FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 2002
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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
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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
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
- ------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for 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 _________
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Part II
Other Information 12
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
2002 2001
------------------- -------------------
ASSETS
Land and buildings on operating leases, net $ 21,923,427 $ 20,867,023
Net investment in direct financing leases 4,756,472 4,805,598
Real estate held for sale 396,800 1,406,726
Investment in joint ventures 4,519,711 4,554,955
Cash and cash equivalents 1,266,738 1,364,668
Restricted cash 86,772 179
Due from related parties 1,388 15,022
Accrued rental income less allowance for doubtful
accounts of $27,005 in 2002 and 2001 1,846,407 1,762,792
Other assets 49,385 55,245
------------------- -------------------
$ 34,847,100 $ 34,832,208
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 18,470 $ 5,993
Real estate taxes payable 15,202 29,605
Distributions payable 800,000 800,000
Due to related parties 21,138 20,970
Rents paid in advance and deposits 39,089 68,253
Deferred rental income -- 6,896
------------------- -------------------
Total liabilities 893,899 931,717
Commitment (Note 8)
Partners' capital 33,953,201 33,900,491
------------------- -------------------
$ 34,847,100 $ 34,832,208
=================== ===================
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
------------- ------------- -------------- --------------
Revenues:
Rental income from operating leases $ 619,645 $ 607,888 1,242,669 $ 1,228,609
Earned income from direct financing leases 124,443 115,493 264,363 252,432
Interest and other income 10,415 25,936 17,385 48,478
------------- ------------- -------------- --------------
754,503 749,317 1,524,417 1,529,519
------------- ------------- -------------- --------------
Expenses:
General operating and administrative 72,377 90,172 154,580 235,344
Property expenses 9,584 40,524 16,060 67,913
Management fees to related parties 8,236 7,783 17,346 16,491
State and other taxes 3,646 -- 40,230 61,212
Depreciation and amortization 81,111 81,826 160,517 167,244
Provision for write-down of assets -- -- -- 288,684
------------- ------------- -------------- --------------
174,954 220,305 388,733 836,888
------------- ------------- -------------- --------------
Income Before Gain on Sale of Assets and Equity
in Earnings of Joint Ventures 579,549 529,012 1,135,684 692,631
Gain on Sale of Assets -- 246,671 -- 246,671
Equity in Earnings of Joint Ventures 111,892 157,359 221,808 238,158
------------- ------------- -------------- --------------
Income from Continuing Operations 691,441 933,042 1,357,492 1,177,460
------------- ------------- -------------- --------------
Discontinued Operations (Note 6):
Income (Loss) from discontinued operations, net (14,847 ) 23,284 (6,610 ) 48,535
Gain on disposal of discontinued operations, net -- -- 301,828 --
------------- ------------- -------------- --------------
(14,847 ) 23,284 295,218 48,535
------------- ------------- -------------- --------------
Net Income $ 676,594 956,326 $ 1,652,710 $ 1,225,995
============= ============= ============== ==============
Income Per Limited Partner Unit
Continuing operations $ 0.16 $ 0.23 $ 0.34 $ 0.29
Discontinued operations 0.01 0.01 0.07 0.02
------------- ------------- -------------- --------------
$ 0.17 0.24 $ 0.41 $ 0.31
============= ============= ============== ==============
Weighted Average Number of Limited
Partner Units Outstanding 4,000,000 4,000,000 4,000,000 4,000,000
============= ============= ============== ==============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
2002 2001
-------------------- ------------------
General partners:
Beginning balance $ 174,788 $ 174,788
Net income -- --
-------------------- ------------------
174,788 174,788
-------------------- ------------------
Limited partners:
Beginning balance 33,725,703 34,285,502
Net income 1,652,710 2,640,201
Distributions ($0.40 and $0.80 per limited
partner unit, respectively) (1,600,000 ) (3,200,000 )
-------------------- ------------------
33,778,413 33,725,703
-------------------- ------------------
Total partners' capital $ 33,953,201 $ 33,900,491
==================== ==================
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2002 2001
