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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 0-26218
CNL INCOME FUND XVI, LTD.
(Exact name of registrant as specified in its charter)
Florida 59-3198891
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to section 12(g) of the Act:
Units of limited partnership interest ($10 per Unit)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of 4,500,000 units of limited
partnership interest (the "Units") on Form S-11 under the Securities Act of
1933, as amended. Since no established market for such Units exists, there is no
market for such Units. Each Unit was originally sold at $10 per Unit.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
Item 1. Business
CNL Income Fund XVI, 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 September 2, 1994, the
Partnership offered for sale up to $45,000,000 of limited partnership interests
(the "Units") (4,500,000 Units at $10 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
February 23, 1994. The offering terminated on June 12, 1995, at which date the
maximum offering proceeds of $45,000,000 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
$39,600,000 and were used to acquire 43 Properties, including seven Properties
consisting of land only.
During the year ended December 31, 1996, the Partnership sold a
Property in Appleton, Wisconsin, and used the net sales proceeds to acquire a
Boston Market Property located in Fayetteville, North Carolina, with an
affiliate of the General Partners as tenants-in-common. During the year ended
December 31, 1997, the Partnership sold a Property in Oviedo, Florida, and
during 1998 the Partnership reinvested the net sales proceeds from the sale of
this Property in a Property in Memphis, Tennessee, as tenants-in-common, with
affiliates of the General Partners. In addition, during 1998, the Partnership
received a reimbursement from the developer of the Property in Farmington, New
Mexico upon final reconciliation of total construction costs. In August 1998,
the Partnership used these proceeds to enter into a joint venture arrangement,
Columbus Joint Venture, with affiliates of the General Partners, to construct
and hold one restaurant Property. During 1999, the Partnership sold a Property
in Lawrence, Kansas. During 2000, the Partnership reinvested the majority of
these net sales proceeds in, TGIF Pittsburgh Joint Venture, with affiliates of
the General Partners, to purchase and hold one restaurant Property. In addition,
during 2000, the Partnership sold its Property in Columbia Heights, Minnesota.
As a result of the above transactions, as of December 31, 2000, the
Partnership owned 43 Properties. The 43 Properties include six Properties
consisting of land only, interests in two Properties owned through joint
ventures in which the Partnership is a co-venturer and two Properties owned with
affiliates of the General Partners as tenants-in-common. The lessee of the six
Properties consisting of only land owns the buildings currently on the land and
has the right, if not in default under the lease, to remove the buildings from
the land at the end of the lease terms. In general, the Partnership leases the
Properties on a triple-net basis with the lessees responsible for all repairs
and maintenance, property taxes, insurance and utilities.
The Partnership will hold its Properties until the General Partners
determine that the sale or other disposition of the Properties is advantageous
in view of the Partnership's investment objectives. In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations. Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed. The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration for the Merger. On
March 1, 2000, the General Partners and APF announced that they had mutually
agreed to terminate the Agreement and Plan of Merger. the agreement to terminate
the Agreement and Plan of Merger was based, in large part, on the General
Partners' concern that, in light of market conditions relating to publicly
traded real estate investment trusts, the value of the transaction had
diminished. As a result of such diminishment, the General Partners, ability to
unequivocally recommend voting for the transaction, in the exercise of their
fiduciary duties, had become questionable. The General Partners are continuing
to evaluate strategic alternatives for the Partnership, including alternatives
to provide liquidity to the Limited Partners.
Leases
Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership, the
Properties owned by joint ventures in which the Partnership is a co-venturer and
Properties owned as tenants-in-common with affiliates of the General Partners
provide for initial terms ranging from 2 to 20 years (the average being 18
years) and expire between 2003 and 2018. The leases are generally on a
triple-net basis, with the lessees responsible for all repairs and maintenance,
property taxes, insurance and utilities. The leases of the Properties provide
for minimum base annual rental payments (payable in monthly installments)
ranging from approximately $19,200 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 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 33 of the Partnership's 43 Properties also have been
granted options to purchase Properties at the Property's then fair market value
after a specified portion of the lease term has elapsed. Fair market value will
be determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.
The leases also generally provide that, in the event the Partnership
wishes to sell the Property subject to that lease, the Partnership first must
offer the lessee the right to purchase the Property on the same terms and
conditions, and for the same price, as any offer which the Partnership has
received for the sale of the Property.
During 1998, three tenants, Long John Silver's, Inc., Finest
Foodservice, L.L.C., and Boston Chicken, Inc., filed for bankruptcy and rejected
the leases relating to five of their seven leases and ceased making rental
payments to the Partnership on the rejected leases. During 1999, the Partnership
entered into new leases, each with a new operator, for two of the five vacant
Properties and sold two of the five vacant Properties, one in each of 1999 and
2000. The terms of the new leases are substantially the same as the
Partnership's other leases, as described above. The Partnership will not
recognize rental and earned income from the one remaining vacant Property until
a new tenant for the Property is located or until the Property is sold and the
proceeds from the sale are reinvested in an additional Property. In August 1999,
Long John Silver's, Inc. and Boston Chicken, Inc. each assumed and affirmed
their one remaining lease, and, the Partnership has continued receiving rental
payments relating to these leases. The General Partners are currently seeking
either new tenants or purchasers for the one remaining vacant Property.
In August 1999, the leases relating to the Long John Silver's
Properties in Silver City and Clovis, New Mexico, and Copperas Cove, Texas were
amended to provide rent deferrals of 15 percent, ten percent, and 30 percent,
respectively, of the annual rental payments required by the lease. The rent
deferrals are payable by the tenant beginning in August 2001 through August
2008.
In October 1999, the lease relating to the Long John Silver's Property
in Kansas City, Missouri was amended to provide to reduce the May 2000 scheduled
rent increase from 12 percent to 5 percent. The remaining scheduled rent
increases remain unchanged.
Major Tenants
During 2000, three lessees of the Partnership, Golden Corral
Corporation, Jack in the Box Inc., and Phoenix Restaurant Group, Inc., each
contributed more than ten percent of the Partnership's total rental and earned
income. As of December 31, 2000, Golden Corral Corporation was the lessee under
leases relating to six restaurants, Jack in the Box Inc. was the lessee under
leases relating to five restaurants, and Phoenix Restaurant Group, Inc. was the
lessee under leases relating to nine restaurants. It is anticipated that based
on the minimum rental payments required by the leases that these three lessees
each will continue to contribute more than ten percent of the Partnership's
total rental and earned income in 2001. In addition, three Restaurant Chains,
Golden Corral Family Steakhouse Restaurants ("Golden Corral"), Jack in the Box,
and Denny's, each accounted for more than ten percent of the Partnership's total
rental and earned income during 2000. In 2001, it is anticipated that each of
these Restaurant Chains will continue to contribute more than ten percent of the
Partnership's 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. As of December 31, 2000, Golden
Corral Corporation and Phoenix Restaurant Group, Inc. each leased Properties
with an aggregate carrying value in excess of 20 percent of the total assets of
the Partnership.
Joint Venture and Tenancy in Common Arrangements
In October 1996, the Partnership entered into an agreement to hold a
Boston Market Property as tenants-in-common, with CNL Income Fund XVII, 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 and net
cash flow from the Property, in proportion to each co-tenant's percentage
interest. The Partnership owns an 80.44% interest in this Property.
In addition, in January 1998, the Partnership entered into an agreement
to hold an IHOP Property in Memphis, Tennessee, as tenants-in-common, with CNL
Income Fund II, Ltd. and CNL Income Fund VI, 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 and net cash flow from the Property,
in proportion to each co-tenant's percentage interest. The Partnership owns a
40.42% 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
co-tenant's ability to sell, transfer, or assign its interest in the tenancy in
common's Property without first offering it for sale to the remaining co-tenant.
In addition, in August 1998, the Partnership entered into a joint
venture arrangement, Columbus Joint Venture, with CNL Income Fund XII, Ltd. and
CNL Income Fund XVIII, Ltd., affiliates of the General Partners, to construct
and hold one Property. The joint venture arrangement provides for the
Partnership and its joint venture partners to share in all costs and benefits
associated in the joint venture in proportion to each partner's percentage
interest in the joint venture. The Partnership and its joint venture partners
are also jointly and severally liable for all debts, obligations and other
liabilities of the joint venture. The Partnership has a 32.35% interest in the
profits and losses of this joint venture. Each of the affiliates is a limited
partnership organized pursuant to the laws of the state of Florida.
In addition, in June 2000, the Partnership entered into a joint venture
arrangement, TGIF Pittsburgh Joint Venture, with CNL Income Fund VII, Ltd., CNL
Income Fund XV, Ltd., and CNL Income Fund XVIII, Ltd., affiliates of the General
Partners, to purchase and hold one Property. The joint venture arrangement
provides for the Partnership and its joint venture partners to share in all
costs and benefits associated in the joint venture in proportion to each
partner's percentage interest in the joint venture. The Partnership and its
joint venture partners are also jointly and severally liable for all debts,
obligations and other liabilities of the joint venture. The Partnership has a
19.72% interest in the profits and losses of this joint venture. Each of the
affiliates is a limited partnership organized pursuant to the laws of the state
of Florida.
The use of joint ventures 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 ventures and tenancy in common arrangements also provides the
Partnership with increased diversification of its portfolio among a greater
number of properties. In addition, tenancy in common arrangements may allow the
Partnership to defer the gain for federal income tax purposes upon the sale of
the property if the proceeds are reinvested in an additional property.
Certain Management Services
CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership. Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties. CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases. For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross rental
revenues from Properties wholly owned by the Partnership plus the Partnership's
allocable share of gross revenues of joint ventures in which the Partnership is
a co-venturer, but not in excess of competitive fees for comparable services.
The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
Competition
The fast-food and family-style restaurant business is characterized by
intense competition. The restaurants on the Partnership's Properties compete
with independently owned restaurants, restaurants which are part of local or
regional chains, and restaurants in other well-known national chains, including
those offering different types of food and service.
Employees
The Partnership has no employees. The officers of CNL Realty
Corporation and the officers and employees of APF, the parent company of CNL
Fund Advisors, Inc., perform certain services for the Partnership. In addition,
the General Partners have available to them the resources and expertise of the
officers and employees of CNL Financial Group, Inc., a diversified real estate
company, and its affiliates, who may also perform certain services for the
Partnership.
Item 2. Properties
As of December 31, 2000, the Partnership owned 43 Properties. Of the 43
Properties, 39 are owned by the Partnership in fee simple, two are owned through
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 16,600
to 104,800 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.
Number of Properties
State
Arizona 1
California 2
Colorado 1
Washington, D.C. 1
Florida 5
Georgia 1
Idaho 1
Indiana 2
Kansas 1
Minnesota 1
Missouri 4
New Mexico 3
Nevada 1
North Carolina 3
Ohio 4
Pennsylvania 1
Tennessee 1
Texas 9
Utah 1
-----------------
TOTAL PROPERTIES 43
=================
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 six Checkers Properties are owned by the tenant while
the land parcels are owned by the Partnership. The buildings generally are
rectangular and are constructed from various combinations of stucco, steel,
wood, brick and tile. The sizes of the buildings owned by the Partnership range
from approximately 2,000 to 11,100 square feet. All buildings on Properties are
freestanding and surrounded by paved parking areas. Buildings are suitable for
conversion to various uses, although modifications may be required prior to use
for other than restaurant operations. As of December 31, 2000, the Partnership
had no plans for renovation of the Properties. Depreciation expense is computed
for buildings and improvements using the straight line method using a
depreciable life of 40 years for federal income tax purposes.
As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and joint ventures (including Properties owned through tenancy
in common arrangements) for federal income tax purposes was $36,276,118 and
$5,908,838, respectively.
