richmond, Virginia, to third parties for a total of
$1,667,462 and received net sales proceeds of $1,606,702, resulting in a total
gain of $70,798 for financial reporting purposes. These Properties were
originally acquired by the Partnership in 1993 and 1994, and had costs totaling
approximately $1,393,400, excluding acquisition fees and miscellaneous
acquisition expenses; therefore, the Partnership sold these Properties for a
total of $213,300 in excess of their original purchase prices. 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 these sales.
In April 1998, the Partnership reinvested a portion of the net sales
proceeds from the sale of the Property in Madison, Alabama in a joint venture
arrangement, Melbourne Joint Venture, with an affiliate of the General Partners,
to construct and hold one restaurant Property, at a total cost of $1,052,552. As
of December 31, 2000, the Partnership had contributed approximately $539,100,
and owned a 50 percent interest in the profits and losses of the joint venture.
In April 1998, the Partnership reached an agreement to accept $360,000
for the Property in Riviera Beach, Florida, which was taken through a right of
way taking in December 1997. The Partnership had received preliminary sales
proceeds of $318,592 as of December 31, 1997. Upon agreement of the final sales
price of $360,000, and receipt of the remaining sales proceeds of $41,408, the
Partnership recognized a gain of $41,408 for financial reporting purposes. This
Property was originally acquired by the Partnership in 1994 and had a cost of
approximately $276,400, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold this Property for a total of
approximately $83,600 in excess of its original purchase price. In October 1998,
the Partnership reinvested the net sales proceeds from the right of way taking
of the Property in Riviera Beach, Florida in a Property in Fayetteville, North
Carolina, as described below.
In October 1998, the Partnership reinvested approximately $1,537,000 of
the net sales proceeds received from the sale of the Properties in Richmond,
Virginia, and the right of way taking of the Property in Riviera Beach, Florida,
and a portion of the net sales proceeds received from the sale of the Property
in Madison, Alabama, along with additional funds, in a Property located in
Fayetteville, North Carolina. The Partnership acquired the Property from CNL
First Corp., an affiliate of the General Partners. The affiliate had purchased
and temporarily held title to the Property in order to facilitate the
acquisition of the Property by the Partnership. The purchase price paid by the
Partnership represented the costs incurred by the affiliate to acquire the
Property, including closing costs.
In May 1999, the Partnership sold its Property in Stockbridge, Georgia,
to a third party for $700,000 and received net sales proceeds of $696,300. As a
result of this transaction, the Partnership recognized a loss of $60,882 for
financial reporting purposes. During 1999, the Partnership reinvested a portion
of the net sales proceeds in Bossier City Joint Venture and Duluth Joint
Venture, as described below. The Partnership intends to use the remaining net
sales proceeds to pay Partnership liabilities.
In November 1999, the Partnership sold its Property in Shelby, North
Carolina, to a third party for $527,370 and received net sales proceeds of
$494,178. As a result of this transaction, the Partnership recognized a loss of
$121,207 for financial reporting purposes. In December 1999, the Partnership
reinvested these net sales proceeds in Duluth Joint Venture, as described below.
In December 1999, the Partnership sold its Property Kansas City,
Missouri to a related party for $270,000 and received net sales proceeds of
$268,450, resulting in a gain of $20,718 for financial reporting purposes. This
Property was originally acquired by the Partnership in 1994 at a cost of
approximately $209,300, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold this Property for approximately
$59,200 in excess of its original purchase price. In December 1999, the
Partnership reinvested a portion of these net sales proceeds in Duluth Joint
Venture, as described below. In September 2000, the Partnership reinvested the
remaining net sales proceeds in an additional Property in Bristol, Virginia, as
described below. The Partnership will distribute 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.
In addition, in December 1999, the Partnership sold its Property in
Houston, Texas to a third party for $387,812 and received net sales proceeds of
$385,673, resulting in a gain of $16,651 for financial reporting purposes. This
Property was originally acquired by the Partnership in 1994 at a cost of
approximately $311,800, excluding acquisition fees and miscellaneous acquisition
expenses; therefore, the Partnership sold this Property for approximately
$73,900 in excess of its original purchase price. In January 2000, the
Partnership reinvested these net sales proceeds in a Property in Niles,
Illinois, as tenants-in-common with CNL Income Fund VI, Ltd., a Florida limited
partnership and an affiliate of the General Partners. The Partnership acquired
this Property from CNL BB Corp., an affiliate of the General Partners. The
affiliate had purchased and temporarily held title to the Property in order to
facilitate the acquisition of the Property by the Partnership. The purchase
price paid by the Partnership represented the costs incurred by the affiliate to
acquire the Property, including closing costs. The transaction, or a portion
thereof, relating to the sale of the Property in Houston, Texas, and the
reinvestment of the net sales proceeds, was structured to qualify as a like-kind
exchange transaction for federal income tax purposes. As of December 31, 2000,
the Partnership had a 26 percent interest as a tenant-in-common.
In November 1999, the Partnership reinvested a portion of the net sales
proceeds from the sale of the Property in Stockbridge, Georgia, in a joint
venture arrangement, Bossier City Joint Venture, with CNL Income Fund VII, Ltd.
and CNL Income Fund XII, Ltd., both Florida limited partnerships and affiliates
of the General Partners, to purchase and hold one restaurant Property. As of
December 31, 2000, the Partnership had contributed approximately $145,100 and
had an 11 percent interest in the profits and losses of the joint venture.
In addition, in December 1999, the Partnership reinvested the net sales
proceeds from the sale of the Property in Shelby, North Carolina and a portion
of the net sales proceeds from the sales of the Properties in Stockbridge,
Georgia and Kansas City, Missouri, in a joint venture arrangement, Duluth Joint
Venture, with CNL Income Fund VII, Ltd., a Florida limited partnership and
affiliate of the General Partners, to construct and hold on restaurant Property.
As of December 31, 2000, the Partnership had contributed approximately $855,200
to purchase land and pay for construction costs relating to this joint venture.
As of December 31, 2000, the Partnership had a 44 percent interest in the
profits and losses of the joint venture.
In September 2000, the Partnership sold its Property in Columbus, Ohio
for and received net sales proceeds of $1,631,946, resulting in a loss of
$75,930 for financial reporting purposes. In November 2000, the Partnership
reinvested the net sales proceeds in a Golden Corral Property in Bristol,
Virginia. In connection therewith, the Partnership entered into a long-term,
triple-net lease with terms substantially the same as its other leases. The
Partnership acquired the Property from CNL BB Corp., an affiliate of the General
Partners. The affiliate had purchased and temporarily held title to the Property
in order to facilitate the acquisition of the Property by the Partnership. The
purchase price paid by the Partnership represented the costs incurred by the
affiliate to acquire the Property, including closing costs.
None of the Properties owned by the Partnership, the joint ventures or
tenancy in common arrangements in which the Partnership owns an interest, is or
may be encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners. The Partnership will not
borrow under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners further have represented that
they will use their reasonable efforts to structure any borrowing so that it
will not constitute "acquisition indebtedness" for federal income tax purposes
and also will limit the Partnership's outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. Affiliates of the General
Partners from time to time incur certain operating expenses on behalf of the
Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, rental income from the Partnership's Properties and net
sales proceeds are invested in money market accounts or other short-term, highly
liquid investments such as demand deposit accounts at commercial banks, money
market and certificates of deposit accounts with less than a 30-day maturity
date, pending the Partnership's use of such funds to pay Partnership expenses,
to make distributions to partners, or to reinvest in additional Properties. At
December 31, 2000, the Partnership had $1,038,555 invested in such short-term
investments as compared to $1,543,691 at December 31, 1999. The decrease in cash
was primarily attributable to the fact that the Partnership reinvested the net
sales proceeds from the 1999 sale of its Property in Houston, Texas in a
Property in Niles, Illinois as tenants-in-common with affiliates of the General
Partners. As of December 31, 2000, the average interest rate earned on the
rental income deposited in demand deposit accounts at commercial banks was
approximately three percent annually. The funds remaining at December 31, 2000
will be used to pay distributions and other liabilities.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because 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 primarily on current cash from operations, and for the years
ended December 31, 1999 and 1998, anticipated future cash from operations, the
Partnership declared distributions to the Limited Partners of $3,712,520 for
each of the years ended December 31, 2000, 1999, and 1998. This represents
distributions of $0.83 per Unit for each of the years ended December 31, 2000,
1999, and 1998. No amounts distributed to the Limited Partners for the years
ended 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 of their adjusted capital contributions. No distributions were
made to the General Partners for the years ended December 31, 2000, 1999, and
1998. The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis.
During 2000, the general partners waived their right to receive future
distributions from the Partnership, including both distributions of operating
cash flow and distributions of liquidation proceeds, to the extent that the
cumulative amount of such distributions would exceed the balance in the general
partners' capital account as of December 31, 1999. Accordingly, the General
Partners were not allocated any net income and did not receive any distributions
during the year ended December 31, 2000.
