<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 8, 1997
COMMERCIAL NET LEASE REALTY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
MARYLAND 0-12989 56-1431377
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION
</TABLE>
<TABLE>
<S> <C>
400 EAST SOUTH STREET, SUITE 500 32801
ORLANDO, FLORIDA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 422-1574
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable.
ITEM 5. OTHER EVENTS.
On April 8, 1997, the Registrant filed a Registration Statement on
Form S-3 (Registration No. 333-24773) registering $300,000,000 of securities
consisting of (i) debt securities, (ii) Common Stock, par value $.01 per share
and (iii) warrants to purchase shares of Common Stock. Pursuant to the
Registration Statement, certain documents were incorporated by reference,
including, without limitation, the Registrant's Annual Report on Form 10-K (the
"Annual Report"). The Annual Report incorporates by reference certain items
that are contained in the Registrant's Proxy Statement with respect to the
Registrant's 1997 Annual Meeting (the "Proxy Statement"). At the time of the
effectiveness of the Registration Statement, the Proxy Statement had not yet
been filed by the Registrant with the Securities and Exchange Commission. Set
forth below are certain items that are contained in the Proxy Statement and are
required to be included in the Registrant's Registration Statement. The
information set forth below shall be superseded by the information contained in
the Proxy Statement upon the Registrant's filing of the Proxy Statement with
the Securities and Exchange Commission.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the
executive officers and directors of Commercial Net Lease Realty, Inc. (the
"Company"):
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
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
</TABLE>
* 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 CNL
Realty Advisors, Inc. (the "Advisor") since its inception in 1991. Mr. Seneff
has served as Chief Executive Officer, director, and a principal stockholder of
CNL Group (as defined below) 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 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
2
<PAGE> 3
acquisition, development and management of real estate projects throughout the
United States. Mr. Bourne formerly was a Certified Public Accountant with
Coopers & Lybrand.
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
3
<PAGE> 4
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.
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.
4
<PAGE> 5
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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
------------------- ----------------------
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>
- -------------------
(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.
5
<PAGE> 6
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>
<CAPTION>
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 31.6% $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.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1)
---------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
James M. Seneff, Jr. 159,000 128,500 $415,000 $342,625
</TABLE>
- --------------------
(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.
6
<PAGE> 7
SECURITY OWNERSHIP
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.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Shares
------------------- ------------------ ---------
<S> <C> <C>
Robert A. Bourne (1) 422,096 (2)(3) 1.8%
400 East South Street, Suite 500
Orlando, Florida 32801
Edward Clark (4) 5,877 (5) (6)
5204 Shamrock Drive
Raleigh, North Carolina 27612
Willoughby T. Cox, Jr. (4) 4,942 (7) (6)
200 Pasadena Place
Orlando, Florida 32802
Kevin B. Habicht 61,667 (12) (6)
400 East South Street, Suite 500
Orlando, Florida 32801
Clifford R. Hinkle (4) 20,592 (8) (6)
215 S. Monroe Street, Suite 500
Tallahassee, Florida 32301
Ted B. Lanier (4) 13,442 (9) (6)
1818 Windmill Drive
Sanford, North Carolina 27330
Gary M. Ralston 82,333 (11) (6)
400 East South Street, Suite 500
Orlando, Florida 32801
James M. Seneff, Jr. (1) 509,368 (2)(10) 2.2%
400 East South Street, Suite 500
Orlando, Florida 32801
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C> <C>
Public Employees Retirement 1,643,000 7.0%
System of Ohio
277 East Town Street
Columbus, Ohio 43215
All directors and executive 809,618 3.5%
officers as a group (8 persons) (2) (3) (5) (7) (8) (9)
(10) (11)(12)
</TABLE>
- -----------------------
(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,
35,73 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.
(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.
8
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CERTAIN 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 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 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.
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.
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.
9
<PAGE> 10
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)-(b) Not Applicable.
(c) Exhbits
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
5 Opinion of Shaw, Pittman, Potts & Trowbridge, filed to
supercede Exhibit 5 of the Registrant's Registration
Statement on Form S-3 (Registration No. 333-24773).
Filed herewith.
23 Consent of Counsel. Included in Exhibit 5.
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be filed on its
behalf by the undersigned thereunto duly authorized.
