FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the quarterly period ended June 30, 2004
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the transition period from _______________________ to ______________________
Commission file number
0-24095
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CNL Income Fund XVIII, Ltd.
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(Exact name of registrant as specified in its charter)
Florida 59-3295394
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
- ---------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act): Yes ___ No X
CONTENTS
Part I Page
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 10
Item 4. Controls and Procedures 10
Part II
Other Information 11-12
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
June 30, December 31,
2004 2003
------------------ ------------------
ASSETS
Real estate properties with operating leases, net $ 16,963,294 $ 17,137,342
Net investment in direct financing leases 1,791,540 1,801,248
Real estate held for sale 741,108 750,329
Investment in joint ventures 2,782,960 2,794,538
Cash and cash equivalents 1,240,858 1,649,020
Receivables, less allowance for doubtful
accounts of $330,190 and $260,198, respectively 37,040 18,003
Accrued rental income 567,764 547,405
Other assets 46,483 33,355
------------------ ------------------
$ 24,171,047 $ 24,731,240
================== ==================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 20,178 $ 4,955
Real estate taxes payable 12,812 13,600
Distributions payable 700,000 700,000
Due to related parties 72,776 64,833
Rents paid in advance 43,687 43,687
Deferred rental income 4,149 4,309
------------------ ------------------
Total liabilities 853,602 831,384
Minority interest 258,760 258,739
Commitment (Note 4)
Partners' capital 23,058,685 23,641,117
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$ 24,171,047 $ 24,731,240
================== ==================
See accompanying notes to condensed financial statements.
1
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Revenues:
Rental income from operating leases $ 483,745 $ 488,582 $ 948,256 $ 976,326
Earned income from direct financing leases 44,018 44,483 88,156 89,075
Interest and other income 1,052 978 1,052 6,870
-------------- -------------- -------------- --------------
528,815 534,043 1,037,464 1,072,271
-------------- -------------- -------------- --------------
Expenses:
General operating and administrative 69,074 38,450 132,174 94,655
Property related 20,122 9,543 35,514 19,488
Management fees to related party 5,849 7,136 12,128 12,844
State and other taxes 72 -- 28,611 7,425
Depreciation and amortization 87,830 87,830 175,658 175,658
-------------- -------------- -------------- --------------
182,947 142,959 384,085 310,070
-------------- -------------- -------------- --------------
Income before minority interest and equity in
earnings of unconsolidated joint ventures 345,868 391,084 653,379 762,201
Minority interest (6,669) (6,711) (13,322) (13,434)
Equity in earnings of unconsolidated joint
ventures 68,565 68,616 136,985 137,358
-------------- -------------- -------------- --------------
Income from continuing operations 407,764 452,989 777,042 886,125
-------------- -------------- -------------- --------------
Discontinued operations:
Income from discontinued operations 23,744 50,102 40,526 86,207
Gain on disposal of discontinued operations -- 273,876 -- 273,876
-------------- -------------- -------------- --------------
23,744 323,978 40,526 360,083
-------------- -------------- -------------- --------------
Net income $ 431,508 $ 776,967 $ 817,568 $ 1,246,208
============== ============== ============== ==============
Income per limited partner unit:
Continuing operations $ 0.12 $ 0.13 $ 0.22 $ 0.25
Discontinued operations -- 0.09 0.01 0.11
-------------- -------------- -------------- --------------
$ 0.12 $ 0.22 $ 0.23 $ 0.36
============== ============== ============== ==============
Weighted average number of limited partner
units outstanding 3,500,000 3,500,000 3,500,000 3,500,000
============== ============== ============== ==============
See accompanying notes to condensed financial statements.
