UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(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, 1996
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-12989
COMMERCIAL NET LEASE REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 56-1431377
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East South Street, Suite 500
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 422-1574
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which
registered:
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
(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]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 19, 1997, was $336,619,823.
The number of shares of common stock outstanding as of March 19, 1997, was
23,393,672.The Form 10-K of Commercial Net Lease Realty, Inc. for the year ended
December 31, 1996, is being amended to eliminate the incorporation by reference
of the Commercial Net Lease Realty, Inc. Proxy Statement for the 1997 Annual
Meeting of Shareholders and include the required information in Items 10, 11, 12
and 13 of Part III.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Registrant incorporates by reference portions of the Commercial Net
Lease Realty, Inc. Annual Report to Shareholders for the year ended December 31,
1996 (Items 5, 6, 7 and 8 of Part II).
PART I
ITEM 1. BUSINESS
Commercial Net Lease Realty, Inc., a Maryland corporation (the
"Registrant" or the "Company"), is a real estate investment trust (a "REIT")
formed in 1984 that acquires, owns and manages a diversified portfolio of high-
quality, freestanding properties leased to major retail businesses generally
under full-credit, long-term commercial net leases.
The Company's strategy is to invest in single-tenant, freestanding retail
properties with purchase prices of generally up to $7.5 million, which typically
are located along intensive commercial corridors near traffic generators, such
as regional malls, business developments and major thoroughfares. Management
believes that these types of properties when leased to high-quality tenants with
significant market presence provide attractive opportunities for a stable
current return and the potential for capital appreciation. In management's
view, these types of properties also provide the Company with flexibility in use
and tenant selection when the Properties are re-let upon lease expiration.
The Company will hold its properties until it determines that the sale or
other disposition of the properties is advantageous in view of the Company's
investment objectives. In deciding whether to sell properties, the Company will
consider factors such as potential capital appreciation, net cash flow and
federal income tax considerations.
Properties
During the year ended December 31, 1996, the Company borrowed $144,600,000
of amounts it has available under its credit facility and assumed mortgages
totalling $6,864,000 to acquire 40 properties and nine buildings which were
developed by the tenant on land parcels owned by the Company. As of December
31, 1996, the Company owned 195 properties (the "Properties") that are leased to
major businesses, including Academy, Baby Superstore, Barnes & Noble, Best Buy,
Blockbuster Music, Borders, Burger King, Checkers, CompUSA, Computer City,
Denny's, Dick's Clothing & Sporting Goods, Eckerd, Food 4 Less, Food Lion,
Golden Corral, Good Guys, Hardee's, Hi-Lo Automotive, HomePlace, International
House of Pancakes, Kash N' Karry, Levitz, Linens 'n Things, Luria's, Marshalls,
Office Depot, OfficeMax, Oshman's, Pier 1 Imports, Pizza Hut, Scotty's, Sears,
Sports Authority, Waccamaw and Wendy's. The occupancy rate of the Company's
Property portfolio was 100 percent at December 31, 1996.
All of the Properties are leased under net leases pursuant to which the
tenant typically will bear responsibility for substantially all property costs
and expenses associated with ongoing maintenance and operation. The lease of
each of the Company's Properties require payment of annual base rent plus,
generally, either percentage rent based on the tenant's gross sales or
contractual increases in annual rent.
During 1996, one of the Company's lessees, Barnes & Noble Superstores,
Inc., accounted for more than ten percent of the Company's total rental income.
As of December 31, 1996, Barnes & Noble Superstores, Inc. was the lessee under
leases relating to 11 Properties. It is anticipated that, based on the minimum
rental payments required by the leases, Barnes & Noble Superstores, Inc. will
continue to account for more than ten percent of the Company's total rental
income in 1997. Any failure of this lessee could materially affect the
Company's income.
Investment in Subsidiaries
In November 1995, the Company purchased 100% of the common stock of two
newly-formed entities, Net Lease Realty I, Inc. and Net Lease Realty II, Inc.,
to facilitate the acquisition of certain properties. Each of the wholly-owned
subsidiaries is a qualified real estate investment trust subsidiary as defined
under Internal Revenue Code Section 856(i)(2).
1
Advisory Services
The Company and CNL Realty Advisors, Inc. (the "Advisor") have entered
into an advisory agreement (the "Advisory Agreement"), which provides for the
Advisor to perform to receive an annual fee, payable monthly, equal to (i) seven
percent of funds from operations, as defined in the Advisory Agreement, up to
$10,000,000, (ii) six percent of funds from operations in excess of $10,000,000
but less than $20,000,000 and (iii) five percent of funds from operations in
excess of $20,000,000. Under the Advisory Agreement, the Advisor generally is
responsible for administering the day-to-day investment operations of the
Company, including investment analysis and development, acquisitions, due
diligence, and asset management and accounting services. These duties include
collecting rental payments, inspecting and managing the Properties, assisting
the Company in responding to tenant inquiries and notices, providing information
to the Company about the status of the leases and the Properties, maintaining
the Company's accounting books and records, and preparing and filing various
reports, returns or statements with various regulatory agencies. In addition,
the Advisor serves as the Company's consultant in connection with policy
decisions to be made by the Board of Directors, manages the Company's Properties
and renders other services as the Board of Directors deems appropriate. The
Advisor is subject to the supervision of the Company's Board of Directors and
has only such functions as are delegated to it.
The Advisory Agreement was renewed January 1, 1997 and continues until
January 1998, and thereafter may be extended annually upon mutual consent of a
majority of the board of directors of the Advisor and a majority of the
independent directors of the Company unless terminated at an earlier date upon
90 days' prior notice by either party.
Historically, the Company has not had a large enough asset base to provide
the economies of scale needed to support efficiently the extensive general and
administrative expenses of an in-house management team. As a result, the
Advisor had incurred the full expense of a management and acquisition team while
receiving advisory and acquisition fees that have offset this expense. However,
management believes that the efficiencies currently experienced by employing a
third-party advisor will diminish as the Company grows and expects that as the
Company continues to grow it will be more cost effective to become self-
administered. Management is currently considering whether it may be appropriate
at this time to recommend to the Board of Directors that the Company become
self-administered. Any recommendation would be evaluated by the Independent
Directors, and any transaction by which the Company would become self-
administered would be submitted to the stockholders for their approval.
Competition
The Company generally competes with other REITs, real estate limited
partnerships and other investors, including but not limited to, insurance
companies, pension funds and financial institutions, in the acquisition,
leasing, financing and disposition of investments in net-leased retail
properties.
Employees
Reference is made to Item 10. Directors and Executive Officers of the
Registrant for a listing of the Company's Executive Officers. The Company has
no other employees.
ITEM 2. PROPERTIES
As of December 31, 1996, the Company owned 195 Properties located in 31
states. Reference is made to the Schedule of Real Estate and Accumulated
Depreciation filed with this Report for a listing of the Properties and their
respective costs.
Description of Properties
Land. The Company's Property sites range from approximately 12,000 to
583,000 square feet depending upon building size and local demographic factors.
Sites purchased by the Company are in locations zoned for
2
commercial use which have been reviewed for traffic patterns and volume.
Land costs range from approximately $36,500 to $4,600,000.
Buildings. The buildings generally are rectangular and are constructed
from various combinations of stucco, steel, wood, brick and tile. Building
sizes range from approximately 1,000 to 60,000 square feet. Building costs
range from approximately $195,000 to $6,062,000 for each Property, depending
upon the size of the building and the site and the area in which the Property is
located. Generally, the Properties owned by the Company are freestanding, with
paved parking areas.
Leases. Although there are variations in the specific terms of the
leases, the following is a summarized description of the general structure of
the Company's leases. Generally, the leases of the Properties owned by the
Company provide for initial terms of 15 to 20 years. As of December 31, 1996,
the average remaining lease term was approximately 14 years. All of the
Properties are leased under net leases pursuant to which the tenant typically
will bear responsibility for substantially all property costs and expenses
associated with ongoing maintenance and operation, including utilities, property
taxes and insurance. In addition, the majority of the Company's leases provide
that the tenant is responsible for roof and structural repairs. The leases of
the Properties provide for annual base rental payments (payable in monthly
installments) ranging from $21,000 to $910,000. Generally, the leases provide
for either percentage rent or contractual increases in annual rent. Leases
which provide for contractual increases in annual rent generally have increases
which range from six to 12 percent after every five years of the lease term. In
addition, for those leases which provide for the payment of percentage rent,
such rent is generally one to eight percent of the tenants' annual gross sales,
less the amount of annual base rent payable in that lease year. As of December
31, 1996, leases representing approximately 74 percent of annual base rent
include contractual increases, leases representing approximately 33 percent of
annual base rent include percentage rent provisions and leases representing
approximately 19 percent of annual base rent include both contractual and
percentage rent provisions.
Generally, the leases of the Properties provide for two, three or four
five-year renewal options subject to the same terms and conditions as the
initial lease. Some of the leases also provide that, in the event the Company
wishes to sell the Property subject to that lease, the Company 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 Company has received for the sale
of the Property.
