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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 0-26216
CNL INCOME FUND XV, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3198888
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to section 12(g) of the Act:
Units of limited partnership interest ($10 per Unit)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 4,000,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
Item 1. Business
CNL Income Fund XV, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on September 2, 1993. 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 February 23, 1994, the
Partnership offered for sale up to $40,000,000 of limited partnership interests
(the "Units") (4,000,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
February 23, 1994. The offering terminated on September 1, 1994, at which date
the maximum offering proceeds of $40,000,000 had been received from investors
who were admitted to the Partnership as limited partners (the "Limited
Partners").
The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains"). Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$35,200,000 and were used to acquire 45 Properties, including 15 Properties
consisting of only land and two Properties owned by a joint venture in which the
Partnership is a co-venturer, to pay acquisition fees totaling $2,200,000 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 two Checkers
Properties in Knoxville, Tennessee, and one Checkers Property in Leavenworth,
Kansas, which consisted of land only, exercised its option in accordance with
the lease agreements to substitute other Properties for these three Properties.
The Partnership sold the two Properties in Knoxville, Tennessee, and the
Property in Leavenworth, Kansas, and used the net sales proceeds to acquire two
Checkers Properties, consisting of land only, located in Orlando and Bradenton,
Florida. During the year ended December 31, 1996, the Partnership acquired a
Property in Clinton, North Carolina, with affiliates of the General Partners as
tenants-in-common. In addition, during the year ended December 31, 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 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
during 1997. In addition, during 1998, the Partnership acquired a Property in
Fort Myers, Florida, with an affiliate of the General Partners, as
tenants-in-common. During the year ended December 31, 1999, the Partnership sold
a Property in Gastonia, North Carolina and used a portion of the net sales
proceeds to invest in a joint venture arrangement, Duluth Joint Venture, with
affiliates of the General Partners, to construct and hold one Property. During
the year ended December 31, 2000, the Partnership sold its interest in Duluth
Joint Venture to an affiliate of the General Partners. In addition, during 2000,
the Partnership sold a Property in Lexington, North Carolina and used the net
sales proceeds to invest in a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with affiliates of the General Partners, to purchase and hold one
Property.
As a result of the above transactions, as of December 31, 2000, the
Partnership owned 49 Properties. The 49 Properties include 14 wholly owned
Properties consisting of only land, interests in seven Properties owned by joint
ventures in which the Partnership is a co-venturer and two Properties owned with
affiliates as tenants-in-common. The lessee of the 14 wholly owned Properties
consisting of only land 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 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 CNL American Properties Fund, Inc.
("APF") announced that they had mutually agreed to terminate the Agreement and
Plan of Merger entered into in March 1999. The agreement to terminate the
Agreement and Plan of Merger was based, in large part, on the General Partners'
concern that, in light of market conditions relating to publicly traded real
estate investment trusts, the value of the transaction had diminished. As a
result of such diminishment, the General Partners ability to unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable. The General Partners are continuing to evaluate
strategic alternatives for the Partnership, including alternatives to provide
liquidity to the Limited Partners.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership, the
joint venture, in which the Partnership is a co-venturer and the Properties
owned with affiliates as tenants-in-common, provide for initial terms ranging
from 10 to 20 years (the average being 18 years) and expire between 2009 and
2019. Generally, the leases are 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 $22,500 to
$259,900. 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 40 of the Partnership's 49 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.
In June 1998, October 1998 and January 1999, three tenants, Long John
Silver's, Inc., Finest Foodservice, LLP, and B.C. Superior, LLC, respectively,
filed for bankruptcy and rejected the leases relating to six of their ten
Properties (including two Properties held by Wood-Ridge Real Estate Joint
Venture) and ceased making rental payments to the Partnership relating to those
leases that were rejected. Between February and May 1999, the Partnership
entered into new leases with new tenants for three of the Properties for which
leases were rejected. The lease terms for these Properties are substantially the
same as the Partnership's other leases as described above. In addition, in
November 1999 and January 2000, the Partnership sold two of the remaining
Properties for which leases were rejected. The General Partners are currently
seeking either a new tenant or purchaser for the Property with the remaining
rejected lease. The Partnership will not recognize rental and earned income from
this Property until a new tenant 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 remaining lease that was rejected could have an
adverse effect on the results of operations of the Partnership if the
Partnership is unable to re-lease this Property in a timely manner. In August
1999, Long John Silver's, Inc. assumed and affirmed its remaining leases and the
Partnership has continued receiving rental payments on such leases. In addition,
in August 1999, the lease relating to the Long John Silver's Property in
Albuquerque, New Mexico was amended to provide rent deferrals. The rent
deferrals are payable by the tenant beginning in August 2001.
In December 1999, the Partnership entered into a new lease with a new
tenant for its Property in Mentor, Ohio to operate the Property as a Bennigan's
restaurant. In connection therewith, the Partnership committed to fund up to
$749,500 for renovation costs all of which had been incurred and paid as of
December 31, 2000. The lease terms for this Property are substantially the same
as the Partnership's other leases as described above. The Partnership received
$450,000 in consideration of the Partnership releasing the former tenant from
its obligation under the terms of its lease.
In addition, in December 1999, the Partnership invested a portion of
the net sales proceeds from the sale of the Property in Gastonia, North
Carolina, in a joint venture arrangement, Duluth Joint Venture, with affiliates
of the General Partners, to purchase and hold one restaurant Property. During
October 2000, the Partnership sold its 33 percent interest in Duluth Joint
Venture to an affiliate of the General Partners.
In June 2000, the Partnership invested the net sales proceeds from the
sale of the Property in Lexington, North Carolina in a joint venture
arrangement, TGIF Pittsburgh Joint Venture, with affiliates of the General
Partners, to purchase and hold one restaurant Property. The lease terms for this
Property are substantially the same as the Partnership's other leases as
described above. The General Partners do not anticipate that the decrease in
rental income relating to this amendment will have a material adverse affect on
the Partnership's financial position or results of operations.
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.
Major Tenants
During 2000, four lessees of the Partnership, Flagstar Enterprises,
Inc., Checkers Drive-In Restaurants, Inc., Jack in the Box 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 seven Properties owned by joint ventures and two Properties
owned with affiliates as tenants-in-common). As of December 31, 2000, Flagstar
Enterprises, Inc. was the lessee under leases relating to seven restaurants,
Checkers Drive-In Restaurants, Inc. was the lessee under leases relating to 14
restaurants, Jack in the Box Inc. was the lessee under leases relating to four
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, these four lessees each will continue to
contribute more than ten percent of the Partnership's total rental income in
2001. In addition, five Restaurant Chains, Hardee's, Checker's, Long John
Silver's, Golden Corral and Jack in the Box, each accounted for more than ten
percent of the Partnership's total rental income during 2000 (including the
Partnership's share of rental income from seven Properties owned by joint
ventures and two Properties owned with affiliates as tenants-in-common). In
2001, it is anticipated that these five Restaurant chains each will continue to
account for more than ten percent of the total rental income to which the
Partnership is entitled under the terms of the leases. Any failure of these
lessees or Restaurant Chains could materially affect the Partnership's income if
the Partnership is not able to re-lease the Properties in a timely manner. No
single tenant or group of affiliated tenants lease Properties with an aggregate
carrying value in excess of 20 percent of the total assets of the Partnership.
Joint Venture and Tenancy in Common Arrangements
In August 1994, the Partnership entered into a joint venture
arrangement, Wood-Ridge Real Estate Joint Venture with CNL Income Fund XIV,
Ltd., to purchase and hold two Properties. In September 1996, Wood-Ridge Real
Estate Joint Venture sold its two Properties to the tenant and as of December
31, 1997, had reinvested the majority of the net sales proceeds in six
replacement Properties. The joint venture distributed the remaining net sales
proceeds to the Partnership and its co-venture partner on a prorata basis during
1997. In addition, in December 1999, the Partnership entered into a joint
venture arrangement, Duluth Joint Venture, with CNL Income Fund V, Ltd., CNL
Income Fund VII, Ltd., and CNL Income Fund XIV, Ltd., to construct and hold one
restaurant Property. In October 2000, the Partnership sold its 33 percent
interest in Duluth Joint Venture, to CNL Income Fund VII, Ltd. In June 2000, the
Partnership entered into a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with CNL Income Fund VII, Ltd., CNL Income Fund XVI, Ltd. and CNL
Income Fund XVIII, Ltd. to purchase and hold one restaurant Property. Each CNL
Income Fund is an affiliate of the General Partners and is a limited partnership
organized pursuant to the laws of the state of Florida.
The joint venture arrangements provide for the Partnership and its
joint venture partners to share in all costs and benefits associated with the
joint venture in accordance with their respective percentage interests in the
joint venture. The Partnership holds a 50 percent and 23.62% interest in the
profits and losses of Wood-Ridge Real Estate Joint Venture and TGIF Pittsburgh
Joint Venture, respectively. 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 and TGIF Pittsburgh Joint Venture
each have an initial term of 30 years. After the expiration of the initial
terms, each joint venture continues in existence from year to year unless
terminated at the option of any of the joint venturers or by an event of
dissolution. Events of dissolution include the bankruptcy, insolvency or
termination of any joint venturer, sale of the Property owned by the joint
venture, 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 an affiliates of
the General Partners for Wood-Ridge Real Estate Joint Venture and TGIF
Pittsburgh 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 both joint ventures is distributed to
the partners in accordance with their respective percentage interests. Any
liquidation proceeds, after paying joint venture debts and liabilities and
funding reserves for contingent liabilities, will be distributed first to the
joint venture partners with positive capital account balances in proportion to
such balances until such balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.
In addition to the above joint venture agreements, the Partnership
entered into an agreement to hold a Golden Corral Property, as
tenants-in-common, with CNL Income Fund IV, Ltd., CNL Income Fund VI, Ltd., and
CNL Income Fund X, Ltd., affiliates of the General Partners. The agreement
provides for the Partnership and the affiliates to share in the profits and
losses of the Property in proportion to each party's percentage interest. The
Partnership owns a 16 percent interest in this Property.
In June 1998, the Partnership entered into an additional agreement to
hold a Bennigan's Property, as tenants-in-common, with CNL Income Fund VI, Ltd.,
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 party's percentage interest. The Partnership owns a 15
percent interest in this Property.
Each of the affiliates is a limited partnership organized pursuant to
the laws of the state of Florida. The tenancy in common agreement restricts each
party's ability to sell, transfer, or assign its interest in the tenancy in
common's Property without first offering it for sale to the remaining party.
The use of joint venture and tenancy in common arrangements allows the
Partnership to fully invest its available funds at times at which it would not
have sufficient funds to purchase an additional Property, or at times when a
suitable opportunity to purchase an additional Property is not available. The
use of joint venture and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of a
Property if the proceeds are reinvested in an additional Property.
Certain Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of APF, the parent company of CNL
Fund Advisors, Inc., perform certain services for the Partnership. In addition,
the General Partners have available to them the resources and expertise of the
officers and employees of CNL Financial Group, Inc., a diversified real estate
company, and its affiliates, who may also perform certain services for the
Partnership.
