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 March 31, 1997
-------------------------------------
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
0-12989
----------------------
Commercial Net Lease Realty, Inc.
(Exact name of registrant as specified in its charter)
Maryland 56-1431377
- ---------------------------- -----------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
400 E. South Street, #500
Orlando, Florida 32801
- ---------------------------- -----------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number
(including area code) (407) 422-1574
-----------------------------
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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
23,393,672 shares of Common Stock, $.01 par value, outstanding as of April 30,
1997.
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONTENTS
--------
Part I Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of
Earnings 2
Condensed Consolidated Statements of
Stockholders' Equity 3
Condensed Consolidated Statements of
Cash Flows 4
Notes to Condensed Consolidated
Financial Statements 5-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10-13
Part II
Other Information 14-16
<PAGE>
<TABLE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
---------- -----------
<S> <C> <C>
Real estate leased to others:
Accounted for using the operating
method, net of accumulated
depreciation $319,709 $269,031
Accounted for using the direct
financing method 101,815 92,413
Cash and cash equivalents 1,339 1,410
Receivables 548 812
Prepaid expenses 326 335
Loan costs, net of accumulated
amortization of $1,291 and
$1,055 1,951 2,185
Accrued rental income 5,111 4,421
Other assets 2,443 346
-------- --------
$433,242 $370,953
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $140,487 $116,956
Accrued interest payable 437 390
Accounts payable and accrued
expenses 471 161
Due to related party 59 93
Rents paid in advance 1,028 779
-------- --------
Total liabilities 142,482 118,379
-------- --------
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $.01 par value.
Authorized 50,000,000 shares;
issued and outstanding
23,393,672 and 20,763,672
shares, respectively 234 208
Excess stock, $0.01 par value.
Authorized 50,000,000 shares;
none issued and outstanding - -
Capital in excess of par value 291,943 254,299
Accumulated dividends in excess
of net earnings (1,417) (1,933)
-------- --------
Total stockholders' equity 290,760 252,574
-------- --------
$433,242 $370,953
======== ========
See accompanying notes to condensed consolidated
financial statements.
1
</TABLE>
<PAGE>
<TABLE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands, except per share data)
<CAPTION>
Quarter Ended
March 31,
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Rental income from operating leases $ 8,139 $ 5,046
Earned income from direct financing
leases 2,676 1,682
Contingent rental income 165 158
Interest and other 36 38
---------- ----------
11,016 6,924
---------- ----------
Expenses:
General operating and administrative 455 383
Advisory fees to related party 472 308
Interest 2,363 1,460
State taxes 84 36
Depreciation and amortization 1,168 747
---------- ----------
4,542 2,934
---------- ----------
Net earnings before gain on sale
of land and building 6,474 3,990
Gain on sale of land and building 271 -
---------- ----------
Net earnings $ 6,745 $ 3,990
========== ==========
Earnings per share of common stock $ 0.31 $ 0.28
========== ==========
Weighted average number of shares
outstanding 21,859,116 14,311,749
========== ==========
See accompanying notes to condensed consolidated
financial statements.
2
</TABLE>
<PAGE>
<TABLE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Quarter Ended March 31, 1997
and Year Ended December 31, 1996
(dollars in thousands, except per share data)
<CAPTION>
Accumulated
dividends
Capital in in excess
Number Common excess of of net
of shares stock par value earnings Total
----------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31,
1995 11,663,672 $ 117 $138,629 $ (2,904) $135,842
Net earnings - - - 19,839 19,839
Dividends de-
clared and
paid ($1.18
per share of
common stock) - - - (18,868) (18,868)
Issuance of
common stock 9,100,000 91 123,284 - 123,375
Stock issuance
costs - - (7,614) - (7,614)
---------- ------- -------- --------- --------
Balance at
December 31,
1996 20,763,672 208 254,299 (1,933) 252,574
Net earnings - - - 6,745 6,745
Dividends de-
clared and
paid ($0.30
per share of
common stock) - - - (6,229) (6,229)
Issuance of
common stock 2,630,000 26 39,752 - 39,778
Stock issuance
costs - - (2,108) - (2,108)
---------- -------- -------- --------- --------
Balance at
March 31, 1997 23,393,672 $ 234 $291,943 $ (1,417) $290,760
========== ======== ======== ========= ========
See accompanying notes to condensed consolidated
financial statements.