--------------- --------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $ 1,532,307 $ 1,560,744
--------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of assets 1,300,882 1,486,728
Additions to land and building on operating leases (1,215,441 ) --
Increase in restricted cash (1,296,422 ) --
Decrease in restricted cash 1,215,620 --
Return of capital from joint venture -- 400,000
Collections on mortgage note receivable -- 225,865
Investment in joint venture (34,876 ) (1,269,658 )
--------------- --------------
Net cash (used in) provided by investing activities (30,237 ) 842,935
--------------- --------------
Cash Flows from Financing Activities:
Distributions to limited partners (1,600,000 ) (1,600,000 )
--------------- --------------
Net cash used in financing activities (1,600,000 ) (1,600,000 )
--------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents (97,930 ) 803,679
Cash and Cash Equivalents at Beginning of Period 1,364,668 1,257,447
--------------- --------------
Cash and Cash Equivalents at End of Period $ 1,266,738 $ 2,061,126
=============== ==============
Supplemental Schedule of Non-Cash Financing
Activities:
Distributions declared and unpaid at end of
period $ 800,000 $ 800,000
=============== ==============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
1. Basis of Presentation:
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and six months ended June 30, 2002, may not be indicative
of the results that may be expected for the year ending December 31,
2002. Amounts as of December 31, 2001, included in the financial
statements, have been derived from audited financial statements as of
that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XV, Ltd. (the "Partnership") for the year ended December
31, 2001.
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement requires that a
long-lived asset be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be
recoverable. The carrying amount of a long-lived asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset.
The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when
the carrying amount of a long-lived asset exceeds its fair value. If an
impairment is recognized, the adjusted carrying amount of a long-lived
asset is its new cost basis. The statement also requires that the
results of operations of a component of an entity that either has been
disposed of or is classified as held for sale be reported as a
discontinued operation if the disposal activity was initiated
subsequent to the adoption of the Standard.
2. Reclassification:
Certain items in the prior years' financial statements have been
reclassified to conform to 2002 presentation. These reclassifications
had no effect on total partners' capital or net income.
3. Restricted Cash:
As of June 30, 2002, a portion of the net sales proceeds from the sale
of the Partnership's property in Redlands, California were being held
in an interest bearing account pending the release of funds by the
escrow agent.
4. Land and Buildings on Operating Leases:
In June 2002, the Partnership reinvested the majority of the proceeds
from the sale of the property in Redlands, California (see Note 6) in a
property in Houston, Texas at an approximate cost of $1,215,400. The
Partnership acquired this property from CNL Funding 2001-A, LP, an
affiliate of the general partners (see Note 7).
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
5. Investment in Joint Ventures:
During 2002, the Partnership and CNL Income Fund VI, Ltd. entered into
an agreement with an unrelated third party to sell the property in Fort
Myers, Florida. The Partnership owns a 15% interest in this property.
CNL Income Fund VI, Ltd. is an affiliate of the general partners. As a
result, the tenancy in common reclassified the asset from land and
building on operating leases and accrued rental income to real estate
held for sale. The reclassified asset was recorded at the lower of its
carrying amount or fair value, less cost to sell. In addition, the
tenancy in common stopped recording depreciation and accrued rental
income once the property was identified for sale. The financial results
for this property are reflected as Discontinued Operations in the
condensed financial information presented below.
As of June 30, 2002, Wood-Ridge Real Estate Joint Venture owned and
leased five properties to operators of fast-food and family-style
restaurants. In addition, Pittsburgh Joint Venture, CNL VII & XV
Columbus Joint Venture and the Partnership and affiliates, as three
separate tenancy in common arrangements, each owned and leased one
property to operators of fast-food and family-style restaurant chains.