Item 2. Properties
As of December 31, 2000, the Partnership owned 49 Properties. Of the 49
Properties, 40 are owned by the Partnership in fee simple, seven are owned
through two joint venture arrangements and two are owned through tenancy in
common arrangements. See Item 1. Business - Joint Venture and Tenancy in Common
Arrangements. The Partnership is not permitted to encumber its Properties under
the terms of its partnership agreement. Reference is made to the Schedule of
Real Estate and Accumulated Depreciation for a listing of the Properties and
their respective costs, including acquisition fees and certain acquisition
expenses.
Description of Properties
Land. The Partnership's Property sites range from approximately 15,600
to 137,700 square feet depending upon building size and local demographic
factors. Sites purchased by the Partnership are in locations zoned for
commercial use which have been reviewed for traffic patterns and volume.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by state. More detailed information regarding the location of
the Properties is contained in the Schedule of Real Estate and Accumulated
Depreciation for the year ended December 31, 2000.
State Number of Properties
Alabama 1
California 3
Florida 10
Georgia 4
Kentucky 1
Minnesota 1
Mississippi 1
Missouri 1
New Jersey 1
New Mexico 1
North Carolina 4
Ohio 2
Oklahoma 2
Pennsylvania 3
South Carolina 5
Tennessee 4
Texas 4
Virginia 1
-------
TOTAL PROPERTIES 49
=======
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 14 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
1,500 to 11,000 square feet. All buildings on the 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. 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 (including the Properties owned through
tenancy in common arrangements) for federal income tax purposes was $31,741,716
and $9,312,896, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
Bennigan's 2
Boston Market 2
Checkers 14
Denny's 2
Golden Corral 5
Hardee's 7
Jack in the Box 4
Japan Express 1
Long John Silver's 6
Quincy's 1
Taco Bell 1
Wendy's 1
Other 3
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TOTAL PROPERTIES 49
=======
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, 92 percent, 98 percent and 88
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 the years ended December 31:
2000 1999 1998 1997 1996
- --------------------------------- -------------- ------------- -------------- ------------- -------------
Rental Income (1) $ 3,555,125 $3,568,289 $3,461,756 $3,906,700 $3,905,897
Properties (2) 48 50 50 49 48
Average Per Property $ 74,065 $ 71,366 $ 69,235 $ 79,729 $ 81,373
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through a joint venture arrangement and the
Properties owned through tenancy in common arrangements. Rental
revenues have been adjusted, as applicable, for any amounts for which
the Partnership has established an allowance for doubtful accounts.
(2) Excludes Properties which were vacant and generated no rental income.
The following is a schedule of lease expirations for leases in place as
of December 31, 2000 for the next ten years and thereafter.
Percentage of
Number Annual Rental Gross Annual
Expiration Year of Leases Revenues Rental Income
- -------------------- ----------------- ------------------- ------------------
2001 -- $ -- --
2002 -- -- --
2003 -- -- --
2004 -- -- --
2005 -- -- --
2006 -- -- --
2007 -- -- --
2008 -- -- --
2009 5 572,121 15.45%
2010 -- -- --
Thereafter 43 3,129,086 84.55%
----------------- ------------------ --------------------
Total (1) 48 $ 3,701,207 100.00%
================= ================== ====================
(1) Excludes one Property which was 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 Corporation leases seven Hardee's restaurants. The initial
term of each lease is 20 years (expiring in 2014) and the average minimum base
annual rent is approximately $73,800 (ranging from approximately $62,900 to
$87,800).
Checkers Drive-In Restaurants, Inc. leases 14 Checkers Drive-In
Restaurants ("Checkers"). The initial term of each of its leases is 20 years
(expiring between 2014 and 2015) and the average minimum base annual rent is
approximately $42,900 (ranging from approximately $22,500 to $63,100). The
leases for the 14 Checkers Properties consist of only land. The tenant owns the
buildings currently on the land and has the right, if not in default under the
lease, to remove the buildings from the land at the end of the lease term.
Jack in the Box Inc. leases four Jack in the Box restaurants. The
initial term of each lease is 18 years (expiring in 2012) and the average
minimum base annual rent is approximately $91,100 (ranging from approximately
$71,000 to $102,200).
In addition, Golden Corral Corporation leases five Golden Corral
restaurants. The initial term of each lease is 15 years (expiring between 2009
and 2011) and the average minimum base annual rent is approximately $136,900
(ranging from approximately $88,000 to $190,600).
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 party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) As of March 15, 2001 there were 2,709 holders of record of the Units. There
is no public trading market for the Units, and it is not anticipated that a
public market for the Units will develop. During 2000, Limited Partners who
wished to sell their Units may have offered the Units for sale pursuant to the
Partnership's distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their distributions used to acquire additional Units (to the
extent Units were available for purchase), may have done so pursuant to such
Plan. The General Partners had the right to prohibit transfers of Units. From
inception through December 31, 2000, the price paid for any Unit transferred
pursuant to the Plan ranged from $8.29 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 $8.01 $7.34 $ 7.54 (2) (2) (2)
Second Quarter 8.50 6.12 7.31 (2) (2) (2)
Third Quarter 7.29 7.22 7.23 $10.00 $ 6.84 $ 8.42
Fourth Quarter 6.83 6.65 6.77 10.00 6.84 7.82
(1) A total of 24,533 and 14,500 Units were transferred other than pursuant
to the Plan for the years ended December 31, 2000 and 1999,
respectively.
(2) No transfer of Units took place during the quarter other than pursuant
to the Plan.
The capital contribution per Unit was $10. All cash available for
distribution will be distributed to the partners pursuant to the provisions of
the Partnership Agreement.
For each of the years ended December 31, 2000 and 1999, the Partnership
declared cash distributions of $3,200,000 to the Limited Partners. Distributions
of $800,000 were declared to the Limited Partners at the close of each of the
Partnership's calendar quarters during 2000 and 1999. These amounts include
monthly distributions made in arrears for the Limited Partners electing to
receive such distributions on this basis. No amounts distributed to the Limited
Partners for the years ended December 31, 2000 and 1999, are required to be or
have been treated by the Partnership as a return of capital for purposes of
calculating the Limited Partners' return on their adjusted capital
contributions. No distributions have been made to the General Partners to date.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
(b) Not applicable.
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
--------------------------------- --------------- ---------------- ---------------
--------------------------------- --------------- ---------------- ---------------
Year ended December 31:
----------------------------------
----------------------------------
Revenues (1) $ 3,683,602 $ 3,373,628 $ 3,471,040 $ 3,908,014 $ 4,068,610
----------------------------------
Net income (2) 2,624,415 2,769,975 2,642,497 3,434,905 3,585,059
----------------------------------
Cash distributions declared 3,200,000 3,200,000 3,400,000 3,200,000 3,280,000
(4)
----------------------------------
Net income per Unit (2)(3) 0.66 0.69 0.65 0.85 0.89
----------------------------------
Cash distributions declared
per Unit (3) 0.80 0.80 0.85 0.80 0.82
----------------------------------
----------------------------------
At December 31:
----------------------------------
Total assets $ 35,483,327 $ 36,073,980 $ 36,356,904 $37,045,723 $ 36,936,678
----------------------------------
Partners' capital 34,460,290 35,035,875 35,465,900 36,223,403 35,988,498
(1) Revenues include equity in earnings of joint ventures and adjustments
to accrued rental income due to three tenants filing for bankruptcy and
rejecting four of the Partnership's leases.
(2) Net income for the year ended December 31, 2000, includes $38,003 from
gain on sale of assets. Net income for the year ended December 31,
1999, includes $165,503 from loss on sale of assets. Net income for the
year ended December 31, 2000, 1999 and 1998 includes $446,975, $83,897
and $280,907, respectively, from provision for loss on assets. In
addition, net income for the year ended December 31, 1999, also
includes lease termination income of $450,000 recognized by the
Partnership in connection with consideration the Partnership received
for releasing a former tenant from their obligation under the terms of
its lease.
(3) Based on the weighted average number of Limited Partner Units
outstanding during the years ended December 31, 2000, 1999, 1998, 1997,
and 1996.
(4) Distributions for the years ended December 31, 1998 and 1996, include a
special distribution to the Limited Partners of $200,000 and $80,000,
respectively, which represented cumulative excess operating reserves.
The above selected financial data should be read in conjunction with the
financial statements and related notes contained in Item 8 hereof.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Partnership was organized on September 2, 1993, to acquire for
cash, either directly or through joint venture arrangements, both newly
constructed and existing restaurant Properties, as well as land upon which
restaurant Properties were to be constructed, to be leased primarily to
operators of selected national and regional fast-food and family-style
Restaurant Chains. The leases are generally triple-net leases, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. As of December 31, 2000, the Partnership owned 49 Properties, either
directly or through joint venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital is cash from operations
(which includes cash received from tenants, distributions from joint ventures
and interest received, less cash paid for expenses). Cash from operations was
$3,325,920, $2,943,295, and $3,216,728 for the years ended December 31, 2000,
1999 and 1998, respectively. The increase in cash from operations during 2000 as
compared to 1999 and the decrease during 1999 as compared to 1998, was primarily
a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.
In June 1998, the Partnership invested in a Bennigan's Property located
in Fort Myers, Florida, with CNL Income Fund VI, Ltd., a Florida limited
partnership and affiliate of the General Partners as tenants-in-common. In
connection therewith, the Partnership and the affiliate of the General Partners
entered into an agreement whereby each party will share in the profits and
losses of the Property in proportion to its applicable percentage interest. As
of December 31, 2000, the Partnership owned a 15 percent interest in this
Property.
In November 1999, the Partnership sold its Property in Gastonia, North
Carolina to an unrelated third party for $672,630 and received net sales
proceeds of $631,304, resulting in a loss of $165,503 for financial reporting
purposes. The Partnership distributed amounts sufficient to enable the Limited
Partners to pay federal and state income taxes, if any (at a level reasonably
assumed by the General Partners), resulting from the sale. In December 1999, the
Partnership reinvested a portion of the net sales proceeds from the sale in a
joint venture arrangement, Duluth Joint Venture, with CNL Income Fund V, Ltd.,
CNL Income Fund VII, Ltd., and CNL Income Fund XIV, Ltd., each of which is a
Florida limited partnership and an affiliate of the General Partners, to
construct and hold one restaurant Property. During 2000 and 1999, the
Partnership contributed $252,591 and $357,441, respectively, to Duluth Joint
Venture to pay for construction costs. In October 2000, the Partnership sold its
33 percent interest in Duluth Joint Venture, to CNL Income Fund VII, Ltd. for
$610,032. The proceeds from the sale exceeded the basis of the interest in this
joint venture resulting in a gain of $38,003 for financial reporting purposes,
as described below in "Results of Operations." The Partnership distributed
amounts sufficient to enable the Limited Partners to pay federal and state
income taxes at a level reasonably assumed by the General Partners, resulting
from the sale.
In December 1999, the Partnership entered into a new lease with a new
tenant for its Property in Mentor, Ohio, to operate the Property as a Bennigan's
restaurant. In connection therewith, the Partnership committed to fund up to
$749,500 for renovation costs, all of which had been incurred and paid as of
December 31, 2000. The Partnership received $450,000 in consideration of the
Partnership releasing the former tenant from its obligation under the terms of
its lease.