3
</TABLE>
<PAGE>
<TABLE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<CAPTION>
Quarter Ended
March 31,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 6,745 $ 3,990
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 951 583
Amortization 217 164
Gain on sale of land and building (271) -
Decrease in real estate leased to others
using the direct financing method 258 145
Increase in accrued rental income (690) (473)
Decrease in receivables 125 193
Increase in due from related party - (2)
Decrease in prepaid expenses 9 15
Decrease in other assets 11 18
Increase in accrued interest payable 47 114
Increase (decrease) in accounts payable and
accrued expenses 217 (21)
Increase (decrease) in due to related
party (30) 172
Increase (decrease) in rents paid in
advance 249 (46)
-------- --------
Net cash provided by operating
activities 7,838 4,852
-------- --------
Cash flows from investing activities:
Additions to real estate leased to others
using the operating method (51,679) (38,631)
Additions to real estate leased to others
using the direct financing method (9,631) (5,390)
Proceeds from sale of land and building 551 -
Increase in other assets (2,173) (37)
Other (78) 89
-------- --------
Net cash used in investing
activities (63,010) (43,969)
-------- --------
Cash flows from financing activities:
Proceeds from loans 62,900 70,550
Repayment of loans (39,369) (76,444)
Payment of loan costs - (726)
Proceeds from issuance of common stock 39,778 52,325
Payment of stock issuance costs (1,995) (3,118)
Payment of dividends (6,229) (3,383)
Other 16 (3)
-------- --------
Net cash provided by financing
activities 55,101 39,201
-------- --------
Net increase (decrease) in cash and cash
equivalents (71) 84
Cash and cash equivalents at beginning
of quarter 1,410 301
-------- --------
Cash and cash equivalents at end of quarter $ 1,339 $ 385
======== ========
See accompanying notes to condensed consolidated
financial statements.
4
</TABLE>
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarter Ended March 31, 1997 and 1996
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments, which
are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Operating results for the
quarter ended March 31, 1997, may not be indicative of the results that
may be expected for the year ending December 31, 1997. Amounts as of
December 31, 1996, 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 the Form 10-K of
Commercial Net Lease Realty, Inc. (the "Company") for the year ended
December 31, 1996.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Earnings per share are calculated based upon the weighted average number
of shares outstanding during each period. Stock options outstanding are
not included since their inclusion would not result in a material dilution
of earnings per share.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, Earnings Per Share.
The Statement, which is effective for fiscal years ending after December
15, 1997, provides for a revised computation of earnings per share. The
Company will adopt this Standard in 1997 and does not expect compliance
with such Standard to have a material effect, if any, on the Company's
earnings per share.
2. Leases:
The Company generally leases its land and buildings to operators of major
retail businesses. The leases are accounted for under the provisions of
Statement of Financial Accounting Standards No. 13, Accounting for Leases.
As of March 31, 1997, 129 of the leases have been classified as operating
leases and 80 leases have been classified as direct
5
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarter Ended March 31, 1997 and 1996
2. Leases - Continued:
financing leases. For the leases classified as direct financing leases,
the building portions of the leases are accounted for as direct financing
leases while the land portions of 53 of these leases are accounted for as
operating leases. Substantially all leases have initial terms of 15 to 20
years (expiring between 1997 and 2020) and provide for minimum rentals.
In addition, the majority of the leases provide for contingent rentals
and/or scheduled rent increases over the terms of the leases. The tenant
is also generally required to pay all property taxes and assessments,
substantially maintain the interior and exterior of the building and carry
insurance coverage for public liability, property damage, fire and
extended coverage. The lease options generally allow tenants to renew the
leases for two to four successive five-year periods subject to
substantially the same terms and conditions as the initial lease.
3. Real Estate Leased to Others:
Accounted for Using the Operating Method - Land and buildings on operating
leases consisted of the following at (dollars in thousands):
March 31, December 31,
1997 1996
------------ --------------
Land $161,932 $138,520
Buildings and
improvements 166,701 138,589
-------- ---------
328,633 277,109
Accumulated depreci-
ation (8,924) (8,078)
------- ---------
$319,709 $269,031
Some leases provide for scheduled rent increase throughout the lease term.
Such amounts are recognized on a straight-line basis over the terms of the
leases. For the quarter ended March 31, 1997 and 1996, the Company
recognized $704,000 and $473,000 respectively, of such income.
6
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarter Ended March 31, 1997 and 1996
3. Real Estate Leased to Others - Continued:
The following is a schedule of future minimum lease payments to be
received on noncancellable operating leases at March 31, 1997 (dollars in
thousands):
1997 $ 24,544
1998 32,950
1999 33,152
2000 33,577
2001 34,263
Thereafter 386,808
--------
$545,294
========
Since lease renewal periods are exercisable at the option of the tenant,
the above table only presents future minimum lease payments due during the
initial lease terms. In addition, this table does not include any amounts
for future contingent rentals which may be received on the leases based on
a percentage of the tenant's gross sales.