The following table lists the Properties owned by the Partnership as of
December 31, 2000 by Restaurant Chain.
Restaurant Chain Number of Properties
Arby's 2
Big Boy 1
Boston Market 3
Checkers 6
Denny's 9
Golden Corral 6
IHOP 2
Jack in the Box 5
Japan Express 1
KFC 1
Long John Silver's 4
Wendy's 1
Other 2
---------------------
TOTAL PROPERTIES 43
=====================
The General Partners consider the Properties to be well-maintained and
sufficient for the Partnership's operations.
The General Partners believe that the Properties are adequately covered
by insurance. In addition, the General Partners have obtained contingent
liability and property coverage for the Partnership. This insurance is intended
to reduce the Partnership's exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.
Leases. The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably necessary to refurbish buildings, premises,
signs and equipment so as to comply with the lessee's obligations, if
applicable, under the franchise agreement to reflect the current commercial
image of its Restaurant Chain. These capital expenditures are required to be
paid by the lessee during the term of the lease. The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.
At December 31, 2000, 1999, 1998, 1997 and 1996, the properties were
98%, 95%, 89%, 100%, and 100% occupied, respectively. The following is a
schedule of the average rent per property for each of the years ended December
31:
2000 1999 1998 1997 1996
-------------- ------------- ------------- ------------- -------------
Rental Revenues (1) $ 3,730,031 $ 4,033,287 $ 4,244,356 $ 4,392,092 $ 4,357,033
Properties (2) 42 43 44 42 43
Average Rent per Property $ 88,810 $ 93,797 $ 96,463 $ 104,574 $ 101,326
(1) Rental income includes the Partnership's share of rental income from
the Properties owned through joint venture arrangements and the
Properties owned through tenancy in common arrangements. Rental
revenues have been adjusted, as applicable, for any amounts for which
the Partnership has established an allowance for doubtful accounts.
(2) Excludes Properties that were vacant at December 31, and did not
generate rental revenues during the year ended December 31. The
following is a schedule of lease expirations for leases in place as of
December 31, 2000 for the next ten years and thereafter.
Percentage of
Expiration Year Number Annual Rental Gross Annual
of Leases Revenues Rental Income
----------------- ---------------- --------------------- --------------------------
2001 -- $ -- --
2002 -- -- --
2003 1 43,795 1.1%
2004 -- -- --
2005 -- -- --
2006 -- -- --
2007 -- -- --
2008 -- -- --
2009 3 447,584 11.3%
2010 4 493,659 12.5%
Thereafter 34 2,974,764 75.1%
---------- ------------- -------------
Total (1) 42 $ 3,959,802 100.00%
========== ============= =============
(1) Excludes one Property that 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.
Golden Corral Corporation leases six 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 $155,400 (ranging from
approximately $113,300 to $192,900).
Jack in the Box Inc. leases five Jack in the Box restaurants. The
initial term of each lease is 18 years (expiring between 2011 and 2012) and the
average minimum base annual rent is approximately $96,700 (ranging from
approximately $87,800 to $115,600).
Phoenix Restaurant Group, Inc. leases nine Denny's restaurants. The
initial term of each lease is 20 years (expiring between 2014 and 2015) and the
average minimum base annual rent is approximately $111,300 (ranging from
approximately $64,800 to $220,600).
Item 3. Legal Proceedings
Neither the Partnership, not its General Partners or any affiliate of
the General Partners, nor any of their respective Properties is party to, or
subject to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) As of March 15, 2001, there were 3,020 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 range from $8.62 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 1999
------------------------------------ -------------------------------------
High Low Average High Low Average
--------- -------- ----------- --------- -------- -----------
First Quarter (2) (2) (2) $10.00 $ 8.77 $ 8.92
Second Quarter $9.30 $ 6.47 $ 8.12 6.99 6.99 6.99
Third Quarter 7.51 5.55 7.22 10.00 7.91 8.64
Fourth Quarter 7.16 5.55 6.84 8.40 7.00 7.60
(1) A total of 41,725 and 23,210 Units were transferred other than pursuant
to the Plan for the years ended December 31, 2000 and 1999.
(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 $3,600,000 to the Limited Partners. 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. Distributions of $900,000 were declared at the close of each
of the Partnership's calendar quarters. This amount includes monthly
distributions made in arrears for the Limited Partners electing to receive such
distributions on this basis.
The Partnership intends to continue to make distributions of cash
available for distribution to the Limited Partners on a quarterly basis,
although some Limited Partners, in accordance with their election, receive
monthly distributions, for an annual fee.
(b) Not applicable
Item 6. Selected Financial Data
2000 1999 1998 1997 1996
-------------- --------------- --------------- -------------- ---------------
Year ended December 31:
Revenues (1) $3,780,584 $4,059,810 $4,093,756 $4,455,994 $4,438,218
Net income (2) 1,945,812 2,815,008 2,976,998 3,660,327 3,748,198
Cash distributions
declared (3) 3,600,000 3,600,000 3,690,000 3,600,000 3,543,751
Net income per Unit
(2)(4) 0.43 0.62 0.65 0.81 0.82
Cash distributions
declared per Unit
(3)(4) 0.80 0.80 0.82 0.80 0.79
At December 31:
Total assets $37,936,084 $39,710,973 $40,188,641 $40,938,320 $40,955,642
Partners' capital 36,752,744 38,406,932 39,191,924 39,904,926 39,844,599
(1) Revenues include equity in earnings of joint ventures and adjustments
to accrued rental income due to the tenants of certain Properties
filing for bankruptcy and experiencing financial difficulties.
(2) Net income for the year ended December 31, 2000, includes $88,661 from
gain on sale of assets. Net income for the year ended December 31, 2000
and 1998 includes $857,316 and $266,257 for provision for loss on
assets. Net income for the year ended December 31, 1999, includes
$84,478 from loss on sale of assets. Net income for the year ended
December 31, 1996, includes $41,148 from gain on sale of assets.
(3) Distributions for the year ended December 31, 1998 include a special
distribution to the Limited Partners of $90,000, which represented
cumulative excess operating reserves.
(4) Based on the weighted average number of Limited Partner Units
outstanding during the years ended December 31, 2000, 1999, 1998, 1997,
and 1996.
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
generally responsible for all repairs and maintenance, property taxes, insurance
and utilities. As of December 31, 2000, the Partnership owned 43 Properties,
either directly or indirectly through joint venture or tenancy in common
arrangements.
Capital Resources
Currently, the Partnership's primary source of capital is cash from
operations (which includes cash received from tenants, distributions from the
joint venture and interest received, less cash paid for expenses). Cash from
operations was $3,165,697, $3,151,231, and $3,623,694 for the years ended
December 31, 2000, 1999, and 1998, respectively. The increase in cash from
operations during 2000, as compared to 1999, was primarily a result of changes
in the Partnership's working capital and changes in income and expenses as
described in "Results of Operations," below. The decrease in cash from
operations during 1999, as compared to 1998, was primarily a result of changes
in income and expenses as described in "Results of Operations" below.
Other sources and uses of capital included the following during the
years ended December 31, 2000, 1999 and 1998.
In January 1998, the Partnership reinvested the net sales proceeds from
its 1997 sale of a Property in Oviedo, Florida, in an IHOP Property in Memphis,
Tennessee, as tenants-in-common with affiliates of the General Partners. In
connection therewith, the Partnership and its affiliates entered into an
agreement whereby each co-tenant will share in the profits and losses of the
Property in proportion to each co-venturer's interest. The Partnership owns a
40.42% interest in the Property.
In April 1998, the Partnership received approximately $162,000 from the
developer of the Property in Farmington, New Mexico. This represents a
reimbursement from the developer upon final reconciliation of total construction
costs to the total construction costs funded by the Partnership in accordance
with the development agreement. In August 1998, the Partnership entered into a
joint venture arrangement, Columbus Joint Venture, with affiliates of the
General Partners, to construct, own and lease one restaurant Property. As of
December 31, 1999, the Partnership had contributed approximately $293,000, of
which approximately $158,500 was contributed during 1999, to purchase land and
pay for construction costs relating to the joint venture. As of December 31,
2000, the Partnership had a 32.35% interest in the profits and losses of the
joint venture.
During the year ended December 31, 1999, the Partnership accepted a
promissory note from the former tenant of the Shoney's Property in Las Vegas,
Nevada, in the amount of $52,191, representing past due rental and other
amounts. The note represents receivables for which the Partnership had
established an allowance for doubtful accounts, and real estate taxes previously
recorded as an expense by the Partnership. Payments are due in 60 monthly
installments of $1,220 including interest at a rate of ten percent per annum,
which were scheduled to commence on March 1, 2000, at which time the accrued and
unpaid interest of $5,219 was capitalized into the principal balance of the
note. Due to the uncertainty of the collectibility of the note, the Partnership
established an allowance for doubtful accounts and is recognizing income as
collected. As of December 31, 2000, the balance in the allowance for doubtful
accounts relating to this promissory note was $62,751, including accrued
interest of $4,914. The Partnership has ceased collection efforts on the
remaining past due receivables not converted into the promissory note.
In February 1999, the Partnership entered into a new lease for the
Property in Las Vegas, Nevada. In connection therewith, the Partnership incurred
$183,500 in renovation costs which were completed in November 2000.
In November 1999, the Partnership sold its Property in Lawrence,
Kansas, to a third party for $690,000 and received net sales proceeds of
$667,311. As a result of this transaction, the Partnership recognized a loss of
$84,478 for financial reporting purposes. In June 2000, the Partnership used the
majority of these net sales proceeds to invest in a joint venture arrangement,
TGIF Pittsburgh Joint Venture, with CNL Income Fund VII, Ltd., CNL Income Fund
XV, 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. The Partnership accounts for its investment using the equity method
since the Partnership shares control with affiliates. As of December 31, 2000,
the Partnership owned a 19.72% interest in the profits and losses of the joint
venture.
In September 2000, the Partnership sold its Property in Columbia
Heights, Minnesota, to a third party for $584,000 and received net sales
proceeds of approximately $575,800, resulting in a gain of approximately $88,700
for the financial reporting purposes. The Partnership intends to reinvest the
majority of these net sales proceeds in an additional Property. The Partnership
distributed amounts sufficient to enable the Limited Partners to pay federal and
state income taxes, if any (at a level reasonably assumed by the General
Partners), resulting from the sale.
None of the Properties owned by the Partnership, or the joint venture
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. In addition, the
Partnership will not borrow unless it first obtains an opinion of counsel that
such borrowing will not constitute acquisition indebtedness. Affiliates of the
General Partners from time to time incur certain operating expenses on behalf of
the Partnership for which the Partnership reimburses the affiliates without
interest.
Currently, rental income from the Partnership's Properties and net
sales proceeds from the sale of Properties 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
reinvest in additional Properties, to pay Partnership expenses, or to make
distributions to partners. At December 31, 2000, the Partnership had $1,081,650
invested in such short-term investments as compared to $1,637,753 at December
31, 1999. As of December 31, 2000, the average interest rate earned on the
rental income deposited in demand deposit accounts at commercial banks was
approximately two percent annually. The funds remaining at December 31, 2000,
will be used toward the payment of distributions and other liabilities.
Short-Term Liquidity
The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.
The Partnership's investment strategy of acquiring Properties for cash
and 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 ongoing operating expenses and cash flow, the General
Partners believe that the Partnership has sufficient working capital reserves at
this time. In addition, because the majority of the leases of the Partnership's
Properties are on a triple-net basis, it is not anticipated that a permanent
reserve for maintenance and repairs will be established at this time. To the
extent, however, that the Partnership has insufficient funds for such purposes,
the General Partners will contribute to the Partnership an aggregate amount of
up to one percent of the offering proceeds for maintenance and repairs. The
General Partners have the right to cause the Partnership to maintain additional
reserves if, in their discretion, they determine such reserves are required to
meet the Partnership's working capital needs.