In January 2000, the Partnership sold its Property in Lexington, North
Carolina, for $599,500 and received net sales proceeds of $562,130, resulting in
a loss of $88,869 for financial reporting purposes, which the Partnership
recorded at December 31, 1999, as described below in "Results of Operations". In
June 2000, the Partnership used the net sales proceeds received from the sale of
this Property to enter into a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with CNL Income Fund VII, Ltd., CNL Income Fund XVI, Ltd., and CNL
Income Fund XVIII, Ltd., each a Florida limited partnership and an affiliate of
the General Partners, to purchase and hold one restaurant Property. As of
December 31, 2000, the Partnership owned a 23.62% interest in the profits and
losses of the joint venture.
None of the Properties owned by the Partnership, or the joint ventures
or tenancy in common arrangements in which the Partnership owns an interest, is
or may be encumbered. Subject to certain restrictions on borrowing, however, the
Partnership may borrow funds but will not encumber any of the Properties in
connection with any such borrowing. The Partnership will not borrow for the
purpose of returning capital to the Limited Partners. The Partnership will not
borrow under arrangements that would make the Limited Partners liable to
creditors of the Partnership. The General Partners further have represented that
they will use their reasonable efforts to structure any borrowing so that it
will not constitute "acquisition indebtedness" for federal income tax purposes
and also will limit the Partnership's outstanding indebtedness to three percent
of the aggregate adjusted tax basis of its Properties. Affiliates of the General
Partners from time to time incur certain operating expenses on behalf of the
Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, cash reserves, rental income from the Partnership's
Properties and net sales proceeds from the sale of Properties, are invested in
money market accounts or other short-term, highly liquid investments such as
demand deposit accounts at commercial banks, money market accounts and
certificates of deposit with less than a 30-day maturity date, pending the
Partnership's use of such funds to pay Partnership expenses, make distributions
to partners or reinvest in additional Properties. At December 31, 2000, the
Partnership had $1,360,947 invested in such short-term investments (including a
certificate of deposit in the amount of $103,500) as compared to $1,660,363 at
December 31, 1999. The decrease in cash and cash equivalents during 2000 was
primarily attributable to the payment of renovation costs for the Partnership's
Property in Mentor, Ohio, as described above. The decrease was partially offset
by the Partnership selling its interest in Duluth Joint Venture, as described
above. As of December 31, 2000, the average interest rate earned on the rental
income deposited in demand deposit accounts at commercial banks was
approximately 2.1% annually. The funds remaining at December 31, 2000, after
payment of distributions and other liabilities, will be used to meet the
Partnership's working capital and other needs.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.
Due to low operating expenses and ongoing cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because substantially all leases of the Partnership's
Properties are on a triple-net basis, it is not anticipated that a permanent
reserve for maintenance and repairs will be established at this time. To the
extent, however, that the Partnership has insufficient funds for such purposes,
the General Partners will contribute to the Partnership an aggregate amount of
up to one percent of the offering proceeds for maintenance and repairs. The
General Partners have the right to cause the Partnership to maintain additional
reserves if, in their discretion, they determine such reserves are required to
meet the Partnership's working capital needs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based on current cash from operations, the Partnership declared
distributions to the Limited Partners of $3,200,000 for the year ended December
31, 2000. Based on current and anticipated future cash from operations, and for
the year ended December 31, 1998, cumulative excess operating reserves, the
Partnership declared distributions to the Limited Partners of $3,200,000 and
$3,400,000 for the years ended December 31, 1999 and 1998, respectively. This
represents distributions of $0.80 for the years ended December 31, 2000 and
1999, and $0.85 per Unit for the year ended December 31, 1998. No distributions
were made to the General Partners for the years ended December 31, 2000, 1999,
and 1998. No amounts distributed to the Limited Partners for the years ended
December 31, 2000, 1999 or 1998 are required to be or have been treated by the
Partnership as a return of capital for purposes of calculating the Limited
Partners' return on their adjusted capital contributions. The Partnership
intends to continue to make distributions of cash available for distribution to
the Limited Partners on a quarterly basis.
During 2000, the general partners waived their right to receive future
distributions from the Partnership, including both distributions of operating
cash flow and distributions of liquidation proceeds, to the extent that the
cumulative amount of such distributions would exceed the balance in the general
partners' capital account as of December 31, 1999. Accordingly, the general
partners were not allocated any net income and did not receive any distributions
during the year ended December 31, 2000.
As of December 31, 2000 and 1999, the Partnership owed $21,224 and
$60,991, respectively, to related parties for accounting and administrative
services and management fees. As of March 15, 2001, the Partnership had
reimbursed the affiliates all such amounts. Other liabilities, including
distributions payable, increased to $1,001,813 at December 31, 2000, from
$977,114 at December 31, 1999. The General Partners believe that the Partnership
has sufficient cash on hand to meet its current working capital needs.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
The Partnership owned and leased 41 wholly owned Properties during 2000
(including one Property which was sold in January 2000) and during 1999 and
1998, the Partnership owned and leased 42 wholly owned properties (including one
Property which was sold in November 1999). During 1998, the Partnership owned
and leased two Properties with affiliates as tenants-in-common, was a
co-venturer in one joint venture that owned and leased six Properties, and
during 1999, the Partnership was a co-venturer in an additional joint venture
that owned and leased one Property. During 2000, the Partnership sold its
interest in one of its joint ventures that owned and leased one Property, and
was a co-venturer in an additional joint venture that owned and leased one
Property. As of December 31, 2000, the Partnership owned, either directly or
through joint venture or tenancy in common arrangements, 49 Properties, which
are generally subject to long-term, triple-net leases. The leases of the
Properties provide for minimum base annual rental payments (payable in monthly
installments) ranging from approximately $22,500 to $259,900. 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 from the sixth or the 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 $3,262,585, $3,031,192, and $3,130,205, respectively, in
rental income from operating leases (net of adjustments to accrued rental
income) and earned income from direct financing leases from Properties wholly
owned by the Partnership. Rental and earned income were impacted in each of the
years presented 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 eight
Properties it leased. As a result, this tenant ceased making rental payments on
the four rejected leases, causing a decrease in rental and earned income of
approximately $159,000 during 1999, as compared to 1998. The Partnership has
continued receiving rental payments relating to the leases not rejected by the
tenant. In conjunction with the four rejected leases, during 1998, the
Partnership reversed approximately $250,600 of accrued rental income. The
accrued rental income was the accumulated amount of non-cash accounting
adjustments previously recorded in order to recognize future scheduled rent
increases as income evenly over the term of the lease. No such amounts were
reversed during 1999 relating to this tenant. In May 1999, the Partnership
re-leased one of the Properties with a rejected lease and rental payments
commenced in July 1999 which offset the decrease during 1999 and caused an
increase in rental and earned income during 2000. In each of November 1999 and
January 2000, the Partnership sold one Property with a rejected lease to a third
party. The Partnership will not recognize rental and earned income from the
remaining Property until a new tenant is located or until the Property is sold
and the proceeds from such sale are reinvested in an 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. During the year ended December 31, 2000, the Partnership
received approximately $99,100 in bankruptcy proceeds relating to the Properties
whose leases were rejected. The General Partners do not anticipate receiving any
additional amounts but will apply such amounts, if and when received, to income.
The lost revenues resulting from the one remaining lease that was rejected, as
described above, could have an adverse affect on the results of operations of
the Partnership if the Partnership is unable to re-lease this Property in a
timely manner.
In addition, rental and earned income decreased during 2000, as
compared to 1999, partially as a result of the Partnership establishing an
allowance for doubtful accounts of approximately $25,700 for past due rental
amounts relating to the Properties in Huntsville, Texas and Bartlesville,
Oklahoma, in accordance with the Partnership's collection policy. In addition,
the Partnership reserved approximately $25,600 in accrued rental income relating
to these Properties. The accrued rental income was the accumulated amount of
non-cash accounting adjustments previously recorded in order to recognize future
scheduled rent increases as income evenly over the term of the lease. The
General partners are continuing to pursue collection of these amounts and will
recognize such amounts as income if collected. No such allowance was recorded in
1999 and 1998.
Rental and earned income also decreased during 1999, as compared to
1998, by approximately $14,700 due to the fact that in December 1999, the
Partnership terminated the lease with the tenant of the Property in Mentor,
Ohio. In connection therewith, during 1999, the Partnership reversed
approximately $175,100 of accrued rental income. In December 1999, the
Partnership re-leased the Property to a new tenant, and renovated the Property
into a Bennigan's restaurant, as described above in "Capital Resources," for
which rental payments commenced in May 2000, causing an increase in rental and
earned income during 2000.
During the years ended December 31, 2000, 1999, and 1998, the
Partnership also earned $28,165, $40,959, and $41,463, respectively, in
contingent rental income. Contingent rental income decreased during 2000, as
compared to 1999, primarily as a result of a decrease in gross sales of certain
restaurant Properties that are subject to leases requiring payment of contingent
rent.
In addition, for the years ended December 31, 2000, 1999 and 1998, the
Partnership earned $296,929, $259,508, and $236,553, respectively, attributable
to net income earned by joint ventures in which the Partnership is a
co-venturer. The increase in net income earned by joint ventures during 2000 and
1999, each as compared to the previous year, was primarily attributable to the
Partnership investing in a Property in Homestead, Pennsylvania in June 2000,
with an affiliate of the General Partners and a Property in Fort Myers, Florida,
in June 1998, with an affiliate of the General Partners as tenants-in-common, as
described above in "Capital Resources."
During the year ended December 31, 2000, four lessees of the
Partnership, Flagstar Enterprises, Inc., Checkers Drive-In Restaurants, Inc.,
Jack in the Box Inc., and Golden Corral Corporation, each contributed more than
ten percent of the Partnership's total rental income (including the
Partnership's share of rental and earned income from seven Properties owned by
joint ventures and two Properties owned with affiliates of the General Partners
as tenants-in-common). As of December 31, 2000, Flagstar Enterprises, Inc. was
the lessee under leases relating to seven restaurants, Checkers Drive-In
Restaurants, Inc. was the lessee under leases relating to 14 restaurants, Jack
in the Box Inc. was the lessee under leases relating to four restaurants and
Golden Corral Corporation was lessee under leases relating to five restaurants.
It is anticipated that, based on the minimum rental payments required by the
leases, these four lessees each will continue to contribute more than ten
percent of the Partnership's total rental income in 2001. In addition, during
the year ended December 31, 2000, five Restaurant Chains, Hardee's, Checkers
Drive-In Restaurants, Long John Silver's, Golden Corral and Jack in the Box,
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 seven Properties owned by joint ventures and two Properties owned with
affiliates of the General Partners as tenants-in-common). In 2001, it is
anticipated that these five Restaurant chains each will continue to account for
more than ten percent of the total rental income to which the Partnership is
entitled under the terms of 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 $95,923, $41,969 and $62,819 respectively in interest and
other income. The increase in interest and other income during 2000, as compared
to 1999, was primarily attributable to interest income earned on the net sales
proceeds relating to the 1999 and 2000 sales of Properties while pending
reinvestment in additional Properties.