The following presents the combined, condensed financial information
for the joint ventures and the properties held as tenants-in-common
with affiliates at:
June 30, December 31,
2002 2001
-------------- ---------------
Land and buildings on operating leases, net $10,200,380 $ 10,363,727
Real estate held for sale 1,520,850 1,516,369
Cash 103,364 115,891
Receivables 4,739 25,675
Accrued rental income 300,222 256,024
Other assets 14,256 15,426
Liabilities 65,521 184,716
Partners' capital 12,078,290 12,108,396
Quarter Ended June 30, Six Months Ended June 30,
2002 2001 2002 2001
------------ ------------- -------------- ---------------
Revenues $ 317,622 $ 279,169 $ 637,129 $ 519,515
Lease termination income -- 200,000 -- 200,000
Expenses (55,393 ) (52,613 ) (115,635 ) (101,111 )
Loss on sale of assets -- -- -- (84,473 )
------------ ------------- -------------- ---------------
Income from continuing operations 262,229 426,556 521,494 533,931
------------ ------------- -------------- ---------------
Discontinued operations:
Revenues 39,419 40,670 79,806 81,422
Expenses (55 ) (377 ) (367 ) (704 )
------------ ------------- -------------- ---------------
39,364 40,293 79,439 80,718
------------ ------------- -------------- ---------------
Net Income $ 301,593 $ 466,849 $ 600,933 $ 614,649
============ ============= ============== ===============
See accompanying notes to condensed financial statements.
CNL INCOME FUND XV, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2002 and 2001
5. Investment in Joint Ventures - Continued:
The Partnership recognized income of $221,808 and $238,158 during the
six months ended June 30, 2002 and 2001, respectively, of which
$111,892 and $157,359 was earned during the quarters ended June 30,
2002 and 2001, respectively, from these joint ventures and
tenants-in-common.
6. Discontinued Operations:
In February 2002, the Partnership sold its property in Redlands,
California for approximately $1,337,900 and received net sales proceeds
of approximately $1,300,900 resulting in a gain of approximately
$301,800. In addition, in June 2002, the Partnership entered into an
agreement with an unrelated third party to sell the property in Medina,
Ohio. As a result, the Partnership reclassified the assets from land
and building on operating leases to real estate held for sale. The
reclassified property was recorded at the lower of its carrying amount
or fair value, less cost to sell. In addition, the Partnership stopped
recording depreciation once the property was identified for sale. The
financial results for these properties are reflected as Discontinued
Operations in the accompanying financial statements.
The operating results of discontinued operations are as follows:
Quarter Ended June 30, Six Months Ended June 30,
2002 2001 2002 2001
------------- -------------- ------------- --------------
Rental revenues $ -- $ 27,761 $ 13,379 $ 55,523
Expenses (6,223 ) (4,477 ) (11,365 ) (6,988 )
Provision for write-down of assets (8,624 ) -- (8,624 ) --
Gain on disposal of assets -- -- 301,828 --
------------- -------------- ------------- ---------------
(Loss) Income from discontinued
operations $ (14,847 ) $ 23,284 $ 295,218 $ 48,535
============= ============== ============= ===============
7. Related Party Transactions:
In June, 2002, the Partnership acquired a property in Houston, Texas
from CNL Funding 2001-A, LP, an affiliate of the general partners for a
purchase price of $1,215,400 (see Note 4). CNL Funding 2001-A, LP
purchased and temporarily held title to the property in order to
facilitate the acquisition of the property by the Partnership. The
purchase price paid by the Partnership represented the costs incurred
by CNL Funding 2001-A, LP to acquire and carry the property, including
closing costs.
8. Commitment:
In June 2002, the Partnership entered into an agreement with an
unrelated third party to sell the property in Medina, Ohio. The
Partnership established a provision for write-down of assets of
approximately $8,600 related to the anticipated sale of the property.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XV, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 2, 1993, to acquire for cash, either
directly or through joint venture and tenancy in common arrangements, both newly
constructed and existing restaurants, as well as land 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 leases generally are triple-net leases, with the lessee responsible for all
repairs and maintenance, property taxes, insurance and utilities. As of June 30,
2001, the Partnership owned 38 Properties directly and owned nine Properties
indirectly through joint venture or tenancy in common arrangements. As of June
30, 2002, the Partnership owned 38 Properties directly and owned 10 Properties
indirectly through joint venture or tenancy in common arrangements.