Accounted for Using the Direct Financing Method - The following lists the
components of real estate leased to others using the direct financing
method at (dollars in thousands):
March 31, December 31,
1997 1996
----------- -----------
Minimum lease
payments to be
received $227,048 $207,838
Estimated residual
values 30,724 28,309
Less unearned income (155,957) (143,734)
-------- --------
Real estate leased to
others using the
direct financing
method $101,815 $ 92,413
======== ========
7
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarter Ended March 31, 1997 and 1996
3. Real Estate Leased to Others - Continued:
The following is a schedule of future minimum lease payments to be
received on direct financing leases at March 31, 1997 (dollars in
thousands):
1997 $ 9,291
1998 12,392
1999 12,438
2000 12,557
2001 12,589
Thereafter 167,781
--------
$227,048
========
The above table does not include future minimum lease payments for renewal
periods or for contingent rental payments that may become due in future
periods (see Real Estate Leased to Others - Accounted for Using the
Operating Method).
4. Notes Payable:
In September 1996, the Company entered into an amended and restated loan
agreement for a $150,000,000 revolving credit facility (the "Credit
Facility") which expires on June 30, 1998 and provides for an interest
rate equal to 160 basis points above LIBOR or the lender's prime rate,
whichever the Company selects. As of March 31, 1997 and December 31,
1996, the outstanding principal balance was $82,600,000 and $58,700,000,
respectively, plus accrued interest of $240,000 and $192,000,
respectively.
5. Related Party Transactions:
During the quarter ended March 31, 1997, the Company acquired 15
properties from unrelated, third parties for purchase prices totalling
$61,510,000. In connection with the acquisition of these 15 properties,
the Company paid CNL Realty Advisors, Inc. $1,230,000 in acquisition fees
and expense reimbursement fees (representing 1.5% and 0.5%, respectively,
of the cost of the properties).
In January 1997, the Company sold its property in Foley, Alabama, for
$570,000 and received net proceeds of $551,000, resulting in a gain of
$271,000 for financial reporting purposes. In connection with the sale of
this property, the Company paid CNL Realty Advisors, Inc. $11,400 in
disposition fees.
8
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Quarter Ended March 31, 1997 and 1996
6. Commitments and Contingencies:
As of March 31, 1997, the Company had entered into agreements to purchase
17 additional properties for an estimated aggregate amount of $42,955,000.
In connection with the acquisition of 12 of these properties, the Company
was contingently liable for $2,806,000 related to bank letters of credit
which guarantee the Company's obligation under the purchase agreements to
acquire these properties. In addition, the Company was contingently
liable for $1,805,000 relating to its obligations under a purchase
agreement to acquire one property.
As of March 31, 1997, the Company owned four land parcels which are leased
to tenants who are obligated to develop a building on the respective land
parcels. The Company has agreed to acquire the completed buildings for an
aggregate amount of up to $8,583,000, upon which time rental income will
increase for each of the properties.
7. Subsequent Events:
In April 1997, the Company declared dividends to its shareholders of
$7,018,102 or $.30 per share of common stock, payable in May 1997.
In addition, in April 1997, the Company filed a shelf registration
statement with the Securities and Exchange Commission which permits the
issuance by the Company of up to $300,000,000 in debt and equity
securities (which includes approximately $37,000,000 of unissued debt and
equity securities under the Company's existing $200,000,000 shelf
registration statement).
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
Commercial Net Lease Realty, Inc. (the "Company") is an equity real estate
investment trust that acquires, owns and manages high-quality, freestanding
properties leased to major retail businesses under long-term commercial net
leases. As of March 31, 1997, the Company owned 209 properties (the
"Properties") each of which are leased to major retail businesses.
Liquidity and Capital Resources
General. Historically, the Company's only demand for funds has been for
the payment of operating expenses and dividends, for property acquisitions and
for the payment of interest on its outstanding indebtedness. Generally, cash
needs for items other than property acquisitions have been met from operations
and property acquisitions have been funded by equity offerings, bank borrowings
and, to a lesser extent, from internally generated funds. Potential future
sources of capital include proceeds from public or private offerings of the
Company's debt or equity securities, secured or unsecured borrowings from banks
or other lenders, or the sale of Properties, as well as undistributed funds from
operations. For the quarters ended March 31, 1997 and 1996, the Company
generated $7,838,000 and $4,852,000, respectively, in net cash provided by
operating activities. The increase in cash from operations for the quarter
ended March 31, 1997, as compared to the quarter ended March 31, 1996, is
primarily a result of changes in revenues and expenses as discussed in "Results
of Operations."