At December 31, 2000 and 1999, the Partnership owed $130,423 and
$76,976, respectively, to affiliates for accounting and administrative services
and management fees. As of March 15, 2001, the Partnership had reimbursed the
affiliates $20,239 of such amounts. Other liabilities, including distributions
payable, increased to $1,188,720 at December 31, 2000, from $1,161,595 at
December 31, 1999. Total liabilities at December 31, 2000, to the extent they
exceed cash and cash equivalents at December 31. 2000, will be paid from future
cash from operations, and in the event the General Partners elect to make
additional contributions, from General Partners' contributions.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
The Partnership owned and leased 50 wholly owned Properties during 1998
(including three Properties that were sold during 1998), 47 wholly owned
Properties during 1999 (including four Properties that were sold during 1999),
and 44 wholly owned Properties during 2000 (including one Property that was sold
during 2000). In addition, during 1998, the Partnership was a co-venturer in
five separate joint ventures that owned and leased ten Properties; during 1999,
the Partnership was a co-venturer in six separate joint ventures that owned and
leased 12 Properties; and during 2000, the Partnership was a co-venturer in
seven separate joint ventures that owned and leased 12 Properties and one
tenancy in common that owned and leased one Property. As of December 31, 2000,
the Partnership owned, either directly through joint venture or through tenancy
in common arrangements, 56 Properties which are, in general, subject to
long-term, triple-net leases. The leases of the Properties provide for minimum
base annual rental amounts (payable in monthly installments) ranging from
approximately $12,000 to $203,600. The 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
(generally the sixth or ninth lease year), the annual base rent required under
the terms of the lease will increase. For further description of the
Partnership's leases and Properties, see Item 1. Business - Leases and Item 2.
Properties, respectively.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $3,682,979, $3,692,965, and $3,359,955, 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.
Rental and earned income decreased during 2000 as compared to 1999 due
to the sale during 2000 of the Property in Columbus, Ohio and the 1999 sales of
several Properties, as described in "Capital Resources." In November 2000, the
Partnership reinvested a portion of these net sales proceeds in a Property in
Bristol, Virginia. The decrease in rental and earned income during 2000 was
partially offset by the rental income earned by this Property. The Partnership
reinvested the remaining net sales proceeds from the above sales in two separate
joint venture arrangements and one Property with an affiliate as
tenants-in-common. Therefore, the Partnership anticipates rental and earned
income to remain at reduced amounts and net income earned by joint ventures to
be at increased amounts, as described below.
The decrease in rental and earned income during the year ended December
31, 2000 was also partially due to the fact that the leases relating to the
Properties in Houston, Texas and Marion, Ohio were amended to provide for rent
reductions to the tenants. The Partnership does not anticipate that the rent
reductions will have an adverse material effect on the financial position of the
Partnership.
In addition, the decrease during 2000 was partially due to the fact
that during 2000, Elias Brothers Restaurants, Inc., which leased one Property
operated as a Big Boy, filed for bankruptcy and rejected its lease. As a result,
this tenant ceased making rental payments. In addition, the Partnership reversed
approximately $6,000 of accrued rental income. The accrued rental income was the
accumulated amount of non-cash accounting adjustment previously recorded in
order to recognize future scheduled rent increases as income evenly over the
term of the lease. The Partnership will not recognize any rental and earned
income from the vacant Property until a replacement tenant for this Property is
located or until the Property is sold and the proceeds from the sale are
reinvested in an additional Property. The lost revenues resulting from the
vacant Property could have an adverse effect on the results of operations of the
Partnership, if the Partnership is not able to re-lease the Property in a timely
manner.
The decrease in rental and earned income during 2000 was partially
offset by an increase in rental and earned income due to the fact that during
the year, the Partnership collected and recognized as income approximately
$175,700 in bankruptcy proceeds relating to Long John Silver's. Inc., which
filed for bankruptcy during 1998 and rejected the leases relating to five
Properties, as described below.
Rental and earned income was lower during 1998, as compared 1999,
primarily due to the fact that in June 1998 Long John Silver's, Inc. filed for
bankruptcy and rejected the leases relating to four of the nine Properties it
leased. As a result, this tenant ceased making rental payments on the four
rejected leases. In connection with the four rejected leases, during 1998, the
Partnership reversed approximately $265,000 of accrued rental income relating to
these four Properties. The effect of the write-off was partially offset by a
decrease during 1999, due to the fact that in September 1999, Long John
Silver's, Inc. rejected an additional lease and ceased making rental payments on
the lease. The Partnership has entered into new leases, each with a new tenant,
for two of the five vacant Properties. In connection with the new leases, the
tenant for each Property agreed to pay for all costs necessary to convert the
Properties into different restaurant concepts. Conversion of both Properties was
completed in March 1999, at which time rental payments commenced resulting in an
increase in rental and earned income during 1999, as compared to 1998. In May
and November 1999, the Partnership sold two of the vacant Properties and
invested the majority of the net sales proceeds in Bossier City Joint Venture
and Duluth Joint Venture in November and December 1999, respectively, as
described in "Capital Resources." The Partnership intends to use the remaining
net sales proceeds to pay Partnership liabilities. In August 1999, Long John
Silver's, Inc. assumed and affirmed its four remaining leases, and the
Partnership has continued receiving rental payments relating to these four
leases. The Partnership will not recognize any rental and earned income from the
remaining vacant Property until a replacement tenant for this Property is
located or until the Property is sold and the proceeds from the sale are
reinvested in an additional Property. The lost revenues resulting from the
remaining vacant Property could have an adverse effect on the results of
operations of the Partnership, if the Partnership is not able to re-lease the
Property in a timely manner.
The increase in rental and earned income during 1999, was partially
offset by the 1998 sales of the Properties in Madison, Alabama and Richmond,
Virginia, and the 1999 sales of the Properties in Shelby, North Carolina; Kansas
City, Missouri; Stockbridge, Georgia; and Houston, Texas. The decrease in rental
and earned income due to the above sales was partially offset by the fact that
in October 1998, the Partnership reinvested the majority of the net sales
proceeds from the 1998 sales in a Property in Fayetteville, North Carolina. The
Partnership reinvested the remaining net sales proceeds from the 1998 sales in
Melbourne Joint Venture, as described in "Capital Resources."
During the years ended December 31, 2000, 1999, and 1998, the
Partnership also earned $47,437, $49,928, and $63,776, respectively, in
contingent rental income. Contingent rental income was lower during 1999 than
during 1998, primarily due to the fact that during 1999, the Partnership
adjusted estimated contingent rental amounts accrued at December 31, 1998, to
actual amounts.
In addition, for the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $266,023, $373,434, and $317,654, respectively, attributable
to net income earned by joint ventures in which the Partnership is a
co-venturer. The decrease in net income earned by joint ventures during 2000, as
compared to 1999 was primarily due to the fact that the lease relating to the
Property held by Melbourne Joint Venture, in which the Partnership owns a 50
percent interest, was amended to provide for rent reductions starting in
February 2000. In June 2000, the operator of this Property vacated the Property
and discontinued operations. As a result, during 2000, the joint venture
established an allowance for doubtful accounts for past due rental amounts. The
joint venture will continue to pursue collection of past due rental amounts and
will recognize such amounts as income if collected. The joint venture will not
recognize any rental income relating to this Property until such time as a new
lease is executed or until the Property is sold and the proceeds from such sale
are reinvested in an additional Property. The joint venture is currently seeking
a new tenant or purchaser for this Property. In addition, the joint venture
established an allowance for loss on assets for this Property of approximately
$219,100. The allowance represented the difference between the net carrying
value of the Property at December 31, 2000, and the current estimated net
realizable value of the Property. The decrease in net income earned by joint
ventures was partially offset by an increase in net income earned by joint
ventures due to the Partnership investing in two joint venture arrangements in
late 1999 and one Property in January 2000, as tenants-in-common, as described
in "Capital Resources". The increase in net income earned by joint ventures
during 1999, as compared to 1998, was partially due to the fact that Melbourne
Joint Venture was operational for a full year during 1999, as compared to a
partial year during 1998. In addition, the increase during 1999 was partially
attributable to the Partnership investing in Bossier City Joint Venture, as
described in "Capital Resources."
During the year ended December 31, 2000, four lessees (or group of
affiliated lessees) of the Partnership, Flagstar Enterprises, Inc., Jack in the
Box Inc., Checkers Drive-In Restaurants, 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 Properties owned by joint ventures and a Property owned with affiliates of
the General Partners as tenancy in common). As of December 31, 2000, Flagstar
Enterprises, Inc. was the lessee under leases relating to six restaurants, Jack
in the Box Inc. was the lessee under leases relating to six restaurants,
Checkers Drive-In Restaurants, Inc. was the lessee under leases relating to 13
restaurants, and Golden Corral Corporation was the lessee under leases relating
to five restaurants. It is anticipated that based on the minimum rental payments
required by the leases, that these four lessees will each continue to contribute
more than ten percent of the Partnership's total rental and earned income in
2001. In addition, during the year ended December 31, 2000, five Restaurant
Chains, Hardee's, Denny's, Jack in the Box, Checkers, and Golden Corral, 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
Properties owned by joint ventures and a Property owned with affiliates of the
General Partners as tenants-in-common). In 2001, it is anticipated that these
five Restaurant Chains will each continue to account for more than ten percent
of the total rental and earned income to which the Partnership is entitled under
the terms of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income if the Partnership is not able to
re-lease the Properties in a timely manner.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $111,298, $75,382, and $90,425, respectively in interest and
other income. Interest and other income was higher during 2000, as compared to
1999, due to the receipt of easement proceeds during 2000, and the fact that the
Partnership earned interest income on net sales proceeds relating to the 1999
sales of several Properties pending the reinvestment of the net sales proceeds
in additional Properties.
Operating expenses, including depreciation and amortization expense,
were $741,347, $948,656, and $707,774 for the years ended December 31, 2000,
1999, and 1998, respectively. The decrease in operating expenses during 2000 and
the increase during 1999, each as compared to the previous year, 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 in "Termination of Merger."