2
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Six Months Ended Year Ended
June 30, December 31,
2004 2003
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General partners:
Beginning balance $ (5,319) $ (5,319)
Net income -- --
------------------ ------------------
(5,319) (5,319)
------------------ ------------------
Limited partners:
Beginning balance 23,646,436 24,252,206
Net income 817,568 2,194,230
Distributions ($0.40 and $0.80 per
limited partner unit, respectively) (1,400,000) (2,800,000)
------------------ ------------------
23,064,004 23,646,436
------------------ ------------------
Total partners' capital $ 23,058,685 $ 23,641,117
================== ==================
See accompanying notes to condensed financial statements.
3
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2004 2003
-------------- --------------
Net cash provided by operating activities $ 1,005,139 $ 1,177,390
-------------- --------------
Cash flows from investing activities:
Proceeds from sale of assets -- 1,742,826
-------------- --------------
Net cash provided by investing activities -- 1,742,826
-------------- --------------
Cash flows from financing activities:
Proceeds from loans from corporate general partner -- 650,000
Repayment of loans from corporate general partner -- (650,000)
Distributions to limited partners (1,400,000) (1,400,000)
Distributions to holder of minority interest (13,301) (12,464)
-------------- --------------
Net cash used in financing activities (1,413,301) (1,412,464)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (408,162) 1,507,752
Cash and cash equivalents at beginning of period 1,649,020 430,753
-------------- --------------
Cash and cash equivalents at end of period $ 1,240,858 $ 1,938,505
============== ==============
Supplemental schedule of non-cash investing and financing activities:
Deferred real estate disposition fee incurred and
unpaid at end of period $ -- $ 54,000
============== ==============
Distributions declared and unpaid at end of period $ 700,000 $ 700,000
============== ==============
See accompanying notes to condensed financial statements.
4
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2004 and 2003
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of the general partners, necessary for a fair
statement of the results for the interim periods presented. Operating
results for the quarter and six months ended June 30, 2004 may not be
indicative of the results that may be expected for the year ending
December 31, 2004. Amounts as of December 31, 2003, included in the
financial statements, have been derived from audited financial
statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XVIII, Ltd. (the "Partnership") for the year ended December
31, 2003.
The Partnership accounts for its 57.2% interest in Portsmouth Joint
Venture using the consolidation method. Minority interest represents
the minority joint venture partner's proportionate share of the equity
in the joint venture. All significant intercompany accounts and
transactions have been eliminated.
In December 2003, the Financial Accounting Standards Board issued a
revision to FASB Interpretation No. 46 (originally issued in January
2003) ("FIN 46R"), "Consolidation of Variable Interest Entities"
requiring existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries. The primary beneficiary of
a variable interest entity is the party that absorbs a majority of the
entity's expected losses, receives a majority of its expected residual
returns, or both, as a result of holding variable interests, which are
the ownership, contractual, or other pecuniary interests in an entity
that change with changes in the fair value of the entity's net assets
excluding variable interests. Prior to FIN 46R, a company generally
included another entity in its financial statements only if it
controlled the entity through voting interests. Application of FIN 46R
is required in financial statements of public entities that have
interests in variable interest entities for periods ending after March
15, 2004. The Partnership adopted FIN 46R during the quarter ended
March 31, 2004, which resulted in the consolidation of a previously
unconsolidated joint venture, which was accounted for under the equity
method. FIN 46R does not require, but does permit restatement of
previously issued financial statements. The Partnership has restated
prior year's financial statements to maintain comparability between the
periods presented. Such consolidation resulted in certain assets and
minority interest, and revenues and expenses, of the entity being
reported on a gross basis in the Partnership's financial statements;
however, these restatements had no effect on partners' capital or net
income.
2. Reclassification
Certain items in the prior year's financial statements have been
reclassified to conform to 2004 presentation. These reclassifications
had no effect on total partners' capital or net income.
3. Discontinued Operations
In May 2004, the Partnership entered into an agreement to sell its
property in Stow, Ohio to a third party and reclassified the asset to
real estate held for sale. Because the current carrying amount of this
asset is less than the anticipated sales proceeds, no provision for
write-down of assets was recorded in 2004. The Partnership has recorded
provisions for write-down of assets in previous years relating to this
property.