Capital Resources
The Partnership's primary source of capital for the six months ended
June 30, 2002 and 2001 was cash from operating activities (which includes cash
received from tenants, distributions from joint ventures, and interest and other
income received, less cash paid for expenses). Cash from operating activities
was $1,532,307 and $1,560,744 for the six months ended June 30, 2002 and 2001,
respectively. The decrease in cash from operating activities for the six months
ended June 30, 2002, was primarily a result of changes in the Partnership's
working capital.
Other sources and uses of capital included the following during the six
months ended June 30, 2002.
In August 2001, the Partnership entered into a joint venture
arrangement, CNL VII, XV Columbus Joint Venture, with CNL Income Fund VII, Ltd.
a Florida limited partnership and an affiliate of the general partners, to
construct and hold one restaurant Property. During the six months ended June 30,
2002, the Partnership contributed approximately $34,900 to the joint venture to
pay construction costs. Construction of the restaurant was completed in February
2002 and as of June 30, 2002 the Partnership owned a 31.25% interest in the
profits and losses of the joint venture.
In addition, in February 2002, the Partnership sold its Property in
Redlands, California to an unrelated third party for approximately $1,337,900
and received net sales proceeds of approximately $1,300,900 resulting in a gain
on disposal of discontinued operations of approximately $301,800. In June 2002,
the Partnership reinvested the majority of these sales proceeds in a Property in
Houston, Texas at an approximate cost of $1,215,400. The Partnership acquired
this Property from CNL Funding 2001-A, LP, a Delaware limited partnership and an
affiliate of the general partners. The purchase price paid by the Partnership
represented the costs incurred by CNL Funding 2001-A, LP to acquire the
Property, including closing costs. The Partnership believes that the
transaction, or a portion thereof, relating to the sale of the Property and the
reinvestment of the proceeds will qualify as a like-kind exchange transaction
for federal income tax purposes; however, the Partnership anticipates that its
distributions will be 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 June 2002, the Partnership entered into an agreement with an
unrelated third party to sell the Property in Medina, Ohio. In addition, during
2002, the Partnership and CNL Income Fund VI, Ltd., an affiliate of the general
partners entered into an agreement with an unrelated third party to sell the
Bennigan's Property in Fort Myers, Florida. The Partnership owns a 15% interest
in this Property. As of August 12, 2002, these sales have not occurred.
Currently, cash reserves and rental income from the Partnership's
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 90-day maturity
date, pending the Partnership's use of such funds to pay Partnership expenses or
to make distributions to the partners. At June 30, 2002, the Partnership had
$1,266,738 invested in such short-term investments, as compared to $1,364,668 at
December 31, 2001. The decrease in cash and cash equivalents at June 30, 2002
was primarily a result of the Partnership contributing amounts to pay for
construction costs related to CNL VII, XV Columbus Joint Venture. The funds
remaining at June 30, 2002, after payment of distributions and other
liabilities, will be used to meet the Partnership's working capital 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.
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 operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and anticipated future cash from operations, the Partnership
declared distributions to limited partners of $1,600,000 for each of the six
months ended June 30, 2002 and 2001 ($800,000 for each applicable quarter). This
represents distributions for each of the six months ended June 30, 2002 and 2001
of $0.40 per unit ($0.20 for each applicable quarter). No distributions were
made to the general partners for the quarters and six months ended June 30, 2002
and 2001. No amounts distributed to the limited partners for the six months
ended June 30, 2002 and 2001 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.