Operating expenses, including depreciation and amortization expense,
were $650,215, $804,253, and $547,636 for the years ended December 31, 2000,
1999 and 1998, respectively. The decrease in operating expenses during 2000, as
compared to 1999, and the increase during 1999, as compared to 1998, was
primarily due to the fact that the Partnership incurred $45,098, $195,622, and
$23,196 during 2000, 1999, and 1998, respectively, in transaction costs 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 decrease in operating expenses during 2000 was
partially due to the fact that during 2000, the Partnership applied settlement
amounts relating to the four Long John Silvers Properties whose leases were
rejected. As a result, the Partnership reversed certain expenses such as legal
fees, real estate taxes, insurance, and maintenance, previously incurred by the
Partnership as a result of the tenant filing for bankruptcy. The decrease in
operating expenses during 2000 was partially offset by an increase in
depreciation expense resulting from the Partnership capitalizing the $749,500 of
renovation costs relating to the Property in Mentor, Ohio during 2000.
The increase in operating expenses during 1999, as compared to 1998,
was partially attributable to the fact that the Partnership incurred insurance
expense, maintenance expense, legal fee expense and real estate taxes as a
result of Long John Silvers, Inc. filing for bankruptcy and rejecting the leases
relating to four Properties in June 1998. In addition, the increase in operating
expenses during 1999, was partially attributable to an increase in depreciation
expense due to the fact that during the year ended December 31, 1998, the
Partnership reclassified these Properties from net investment in direct
financing leases to land and buildings on operating leases. In May 1999, the
Partnership re-leased one of the Properties and sold one Property in each of
November 1999 and January 2000. The Partnership will continue to incur such
expenses, relating to the remaining Property with a rejected lease until a
replacement tenant or purchaser is located. Due to the fact that, in August
1999, Long John Silvers Inc. assumed and affirmed its four remaining leases, as
described above, Long John Silvers, Inc. will be responsible for such expenses
relating to these Properties; therefore, the General Partners do not anticipate
that the Partnership will incur these expenses for the four remaining leases.
During the year ended December 31, 2000, the Partnership recorded a
provision for loss on assets in the amount of $446,975 for financial reporting
purposes relating to the Property in Medina, Ohio. The allowance represented the
difference between the carrying value of the Property and the estimated net
realizable value of the Property at December 31, 2000. During the year ended
December 31, 1999, the Partnership recorded a provision for loss on assets of
$83,897 for financial reporting purposes relating to the Property in Lexington,
North Carolina. The allowance represented the difference between the carrying
value of the Property at December 31, 1999, and the net sales proceeds received
from the sale of the Property to a third party in January 2000. In addition,
during the year ended December 31, 1998, the Partnership established an
allowance for loss on assets of $280,907 for financial reporting purposes
relating to two of the four Long John Silver's Properties for which leases were
rejected by the tenant, as described above. The loss represented the difference
between the carrying value of the Properties at December 31, 1998 and the
estimated net realizable value for these Properties.
As a result of the sale of the Partnership's interest in Duluth Joint
Venture, the Partnership recognized a gain of $38,003 for financial reporting
purposes during the year ended December 31, 2000. As a result of the sale of the
Property in Gastonia, North Carolina the Partnership recognized a loss of
$165,503 during the year ended December 31, 1999 for financial reporting
purposes. In addition, in connection with the lease termination relating to the
Property in Mentor, Ohio, the Partnership received $450,000 as a lease
termination fee from the former tenant in consideration of the Partnership's
releasing the tenant from its obligation under the terms of the lease. No such
transactions occurred during the year ended December 31, 1998.
The Partnership's leases as of December 31, 2000, are generally
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in 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 result of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments, embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Statement requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral
of the Effective Date of FASB Statement No. 133, an Amendment of FASB Statement
No. 133." FAS 137 deferred the effective date of FAS 133 for one year. FAS 133,
as amended, is now effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The partnership has reviewed both statements and
has determined that both FAS 133 and FAS 137 do not apply to the Partnership as
of December 31, 2000.
Termination of Merger
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with APF, pursuant to which the Partnership would be merged with and
into a subsidiary of APF. Under the Agreement and Plan of Merger, APF was to
issue shares of its common stock as consideration for the Merger. On March 1,
2000, the General Partners and APF announced that they had mutually agreed to
terminate the Agreement and Plan of Merger. The agreement to terminate the
Agreement and Plan of Merger was based, in large part, on the General Partners'
concern that, in light of market conditions relating to publicly traded real
estate investment trusts, the value of the transaction had diminished. As a
result of such diminishment, the General Partners' ability to unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND XV, 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 24-40
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund XV, 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 XV, 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) presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related financial
statements. These financial statements and financial statement schedules are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements and financial statement schedules based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
February 2, 2001
CNL INCOME FUND XV, 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
$ 22,719,190 $ 23,263,676
Net Investment in direct financing leases, less 6,105,701 6,236,233
allowance for impairment in carrying value
Investment in joint ventures 3,307,718 3,095,152
Cash and cash equivalents 1,257,447 1,660,363
Certificate of deposit 103,500 --
Receivables, less allowance for doubtful accounts of $37,881
and $13,085, respectively 75,750 97,068
Due from related parties 33,878 --
Prepaid expenses 27,511 14,988
Lease costs, less accumulated amortization of $3,426 and $1,479, 17,813 19,760
respectively
Accrued rental income, less allowance for doubtful accounts of 1,834,819 1,686,740
$25,626 in 2000
-------------------------- -----------------------
$ 35,483,327 $ 36,073,980
========================== =======================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 37,111 $ 122,999
Accrued and escrowed real estate taxes payable
30,406 28,352
Distributions payable 800,000 800,000
Due to related parties 21,224 60,991
Rents paid in advance and deposits 134,296 25,763
-------------------------- -----------------------
Total liabilities 1,023,037 1,038,105
Partners' capital 34,460,290 35,035,875
-------------------------- -----------------------
$ 35,483,327 $ 36,073,980
========================== =======================
See accompanying notes to financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
------------------ ----------------- -----------------
----------------- -----------------
Revenues
Rental income from operating leases $ 2,642,380 $ 2,384,318 $ 2,443,550
Adjustments to accrued rental income (25,626) (175,098) (250,631)
Earned income from direct financing leases 645,831 821,972 937,286
Contingent rental income 28,165 40,959 41,463
Interest and other income 95,923 41,969 62,819
----------------- -----------------
------------------ ----------------- -----------------
3,386,673 3,114,120 3,234,487
------------------ ----------------- -----------------
----------------- -----------------
Expenses:
General operating and administrative 162,307 158,505 137,794
Professional services 31,317 53,840 26,208
Management fees to related parties 35,870 33,430 33,990
Real estate taxes -- 29,381 16,797
State and other taxes 35,676 32,585 27,763
Depreciation and amortization 339,956 300,890 281,888
Transaction costs 45,089 195,622 23,196
----------------- -----------------
------------------ ----------------- -----------------
650,215 804,253 547,636
------------------ ----------------- -----------------
----------------- -----------------
Income Before Equity in Earnings of Joint Ventures, Gain
(Loss) on Sale of Assets, Provision for Loss on Assets,
and Lease Termination Income 2,736,458 2,309,867 2,686,851
Equity in Earnings of Joint Ventures 296,929 259,508 236,553
Gain (Loss) on Sale of Assets 38,003 (165,503) --
Provision for Loss on Assets (446,975) (83,897) (280,907)
Lease Termination Income -- 450,000 --
------------------ ----------------- -----------------
------------------ ----------------- -----------------
Net Income $ 2,624,415 $ 2,769,975 $ 2,642,497
================== ================= =================
================= =================
Allocation of Net Income:
General partners $ -- $ 29,159 $ 28,218
Limited partners 2,624,415 2,740,816 2,614,279
------------------ ----------------- -----------------
----------------- -----------------
$ 2,624,415 $ 2,769,975 $ 2,642,497
================== ================= =================
================= =================
Net Income Per Limited Partner Unit $ 0.66 $ 0.69 $ 0.65
================== ================= =================
================= =================
Weighted Average Number of Limited Partner Units Outstanding
4,000,000 4,000,000 4,000,000
================== ================= =================
================= =================
See accompanying notes to financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2000, 1999 and 1998
General Partners
-------------------------------------- -
-------------------- -
Accumulated
Contributions Earnings
------------------- ----------------- -
------------------- ----------------- -
Balance, December 31, 1997 $ 1,000 $ 116,411
Distributions to limited
partners ($0.85 per
limited partner unit) -- --
Net income -- 28,218
------------------- ----------------- -
------------------- ----------------- -
Balance, December 31, 1998 1,000 144,629
Distributions to limited
partners ($0.80 per
limited partner unit) -- --
Net income -- 29,159
------------------- ----------------- -
------------------- ----------------- -
Balance, December 31, 1999 1,000 173,788
Distributions to limited
partners ($0.80 per
limited partner unit) -- --
Net income -- --
------------------- ----------------- -
Balance, December 31, 2000 $ 1,000 $ 173,788
=================== ================= =
Limited Partners
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Accumulated Syndication
Contributions Distributions Earnings Costs Total
- ----------------- ----------------- ------------------ --------------- ---------------
- ----------------- ----------------- ------------------ --------------- ---------------
$ 40,000,000 $ (10,565,947) $ 11,461,939 $ (4,790,000) $ 36,223,403
-- (3,400,000) -- -- (3,400,000)
-- -- 2,614,279 -- 2,642,497
- ----------------- ----------------- ------------------ --------------- ---------------
- ----------------- ----------------- ------------------ --------------- ---------------
40,000,000 (13,965,947) 14,076,218 (4,790,000) 35,465,900
-- (3,200,000) -- -- (3,200,000)
-- -- 2,740,816 -- 2,769,975
- ----------------- ----------------- ------------------ --------------- ---------------
- ----------------- ----------------- ------------------ --------------- ---------------
40,000,000 (17,165,947) 16,817,034 (4,790,000) 35,035,875
-- (3,200,000) -- -- (3,200,000)
-- -- 2,624,415 -- 2,624,415
- ----------------- ----------------- ------------------ --------------- ---------------
$ 40,000,000 $ (20,365,947) $ 19,441,449 $ (4,790,000) $ 34,460,290
================= ================= ================== =============== ===============
See accompanying notes to financial statements.