In addition, the increase in operating expenses during 1999 as compared
to 1998, was partially attributable to an increase in depreciation expense due
to the fact that Long John Silver's, Inc. filed for bankruptcy and during 1999
and 1998, rejected the leases relating to one Property and four Properties,
respectively, as described above. In connection with the bankruptcy, the
Partnership reclassified these assets from net investment in direct financing
leases to land and buildings on operating leases. In accordance with Statement
of Financial Accounting Standards No. 13, "Accounting for Leases," the
Partnership recorded the reclassified assets at the lower of original cost,
present fair value, or present carrying amount, which resulted in a loss on
termination of direct financing lease, for financial reporting purposes of
$20,119 and $21,873 during 1999 and 1998, respectively. No such loss was
recorded during 2000.
In addition, during 2000, 1999, and 1998, the Partnership incurred
certain expenses, such as legal fees, real estate taxes, insurance and
maintenance relating to the Properties whose leases were rejected by their
respective tenants, as described above. The Partnership has entered into new
leases with new tenants for two of the five rejected Long John Silver Properties
and has sold two of the vacant Long John Silvers' Properties. The new tenants
are responsible for real estate taxes, insurance, and maintenance relating to
the respective Properties in accordance with the terms of their leases;
therefore, the General Partners do not anticipate the Partnership will incur
these expenses for these four Properties in the future. However, the Partnership
will continue to incur certain expenses, such as legal fees, real estate taxes,
insurance, and maintenance relating to the remaining vacant Properties until new
tenants or purchasers are located. The Partnership is currently seeking a
replacement tenant or purchaser for this Property. Due to the fact that Long
John Silver's, Inc. assumed and affirmed its four remaining leases, as described
above, Long John Silver's, Inc. will be responsible for real estate taxes,
insurance and maintenance relating to these Properties; therefore, the General
Partners do not anticipate that the Partnership will incur these expenses for
these Properties in the future.
As a result of the sales of several Properties as described above in
"Capital Resources," the Partnership recognized a loss of $75,930 and $144,720
for financial reporting purposes during 2000 and 1999, respectively. As a result
of the sales of several Properties and the receipt of proceeds from the right of
way taking of the Property in Riviera Beach, Florida, as described above in
"Capital Resources," the Partnership recognized gains totaling $112,206 for
financial reporting purposes during the year ended December 31, 1998.
At December 31, 2000, 1999, and 1998, the Partnership recorded
provisions for loss on assets in the amount of $98,822, $27,211, and $37,155,
respectively, for financial reporting purposes relating to two Long John
Silver's Properties whose leases were rejected by the tenant, as described
above. The tenant of these Properties filed for bankruptcy and ceased payment of
rents under the terms of its lease agreements. The allowances represented the
difference between the carrying value of the Properties at December 31, 2000,
1999 and 1998 and the respective estimated net realizable value for the
Properties. During 1999, the Partnership sold one of the Long John Silver's
Properties, as described in "Capital Resources."
The Partnership's leases as of December 31, 2000, are, in general,
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Management expects that increases in restaurant
sales volumes due to inflation and real sales growth should result in an
increase in rental income over time. Continued inflation also may cause capital
appreciation of the Partnership's Properties. Inflation and changing prices,
however, also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.
In December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. SAB 101 requires the
Partnership to defer recognition of certain percentage rental income until
certain defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments, embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Statement requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB
Statement No. 133." FAS 137 deferred the effective date of FAS 133 for one year.
FAS 133, as amended, is now effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The Partnership has reviewed both
statements and has determined that both FAS 133 and FAS 137 do not apply to the
Partnership as of December 31, 2000.
Termination of Merger
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with APF, pursuant to which the Partnership would be merged with and
into a subsidiary of APF. Under the Agreement and Plan of Merger, APF was to
issue shares of its common stock as consideration for the Merger. On March 1,
2000, the General Partners and APF announced that they had mutually agreed to
terminate the Agreement and Plan of Merger. The agreement to terminate the
Agreement and Plan of Merger was based, in large part, on the General Partners'
concern that, in light of market conditions relating to publicly traded real
estate investment trusts, the value of the transaction had diminished. As a
result of such diminishment, the General Partners' ability to unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.
Item 7A. Quantitative and qualitative Disclosures About Market Risk.
Not applicable
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND XIV, LTD
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 18
Financial Statements:
Balance Sheets 19
Statements of Income 20
Statements of Partners' Capital 21
Statements of Cash Flows 22-23
Notes to Financial Statements 24-41
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund XIV, 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 XIV, 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 the
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 use 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 XIV, 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 $ 24,460,091 $ 24,579,081
Net Investment in direct financing leases 6,663,943 6,779,642
Investment in joint ventures 5,055,505 4,502,838
Cash and cash equivalents 1,038,555 1,543,691
Restricted cash -- 383,368
Receivables, less allowance for doubtful accounts of $29,921
and $6,703, respectively 177,442 86,811
Due from related parties 18,745 5,040
Prepaid expenses 30,081 17,393
Lease costs, less accumulated amortization of $6,848 and
$3,548, respectively 26,152 29,452
Accrued rental income less allowance for doubtful accounts of
$48,635 and $12,622, respectively 2,162,073 2,145,581
-------------------- -------------------
-------------------- -------------------
$ 39,632,587 $ 40,072,897
==================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 75,746 $ 137,749
Accrued and escrowed real estate taxes payable
28,426 28,520
Distributions payable 928,130 928,130
Due to related parties 130,423 76,976
Rents paid in advance and deposits 156,418 67,196
---------------------- --------------------
----------------------
Total liabilities 1,319,143 1,238,571
Partners' capital 38,313,444 38,834,326
----------------------
---------------------- --------------------
$ 39,632,587 $ 40,072,897
====================== ====================
See accompanying notes to financial statements.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
----------------- -----------------
------------------
Revenues:
Rental income from operating leases $ 3,018,716 $ 2,876,498 $ 2,792,931
Adjustments to accrued rental income (41,997) -- (277,319)
Earned income from direct financing leases 706,260 816,467 844,343
Contingent rental income 47,437 49,928 63,776
Interest and other income 111,298 75,382 90,425
------------------ ----------------- -----------------
------------------ ----------------- -----------------
3,841,714 3,818,275 3,514,156
------------------ ----------------- -----------------
------------------ ----------------- -----------------
Expenses:
General operating and administrative 193,074 181,011 168,184
Professional services 38,158 46,238 34,309
Management fees to related parties 40,255 39,473 37,430
Real estate taxes 13,873 22,148 17,435
State and other taxes 30,957 33,353 22,498
Loss on termination of direct financing lease -- 20,119 21,873
Depreciation and amortization 385,635 391,703 380,814
Transaction costs 39,395 214,611 25,231
------------------ ----------------- -----------------
------------------ ----------------- -----------------
741,347 948,656 707,774
------------------ ----------------- -----------------
------------------ ----------------- -----------------
Income Before Equity in Earnings of Joint Ventures, Gain on
Land and Building from Right of Way Taking, Gain (Loss)
on Sale of Assets, and Provision for Loss on Assets
3,100,367 2,869,619 2,806,382
Equity in Earnings of Joint Ventures 266,023 373,434 317,654
Gain on Land and Building from Right of Way Taking -- -- 41,408
Gain (Loss) on Sale of Assets (75,930) (144,720) 70,798
Provision for Loss on Assets (98,822) (27,211) (37,155)
------------------ ----------------- ------------------
------------------ ----------------- -----------------
Net Income $ 3,191,638 $ 3,071,122 $ 3,199,087
================== ================= =================
================== ================= =================
Allocation of Net Income:
General partners $ -- $ 31,522 $ 31,093
Limited partners 3,191,638 3,039,600 3,167,994
------------------ ----------------- -----------------
$ 3,191,638 $ 3,071,122 $ 3,199,087
================== ================= =================
Net Income Per Limited Partner Unit $ 0.71 $ 0.68 $ 0.70
================== ================= =================
================== ================= =================
Weighted Average Number of Limited Partner Units
Outstanding 4,500,000 4,500,000 4,500,000
================== ================= =================
See accompanying notes to financial statements.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2000, 1999 and 1998
General Partners
---------------------------------------
Accumulated
Contributions Earnings C
------------------ ----------------- --
Balance, December 31, 1997 $ 1,000 $ 145,640
Distributions to limited
partners ($0.83 per
limited partner unit) -- --
Net income -- 31,093
------------------ ----------------- --
Balance, December 31, 1998 1,000 176,733
Distributions to limited
partners ($0.83 per
limited partner unit) -- --
Net income -- 31,522
------------------ ----------------- --
Balance, December 31, 1999 1,000 208,255
Distributions to limited
partners ($0.83 per
limited partner unit) -- --
Net income -- --
------------------ ----------------- --
Balance, December 31, 2000 $ 1,000 $ 208,255
================== ================= ==
Limited Partners
- -----------------------------------------------------------------------
Accumulated Syndication
ontributions Distributions Earnings Costs Total
- -------------- ----------------- ----------------- -------------- -------------
$ 45,000,000 $ (14,135,925 ) $ 14,362,387 $ (5,383,945 ) $39,989,157
-- (3,712,520 ) -- -- (3,712,520 )
-- -- 3,167,994 -- 3,199,087
- -------------- ----------------- ----------------- -------------- -------------
45,000,000 (17,848,445 ) 17,530,381 (5,383,945 ) 39,475,724
-- (3,712,520 ) -- -- (3,712,520 )
-- -- 3,039,600 -- 3,071,122
- -------------- ----------------- ----------------- -------------- -------------
45,000,000 (21,560,965 ) 20,569,981 (5,383,945 ) 38,834,326
-- (3,712,520 ) -- -- (3,712,520 )
-- -- 3,191,638 -- 3,191,638
- -------------- ----------------- ----------------- -------------- -------------
$ 45,000,000 $ (25,273,485 ) $ 23,761,619 $ (5,383,945 ) $38,313,444
============== ================= ================= ============== =============
See accompanying notes to financial statements.