The General Partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
The Partnership generally distributes cash from operations remaining
after the payment of the operating expenses of the Partnership, to the extent
that the General Partners determine that such funds are available for
distribution. Based on current and 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 $3,600,000 and
$3,600,000, and $3,690,000, for the years ended December 31, 2000, 1999, and
1998, respectively. This represents distributions of $0.80, $0.80, and $0.82 per
Unit for the years ended December 31, 2000, 1999, and 1998, respectively. No
distributions were made to the General Partners during the years ended December
31, 2000, 1999, and 1998, respectively. No amounts distributed to the Limited
Partners for the years ended December 31, 2000, 1999, and 1998, are required to
be or have been treated by the Partnership as a return of capital for purposes
of calculating the Limited Partners' return on their adjusted capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to 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 $152,957 and
$73,853, respectively, to related parties for such amounts as accounting and
administrative services and management fees. As of March 15, 2001, the
Partnership had reimbursed the affiliates $23,870 of all such amounts. Other
liabilities, including distributions payable, decreased to $1,030,383 at
December 31, 2000, from $1,230,188 at December 31, 1999, partially as a result
of the fact that during 2000, the Partnership paid amounts that were accrued at
December 31, 1999 for construction costs relating to the Property in Las Vegas,
Nevada and transaction costs relating to the proposed Merger with APF, as
described in "Termination of Merger." Liabilities at December 31, 2000, to the
extent they exceed cash and cash equivalents at December 31, 2000, will be paid
from anticipated future cash from operations.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
During 1998, the Partnership owned and leased 43 wholly owned
Properties (including two Properties in Madison and Chattanooga, Tennessee
exchanged for two Properties in Lawrence, Kansas and Indianapolis, Indiana),
during 1999, the Partnership owned and leased 41 wholly owned Properties
(including one Property which was sold in November 1999) and during 2000, the
Partnership owned and leased 40 wholly owned Properties (including one Property
which was sold in September 2000). In addition, during 1999 and 1998, the
Partnership was a co-venturer in a joint venture arrangement that owned and
leased one Property, and during 2000, the Partnership was a co-venturer in an
additional joint venture arrangement that owned and leased one Property. In
addition during 2000, 1999, and 1998, the Partnership owned and leased two
Properties with affiliates, as tenants-in-common. As of December 31, 2000, the
Partnership owned, either directly, as tenants-in-common or through a joint
venture arrangement, 43 Properties which are generally subject to long-term,
triple-net leases that provide for minimum base annual rental amounts (payable
in monthly installments) ranging from approximately $19,200 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 lease year), the annual
base rent required under the terms of the lease will increase. For a 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 $3,548,605, $3,839,624, and $3,899,981, respectively, in
rental income from operating leases (net of adjustments to accrued rental
income), earned income from direct financing leases and contingent rental income
from Properties wholly owned by the Partnership. The decrease in rental, earned,
and contingent rental income in 2000, and 1999, each as compared to the previous
year, is partially attributable by approximately $133,700 due to the fact that
in 1998 three tenants filed for bankruptcy and rejected the leases relating to a
total of five of the seven Properties leased by these tenants. As a result,
these tenants ceased making rental payments on the five rejected leases. In
conjunction with the five rejected leases, during 2000 and 1998, the Partnership
reversed approximately $57,100 and $107,000, respectively, 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. The
Partnership has continued receiving rental payments relating to the two leases
not rejected by the tenants. In March 1999, the Partnership entered into a new
lease with a new tenant for another one of the vacant Properties; rental
payments commenced in April 1999, thereby partially offsetting the decrease in
rental and earned income. In November 1999, the Partnership entered into a new
lease with a new tenant for one of the vacant Properties; rental payments
commenced in the first quarter of 2000. In addition, between November 1999 and
September 2000, the Partnership sold two of the vacant Properties. In June 2000,
the Partnership reinvested the majority of the net sales proceeds from the 1999
sale in TGIF Pittsburgh Joint Venture, as described in "Capital Resources" and
intends to reinvest the majority of the net sales proceeds from the 2000 sale of
the Property in an additional Property. The decrease in rental and earned income
during 2000 was partially offset by an increase in rental and earned income of
approximately $34,100 due to the fact that during 2000, the Partnership
collected and recognized as income past due rental amounts received from Long
John Silver's, Inc., which filed for bankruptcy during 1998 and rejected the
leases relating to two of the three Properties it leased. In August 1999 and
June 2000, Long John Silver's, Inc. and Boston Chicken, Inc. assumed and
affirmed their one remaining lease, and the Partnership has continued receiving
rental payments relating to these leases. The General Partners are currently
seeking either a new tenant or purchaser for the one remaining rejected and
vacant Property. The Partnership will not recognize any rental and earned income
from this vacant Property until a new tenant for this Property is located or
until the Property is sold and the proceeds from such sale are reinvested in an
additional Property. The lost revenues resulting from the remaining rejected and
vacant Property could have an adverse effect on the results of operations of the
Partnership if the Partnership is not able to re-lease the Property in a timely
manner.
The decrease in rental and earned income during 1999 as compared to
1998, was also partially attributable to the fact that in July 1998, the tenant
of the Shoney's Property in Las Vegas, Nevada vacated the Property and ceased
making rental payments on this Property. As a result, during the year ended
December 31, 1998, the Partnership reversed approximately $77,300 of accrued
rental income relating to this Property. 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 reversal of accrued rental income was offset by the fact
that the Partnership recorded approximately $140,100 in rental and earned income
during the year ended December 31, 1998, prior to the tenant vacating the
Property. No rental and earned income was recognized during the year ended
December 31, 1999, relating to this tenant. During 1998, the Partnership
established an allowance for doubtful accounts of approximately $82,500 for
rental and earned income amounts due from this tenant. The decrease during 2000
and 1999 was partially offset by the fact that in February 1999, the Partnership
entered into a new lease with a new tenant for this Property for which rental
payments commenced in August 1999. In connection with the new lease, the
Partnership paid $183,500 of the construction costs necessary to convert this
Property into a new concept.
Rental and earned income also decreased during 2000, due to the fact
that during 2000, the Partnership reversed accrued rental income of
approximately $36,200 relating to the Property in Mesquite, Texas, to adjust the
carrying value of the Property to the estimated net realizable value of the
Property. Additionally, the decrease in rental and earned income during 2000,
was also partially attributable to the fact that during 2000, the Partnership
established an allowance for doubtful accounts for past due rental amounts
relating to several Denny's Properties in accordance with the Partnership's
policy. During 2000, the tenant of the Property in Bucyrus, Ohio terminated its
lease due to financial difficulties the tenant was experiencing. As a result,
the Partnership reclassified the asset from net investment in direct financing
leases to land and buildings on operating leases. In accordance with Statement
of Financial Accounting Standards No. 13, "Accounting for Leases," the
Partnership recorded the reclassified asset at the lower of original cost,
present fair value, or present carrying amount. No loss on termination of direct
financing lease was recorded for financial reporting purposes. The Partnership
will not recognize any rental and earned income from this Property until the
Property is re-leased or the Property is sold and the proceeds are reinvested in
an additional Property. The General Partners are currently seeking a replacement
tenant or purchaser for this Property. The General Partners will continue to
pursue collection of past due rental amounts relating to these Properties and
will recognize such amounts as income if collected.
In addition, for the years ended December 31, 2000, 1999, and 1998, the
Partnership earned $180,084, $158,580, and $132,002, respectively, attributable
to net income earned by joint ventures. The increase in net income earned by
joint ventures during 2000, as compared to 1999, was primarily attributable to
the fact that in June 2000, the Partnership reinvested the net sales proceeds it
received from the 1999 sale of the Property in Lawrence, Kansas in TGIF
Pittsburgh Joint Venture with affiliates of the General Partners as described in
"Capital Resources." The increase in net income earned by joint ventures during
1999, as compared to 1998, was primarily attributable to the fact that in August
1998, the Partnership invested in Columbus Joint Venture with affiliates of the
General Partners, as described in "Capital Resources."
During the year ended December 31, 2000, three lessees of the
Partnership, Golden Corral Corporation, Jack in the Box Inc., and Phoenix
Restaurant Group, Inc., each contributed more than ten percent of the
Partnership's total rental and earned income (including the Partnership's share
of rental income from the Properties owned by joint ventures and the two
Properties owned with affiliates of the General Partners as tenants-in-common).
As of December 31, 2000, Golden Corral Corporation was the lessee under leases
relating to six restaurants, Jack in the Box Inc. was the lessee under leases
relating to five restaurants, and Phoenix Restaurant Group, Inc. was the lessee
under leases relating to nine restaurants. It is anticipated that, based on the
minimum rental payments required by the leases, each of these lessees 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, three
Restaurant Chains, Golden Corral, Jack in the Box, and Denny's, each accounted
for more than ten percent of the Partnership's total rental and earned income
(including the Partnership's share of rental income from the Properties owned by
joint ventures and the two Properties owned with affiliates of the General
Partners as tenants-in-common). In 2001, it is anticipated that each of these
Restaurant Chains 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.
Operating expenses, including depreciation and amortization expense,
were $1,066,117, $1,160,324, and $850,501 for the years ended December 31, 2000,
1999, and 1998, respectively. The decrease in operating expenses during 2000,
and the increase during 1999, was primarily due to the amount of transaction
costs that the Partnership incurred relating to the General Partners retaining
financial and legal advisors to assist them in evaluating and negotiating the
proposed and terminated Merger with APF, as described in "Termination of
Merger."
The decrease in operating expenses during 2000, was partially offset
by, and the increase in operating expenses during 1999, was partially due to the
fact that the Partnership incurred certain expenses, such as legal fees, real
estate taxes, insurance, and maintenance relating to a Shoney's Property, two
Boston Market Properties and two Long John Silver's Properties which became
vacant during 1998, due to financial difficulties or bankruptcies, as described
above. During 2000, the Partnership recorded bad debt expense of $33,532 for
past due amounts relating to the Property in Las Vegas, Nevada. The Partnership
entered into new leases with new tenants for the Shoney's Property in Las Vegas,
Nevada and the Long John Silver's Properties in Celina, Ohio and Charlotte,
North Carolina in February, March and November 1999, respectively. The new
tenants are responsible for real estate taxes, insurance, and maintenance
relating to these three Properties. In addition, in November 1999 and September
2000, the Partnership sold the Boston Market Properties in Lawrence, Kansas and
Columbia Heights, Minnesota, respectively. The General Partners do not
anticipate that the Partnership will incur these expenses for these five
Properties in the future. In addition, the increase in operating expenses during
1999 was partially attributable to an increase in depreciation expense due to
the fact that during 1998, the Partnership reclassified some of these leases
from net investment in direct financing leases to land and buildings on
operating leases as a result of lease terminations.
As a result of the sale of the Property in Columbia Heights, Minnesota,
as described above in "Capital Resources," the Partnership recognized a gain of
$88,661 for financial reporting purposes during the year ended December 31,
2000. As a result of the sale of the Property in Lawrence, Kansas, as described
above in "Capital Resources," the Partnership recognized a loss of $84,478 for
financial reporting purposes during the year ended December 31, 1999. No
Properties were sold during 1998.