The Company is not aware of any environmental liability with respect to
any of its Properties that it believes would have a material adverse effect on
the Company's assets or financial condition.
The Company's principal executive offices are located at 400 E. South
Street, Suite 500, Orlando, Florida 32801, where it occupies office space
provided to it free of charge by CNL Realty Advisors, Inc., the Company's
advisor.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in a law suit filed on December 20, 1994, in
the Circuit Court, Knox County, Tennessee, and in the Circuit Court, Greene
County, Tennessee, by the surviving spouse of a patron of the Company's Property
in Tusculum, Tennessee. The plaintiff is alleging that the Company was
negligent in the design and control of the parking lot on the Company's Property
and is seeking damages of $2,500,000. Management intends to vigorously contest
these claims and to seek full indemnification from the tenant. Management
believes that, if the Company were to be held liable for any damages, such
damages would be covered by insurance.
The Company is not a party to any other pending legal proceedings which,
in the opinion of the Company and its general counsel, is likely to have a
material adverse effect upon the Company's business or financial condition.
3
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information responsive to this Item is contained in the section captioned
"Share Price and Dividend Data" on page 21 of the Registrant's Annual Report to
Shareholders for the year ended December 31, 1996; the information in such
section is filed as an exhibit to this report and the cited portion of which is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information responsive to this Item is contained in the section captioned
"Historical Financial Highlights" on page one of the Registrant's Annual Report
to Shareholders for the year ended December 31, 1996; the information in such
section is filed as an exhibit to this report and the cited portion of which is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information responsive to this Item is contained in the section captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages six through nine of the Registrant's Annual Report to
Shareholders for the year ended December 31, 1996; the information in such
section is filed as an exhibit to this report and the cited portion of which is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Certain information responsive to this Item is contained in the section
captioned "Condensed Quarterly Financial Data" on page 21 of the Registrant's
Annual Report to Shareholders for the year ended December 31, 1996; the
information in such section is filed as an exhibit to this report and the cited
portion of which is incorporated herein by reference. The financial statements
of the Registrant, together with the report thereon of KPMG Peat Marwick LLP,
appearing in the Annual Report to Shareholders for the year ended December 31,
1996, are incorporated herein by reference.
ITEM 9. DISAGREEMENTS OF ACCOUNTING AND FINANCIAL DISCLOSURE
None.
4
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers and directors of the Registrant:
NAME AGE POSITION WITH THE COMPANY
---- --- ------------------------------------
James M. Seneff, Jr.* 50 Chairman of the Board and Chief
Executive Officer
Robert A. Bourne* 50 Vice Chairman, Secretary and
Treasurer and Director
Gary M. Ralston* 45 President and Chief Operating
Officer
Kevin B. Habicht* 38 Executive Vice President, Chief
Financial Officer and
Assistant Secretary
Edward Clark 77 Director
Willoughby T. Cox, Jr. 70 Director
Clifford R. Hinkle 48 Director
Ted B. Lanier 62 Director
* Affiliated with the CNL Realty Advisors, Inc.
James M. Seneff, Jr. Mr. Seneff has been Chief Executive Officer of the
Company since July 1992 and Chairman of the Board of the Company since June
1992, as well as Chief Executive Officer and Chairman of the Board of the
Advisor since its inception in 1991. Mr. Seneff has served as Chief Executive
Officer, director, and a principal stockholder of CNL Group since its formation
in 1973. From 1986 to 1994, Mr. Seneff served on the Florida Investment
Advisory Council, which oversees the $40 billion Florida state retirement plan,
and was Chairman of the Council from 1991 to 1992. Since 1971, Mr. Seneff has
been active in the acquisition, development and management of real estate
projects throughout the United States. Mr. Seneff is the brother-in-law of
Kevin B. Habicht, Chief Financial Officer of the Company.
Robert A. Bourne. Mr. Bourne has served as Vice Chairman of the Board,
Secretary and Treasurer of the Company and CNL Realty Advisors, Inc. (the
"Advisor") since February 1996. Additionally, he has served as a director of
the Company since June 1992 and a Director of the Advisor since its inception in
1991. Previously, he served as President of the Company from July 1992 until
February 1996 and as President of the Advisor from 1991 until February 1996.
The Advisor is responsible for the day-to-day operation of the Company and
performs certain other administrative services for the Company. See "Certain
Transactions." Mr. Bourne also serves as President of CNL Group, Inc. In
addition, Mr. Bourne is President, a director and a registered principal of CNL
Securities Corp., President and a director of CNL Investment Company, President
of CNL Realty Corp. and President and a director of CNL Institutional Advisors,
Inc., a registered investment advisor. All of such entities are affiliates of
CNL Group, Inc., a privately held, diversified real estate company of which the
Advisor is a wholly owned subsidiary ("CNL Group"). Since joining CNL Group in
1979, Mr. Bourne has been active in the acquisition, development and management
of real estate projects throughout the United States. Mr. Bourne formerly was a
Certified Public Accountant with Coopers & Lybrand.
5
Gary M. Ralston. Mr. Ralston has served as President of the Company and
the Advisor since February 1996. From December 1993 until February 1996 he
served as Executive Vice President and Chief Operating Officer of the Company
and the Advisor. Mr. Ralston previously served as Vice President of the Company
from July 1992 through December 1993 and as Vice President of the Advisor from
its inception in 1991 through December 1993. From 1988 to 1992, he also served
as a Senior Vice President of CNL Properties, Inc., a real estate investment and
asset/property management company affiliated with CNL Group. From 1983 until
1988, Mr. Ralston was Vice President of ENCO, a real estate investment and
asset/property management firm located in Lakeland, Florida. Mr. Ralston holds
the Certified Commercial Investment Member and Society of Industrial and Office
Realtors designations and is also a Florida licensed Real Estate Broker,
Mortgage Broker and Certified Building Contractor. Mr. Ralston is a member of
the Board of Directors of the National Association of Realtors, Vice Chairman of
its Commercial Investment Committee and a member of the Capital Consortium.
Kevin B. Habicht. Mr. Habicht has been Executive Vice President, Chief
Financial Officer and Assistant Secretary of the Company and the Advisor since
December 1993. Mr. Habicht previously served as Vice President of the Company
from July 1992 through December 1993 and as Vice President of the Advisor from
its inception in 1991 through December 1993. Since 1990, Mr. Habicht has served
as a Senior Vice President of CNL Institutional Advisors, Inc. and for the last
five years he also has served as Treasurer of CNL Investment Company, Senior
Vice President of CNL Management Company and Treasurer of CNL Securities Corp.
From 1981 to 1983, Mr. Habicht, a Certified Public Accountant and a Chartered
Financial Analyst, was employed by Coopers & Lybrand, Certified Public
Accountants. Mr. Habicht is the brother-in-law of James M. Seneff, Jr., Chief
Executive Officer and Chairman of the Board of the Company.
Edward Clark. Mr. Clark served as President of the Company from 1984
until July 1992. He has been a consultant to Golden Corral Corporation and to
its parent corporation, Investors Management Corporation, a privately held
corporation, on tax and financial matters since 1982. From 1966 to 1980, Mr.
Clark, a certified public accountant, was a partner in the public accounting
firm of Peat Marwick Mitchell & Co.
Willoughby T. Cox, Jr. Mr. Cox currently is a private real estate
investor. From 1960 to 1985, Mr. Cox was a Mortgage Loan Correspondent for the
State of Florida for Connecticut Mutual Life Insurance Company. From 1978
through 1981, Mr. Cox also was employed as a Florida Agriculture Mortgage Loan
Correspondent for Aetna Life and Casualty Insurance Company. He currently
serves as the agricultural Loan Correspondent for the State of Florida for
Batterymach-AgriVest, the successor to the Agricultural Loan Department of
Connecticut Mutual Life Insurance Company. Mr. Cox is a former director of
Orange State Bank, Landmark Bank of Orlando and Atico Savings Bank and a former
Vice Chairman of Pan American Bank of Orlando. Mr. Cox has been involved in
real estate related activities in Florida since 1950, including real estate
brokerage, management, mortgage lending, appraisal and construction.
Clifford R. Hinkle. Mr. Hinkle has served as a director of the Company
since 1993. Since 1991, Mr. Hinkle has been a director and executive officer of
the Flagler companies, including Flagler Capital Corporation, which provides
financial advisory and investment consulting services, where he has been the
President since 1991, and Flagler Holdings, Inc., a merchant banking company,
where he has been the Chairman and Chief Executive Officer since 1996.
Additionally, Mr. Hinkle was a director of MHI Group, Inc., a New York Stock
Exchange company, which owned and operated funeral homes and cemeteries from
November 1993 until November 1995, and was the Chief Executive Officer of MHI
Group, Inc. from April 1995 until November 1995 when it was acquired by a
subsidiary of The Loewen Group. Since 1996, Mr. Hinkle has been a director of
Integrated Orthopaedics, Inc., an American Stock Exchange company, which owns
and operates orthopaedic physician management practices. From 1987 to 1991, Mr.