5
CNL INCOME FUND XVIII, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Six Months Ended June 30, 2004 and 2003
3. Discontinued Operations - Continued
The following presents the operating results of the discontinued
operations for this property, along with the property in Destin,
Florida that was sold in June 2003.
Quarter Ended June 30, Six Months Ended June 30,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Rental revenues $ 23,744 $ 51,324 $ 42,944 $ 97,321
Expenses -- (1,222) (2,418) (11,114)
-------------- -------------- -------------- --------------
Income from discontinued
operations $ 23,744 $ 50,102 $ 40,526 $ 86,207
============== ============== ============== ==============
4. Commitment
In May 2004, the Partnership entered into an agreement with a third
party to sell the property in Stow, Ohio.
5. Subsequent Event
On August 9, 2004, the Partnership entered into a definitive Agreement
and Plan of Merger pursuant to which the Partnership will be merged
with a subsidiary of U.S. Restaurant Properties, Inc. (NYSE: USV). The
merger is one of multiple concurrent transactions pursuant to which 17
other affiliated limited partnerships also will be merged with a
subsidiary of U.S. Restaurant Properties, Inc. and in which CNL
Restaurant Properties, Inc., an affiliate, also will be merged with
U.S. Restaurant Properties, Inc. CNL Restaurant Properties, Inc.
currently provides property management and other services to the
Partnership. The merger of the Partnership (and each of the 17 other
affiliated mergers) is subject to certain conditions including approval
by a majority of the limited partners, consummation of a minimum number
of limited partnership mergers representing at least 75.0% in value (as
measured by the value of the merger consideration) of all limited
partnerships, consummation of the merger between U. S. Restaurant
Properties, Inc. and CNL Restaurant Properties, Inc., approval of the
shareholders of U.S. Restaurant Properties, Inc., and availability of
financing. The transaction is expected to be consummated in the first
quarter of 2005.
Under the terms of the transaction, the limited partners will receive
total consideration of approximately $30.46 million, consisting of
approximately $25.47 million in cash and approximately $4.99 million in
U.S. Restaurant Properties, Inc. Series A Convertible Preferred Stock
that is listed on the New York Stock Exchange. The general partners
will receive total consideration of approximately $33,000 consisting of
approximately $28,000 in cash and approximately $5,000 in preferred
stock.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund XVIII, Ltd. (the "Partnership," which may be referred
to as "we," "us," or "our") is a Florida limited partnership that was organized
on February 10, 1995, to acquire for cash, either directly or through joint
venture arrangements, both newly constructed and existing restaurants, as well
as land upon which restaurants were to be constructed (collectively, the
"Properties"), which are leased primarily to operators of selected national and
regional fast-food, family-style and casual dining restaurant chains. The leases
generally are triple-net leases, with the lessees responsible for all repairs
and maintenance, property taxes, insurance and utilities. As of June 30, 2003
and 2004, we owned 17 Properties directly and five Properties indirectly through
joint venture or tenancy in common arrangements.
Capital Resources
Net cash provided by operating activities was $1,005,139 and $1,177,390
for the six months ended June 30, 2004 and 2003, respectively. The decrease in
net cash provided by operating activities during the six months ended June 30,
2004, was a result of changes in our working capital, such as the timing of
transactions relating to the collection of receivables and the payment of
expenses, and changes in income and expenses, such as changes in rental revenues
and changes in operating and property related expenses.
At June 30, 2004, we had $1,240,858 in cash and cash equivalents, as
compared to $1,649,020 at December 31, 2003. At June 30, 2004, these funds were
held in demand deposit accounts at a commercial bank. The funds remaining at
June 30, 2004, after the payment of distributions and other liabilities, will be
used to meet our working capital needs.
Short-Term Liquidity
Our investment strategy of acquiring Properties for cash and leasing
them under triple-net leases to operators who generally meet specified financial
standards minimizes our operating expenses. The general partners believe that
generally the leases will generate net cash flow in excess of operating
expenses.