During the year ended December 31, 2000, the Partnership recorded
provisions for loss on assets of $400,492 and $456,824, respectively, relating
to Boston Market Properties located in Columbia Heights and St. Cloud,
Minnesota. The tenant for these Properties filed for bankruptcy and discontinued
the payment of rents. The allowances represented the difference between the net
carrying value of the Properties and the estimated net realizable value for the
Properties. During the year ended December 31, 1998, the Partnership recorded a
provision for loss on assets of $266,257 for financial reporting purposes
relating to a Long John Silver's Property in Celina, Ohio. The tenant of this
Property filed for bankruptcy and ceased payment of rents under the terms of its
lease agreement, as described above. The allowance represented the difference
between the Property's carrying value at December 31, 1998 and the estimated net
realizable value for this Property. No such allowance was established during the
years ended December 31, 1999.
The Partnership's leases as of December 31, 2000, are generally
triple-net leases and contain provisions that the General Partners believe
mitigate the adverse effect of inflation. Such provisions include clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified level and/or automatic increases in base rent at specified times
during the term of the lease. Management expects that increases in restaurant
sales volumes due to inflation and real sales growth should result in an
increase in rental income over time. Continued inflation also may cause capital
appreciation of the Partnership's Properties. Inflation and changing prices,
however, also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.
In December 1999, the Securities and Exchange Commission released SAB
101, which provides the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. SAB 101 requires the
Partnership to defer recognition of certain percentage rental income until
certain defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments, embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Statement requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB
Statement No. 133." FAS 137 deferred the effective date of FAS 133 for one year.
FAS 133, as amended, is now effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. The Partnership has reviewed both
statements and has determined that both FAS 133 and FAS 137 do not apply to the
Partnership as of December 31, 2000.
Termination of Merger
On March 11, 1999, the Partnership entered into an Agreement and Plan
of Merger with APF, pursuant to which the Partnership would be merged with and
into a subsidiary of APF. Under the Agreement and Plan of Merger, APF was to
issue shares of its common stock as consideration for the Merger. On March 1,
2000, the General Partners and APF announced that they had mutually agreed to
terminate the Agreement and Plan of Merger. The agreement to terminate the
Agreement and Plan of Merger was based, in large part, on the General Partners'
concern that, in light of market conditions relating to publicly traded real
estate investment trusts, the value of the transaction had diminished. As a
result of such diminishment, the General Partners' ability to unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONTENTS
Page
Report of Independent Certified Public Accountants 17
Financial Statements:
Balance Sheets 18
Statements of Income 19
Statements of Partners' Capital 20
Statements of Cash Flows 21-23
Notes to Financial Statements 24-39
Report of Independent Certified Public Accountants
To the Partners
CNL Income Fund XVI, 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 XVI, Ltd. (a Florida limited partnership) at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedules listed in the index
appearing under item 14(a)(2) present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements. These financial statements and financial statement
schedules are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
February 2, 2001
CNL INCOME FUND XVI, 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 $28,488,803 $ 29,804,331
Net investment in direct financing leases 3,887,824 4,540,067
Investment in joint ventures 2,143,328 1,650,860
Cash and cash equivalents 1,081,650 1,637,753
Receivables, less allowance for doubtful accounts of
$429,262 and $90,894,
respectively 440,739 287,757
Prepaid expenses 8,827 13,121
Lease costs, less accumulated amortization of
$14,357 and $1,348 in 2000 and1999,
respectively 25,566 24,518
Accrued rental income, less allowance for
doubtful accounts of $18,466 and $6,098,
respectively 1,859,347 1,752,566
------------------- -------------------
$37,936,084 $39,710,973
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Acquisition and construction costs payable $ -- $ 150,000
Accounts payable 30,429 131,113
Accrued and escrowed real estate taxes
payable 13,359 5,860
Distributions payable 900,000 900,000
Due to related parties 152,957 73,853
Rents paid in advance and deposits 86,595 43,215
------------------- -------------------
Total liabilities 1,183,340 1,304,041
Partners' capital 36,752,744 38,406,932
------------------- -------------------
$37,936,084 $39,710,973
=================== ===================
See accompanying notes to financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
---------------- ---------------- ---------------
Revenues:
Rental income from operating leases $ 3,171,534 $ 3,281,281 $ 3,482,762
Adjustments to accrued rental income (105,655 ) -- (184,368 )
Earned income from direct financing leases 482,726 558,343 601,587
Interest income 45,310 49,008 60,199
Other income 6,585 12,598 1,574
---------------- ---------------- ---------------
3,600,500 3,901,230 3,961,754
---------------- ---------------- ---------------
Expenses:
General operating and administrative 187,861 183,150 158,519
Bad debt expense 33,532 -- --
Professional services 80,343 53,282 40,471
Management fees to related parties 36,605 37,385 38,570
Real estate taxes 50,966 59,895 9,060
State and other taxes 27,356 25,599 19,398
Loss on termination of direct financing lease 31,215 -- 4,471
Depreciation and amortization 585,659 588,920 555,360
Transaction costs 32,580 212,093 24,652
---------------- ---------------- ---------------
1,066,117 1,160,324 850,501
---------------- ---------------- ---------------
Income Before Equity in Earnings of Joint
Ventures, Gain (Loss) on Sale of Assets, and
Provision for Loss on Assets 2,534,383 2,740,906 3,111,253
Equity in Earnings of Joint Ventures 180,084 158,580 132,002
Gain (Loss) on Sale of Assets 88,661 (84,478 ) --
Provision for Loss on Assets (857,316 ) -- (266,257 )
---------------- ---------------- ---------------
Net Income 1,945,812 $ 2,815,008 $ 2,976,998
================ ================ ===============
Allocation of Net Income
General partners $ -- $ 28,717 $ 31,685
Limited partners 1,945,812 2,786,291 2,945,313
---------------- ---------------- ---------------
$ 1,945,812 $ 2,815,008 $ 2,976,998
================ ================ ===============
Net Income Per Limited Partner Unit $ 0.43 $ 0.62 $ 0.65
================ ================ ===============
Weighted Average Number of
Limited Partner Units Outstanding 4,500,000 4,500,000 4,500,000
================ ================ ===============
See accompanying notes to financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2000, 1999, and 1998
General Partners Limited Partners
------------------------------- ------------------------------------------------------------------------
Accumulated Accumulated Syndication
Contributions Earnings Contributions Distributions Earnings Costs Total
--------------- -------------- ------------- -------------- ------------ ------------- -----------
Balance, December 31, 1997 $1,000 $98,615 $45,000,000 $ (9,733,017) $9,928,328 $5,390,000) $39,904,926
Distributions to limited
partners ($0.82 per
limited partner unit) -- -- -- (3,690,000) -- -- (3,690,000)
Net income -- $31,685 -- -- 2,945,313 -- 2,976,998
--------------- ---------- ------------- -------------- ------------ ------------- ------------
Balance, December 31, 1998 $1,000 $ 30,300 $45,000,000 (13,423,017) 12,873,641 (5,390,000) 9,191,924
Distributions to limited
partners ($0.80 per
limited partner unit) -- -- -- (3,600,000) -- -- (3,600,000)
Net income -- $ 28,717 -- -- 2,786,291 -- 2,815,008
--------------- ---------- ------------- --------------- ------------- ------------ ------------
Balance, December 31, 1999 $1,000 $159,017 $45,000,000 (17,023,017) 15,659,932 (5,390,000) 38,406,932
Distributions to limited
partners ($0.80 per
limited partner unit) -- -- -- (3,600,000) -- -- (3,600,000)
Net income -- -- -- -- 1,945,812 -- 1,945,812
--------------- ---------- ------------ ---------------- -------------- ------------- ------------
Balance, December 31, 2000 $1,000 $159,017 $45,000,000 $ (20,623,017) $ 17,605,744 $(5,390,000) $36,752,744
=============== ========== ============ ================ ============== ============= ============
See accompanying notes to financial statements.
CNL INCOME FUND XVI, 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 $ 3,366,743 $3,341,862 $3,675,430
Distributions from joint venture 187,637 170,697 143,279
Cash paid for expenses (428,209 ) (410,336 ) (273,929 )
Interest received 39,526 49,008 78,914
---------------- --------------- --------------
Net cash provided by operating activities
3,165,697 3,151,231 3,623,694
---------------- --------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of land and buildings 575,778 667,311 --
Reimbursement of construction costs from
developer -- -- 161,648
Additions to land and buildings on operating
leases (183,500 ) -- (3,545 )
Investment in direct financing leases -- -- (28,403 )
Investment in joint ventures (500,021 ) (158,512 ) (744,058 )
Decrease in restricted cash -- -- 610,384
Payment of lease costs (14,057 ) (25,866 ) --
---------------- --------------- --------------
Net cash (used in) investing activities (121,800 ) 482,933 (3,974 )
---------------- --------------- --------------
Cash Flows from Financing Activities:
Distributions to limited partners (3,600,000 ) (3,600,000 ) (3,690,000 )
---------------- --------------- --------------
Net cash used in financing activities (3,600,000 ) (3,600,000 ) (3,690,000 )
---------------- --------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents
(556,103 ) 34,164 (70,280 )
Cash and Cash Equivalents at Beginning of Year 1,637,753 1,603,589 1,673,869
---------------- --------------- --------------
Cash and Cash Equivalents at End of Year $ 1,081,650 $1,637,753 $1,603,589
================ =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended December 31,
2000 1999 1998
--------------- --------------- --------------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net Income $1,945,812 $2,815,008 $2,976,998
--------------- --------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 572,650 586,122 553,360
Amortization 13,009 2,798 2,000
Bad debt expense 33,532 -- --
Loss on termination of direct
financing lease 31,215 -- 4,471
Equity in earnings of joint ventures,
net of distributions 7,553 12,117 11,277
Loss (gain) on sale of assets (88,661 ) 84,478 --
Provision for loss on assets 857,316 -- 266,257
(Increase) in receivables (186,514 ) (220,782 ) (13,753 )
Decrease in net investment in direct
financing leases 52,973 41,327 43,343
Decrease (increase) in prepaid
expenses 4,294 624 (4,452 )
Increase in accrued rental income (106,781 ) (327,785 ) (232,408 )
Increase (decrease) in accounts
payable and accrued expenses (93,185 ) 127,994 1,919
Increase in due to related parties 79,104 47,377 23,125
Increase (decrease) in rents paid in
advance and deposits 43,380 (18,047 ) (8,443 )
--------------- --------------- --------------
Total adjustments 1,219,885 336,223 646,696
--------------- --------------- --------------
Net Cash Provided by Operating Activities $3,165,697 $3,151,231 $3,623,694
=============== =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
Years Ended December 31,
2000 1999 1998
--------------- --------------- --------------
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Land and building under operating lease
exchanged for land and building under
operating lease $ -- $ -- $ 779,181
=============== =============== ==============
Land and building under direct financing lease
exchanged for land and building under
direct financing lease $ -- $ -- $ 761,334
=============== =============== ==============
Distributions declared and unpaid at
December 31 $ 900,000 $ 900,000 $ 900,000
=============== =============== ==============
See accompanying notes to financial statements.
CNL INCOME FUND XVI, 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 XVI, Ltd. (the
"Partnership") is a Florida limited partnership that was organized for
the purpose of acquiring both newly constructed and existing restaurant
properties, as well as properties upon which restaurants were to be
constructed, which are leased primarily to operators of national and
regional fast-food and family-style restaurant chains.
The general partners of the Partnership are CNL Realty Corporation (the
"Corporate General Partner"), James M. Seneff, Jr. and Robert A.
Bourne. Mr. Seneff and Mr. Bourne are also 50 percent shareholders of
the Corporate General Partner. The general partners have responsibility
for managing the day-to-day operations of the Partnership.