CNL INCOME FUND XIV, 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 $ 3,661,139 $ 3,504,076 $ 3,391,042
Distributions from joint ventures 481,458 348,560 343,684
Cash paid for expenses (369,129) (348,555) (293,428)
Interest received 66,695 41,390 73,246
------------------ ------------------ -----------------
Net cash provided by operating activities 3,840,163 3,545,471 3,514,544
------------------ ------------------ -----------------
Cash Flows from Investing Activities:
Proceeds from sale of land and building 1,631,947 1,844,601 1,606,702
Proceeds received from right of way taking -- -- 41,408
Additions to land and buildings on operating leases
(1,879,324) -- (605,712)
Investment in direct financing lease -- -- (931,237)
Investment in joint ventures (769,498) (665,821) (568,498)
Decrease (increase) in restricted cash 384,096 (384,096) 318,592
Payment of lease costs -- (33,000) --
------------------ ------------------ -----------------
Net cash provided by (used in) investing activities
(632,779) 761,684 (138,745)
------------------ ------------------ -----------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,712,520) (3,712,520) (3,712,520)
------------------ ------------------ -----------------
Net cash used in financing activities (3,712,520) (3,712,520) (3,712,520)
------------------ ------------------ -----------------
Net Increase (Decrease) in Cash and Cash Equivalents
(505,136) 594,635 (336,721)
Cash and Cash Equivalents at Beginning of Year 1,543,691 949,056 1,285,777
------------------ ------------------ -----------------
Cash and Cash Equivalents at End of Year $ 1,038,555 $ 1,543,691 $ 949,056
================== ================== =================
See accompanying notes to financial statements.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended December 31,
2000 1999 1998
----------------- ----------------- -----------------
Reconciliation of Net Income to Net Cash Provided by
Operating Activities
Net income $ 3,191,638 $ 3,071,122 $ 3,199,087
----------------- ----------------- -----------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Loss on termination of direct financing lease -- 20,119 21,873
Depreciation 381,303 387,123 378,381
Amortization 4,332 4,580 2,433
Equity in earnings of joint ventures, net of
distributions 215,799 (24,874 ) 26,030
Gain on land and building from right of way
taking -- -- (41,408 )
Loss (gain) on sale of assets 75,930 144,720 (70,798 )
Provision for loss on assets 98,822 27,211 37,155
Decrease in net investment in direct financing
leases 115,699 107,236 82,359
Increase in receivables (91,359 ) (47,175 ) (38,232 )
Increase in due from related parties (13,705 ) (5,040 ) --
Increase in prepaid expenses (12,688 ) (9,004 ) (474 )
Increase in accrued rental income (206,180 ) (306,683 ) (148,845 )
Increase (decrease) in accounts payable and
accrued expenses (62,097 ) 145,494 (9,038 )
Increase in due to related parties 53,447 51,544 17,579
Increase (decrease) in rents paid in advance and
deposits 89,222 (20,902 ) 58,442
----------------- ----------------- -----------------
Total adjustments 648,525 474,349 315,457
----------------- ----------------- -----------------
Net Cash Provided by Operating Activities $ 3,840,163 $ 3,545,471 $ 3,514,544
================= ================= =================
Supplemental Schedule of Non-Cash Financing Activities:
Distributions declared and unpaid at December 31 $ 928,130 $ 928,130 $ 928,130
================= ================= =================
See accompanying notes to financial statements.
CNL INCOME FUND XIV, 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 XIV, 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. Borne 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) (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 XIV, 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, Wood-Ridge Real Estate Joint
Venture, Salem Joint Venture, Melbourne Joint Venture, CNL Kingston
Joint Venture, Bossier City Joint Venture, Duluth Joint Venture and a
property in Niles, Illinois held as tenants-in-common with an affiliate
using the equity method since the Partnership shares control with
affiliates which have the same general partners.
CNL INCOME FUND XIV, 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 terms of
the new leases using the straight-line method. When a property is sold
or a lease is terminated the relate lease cost, if any, net of
accumulated amortization is removed from the accounts and charged
against income.
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.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
- ----------------------------------------------------
Staff Accounting Bulletin No. 101 ("SAB 101") - In December 1999, the
Securities and Exchange Commission released SAB 101, which provides the
staff's view in applying generally accepted accounting principles to
selected revenue recognition issues. SAB 101 requires the Partnership
to defer recognition of certain percentage rental income until certain
defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material
impact on the Partnership's results of operations.
Statement of Financial Accounting Standards No. 133 ("FAS 133") and
Statement of Financial Accounting Standards No. 137 ("FAS 137") - In
June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment
of FASB Statement No. 133." FAS 137 deferred the effective date of FAS
133 for one year. FAS 133, as amended, is now effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The
Partnership has reviewed both statements and has determined that both
FAS 133 and FAS 137 do not apply to the Partnership as of December 31,
2000.
2. Leases:
- ---------------
The Partnership leases its land or land and buildings primarily 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 the leases are operating leases.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
2. Leases - Continued:
- ---------------------------
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.
3. Land and Buildings on Operating Leases:
- -----------------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
------------------- -------------------
-------------------
Land $ 15,324,747 $ 15,289,459
Buildings 11,446,115 11,319,706
------------------- -------------------
-------------------
26,770,862 26,609,165
Less accumulated depreciation (2,184,738 ) (2,002,873 )
------------------- -------------------
-------------------
24,586,124 24,606,292
Less allowance for loss on assets (126,033 ) (27,211 )
------------------- -------------------
-------------------
$ 24,460,091 $ 24,579,081
=================== ===================
In May 1999, the Partnership sold Property in Stockbridge in Georgia,
to an unrelated third party for $700,000 and received net sales
proceeds of $696,300, resulting in a loss of $60,882 for financial
reporting purposes. During 1999, the Partnership reinvested these net
sales proceeds in Bossier City Joint Venture and Duluth Joint Venture
(See Note 5).
In November 1999, the Partnership sold its property in Shelby, North
Carolina to an unrelated third party for $527,370 and received net
sales proceeds of $494,178, resulting in a loss of $121,207 for
financial reporting purposes. The Partnership reinvested these net
sales proceeds in Duluth Joint Venture (See Note 5).
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Lease - Continued:
-------------------------------------------------
In December 1999, the Partnership sold its property in Kansas City,
Missouri to a related party for $270,000 and received net sales
proceeds of $268,450, resulting in a gain of $20,718 for financial
reporting purposes (see Note 9). This property was originally acquired
by the Partnership in 1994, at a cost of approximately $209,300,
excluding acquisition fees and miscellaneous acquisition expenses;
therefore, the Partnership sold this property for approximately $59,200
in excess of its original purchase price. In December 1999, the
Partnership reinvested these net sales proceeds in Duluth Joint Venture
(See Note 5).
In December 1999, the Partnership sold its property in Houston, Texas
to an unrelated third party for $387,812 and received net sales
proceeds of $385,673, resulting in a gain of $16,651 for financial
reporting purposes. This property was originally acquired by the
Partnership in 1994, at a cost of approximately $311,800 excluding
acquisition fees and miscellaneous acquisition expenses; therefore, the
Partnership sold this property for approximately $73,900 in excess of
its original purchase price. In January 2000, the Partnership
reinvested these net sales proceeds in a property in Niles, Illinois
with affiliates of the general partners as tenants-in-common (See Note
5).
At December 31, 2000 and 1999, the Partnership recorded a provision for
loss on assets in the amount of $98,822 and $27,211, respectively, for
financial reporting purposes relating to a Long John Silver's Property.
The tenant of this property filed for bankruptcy and ceased payment of
rents under the terms of its lease agreement. The allowance represented
the difference between the carrying value of the property at December
31, 2000 and 1999 and the estimated net realizable value for the
property.
In September 2000, the Partnership sold its property in Columbus, Ohio
and received net sales proceeds of $1,631,947, resulting in a loss of
$75,930 for financial reporting purposes. In November 2000, the
Partnership reinvested these net sales proceeds in a property in
Bristol, Virginia.
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.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership recognized $206,180 (net of $36,013 in reserves and $5,984
in reversals) $306,683 and $148,845 (net of $6,327 in reserves and
$277,319 in reversals), respectively, of such rental income.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued:
--------------------------------------------------
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 2,554,680
2002 2,611,101
2003 2,625,956
2004 2,791,104
2005 2,836,392
Thereafter 22,445,329
---------------------
---------------------
$ 35,864,562
=====================
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
$ 12,016,087 $ 12,862,784
Estimated residual values 2,156,574 2,156,574
Less unearned income (7,508,718 ) (8,239,716 )
---------------- ----------------
----------------
Net investment in direct financing leases
$ 6,663,943 $ 6,779,642
================ ================
CNL INCOME FUND XIV, 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:
- --------------------------------------------------------------
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2000:
2001 $ 849,520
2002 857,988
2003 861,651
2004 868,976
2005 868,976
Thereafter 7,708,976
-----------------
-----------------
$ 12,016,087
=================
The above table does not include future minimum lease payments for
renewal periods of for contingent rental payments that may become due
in future periods (see Note 3).
