Filed pursuant to 424(b)(3)
Registration No. 333-128662
CNL INCOME PROPERTIES, INC.
STICKER SUPPLEMENT DATED DECEMBER 6, 2007
TO PROSPECTUS DATED APRIL 20, 2007
This Sticker Supplement is part of, and should be read in conjunction with, our prospectus dated April 20, 2007, our Prospectus Supplement No. Two dated October 15, 2007 and our Sticker Supplement dated November 14, 2007. Capitalized terms have the same meaning as in the prospectus unless otherwise stated herein. The terms “we,” “our,” “us” and “CNL Income Properties” include CNL Income Properties, Inc. and its subsidiaries.
Information as to the number and types of properties we have entered into initial commitments to acquire, properties we have acquired and loans we have made is presented as of November 30, 2007, and all references to property acquisitions, commitments and loans should be read in that context.
RECENT DEVELOPMENTS
At November 30, 2007, we had a portfolio of 97 lifestyle properties, including ten owned through unconsolidated ventures, within the following seven asset classes: Marinas, Ski and Mountain Lifestyle, Destination Retail, Golf Courses, Merchandise Marts, Attractions and Dealerships. We have also made 11 loans, ten of which remain outstanding, and have committed to acquire 6 additional golf properties. All of the properties in which we own an interest are, or will be, leased on a long-term basis to either affiliated or third-party tenants and managed by third-party operators that we consider to be significant industry leaders.
We entered into an asset purchase agreement on October 29, 2007 committing to acquire 28 golf course properties from American Golf Corporation and certain of its affiliates (collectively “AGC”). On November 30, 2007, we completed the acquisition of 22 of those golf course properties for a purchase price of $244.0 million.
The following list sets forth the names and locations of the golf courses we acquired:
Ancala Country Club, Scottsdale, Arizona
Arrowhead Country Club, Glendale (Phoenix), Arizona
Arrowhead Golf Club, Littleton (Denver), Colorado
Continental Golf Course, Scottsdale, Arizona
Deer Creek Golf Club, Overland Park (Kansas City), Kansas
Desert Lakes Golf Course, Bullhead City, Arizona
Eagle Brook Country Club, Geneva (Chicago), Illinois
Foothills Golf Club, Phoenix, Arizona
Hunt Valley Golf Club, Phoenix (Baltimore), Maryland
Kokopelli Golf Course, Gilbert (Phoenix), Arizona
Legend at Arrowhead Golf Resort, Glendale (Phoenix), Arizona
London Bridge Golf Club, Lake Havasu, Arizona
Majestic Oaks Golf Club, Ham Lake (Minneapolis), Minnesota
Meadowbrook Country Club, Tulsa, Oklahoma
Mission Hills Country Club, Northbrook (Chicago), Illinois
Painted Desert Golf Club, Las Vegas, Nevada
Ruffled Feathers Golf Club, Lemont (Chicago), Illinois
Stonecreek Golf Club, Phoenix, Arizona
Superstition Springs Golf Club, Mesa, Arizona
Tallgrass Country Club, Wichita, Kansas
Tamarack Golf Club, Naperville (Chicago), Illinois
Tatum Ranch Golf Club, Cave Creek (Phoenix), Arizona
We leased our interests in these properties on a long-term, triple-net basis to Evergreen Alliance Golf Limited, L.P. (“EAGLE”) to operate on our behalf. The leases have a 20-year initial term, with four 5-year renewal options and are cross-defaulted with each other and with the 15 other leases for our golf course properties that are operated by EAGLE. The minimum aggregate annual rent for the properties is approximately $20.7 million in the initial year.