Real Estate and Lease Accounting - The Partnership records the
acquisition of land and buildings at cost, including acquisition and
closing costs. Land and buildings are leased to unrelated third parties
on a triple-net basis, whereby the tenant is generally responsible for
all operating expenses relating to the property, including property
taxes, insurance, maintenance and repairs. The leases are accounted for
using either the direct financing or the operating methods. Such
methods are described below:
Direct financing method - The leases accounted for using the
direct financing method are recorded at their net investment
(which at the inception of the lease generally represents the
cost of the asset) (see Note 4). Unearned income is deferred
and amortized to income over the lease terms so as to produce
a constant periodic rate of return on the Partnership's net
investment in the leases.
Operating method - Land and building leases accounted for
using the operating method are recorded at cost, revenue is
recognized as rentals are earned and depreciation is charged
to operations as incurred. Buildings are depreciated on the
straight-line method over their estimated useful lives of 30
years. When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce
a constant periodic rent over the lease term commencing on the
date the property is placed in service.
CNL INCOME FUND XVI, 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's investments in TGIF
Pittsburgh Joint Venture and Columbus Joint Venture and the properties
in Fayetteville, North Carolina and Memphis, Tennessee, each of which
is held as tenants-in-common with affiliates, are accounted for using
the equity method since the Partnership shares control with affiliates
which have the same general partners.
CNL INCOME FUND XVI, 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.
Organization Costs - Effective January 1, 1999, the Partnership adopted
Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities." The Statement requires that an entity expense the costs of
start-up activities and organization costs as they are incurred.
Adoption of this statement did not have a material effect on the
Partnership's financial position or results of operations.
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.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
1. Significant Accounting Policies - Continued:
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.
Reclassifications - Certain items in the prior year's financial
statements have been reclassified to conform to 2000 presentation.
These reclassifications had no effect on partners' capital or net
income.
Staff Accounting Bulletin No. 101 ("SAB 101") - In December 1999, the
Securities and Exchange Commission released SAB 101, which provides the
staff's view in applying generally accepted accounting principles to
selected revenue recognition issues. SAB 101 requires the Partnership
to defer recognition of certain percentage rental income until certain
defined thresholds are met. The Partnership adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material
impact on the Partnership's results of operations.
Statement of Financial Accounting Standards No. 133 ("FAS 133") and
Statement of Financial Accounting Standards No. 137 ("FAS 137") - In
June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments, embedded in other contracts
(collectively referred to as derivatives), and for hedging activities.
The Statement requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those
instruments at fair value. In June 1999, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, an Amendment
of FASB Statement No. 133." FAS 137 deferred the effective date of FAS
133 for one year. FAS 133, as amended, is now effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The
Partnership has reviewed both statements and has determined that both
FAS 133 and FAS 137 do not apply to the Partnership as of December 31,
2000.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
2. Leases:
------
The Partnership leases its land or land and buildings primarily to
operators of national and regional fast-food and family-style
restaurants. The leases are accounted for under the provisions of
Statement of Financial Accounting Standards No. 13, "Accounting for
Leases." Some of the leases are classified as operating leases and some
of the leases have been classified as direct financing leases. For the
leases classified as direct financing leases, the building portions of
the property leases are accounted for as direct financing leases while
the land portion of some of the leases are operating leases. The
majority of the leases are for 15 to 20 years and provide for minimum
and contingent rentals. In addition, generally the tenant pays all
property taxes and assessments, fully maintains the interior and
exterior of the building and carries insurance coverage for public
liability, property damage, fire and extended coverage. The lease
options generally allow tenants to renew the leases for two to five
successive five-year periods subject to the same terms and conditions
as the initial lease. Most leases also allow the tenant to purchase the
property at fair market value after a specified portion of the lease
has elapsed.
3. Land and Buildings on Operating Leases:
--------------------------------------
Land and buildings on operating leases consisted of the following at
December 31:
2000 1999
-------------------- --------------------
Land $ 14,896,276 $ 15,034,850
Buildings 17,277,021 17,540,422
-------------------- --------------------
32,173,297 32,575,272
Less accumulated depreciation (2,961,413 ) (2,504,684 )
-------------------- --------------------
29,211,884 30,070,588
Less allowance for loss on
assets (723,081 ) (266,257 )
-------------------- --------------------
$ 28,488,803 $ 29,804,331
==================== ====================
In November 1999, the Partnership sold its property in Lawrence, Kansas
to a third party for $690,000, and received net sales proceeds of
$667,311, resulting in a loss of $84,478 for financial reporting
purposes.
CNL INCOME FUND XVI, 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:
--------------------------------------------------
At December 31, 1999, the Partnership established an allowance for loss
on assets of $266,257 relating to the Long John Silver's property
located in Celina, Ohio. The tenant of this Property filed for
bankruptcy and ceased payment of rents under the terms of its lease
agreement. The allowance represented the difference between the
carrying value of the property at December 31, 1999, and the current
estimate of net realizable value for this property.
At December 31, 2000, the Partnership established an allowance for loss
on assets of $456,824 relating to a Boston Market property located in
St. Cloud, Minnesota. The tenant for this property filed for bankruptcy
and discontinued the payment of rents. The allowance represented the
difference between the net carrying value of the property at December
31, 2000 and the estimated net realizable value for the property.
During 2000, the Partnership established an allowance for loss on
assets of $400,492 relating to its Boston Market property in Columbia
Heights, Minnesota. The tenant of this property filed for bankruptcy
and discontinued the payment of rents. In September 2000, the
Partnership sold its property in Columbia Heights, Minnesota, to a
third party for $584,000 and received net sales proceeds of
approximately $575,800, resulting in a gain of approximately $88,700
for the financial reporting purposes.
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 $106,781 (net of $12,368 in reserves and $93,287 in
reversals), $327,785 (net of $6,098 in reserves), and $232,408 (net of
$184,368 in reversals), respectively, of such rental income.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
3. Land and Buildings on Operating Leases - Continued:
--------------------------------------------------
The following is a schedule of the future minimum lease payments to be
received on noncancellable operating leases at December 31, 2000:
2001 $ 3,079,133
2002 3,087,500
2003 3,095,582
2004 3,146,322
2005 3,304,208
Thereafter 25,427,227
------------------
$ 41,139,972
==================
Since lease renewal periods are exercisable at the option of the
tenant, the above table only presents future minimum lease payments due
during the initial lease terms. In addition, this table does not
include any amounts for future contingent rentals which may be received
on the leases based on a percentage of the tenant's gross sales.
4. Net Investment in Direct Financing Leases:
-----------------------------------------
The following lists the components of the net investment in direct
financing leases at December 31:
2000 1999
----------------- -----------------
Minimum lease payments
receivable $ 7,496,712 $ 9,316,791
Estimated residual values 1,261,543 1,507,809
Less unearned income (4,870,431 ) (6,284,533 )
----------------- -----------------
Net investment in direct
financing leases $ 3,887,824 $ 4,540,067
================= =================
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
4. Net Investment in Direct Financing Leases - Continued:
-----------------------------------------------------
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 1999:
2001 $ 512,704
2002 518,715
2003 523,198
2004 523,853
2005 524,515
Thereafter 4,893,727
----------------
$7,496,712
================
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, 1999, the tenant of the Shoney's
property in Las Vegas, Nevada terminated its lease due to financial
difficulties. As a result, the Partnership reclassified the asset from
net investment in direct financing leases to land and buildings on
operating leases. In accordance with Statement of Financial Accounting
Standards No. 13, "Accounting for Leases," the Partnership recorded the
reclassified asset at the lower of original cost, present fair value,
or present carrying amount. No loss on termination of direct financing
lease was recorded for financial reporting purposes.
During the year ended December 31, 2000, the tenant of the Denny's
property in Bucyrus, Ohio terminated its lease due to financial
difficulties. As a result, the Partnership reclassified the asset from
net investment in direct financing leases to land and buildings on
operating leases. In accordance with Statement of Financial Accounting
Standards No. 13, "Accounting for Leases," the Partnership recorded the
reclassified asset at the lower of original cost, present fair value,
or present carrying amount. A loss on termination of direct financing
lease of $31,215 was recorded for financial reporting purposes.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
5. Investment in Joint Ventures:
----------------------------
The Partnership owns a property in each of Fayetteville, North
Carolina, and Memphis, Tennessee, as tenants-in-common with affiliates
of the general partners. As of December 31, 2000, the Partnership owned
an 80.44% and 40.42% interest in each property, respectively. Amounts
relating to these investments are included in investment in joint
ventures.
In August 1998, the Partnership entered into a joint venture
arrangement, Columbus Joint Venture, with affiliates of the general
partners, to construct and hold one restaurant property. As of December
31, 2000, the owned a 32.35% interest in this joint venture.
In June 2000, the Partnership used the majority of the net sales
proceeds received from the 1999 sale of the property in Lawrence,
Kansas, to invest in a joint venture arrangement, TGIF Pittsburgh Joint
Venture, with CNL Income Fund VII, Ltd., CNL Income Fund XV, 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. The Partnership accounts for its investment using the equity
method since the Partnership shares control with affiliates. As for
December 31, 2000, the Partnership owned a 19.72% interest in the
profits and losses of the joint venture.
Columbus Joint Venture, TGIF Pittsburgh Joint Venture and the
Partnership and affiliates, as tenants-in-common in two separate
tenancy-in-common arrangements, each own and lease one property to
operators of national fast-food and family-style restaurants. The
following presents the combined, condensed financial information for
the joint ventures and the properties held as tenants-in-common with
affiliates at December 31:
2000 1999
---------------- ----------------
Land and buildings on operating
leases, less accumulated
depreciation $ 5,682,834 $ 3,240,248
Cash 50,478 7,963
Prepaid expenses 413 581
Accrued rental income 160,331 100,220
Liabilities 21,173 20,919
Partners' capital 5,872,883 3,328,093
Revenues 530,177 386,985
Net income 432,495 317,252
CNL INCOME FUND XVI, 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 Partnership recognized income totalling $180,084, $158,580, and
$132,002, for the years ended December 31, 2000, 1999, and 1998,
respectively, from the joint ventures and the properties held as
tenants-in-common with affiliates of the general partners.
6. Receivables:
------------
During the year ended December 31, 1999, the Partnership accepted a
promissory note from the former tenant of the Shoney's property in Las
Vegas, Nevada, in the amount of $52,191 representing real estate taxes
previously recorded as an expense by the Partnership and past due
rental and other amounts, which had been included in receivables for
financial statement purposes and for which the Partnership had
established an allowance for doubtful accounts. Payments are due in 60
monthly installments of $1,220 including interest at a rate of ten
percent per annum, commencing on March 1, 2000, at which time, all
accrued and unpaid interest amounts were capitalized into the principal
balance of the note. Due to the uncertainty of collection of the note,
the Partnership established an allowance for doubtful accounts. As of
December 31, 2000, the balance in the allowance for doubtful accounts
relating to this promissory note was $62,751, including accrued
interest of $4,914.
7. Allocations and Distributions:
-----------------------------
From inception through December 31, 1999, generally, net income and
losses of the Partnership, excluding gains and losses from the sale of
properties, were allocated 99 percent to the limited partners and one
percent to the general partners. From inception through December 31,
1999, distributions of net cash flow were made 99 percent to the
limited partners and one percent to the general partners; provided,
however, that the one percent of net cash flow to be distributed to the
general partners shall be 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").
From inception through December 31, 1999, generally, net sales proceeds
from the sale of properties not in liquidation of the Partnership, to
the extent distributed, were distributed first to the limited partners
in an amount sufficient to provide them with their Limited Partners' 8%
Return, plus the return of their adjusted capital contributions. The
general partners then received, to the extent previously subordinated
and unpaid, a one
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
7. Allocations and Distributions - Continued:
-----------------------------------------
percent interest in all prior distributions of net cash flow and a
return of their capital contributions. Any remaining sales proceeds
were distributed 95 percent to the limited partners and five percent to
the general partners. Any gain from the sale of a property, not in
liquidation of the Partnership was, in general, allocated in the same
manner as net sales proceeds are distributable. Any loss from the sale
of a property was, in general, allocated first, on a pro rata basis, to
partners with positive balances in their capital accounts; and
thereafter, 95 percent to the limited partners and five percent to the
general partners.