In June 1998, four of the Partnership's leases with Long John Silver's,
Inc. were rejected in connection with the tenant filing for bankruptcy.
As a result, the Partnership reclassified these assets from net
investment in direct financing leases to land and buildings on
operating leases. In accordance with Statement of Financial Accounting
Standards No.13, "Accounting for Leases," in 1999 and 1998, the
Partnership recorded the reclassified assets at the lower of original
cost, present fair value, or present carrying amount, which resulted in
a loss on termination of direct financing lease of $20,119 and $21,873,
respectively, for financial reporting purposes. In addition, in August
1999, one of the Partnership's remaining leases with Long John
Silver's, Inc. was rejected in connection with the tenant filing for
bankruptcy in June 1998.
5. Investment in Joint Ventures:
- -------------------------------------
The Partnership owns a 50 percent, 72.2%, 50 percent, 39.94%, 50
percent, 11 percent and 44 percent interest in the profits and losses
of Attalla Joint Venture, Salem Joint Venture, Wood-Ridge Real Estate
Joint Venture, CNL Kingston Joint Venture, Melbourne Joint Venture,
Bossier City Joint Venture, and Duluth 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
accounts for its investments in these joint ventures using the equity
method since the Partnership shares control with affiliates.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
- -------------------------------------------------
In January 2000, the Partnership used the majority of the net sales
proceeds it received from the 1999 sale of a property in Houston,
Texas, to acquire an interest in a Baker's Square property in Niles,
Illinois, with CNL Income Fund VI, Ltd., a Florida limited partnership
and an affiliate of the general partners, as tenants-in-common. In
connection therewith, the Partnership and the affiliate entered into an
agreement whereby each co-venturer will share in the profits and losses
of the property in proportion to its applicable percentage interest.
The Partnership accounts for its investment in this property using the
equity method since the Partnership shares control with an affiliate.
As of December 31, 2000, the Partnership owned a 26 percent interest in
this property.
As of December 31, 2000, the lease associated with the property owned
by Melbourne Joint Venture had been amended to provide for rent
reductions due to financial difficulties the tenant was experiencing.
As a result, Melbourne Joint Venture reclassified the building portion
of the asset from net investment in direct financing lease to land and
building on operating leases. In accordance with the Statement of
Financial Accounting Standards #13, "Accounting for Leases," Melbourne
Joint Venture recorded the reclassified asset at the lower of original
cost, present fair value, or present carrying amount. No loss on the
reclassification of the direct financing lease was recorded for
financial reporting purposes.
As of December 31, 2000, the Melbourne Joint Venture recorded a
provision for loss on assets totaling approximately $219,100 for
financial reporting purposes due to the that the operator of its
property vacated the property and discontinued operations. The
allowance represented the difference between the property's net
carrying value at December 31, 2000 and the estimated net realizable
value of the property.
As of December 31, 2000, Attalla Joint Venture, Salem Joint Venture,
CNL Kingston Joint Venture, Melbourne Joint Venture, Bossier City Joint
Venture, Duluth Joint Venture, and the Partnership and an affiliate, as
tenants-in-common, each owned and leased one property, and Wood-Ridge
Real Estate Joint Venture owned and leased six
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
properties, to operators of fast-food or family-style restaurants. The
following presents the condensed financial information for the joint
ventures and the property held as tenants-in-common with an affiliate
at December 31:
2000 1999
-------------------------------------------------- ----------------- -----------------
Land and buildings on operating leases, less
accumulated depreciation and allowance for
loss on assets $11,173,080 $8,588,997
--------------------------------------------------
Net investment in direct financing leases 351,555 990,480
--------------------------------------------------
Cash 96,732 31,188
--------------------------------------------------
Receivables 29,955 118,630
--------------------------------------------------
Accrued rental income 380,924 309,013
--------------------------------------------------
Other assets 18,074 20,817
--------------------------------------------------
Liabilities 170,367 82,684
--------------------------------------------------
Partners' capital 11,879,953 9,976,441
--------------------------------------------------
Revenues 1,152,258 895,295
--------------------------------------------------
Provision for loss in assets 219,053 --
--------------------------------------------------
Net income 661,064 739,271
The Partnership recognized income totalling $266,023, $373,434, and
$317,654 for the years ended December 31, 2000, 1999, and 1998,
respectively, from these joint ventures.
6. Restricted Cash:
---------------
As of December 31, 1999, the net sales proceeds of $385,673 from the
sale of the property in Houston, Texas, less miscellaneous escrow fees
of $2,305 were being held in and interest-bearing escrow account
pending the release of funds to acquire an additional property. These
funds were released by the escrow agent during 2000 and were used to
invest in a property in Niles, Illinois, with affiliates of the general
partners as tenants-in-common.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
7. Allocations and Distributions:
- --------------------------------------
From inception through December 31, 1999, generally, all net income and
net losses of the Partnership, excluding gains and losses from the sale
of properties, were allocated 99 percent to the limited partners and
one percent to the general partners. From inception through December
31, 1999, distributions of net cash flow were made 99 percent to the
limited partners and one percent to the general partners; provided,
however, that the one percent of net cash flow to be distributed to the
general partners was subordinated to receipt by the limited partners of
an aggregate, ten percent, cumulative, noncompounded annual return on
their invested capital contributions (the "Limited Partners' 10%
Return").
From inception through December 31, 1999, generally, net sales proceeds
from the 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.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
7. Allocations and Distributions - Continued:
- --------------------------------------------------
Effective January 1, 2000, the general partners waived their right to
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2000.
During each of the years ended December 31, 2000, 1999 and 1998, the
Partnership declared distributions to the limited partners of
$3,712,520. No distributions have been made to the general partners to
date.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
8. Income Taxes:
- ---------------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
2000 1999 1998
-------------- -------------- ---------------
-------------- ---------------
Net income for financial reporting purposes $ 3,191,638 $ 3,071,122 $3,199,087
Loss on lease termination of direct financing
leases -- 20,119 21,873
Depreciation for tax reporting purposes in
excess of depreciation for financial
reporting purposes (44,656 ) (58,526 ) (77,202 )
Equity in earnings of joint ventures for tax reporting purposes in
excess of (less than) equity in earnings of joint
ventures for financial reporting purposes 133,500 (79,904 ) 35,645
Gain on land and building from right of way
taking deferred for tax reporting purposes -- -- (41,408 )
Gain on sale of assets for tax reporting
purposes in excess of gain for financial
reporting purposes 138,725 37,025 94,442
Allowance for loss on assets 98,822 27,211 37,155
Direct financing leases recorded as operating
leases for tax reporting purposes 115,699 107,236 82,359
Allowance for doubtful accounts 23,218 5,598 1,105
Accrued rental income (206,180 ) (306,683 ) (148,845 )
Capitalization (deduction) of transaction
costs for tax reporting purposes (239,842 ) 214,611 25,231
Rents paid in advance 77,385 (28,232 ) 53,442
Other 1,920 566 1,034
-------------- -------------- ---------------
-------------- ---------------
Net income for federal income tax purposes $ 3,290,229 $ 3,010,143 $3,283,918
============== ============== ===============
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
9. Related Party Transactions:
- -----------------------------------
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc. CNL Fund Advisors, Inc. (the "Advisor") was a majority owned
subsidiary of CNL Financial Group, Inc. until it merged with CNL
American Properties Fund, Inc. ("APF"), effective September 1, 1999.
The individual general partners are stockholders and directors of APF.
The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with
the Partnership. In connection therewith, the Partnership has 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 Advisors shall determine. The Partnership
incurred management fees of $40,255, $39,473, and $37,430 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 XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
9. 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. The Partnership incurred $109,991,
$142,557, and $110,618 for the years ended December 31, 2000, 1999, and
1998, respectively, for such services.
During 1999, the Partnership sold its property in Kansas City, Missouri
to Commercial Net Lease Realty, Inc., an affiliate of the general
partners, for $270,000 and received net sales proceeds of $268,450,
resulting in a gain of $20,718 for financial reporting purposes.
During 2000, the Partnership acquired a 26 percent interest in a
property from CNL BB Corp., an affiliate of the general partners, for
which the property had a total purchase price of $1,223,500. The
property acquired during 2000 is being held as tenants-in-common, with
CNL Income Fund VI, Ltd. ("CNL VI"), a Florida limited partnership, an
affiliate of the general partners (see Note 3). CNL BB Corp. had
purchased and temporarily held title to this property in order to
facilitate the acquisition of the property by the Partnership and CNL
VI as tenants-in-common. The total purchase price paid by the
Partnership and CNL VI represented the costs incurred by CNL BB Corp.
to acquire and carry the property, including closing costs. In
accordance with the Statement of Policy of Real Estate programs for the
North American Securities Administrators Association, Inc., all income,
expenses, profits and losses generated by or associated with the
property, or interests therein, purchased from an affiliate in which
the affiliate has acted as an interim owner, are treated as belonging
to the Partnership and CNL VI, as tenants-in-common. For the year ended
December 31, 2000, other income includes $2,103 of such amounts.