Hinkle was the Executive Director and Chief Investment Officer of the State
Board of Administration of Florida and managed over $40 billion in various trust
funds.
Ted B. Lanier. Mr. Lanier was the Chief Executive Officer of the Triangle
Bank and Trust Company, Raleigh, North Carolina ("Triangle"), from January 1988
until March 1991. Mr. Lanier also was the Chairman of Triangle from January
1989 until March 1991 and its President from January 1988 until January 1989.
Since his retirement in 1991 as Chairman and Chief Executive Officer of
Triangle, Mr. Lanier has managed his personal investments and managed investment
accounts for various individuals and trusts.
6
COMPENSATION OF DIRECTORS
During the year ended December 31, 1996, each director who was a director
for the entire year was paid $12,000 for serving on the Board of Directors.
Each director received $1,000 per quarterly Board of Directors meeting attended
and $750 per committee meeting attended. Since May 1993, however, Messrs.
Seneff and Bourne have waived their directors' fees. The Board of Directors
believes this compensation level is comparable to that provided by many other
companies in the real estate investment trust ("REIT") industry.
The Board of Directors met 12 times during the year ended December 31,
1996 and the average attendance by directors at Board meetings was approximately
95%. Each current member attended at least 83% of the total meetings of the
Board of Directors and of any committee on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee, the members of which are
selected by the full Board of Directors each year. The current members of the
Audit Committee, who have served since June 1992, are Messrs. Clark, Cox and
Lanier. The Audit Committee makes recommendations to the Board of Directors as
to the independent accountants of the Company and reviews with such accounting
firm the scope of the audit and the results of the audit upon its completion.
The Audit Committee met once during the year ended December 31, 1996.
The Company has a standing Compensation Committee, the members of which
are selected by the full Board of Directors each year. The current members of
the Compensation Committee are Messrs. Clark, Hinkle and Lanier. The principal
function of the Compensation Committee is to make awards of stock options under
the 1992 Commercial Net Lease Realty, Inc. Stock Option Plan (the "1992 Plan")
and to set the terms of such stock options in accordance with the terms of the
1992 Plan. The Compensation Committee met twice during the year ended December
31, 1996.
The Company does not have a nominating committee.
ITEM 11. EXECUTIVE COMPENSATION
ANNUAL COMPENSATION
The following Summary Compensation Table shows the annual and long-term
compensation paid by the Company to the Chief Executive Officer for services
rendered in all capacities to the Company during the fiscal years ended December
31, 1996, 1995, and 1994. No executive officer of the Company received a total
annual salary bonus in excess of $100,000 from the Company during the fiscal
year ended December 31, 1996. The Company's employees and executive officers
also are employees and executive officers of the Advisor and receive
compensation from CNL Group in part for services in such capacities. See
"Certain Transactions" for a description of the fees payable and expenses
reimbursed to the Advisor.
<TABLE>
SUMMARY COMPENSATION TABLE
---------------------------
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
------------------- -----------------------
<CAPTION>
Name and Stock Option
Principle Position Year Salary Bonus Awards(Shares)
- ------------------ ---- ------ ----- --------------
<S> <C> <C> <C> <C>
James M. Seneff, Jr. 1996 $0 $0 120,000
Chief Executive Officer 1995 $0 $0 -0-
& Chairman of the Board 1994 $0 $0 145,500
</TABLE>
7
- ------------------------
(1) Mr. Seneff became the Chief Executive Officer of the Company in July
1992. No executive officer received a salary or bonus from the Company during
1996.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
option grants, pursuant to the 1992 Plan, made to the Chief Executive Officer
during the fiscal year ended December 31, 1996:
<TABLE>
Options % of Total Exercise Price Expiration Grant Date
Name Granted (1) Granted in 1996 (Per Share) Date Present Value (2)
- ---- ------- ---------------- --------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
James M. Seneff, Jr. 120,000 31.65% $13.00 03/04/06 $165,573
</TABLE>
(1) Options vest in one-third increments on each of the first three
consecutive anniversaries of the date of grant and may be exercised, if at
all, only with respect to those options which have vested.
(2) Based on the Black-Scholes options pricing model adapted for use in
valuing stock options granted to executives. The following assumptions
were used in determining the values set forth in the table: (a) expected
volatilities of 13.0%, (b) risk-free rates of return of 6.17% (which
percentage represents the yield on a United States Government Zero Coupon
bond with a 10-year maturity prevailing on the date on which the
respective options were granted), (c) dividend yields of 8.6%, and (d) the
exercise of the options at the end of their respective 10-year term. No
adjustments were made for nontransferability or risk of forfeiture of the
options. The calculations were made using prices per share of the Common
Stock and option exercise prices of $13.00 (which represented the closing
sale price of the Common Stock on the New York Stock Exchange on the date
prior to the date on which the options were granted). The estimated
present values in the table are not intended to provide, nor should they
be interpreted as providing, any indication or assurance concerning future
values of the Common Stock.
OPTIONS EXERCISED AND FISCAL YEAR-END VALUES
The following table sets forth certain information with respect to
unexercised stock options held by the Chief Executive Officer at December 31,
1996. The Chief Executive Officer did not exercise any stock options during the
fiscal year ended December 31, 1996.
Number of Unexercised Value of Unexercised
Options at December 31, 1996 In-the-Money Options
---------------------------- -------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- ------------
James M. Seneff 159,000 128,000 $415,000 342,625
- ------------------
(1) Based on the closing price of $15.875 on the New York Stock Exchange on
December 31, 1996.
The Company's only employee compensation plan is the 1992 Plan. The
Company does not have any other compensation or pension plans.
8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 14, 1997, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's Common
Stock, by each director and nominee, by each of the executive officers named in
"Executive Compensation," above, and by all officers and directors as a group,
based upon information furnished to the Company by such stockholders, officers
and directors. Unless otherwise noted below, the persons named in the table
have sole voting and sole investment power with respect to each of the shares
beneficially owned by such person.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Shares
- ------------------- ------------------- -----------
Robert A. Bourne (1)
400 East South Street,
Suite 500
Orlando, Florida 32801 422,096 (2)(3) 1.8 %
Edward Clark (4)
5204 Shamrock Drive
Raleigh, North Carolina
27612 5,877 (5) (6)
Willoughby T. Cox, Jr. (4)
200 Pasadena Place
Orlando, Florida 32802 4,942 (7) (6)
Kevin B. Habicht
400 East South Street,
Suite 500
Orlando, Florida 32801 61,667 (12) (6)
Clifford R. Hinkle (4)
215 S. Monroe Street,
Suite 500
Tallahassee, Florida
32301 20,592 (8) (6)
Ted B. Lanier (4)
1818 Windmill Drive
Sanford, North Carolina
27330 13,442 (9) (6)
Gary M. Ralston
400 East South Street,
Suite 500
Orlando, Florida 32801 82,333 (11) (6)
James M. Seneff, Jr. (1)
400 East South Street,
Suite 500
Orlando, Florida 32801 509,368 (2)(10) 2.2%
Public Employees Retirement
System of Ohio
277 East Town Street
Columbus, Ohio 43215 1,643,000 7.0%
All directors and executive
officers as
a group (8 persons) 809,618
(2) (3) (5) (7) (8) (9) (10) (11)(12) 3.5%
9
- -----------------------
(1) A director and executive officer of the Company.
(2) Of these shares, 310,699 shares are held by six limited partnerships, of
which Messrs. Bourne and Seneff are general partners. In addition, 35,473
of these shares are held by a trust of which Mr. Seneff serves as trustee
Messrs. Bourne and Seneff disclaim beneficial ownership of these shares,
except to the extent of their respective percentage interests in each of
these entities. A director and executive officer of the Company.
(3) Includes 1,730 shares held by Mr. Bourne as custodian for his minor
children and 109,667 shares subject to currently exercisable options.
(4) A director of the Company.
(5) Includes 635 shares held by Mr. Clark's spouse and 4,942 shares subject to
currently exercisable options.
(6) Less than 1 percent.
(7) Includes 4,942 shares subject to currently exercisable options.
(8) Includes 800 vested shares held by Flagler Capital Corporation Profit
Sharing Plan on behalf of Mr. Hinkle, who is the sole participant, 4,942
shares subject to currently exercisable options, 250 shares held by Mr.
Hinkle as custodian for his son under the Uniform Gift to Minors Act,
1,000 shares held by Mr. Hinkle's spouse, and 10,000 shares owned by
Flagler Holdings, Inc., in which Mr. Hinkle has a 26 percent interest and
dispository and voting authority.
(9) Includes 5,000 shares held by Mr. Lanier's spouse, and 4,942 shares
subject to currently exercisable options.
(10) Includes 159,000 shares subject to currently exercisable options.
(11) Includes 77,333 shares subject to currently exercisable options.