COMMERCIAL NET LEASE REALTY, INC.
Dated: April 21, 1997 By: /s/ KEVIN B. HABICHT
----------------------------------------
Kevin B. Habicht, Chief Financial Officer
11
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF SHAW, PITTMAN, POTTS & TROWBRIDGE]
April 21, 1997
Commercial Net Lease Realty, Inc.
400 East South Street
Suite 500
Orlando, Florida 32801
RE: COMMERCIAL NET LEASE REALTY, INC.
Ladies and Gentleman:
We have acted as counsel to Commercial Net Lease Realty, Inc., a Maryland
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 filed (Registration No. 333-24773) by the Company on April 8, 1997,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended to date (the "Registration Statement"), relating to the offering by
the Company from time to time of (i) one or more series of debt securities (the
"Debt Securities"), (ii) shares of common stock, par value $.01 per share (the
"Common Stock"), and (iii) warrants to purchase Common Stock (the "Common Stock
Warrants"), with an aggregate initial public offering price of up to
$300,000,000. The Debt Securities, Common Stock and Common Stock Warrants are
collectively referred to herein as the "Offered Securities."
In our capacity as counsel in connection with such registration, we are
familiar with the proceedings taken and proposed to be taken by the Company in
connection with the authorization and issuance of the Offered Securities, and
for purpose of this opinion have assumed that such proceedings will be timely
completed in the manner presently proposed. In addition, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records and instruments as we have deemed necessary
or appropriate for purposes of this opinion. Among such documents are the
Registration Statement, the charter of the Company certified as of a recent
date by the State Department of Assessments and Taxation of Maryland (the
"Charter"), the by-laws of the Company, Resolutions adopted by the Board of
Directors of the Company (the "Board of Directors") in connection with the
matters contemplated by the Registration Statement, and the form of Indenture
(the "Indenture") to be entered into between the Company and a financial
institution organized under the laws of the United States of America (the
"Trustee").
The Debt Securities will be issued pursuant to the Indenture and the
Common Stock Warrants will be issued under one or more warrant agreements
(each, a "Warrant Agreement"), each to be between the Company and a financial
institution identified therein as warrant agent (each, a "Warrant Agent").
Subject to the foregoing and the other matters set forth herein, it is
our opinion, that, as of the date hereof:
1. The issuance of the Debt Securities by the Company has been duly
authorized by the Board of Directors and, (i) when the Debt Securities have
been duly established by the Indenture (including, without limitation, the
<PAGE> 2
Commercial Net Lease Realty, Inc.
April 21, 1997
Page 2
adoption by the Board of Directors of a resolution duly authorizing the
issuance and delivery of the Debt Securities), (ii) when the Debt Securities
have been duly authenticated by the Trustee and (iii) when the Debt Securities
have been duly executed and delivered on behalf of the Company against payment
therefor in accordance with the terms and provisions of the Indenture and as
contemplated by the Registration Statement and the applicable Prospectus
Supplement, the Debt Securities will constitute legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms.
2. The Company has the authority, pursuant to its Charter, to issue up to
50,000,000 shares of Common Stock. Upon adoption by the Board of Directors of
a resolution in form and content as required by applicable law, and upon
issuance and delivery of and payment for such shares in the manner contemplated
by the Registration Statement and the applicable Prospectus Supplement and by
such resolution, such shares of Common Stock will be validly issued, fully paid
and nonassessable.
3. The issuance of the Common Stock Warrants by the Company has been duly
authorized by the Board of Directors and, (i) when the final terms of the
Common Stock Warrants and applicable Warrant Agreement have been duly
established in accordance with the Charter and applicable law, (ii) upon the
adoption by the Board of Directors of a resolution duly authorizing the
issuance and delivery of the Common Stock Warrants and (iii) when duly executed
and delivered by the Company against payment therefor and countersigned by the
applicable Warrant Agent in accordance with the applicable Warrant Agreement
and delivered to and paid for by the purchasers of the Common Stock Warrants in
the manner contemplated by the Registration Statement and the applicable
Prospectus Supplement, the Common Stock Warrants will constitute legally valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms.
We consent to your filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the prospectus included therein.
Very truly yours,
/s/ Shaw, Pittman, Potts & Trowbridge
Shaw, Pittman, Potts & Trowbridge