During 2000, the Partnership acquired a property for a purchase price
of approximately $1,879,300 from CNL BB Corp., an affiliate of the
general partners. CNL BB Corp. had purchased and temporarily held title
to this property in order to facilitate the acquisition of the property
by the Partnership. The purchase price paid by the Partnership
represented the costs incurred by CNL BB Corp. to acquire and carry the
property, including closing costs. In accordance with the Statement of
Policy of Real Estate programs for the North American Securities
Administrators Association, Inc., all income, expenses, profits and
losses generated by or associated with the property, or interests
therein, purchased from an affiliate in which the affiliate has acted
as an interim owner,
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
9. Related Party Transactions - Continued:
--------------------------------------
are treated as belonging to the Partnership. For 2000, general
operating and administrative expenses, include $20,422 of such amounts.
The due to related parties at December 31, 2000 and 1999, totaled
$130,423 and $76,976, respectively.
10. Concentration of Credit Risk:
----------------------------
The following schedule presents total rental and earned income from
individual lessees, or affiliated groups of 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 property held as tenants-in-common
with an affiliate) for each of the years ended December 31:
2000 1999 1998
---------------- ---------------- ----------------
Jack in the Box Inc. (formerly
Foodmaker, Inc.) $ 577,253 $ 572,503 $ 574,481
Golden Corral Corporation 548,433 534,997 534,624
Checkers Drive-In
Restaurants, Inc. 540,233 603,070 628,816
Flagstar Enterprises, Inc. 424,211 425,409 427,801
Long John Silver's, Inc. N/A 433,701 634,121
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
10. Concentration of Credit Risk - Continued:
----------------------------------------
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from joint ventures and the property held as tenants-in-common with an
affiliate) for each of the years ended December 31:
2000 1999 1998
---------------- ---------------- ----------------
Jack in the Box $ 577,253 $ 572,503 $ 574,481
Golden Corral Family Steakhouse
Restaurants 548,433 534,997 534,624
Checkers Drive-In Restaurants 540,233 603,070 628,816
Denny's 526,651 615,893 625,101
Hardee's 424,211 425,409 427,801
Long John Silver's N/A 433,701 634,121
The information denoted by N/A indicates that for each period
presented, the tenant or group of affiliated tenants and 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 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 1998, Long John Silver's, Inc. filed for bankruptcy and in June 1998
and August 1999 rejected the leases relating to four and one of its
nine leases, respectively, and ceased making rental payments to the
Partnership on the rejected leases. The Partnership entered into new
leases, each with a new tenant, for two of the five properties with
rejected leases. In addition, the Partnership sold two of the five
properties with rejected leases. The Partnership will not recognize any
rental and earned income from the remaining vacant property until a new
tenant for the property is located, or until the property is sold and
the proceeds from the sale are reinvested in additional property. In
August 1999, Long John Silver's, Inc. assumed and affirmed its four
remaining leases, and the Partnership has continued to receive rental
payments relating to these four leases. The
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
10. Concentration of Credit Risk - Continued:
----------------------------------------
lost revenues resulting from the remaining vacant property, as
described above, could have an adverse effect on the results of
operations of the Partnership if the Partnership is not able to
re-lease the property in a timely manner.
11. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2000 and
1999:
2000 Quarter First Second Third Fourth Year
----------------------- --------------- -------------- -------------- --------------- --------------
Revenues (1) $1,132,075 $887,799 $966,910 $1,120,953 $4,107,737
Net income 872,548 686,940 634,881 997,269 3,191,638
Net income per
limited partner
unit 0.19 0.15 0.14 0.23 0.71
1999 Quarter First Second Third Fourth Year
----------------------- --------------- -------------- -------------- --------------- --------------
Revenues (1) $1,010,177 $1,054,947 $1,046,528 $1,080,057 $4,191,709
Net income 711,295 701,005 805,831 852,991 3,071,122
Net income per
limited partner
unit 0.16 0.15 0.18 0.19 0.68
(1) Revenues include equity in earnings of the joint ventures and
adjustments to accrued rental income due to the tenants of certain
Properties filing for bankruptcy.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in June
2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group, Inc. (formerly CNL Group, Inc.), a diversified real estate company, and
has served as a director, Chairman of the Board and Chief Executive Officer of
CNL Financial Group, Inc. since its formation in 1980. CNL Financial Group, Inc.
is the parent company, either directly or indirectly through subsidiaries, of
CNL Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. Mr. Seneff also serves as a Director, Chairman
of the Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust, as well as, CNL Hospitality
Corp., its advisor. In addition, he serves as a Director, Chairman of the Board
and Chief Executive Officer of CNL Retirement Properties, Inc., a public,
unlisted real estate investment trust and its advisor, CNL Retirement Corp.
Since 1992, Mr. Seneff has also served as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net Lease Realty, Inc., a public real
estate investment trust that is listed on the New York Stock Exchange. Mr.
Seneff has also served as a Director, Chairman of the Board and Chief Executive
Officer of CNL Securities Corp. since 1979; CNL Investment Company since 1990;
and CNL Institutional Advisors, Inc., a registered investment advisor for
pension plans, since 1990. Mr. Seneff formerly served as a Director of First
Union National Bank of Florida, N.A., and currently serves as the Chairman of
the Board of CNL Bank. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as Treasurer
from February 1999 through August 1999 and from May 1994 through December 1994.
He also served in various executive positions with the Advisor prior to its
merger with APF including, President from 1994 through September 1997, and
Director from 1994 through August 1999. Mr. Bourne serves as President and
Treasurer of CNL Financial Group, Inc. (formerly CNL Group, Inc.); Director,
Vice Chairman of the Board and President of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director and
President of CNL Hospitality Corp., its advisor. In addition, Mr. Bourne serves
as Director and President of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director and President of its
advisor, CNL Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank.
He has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997, and
President from July 1992 through February 1996, of Commercial Net Lease Realty,
Inc., a public real estate investment trust listed on the New York Stock
Exchange. Mr. Bourne also serves as Director, President and Treasurer for
various affiliates of CNL Financial Group, Inc. including, CNL Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager in 1975.
Mr. Bourne graduated from Florida State University in 1970 where he received a
B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master of
Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a subsidiary
of APF from December 1999 until December 2000. Previously, he served as
Executive Vice President of APF from January 1996 to September 1999. Mr. Walker
joined the Advisor in September 1994, as Senior Vice President responsible for
Research and Development. He served as the Chief Operating Officer of the
Advisor from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with APF. Mr.
Walker also served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.) from
1997 to October 1998. From May 1992 to May 1994, he was Executive Vice President
for Finance and Administration and Chief Financial Officer of Z Music, Inc., a
cable television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management and planning. From January 1990 through April 1992, Mr. Walker was
Chief Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum laude graduate
of Wake Forest University with a Bachelor of Science degree in Accountancy and
is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to Executive Vice
President and Chief Financial Officer of APF in July 2000. He served as Senior
Vice President and Chief Financial Officer of APF since January 1997. Mr.
Shackelford also served as Secretary and Treasurer of APF since September 1999.
He also served as Chief Financial Officer of the Advisor from September 1996 to
September 1999. From March 1995 to July 1996, Mr. Shackelford was a senior
manager in the national office of Price Waterhouse LLP where he was responsible
for advising foreign clients seeking to raise capital and a public listing in
the United States. From August 1992 to March 1995, he was a manager in the
Paris, France office of Price Waterhouse, serving several multi-national
clients. Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of Arts degree in Accounting, with honors, and a Master of Business
Administration degree from Florida State University and is a certified public
accountant.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 15, 2001, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 15, 2001, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2000, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- --------------------------------------------- -------------------------------
Reimbursement to affiliates for Operating expenses are reimbursed at the Accounting and administrative
operating expenses lower of cost or 90 percent of the services: $109,991
prevailing rate at which comparable
services could have been obtained in the
same geographic area. Affiliates of the
General Partners from time to time incur
certain operating expenses on behalf of
the Partnership for which the Partnership
reimburses the affiliates without
interest.
Annual management fee to One percent of the sum of gross revenues $40,255
affiliate 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. 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.
Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale of one
to affiliates 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.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- --------------------------------------------- -------------------------------
General Partners' deferred, A deferred, subordinated share equal to one $-0-
subordinated share of percent of Partnership distributions of net
Partnership net cash flow cash flow, subordinated to certain minimum
returns to the Limited Partners.
Geeral Partners's deferred, A deferred, subordinated share equal to five $-0-
subordinated share of percent of Partnership distributions of such
Partnership net sales net sales proceeds, subordinated to certain
proceeds from a sale or sales minimum returns to the Limited Partners.
not in liquidation of the
Partnership
General Partners' share of Distributions of net sales proceeds from a $-0-
Partnership net sales proceeds sale or sales of substantially all of the
from a sale or sales in Partnership's assets will be distributed in
liquidation of the Partnership 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.
In addition, during 2000 the Partnership acquired a 26% interest in one Property
from CNL BB Corp., which is an affiliate of the General Partners. The aggregate
purchase price paid for this Property was approximately $1,223,500. The
Partnership also purchased another Property from CNL BB Corp. for a purchase
price of approximately $1,879,300.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Certified Public Accountants
Balance Sheets at December 31, 2000 and 1999
Statements of Income for the Years Ended December 31, 2000,
1999, and 1998
Statements of Partners' Capital for the Years Ended December
31, 2000, 1999, and 1998
Statements of Cash Flows for the Years Ended December 31,
2000, 1999, and 1998
Notes to Financial Statements
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts - Years Ended
December 31, 2000, 1999, and 1998
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2000
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2000
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 XIV, 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 XIV, 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 XIV, Ltd. ( Included as Exhibit 4.2 to Form
10-K filed with the Securities and Exchange Commission on
April 13, 1994, incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XIV, Ltd.
and CNL Investment Company (Included as Exhibit 10.1 to Form
10-K filed with the Securities and Exchange Commission on
April 13, 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.