Generally, net sales proceeds from a sale of properties in liquidation
of the Partnership, will be used in the following order: (i) first to
pay and discharge all of the Partnership's liabilities to creditors,
(ii) second, to establish reserves that may be deemed necessary for any
anticipated or unforeseen liabilities or obligations of the
Partnership, (iii) third, to pay all of the Partnership's liabilities,
if any, to the general and limited partners, (iv) fourth, after
allocations of net income, gains and/or losses, to the partners with
positive capital account balances, in proportion to such balances, up
to amounts sufficient to reduce such positive balances to zero, and (v)
thereafter, any funds remaining shall then be distributed 95 percent to
the limited partners and five percent to the general partners.
Effective January 1, 2000, the general partners waived their right to
receive future distributions from the Partnership, including both
distributions of operating cash flow and distributions of liquidation
proceeds, to the extent that the cumulative amount of such
distributions would exceed the balance in the general partners' capital
account as of December 31, 1999. Accordingly, for years commencing
January 1, 2000 and after, the Partnership's net income will be
allocated entirely among the limited partners. However, if losses are
allocated to the general partners in a year, an amount of income equal
to the sum of such losses may be allocated to the general partners in
succeeding years. Accordingly, the general partners were not allocated
any net income and did not receive any distributions during the year
ended December 31, 2000.
During the years ended December 31, 2000, 1999, and 1998 the
Partnership declared distributions to the limited partners of
$3,600,000, $3,600,000, and $3,690,000, respectively. No distributions
have been made to the general partners to date.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
8. Income Taxes:
------------
The following is a reconciliation of net income for financial reporting
purposes to net income for federal income tax purposes for the years
ended December 31:
2000 1999 1998
-------------- -------------- ---------------
Net income for financial reporting purposes $ 1,945,812 $ 2,815,008 $ 2,976,998
Depreciation for tax reporting purposes in
excess of depreciation for financial
reporting purposes 38,747 38,885 809
Allowance for loss on building 857,316 -- 266,257
Direct financing leases recorded as operating
leases for tax reporting purposes 52,973 41,327 43,343
Loss on termination of direct financing leases 31,215 -- 4,471
Equity in earnings of joint ventures for
financial reporting purposes in excess of
equity in earnings of joint ventures for
tax reporting purposes (7,155 ) (9,081 ) (11,217 )
Gain on sale of land and buildings for
financial reporting purposes in
excess of gain for tax reporting
purposes (430,205 ) (17,919 ) --
Allowance for doubtful accounts 338,368 1,072 88,943
Accrued rental income (106,781 ) (327,785 ) (232,408 )
Rents paid in advance 43,380 (20,042 ) (8,443 )
Capitalization (deduction) of transaction costs
for tax reporting purposes (236,745 ) 212,093 24,652
Other -- -- 212
-------------- -------------- ---------------
Net income for federal income tax purposes $ 2,526,925 $ 2,733,558 $ 3,153,617
============== ============== ===============
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Related Party Transactions:
--------------------------
One of the individual general partners, James M. Seneff, Jr., is one of
the principal shareholders of CNL Holdings, Inc. The other individual
general partner, Robert A. Bourne, serves as President and Treasurer of
CNL Financial Group, Inc., a wholly owned subsidiary of CNL Holdings,
Inc., CNL Fund Advisors, Inc. (the "Advisor") was a majority owned
subsidiary of CNL Financial Group, Inc. until it merged with CNL
American Properties Fund, Inc. ("APF"), effective September 1, 1999.
The individual general partners are stockholders and directors of APF.
The Advisor provides certain services relating to management of the
Partnership and its properties pursuant to a management agreement with
the Partnership. In connection therewith, the Partnership has agreed to
pay the Advisors an annual 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 Affiliates. 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. The
Partnership incurred management fees of $36,605, $37,385, and $38,570,
for the years ended December 31, 2000, 1999, and 1998, respectively.
The Advisor is also entitled to receive a deferred, subordinated real
estate disposition fee, payable upon the sale of one or more
properties, based on the lesser of one-half of a competitive real
estate commission or three percent of the sales price if the Advisor
provides a substantial amount of services in connection with the sale.
However, if the net sales proceeds are reinvested in a replacement
property, no such real estate disposition fees will be incurred until
such replacement property is sold and the net sales proceeds are
distributed. The payment of the real estate disposition fee is
subordinated to the receipt by the limited partners of their aggregate
Limited Partners' 8% Return, plus their adjusted capital contributions.
No deferred, subordinated real estate disposition fees have been
incurred since inception.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
9. Related Party Transactions - Continued:
--------------------------------------
During the years ended December 31, 2000, 1999, and 1998, the Advisor
and its affiliates provided accounting and administrative services to
the Partnership on a day-to-day basis including services relating to
the proposed and terminated merger. The Partnership incurred $109,898,
$138,583, and $102,840 for the years ended December 31, 2000, 1999, and
1998, respectively, for such services.
The amount due to related parties at December 31, 2000 and 1999 totaled
$152,957 and $73,853, respectively.
10. 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 income from the joint ventures and
the properties held as tenants-in-common with affiliates) for each of
the years ended December 31:
2000 1999 1998
----------------- ----------------- -----------------
Golden Corral Corporation $ 931,631 $ 968,456 $ 971,344
Phoenix Restaurant Group, Inc.
(formerly known as DenAmerica
Corporation) 834,288 1,143,192 1,164,160
Jack in the Box Inc.
(formerly known as Foodmaker, Inc.) 556,365 556,610 558,466
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
10. Concentration of Credit Risk - Continued:
----------------------------------------
In addition, the following schedule presents total rental and earned
income from individual restaurant chains, each representing more than
ten percent of the Partnership's total rental and earned income
(including the Partnership's share of total rental income from the
joint ventures and the properties held as tenants-in-common with
affiliates) for each of the years ended December 31:
2000 1999 1998
---------------- ---------------- ---------------
Golden Corral Family
Steakhouse Restaurants $ 931,631 $ 968,456 $ 971,344
Denny's 946,399 1,143,192 1,164,160
Jack in the Box 556,365 556,610 558,466
Boston Market N/A N/A 467,043
The information denoted by N/A indicates that for each period
presented, the tenant or group of affiliated tenants and the chain did
not represent more than ten percent of the Partnership's total rental
and earned income.
Although the Partnership's properties are geographically diverse
throughout the United States and the Partnership's lessees operate a
variety of restaurant concepts, default by any one of these lessees or
restaurant chains could significantly impact the results of operations
of the Partnership if the Partnership is not able to re-lease the
properties in a timely manner.
In October 1998, Finest Foodservice, L.L.C. and Boston Chicken, Inc.,
the tenants of four Boston Market properties filed for bankruptcy and
rejected the leases relating to three properties. In November 1999 and
September 2000, the Partnership sold two of the vacant properties. The
Partnership will not recognize any rental and earned income from the
one remaining, vacant property until a new tenant for the property is
located, or until the property is sold and the proceeds from such sale
are reinvested in an additional property. In August 1999, Boston
Chicken, Inc. assumed and affirmed its one remaining lease.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2000, 1999, and 1998
11. Selected Quarterly Financial Data:
----------------------------------
The following table presents selected unaudited quarterly financial
data for each full quarter during the years ended December 31, 2000 and
1999:
2000 Quarter First Second Third Fourth Year
----------------------- --------------- -------------- -------------- --------------- --------------
Revenues (1) $ 947,390 $ 944,933 $ 842,921 $ 1,045,340 $ 3,780,584
Net income 236,047 169,575 671,811 868,379 1,945,812
Net income per
limited partner
unit 0.05 0.04 0.15 0.19 0.43
1999 Quarter First Second Third Fourth Year
----------------------- --------------- -------------- -------------- --------------- --------------
Revenues (1) $ 989,673 $ 993,576 $ 1,004,434 $ 1,072,127 $ 4,059,810
Net income 705,396 606,072 710,602 792,938 2,815,008
Net income per
limited partner
unit 0.16 0.13 0.16 0.17 0.62
(1) Revenues include equity in earnings of the joint ventures and
adjustments to accrued rental income due to the tenants of
certain Properties filing for bankruptcy.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partners of the Registrant are James M. Seneff, Jr., Robert
A. Bourne and CNL Realty Corporation, a Florida corporation. The General
Partners manage and control the Partnership's affairs and have general
responsibility and the ultimate authority in all matters affecting the
Partnership's business. The Partnership has available to it the services,
personnel and experience of CNL Fund Advisors, Inc., CNL Financial Group, Inc.
and their affiliates, all of which are affiliates of the General Partners.
James M. Seneff, Jr., age 54. Since 1971, Mr. Seneff has been active in
the acquisition, development, and management of real estate projects and,
directly or through an affiliated entity, has served as a general partner or
co-venturer in over 100 real estate ventures. These ventures have involved the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL American Properties Fund,
Inc. ("APF"), a public, unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief Executive Officer of APF from 1994 through August 1999
and has served as Co-Chief Executive Officer of APF since December 2000. Mr.
Seneff served as Chairman of the Board and Chief Executive Officer of CNL Fund
Advisors (the "Advisor") until it merged with APF in September 1999, and in June
2000, was re-elected to those positions of the Advisor. Mr. Seneff is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group, Inc. (formerly CNL Group, Inc.), a diversified real estate company, and
has served as a director, Chairman of the Board and Chief Executive Officer of
CNL Financial Group, Inc. since its formation in 1980. CNL Financial Group, Inc.
is the parent company, either directly or indirectly through subsidiaries, of
CNL Real Estate Services, Inc., CNL Capital Markets, Inc., CNL Investment
Company and CNL Securities Corp. Mr. Seneff also serves as a Director, Chairman
of the Board and Chief Executive Officer of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust, as well as, CNL Hospitality
Corp., its advisor. In addition, he serves as a Director, Chairman of the Board
and Chief Executive Officer of CNL Retirement Properties, Inc., a public,
unlisted real estate investment trust and its advisor, CNL Retirement Corp.
Since 1992, Mr. Seneff has also served as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net Lease Realty, Inc., a public real
estate investment trust that is listed on the New York Stock Exchange. Mr.
Seneff has also served as a Director, Chairman of the Board and Chief Executive
Officer of CNL Securities Corp. since 1979; CNL Investment Company since 1990;
and CNL Institutional Advisors, Inc., a registered investment advisor for
pension plans, since 1990. Mr. Seneff formerly served as a Director of First
Union National Bank of Florida, N.A., and currently serves as the Chairman of
the Board of CNL Bank. Mr. Seneff previously served on the Florida State
Commission on Ethics and is a former member and past Chairman of the State of
Florida Investment Advisory Council, which recommends to the Florida Board of
Administration investments for various Florida employee retirement funds. The
Florida Board of Administration, Florida's principal investment advisory and
money management agency, oversees the investment of more than $60 billion of
retirement funds. Mr. Seneff received his degree in Business Administration from
Florida State University in 1968.
Robert A. Bourne, age 53. Mr. Bourne has participated as a general
partner or co-venturer in over 100 real estate ventures involved in the
financing, acquisition, construction, and leasing of restaurants, office
buildings, apartment complexes, hotels, and other real estate. Mr. Bourne is
Director and Vice Chairman of the Board of Directors of APF. Mr. Bourne served
as President of APF from 1994 through February 1999. He also served as Treasurer
from February 1999 through August 1999 and from May 1994 through December 1994.