(12) Includes 61,667 shares subject to currently exercisable options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for the last fiscal year, the Company believes
that all its officers, directors, and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during fiscal 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Administration of the day-to-day operations of the Company is provided by
the Advisor, a subsidiary of CNL Group, of which Messrs. Seneff and Bourne are
affiliates, pursuant to the terms of the Advisory Agreement. All of the
officers of the Advisor also are officers of the Company. The Advisor also
serves as the Company's consultant in connection with policy decisions to be
made by the Company's Board of Directors, manages the Company's properties and
renders such other services as the Board of Directors deems appropriate. The
Advisor
10
also bears the expense of providing the executive and administrative
personnel, office space and services required in rendering such services to the
Company. The Advisor is at all times subject to the supervision of the Board of
Directors of the Company and has only such functions and authority as the
Company may delegate to it as the Company's agent.
The Advisory Agreement provides that the Advisor is entitled to receive an
annual Advisor Fee, paid monthly, equal to seven percent (7%) of Funds From
Operations (as defined in the Advisory Agreement) up to $10,000,000, six percent
(6%) of Funds From Operations in excess of $10,000,000 but less than
$20,000,000, and five percent (5%) of Funds From Operations in excess of
$20,000,000. In addition, the Advisory Agreement provides that, to the extent
that the Board of Directors requests that the Advisor render services other than
those otherwise required to be performed, such additional services shall be
compensated separately on terms to be agreed upon.
The aggregate Advisor Fee incurred by the Company to the Advisor during
the year ended December 31, 1996 was $1,466,000.
The Company's Board of Directors (including a majority of its independent
directors) approved the payment to the Advisor of an acquisition fee equal to
1.5 percent of the cost of 27 properties and nine buildings acquired by the
Company in 1996 that were not developed by or purchased from affiliates of CNL
Group and an expense reimbursement equal to 0.5 percent of such costs to cover
costs incurred on behalf of the Company in site selection and acquisition
activities (including travel and related items) of the Advisor. During 1996,
the Company incurred $1,709,000 in acquisition fees and $569,000 in expense
reimbursements payable to the Advisor with respect to these properties.
The term of the Advisory Agreement expired January 1, 1997, subject to
successive one-year renewals upon mutual consent of the parties. The Company
has renewed the Advisory Agreement for 1997 by a unanimous vote of directors.
The Advisory Agreement may be terminated for cause by either party thereto, or
by the mutual consent of the parties (by a majority of the independent directors
of the Company or a majority of the Board of Directors of the Advisor, as the
case may be), upon 90 days written notice.
During 1996, the Company acquired thirteen properties for purchase prices
totaling $34,313,000 from affiliates of CNL Group who had developed the
properties. The purchase prices paid by the Company for these properties
include development fees totaling $1,453,000. No acquisition fees or expense
reimbursement fees were paid to the Advisor in connection with acquisition of
these properties.
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
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Earnings for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994
11
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
Report of Independent Auditors' on Supplementary Information
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1996
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1996
All other schedules are omitted because they are not
applicable or because the required information is shown in the
financial statements or the notes thereto.
3. Exhibits
3.1 Articles of Incorporation of the Registrant (filed as Exhibit
3.3(i) to the Registrant's Registration Statement No. 1-11290
on Form 8-B, and incorporated herein by reference).
3.2 Bylaws of the Registrant, (filed as Exhibit 3(ii) to Amendment
No. 2 to the Registrant's Registration No. 33-83110 on Form S-
3, and incorporated herein by reference).
3.3 Articles of Amendment to the Articles of Incorporation of the
Registrant (filed as Exhibit 3.3 to the Registrant's Form 10-Q
for the quarter ended June 30, 1996, and incorporated herein
by reference).
4 Specimen Certificate of Common Stock, par value $.01 per
share, of the Registrant (filed as Exhibit 3.4 to the
Registrant's Registration Statement No. 1-11290 on Form 8-B
and incorporated herein by reference).
10.1 Letter Agreement dated July 10, 1992, amending Stock Purchase
Agreement dated January 23, 1992 (filed as Exhibit 10.34 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, and incorporated herein by reference).
10.2 Advisory Agreement between Registrant and CNL Realty Advisors,
Inc. effective as of April 1, 1993 and renewed January 1, 1997
(filed as Exhibit 10.04 to Amendment No. 1 to the Registrant's
Registration Statement No. 33-61214 on Form S-2, and
incorporated herein by reference).
10.3 1992 Commercial Net Lease Realty, Inc. Stock Option Plan
(filed as Exhibit No. 10(x) to the Registrant's Registration
Statement No. 33-83110 on Form S-3, and incorporated herein by
reference).
10.4 Interest Rate Cap Agreement dated December 23, 1994, by and
between the Registrant and First Union National Bank of
Florida (filed as Exhibit 10.12 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994, and
incorporated by reference).
10.5 Second Amended and Restated Line of Credit and Security
Agreement, dated December 7, 1995, among Registrant, certain
lenders listed therein and First Union National Bank of
Florida, as the Agent, relating to a $100,000,000 loan (filed
as Exhibit 10.14 to the Registrant's Current Report on Form 8-
K dated January 18, 1996, and incorporated herein by
reference).
10.6 Secured Promissory Note, dated December 14, 1995, among
Registrant and Principal Mutual Life Insurance Company
relating to a $13,150,000 loan (filed as Exhibit 10.15 to the
Registrant's Current Report on Form 8-K dated January 18,
1996, and incorporated herein by reference).
12
10.7 Mortgage and Security Agreement, dated December 14, 1995,
among Registrant and Principal Mutual Life Insurance Company
relating to a $13,150,000 loan (filed as Exhibit 10.16 to the
Registrant's Current Report on Form 8-K dated January 18,
1996, and incorporated herein by reference).
10.8 Loan Agreement, dated January 19, 1996, among Registrant and
Principal Mutual Life Insurance Company relating to a
$39,450,000 loan (filed as Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1995, and incorporated herein by reference).
10.9 Secured Promissory Note, dated January 19, 1996, among
Registrant and Principal Mutual Life Insurance Company
relating to a $39,450,000 loan (filed as Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference).
10.10 Third Amended and Restated Line of Credit and Security
Agreement, dated September 3, 1996, by and among Registrant,
certain lenders and First Union National Bank of Florida, as
the Agent, relating to a $150,000,000 loan (filed as Exhibit
10.11 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, and incorporated herein
by reference).
10.11 Second Renewal and Modification Promissory Note, dated
September 3, 1996, by and among Registrant and First Union
National Bank of Florida, as the Agent, relating to
$150,000,000 loan (filed as Exhibit 10.12 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1996, and incorporated herein by reference).
13 Annual Report to Shareholders for the year ended December 31,
1996 (previously filed).
23 Consent of Independent Accountants dated March 19, 1997
(previously filed).
(b) The Registrant filed no reports on Form 8-K during the period from October
1, 1996 through December 31, 1996.
13
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 30th day of
April, 1997.
COMMERCIAL NET LEASE REALTY, INC.
BY: /s/ Robert A. Bourne
-----------------------------
ROBERT A. BOURNE
Vice Chairman of the
Board of Directors
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 Vice Chairman of the April 30, 1997
- -------------------- Board of Directors,
Robert A. Bourne Secretary and Treasurer.
Report of Independent Auditors' on Supplementary Information
-------------------------------------------------------------
The Board of Directors
Commercial Net Lease Realty, Inc.:
Under date of January 20, 1997, except for Note 12 for which the date is
February 13, 1997, we reported on the consolidated balance sheets of
Commercial Net Lease Realty, Inc. as of December 31, 1996 and 1995, and the
related consolidated statements of earnings, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996,
as contained in Item 14(a)1 of Form 10-K and in the 1996 annual report to
stockholders. These consolidated financial statements and our report thereon
are both included in Item 14(a)1 of Form 10-K and incorporated by reference in
the annual report on Form 10-K for the year 1996. In connection with our
audit of the aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedule at December 31, 1996.
This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
herein.