(c) Not applicable.
(d) Other Financial Information.
The Partnership is required to file audited financial
information of one of its tenants (Golden Corral Corporation)
as a result of this tenant leasing more than 20 percent of the
Partnership's total assets for the year ended December 31,
2000. Golden Corral Corporation is a privately-held company
and its financial information is not available to the
Partnership to include in this filing. The Partnership will
file this financial information under cover of a Form 10-K/A
as soon as it is available.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day of
March, 2001.
CNL INCOME FUND XIV, 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 XIV, 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) $ -- $ 12,622 $ 1,105 (b) $ -- (c) $ -- $ 13,727
- ---------- ============== =============== ============= ============= ============ ============
- ----------
1999 Allowance for
doubtful
accounts (a) $ 13,727 $ -- $ 6,563 (b) $ -- (c) $ (965 ) $ 19,325
- ----------
============== =============== ============= ============= ============ ============
- ----------
- ----------
2000 Allowance for
doubtful
accounts (a) $ 19,325 $ 36,750 $ 44,907 (b) $ -- (c) $ (22,426 ) $ 78,556
============== =============== ============= ============= ============ ============
(a) Deducted from receivables and accrued rental income on the balance sheet.
(b) Reduction of rental and other income.
(c) Amounts written off as uncollectible.
Costs Capitalized
Subsequent To
Initial Cost Acquisition
------------------- ---------------
Encum- Buildings Improve- Carrying
brances Land Improvemenments Costs
------- --------- ------------------- -----
Properties the Partnership
has Invested in Under
Operating Leases:
Bennigan's Restaurant:
Fayetteville, North Ca-olina (m$605,712 - - -
Burger King Restaurant:
Alliance, Ohio - 210,290 - - -
Checkers Drive-In Restaurants:
Boynton Beach, Florida- 501,606 - - -
Chamblee, Georgia - 332,737 - - -
Delray Beach, Florida - 193,110 - - -
Foley, Alabama - 197,821 - - -
Huntsville, Alabama - 362,907 - - -
Marietta, Georgia - 332,418 - - -
Merriam, Kansas - 305,896 - - -
Norcross, Georgia - 474,262 - - -
Orlando, Florida - 559,646 - - -
Pensacola, Florida - 296,726 - - -
Suwannee, Georgia - 269,643 - - -
St. Petersburg, Florid- 338,396 - - -
Coral Springs, Florida- 421,221 - - -
Denny's Restaurants:
Albemarle, North Carol-na 202,363 447,278 - -
Bullhead City, Arizona- 282,086 623,778 152,416 -
Topeka, Kansas - 420,446 - - -
Tempe, Arizona - 881,047 - - -
-
El Ranchito Restaurant:
Albemarle,
North Carolina (j)- 214,623 370,149 - -
Golden Corral Family
Steakhouse Restaurants:
Burlington, North Caro-ina 931,962 - 975,218 -
Wilson, North Carolina- 415,390 - 833,156 -
Greeley, Colorado - 303,170 - 965,024 -
Bristol, Virginia - 733,334 1,145,990 - -
Hardee's Restaurants:
Franklin, Tennessee - 201,441 423,569 - -
Nashville, Tennessee - 315,087 - - -
Nashville, Tennessee - 296,341 485,974 - -
Batesville, Mississipp- 186,404 453,720 - -
Jacksonville, Florida - 385,903 409,773 - -
Jack in the Box Restaurants:
Mesquite, Texas - 449,442 528,882 - -
Plano, Texas - 423,092 467,253 - -
Farmers Branch, Texas - 465,235 525,470 - -
Fort Worth, Texas - 297,688 551,394 - -
Fort Worth, Texas - 257,393 419,245 - -
Long John Silver's Restaurants:
Apopka, Florida - 320,435 - - -
Houston, Texas - 411,403 - - -
Houston, Texas(j) - 342,971 475,749 - -
Marion, Ohio - 321,032 - - -
Laurens, South Carolin- (k)(m) 96,753 386,284 - -
Other Restaurants:
Akron, Ohio (h) - 246,431 805,793 - -
Las Vegas, Nevada - 520,884 - - -
--------- --------- --------- -----
$15,324,74$8,520,301$2,925,814 -
========= ========= ========= =====
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 - -
========= ========= ========= =====
Properties of Joint Venture in Which the Partnership has a 50% Interest and has
Invested in Under Operating Leases:
Boston Market Restaurants:
Matthews, North Ca-olina 409,942 737,391 - -
Raleigh, North Car-lina 518,507 542,919 - -
Golden Corral Family
Steakhouse Restaurant:
Paris, Texas - 303,608 685,064 - -
Taco Bell Restaurant:
Anniston, Alabam- 173,395 329,202 - -
Other Restaurants:
Murfreesboro, Tenn-ssee 398,313 - - -
Blaine, Minnesota - 253,934 531,509 - -
--------- --------- --------- -----
$2,057,699$2,826,085 - -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 72.2% Interest and has
Invested in Under an Operating Lease:
Denny's Restaurant:
Salem, Ohio - $131,762 - - -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 39.94% Interest and has
Invested in Under an Operating Lease:
Taco Bell Restaurant:
Kingston, Tennesse- $189,452 - $328,445 -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 50% Interest and has
Invested in Under an Operating Lease:
5 & Diner Restaurant:
Melbourne, Florida- $438,973 $639,141 - -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 11% Interest and has
Invested in Under an Operating Lease:
IHOPaRestaurantstaurants:
Bossier City, Lou-siana $453,016 $866,192 - -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 44% Interest and has
Invested in Under an Operating Lease:
RoadhouseeGrillsRestaurant:
Duluth, Georgia - $1,083,153$865,184 - -
========= ========= ========= =====
Property of Tenants-in-Common in Which the Partnership has a 26% Interest and
has Invested in Under an Operating Lease:
Baker's Square
Niles, Illinois - $664,944 $838,434 - -
========= ========= ========= =====
Properties the Partnership has
Invested in Under Direct
Financing Leases:
Bennigan's Restaurant:
Fayetteville, Nor-h Carolina (m) - $931,239 - -
Burger King Restaurant:
Alliance, Ohio - - 535,949 - -
Denny's Restaurants:
Winslow, Arizona - 199,767 788,202 - -
Topeka, Kansas - - - 489,014 -
Tempe, Arizona - - - 585,382 -
Hardee's Restaurants:
Nashville, Tennes-ee - 553,400 - -
Jack in the Box Restaurant:
Shreveport, Louis-ana 240,811 848,338 - -
Long John Silver's Restaurants:
Apopka, Florida - - 506,493 - -
Houston, Texas - - 449,633 - -
Marion, Ohio - - 463,504 - -
Other Restaurant:
Las Vegas, Nevada- - 565,680 - -
--------- --------- --------- -----
$440,578 $5,642,438$1,074,396 -
========= ========= ========= =====
Property of Joint Venture in Which the Partnership has a 72.2% Interest and has
Invested in Under a Direct Financing Lease:
Denny's Restaurant:
Salem, Ohio - - - $371,836 -
========= ========= ========= =====
Life on Which
Gross Amount at Which Depreciation in
Carried at Close of Period (c) Date Latest Income
- ---------------------------------
Buildings and Accumulated of Con- Date Statement is
Land ImprovementsTotal DepreciationstructioAcquired Computed
- ----------- --------- --------- ---------- --------------------------
$605,712 (g) $605,712 (e) 1983 10/98 (e)
210,290 (g) 210,290 (e) 1994 07/94 (e)
501,606 - 501,606 (d) - 03/94 (d)
332,737 - 332,737 (d) - 03/94 (d)
193,110 - 193,110 (d) - 03/94 (d)
197,821 - 197,821 (d) - 03/94 (d)
362,907 - 362,907 (d) - 03/94 (d)
332,418 - 332,418 (d) - 03/94 (d)
305,896 - 305,896 (d) - 03/94 (d)
474,262 - 474,262 (d) - 03/94 (d)
559,646 - 559,646 (d) - 03/94 (d)
296,726 - 296,726 (d) - 03/94 (d)
269,643 - 269,643 (d) - 03/94 (d)
338,396 - 338,396 (d) - 03/95 (d)
421,221 - 421,221 (d) - 03/95 (d)
202,363 447,278 649,641 108,255 1992 09/93 (b)
282,086 776,194 1,058,280 182,951 1988 09/93 (b)
420,446 (g) 420,446 (e) 1994 10/93 (e)
881,047 (g) 881,047 (e) 1994 11/93 (e)
214,623 370,149 584,772 36,474 1994 04/94 (j)
931,962 975,218 1,907,180 227,639 1993 10/93 (b)
415,390 833,156 1,248,546 200,097 1993 10/93 (b)
303,170 965,024 1,268,194 194,679 1994 08/94 (b)
733,334 1,145,990 1,879,324 6,367 2000 11/00 (b)
201,441 423,569 625,010 100,860 1993 11/93 (b)
315,087 (g) 315,087 (e) 1993 11/93 (e)
296,341 485,974 782,315 115,719 1993 11/93 (b)
186,404 453,720 640,124 106,614 1993 12/93 (b)
385,903 409,773 795,676 96,287 1993 12/93 (b)
449,442 528,882 978,324 125,938 1992 11/93 (b)
423,092 467,253 890,345 110,324 1992 11/93 (b)
465,235 525,470 990,705 124,049 1988 12/93 (b)
297,688 551,394 849,082 129,212 1992 12/93 (b)
257,393 419,245 676,638 98,972 1983 12/93 (b)
320,435 (g) 320,435 (e) 1994 03/94 (e)
411,403 (g) 411,403 (e) 1993 03/94 (e)
342,971 475,749 818,720 24,184 1994 04/94 (j)
321,032 (g) 321,032 (e) 1994 06/94 (e)
96,753 386,284 483,037 19,163 1994 03/94 (k)
246,431 805,793 1,052,224 176,954 1993 10/93 (b)
520,884 (g) 520,884 (e) 1994 07/94 (e)
- ----------- --------- --------- ----------
$15,324,747 $11,446,115$26,770,862 $2,184,738
=========== ========= ========= ==========
$196,274 $434,428 $630,702 $102,080 1993 11/93 (b)
=========== ========= ========= ==========
409,942 737,391 1,147,333 103,964 1994 10/96 (b)
518,507 542,919 1,061,426 76,546 1994 10/96 (b)
303,608 685,064 988,672 96,586 1996 10/96 (b)
173,395 329,202 502,597 43,641 1993 01/97 (b)
398,313 - 398,313 (d) 1996 10/96 (d)
253,934 531,509 785,443 74,938 1996 10/96 (b)
- ----------- --------- --------- ----------
$2,057,699 $2,826,085 $4,883,784 $395,675
=========== ========= ========= ==========
$131,762 (g) $131,762 (e) 1991 03/95 (e)
=========== =========