He also served in various executive positions with the Advisor prior to its
merger with APF including, President from 1994 through September 1997, and
Director from 1994 through August 1999. Mr. Bourne serves as President and
Treasurer of CNL Financial Group, Inc. (formerly CNL Group, Inc.); Director,
Vice Chairman of the Board and President of CNL Hospitality Properties, Inc., a
public, unlisted real estate investment trust; as well as, Director and
President of CNL Hospitality Corp., its advisor. In addition, Mr. Bourne serves
as Director and President of CNL Retirement Properties, Inc., a public, unlisted
real estate investment trust; as well as, a Director and President of its
advisor, CNL Retirement Corp. Mr. Bourne also serves as a Director of CNL Bank.
He has served as a Director since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from February 1996 through 1997, and
President from July 1992 through February 1996, of Commercial Net Lease Realty,
Inc., a public real estate investment trust listed on the New York Stock
Exchange. Mr. Bourne also serves as Director, President and Treasurer for
various affiliates of CNL Financial Group, Inc. including, CNL Investment
Company, CNL Securities Corp. and CNL Institutional Advisors, Inc., a registered
investment advisor for pension plans. Mr. Bourne began his career as a certified
public accountant employed by Coopers & Lybrand, Certified Public Accountants,
from 1971 through 1978, where he attained the position of Tax Manager in 1975.
Mr. Bourne graduated from Florida State University in 1970 where he received a
B.A. in Accounting, with honors.
Curtis B. McWilliams, age 45. Mr. McWilliams has served as Co-Chief
Executive Officer of APF since December 2000 and previously served as Chief
Executive Officer from September 1999 through December 2000. Prior to the
acquisition of the Advisor, Mr. McWilliams served as President of APF from
February 1999 until September 1999. From April 1997 to February 1999, he served
as Executive Vice President of APF. Mr. McWilliams joined CNL Financial Group,
Inc. (formerly CNL Group, Inc.) in April 1997 and served as an Executive Vice
President until September 1999. In addition, Mr. McWilliams served as President
of the Advisor and CNL Financial Services, Inc. from April 1997 until the
acquisition of such entities by APF in September 1999. From September 1983
through March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The
majority of his career at Merrill Lynch & Co. was in the Investment Banking
division where he served as a Managing Director. Mr. McWilliams received a
B.S.E. in Chemical Engineering from Princeton University in 1977 and a Master of
Business Administration degree with a concentration in finance from the
University of Chicago in 1983.
John T. Walker, age 42. Mr. Walker has served as President of APF since
September 1999 and as Chief Operating Officer since March 1995. Mr. Walker also
served as a board member of CNL Restaurant Property Services, Inc., a subsidiary
of APF from December 1999 until December 2000. Previously, he served as
Executive Vice President of APF from January 1996 to September 1999. Mr. Walker
joined the Advisor in September 1994, as Senior Vice President responsible for
Research and Development. He served as the Chief Operating Officer of the
Advisor from April 1995 until September 1999 and as Executive Vice President
from January 1996 until September 1999, at which time it merged with APF. Mr.
Walker also served as Executive Vice President of CNL Hospitality Properties,
Inc. and CNL Hospitality Corp. (formerly CNL Hospitality Advisors, Inc.) from
1997 to October 1998. From May 1992 to May 1994, he was Executive Vice President
for Finance and Administration and Chief Financial Officer of Z Music, Inc., a
cable television network which was subsequently acquired by Gaylord
Entertainment, where he was responsible for overall financial and administrative
management and planning. From January 1990 through April 1992, Mr. Walker was
Chief Financial Officer of the First Baptist Church in Orlando, Florida. From
April 1984 through December 1989, he was a partner in the accounting firm of
Chastang, Ferrell & Walker, P.A., where he was the partner in charge of audit
and consulting services, and from 1981 to 1984, Mr. Walker was a Senior
Consultant/Audit Senior at Price Waterhouse. Mr. Walker is a cum laude graduate
of Wake Forest University with a Bachelor of Science degree in Accountancy and
is a certified public accountant.
Steven D. Shackelford, age 37. Mr. Shackelford was promoted to
Executive Vice President and Chief Financial Officer of APF in July 2000. He
served as Senior Vice President and Chief Financial Officer of APF since January
1997. Mr. Shackelford also served as Secretary and Treasurer of APF since
September 1999. He also served as Chief Financial Officer of the Advisor from
September 1996 to September 1999. From March 1995 to July 1996, Mr. Shackelford
was a senior manager in the national office of Price Waterhouse LLP where he was
responsible for advising foreign clients seeking to raise capital and a public
listing in the United States. From August 1992 to March 1995, he was a manager
in the Paris, France office of Price Waterhouse, serving several multi-national
clients. Mr. Shackelford was an audit staff and senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor
of Arts degree in Accounting, with honors, and a Master of Business
Administration degree from Florida State University and is a certified public
accountant.
Item 11. Executive Compensation
Other than as described in Item 13, the Partnership has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates. There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 15, 2001, no person was known to the Registrant to be a
beneficial owner of more than five percent of the Units.
The following table sets forth, as of March 15, 2001, the beneficial
ownership interests of the General Partners in the Registrant.
Title of Class Name of Partner Percent of Class
-------------- --------------- ----------------
General Partnership Interests James M. Seneff, Jr. 45%
Robert A. Bourne 45%
CNL Realty Corporation 10%
--------
100%
========
Neither the General Partners, nor any of their affiliates, owns any
interest in the Registrant, except as noted above.
Item 13. Certain Relationships and Related Transactions
The table below summarizes the types, recipients, methods of
computation and amounts of compensation, fees and distributions paid or payable
by the Partnership to the General Partners and their affiliates for the year
ended December 31, 2000, exclusive of any distributions to which the General
Partners or their affiliates may be entitled by reason of their purchase and
ownership of Units.
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------
Reimbursement to affiliates for Operating expenses are reimbursed at Accounting and
operating expenses the lower of cost or 90 percent of admini-strative services:
the prevailing rate at which $109,898
comparable services could have been
obtained in the same geographic
area. Affiliates of the General
Partners from time to time incur
certain operating expenses on behalf
of the Partnership for which the
Partnership reimburses the
affiliates without interest.
Annual management fee to One percent of the sum of gross $36,605
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
the affiliates. All of 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 of proceeds, subordinated to certain
Properties not in liquidation minimum returns to the Limited
of the Partnership Partners
Amount Incurred
Type of Compensation For the Year
and Recipient Method of Computation Ended December 31, 2000
- --------------------------------- -------------------------------------- ------------------------------
General Partners' share of Distributions of net sales proceeds $-0-
Partnership net sales proceeds from a sale or sales of
from a sale or sales in substantially all of the
liquidation of the Partnership Partnership's assets will be
distributed in the following order
or priority: (i) first, to pay all
debts and liabilities of the
Partnership and to establish
reserves; (ii) second, to Partners
with positive capital account
balances, determined after the
allocation of net income, net loss,
gain and loss, in proportion to such
balances, up to amounts sufficient
to reduce such balances to zero; and
(iii) thereafter, 95% to the Limited
Partners and 5% to the General Partners.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements
Report of Independent Certified Public Accountants
Balance Sheets at December 31, 2000 and 1999
Statements of Income for the years ended December 31, 2000,
1999, and 1998
Statements of Partners' Capital for the years ended December
31, 2000, 1999, and 1998
Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998
Notes to Financial Statements
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years
ended December 31, 2000, 1999, and 1998
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2000
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2000
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11
and incorporated herein by reference.)
4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated herein
by reference.)
10.1 Management Agreement between CNL Income Fund XVI,
Ltd. and CNL Investment Company (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and
incorporated herein by reference.)
10.2 Assignment of Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
(b) The Registrant filed no reports on Form 8-K during the
period October 1, 2000 through December 31, 2000.
(c) Not applicable.
(d) Other Financial Information.
The Partnership is required to file audited financial
information of two of its tenants (Phoenix Restaurant Group,
Inc. and Golden Corral Corporation) as a result of these two
tenants each leasing more than 20 percent of the Partnership's
total assets for the year ended December 31, 2000. Phoenix
Restaurant Group, Inc. is a public company and as of the date
hereof, had not filed its Form 10-K; therefore, the financial
statements are not available to the Partnership to include in
this filing. The Partnership will file this financial
information under cover of a Form 10K/A as soon as it is
available. Golden Corral Corporation is a privately-held
company and its financial information is not available to the
Partnership to include in this filing. The Partnership will
file this financial information under cover of a Form 10-K/A
as soon as it is available.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28th day of
March, 2001.
CNL INCOME FUND XVI, 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 XVI, 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) $ 879 $ -- $ 89,822 (b) $ 879 (c) $ -- $ 89,822
============== =============== ================ ============= ============ ============
1999 Allowance for
doubtful
accounts (a) $ 89,822 $ -- $ 66,899 (b) $ 59,241 (c) $ 488 $ 96,992
============== =============== ================ ============= ============ ============
2000 Allowance for
doubtful
accounts (a) $ 96,992 $ 42,688 $ 459,522 (b) $ 3,171 (c) $ 148,303 $ 447,728
============== =============== ================ ============= ============ ============
(a) Deducted from receivables and accrued rental income on the balance
sheet.
(b) Reduction of rental, earned and other income.