/s/ KPMG Peat Marwick LLP
Orlando, Florida
January 20, 1997, except for Note 12
for which the date is February 13, 1997
<TABLE>
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ ------------------
Buildings
Encum- and Improve- Carrying
brances(l) Land Improvements ments Costs
-------------- ----------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
Properties the Company has
Invested in Under Operating
Leases:
Academy:
Houston, Texas $ - $ 1,074,232 $ - $ - $ -
Houston, Texas - 699,165 - - -
N. Richland Hills, Texas - 1,307,655 - - -
Houston, Texas - 3,086,610 - - -
Houston, Texas - 795,005 - - -
San Antonio, Texas - 931,478 - - -
Baton Rouge, Louisiana - 1,552,041 - - -
Baby Superstore:
Arlington, Texas - 830,689 2,611,867 - -
Barnes & Noble:
Lakeland, Florida - 1,070,902 1,516,983 - -
Brandon, Florida 1,629,182(k) 1,476,407 1,527,150 - -
Denver, Colorado - 3,244,785 2,722,087 - -
Houston, Texas - 3,307,562 2,396,024 - -
Plantation, Florida - 3,616,357 - - -
Cary, North Carolina - 2,778,458 2,650,008 - -
Lafayette, Louisiana - 1,204,279 2,301,983 - -
Oklahoma City, Oklahoma - 1,688,556 2,311,487 - -
Daytona, Florida - 2,587,451 2,052,643 - -
Freehold, New Jersey - 2,917,219 2,260,663 - -
Memphis, Tennessee - 1,785,157 - - -
Best Buy:
Corpus Christi, Texas 1,268,679(j) 818,448 896,395 12,222 -
Blockbuster Music:
Dallas, Texas - 346,548 1,963,773 39,243 -
Borders:
Wilmington, Delaware 4,932,406(k) 3,030,769 6,061,538 - -
Richmond, Virginia 2,591,377(k) 2,177,310 2,599,587 - -
Ft. Lauderdale, Florida - 3,164,984 3,934,577 - -
Bangor, Maine - 1,546,915 2,486,761 - -
Burger King:
Asheboro, North Carolina - 420,508 815,190 - -
Galliano, Louisiana - 249,001 1,130,506 - -
John's Island, S. Carolina - 385,517 698,309 - -
Lake Charles, Louisiana - 272,381 965,713 - -
Lancaster, Ohio - 220,846 582,815 - -
Natchez, Mississippi - 206,717 653,530 - -
Tappahannock, Virginia - 289,840 572,779 - -
Warren, Michigan - 298,817 785,031 - -
Manchester, New Hampshire - 619,037 428,757 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
----------- ------------- ------------ ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,074,232 (c) $ 1,074,232 $ - 1994 05/95 (c)
699,165 (c) 699,165 - 1995 06/95 (c)
1,307,655 (c) 1,307,655 - 1996 08/95(h) (c)
3,086,610 (c) 3,086,610 - 1996 02/96(h) (c)
795,005 (c) 795,005 - 1996 06/96(h) (c)
931,478 (c) 931,478 - 1996 06/96 (c)
1,552,041 (f) 1,552,041 - (f) 08/96 (f)
830,689 2,611,867 3,442,556 33,192 1996 06/96 40 years
1,070,902 1,516,983 2,587,885 74,808 1995 07/94(h) 40 years
1,476,407 1,527,150 3,003,557 75,520 1995 08/94(h) 40 years
3,244,785 2,722,087 5,966,872 153,229 1994 09/94 40 years
3,307,562 2,396,024 5,703,586 74,884 1995 10/94(h) 40 years
3,616,357 (c) 3,616,357 - 1996 05/95(h) (c)
2,778,458 2,650,008 5,428,466 61,798 1996 05/95(h) 40 years
1,204,279 2,301,983 3,506,262 40,285 1996 06/95(h) 40 years
1,688,556 2,311,487 4,000,043 56,234 1996 06/95(h) 40 years
2,587,451 2,052,643 4,640,094 47,867 1996 09/95(h) 40 years
2,917,219 2,260,663 5,177,882 52,121 1995 01/96 40 years
1,785,157 (f) 1,785,157 - (f) 09/96 (f)
818,448 908,617 1,727,065 70,254 1967 11/93 40 years
346,548 2,003,016 2,349,564 136,345 1985 04/94 40 years
3,030,769 6,061,538 9,092,307 307,151 1994 12/94 40 years
2,177,310 2,599,587 4,776,897 101,456 1995 06/95 40 years
3,164,984 3,934,577 7,099,561 82,536 1995 02/96 40 years
1,546,915 2,486,761 4,033,676 32,811 1996 06/96 40 years
420,508 815,190 1,235,698 91,709 1986 07/92 40 years
249,001 1,130,506 1,379,507 127,182 1991 07/92 40 years
385,517 698,309 1,083,826 78,560 1988 07/92 40 years
272,381 965,713 1,238,094 108,643 1988 07/92 40 years
220,846 582,815 803,661 65,567 1987 07/92 40 years
206,717 653,530 860,247 73,522 1986 07/92 40 years
289,840 572,779 862,619 64,438 1987 07/92 40 years
298,817 785,031 1,083,848 88,316 1987 07/92 40 years
619,037 428,757 1,047,794 38,515 1980 05/93 40 years
F-1
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
------------ ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Rochester, New Hampshire - 216,652 779,450 - -
St. Paul, Minnesota - 225,297 542,847 - -
Columbus, Ohio - 357,114 407,093 - -
Opelousas, Louisiana - 460,374 824,510 - -
Coon Rapids, Minnesota - 322,658 544,936 - -
Checkers:
Orlando, Florida - 256,568 - - -
CompUSA:
Mission Viejo, California - 2,706,352 1,368,966 - -
Computer City:
Miami, Florida 2,484,493(k) 2,713,192 1,866,676 - -
Baton Rouge, Louisiana - 609,069 913,603 - -
Anchorage, Alaska - 928,321 1,662,584 - -
Richmond, Virginia - 888,772 1,948,036 - -
Hartsdale, New York - 4,599,134 2,497,199 - -
Denny's:
Greenville, South Carolina - 344,817 400,895 - -
Landrum, South Carolina - 155,429 - - -
Mooresville, North Carolina - 307,299 - - -
Greensboro, North Carolina - 265,915 493,407 - -
Houston, Texas - 289,036 572,985 - -
Santee, South Carolina - 244,284 312,045 - -
Duncan, South Carolina - 219,703 - - -
Topeka, Kansas - 414,686 - - -
Winter Springs, Florida - 555,232 - - -
Dick's Clothing:
Taylor, Michigan - 1,920,032 3,526,868 - -
White Marsh, Maryland - 2,680,532 3,916,889 - -
Eckerd:
San Antonio, Texas 664,517(k) 440,985 - - -
Dallas, Texas 640,224(k) 541,493 - - -
Garland, Texas 515,167(k) 239,014 - - -
Arlington, Texas 545,212(k) 368,964 - - -
Millville, New Jersey 676,227(k) 417,603 - - -
Atlanta, Georgia 604,315(k) 445,593 - - -
Mantua, New Jersey 703,012(k) 344,022 - - -
Amarillo, Texas 813,010(k) 650,864 - - -
Amarillo, Texas 625,555(k) 329,231 - - -
Glassboro, New Jersey 771,267(k) 534,243 - - -
Kissimmee, Florida 898,488(k) 715,480 - - -
Colleyville, Texas 993,034(k) 756,472 - - -
Tampa, Florida - 604,682 - - -
Lafayette, Louisiana - 967,528 - - -
Moore, Oklahoma - 414,738 - - -
Douglasville, Georgia - 413,439 995,209 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------- ------------ ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
216,652 779,450 996,102 70,017 1987 05/93 40 years
225,297 542,847 768,144 47,536 1986 06/93 40 years
357,114 407,093 764,207 35,649 1982 06/93 40 years
460,374 824,510 1,284,884 72,201 1989 06/93 40 years
322,658 544,936 867,594 47,719 1990 06/93 40 years
256,568 (c) 256,568 - 1988 07/92 (c)
2,706,352 1,368,966 4,075,318 54,186 1994 02/94(h) 40 years
2,713,192 1,866,676 4,579,868 126,129 1994 04/94 40 years
609,069 913,603 1,522,672 22,901 1995 12/95 40 years
928,321 1,662,584 2,590,905 34,876 1995 02/96 40 years
888,772 1,948,036 2,836,808 28,671 1996 05/96 40 years
4,599,134 2,497,199 7,096,333 19,467 1996 08/96 40 years
344,817 400,895 745,712 36,012 1985 05/93 40 years
155,429 (c) 155,429 - 1992 05/93 (c)
307,299 (c) 307,299 - 1992 05/93 (c)
265,915 493,407 759,322 44,322 1992 05/93 40 years
289,036 572,985 862,021 51,471 1985 05/93 40 years
244,284 312,045 556,329 28,031 1992 05/93 40 years
219,703 (c) 219,703 - 1992 05/93 (c)
414,686 (c) 414,686 - 1989 06/93 (c)
555,232 (c) 555,232 - 1994 01/94 (c)
1,920,032 3,526,868 5,446,900 26,072 1996 08/96 40 years
2,680,532 3,916,889 6,597,421 28,956 1996 08/96 40 years
440,985 (c) 440,985 - 1993 12/93 (c)