The Company's leases typically provide that the tenant bears
responsibility for substantially all property costs and expenses associated with
ongoing maintenance and operation, including utilities, property taxes and
insurance. In addition, the Company's leases generally provide that the tenant
is responsible for roof and structural repairs. Certain of the Company's
Properties are subject to leases under which the Company retains responsibility
for certain costs and expenses associated with the Property. Because many of
the Properties which are subject to leases that place these responsibilities on
the Company are recently constructed, management anticipates that capital
demands to meet obligations with respect to these Properties will be minimal for
the foreseeable future and can be met with funds from operations and working
capital. The Company may be required to use bank borrowings or other sources of
capital in the event of unforeseen significant capital expenditures.
Debt and Equity Securities. In February 1997, the Company filed a
prospectus supplement to its $200,000,000 shelf registration and issued
2,300,000 shares of common stock and received gross proceeds of $34,787,000.
In addition, in March 1997, the Company issued an additional 330,000 shares
of common
10
<PAGE>
Liquidity and Capital Resources - Continued
stock in connection with the underwriters' overallotment option and received
gross proceeds of $4,991,000. In connection with the offering, the Company
incurred stock issuance costs totalling $2,108,000, consisting primarily of
underwriters' commissions and fees, legal and accounting fees and printing
expenses. Proceeds from the offering were used to pay down the Company's credit
facility. In April 1997, the Company filed a shelf registration statement with
the Securities and Exchange Commission which permits the issuance by the Company
of up to $300,000,000 in debt and equity securities (which includes
approximately $37,000,000 of unissued debt and equity securities under the
Company's existing $200,000,000 shelf registration statement).
Property Acquisitions and Commitments. During the quarter ended March 31,
1997, the Company borrowed $62,900,000 under its credit facility to acquire 15
Properties (two Eckerd drugstores, one OfficeMax office supply store, one Good
Guys consumer electronics store, two Best Buy consumer electronics stores, one
Kroger grocery store and eight independently operated grocery stores leased to
or partially guaranteed by SuperValu, Inc.
As of March 31, 1997, the Company owned four land parcels which are leased
to tenants who are obligated to develop a building on the respective land
parcels. The Company has agreed to acquire the completed buildings for an
aggregate amount of up to $8,583,000, at which time rental income will increase
for each of the Properties.
As of March 31, 1997, the Company had entered into agreements to purchase
17 additional properties for an estimated aggregate amount of $42,955,000. The
purchase of these properties is subject to conditions relating to completion of
development activities, review of title and obtaining title insurance,
engineering and environmental inspections and other matters.
In addition to the 17 properties under contract and the four buildings
under construction as of March 31, 1997, the Company is currently negotiating
the acquisition of a number of prospective properties. The Company may elect to
acquire these prospective properties or other additional properties (or
interests therein) in the future. Such property acquisitions are expected to be
the primary demand for additional capital in the future. The Company
anticipates that it may engage in equity or debt financing, through either
public or private offerings of its securities for cash, issuance of such
securities in exchange for assets, or a combination of the foregoing. Subject
to the constraints imposed by the Company's $150,000,000 credit facility and
long-term, fixed rate financing, the Company may enter into additional financing
arrangements.
In January 1997, the Company sold its property in Foley, Alabama, for
$570,000 and received net sales proceeds of $551,000, resulting in a gain of
$271,000 for financial reporting purposes.
11
<PAGE>
Liquidity and Capital Resources - Continued
The Company reinvested the proceeds to acquire an additional property and
structured the transaction to qualify as a like-kind exchange transaction for
federal income tax purposes.
Management believes that the Company's current capital resources
(including cash on hand), coupled with the Company's borrowing capacity, are
sufficient to meet its liquidity needs for the foreseeable future.
Dividends. One of the Company's primary objectives, consistent with its
policy of retaining sufficient cash for reserves and working capital purposes,
is to distribute a substantial portion of its funds available from operations to
its stockholders in the form of dividends. For the quarters ended March 31,
1997 and 1996, the Company declared and paid dividends to its stockholders of
$6,229,000 and $3,382,000, respectively, or $.30 and $29., respectively, per
share of common stock. In April 1997, the Company declared dividends to its
shareholders of $7,018,000 or $.30 per share of common stock, payable in May
1997.