(c) Amounts written off as uncollectible.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Costs Capitalized
Subsequent To
Initial Cost Acquisition
------------------------- ----------------------
Encum- Buildings and Improve- Carrying
brances Land Improvements ments Costs
----------- ----------- ------------ ------------- -------
Properties the Partnership
has Invested in Under
Operating Leases:
Arby's Restaurant:
Indianapolis, Indiana - $315,276 $591,993 - -
Big Boy's Restaurant:
Las Vegas, Nevada (i) - 426,238 780,454 183,500 -
Boston Market Restaurants:
St. Cloud, Minnesota - 502,786 645,127 - -
Checkers Drive-In Restaurants:
Conyers, Georgia - 363,553 - - -
Lake Worth, Florida - 325,301 - - -
Ocala, Florida - 289,578 - - -
Pompano Beach, Florida - 373,491 - - -
Tampa, Florida - 372,176 - - -
Tampa, Florida - 221,715 - - -
Denny's Restaurants:
Tucson, Arizona - 218,353 - - -
Idaho Falls, Idaho - 552,186 - 692,274 -
Branson, Missouri - 1,160,979 - 1,010,688 -
Bucyrus, Ohio - 139,003 429,052 - -
Dover, Ohio - 266,829 - - -
Salina, Kansas - 261,154 - - -
Moab, Utah - 435,927 - - -
Mesquite, Texas - 403,548 650,659 - -
Temple, Texas - 306,866 677,659 - -
Golden Corral Family
Steakhouse Restaurants:
Fort Collins, Colorado- 566,943 - 1,122,500 -
Hickory, North Carolina-(h) 761,108 - 1,001,893 -
Independence, Missouri -h) 781,761 - 1,147,538 -
Baytown, Texas - 446,240 - 971,766 -
Rosenburg, Texas - 320,133 - 804,428 -
Farmington, New Mexico -m) 523,584 - 870,136 -
IHOP Restaurant:
Ft. Worth, Texas - 364,634 554,302 - -
Jack in the Box Restaurants:
Brownsville, Texas - 553,671 - 658,282 -
Grand Prairie, Texas - 439,950 - 636,524 -
Rancho Cordova, California -h) 401,302 595,722 - -
Temple City, California (h)- 744,493 225,404 - -
Texas City, Texas (h) - 403,476 568,053 - -
KFC Restaurant:
Concordia, Missouri - 188,759 - 434,369 -
Long John Silver's Restaurants:
Celina, Ohio (l) - 109,130 - 425,145 -
Charlotte, North Carolina - 313,200 - 415,695 -
Copperas Cove, Texas - 162,000 - - -
Kansas City, Missouri - 370,204 - 433,058 -
Silver City, New Mexico - 116,767 183,174 - -
Wendy's Old Fashioned
Hamburgers Restaurant:
Washington, District of
Columbia - 393,962 567,626 - -
----------- ------------ ------------- -------
$14,896,276 $6,469,225 $10,807,796 -
=========== ============ ============= =======
Property in Which the Partnership
has an 80.44% Interest as
Tenants-in-Common and has
Invested in Under an Operating
Lease:
Boston Market Restaurant:
Fayetville, North Carolina -h) $377,800 $587,700 - -
=========== ============ ============= =======
Property in Which the Partnership
has a 40.42% Interest as Tenants-
in-Common and has Invested in
Under an Operating Lease:
IHOP Restaurant:
Memphis, Tennessee - $678,890 $825,076 - -
=========== ============ ============= =======
Property of Joint Venture in
Which the Partnership has a
32.35% Interest
Arby's Restaurant:
Columbus, Ohio - $406,976 - $498,804 -
=========== ============ ============= =======
Property of Joint Venture in
Which the Partnership
has a 19.72% Interest - $1,036,297 $1,499,295 - -
=========== ============ ============= =======
-
Properties the Partnership has
Invested in Under Direct
Financing Leases:
Boston Market Restaurant:
Indianapolis, Indiana -j) $184,014 $577,320 - -
Denny's Restaurants:
Tucson, Arizona - - - 539,769 -
Bucyrus, Ohio - 139,003 155,194 273,858 -
Dover, Ohio - - 200,612 236,270 -
Salina, Kansas - - - 677,539 -
Moab, Utah - - - 718,578 -
Long John Silver's Restaurants:
Clovis, New Mexico - 127,607 425,282 - -
Copperas Cove, Texas - - 424,319 - -
----------- ------------ ------------- -------
$450,624 $1,782,727 $2,446,014 -
=========== ============ ============= =======
Life on Which
Gross Amount at Which Depreciation in
Carried at Close of Period (g) Date Latest Income
- -------------------------------------------
Buildings and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
- ------------- ----------- ----------- ---------- ------- ------- -------------
$315,276 $591,993 $907,269 $105,997 1978 08/95 (c)
426,238 963,954 1,390,192 62,890 1992 05/95 (i)
502,786 645,127 1,147,913 109,139 1995 09/95 (c)
363,553 - 363,553 (b) - 12/94 (b)
325,301 - 325,301 (b) - 12/94 (b)
289,578 - 289,578 (b) - 12/94 (b)
373,491 - 373,491 (b) - 12/94 (b)
372,176 - 372,176 (b) - 12/94 (b)
221,715 - 221,715 (b) - 12/94 (b)
218,353 (d) 218,353 (e) 1995 10/94 (e)
552,186 692,274 1,244,460 127,361 1995 01/95 (c)
1,160,979 1,010,688 2,171,667 170,600 1995 03/95 (c)
139,003 429,052 568,055 1,932 1973 03/95 (n)
266,829 (d) 266,829 (e) 1971 03/95 (e)
261,154 (d) 261,154 (e) 1995 04/95 (e)
435,927 (d) 435,927 (e) 1995 06/95 (e)
403,548 650,659 1,054,207 115,707 1995 08/95 (c)
306,866 677,659 984,525 120,508 1975 08/95 (c)
566,943 1,122,500 1,689,443 217,093 1995 10/94 (c)
761,108 1,001,893 1,763,001 200,470 1994 11/94 (c)
781,761 1,147,538 1,929,299 229,612 1994 11/94 (c)
446,240 971,766 1,418,006 185,940 1995 01/95 (c)
320,133 804,428 1,124,561 145,537 1995 05/95 (c)
523,584 870,136 1,393,720 139,127 1996 01/96 (c)
364,634 554,302 918,936 89,131 1994 03/96 (c)
553,671 658,282 1,211,953 130,980 1995 10/94 (c)
439,950 636,524 1,076,474 122,640 1995 10/94 (c)
401,302 595,722 997,024 122,518 1985 10/94 (c)
744,493 225,404 969,897 46,357 1984 10/94 (c)
403,476 568,053 971,529 116,827 1991 10/94 (c)
188,759 434,369 623,128 74,418 1995 09/95 (c)
109,130 425,145 534,275 18,981 1995 10/94 (k)
313,200 415,695 728,895 78,868 1995 12/94 (c)
162,000 (d) 162,000 (e) 1994 12/94 (e)
370,204 433,058 803,262 83,477 1995 12/94 (c)
116,767 183,174 299,941 30,947 1982 12/95 (c)
393,963 567,625 961,588 114,356 1983 12/94 (c)
- ------------- ----------- ----------- ----------
$14,896,277 $17,277,020 $32,173,297 $2,961,413
============= =========== =========== ==========
$377,800 $587,700 $965,500 $83,128 1996 10/96 (c)
============= =========== =========== ==========
$678,890 $825,076 $1,503,966 $81,648 1997 01/98 (c)
============= =========== =========== ==========
$406,976 $498,804 $905,780 $33,938 1999 08/98 (c)
============= =========== =========== ==========
$1,036,297 $1,499,295 $2,535,592 $29,290 2000 06/00 (c)
============= =========== =========== ==========
(d) (d) (d) (f) 1995 05/95 (f)
- (d) (d) (e) 1995 10/94 (e)
(d) (d) (d) (f) 1973 03/95 (f)
- (d) (d) (e) 1971 03/95 (e)
- (d) (d) (e) 1995 04/95 (e)
- (d) (d) (e) 1995 06/94 (e)
(d) (d) (d) (f) 1976 12/94 (f)
- (d) (d) (e) 1994 12/94 (e)
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
(a) Transactions in real estate and accumulated depreciation during 2000,
1999, and 1998, are summarized as follows:
Accumulated
Cost Depreciation
---------------- -----------------
Properties the Partnership has Invested
in Under Operating Leases:
Balance, December 31, 1997 $ 32,096,437 $ 1,437,443
Reclassified from direct financing leases 534,275 --
Acquisitions 3,545 --
Reimbursement of construction costs (m) (210,259 ) (48,611 )
Depreciation expense -- 553,360
---------------- -----------------
Balance, December 31, 1998 32,423,998 1,942,192
Reclassified from direct financing leases 780,454 --
Acquisitions 150,000 --
Dispositions (779,180 ) (23,630 )
Depreciation expense -- 586,122
---------------- -----------------
Balance, December 31, 1999 32,575,272 2,504,684
Reclassified from direct financing leases 568,055 --
Acquisitions 33,500
Dispositions (1,003,530 ) (115,921 )
Depreciation expense -- 572,650
---------------- -----------------
Balance, December 31, 2000 $ 32,173,297 $ 2,961,413
================ =================
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- ----------------
Property in Which the Partnership has an 80.44%
Interest as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1997 $ 965,500 $ 24,358
Depreciation expense -- 19,590
---------------- ----------------
Balance, December 31, 1998 965,500 43,948
Depreciation expense -- 19,590
---------------- ----------------
Balance, December 31, 1999 965,500 63,538
Depreciation expense -- 19,590
---------------- ----------------
Balance, December 31, 2000 $ 965,500 $ 83,128
================ ================
Property in Which the Partnership has a 40.42%
Interest as Tenants-in-Common and has Invested in Under
an Operating Lease:
Balance, December 31, 1997 $ -- $ --
Acquisition 1,503,966 --
Depreciation expense -- 26,642
---------------- ----------------
Balance, December 31, 1998 1,503,966 26,642
Depreciation expense -- 27,503
---------------- ----------------
Balance, December 31, 1999 1,503,966 54,145
Depreciation expense -- 27,503
---------------- ----------------
Balance, December 31, 2000 $ 1,503,966 $ 81,648
================ ================
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
Accumulated
Cost Depreciation
---------------- ------------------
Property of Joint Venture in Which the Partnership
has a 32.35% Interest and has Invested in Under an Operating
Lease:
Balance, December 31, 1997 $ -- $ --
Acquisition 875,701 --
Depreciation (m) -- --
---------------- ----------------
Balance, December 31, 1998 $ 875,701 $ --
Acquisition 30,079 --
Depreciation -- 17,315
---------------- ----------------
Balance, December 31, 1999 905,780 17,315
Acquisition -- --
Depreciation -- 16,623
---------------- ----------------
Balance, December 31, 2000 $ 905,780 $ 33,938
================ ================
Property of Joint Venture in Which the Partnership has
a 19.72% Interest and has Invested in Under an Operating Lease.
Balance, December 31, 1999 $ -- $ --
Acquisition 2,535,592 --
Depreciation -- 29,290
---------------- ----------------
Balance, December 31, 2000 $ 2,535,592 $ 29,290
================ ================
(b) The building portion of this Property is owned by the tenant;
therefore, depreciation is not applicable.
(c) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
(d) 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.
(e) For financial reporting purposes, the portion of the lease relating to
the building has been recorded as a direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2000
(f) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(g) As of December 31, 2000, the aggregate cost of the Properties owned by
the Partnership and the joint venture for federal income tax purposes
was $36,276,118 and $5,908,838, respectively. All of the leases are
treated as operating leases for federal income tax purposes.
(h) During the years ended December 31, 1996 and 1994, the Partnership, and
an affiliate as tenants-in-common, purchased land and buildings from
CNL BB Corp., an affiliate of the General Partners, for an aggregate
cost of $775,000 and $4,094,922, respectively.
(i) Effective February 23, 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 as of February 23, 1999, and depreciated over its remaining
estimated life of approximately 26 years.
(j) This Property was exchanged for a Boston Market Property previously
owned and located in Chattanooga, Tennessee.
(k) Effective June 1998, the lease for this Property was terminated,
resulting in the reclassification of the building portion of the lease
as an operating lease. The building was recorded at net book value as
of June 11, 1998 and depreciated over its remaining estimated life of
approximately 26 years.
(l) For financial reporting purposes the undepreciated cost of the
Properties in Celina, Ohio, and St. Cloud, Minnesota were written down
to net realizable value due to an anticipated impairment in value. The
Partnership recognized an impairment by recording an allowance for loss
on assets in the amount of $266,257 at December 31, 1998, relating to
the Property in Celina, Ohio. In addition, the Partnership recognized
an impairment by recording an allowance for loss on assets in the
amount of $456,824 at December 31, 2000, relating to the Property in
St. Cloud, Minnesota. The tenant of these Properties experienced
financial difficulties and ceased payments of rents under the terms of
its lease agreement. The impairments represented the difference between
the Property's carrying value and the estimated net realizable value of
the Properties. The cost of the Properties presented on this schedule
is the gross amount at which the Properties were carried at December
31, 2000, excluding the allowance for loss on assets.
(m) During the year ended December 31, 1998, the Partnership received
reimbursements from the developer upon final construction costs
reconciliation. In connection therewith, the land and building values
were adjusted down accordingly.
(n) Effective December 2000, the lease for this Property was terminated,
resulting in the reclassification of the land and building to an
operating lease. The building was recorded at the net book value as of
December 31, 2000 and depreciated over its remaining estimated life of
approximately 25 years.
EXHIBITS
EXHIBIT INDEX
Exhibit Number
3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-69968-01 on Form S-11 and incorporated herein
by reference.)
4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVI, Ltd. (Included as Exhibit 3.2 to Registration
Statement No. 33-69968-01 on Form S-11 and incorporated herein
by reference.)
4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 30,
1995, and incorporated herein by reference.)
10.1 Management Agreement between CNL Income Fund XVI, Ltd. and CNL
Investment Company (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 30,
1995, 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.)