541,493 (c) 541,493 - 1994 01/94 (c)
239,014 (c) 239,014 - 1994 02/94 (c)
368,964 (c) 368,964 - 1994 02/94 (c)
417,603 (c) 417,603 - 1994 03/94 (c)
445,593 (c) 445,593 - 1994 03/94 (c)
344,022 (c) 344,022 - 1994 06/94 (c)
650,864 (c) 650,864 - 1994 12/94 (c)
329,231 (c) 329,231 - 1994 12/94 (c)
534,243 (c) 534,243 - 1994 12/94 (c)
715,480 (c) 715,480 - 1995 04/95 (c)
756,472 (c) 756,472 - 1995 06/95 (c)
604,682 (c) 604,682 - 1995 12/95 (c)
967,528 (c) 967,528 - 1995 01/96 (c)
414,738 (c) 414,738 - 1995 01/96 (c)
413,439 995,209 1,408,648 22,945 1996 01/96 40 years
F-2
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
------------ ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Midwest City, Oklahoma - 1,080,637 1,103,351 - -
Tallahassee, Florida - 691,523 - - -
Irving, Texas - 1,000,222 - - -
Snellville, Georgia - 486,272 1,320,087 - -
Food 4 Less:
Lemon Grove, California - 3,695,816 - - -
Golden Corral Family
Steakhouse:
Foley, Alabama - 101,286 283,991 - -
Edenton, North Carolina - 36,578 318,481 - -
Woodstock, Georgia - 200,680 328,450 - -
Bonham, Texas - 128,451 344,170 - -
Center, Texas (e) - 103,187 308,859 - -
Gilmer, Texas (e) - 116,815 296,454 - -
Leitchfield, Kentucky (e) - 73,660 306,642 - -
Marietta, Georgia (g) - 156,190 346,509 - -
Rockledge, Florida - 120,593 340,889 - -
Silsbee, Texas (e) - 132,802 302,052 - -
Atlanta, Texas (e) - 88,457 368,317 - -
Vernon, Texas (e) - 105,798 328,943 - -
Abbeville, Louisiana (e) - 98,577 362,416 - -
Fredericksburg, Texas - 169,984 321,189 - -
Bowie, Texas (e) - 57,824 311,544 - -
Clanton, Alabama (e) - 113,017 296,921 - -
Jacksonville, Texas - 115,276 318,196 - -
Lake Placid, Florida (e) - 115,113 305,074 - -
Pleasanton, Texas (e) - 139,694 316,070 - -
Ennis, Texas - 153,701 366,639 - -
Franklin, Louisiana (e) - 105,840 396,831 - -
Melbourne, Florida (e) - 193,447 341,351 - -
Franklin, Virginia - 100,808 424,164 - -
Minden, Louisiana (e) - 86,120 402,364 - -
Durant, Oklahoma - 140,862 411,135 - -
Good Guys:
Foothill Ranch, California - 1,456,113 2,505,022 - -
Hardee's:
Chalkville, Alabama - 170,834 457,167 - -
Gulf Shores, Alabama - 348,281 595,164 - -
Mobile, Alabama - 336,696 - - -
Warrior, Alabama - 177,659 - - -
Horn Lake, Mississippi - 302,787 - - -
Petal, Mississippi - 277,104 415,193 - -
West Point, Mississippi - 173,386 - - -
Rock Hill, South Carolina - 216,777 466,450 - -
Columbia, Tennessee - 226,300 - - -
Johnson City, Tennessee - 215,567 - - -
Tusculum, Tennessee - 182,349 507,293 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------ ---------- ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
1,080,637 1,103,351 2,183,988 22,764 1996 03/96 40 years
691,523 (c) 691,523 - 1996 06/96 (c)
1,000,222 (c) 1,000,222 - 1996 12/96 (c)
486,272 1,320,087 1,806,359 177 1996 12/96 40 years
3,695,816 (c) 3,695,816 - 1996 07/95(h) (c)
101,286 283,991 385,277 105,105 1984 10/84 35 years
36,578 318,481 355,059 115,975 1984 11/84 35 years
200,680 328,450 529,130 119,556 1984 11/84 35 years
128,451 344,170 472,621 124,245 1984 12/84 35 years
103,187 308,859 412,046 111,509 1984 12/84 35 years
116,815 296,454 413,269 107,030 1984 12/84 35 years
73,660 306,642 380,302 110,699 1984 12/84 35 years
156,190 346,509 502,699 125,091 1984 12/84 35 years
120,593 340,889 461,482 123,060 1984 12/84 35 years
132,802 302,052 434,854 109,056 1984 12/84 35 years
88,457 368,317 456,774 132,594 1985 01/85 35 years
105,798 328,943 434,741 115,130 1985 03/85 35 years
98,577 362,416 460,993 126,846 1985 04/85 35 years
169,984 321,189 491,173 112,416 1985 04/85 35 years
57,824 311,544 369,368 109,040 1985 05/85 35 years
113,017 296,921 409,938 103,922 1985 05/85 35 years
115,276 318,196 433,472 111,368 1985 05/85 35 years
115,113 305,074 420,187 106,776 1985 05/85 35 years
139,694 316,070 455,764 110,625 1985 05/85 35 years
153,701 366,639 520,340 124,657 1985 07/85 35 years
105,840 396,831 502,671 134,922 1985 07/85 35 years
193,447 341,351 534,798 116,059 1985 07/85 35 years
93,719 424,164 517,883 104,173 1987 02/87 40 years
86,120 402,364 488,484 78,794 1989 03/89 40 years
140,862 411,135 551,997 76,295 1989 08/89 40 years
1,456,113 2,505,022 3,961,135 337 1995 12/96 40 years
170,834 457,167 628,001 36,292 1992 10/93 40 years
348,281 595,164 943,445 47,246 1993 10/93 40 years
336,696 (c) 336,696 - 1993 10/93 (c)
177,659 (c) 177,659 - 1992 10/93 (c)
302,787 (c) 302,787 - 1993 10/93 (c)
277,104 415,193 692,297 32,959 1993 10/93 40 years
173,386 (c) 173,386 - 1993 10/93 (c)
216,777 466,450 683,227 37,028 1993 10/93 40 years
226,300 (c) 226,300 - 1993 10/93 (c)
215,567 (c) 215,567 - 1993 10/93 (c)
182,349 507,293 689,642 40,271 1993 10/93 40 years
F-3
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
------------ ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Hi-Lo Automotive:
Mesquite, Texas - 233,420 513,523 - -
Fort Worth, Texas - 197,037 512,296 - -
Houston, Texas - 261,318 531,968 - -
Arlington, Texas - 295,331 571,609 - -
Garland, Texas - 239,570 512,023 - -
Dallas, Texas - 281,347 543,937 - -
McAllen, Texas - 265,177 605,397 - -
Temple, Texas - 177,451 587,755 - -
San Antonio, Texas - 200,510 643,741 - -
Universal City, Texas - 247,264 570,677 - -
Bastrop, Texas - 197,905 383,144 - -
Lake Worth, Texas - 252,141 539,510 - -
Nacogdoches, Texas - 190,324 522,232 - -
Eagle Pass, Texas - 256,745 455,841 - -
International House of
Pancakes:
Stafford, Texas 517,481(k) 382,084 - - -
Sunset Hills, Missouri 546,928(k) 271,853 - - -
Las Vegas, Nevada 614,918(k) 519,947 - - -
Fort Worth, Texas 572,066(k) 430,896 - - -
Arlington, Texas 549,340(k) 404,512 - - -
Matthews, North Carolina 561,854(k) 380,043 - - -
Phoenix, Arizona 565,635(k) 483,374 - - -
Kash N Karry:
Brandon, Florida - 1,234,480 - - -
Linens 'n Things:
Freehold, New Jersey 2,931,484(j) 1,753,766 2,208,651 - -
Luria's:
South Miami, Florida - 1,379,229 - - -
Tampa, Florida - 2,127,503 1,521,730 - -
Coral Gables, Florida - 1,782,346 - - -
Marshalls:
Freehold, New Jersey 3,431,576(j) 2,052,946 2,585,432 - -
Office Depot:
Arlington, Texas 1,089,007(k) 596,024 1,411,432 - -
OfficeMax:
Corpus Christi, Texas 1,439,600(j) 893,270 978,344 76,664 -
Dallas, Texas 1,534,349(k) 1,118,500 1,709,891 - -
Cincinnati, Ohio 1,148,996(k) 543,489 1,574,551 - -
Evanston, Illinois 1,966,738(k) 1,867,831 1,757,618 - -
Altamonte Springs, Florida - 1,650,419 2,979,087 - -
Pompano Beach, Florida - 2,266,908 1,904,803 - -
Cutler Ridge, Florida - 989,370 1,479,119 - -
Sacramento, California - 1,129,077 2,922,150 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------- ----------- ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
233,420 513,523 746,943 28,299 1994 10/94 40 years
197,037 512,296 709,333 26,713 1993 11/94 40 years
261,318 531,968 793,286 27,744 1994 11/94 40 years
295,331 571,609 866,940 29,808 1993 11/94 40 years
239,570 512,023 751,593 26,698 1993 11/94 40 years
281,347 543,937 825,284 27,343 1994 12/94 40 years
265,177 605,397 870,574 19,087 1995 09/95 40 years
177,451 587,755 765,206 18,531 1989 09/95 40 years