Results of Operations
During the quarters ended March 31, 1997 and 1996, the Company owned and
leased 210 (including one property which was sold during 1997) and 167
Properties, respectively, to operators of major retail businesses. In
connection therewith, during the quarters ended March 31, 1997 and 1996, the
Company earned $10,815,000 and $6,728,000, respectively, in rental income from
operating leases and earned income from direct financing leases. The increase
in rental and earned income during the quarter ended March 31, 1997, is
primarily a result of the facts that (i) the 40 Properties acquired and nine
buildings upon which construction was completed during 1996 were operational for
a full quarter in 1997 and (ii) the Company acquired 15 Properties during the
quarter ended March 31, 1997. Rental and earned income are expected to increase
as the Company acquires additional properties and due to the fact that the 15
Properties acquired during the quarter ended March 31, 1997 will contribute to
the Company's income for a full fiscal quarter in future quarters.
The Company incurred $2,363,000 and $1,460,000 in interest expense for the
quarters ended March 31, 1997 and 1996, respectively. Interest expense
increased during the quarter ended March 31, 1997, primarily as a result of
higher average borrowing levels on the Company's credit facility. However, the
increase was partially offset by a decrease in the average interest rates of the
Company's credit facility.
During the quarter ended March 31, 1997 and 1996, operating expenses,
including depreciation and amortization, were $2,179,000 and $1,474,000,
respectively (19.8% and 21.3%, respectively, of gross operating revenues). The
increase in the dollar amount of operating expenses for the quarter
ended March 31, 1997, as
12
<PAGE>
Results of Operations - Continued
compared to the quarter ended March 31, 1996, is primarily attributable to the
increase in depreciation expense as a result of the additional Properties
acquired during the quarter ended March 31, 1997, and a full quarter of
depreciation expense relating to the 40 Properties and nine buildings acquired
during 1996. The increase is also attributable to an increase in amortization
expense as a result of the amortization of loan costs relating to the Company's
fixed rate financing and amendment to the Company's credit facility. In
addition, advisory fees increased as a result of increased funds from operations
for the quarter ended March 31, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, Earnings Per Share. The Statement, which
is effective for fiscal years ending after December 15, 1997, provides for a
revised computation of earnings per share. The Company will adopt this Standard
in 1997 and does not expect compliance with such Standard to have a material
effect, if any, on the Company's earnings per share.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No material developments in legal proceedings as previously reported
in the Form 10-K for the year ended December 31, 1996.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as a part of this report.
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 3.3(ii) to
Amendment No. 2 to the Registrant's Registration
Statement No. 1-11290 on Form 8-B, and incorporated
herein by reference).
3.3 Articles of Amendment to the Articles of Incorporation
of 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).
14
<PAGE>
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 (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 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).
10.5 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).
10.6 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).
10.7 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).
15
<PAGE>
10.8 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).
10.9 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 Regis-
trant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by
reference).
10.10 Second Renewal and Modification Promissory Note, date
September 3, 1996, by and among Registrant and First
Union National Bank of Florida, as the Agent, relating
to a $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).
(b) The Registrant filed one report on Form 8-K during the period
from January 1, 1997 through March 31, 1997 for the purpose of
incorporating certain items by reference into its $300,000,000
shelf regis-tration statement.
16
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
DATED this 13th day of May, 1997.
COMMERCIAL NET LEASE REALTY, INC.
By: /s/ Gary M. Ralston
---------------------------
Gary M. Ralston
President
By: /s/ Kevin B. Habicht
----------------------------
Kevin B. Habicht
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of Commercial Net Lease Realty, Inc. at March 31, 1997, and its statement
of earnings for the three months then ended and is qualified in its entirety by
reference to the Form 10-Q of Commercial Net Lease Realty, Inc. for the three
months ended March 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,339,000
<SECURITIES> 0
<RECEIVABLES> 548,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 328,633,000
<DEPRECIATION> 8,924,000
<TOTAL-ASSETS> 433,242,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 234,000
<OTHER-SE> 290,526,000
<TOTAL-LIABILITY-AND-EQUITY> 433,242,000
<SALES> 0
<TOTAL-REVENUES> 11,016,000
<CGS> 0
<TOTAL-COSTS> 2,179,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,363,000
<INCOME-PRETAX> 6,745,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,745,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,745,000
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
<FN>
<F1>Due to the nature of its industry, Commercial Net Lease Realty, Inc. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