Total liabilities of the Partnership, including distributions payable,
were $893,899 at June 30, 2002, as compared to $931,717 at December 31, 2001,
primarily as a result of a decrease in real estate taxes payable, rents paid in
advance and deposits and deferred rental income at June 30, 2002. The decrease
was partially offset by an increase in accounts payable at June 30, 2002, as
compared to December 31, 2001. 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
Total rental revenues were $1,507,032 for the six months ended June 30,
2002, as compared to $1,481,041 in the comparable period of 2001, of which
$744,088 and $723,381 were earned during the second quarter of 2002 and 2001,
respectively. The increase in rental revenues during the quarter and six months
ended June 30, 2002, as compared to the same periods of 2001, was partially due
to the fact that in December 2001 the Partnership used a portion of the sales
proceeds from the sale of the Partnership's Property in Greer, South Carolina
and the majority of the sales proceeds from the sale of the Partnership's
Property in Altadena, California to acquire a Property in Houston, Texas. In
addition, the increase in revenues during the quarter and six months ended June
30, 2002, as compared to the same periods of 2001 was also partially due to the
fact that the Partnership received rental payments relating to the Property in
Bartlesville, Oklahoma. During 2000, Phoenix Restaurant Group, Inc. ("PRG"), the
tenant of this Property, experienced financial difficulties and ceased payment
of rent. As a result, the Partnership stopped recording rental revenue during
the quarter ended March 31, 2001. In October 2001, PRG filed for bankruptcy and
resumed payment of rent to the Partnership from the bankruptcy date through
April 30, 2002. The Partnership re-leased this Property to a new tenant in May
2002. The increase in rental revenues during the quarter and six months ended
June 30, 2002 was partially offset by the fact that the Partnership sold several
Properties during 2001.
During the six months ended June 30, 2002 and 2001, the Partnership
earned $17,385 and $48,478, respectively, in interest and other income, of which
$10,415 and $25,936 were earned during the quarters ended June 30, 2002 and
2001, respectively. The decrease in interest and other income during the quarter
and six months ended June 30, 2002, as compared to the same periods of 2001, was
due to a decrease in the average cash balance and due to a decline in interest
rates.
During the six months ended June 30, 2002 and 2001, the Partnership
earned $221,808 and $238,158, respectively, attributable to net income earned by
joint ventures, of which $111,892 and $157,359 were earned during the quarters
ended June 30, 2002 and 2001. The decrease in net income earned by joint
ventures during the quarter and six months ended June 30, 2002, as compared to
the same periods in 2001, was primarily due to the fact that in May 2001,
Wood-Ridge Real Estate Joint Venture, in which the Partnership owns a 50%
interest, sold its Property in Paris, Texas in accordance with the purchase
option under the lease agreement. During 2001, the joint venture distributed the
net sales proceeds received from the sale as a return of capital to the
Partnership and the other joint venture partner. The decrease in net income
earned by joint ventures was partially offset by the fact that in April and
August 2001, respectively, the Partnership invested in a Property in Blue
Springs, Missouri with CNL Income Fund XIII, Ltd. as tenants-in-common, and in a
joint venture arrangement, CNL VII, XV Columbus Joint Venture, with CNL Income
Fund VII, Ltd. Each of the CNL Income Funds is a Florida limited partnership and
an affiliate of the general partners.
In June 2002, the Partnership and CNL Income Fund VI, Ltd. entered into
an agreement with an unrelated third party to sell the Property in Fort Myers,
Florida, as described below.
Operating expenses, including depreciation and amortization expense and
provision for write-down of assets were $388,733 and $836,888 for the six months
ended June 30, 2002 and 2001, respectively, of which $174,954 and $220,305 were
incurred during the quarters ended June 30, 2002 and 2001, respectively.
Operating expenses were higher during the six months ended June 30, 2001,
compared to the six months ended June 30, 2002, as a result of the Partnership
recording a provision for write-down of assets during the six months ended June
30, 2001 in the amount of $288,684 relating to the Property in Greer, South
Carolina. The provision represented the difference between the carrying value of
the Property and its fair value.
The decrease in operating expenses during the quarter and six months
ended June 30, 2002, as compared to the same periods of 2001, was also
attributable to a decrease in the costs incurred for administrative expenses for
servicing the Partnership and its Properties and due to a decrease in state tax
expense. In addition, during the quarter and six months ended June 30, 2001, the
Partnership recorded a provision for doubtful accounts of approximately $46,900
related to the Property in Bartlesville, Oklahoma. The tenant of the Property,
Phoenix Restaurant Group, Inc., experienced financial difficulty and filed for
bankruptcy during 2001. The Partnership re-leased this Property to a new tenant
in May 2002.
Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement requires that a long-lived asset
be tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds its fair value. If an impairment
is recognized, the adjusted carrying amount of a long-lived asset is its new
cost basis. The statement also requires that the results of operations of a
component of an entity that either has been disposed of or is classified as held
for sale be reported as a discontinued operation if the disposal activity was
initiated subsequent to the adoption of the Standard.
As a result of the sale of the Property in Woodland Hills, California,
the Partnership recorded a gain of $246,671 during the quarter and six months
ended June 30, 2001.
In February 2002, the Partnership sold its Property in Redlands,
California to an unrelated third party and recognized a gain on disposal of
discontinued operations of approximately $301,800, as described above. The
Partnership used the sales proceeds to invest in an additional Property. In
addition, in June 2002, The Partnership entered into an agreement with an
unrelated third party to sell the Property in Medina, Ohio. The Partnership
expects to use the proceeds from the sale to reinvest in an additional income
producing Property. In accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," the Partnership reclassified this asset from land and building on
operating leases to real estate held for sale. The Partnership recorded the
reclassified asset at the lower of its carrying amount or fair value, less cost
to sell. In addition, during the six months ended June 30, 2002, the Partnership
stopped recording depreciation once the Property was identified for sale. The
Partnership recognized net rental (loss) income (rental revenues less Property
related expenses) of ($6,610) and $48,535 during the six months ended June 30,
2002 and 2001, respectively, of which ($14,847) and $23,284 was recorded during
the quarters ended June 30, 2002 and 2001, respectively. These amounts were
reported as Discontinued Operations in the financial statements.
In June 2002, the Partnership and CNL Income Fund VI, Ltd., as
tenants-in common, entered into an agreement with an unrelated third party to
sell the Property in Fort Myers, Florida. The Partnership owns a 15% interest in
this Property. The Partnership expects to use the proceeds from the sale to
reinvest in an additional income producing Property. In accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the tenancy-in common reclassified
this asset from land and building on operating leases and accrued rental income
to real estate held for sale. The tenancy-in common recorded the reclassified
asset at the lower of its carrying amount or fair value, less cost to sell. In
addition, during the six months ended June 30, 2002, the tenancy-n common
stopped recording depreciation and accrued rental income once the Property was
identified for sale. The tenancy-in-common recognized net rental income (rental
revenues less Property related expenses) of $79,439 and $80,718 during the six
months ended June 30, 2002 and 2001, respectively, of which $39,364 and $40,293
was earned during the quarters ended June 30, 2002 and 2001, respectively. The
Partnership's pro-rata share of these amounts are included in equity in earnings
of joint ventures in the accompanying financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable.
Item 3. Default upon Senior Securities. Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
Item 5. Other Information. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) 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 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.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 7, 2001 and
incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Filed
herewith.)
(b) Reports on Form 8-K
No reports on From 8-K were filed during the quarter
ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 12th day of August, 2002.
CNL INCOME FUND XV, LTD.
By:CNL REALTY CORPORATION
General Partner
By:/s/ James M. Seneff, Jr.
------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Robert A. Bourne
------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund XV, Ltd. (the
"Partnership"), has executed this certification in connection with the filing
with the Securities and Exchange Commission of the Partnership's Quarterly
Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The
undersigned hereby certifies that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: August 12, 2002 /s/ James M. Seneff, Jr.
-----------------------------------
Name: James M. Seneff, Jr.
Title: Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Robert A. Bourne, the President and Treasurer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund XV, Ltd. (the
"Partnership"), has executed this certification in connection with the filing
with the Securities and Exchange Commission of the Partnership's Quarterly
Report on Form 10-Q for the period ending June 30, 2002 (the "Report"). The
undersigned hereby certifies that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: August 12, 2002 /s/ Robert A. Bourne
---------------------------------
Name: Robert A. Bourne
Title: President and Treasurer
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.)
10.4 Assignment of Management Agreement from CNL Fund Advisors,
Inc. to CNL APF Partners, LP. (Included as Exhibit 10.4 to
Form 10-Q filed with the Securities and Exchange Commission
on August 7, 2001 and incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF Partners,
LP to CNL Restaurants XVIII, Inc. (Filed herewith.)
EXHIBIT 10.5