200,510 643,741 844,251 20,296 1994 09/95 40 years
247,264 570,677 817,941 17,992 1995 09/95 40 years
197,905 383,144 581,049 12,080 1994 09/95 40 years
252,141 539,510 791,651 17,010 1995 09/95 40 years
190,324 522,232 712,556 16,465 1995 09/95 40 years
256,745 455,841 712,586 14,372 1994 09/95 40 years
382,084 (c) 382,084 - 1992 10/93 (c)
271,853 (c) 271,853 - 1993 10/93 (c)
519,947 (c) 519,947 - 1993 12/93 (c)
430,896 (c) 430,896 - 1993 12/93 (c)
404,512 (c) 404,512 - 1993 12/93 (c)
380,043 (c) 380,043 - 1993 12/93 (c)
483,374 (c) 483,374 - 1993 12/93 (c)
1,234,480 (f) 1,234,480 - (f) 10/96 (f)
1,753,766 2,208,651 3,962,417 129,283 1994 08/94 40 years
1,379,229 (c) 1,379,229 - 1988 06/96 (c)
2,127,503 1,521,730 3,649,233 19,339 1994 06/96 40 years
1,782,346 (c) 1,782,346 - 1994 06/96 (c)
2,052,946 2,585,432 4,638,378 151,338 1994 08/94 40 years
596,024 1,411,432 2,007,456 102,836 1991 01/94 40 years
893,270 1,055,008 1,948,278 81,889 1967 11/93 40 years
1,118,500 1,709,891 2,828,391 128,359 1993 12/93 40 years
543,489 1,574,551 2,118,040 97,735 1994 07/94 40 years
1,867,831 1,757,618 3,625,449 68,596 1995 06/95 40 years
1,650,419 2,979,087 4,629,506 68,685 1995 01/96 40 years
2,266,908 1,904,803 4,171,711 43,104 1972 02/96 40 years
989,370 1,479,119 2,468,489 18,797 1995 06/96 40 years
1,129,077 2,922,150 4,051,227 196 1996 12/96 40 years
F-4
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
------------ ---------- ------------ -------- -------
<S> <C> <C> <C> <C> <C>
Oshman's Sporting Goods:
Dallas, Texas - 1,311,440 - - -
Pier 1 Imports:
Dallas, Texas - 189,010 1,071,054 20,710 -
Memphis, Tennessee - 716,332 - - -
Pizza Hut:
Orlando, Florida - 220,632 258,483 - -
Rally's:
Toledo, Ohio - 125,882 319,770 - -
Scotty's:
Orlando, Florida - 1,044,796 2,011,952 - -
Orlando, Florida - 1,157,268 2,077,131 - -
Sears Homelife Centers:
Orlando, Florida 1,630,220(k) 820,397 2,184,721 - -
Clearwater, Florida 2,745,218(j) 1,184,438 2,526,207 10,555 -
Tampa, Florida 2,511,525 1,454,908 2,045,833 - -
Pensacola, Florida 1,885,394 633,125 1,595,405 - -
Raleigh, North Carolina 2,357,255 1,848,026 1,753,635 - -
Sports Authority:
Sarasota, Florida - 1,403,494 1,963,006 - -
Waccamaw:
Fairfax, Virginia - 2,156,801 - - -
Sarasota, Florida - 2,207,244 3,087,176 - -
Wendy's Old Fashioned
Hamburger:
Fenton, Missouri - 307,068 496,410 - -
Longwood, Florida - 333,335 194,926 - -
----------- ------------ ------------ -------- -------
$49,955,749 $138,527,151 $138,429,902 $159,394 $ -
=========== ============ ============ ======== =======
Properties the Company has
Invested in Under Direct
Financing Leases:
Academy:
Houston, Texas - $ - $ 1,924,740 $ - $ -
Houston, Texas - - 1,867,519 - -
N. Richland Hills, Texas - - 2,253,408 - -
Houston, Texas - - 2,112,335 - -
Houston, Texas - - 1,910,697 - -
San Antonio, Texas - - 1,963,109 - -
Barnes & Noble:
Plantation, Florida - - 3,498,559 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------ ---------- ------------- --------- -------- ------------
<C> <C> <S> <S> <S> <S> <S>
1,311,440 (c) 1,311,440 - 1994 03/94 (c)
189,010 1,091,764 1,280,774 74,324 1980 04/94 40 years
716,332 (f) 716,332 - (f) 09/96 (f)
220,632 258,483 479,115 42,194 1974 08/93 20.9 years
125,882 319,770 445,652 37,095 1989 07/92 38.8 years
1,044,796 2,011,952 3,056,748 78,296 1995 06/95 40 years
1,157,268 2,077,131 3,234,399 79,168 1995 06/95 40 years
820,397 2,184,721 3,005,118 196,400 1992 05/93 40 years
1,184,438 2,536,762 3,721,200 227,358 1992 05/93 40 years
1,454,908 2,045,833 3,500,741 26,141 1992 06/96 40 years
633,125 1,595,405 2,228,530 20,386 1994 06/96 40 years
1,848,026 1,753,635 3,601,661 22,408 1995 06/96 40 years
1,403,494 1,963,006 3,366,500 132 1988 12/96 40 years
2,156,801 (c) 2,156,801 - 1995 12/95 (c)
2,207,244 3,087,176 5,294,420 207 1988 12/96 40 years
307,068 496,410 803,478 67,778 1985 07/92 33 years
333,335 194,926 528,261 27,959 1982 07/92 31.4 years
- ------------ ------------ ------------ ----------
$138,520,062 $138,589,296 $277,109,358 $8,078,562
============ ============ ============ ==========
- (c) (c) (c) 1994 05/95 (c)
- (c) (c) (c) 1995 06/95 (c)
- (c) (c) (c) 1996 08/95(h) (c)
- (c) (c) (c) 1996 02/96(h) (c)
- (c) (c) (c) 1996 06/96(h) (c)
- (c) (c) (c) 1996 06/96 (c)
- (c) (c) (c) 1996 05/95(h)
F-5
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
------------ ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Checkers:
Orlando, Florida - - 286,910 - -
Denny's:
Landrum, South Carolina - - 374,684 - -
Mooresville,North Carolina - - 535,309 - -
Akron, Ohio - 137,424 733,450 - -
Duncan, South Carolina - - 628,571 - -
Topeka, Kansas - - 498,921 - -
Winter Springs, Florida - - 620,148 - -
Eckerd:
San Antonio, Texas - - 783,974 - -
Dallas, Texas - - 638,684 - -
Garland, Texas - - 710,634 - -
Arlington, Texas - - 636,070 - -
Millville, New Jersey - - 828,942 - -
Atlanta, Georgia - - 668,390 - -
Mantua, New Jersey - - 951,795 - -
Vineland, New Jersey 732,010(k) 286,231 1,063,142 - -
Amarillo, Texas - - 869,846 - -
Amarillo, Texas 531,326(k) 158,851 855,348 - -
Amarillo, Texas - - 849,071 - -
Glassboro, New Jersey - - 887,497 - -
Kissimmee, Florida - - 933,852 - -
Alice, Texas 539,133(k) 189,187 804,963 - -
Colleyville, Texas - - 1,076,066 - -
Tampa, Florida - - 1,090,532 - -
Lafayette, Louisiana - - 949,128 - -
Moore, Oklahoma - - 879,296 - -
Tallahassee, Florida - - 1,274,147 - -
East Point, Georgia - 336,610 1,173,529 - -
Irving, Texas - - 1,228,436 - -
Ft. Worth, Texas - 399,592 2,529,969 - -
Food 4 Less
Lemon Grove, California - - 4,068,179 - -
Food Lion:
Keystone Heights, Florida 1,049,480(k) 88,604 1,845,988 - -
Chattanooga, Tennessee 1,105,338(k) 336,488 1,701,072 - -
Lynchburg, Virginia 1,333,443(j) 128,216 1,674,167 - -
Martinsburg, West Virginia 1,080,743(k) 448,648 1,543,573 - -
Good Guys:
Stockton, California 1,928,780(k) 580,609 2,974,868 - -
Portland, Oregon - 817,574 2,630,652 - -
Hardee's:
Mobile, Alabama - - 479,107 - -
Warrior, Alabama - - 470,556 - -
Horn Lake, Mississippi - - 555,975 - -
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------- ------------ ------------- --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
- (c) (c) (c) 1988 07/92 (c)
- (c) (c) (c) 1992 05/93 (c)
- (c) (c) (c) 1992 05/93 (c)
(d) (d) (d) (d) 1992 05/93 (d)
- (c) (c) (c) 1992 05/93 (c)
- (c) (c) (c) 1989 06/93 (c)
- (c) (c) (c) 1994 01/94 (c)
- (c) (c) (c) 1993 12/93 (c)
- (c) (c) (c) 1994 01/94 (c)
- (c) (c) (c) 1994 02/94 (c)
- (c) (c) (c) 1994 02/94 (c)
- (c) (c) (c) 1994 03/94 (c)
- (c) (c) (c) 1994 03/94 (c)
- (c) (c) (c) 1994 06/94 (c)
(d) (d) (d) (d) 1994 11/94 (d)
- (c) (c) (c) 1994 12/94 (c)
(d) (d) (d) (d) 1994 12/94 (d)
- (c) (c) (c) 1994 12/94 (c)
- (c) (c) (c) 1994 12/94 (c)
- (c) (c) (c) 1995 04/95 (c)
(d) (d) (d) (d) 1995 06/95 (d)
- (c) (c) (c) 1995 06/95 (c)
- (c) (c) (c) 1995 12/95 (c)
- (c) (c) (c) 1995 01/96 (c)
- (c) (c) (c) 1995 01/96 (c)
- (c) (c) (c) 1996 06/96 (c)
(d) (d) (d) (d) 1996 12/96 (d)
- (c) (c) (c) 1996 12/96 (c)
(d) (d) (d) (d) 1996 12/96 (d)
- (c) (c) (c) 1996 07/95(h) (c)