CNL INCOME FUND XV, 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 $ 3,399,282 $ 2,980,513 $ 3,143,119
Distributions from joint ventures 363,205 264,410 271,075
Cash paid for expenses (485,468) (337,268) (252,042)
Interest received 48,901 35,640 54,576
------------------- ------------------- --------------------
------------------- ------------------- --------------------
Net cash provided by operating 3,216,728
activities 3,325,920 2,943,295
------------------- ------------------- --------------------
------------------- ------------------- --------------------
Cash Flows from Investing Activities:
Proceeds from sale of assets 562,130 631,304 --
Additions to land and buildings on operating
leases (749,500) -- --
Proceeds received from tenant in connection with
termination of lease -- 450,000 --
Investment in certificate of deposit (100,000) -- --
Investment in joint ventures (241,466) (357,441) (216,992)
Payment of lease costs -- (21,239) --
------------------- ------------------- --------------------
Net cash provided by (used in)
investing activities (528,836) 702,624 (216,992)
------------------- ------------------- --------------------
------------------- ------------------- --------------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,200,000) (3,200,000) (3,400,000)
------------------- --------------------
------------------- ------------------- --------------------
Net cash used in financing activities (3,200,000) (3,200,000) (3,400,000)
------------------- ------------------- --------------------
------------------- --------------------
Net Increase (Decrease) in Cash and Cash Equivalents
(402,916) 445,919 (400,264)
Cash and Cash Equivalents at Beginning of Year
1,660,363 1,214,444 1,614,708
------------------- ------------------- --------------------
------------------- --------------------
Cash and Cash Equivalents at End of Year $ 1,257,447 $ 1,660,363 $ 1,214,444
=================== =================== ====================
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
STATEMENT OF CASH FLOWS - CONTINUED
Year Ended December 31,
2000 1999 1998
---------------------- --------------------- ---------------------
--------------------- ---------------------
Reconciliation of Net Income to Net Cash Provided
by Operating Activities
Net income $ 2,624,415 $ 2,769,975 $ 2,642,497
---------------------- --------------------- ---------------------
--------------------- ---------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 337,382 298,123 279,051
Amortization 2,574 2,767 2,837
Equity in earnings of joint ventures,
net of distributions 66,276 4,902 34,522
Loss (Gain) on sale of asset (38,003) 165,503 --
Provision for loss on assets 446,975 83,897 280,907
Lease termination income -- (450,000) --
Decrease (increase) in receivables
17,818 (36,753) (33,427)
Increase in due from related parties
(33,878) -- --
Decrease in net investment in direct
financing leases 78,031 84,867 85,884
Increase in prepaid expenses (12,523) (5,361) (1,994)
Increase in accrued rental income (148,079) (121,726) (142,233)
Increase (decrease) in accounts
payable and accrued expenses (83,834) 134,740 3,462
Increase (decrease) in due to related
parties (39,767) 39,804 16,876
Increase (decrease) in rents paid in
advance and deposits 108,533 (27,443) 48,346
---------------------- --------------------- ---------------------
---------------------- --------------------- ---------------------
Total adjustments 701,505 173,320 574,231
---------------------- --------------------- ---------------------
--------------------- ---------------------
Net Cash Provided by Operating Activities $ 3,325,920 $ 2,943,295 $ 3,216,728
====================== ===================== =====================
Supplemental Schedule of Non-Cash
Financing Activities:
Distributions declared and unpaid at
December 31 $ 800,000 $ 800,000 $ 800,000
====================== ===================== =====================
CNL INCOME FUND XV, 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 XV, 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 XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
- ----------------------------------------------------
Accrued rental income represents the aggregate amount of
income recognized on a straight-line basis in excess of
scheduled rental payments to date. Whenever a tenant defaults
under the terms of its lease, or events or changes in
circumstance indicate that the tenant will not lease the
property through the end of the lease term, the Partnership
either reserves or reverses the cumulative accrued rental
income balance.
When the properties are sold, the related cost and accumulated
depreciation for operating leases and the net investment for direct
financing leases, plus any accrued rental income, are removed from the
accounts and gains or losses from sales are reflected in income. The
general partners of the Partnership review properties for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable through operations. The
general partners determine whether an impairment in value has occurred
by comparing the estimated future undiscounted cash flows, including
the residual value of the property, with the carrying cost of the
individual property. If an impairment is indicated, the assets are
adjusted to 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 Wood-Ridge Real Estate Joint Venture, TGIF Pittsburgh
Joint Venture, and properties in Clinton, North Carolina and Fort
Myers, Florida, held as tenants-in-common with affiliates, using the
equity method since the Partnership shares control with affiliates
which have the same general partners.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
- ----------------------------------------------------
Cash and Cash Equivalents - The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds (some of which are
backed by government securities). Cash equivalents are stated at cost
plus accrued interest, which approximates market value.
Cash accounts maintained on behalf of the Partnership in demand
deposits at commercial banks and money market funds may exceed
federally insured levels; however, the Partnership has not experienced
any losses in such accounts.
Lease Costs - Brokerage fees associated with negotiating a new lease
are amortized over the term of the new lease using the straight-line
method.
Income Taxes - Under Section 701 of the Internal Revenue Code, all
income, expenses and tax credit items flow through to the partners for
tax purposes. Therefore, no provision for federal income taxes is
provided in the accompanying financial statements. The Partnership is
subject to certain state taxes on its income and property.
Additionally, for tax purposes, syndication costs are included in
partnership equity and in the basis of each partner's investment. For
financial reporting purposes, syndication costs are netted against
partners' capital and represent a reduction of Partnership equity and a
reduction in the basis of each partner's investment.
Use of Estimates - The general partners of the Partnership have made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. The more significant areas requiring
the use of management estimates relate to the allowance for doubtful
accounts and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
-------------------------------------------
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to 2000 presentation.
These reclassifications had no effect on partners' capital or net
income.
Staff Accounting Bulleting No. 101 ("SAB 101")
In December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. SAB 101
requires the Partnership to defer recognition of certain percentage
rental income until certain defined thresholds are met. The Partnership
adopted SAB 101 beginning January 1, 2000. Implementation of SAB 101
did not have a material impact on the partnership's result of
operations.
Statement of Financial Accounting Standards No 133 ("FAS 133") and
Statement of Financial Accounting Standards No. 137 ("FAS 137")
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB Statement No. 133." FAS 137 deferred the effective
date of FAS 133 for one year. FAS 133, as amended, is now effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000.
The partnership has reviewed both statements and has determined that
both FAS 133 and FAS 137 do not apply to the Partnership as of December
31, 2000.
2. Leases:
- ---------------
The Partnership leases its land or land and buildings to operators of
national and regional fast food and family-style restaurants. The
leases are accounted for under the provisions of Statement of Financial
Accounting Standards No. 13, "Accounting for Leases." Some of the
leases are classified as operating leases and some of the leases have
been classified as direct financing leases. For some leases classified
as direct financing leases, the
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
2. Leases-Continued:
----------------
building portions of the property leases are accounted for as direct
financing leases while the land portions of the majority of these
leases are operating leases. The majority of the leases are for 15 to
20 years and provide for minimum and contingent rentals. In addition,
the tenant generally pays all property taxes and assessments, fully
maintains the interior and exterior of the building and carries
insurance coverage for public liability, property damage, fire and
extended coverage. The lease options generally allow tenants to renew
the leases for two to five successive five-year periods subject to the
same terms and conditions as the initial lease. Most leases also allow
the tenant to purchase the property at fair market value after a
specified portion of the lease has elapsed.
3. Land and Buildings on Operating Leases:
- -----------------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
------------------------ -----------------------
-----------------------
Land $ 14,925,838 $ 15,200,352
Buildings 9,955,370 9,606,254
----------------------- ------------------------
------------------------
24,881,208 24,806,606
Less accumulated depreciation (1,659,134) (1,345,651)
----------------------- ------------------------
------------------------
23,222,074 23,460,955
Less allowance for loss on land and
buildings (502,884) (197,279)
----------------------- ------------------------
$ 22,719,190 $ 23,263,676
======================== =======================
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued
During the year ended December 31, 1998, the Partnership established an
allowance for loss on assets of $280,907 for financial reporting
purposes relating to the properties in Lancaster, South Carolina and
Lexington, North Carolina, two of the four Long John Silver's
properties for which the leases were rejected by the tenant as a result
of the tenant filing for bankruptcy. The loss represented the
difference between the carrying value of the properties at December 31,
1998 and the estimated net realizable value for the properties. During
the year ended December 31, 1999, the Partnership's property in
Lancaster, South Carolina was re-leased to a new operator. In
accordance with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases," the Partnership classified the land portion of
this property as an operating lease and reclassified the building
portion of this property from an operating lease to net investment in
direct financing lease at the lower of original cost, present fair
value, or present carrying value. No loss on termination of operating
lease was recorded for financial reporting purposes (See Note 4). In
addition, during 1999, the Partnership increased the allowance for loss
on assets by $83,897 for the property in Lexington, North Carolina. The
allowance represented the difference between the carrying value of the
property at December 31, 1999 and the net sales proceeds from the sale
of the property to an unrelated third party in January 2000. The
Partnership sold this property for $599,500 and received net sales
proceeds of $562,130. No gain of loss was recorded during 2000 as a
result of the sale.
In October 1999, the lease relating to the property in Lexington,
Kentucky, was amended to allow for rent reductions. In connection
therewith, the Partnership reclassified the building portion of the
lease from net investment in direct financing lease to an operating
lease. In accordance with Statement of Financial Accounting Standards
No. 13, "Accounting for Leases," the Partnership recorded the
reclassified Property at the lower of original cost, present fair
value, or present carrying amount. No loss on termination of operating
lease was recorded for financial reporting purposes.
In November 1999, the Partnership sold its property in Gastonia, North
Carolina, to a third party for $672,630 and received net sales proceeds
of $631,304, resulting in a loss of $165,503 for financial reporting
purposes. In December 1999, the Partnership reinvested a portion of the
net sales proceeds in Duluth Joint Venture (See Note 5).
In December 1999, the Partnership re-leased the property in Mentor,
Ohio to a new tenant to operate the property as a Bennigan's
restaurant. In connection with the original lease, the Partnership
received $450,000 as a lease termination fee in consideration of the
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued
Partnership releasing the former tenant from its obligation under the
terms of the original lease. In connection with the new lease, the
Partnership agreed to pay $749,500 in renovation costs, all of which
had been incurred and paid as of December 31, 2000.
During 2000, the Partnership established an allowance for loss on
assets of $394,474 for financial reporting purposes relating to the
property in Medina, Ohio. The loss represented the difference between
the carrying value of the property at December 31, 2000 and the
estimated net realizable value for the property.
Generally, the leases provide for escalating guaranteed minimum rents
throughout the lease term. Income from these scheduled rent increases
is recognized on a straight-line basis over the terms of the leases.
For the years ended December 31, 2000, 1999, and 1998, the Partnership
recognized $148,080 (net of $25,626 in reserves), $121,726 (net of
$175,098 in reversals), and $142,233 (net of $250,631 in reversals),
respectively, of such rental income.
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 2,439,097
2002 2,470,310
2003 2,486,225
2004 2,556,309
2005 2,701,692
Thereafter 21,598,021
---------------------
---------------------
$ 34,251,654
=====================
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases:
- --------------------------------------------------
The following lists the components of the net investment in direct
financing leases at December 31:
2000 1999
----------------- ---------------------
---------------------
Minimum lease payments receivable
$ 10,760,255 $ 11,502,994
Estimated residual values 2,168,477 2,168,477
Less unearned income (6,770,530) (7,435,238 )
Less allowance for impair-ment in
carrying value (52,501) --
----------------- ---------------------
Net investment in direct financing
leases $ 6,105,701 $ 6,236,233
================= =====================
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2000:
2001 $ 748,225
2002 770,582
2003 775,937
2004 775,937
2005 779,642
Thereafter 6,909,932
-----------------------
-----------------------
$ 10,760,255
=======================
The above table does not include future minimum lease payments for
renewal periods or for contingent rental payments that may become due
in future periods (see Note 3)
During the year ended December 31, 1998, four of the eight leases with
Long John Silver's, Inc. were rejected in connection with the tenant
filing for bankruptcy. As a result, the Partnership reclassified these
properties from net investment in direct financing leases to land and
buildings on operating leases. In accordance with the Statement of
Financial Accounting Standards No. 13, "Accounting for Leases," the
Partnership recorded the reclassified properties at the lower of
original cost, present fair value, or
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases - Continued:
-----------------------------------------------------
present carrying amount. No losses on the termination of direct
financing leases were recorded for financial reporting purposes. In
November 1999, the Partnership sold the property located in Gastonia,
North Carolina (see Note 3) and re-leased the property located in
Lancaster, South Carolina. As a result of the re-lease, the Partnership
reclassified the building portion on operating lease to net investment
in direct financing leases (see Note 3). In addition, in January 2000,
the Partnership sold the property located in Lexington, North Carolina
(See Note 3).