We have agreed to acquire the remaining six properties, all of which are leasehold interests, by April 17, 2008. All six properties require certain consents and estoppels in order for us to be able to acquire them. There can be no assurance that these conditions will be satisfied or, if satisfied, that the remaining properties will ultimately be acquired. The remaining properties and their locations are as follows:
David L. Baker Memorial Golf Center, Fountain Valley (Orange County), California
Forest Park Golf Course, St. Louis, Missouri
Las Vegas Golf Club, Las Vegas, Nevada
Shandin Hills Golf Club, San Bernardino California
Meadowlark Golf Course, Huntington Beach (Orange County), California
Micke Grove Golf Course, Lodi, California
On November 30, 2007, our board of directors approved by written consent an amendment to article three, section 11 of our bylaws to increase the directors’ compensation for their services on our board of directors and our audit committee beginning January 1, 2008. More specifically, the board of directors agreed to increase (i) the annual fee for directors to $45,000 from $30,000, (ii) the annual fee for the audit committee chairperson to $10,000 from $5,000 and (iii) the board and audit committee meeting fees to $2,000 from $1,500 per meeting attended.
Our board of directors previously declared distributions of $0.05 per share to stockholders of record on October 1, November 1 and December 1, 2007, which distributions will be paid by December 31, 2007.
We anticipate increasing our distribution rate from $0.05000 to $0.05125 per share in January 2008. On an annualized basis this would represent a 6.15% return based on the current $10.00 per share offering price of our common stock. This increase is dependent upon the authorization of our board of directors after considering our results of operations, financial condition and net operating cash flows, including distributions from unconsolidated entities in which we have an equity interest, and anticipated cash requirements for acquisitions and operations. There can be no assurance that any such increase in the distribution rate would be maintained or continued in the event of any changes to any of the foregoing factors. The amount, timing, declaration and payment of future dividends will be at the sole discretion of our board of directors and will depend upon our profitability, our objective of continuing to qualify as a REIT for federal income tax purposes, capital needs, future prospects, economic conditions, other operating trends, the avoidance of volatility of distributions and other factors deemed relevant by our board of directors.
THE OFFERING
As of September 30, 2007, we had received $1.3 billion (130.8 million shares) in subscription proceeds for this offering, including $44.4 million (4.7 million shares) received through our reinvestment plan. As of that same date, we had received $1.8 billion (182.9 million shares) in total proceeds in connection with our public offerings, including proceeds received through our reinvestment plan. Our total proceeds exclude $200,000 for 20,000 shares purchased by our Advisor preceding the commencement of our initial offering and $1.2 million for 117,708 restricted common shares issued to CNL Financial Group, Inc. in December 2004.
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BUSINESS
GOLF COURSES
The following information updates and supplements the “Golf Courses” section beginning on page 80 of the prospectus:
EAGLE Golf Clubs
We entered into an asset purchase agreement on October 29, 2007 committing to acquire 28 golf course properties from American Golf Corporation and certain of its affiliates (collectively “AGC”) for a purchase price of $301.0 million. On November 30, 2007, we completed the acquisition of 22 of those golf course properties for a purchase price of $244.0 million.
The following list sets forth the names and locations of the golf courses we acquired (dollars are in thousands):
Property | Initial Purchase Price | ||
Ancala Country Club – Scottsdale, Arizona 18-hole private course | $ | 14,107 | |
Arrowhead Country Club – Glendale (Phoenix), Arizona 18-hole private course | $ | 17,357 | |
Arrowhead Golf Club – Littleton (Denver), Colorado 18-hole public course | $ | 15,783 | |
Continental Golf Course – Scottsdale, Arizona 18-hole public course | $ | 6,419 | |
Deer Creek Golf Club – Overland Park (Kansas City), Kansas 18-hole public course | $ | 8,934 | |
Desert Lakes Golf Course – Bullhead City, Arizona 18-hole public course | $ | 2,637 | |
Eagle Brook Country Club – Geneva (Chicago), Illinois 18-hole private course | $ | 16,253 | |
Foothills Golf Club – Phoenix, Arizona 18-hole public course | $ | 9,881 | |
Hunt Valley Golf Club – Phoenix (Baltimore), Maryland 18-hole private course | $ | 23,430 | |