$189,452 $328,445 $517,897 $33,817 1997 11/97 (b)
=========== ========= ========= ==========
$438,973 $639,141 $1,078,114 16,219 1998 04/98 (m)
=========== ========= ========= ==========
$453,016 $866,192 $1,319,208 $33,415 1998 11/99 (b)
=========== ========= ========= ==========
$1,083,153 $865,184 $1,948,337 $7,210 2000 12/99 (b)
=========== ========= ========= ==========
$664,944 $838,434 $1,503,378 $27,948 2000 01/00 (b)
=========== ========= ========= ==========
(g) (g) (g) (e) 1983 10/98 (e)
- (g) (g) (e) 1994 07/94 (e)
(g) (g) (g) (f) 1993 09/93 (f)
- (g) (g) (e) 1994 10/93 (e)
- (g) (g) (e) 1994 11/93 (e)
- (g) (g) (e) 1993 11/93 (e)
(g) (g) (g) (f) 1993 11/93 (f)
- (g) (g) (e) 1994 03/94 (e)
- (g) (g) (e) 1993 03/94 (e)
- (g) (g) (e) 1994 06/94 (e)
- (g) (g) (e) 1994 07/94 (e)
- (g) (g) (e) 1991 03/95 (e)
CNL INCOME FUND XIV, 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 $ 26,513,438 $ 1,295,713
Acquisitions 605,712 --
Dispositions (982,778) --
Reclassified from direct financing lease 2,084,141 --
Depreciation expense -- 378,381
----------------- ------------------
----------------- ------------------
Balance, December 31, 1998 28,220,513 1,674,094
Dispositions (1,987,957 ) (58,344 )
Reclassified from direct financing lease 958,786 --
Reclassified to direct financing lease (582,177 ) --
Depreciation expense -- 387,123
----------------- ------------------
Balance, December 31, 1999 26,609,165 2,002,873
Acquisitions 1,879,324 --
Dispositions (1,717,627 ) (199,438 )
Depreciation expense -- 381,303
----------------- ------------------
Balance, December 31, 2000 $ 26,770,862 $ 2,184,738
================= ==================
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 XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
----------------- ------------------
----------------- ------------------
Properties of Joint Venture in Which the Partnership has a 50% Interest
and has Invested in Under Operating Leases:
Balance, December 31, 1997 $ 4,906,644 $ 114,171
Dispositions (22,860 ) --
Depreciation expense -- 93,098
----------------- ------------------
----------------- ------------------
Balance, December 31, 1998 4,883,784 207,269
Depreciation expense -- 94,203
----------------- ------------------
Balance, December 31, 1999 4,883,784 301,472
Depreciation expense -- 94,203
----------------- ------------------
Balance, December 31, 2000 $ 4,883,784 $ 395,675
================= ==================
Properties of Joint Venture in Which the Partnership has a 72.2%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1997 $ 131,762 $ --
Depreciation expense (e) -- --
----------------- ------------------
----------------- ------------------
Balance, December 31, 1998 131,762 --
Depreciation expense (e) -- --
----------------- ------------------
Balance, December 31, 1999 131,762 --
Depreciation expense (e) -- --
----------------- ------------------
Balance, December 31, 2000 $ 131,762 $ --
================= ==================
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- ------------------
---------------- ------------------
Property of Joint Venture in Which the Partnership has a 39.94% Interest
and has Invested in Under an Operating Lease:
Balance, December 31, 1997 $ 512,925 $ 984
Acquisition 4,972 --
Depreciation expense -- 10,937
---------------- ------------------
---------------- ------------------
Balance, December 31, 1998 517,897 11,921
Depreciation expense -- 10,948
---------------- ------------------
Balance, December 31, 1999 517,897 22,869
Depreciation expense -- 10,948
---------------- ------------------
Balance, December 31, 2000 $ 517,897 $ 33,817
================ ==================
Property of Joint Venture in Which the Partnership has a 50% Interest and
has Invested in Under an Operating Lease:
Balance, December 31, 1997 $ -- $ --
Acquisition 1,042,865 --
Depreciation expense -- 937
---------------- ------------------
Balance, December 31, 1998 1,042,865 937
Reclassified to a direct financing lease (603,892 ) (937 )
Depreciation Expense -- --
---------------- ------------------
Balance, December 31, 1999 438,973 --
Reclassified from a direct financing lease 639,141 --
Depreciation Expense -- 16,219
---------------- ------------------
Balance, December 31, 2000 $ 1,078,114 $ 16,219
================ ==================
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- ------------------
---------------- ------------------
Property of Joint Venture in Which the Partnership has a 11% Interest and
has Invested in Under an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisition 1,319,208 --
Depreciation expense -- 4,542
--------------- -----------------
--------------- -----------------
Balance, December 31, 1999 1,319,208 4,542
Depreciation expense -- 28,873
--------------- -----------------
Balance, December 31, 2000 $ 1,319,208 $ 33,415
=============== =================
Property of Joint Venture in Which the Partnership has a 44% Interest and
has Invested in Under an Operating Lease:
Balance, December 31, 1998 $ -- $ --
Acquisition 1,083,153 --
Depreciation expense -- --
--------------- -----------------
Balance, December 31, 1999 $ 1,083,153 $ --
Acquisition 865,184 --
Depreciation Expense -- 7,210
--------------- -----------------
Balance, December 31, 2000 $ 1,948,337 $ 7,210
=============== =================
Property held as Tenant-in-Common in Which the Partnership has a 26%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1999 $ -- $ --
Acquisitions 1,503,378 --
Depreciation Expense -- 27,948
--------------- -----------------
Balance, December 31, 2000 $ 1,503,378 $ 27,948
=============== =================
(b) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years. All of the leases are treated as
operating leases for federal income tax purposes.
(c) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures for federal income tax purposes was
$32,470,424 and $10,824,175, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
(d) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(e) 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.
(f) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(g) 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.
(h) Effective August 1994, the lease for this Property was terminated,
resulting in the lease being reclassified as an operating lease. The
Partnership does not believe this is indicative of an impairment in the
carrying value of the Property.
(i) Effective October 1999, the lease for this property was amended,
resulting in the reclassification of the land and building portions of
the lease to an operating lease. The building was recorded at net book
value and depreciated over its remaining estimated life of
approximately 24.5 years.
(j) Effective August 1999, the lease for this Property was terminated,
resulting in the reclassification of the land and building portions of
the lease to an operating lease. The land and building were recorded at
net book value and the building is being depreciated over its remaining
estimated life of approximately 25 years.
(k) During the year ended December 31, 1998, the Partnership purchased land
and building from CNL First Corp., an affiliate of the General
Partners, for an aggregate cost of $1,537,000.
(l) For financial reporting purposes the undepreciated cost of the Property
in Laurens, South Carolina was written down to 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 $98,822 and
$27,211 at December 31, 2000 and 1999, respectively. The tenant of this
Property filed for bankruptcy and ceased payment of rents under the
terms of its lease agreement. The impairment at December 31, 2000 and
1999 represented the difference between the Property's carrying value
and the estimated net realizable value of the Property. 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 assets.
(m) Effective February 2000, the lease for this Property was terminated,
resulting in the reclassification of the building portion of the lease
to an operating lease. The building was recorded at net book value and
is being depreciated over its remaining estimated life of approximately
29 years.
CNL INCOME FUND XIV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
(n) During the year ended December 31, 2000, the Partnership purchased land
and building from CNL BB Corp., an affiliate of the General Partners,
for an aggregate cost of $1,879,300. In addition, during the year ended
December 31, 2000, the Partnership and an affiliate, as
tenants-in-common, purchased a Property from CNL BB Corp., an affiliate
of the General Partners for an aggregate cost of $1,223,500.
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XIV, 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 XIV, 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 XIV, Ltd. ( Included as Exhibit
4.2 to Form 10-K filed with the Securities and
Exchange Commission on April 13, 1994, incorporated
herein by reference.)
10.1 Management Agreement between CNL Income Fund XIV, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on April 13, 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.)