During 2000, the Partnership established an allowance for impairment in
carrying value in the amount of $52,501 for its property in
Bartlesville, Oklahoma. The allowance represented the difference
between the carrying value of the net investment in the direct
financing lease and the estimated net realizable value of the
investment in the direct financing lease at December 31, 2000.
5. Investment in Joint Ventures:
----------------------------
The Partnership has a 50 percent interest in the profits and losses of
Wood-Ridge Real Estate Joint Venture. The remaining interest in this
joint venture is held by an affiliate of the Partnership, which has the
same general partners. In January 1997, Wood-Ridge Real Estate Joint
Venture reinvested $502,598 of the net sales proceeds from the sale of
two properties during 1996 in one property. As of December 31, 1998,
the Partnership had received approximately $52,000, representing its
prorata share of the uninvested net sales proceeds.
The Partnership also has a 16 percent interest in a Property in
Clinton, North Carolina, with affiliates of the Partnership that have
the same general partners, as tenants-in common.
In June 1998, the Partnership acquired a property in Fort Myers,
Florida, with CNL Income Fund VI, Ltd., a Florida limited partnership
and affiliate of the general partners as tenants-in-common. In
connection therewith, the Partnership contributed an amount to acquire
a 15 percent interest in such property. The Partnership accounts for
its investment using the equity method since it shares control with
affiliates.
In December 1999, the Partnership entered into a joint venture
arrangement, Duluth Joint Venture, with CNL Income Fund V, Ltd., CNL
Income Fund VII, Ltd., and CNL Income
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
Fund XIV, Ltd., each of which is a Florida limited partnership and an
affiliate of the general partners, to construct and hold one restaurant
property. The Partnership contributed $252,591 and $357,441 during 2000
and 1999, respectively, to Duluth Joint Venture to pay for construction
costs. In October 2000, the Partnership sold its 33 percent interest to
CNL Income Fund VII, Ltd. for $610,032 resulting in a gain of $38,003
for financial reporting purposes.
In June 2000, the Partnership reinvested $598,907 of the net sales
proceeds from the sale of its property in Lexington, North Carolina in
a joint venture arrangement, TGIF Pittsburgh Joint Venture, with CNL
Income Fund VII, Ltd., CNL Income Fund XVI, Ltd., and CNL Income Fund
XVIII, Ltd., each of which is a Florida limited partnership and an
affiliate of the general partners, to purchase and hold one restaurant
property. The Partnership accounts for its investment using the equity
method since it shares control with affiliates. As of December 31,
2000, the Partnership owned a 23.62% interest in the profits and losses
of the joint venture.
Wood-Ridge Real Estate Joint Venture owns and leases six properties and
TGIF Pittsburgh Joint Venture owns and leases one property to operators
of national fast food or family-style restaurants. The Partnership and
affiliates, as tenants-in-common in two separate tenancy-in-common
arrangements, each own and lease one property to an operator of
national fast food or family-style restaurants.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures - Continued:
----------------------------------------
The following presents the combined, condensed financial information
for all of the Partnership's investments in joint ventures and
properties held as tenants-in-common at December 31:
2000 1999
------------------------------------------------------------------------- ----------------------
---------------------- ----------------------
----------------------------------------------------
----------------------------------------------------
Land and buildings on operating leases, less
accumulated depreciation $ 8,336,028 $ 7,029,635
----------------------------------------------------
Net investment in direct financing lease 805,673 816,789
----------------------------------------------------
Cash 107,284 31,017
----------------------------------------------------
Prepaid expenses 684 1,458
----------------------------------------------------
Receivables 6,531 28,700
----------------------------------------------------
Lease costs, less accumulated amortization 16,767 19,279
----------------------------------------------------
Accrued rental income 251,902 178,331
----------------------------------------------------
Liabilities 44,218 30,024
----------------------------------------------------
Partners' capital 9,480,651 8,075,185
----------------------------------------------------
Revenues 984,548 817,713
----------------------------------------------------
Net income 815,718 677,126
The Partnership recognized income totalling $296,929, $259,508, and
$236,553 for the years ended December 31, 2000, 1999, and 1998,
respectively, from these entities.
6. Allocations and Distributions:
-----------------------------
From inception through December 31, 1999, generally, all net income and
net losses of the Partnership, excluding gains and losses from the sale
of properties, were allocated 99 percent to the limited partners and
one percent to the general partners. From inception through December
31, 1999, generally, 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, eight percent, cumulative,
noncompounded annual return on their invested capital contributions
(the "Limited Partners' 8% Return").
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
6. Allocations and Distributions - Continued:
-----------------------------------------
From inception through December 31, 1999, generally, net sales proceeds
from the sales of properties not in liquidation of the Partnership to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their Limited Partners' 8%
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 obligation of the Partnership,
(iii), third, to pay all of the Partnership's liabilities, if any, to
the general and limited partners, (iv) fourth, after allocations of net
income, gains and/or losses, to the partners with positive capital
account balances, in proportion to such balances, up to amounts
sufficient to reduce such positive balances to zero, and (v)
thereafter, any funds remaining shall then be distributed 95 percent to
the limited partners and five percent to the general partners.
Effective January 1, 2000, the general partners waived their 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.
The Partnership declared distributions to the limited partners of
$3,200,000, during the years ended December 31, 2000 and 1999 and
$3,400,000 during the year ended December 31, 1998. No distributions
have been made to the general partners to date.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Income Taxes:
------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
2000 1999 1998
---------------- ---------------- -------------
---------------- -------------
Net income for financial reporting purposes $ 2,624,415 $ 2,769,975 $2,642,497
Depreciation for tax reporting purposes in
excess of depreciation for financial (60,009) (106,014) (126,518)
reporting purposes
Direct financing leases recorded as operating
leases for tax reporting purposes 78,031 84,868 85,884
Allowance for loss on assets 446,975 83,897 280,907
Equity in earning of joint ventures for tax reporting purposes in
excess of (less than) equity in earnings of joint ventures for
financial reporting purposes 34,119 (49,720) 33,872
Accrued rental income (148,079) (121,726) (142,233)
Rents paid in advance 108,533 (42,427) 48,346
Capitalization (deduction) of transaction costs
for tax reporting purposes (218,818) 195,622 23,196
Allowance for doubtful accounts 24,796 12,236 --
Gain/Loss on sale of assets for financial
reporting purposes in excess of gain/loss
on sale of assets for tax reporting purposes (109,474) 20,160 --
Other 1,327 835 1,686
---------------- ---------------- -------------
---------------- ---------------- -------------
Net income for federal income tax purposes $ 2,781,816 $ 2,847,706 $2,847,637
================ ================ =============
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. Related Party Transactions:
--------------------------
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc. CNL Fund Advisors, Inc. (the "Advisor") was a majority owned
subsidiary of CNL Financial Group, Inc. until it merged with CNL
American Properties Fund, Inc. ("APF"), effective September 1, 1999.
The individual general partners are stockholders and directors of APF.
The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with
the Partnership. In connection therewith, the Partnership agreed to pay
the Advisor a management fee of one percent of the sum of gross
revenues from properties wholly owned by the Partnership and the
Partnership's allocable share of gross revenues from joint ventures.
The management fee, which will not exceed fees which are competitive
for similar services in the same geographic area, may or may not be
taken, in whole or in part as to any year, in the sole discretion of
the Advisor. All or any portion of the management fee not taken as to
any fiscal year shall be deferred without interest and may be taken in
such other fiscal year as the Advisor shall determine. The Partnership
incurred management fees of $35,870, $33,430, and $33,990 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 receipt by the limited partners of their aggregate
Limited Partners' 8% Return plus their invested capital contributions.
No deferred, subordinated real estate disposition fees have been
incurred since inception.
During the years ended December 31, 2000, 1999, and 1998, the Advisor
and its affiliates of the general partners 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 $102,104, $126,857, and $92,573, for the years
ended December 31, 2000, 1999, and 1998, respectively, for such
services.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. Related Party Transactions - Continued:
--------------------------------------
The amount due to related parties at December 31, 2000, 1999, and 1998,
totaled $21,224, $60,991 and $21,187, respectively.
9. Concentration of Credit Risk:
----------------------------
The following schedule presents total rental and earned income from
individual lessees, each representing more than ten percent of the
Partnership's total rental and earned income (including the
Partnership's share of total rental and earned income from joint
ventures and the properties held as tenants-in-common with affiliates
of the general partners) for each of the years ended December 31:
2000 1999 1998
---------------- --------------- ---------------
--------------- ---------------
Checkers Drive-In Restaurants, Inc.
$ 716,761 $ 717,964 $ 719,308
Golden Corral Corporation 584,897 598,199 595,343
Flagstar Enterprises, Inc. (and
Quincy's Restaurants, Inc.
during 1998) 536,076 538,930 632,526
Jack in the Box Inc. (formerly
Foodmaker, Inc.) 417,426 417,559 417,426
Long John Silver's, Inc. N/A N/A 510,187
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental and earned income
from joint ventures and the properties held as tenants-in-common with
affiliates of the general partners) for each of the years ended
December 31:
2000 1999 1998
---------------- ---------------- ----------------
Checkers Drive-In Restaurants $ 716,761 $ 717,964 $ 719,308
Golden Corral Family Steakhouse
Restaurants 584,897 598,199 595,343
Hardee's 536,076 538,930 541,527
Jack in the Box 417,426 417,559 417,426
Long John Silver's 392,709 407,021 573,104
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Concentration of Credit Risk - Continued:
----------------------------------------
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any 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.
The information denoted by N/A indicates that for each period
presented, the tenant or group of affiliated tenants did not represent
more than ten percent of the Partnership's total rental and earned
income.