Kokopelli Golf Course – Gilbert (Phoenix), Arizona 18-hole public course | $ | 9,416 | |
Legend at Arrowhead Golf Resort – Glendale (Scottsdale), Arizona 18-hole public course | $ | 10,438 |
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Property | Initial Purchase Price | ||
London Bridge Golf Club – Lake Havasu, Arizona Two 18-hole public courses | $ | 11,805 | |
Majestic Oaks Golf Club – Ham Lake (Minneapolis), Minnesota Two 18-hole and one 9-hole public courses | $ | 13,217 | |
Meadowbrook Country Club – Tulsa, Oklahoma 18-hole private course | $ | 11,530 | |
Mission Hills Country Club – Northbrook (Chicago), Illinois 18-hole private course | $ | 4,779 | |
Painted Desert Golf Club – Las Vegas, Nevada 18-hole public course | $ | 9,468 | |
Ruffled Feathers Golf Club – Lemont (Chicago), Illinois 18-hole public course | $ | 13,883 | |
Stonecreek Golf Club – Phoenix, Arizona 18-hole public course | $ | 14,095 | |
Superstition Springs Golf Club – Mesa, Arizona 18-hole public course | $ | 11,042 | |
Tallgrass Country Club – Wichita, Kansas 18-hole private course | $ | 5,405 | |
Tamarack Golf Club – Naperville (Chicago), Illinois 18-hole public course | $ | 7,747 | |
Tatum Ranch Golf Club – Cave Creek (Phoenix), Arizona 18-hole private course | $ | 6,379 |
The approximate federal income tax basis of the depreciable portion of the acquired golf course properties is $138.7 million. The properties are adequately insured and are expected to require approximately $12.0 million in capital expenditures over the next three years.
We have agreed to acquire the remaining six properties, all of which are leasehold interests, by April 17, 2008. All six properties require certain consents and estoppels in order for us to be able to acquire them. There can be no assurance that these conditions will be satisfied or, if satisfied, that the remaining properties will ultimately be acquired. The remaining properties and their locations are as follows:
David L. Baker Memorial Golf Center
Fountain Valley (Orange County), California
18-hole public course
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Forest Park Golf Course
St. Louis, Missouri
27-hole public course
Las Vegas Golf Club
Las Vegas, Nevada
18-hole public course
Shandin Hills Golf Club
San Bernardino, California
18-hole public course
Meadowlark Golf Course
Huntington Beach (Orange County), California
18-hole public course
Micke Grove Golf Course
Lodi, California
18-hole public course
Leases. We leased our interests in the acquired properties on a long-term, triple-net basis to Evergreen Alliance Golf Limited, L.P. (“EAGLE,” formerly known as “EAGL”) to operate on our behalf. The leases have a 20-year initial term, with four 5-year renewal options and are cross-defaulted with each other and with the leases on 15 of our other golf course properties that are operated by EAGLE. The minimum aggregate annual rent for these properties is approximately $20.7 million in the initial year. The general terms of the lease agreements are described in the section of the prospectus entitled “Business – Description of Property Leases.”
Operator.EAGLE, formerly known as EAGL, is described in the section entitled “Business – Golf Courses – EAGL Golf Clubs,” that begins on p. 85 of the prospectus. As part of this transaction, EAGLE acquired five additional golf properties from AGC that it will operate on its own behalf, and it has committed to acquire nine additional golf courses from AGC by April 17, 2008.
Competition.Generally, the acquired courses face a variety of competitors depending on their location and quality. The private courses compete with other private courses or high-end public courses within a nearby 50-mile radius, and generally compete on the basis of management expertise, reputation, featured facilities, quality of services and price. The public courses compete with other public courses in their local metropolitan areas and, depending on the quality of the public course, with private courses as well.
MANAGEMENT
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information updates the first paragraph of the “Compensation of Directors and Executive Officers” section that begins on page 136 of the prospectus:
On November 30, 2007, our board of directors approved by written consent an amendment to article three, section 11 of our bylaws to increase the directors’ compensation for their services on our board and audit committee beginning January 1, 2008. More specifically, the board of directors agreed to increase (i) the annual fee for directors to $45,000 from $30,000, (ii) the annual fee for the audit committee chairperson to $10,000 from $5,000 and (iii) the board and audit committee meeting fees to $2,000 from $1,500 per meeting attended.
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