Our short-term liquidity requirements consist primarily of our
operating expenses.
The general partners have the right, but not the obligation, to make
additional capital contributions and loans if they deem it appropriate in
connection with our operations.
We generally distribute cash from operations remaining after the
payment of operating expenses, to the extent that the general partners determine
that such funds are available for distribution. Based on current and anticipated
future cash from operations, a portion of the sales proceeds from a 2003 sale,
and for the six months ended June 30, 2003, loans from the corporate general
partner, we declared distributions to limited partners of $1,400,000 for each of
the six months ended June 30, 2004 and 2003, ($700,000 for each of the quarters
ended June 30, 2004 and 2003). This represents distributions of $0.40 per unit
for each of the six months ended June 30, 2004 and 2003, ($0.20 per unit for
each applicable quarter). No distributions were made to the general partners for
the quarters and six months ended June 30, 2004 and 2003. No amounts distributed
to the limited partners for the six months ended June 30, 2004 and 2003 are
required to be or have been treated as a return of capital for purposes of
calculating the limited partners' return on their adjusted capital
contributions. We intend to continue to make distributions of cash to the
limited partners on a quarterly basis. If the general partners do not elect to
make additional capital contributions or loans to us, we may consider lowering
the distribution rate.
Total liabilities, including distributions payable, were $853,602 at
June 30, 2004, as compared to $831,384 at December 31, 2003. The general
partners believe that we have sufficient cash on hand to meet our current
working capital needs.
7
Contractual Obligations, Contingent Liabilities, and Commitments
In May 2004, we entered into an agreement with a third party to sell
the Property in Stow, Ohio. As of August 9, 2004, the sale had not occurred.
Long-Term Liquidity
We have no long-term debt or other long-term liquidity requirements.
Results of Operations
Rental revenues from continuing operations were $1,036,412 during the
six months ended June 30, 2004, as compared to $1,065,401 during the same period
of 2003, $527,763 and $533,065 of which were earned during the second quarters
of 2004 and 2003, respectively. The decrease in rental revenues from continuing
operations during the quarter and six months ended June 30, 2004, was partially
a result of the fact that in February 2004, American Hospitality Concepts, Inc.,
the parent company of Ground Round, Inc., filed for Chapter 11 bankruptcy
protection. As a result, we stopped recording rental revenues relating to the
one Property we leased to Ground Round, Inc. In April 2004, the tenant rejected
the lease. The lost revenues will have an adverse effect on the results of
operations until we are able to re-lease the Property in a timely manner.
In March 2004, we entered into an agreement, effective January 2004, to
provide temporary and partial rent deferral to a tenant who is experiencing
liquidity difficulties. The general partners anticipate that deferring a portion
of monthly rent through December 2004 on the one lease the tenant has with us
will provide the necessary relief to the tenant. Rental payment terms revert to
the original terms beginning in January 2005. Repayment of the deferred amounts
is secured by letters of credit and scheduled to begin in January 2005 and
continue for 60 months. The general partners do not believe that this temporary
decline in cash flows will have a material adverse effect on our operating
results.
During the quarters and six months ended June 30, 2004 and 2003, we did
not record rental revenues relating to the Property in Minnetonka, Minnesota
because the tenant rejected the lease in 1998 in connection with the tenant's
bankruptcy proceedings. The lost revenues will continue to have an adverse
effect on our cash from operations and results of operations until we are able
to resolve the outstanding issues.
In October 2003, Chevy's, Inc., the tenant of the Property in Mesa,
Arizona filed for Chapter 11 bankruptcy protection. While the tenant has neither
rejected nor affirmed the one lease it has with us, there can be no assurance
that the lease will not be rejected in the future. As of August 9, 2004, we have
received substantially all of the rental payments relating to this lease. The
lost revenues that would result if the tenant were to reject this lease will
have an adverse effect on our results of operations if we are not able to
re-lease the Property in a timely manner.