In June 1998, Long John Silver's, Inc. filed for bankruptcy and
rejected the leases relating to four of its nine Properties and ceased
making rental payments to the Partnership on the rejected leases. In
May 1999, the Partnership entered into a new lease with a new tenant
for one of the rejected lease properties and in November 1999, the
Partnership sold one property. In addition, in January 2000, the
Partnership sold another rejected lease property. The Partnership will
not recognize any rental and earned income from the remaining vacant
Property until a new tenant 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 remaining rejected
lease, as described above, could have an adverse affect on the results
of operations of the Partnership if the Partnership is not able to
re-lease this property in a timely manner. In August 1999, Long John
Silver's, Inc. assumed and affirmed its remaining leases.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
10. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each full quarter during they years ended December 31, 2000
and 1999:
2000 Quarter First Second Third Fourth Year
- ---------------------------- -------------- ---------------- -------------- --------------- ----------------
Revenues (1) $ 907,407 $ 900,002 $ 922,769 $953,424 $3,683,602
Net Income 670,430 657,198 756,659 540,128 2,624,415
Net income per limited
partner unit
0.17 0.16 0.19 0.14 0.66
1999 Quarter First Second Third Fourth Year
- ---------------------------- -------------- ---------------- -------------- --------------- ----------------
Revenues (1) $ 877,213 $ 875,022 $ 886,683 $734,710 $3,373,628
Net Income 682,041 519,832 674,510 893,592 2,769,975
Net income per limited
partner unit
0. 17 0.13 0.17 0.22 0.69
(1) Revenues include equity in earnings of joint ventures and
adjustments to accrued rental income due to three tenants
filing for bankruptcy and rejecting four of the Partnership
leases.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in June
2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group, Inc. (formerly CNL Group, Inc.), a diversified real estate company, and
has served as a director, Chairman of the Board and Chief Executive Officer of
CNL Financial Group, Inc. since its formation in 1980. CNL Financial Group, Inc.
is the parent company, either directly or indirectly through subsidiaries, of
CNL Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. Mr. Seneff also serves as a Director, Chairman
of the Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust, as well as, CNL Hospitality
Corp., its advisor. In addition, he serves as a Director, Chairman of the Board
and Chief Executive Officer of CNL Retirement Properties, Inc., a public,
unlisted real estate investment trust and its advisor, CNL Retirement Corp.
Since 1992, Mr. Seneff has also served as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net Lease Realty, Inc., a public real
estate investment trust that is listed on the New York Stock Exchange. Mr.
Seneff has also served as a Director, Chairman of the Board and Chief Executive
Officer of CNL Securities Corp. since 1979; CNL Investment Company since 1990;
and CNL Institutional Advisors, Inc., a registered investment advisor for
pension plans, since 1990. Mr. Seneff formerly served as a Director of First
Union National Bank of Florida, N.A., and currently serves as the Chairman of
the Board of CNL Bank. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as Treasurer
from February 1999 through August 1999 and from May 1994 through December 1994.
He also served in various executive positions with the Advisor prior to its
merger with APF including, President from 1994 through September 1997, and
Director from 1994 through August 1999. Mr. Bourne serves as President and
Treasurer of CNL Financial Group, Inc. (formerly CNL Group, Inc.); Director,
Vice Chairman of the Board and President of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director and
President of CNL Hospitality Corp., its advisor. In addition, Mr. Bourne serves
as Director and President of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director and President of its
advisor, CNL Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank.
He has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997, and
President from July 1992 through February 1996, of Commercial Net Lease Realty,
Inc., a public real estate investment trust listed on the New York Stock
Exchange. Mr. Bourne also serves as Director, President and Treasurer for
various affiliates of CNL Financial Group, Inc. including, CNL Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager in 1975.
Mr. Bourne graduated from Florida State University in 1970 where he received a
B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master of
Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a subsidiary
of APF from December 1999 until December 2000. Previously, he served as
Executive Vice President of APF from January 1996 to September 1999. Mr. Walker
joined the Advisor in September 1994, as Senior Vice President responsible for
Research and Development. He served as the Chief Operating Officer of the
Advisor from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with APF. Mr.
Walker also served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.) from
1997 to October 1998. From May 1992 to May 1994, he was Executive Vice President
for Finance and Administration and Chief Financial Officer of Z Music, Inc., a
cable television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management and planning. From January 1990 through April 1992, Mr. Walker was
Chief Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum laude graduate
of Wake Forest University with a Bachelor of Science degree in Accountancy and
is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to Executive Vice
President and Chief Financial Officer of APF in July 2000. He served as Senior
Vice President and Chief Financial Officer of APF since January 1997. Mr.
Shackelford also served as Secretary and Treasurer of APF since September 1999.
He also served as Chief Financial Officer of the Advisor from September 1996 to
September 1999. From March 1995 to July 1996, Mr. Shackelford was a senior
manager in the national office of Price Waterhouse LLP where he was responsible
for advising foreign clients seeking to raise capital and a public listing in
the United States. From August 1992 to March 1995, he was a manager in the
Paris, France office of Price Waterhouse, serving several multi-national
clients. Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of Arts degree in Accounting, with honors, and a Master of Business
Administration degree from Florida State University and is a certified public
accountant.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 15, 2001, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 15, 2001, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2000, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
--------------------------------- -------------------------------------- -------------------------------
Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and
operating expenses the lower of cost or 90 percent of administra-tive services:
the prevailing rate at which $102,104
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 $35,870
affiliates revenues from Properties wholly
owned by the Partnership plus the
Partnership's allocable share of
gross revenues of joint ventures in
which the Partnership is a
co-venturer. The management fee,
which will not exceed competitive
fees for comparable services in the
same geographic area, may or may not
be taken, in whole or in part as to
any year, in the sole discretion of
affiliates of the General Partners.
All or any portion of the management
fee not taken as to any fiscal year
shall be deferred without interest
and may be taken in such other
fiscal year as the affiliates shall
determine.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
--------------------------------- -------------------------------------- -------------------------------
Deferred, subordinated real A deferred, subordinated real estate $-0-
estate disposition fee payable disposition fee, payable upon sale
to affiliates of one or more Properties, in an
amount equal to the lesser of (i)
one-half of a competitive real
estate commission, or (ii) three
percent of the sales price of such
Property or Properties. Payment of
such fee shall be made only if
affiliates of the General Partners
provide a substantial amount of
services in connection with the sale
of a Property or Properties and
shall be subordinated to certain
minimum returns to the Limited
Partners. However, if the net sales
proceeds are reinvested in a
replacement Property, no such real
estate disposition fee will be
incurred until such replacement
Property is sold and the net sales
proceeds are distributed.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to one percent of Partnership
Partnership net cash flow distributions of net cash flow,
subordinated to certain minimum
returns to the Limited Partners.
General Partners' deferred, A deferred, subordinated share equal $-0-
subordinated share of to five percent of Partnership
Partnership net sales proceeds distributions of such net sales
from a sale or sales not in proceeds, subordinated to certain
liquidation of the Partnership minimum returns to the Limited
Partners.
Amount Incurred
Type of Compensation For the Year
And Recipient Method of Computation Ended December 31, 2000
--------------------------------- -------------------------------------- -------------------------------
General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following order
or priority: (i) first, to pay all
debts and liabilities of the
Partnership and to establish
reserves; (ii) second, to Partners
with positive capital account
balances, determined after the
allocation of net income, net loss,
gain and loss, in proportion to such
balances, up to amounts sufficient
to reduce such balances to zero; and
(iii) thereafter, 95% to the Limited
Partners and 5% to the General
Partners.
In addition, in 2000, the Partnership sold its 33 percent interest in Duluth
Joint Venture to CNL Income Fund VII, Ltd., an affiliate of the General
Partners, for $610,032. The proceeds from the sale exceeded the basis of the
interest in this joint venture resulting in a gain of $38,003 for financial
reporting purposes.
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 Schedule
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 XV, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968 on Form S-11 and
incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XV, Ltd. (Included as Exhibit 3.1 to
Registration Statement No. 33-69968 on Form S-11 and
incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XV, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on March 30,1995, incorporated herein by
reference.)
10.1 Management Agreement between CNL Income Fund XV, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on March 30, 1996, and incorporated herein
by reference.)
10.2 Assignment of Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
(b) The Registrant filed no reports on Form 8-K during
the period October 1, 2000 through December 31, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day of
March, 2001.
CNL INCOME FUND XV, 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 XV, 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) $ -- $ -- $ 849 (b) $ -- (c) $ -- $ 849
- ---------- ============== =============== ================ ============= ============ ============
- ----------
1999 Allowance for
doubtful
accounts (a) $ 849 $ -- $ 13,085 (b) $ -- (c) $ 849 $ 13,085
- ---------- ============== =============== ================ ============= ============ ============
- ----------
2000 Allowance for
doubtful
accounts (a) $ 13,085 $ -- $ 97,872 (b) $ -- (c) $ 47,450 $ 63,507
- ---------- ============== =============== ================ ============= ============ ============
(a) deducted from receivables on the balance sheet.
(b) reduction of rental and other income.
(c) amounts written off as uncollectible.