(d) (d) (d) (d) 1993 05/93 (d)
(d) (d) (d) (d) 1993 10/93 (d)
(d) (d) (d) (d) 1994 01/94 (d)
(d) (d) (d) (d) 1994 08/94 (d)
(d) (d) (d) (d) 1991 07/94 (d)
(d) (d) (d) (d) 1996 05/96 (d)
- (c) (c) (c) 1993 10/93 (c)
- (c) (c) (c) 1992 10/93 (c)
- (c) (c) (c) 1993 10/93 (c)
F-6
COMMERCIAL NET LEASE REALTY, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
-------------------------------------------------------------------
December 31, 1996
<CAPTION>
Costs Capitalized
Initial Cost Subsequent
To Company To Acquisition
------------------------ -----------------
Buildings
Encum- and Improve- Carrying
brances (l) Land Improvements ments Costs
----------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Iuka, Mississippi - 130,258 505,363 - -
West Point, Mississippi - - 517,424 - -
Biscoe, North Carolina - 60,301 479,984 - -
Aynor, South Carolina - 44,871 521,192 - -
Columbia, Tennessee - - 584,927 - -
Johnson City, Tennessee - - 570,690 - -
Hi-Lo Automotive:
Edinberg, Texas - 97,056 418,926 - -
Copperas Cove, Texas - 116,637 476,331 - -
Baton Rouge, Louisiana - 89,954 508,146 - -
Lake Jackson, Texas - 120,313 609,300 - -
Fort Worth, Texas - 92,779 607,971 - -
Pantego, Texas - 154,368 505,323 - -
Fort Worth, Texas - 91,373 548,238 - -
Pharr, Texas - 94,576 472,880 - -
Baton Rouge, Louisiana - 122,349 527,930 - -
Houston, Texas - 37,508 596,069 - -
Homeplace:
Arlington, Texas - 752,840 4,045,374 - -
International House of
Pancakes:
Stafford, Texas - - 571,832 - -
Sunset Hills, Missouri - - 736,345 - -
Las Vegas, Nevada - - 613,582 - -
Fort Worth, Texas - - 623,641 - -
Arlington, Texas - - 608,132 - -
Matthews, North Carolina - - 655,668 - -
Phoenix, Arizona - - 559,307 - -
Levitz:
Tempe, Arizona - 634,444 2,225,991 - -
Luria's:
South Miami, Florida - - 1,756,808 - -
Coral Gables, Florida - - 1,692,012 - -
Oshman's Sporting Goods:
Dallas, Texas - - 2,658,976 - -
Waccamaw:
Fairfax, Virginia - - 3,356,493 - -
------------ ----------- ----------- -------- -------
$ 8,300,253 $ 6,547,661 $87,390,663 $ - $ -
============ =========== =========== ======== =======
<CAPTION>
Life
on Which
Gross Amount at Which Carried Depreciation
at Close of Period (b) in Latest
Buildings Date Income
and Accumulated of Con- Date Statement is
Land Improvements Total Depreciation struction Acquired Computed
---------- ------------- ------------ ------------ --------- -------- ------------
<C> <C> <C> <C> <C> <C> <C>
(d) (d) (d) (d) 1993 10/93 (d)
- (c) (c) (c) 1993 10/93 (c)
(d) (d) (d) (d) 1993 10/93 (d)
(d) (d) (d) (d) 1993 10/93 (d)
- (c) (c) (c) 1993 10/93 (c)
- (c) (c) (c) 1993 10/93 (c)
(d) (d) (d) (d) 1993 10/94 (d)
(d) (d) (d) (d) 1994 10/94 (d)
(d) (d) (d) (d) 1994 10/94 (d)
(d) (d) (d) (d) 1994 10/94 (d)
(d) (d) (d) (d) 1993 10/94 (d)
(d) (d) (d) (d) 1993 10/94 (d)
(d) (d) (d) (d) 1993 11/94 (d)
(d) (d) (d) (d) 1993 11/94 (d)
(d) (d) (d) (d) 1994 12/94 (d)
(d) (d) (d) (d) 1982 09/95 (d)
(d) (d) (d) (d) 1996 06/96 (d)
- (c) (c) (c) 1992 10/93 (c)
- (c) (c) (c) 1993 10/93 (c)
- (c) (c) (c) 1993 12/93 (c)
- (c) (c) (c) 1993 12/93 (c)
- (c) (c) (c) 1993 12/93 (c)
- (c) (c) (c) 1993 12/93 (c)
- (c) (c) (c) 1993 12/93 (c)
(d) (d) (d) (d) 1994 01/95 (d)
- (c) (c) (c) 1988 06/96 (c)
- (c) (c) (c) 1994 06/96 (c)
- (c) (c) (c) 1994 03/94 (c)
- (c) (c) (c) 1995 12/95 (c)
F-7
</TABLE>
COMMERCIAL NET LEASE REALTY, INC.
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------------------------------
December 31, 1996
(a) Transactions in real estate and accumulated depreciation during 1996,
1995 and 1994, are summarized as follows:
Accumulated
Cost Depreciation
------------ ------------
Land and Buildings:
Balance, December 31, 1993 $ 54,633,354 $2,684,776
Acquisitions 55,219,077 -
Depreciation expense - 1,076,593
------------ ----------
Balance, December 31, 1994 109,852,431 3,761,369
Acquisitions 51,601,698 -
Depreciation expense - 1,736,021
------------ ----------
Balance, December 31, 1995 161,454,129 5,497,390
Acquisitions 116,563,622 -
Sale of land and buildings (908,393) (222,940)
Depreciation expense - 2,804,112
------------ ----------
Balance, December 31, 1996 $277,109,358 $8,078,562
============ ==========
(b) As of December 31, 1996, all of the leases are treated as operating
leases for federal income tax purposes. As of December 31, 1996 and
1995, the aggregate cost of the Properties owned by the Company and
its subsidiaries for federal income tax purposes was $371,047,781 and
$219,057,229, respectively.
(c) For financial reporting purposes, the portion of the lease relating to
the building has been recorded as a direct financing lease; therefore,
depreciation is not applicable.
(d) For financial reporting purposes, the lease for the land and building
has been recorded as a direct financing lease; therefore, depreciation
is not applicable.
(e) The tenant of this Property, Golden Corral Corporation, has subleased
this Property to a separate operator. Golden Corral Corporation
continues to be responsible for complying with all the terms of the
lease agreement and is continuing to pay rent on this Property to the
Company.
(f) The Company owns only land for this Property. Pursuant to the lease
agreement, the Company will purchase the building once construction is
complete.
(g) The tenant of this Property, Golden Corral Corporation, has subleased
this Property to an operator of a Ragazzi's restaurant. Golden Corral
Corporation continues to be responsible for complying with all of the
terms of the lease agreement and is continuing to pay rent on this
Property to the Company.
(h) Date acquired represents acquisition date of land. Pursuant to the
lease agreement, the Company purchased the buildings from the tenants
upon completion of construction, generally within 12 months from the
acquisition of the land.
F-8
COMMERCIAL NET LEASE REALTY, INC.
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
----------------------------------------------------------------------------
December 31, 1996
(i) During the years ended December 31, 1996, 1995 and 1994, the Company
(i) incurred acquisition fees and expense reimbursement fees totalling
$2,278,306, $937,363 and $1,436,073, respectively, paid to CNL Realty
Advisors, Inc. and (ii) acquired land and buildings purchased from
affiliates of CNL Realty Advisors, Inc. for an aggregate cost of
$37,712,514, $17,968,518 and $7,261,454, respectively. Such amounts
are included in land and buildings on operating leases and net
investments in direct financing leases.
(j) Property is encumbered as a part of the Company's $13,150,000 long
term, fixed rate mortgage and security agreement.
(k) Property is encumbered as a part of the Company's $39,450,000 long
term, fixed rate mortgage and security agreement.
(l) Encumbered properties for which the portion of the lease relating to
the land is accounted for as an operating lease and the portion of the
lease relating to the building is accounted for as a direct financing
lease, the total amount of the encumbrance is listed with the land
portion of the property.
F-9