We earned $136,985 attributable to net income earned by unconsolidated
joint ventures during the six months ended June 30, 2004, as compared to
$137,358 during the same period of 2003, $68,565 and $68,616 of which were
earned during the second quarters of 2004 and 2003, respectively. These amounts
remained relatively constant, because the leased Property portfolio owned by the
joint ventures and the tenancies in common did not change.
We earned $1,052 in interest and other income during the quarter and
six months ended June 30, 2004, as compared to $978 and $6,870 during the same
periods of 2003. Interest and other income during 2003 included $5,000 relating
to a right-of-way taking for a parcel of land on the San Antonio, Texas
Property.
Operating expenses, including depreciation and amortization expense,
were $384,085 during the six months ended June 30, 2004, as compared to $310,070
during the same period of 2003, $182,947 and $142,959 of which were incurred
during the second quarters of 2004 and 2003, respectively. Operating expenses
were higher during the quarter and six months ended June 30, 2004 due to an
increase in state tax expense relating to several states in which we conduct
8
business and due to additional general operating and administrative expenses,
including legal fees. In addition, operating expenses were higher during the
quarter and six months ended June 30, 2004 because we incurred property related
expenses such as insurance, repairs and maintenance, legal fees and real estate
taxes relating to the vacant Property in Rochester, New York, which was
previously leased by Ground Round, Inc. We will continue to incur these expenses
until the Property is re-leased.
During the quarters and six months ended June 30, 2004 and 2003, we
incurred property related expenses such as insurance, repairs and maintenance,
legal fees and real estate taxes relating to the vacant Property in Minnetonka,
Minnesota. We will continue to incur these expenses until we are able to resolve
the outstanding issues.
We recognized income from discontinued operations (rental revenues less
property related expenses) of $50,102 and $86,207 relating to the Properties in
Destin, Florida and Stow, Ohio during the quarter and six months ended June 30,
2003, respectively. We sold the Property in Destin, Florida in June 2003,
resulting in a gain on disposal of discontinued operations of approximately
$273,900. We recognized income from discontinued operations of $23,744 and
$40,526 during the quarter and six months ended June 30, 2004 relating to the
Property in Stow, Ohio. As of August 9, 2004, the sale of this Property had not
occurred.
In December 2003, the Financial Accounting Standards Board issued a
revision to FASB Interpretation No. 46 (originally issued in January 2003) ("FIN
46R"), "Consolidation of Variable Interest Entities" requiring existing
unconsolidated variable interest entities to be consolidated by their primary
beneficiaries. The primary beneficiary of a variable interest entity is the
party that absorbs a majority of the entity's expected losses, receives a
majority of its expected residual returns, or both, as a result of holding
variable interests, which are the ownership, contractual, or other pecuniary
interests in an entity that change with changes in the fair value of the
entity's net assets excluding variable interests. Prior to FIN 46R, a company
generally included another entity in its financial statements only if it
controlled the entity through voting interests. Application of FIN 46R is
required in financial statements of public entities that have interests in
variable interest entities for periods ending after March 15, 2004. We adopted
FIN 46R during the quarter ended March 31, 2004, which resulted in the
consolidation of a previously unconsolidated joint venture, Portsmouth Joint
Venture, which was accounted for under the equity method. FIN 46R does not
require, but does permit restatement of previously issued financial statements.
We restated prior year's financial statements to maintain comparability between
the periods presented. Such consolidation resulted in certain assets and
minority interest, and revenues and expenses, of the entity being reported on a
gross basis in our financial statements; however, these restatements had no
effect on partners' capital or net income.
The general partners believe their primary objective is to maintain
current operations with restaurant operators as successfully as possible, while
evaluating strategic alternatives, including alternatives that may provide
liquidity to the limited partners. Real estate markets are strong throughout
much of the nation, and the performance of restaurants has generally improved
after several challenging years. As a result, the general partners believe that
this is an attractive period for a strategic event to monetize the interests of
the limited partners.