Costs Capitalized
Subsequent To
Initial Cost Acquisition
-------------------------- ----------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
---------- ------------ ------------ ------------- -------
Properties the Partnership
has Invested in Under
Operating Leases:
Bennigan's Restaurant:
Mentor, Ohio - $520,556 $1,135,584 $749,500 -
Checkers Drive-In Restaurants:
Englewood, Florida - 339,499 - - -
Marietta, Georgia - 432,547 - - -
Norcross, Georgia - 405,256 - - -
Philadelphia, Pennsylvania - 417,014 - - -
St. Petersburg, Florida - 557,206 - - -
Stratford, New Jersey - 309,370 - - -
Lake Mary, Florida - 614,471 - - -
Philadelphia, Pennsylvania - 599,586 - - -
Winter Garden, Florida - 353,799 - - -
Chamblee, Georgia - 427,829 - - -
Largo, Florida - 407,211 - - -
Seminole, Florida - 423,116 - - -
Orlando, Florida - 604,920 - - -
Bradenton, Florida - 215,478 - - -
Denny's Restaurant:
Huntsville, Texas - 349,266 - - -
Golden Corral Family
Steakhouse Restaurants:
Aberdeen, North Carolina - 406,989 - 849,648 -
Norman, Oklahoma - 763,892 - 939,205 -
Augusta, Georgia - 766,891 - 1,124,687 -
Hardee's Restaurants:
Olive Branch, Mississippi - 209,243 - - -
Columbia, South Carolina - 230,268 497,047 - -
Pawleys Island, South Carolina - 307,911 593,997 - -
Cookeville, Tennessee - 216,335 - - -
Niceville, Florida - 310,511 480,398 - -
Jack in the Box Restaurants:
Woodland Hills, California - 617,887 406,122 - -
Redlands, California - 494,336 566,016 - -
Altadena, California - 501,099 272,441 - -
Port Arthur, Texas - 426,378 646,811 - -
Japan Express Restaurants:
Lancaster, South Carolina (m) - 221,251 - - -
Long John Silver's Restaurants:
Medina, Ohio (h) - 445,614 - 399,974 -
Lexington, Kentucky (j) - 346,854 303,425 - -
Jackson, Tennessee - 254,023 - - -
Albuquerque, New Mexico - 210,008 311,622 - -
Irving, Texas - 454,448 - - -
Neosho, Missouri - 171,859 - - -
Wendy's Old Fashioned
Hamburgers Restaurants:
Arlington, Virginia - 592,917 678,893 - -
------------ ------------ ------------- -------
$14,925,838 $5,892,356 $4,063,014 -
============ ============ ============= =======
Properties of Joint Venture in Which the
Partnership has a 50% Interest and has
Invested in Under an Operating Lease:
Boston Market Restaurants:
Matthews, North Carolina - 409,942 737,391 - -
Raleigh, North Carolina - 518,507 542,919 - -
Golden Corral Family
Steakhouse Restaurant:
Paris, Texas - 303,608 685,064 - -
Taco Bell Restaurant:
Anniston, Alabama - 173,396 329,201 - -
Other Restaurants:
Murfeesboro, Tennessee - 398,313 - - -
Blaine, Minnesota - 253,934 531,509 - -
------------ ------------ ------------- -------
$2,057,700 $2,826,084 - -
============ ============ ============= =======
Property of Joint Venture
in Which the Partnership
has a 23.62% Interest
and has Invested in
Under an Operating Lease:
TGI Friday's Restaurant:
Homestead, Pennsylvania - $1,036,297 $1,499,296 - -
============ ============ ============= =======
Property in Which the Partnership has a
16% Interest as Tenants-in-Common and
has Invested in Under an Operating Lease:
Golden Corral Family
Steakhouse Restaurant:
Clinton, North Carolina - $138,382 $676,588 - -
============ ============ ============= =======
Property in Which the Partnership has a
15% Interest as Tenants-in-Common and
has Invested in Under an Operating Lease:
Bennigan's Restaurant:
Ft. Myers, Florida - $638,026 - - -
============ ============ ============= =======
Properties the Partnership has
Invested in Under Direct
Financing Leases:
Denny's Restaurants:
Huntsville, Texas - - - $590,147 -
Bartlesville, Oklahoma - 199,747 789,589 - -
Hardee's Restaurants:
Chester, South Carolina - 140,016 587,718 - -
Cookeville, Tennessee - - 574,511 - -
Olive Branch, Mississippi - - 510,712 - -
Piney Flats, Tennessee - 141,724 504,827 - -
Japan Express Restaurant:
Lancaster, South Carolina (k) - - 170,415 - -
Long John Silver's Restaurants:
Jackson, Tennessee - - 459,725 - -
Neosho, Missouri - - - 403,331 -
Irving, Texas - - - 414,009 -
Quincy's Restaurant:
Greer, South Carolina - 178,404 849,860 - -
------------ ------------ ------------- -------
$659,891 $4,447,357 $1,407,487 -
============ ============ ============= =======
Property in Which the Partnership has a
15% Interest as Tenants-in-Common
and has Invested in Under
Direct Financing Lease:
Bennigan's Restaurant:
Ft. Myers, Florida - - $831,741 - -
============ ============ ============= =======
Gross Amount at Which Life on Which
Carried at Close of Period (c) Depreciation in
- ----------------------------------------- Date Latest Income
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ------------- ------------ ------------ ------------ --------- -------- ------------
$520,556 $1,885,084 $2,405,640 $67,559 1995 10/94 (i)
339,499 - 339,499 (d) - 05/94 (d)
432,547 - 432,547 (d) - 05/94 (d)
405,256 - 405,256 (d) - 05/94 (d)
417,014 - 417,014 (d) - 05/94 (d)
557,206 - 557,206 (d) - 05/94 (d)
309,370 - 309,370 (d) - 05/94 (d)
614,471 - 614,471 (d) - 07/94 (d)
599,586 - 599,586 (d) - 08/94 (d)
353,799 - 353,799 (d) - 08/94 (d)
427,829 - 427,829 (d) - 12/94 (d)
407,211 - 407,211 (d) - 12/94 (d)
423,116 - 423,116 (d) - 12/94 (d)
604,920 - 604,920 (d) - 03/95 (d)
215,478 - 215,478 (d) - 03/95 (d)
349,266 (e) 349,266 (f) 1994 05/94 (f)
406,989 849,648 1,256,637 177,088 1994 06/94 (b)
763,892 939,205 1,703,097 189,299 1994 08/94 (b)
766,891 1,124,687 1,891,578 225,246 1994 09/94 (b)
209,243 (e) 209,243 (f) 1994 04/94 (f)
230,268 497,047 727,315 111,461 1993 04/94 (b)
307,911 593,997 901,908 132,117 1992 04/94 (b)
216,335 (e) 216,335 (f) 1992 04/94 (f)
310,511 480,398 790,909 106,894 1993 04/94 (b)
617,887 406,122 1,024,009 86,982 1988 07/94 (b)
494,336 566,016 1,060,352 121,228 1988 07/94 (b)
501,099 272,441 773,540 58,351 1976 07/94 (b)
426,378 646,811 1,073,189 134,811 1994 09/94 (b)
221,251 (e) 221,251 (f) 1994 07/94 (f)
445,614 399,974 845,588 38,048 1994 06/94 (h)
346,854 303,425 650,279 15,238 1994 06/94 (j)
254,023 (e) 254,023 (f) 1994 06/94 (f)
210,008 311,622 521,630 58,041 1976 05/95 (b)
454,448 (e) 454,448 (f) 1995 07/94 (f)
171,859 (e) 171,859 (f) 1994 07/94 (f)
592,917 678,893 1,271,810 136,771 1994 12/94 (b)
- ------------- ------------ ------------ ----------
$14,925,838 $9,955,370 $24,881,208 $1,659,134
============= ============ ============ ==========
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 96,587 1996 10/96 (b)
173,396 329,201 502,597 43,640 1993 01/97 (b)
398,313 - 398,313 (d) - 10/96 (d)
253,934 531,509 785,443 74,936 1996 10/96 (b)
- ------------- ------------ ------------ ----------
$2,057,700 $2,826,084 $4,883,784 $395,673
============= ============ ============ ==========
$1,036,297 $1,499,296 $2,535,593 $29,292 2000 06/00 (b)
============= ============ ============ ==========
$138,382 $676,588 $814,970 $111,380 1996 01/96 (b)
============= ============ ============ ==========
$638,026 (e) $638,026 (f) 1982 06/98 (f)
============= ============ ============
- (e) (e) (f) 1994 05/94 (f)
(e) (e) (e) (g) 1983 08/95 (g)
(e) (e) (e) (g) 1994 04/94 (g)
- (e) (e) (f) 1992 04/94 (f)
- (e) (e) (f) 1994 04/94 (f)
(e) (e) (e) (g) 1993 04/94 (g)
- (e) (e) (f) 1994 07/94 (f)
- (e) (e) (f) 1994 06/94 (f)
- (e) (e) (f) 1994 07/94 (f)
- (e) (e) (f) 1995 07/94 (f)
(e) (e) (e) (g) 1988 06/94 (g)
- (e) (e) (f) 1982 06/98 (f)
CNL INCOME FUND XV, 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 $ 22,946,739 $ 801,601
Reclassified from net investment
in direct financing lease 1,588,729 --
Depreciation expense -- 279,051
------------------- --------------------
------------------- --------------------
Balance, December 31, 1998 24,535,468 1,080,652
Dispositions (818,708 ) (33,124 )
Reclassified from net investment
in direct financing lease 1,439,009 --
Reclassified to net investment in
direct financing lease (349,163 ) --
Depreciation expense -- 298,123
------------------- --------------------
------------------- --------------------
Balance, December 31, 1999 24,806,606 1,345,651
Acquisition 749,500 --
Dispositions (674,898 ) (23,899 )
Depreciation expense -- 337,382
------------------- --------------------
Balance, December 31, 2000 $ 24,881,208 $ 1,659,134
=================== ====================
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 -- 94,202
------------------- --------------------
-------------------
Balance, December 31, 1999 4,883,784 301,471
Depreciation expense -- 94,202
------------------- --------------------
Balance, December 31, 2000 $ 4,883,784 $ 395,673
=================== ====================
CNL INCOME FUND XV, 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 23.62%
Interest and has Invested in Under an Operating Lease:
Balance, December 31, 1999 $ -- $ --
Acquisition 2,535,593 --
Depreciation expense -- 29,292
------------------- -------------------
Balance, December 31, 2000 $ 2,535,593 $ 29,292
=================== ===================
Property Which the Partnership has a 16% Interest as
Tenants-In-Common and has Invested in Under an Operating
Lease:
Balance, December 31, 1997 $ 814,970 $ 43,721
Depreciation expense -- 22,553
------------------- -------------------
------------------- -------------------
Balance, December 31, 1998 814,970 66,274
Depreciation expense -- 22,553
------------------- -------------------
Balance, December 31, 1999 814,970 88,827
Depreciation expense -- 22,553
------------------- -------------------
Balance, December 31, 2000 $ 814,970 $ 111,380
=================== ===================
Property in Which the Partnership has a 15% Interest as
Tenants-In-Common has invested in Under an Operating Lease:
Balance, December 31, 1997 $ -- $ --
Acquisition 638,026 --
Depreciation expense (f) -- --
------------------- -------------------
Balance, December 31, 1998 638,026 --
Depreciation expense (f) -- --
------------------- -------------------
------------------- -------------------
Balance, December 31, 1999 638,026 --
Depreciation expense (f) -- --
------------------- -------------------
Balance, December 31, 2000 $ 638,026 $ --
=================== ===================
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED DEPRECIATION -
------------------------------------------------------------------
CONTINUED
December 31, 2000
(b) Depreciation expense is computed for buildings and improvements
based upon estimated lives of 30 years.
(c) As of December 31, 2000, the aggregate cost of the Properties
owned by the Partnership and joint ventures for federal income
tax purposes was $31,741,716 and $9,312,896, respectively. All
of the leases are treated as operating leases for federal
income tax purposes.
(d) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(e) 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.
(f) 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.
(g) For financial reporting purposes, the lease for the land and
building has been recorded as a direct financing lease. The
cost of the land and building has been included in the net
investment in direct financing leases; therefore, depreciation
is not applicable.
(h) Effective June 11, 1998, the lease for this Property was
terminated, resulting in the reclassification of the building
portion of the lease to an operating lease. The building was
recorded at net book value and depreciated over its remaining
estimated life of approximately 26 years. For financial
reporting purposes, the undepreciated cost of the Property in
Medina, Ohio was written down to its estimated net realizable
value due to an impairment in value. The Partnership recognized
the impairments by recording an allowance for loss on assets in
the amount of $394,474 in 2000. The impairment at December 31,
2000 represented the difference between the Property's carrying
value and the estimated net realizable value of the Property at
December 31, 2000. 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.
(i) Effective December 9, 1999, 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 depreciated over its remaining
estimated life of approximately 25 years.
(j) Effective October 1, 1999, the lease for this property was
amended, resulting in the reclassification of the building
portion of the lease to an operating lease. The building was
recorded at net book value and depreciated over its remaining
estimated life of approximately 25 years.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDUE III - REAL ESTATE AND ACCUMULATED DEPRECIATION -
------------------------------------------------------------------
CONTINUED
December 31, 2000
(k) Effective June 11, 1998, the lease for this Property was
terminated, resulting in the reclassification of the building
portion of the lease to an operating lease. The building was
recorded at net book value and depreciated over its remaining
estimated life of approximately 26 years. For financial
reporting purposes, the undepreciated cost of the Property in
Lancaster, South Carolina was written down to its estimated net
realizable value due to an impairment in value. The Partnership
recognized the impairment during 1998, by recording an
allowance for loss on assets in the amount of $108,410 and
$167,526, respectively. The impairment represented the
difference between the Property's carrying value and the
estimated net realizable value of the Property at December 31,
1998. In May 1999, the Partnership re-leased the Property to a
new tenant to operate the location as a Japan Express. In
connection, the building portion of the lease was reclassified
from an operating lease to a net investment in direct financing
lease, based on the net carrying value of the building.
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XV, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-69968 on Form S-11 and incorporated herein by
reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XV, Ltd. (Included as Exhibit 4.1 to Registration
Statement No. 33-69968 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XV, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March
30,1995, incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XV, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 30,
1996, 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.)