In furtherance of this, on August 9, 2004, we entered into a definitive
Agreement and Plan of Merger pursuant to which we will be merged with a
subsidiary of U.S. Restaurant Properties, Inc. (NYSE: USV). The merger is one of
multiple concurrent transactions pursuant to which 17 other affiliated limited
partnerships also will be merged with a subsidiary of U.S. Restaurant
Properties, Inc. and in which CNL Restaurant Properties, Inc., an affiliate,
also will be merged with U.S. Restaurant Properties, Inc. Our merger (and each
of the 17 other affiliated mergers) is subject to certain conditions including
approval by a majority of the limited partners, consummation of a minimum number
of limited partnership mergers representing at least 75.0% in value (as measured
by the value of the merger consideration) of all limited partnerships,
consummation of the merger between U. S. Restaurant Properties, Inc. and CNL
Restaurant Properties, Inc., approval of the shareholders of U.S. Restaurant
Properties, Inc., and availability of financing. U.S. Restaurant Properties,
Inc. is a real estate investment trust (REIT) that focuses primarily on
acquiring, owning and leasing restaurant properties. The transaction is expected
to be consummated in the first quarter of 2005.
Under the terms of the transaction, our limited partners will receive
total consideration of approximately $30.46 million, consisting of approximately
$25.47 million in cash and approximately $4.99 million in U.S. Restaurant
Properties, Inc. Series A Convertible Preferred Stock that is listed on the New
York Stock Exchange. The general partners will receive total consideration of
approximately $33,000 consisting of approximately $28,000 in cash and
approximately $5,000 in preferred stock.
9
We received an opinion from Wachovia Capital Markets, LLC that as of
August 9, 2004 the merger consideration to be received by the holders of our
general and limited partnership interests is fair, from a financial point of
view, to such holders.
As reflected above, the contemplated transactions are complex, and
contingent upon certain conditions. The restaurant marketplace, the real estate
industry, and the equities markets, all individually or taken as a whole, could
impact the economics of this transaction. As a result, there is no assurance
that we will be successful in completing the contemplated transaction.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
The general partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in our
filings under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. The principal executive and financial
officers of the corporate general partner have evaluated our disclosure controls
and procedures as of the end of the period covered by this Quarterly Report on
Form 10-Q and have determined that such disclosure controls and procedures are
effective.
There was no change in internal control over financial reporting that
occurred during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, internal control over financial
reporting.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
------------------
Item 2. Changes in Securities. Inapplicable.
----------------------
Item 3. Default upon Senior Securities. Inapplicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
----------------------------------------------------
Item 5. Other Information. Inapplicable.
------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
**3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-11, No. 33-90998-01,
incorporated herein by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 3.2 to Registrant's
Registration Statement on Form S-11, No. 33-90998-01 and
incorporated herein by reference.)
**4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating
to the Distribution Reinvestment Plans (Filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**5.1 Opinion of Baker & Hostetler as to the legality of the
securities being registered by CNL Income Fund XVIII, Ltd.
(Filed as Exhibit 5.2 to Amendment No. Three to the
Registrant's Registration Statements on Form S-11, No.
33-90998, incorporated herein by reference.)
**8.1 Opinion of Baker & Hostetler regarding certain material tax
issues relating to CNL Income Fund XVIII, Ltd. (Filed as
Exhibit 8.1 to Amendment No. Three to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**8.2 Opinion of Baker & Hostetler regarding certain material issues
relating to the Distribution Reinvestment Plan of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 8.4 to Amendment No. Three
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**8.3 Amended Opinion of Baker & Hostetler regarding certain
material issues relating to CNL Income Fund XVIII, Ltd. (Filed
as Exhibit 8.5 to Post-Effective Amendment No. Four to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
11
**10.1 Management Agreement between CNL Income Fund XVIII, Ltd. and
CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 20,
1997, and incorporated herein by reference.)
**10.2 Assignment of Management Agreement from CNL Fund Advisors,
Inc. to CNL APF Partners, LP. (Filed as Exhibit 10.2 to Form
10-Q filed with the Securities and Exchange Commission on
August 9, 2001, and incorporated herein by reference.)
**10.3 Assignment of Management Agreement from CNL APF Partners, LP
to CNL Restaurants XVIII, Inc. (Included as Exhibit 10.3 to
Form 10-Q filed with the Securities and Exchange Commission on
August 13, 2002, and incorporated herein by reference.)
31.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to Rule 13a-14 as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
31.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to Rule 13a-14 as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
32.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 2004.
**previously filed.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 9th day of August 2004.
CNL INCOME FUND XVIII, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
-----------------------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
-----------------------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit Number
(c) Exhibits
**3.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-11, No. 33-90998-01,
incorporated herein by reference.)
**3.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.1 Affidavit and Certificate of Limited Partnership of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 3.2 to Registrant's
Registration Statement on Form S-11, No. 33-90998-01 and
incorporated herein by reference.)
**4.2 Amended and Restated Agreement of Limited Partnership of CNL
Income Fund XVIII, Ltd. (Included as Exhibit 4.2 to Form 10-K
filed with the Securities and Exchange Commission on March 21,
1996, and incorporated herein by reference.)
**4.3 Form of Agreement between CNL Income Fund XVII, Ltd. and MMS
Escrow and Transfer Agency, Inc. and between CNL Income Fund
XVIII, Ltd. and MMS Escrow and Transfer Agency, Inc. relating
to the Distribution Reinvestment Plans (Filed as Exhibit 4.4
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**5.1 Opinion of Baker & Hostetler as to the legality of the
securities being registered by CNL Income Fund XVIII, Ltd.
(Filed as Exhibit 5.2 to Amendment No. Three to the
Registrant's Registration Statements on Form S-11, No.
33-90998, incorporated herein by reference.)
**8.1 Opinion of Baker & Hostetler regarding certain material tax
issues relating to CNL Income Fund XVIII, Ltd. (Filed as
Exhibit 8.1 to Amendment No. Three to the Registrant's
Registration Statement on Form S-11, No. 33-90998,
incorporated herein by reference.)
**8.2 Opinion of Baker & Hostetler regarding certain material issues
relating to the Distribution Reinvestment Plan of CNL Income
Fund XVIII, Ltd. (Filed as Exhibit 8.4 to Amendment No. Three
to the Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**8.3 Amended Opinion of Baker & Hostetler regarding certain
material issues relating to CNL Income Fund XVIII, Ltd. (Filed
as Exhibit 8.5 to Post-Effective Amendment No. Four to the
Registrant's Registration Statement on Form S-11, No.
33-90998, incorporated herein by reference.)
**10.1 Management Agreement between CNL Income Fund XVIII, Ltd. and
CNL Fund Advisors, Inc. (Included as Exhibit 10.1 to Form 10-K
filed with the Securities and Exchange Commission on March 20,
1997, and incorporated herein by reference.)
**10.2 Assignment of Management Agreement from CNL Fund Advisors,
Inc. to CNL APF Partners, LP. (Filed as Exhibit 10.2 to Form
10-Q filed with the Securities and Exchange Commission on
August 9, 2001, and incorporated herein by reference.)
**10.3 Assignment of Management Agreement from CNL APF Partners, LP
to CNL Restaurants XVIII, Inc. (Included as Exhibit 10.3 to
Form 10-Q filed with the Securities and Exchange Commission on
August 13, 2002, and incorporated herein by reference.)
31.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to Rule 13a-14 as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
31.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to Rule 13a-14 as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.1 Certification of Chief Executive Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
32.2 Certification of Chief Financial Officer of Corporate General
Partner Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
**previously filed.
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2