<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
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 0-28332
Brauvin Net Lease V, Inc.
(Exact name of small business issuer as specified
in its charter)
Maryland 36-3913066
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 .
The aggregate market value of Common Stock held by nonaffiliates as
of August 13, 1996 was $12,991,510. As of August 13, 1996, the
issuer had 1,299,151 shares of common stock outstanding.
Transitional Small Business Disclosure Format: Yes No X .
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . .3
Balance Sheet at June 30, 1996 . . . . . . . . . . . . . . . .4
Statements of Income for the Six Months
Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . .5
Statements of Income for the Three Months
Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . .6
Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . .7
Notes to Financial Statements. . . . . . . . . . . . . . . . .8
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . . . . . 12
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Balance Sheet as of June 30, 1996, Statements of
Income for the six and three months ended June 30, 1996 and 1995
and Statements of Cash Flows for the six months ended June 30, 1996
and 1995 for Brauvin Net Lease V, Inc. (the "Fund") are unaudited
but reflect, in the opinion of the management, all adjustments
necessary to make the financial statements not misleading. All
such adjustments are of a normal recurring nature.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Fund's 1995
Annual Report on Form 10-K.
<PAGE>
BALANCE SHEET
(Unaudited)
June 30,
1996
ASSETS
Investment in real estate, at cost:
Land $ 3,175,991
Buildings 6,064,255
9,240,246
Less: accumulated depreciation (165,085)
Net investment in real estate 9,075,161
Cash and cash equivalents 2,793,968
Organization costs (net of accumulated
amortization of $16,333) 18,667
Tenant receivables 42,282
Prepaid expenses and deferred
acquisition costs 66,942
Total Assets $11,997,020
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 12,000
Prepaid rent 27,842
Total Liabilities 39,842
Stockholders' Equity:
Preferred stock, $.01 par value,
1,000,000 shares authorized; none issued --
Common stock, $.01 par value,
9,000,000 shares authorized;
1,303,172 shares issued and outstanding 13,032
Additional paid-in capital 11,940,169
Retained earnings 3,977
Total Stockholders' Equity 11,957,178
Total Liabilities and Stockholders' Equity $11,997,020
See notes to financial statements.
<PAGE>
STATEMENTS OF INCOME
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $481,795 $224,420
Interest 85,435 79,319
Total Income 567,230 303,739
EXPENSES
Directors fees 11,998 12,002
Advisory fees 38,590 23,515
Management fees 4,667 2,248
General and administrative 63,967 25,915
Acquisition costs 30,902 12,155
Depreciation and amortization 71,980 35,338
Total Expenses 222,104 111,173
Net Income $345,126 $192,566
Net Income Per Share $ 0.27 $ 0.26
See notes to financial statements.
<PAGE>
STATEMENTS OF INCOME
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $253,565 $144,897
Interest 44,251 42,850
Total Income 297,816 187,747
EXPENSES
Directors fees 4,999 6,001
Advisory fees 19,542 13,052
Management fees 2,536 1,699
General and administrative 47,636 14,824
Acquisition costs 88 3,426
Depreciation and amortization 37,819 22,501
Total Expenses 112,620 61,503
Net Income $185,196 $126,244
Net Income Per Share $ 0.14 $ 0.15
See notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
Cash flows from operating activities
Net income $ 345,126 $ 192,566
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of organization costs 3,500 3,500
Depreciation 68,480 31,838
Acquisition costs charged off 30,902 12,155
Changes in operating assets
and liabilities:
Decrease in prepaid expenses 4,998 4,002
Increase in tenant receivables (42,282) --
Decrease in accounts payable and
accrued expenses (6,500) (13,253)
Increase in prepaid rent 8,550 12,292
Decrease in due to affiliates (20) (16)
Net cash provided by operating
activities 412,754 243,084
Cash flows from investing activities
Purchase of properties (1,455,560) (5,957,370)
Acquisition costs (42,572) (10,370)
Cash used in investing activities (1,498,132) (5,967,740)
Cash flows from financing activities
Issuance of stock 1,353,714 4,313,644
Selling commissions and other
offering costs (120,519) (397,239)
Dividends (412,353) (114,680)
Net cash provided by financing
activities 820,842 3,801,725
Net decrease in cash and cash
equivalents (264,536) (1,922,931)
Cash and cash equivalents at
beginning of period 3,058,504 3,455,715
Cash and cash equivalents at
end of period $2,793,968 $1,532,784
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Business
Brauvin Net Lease V, Inc. (the "Fund") is a Maryland
corporation formed on October 14, 1993, which operates as a real
estate investment trust ("REIT") under federal tax laws. The Fund
acquires properties that are leased to creditworthy corporate
operators of nationally or regionally established businesses
primarily in the retail and family restaurant sectors.
Substantially all of the leases are on a long-term "triple net"
basis generally requiring the corporate tenant to pay both base
annual rent with mandatory escalation clauses and all operating
expenses.
The advisory agreement provides for Brauvin Realty Advisors V,
L.L.C. (the "Advisor"), an affiliate of the Fund, to be the advisor
to the Fund. The Fund registered the sale of up to 5,000,000
shares of common stock at $10.00 per share in an initial public
offering filed with the Securities and Exchange Commission
("Registration Statement") and the issuance of 500,000 shares
pursuant to the Fund's dividend reinvestment plan. On August 8,
1994, the Fund sold the minimum 120,000 shares required under its
Registration Statement and commenced its real estate activities.
The offering period for the sale of common stock terminated on
February 25, 1996.
2. Significant Accounting Policies
Federal Income Taxes
The Fund intends to be treated as a REIT under the Internal
Revenue Code Sections 856-860. A REIT will generally not be
subject to federal income taxation to the extent that it
distributes at least 95% of its taxable income to its stockholders
and meets certain asset and income tests as well as other
requirements. Accordingly, no provision has been made for Federal
income taxes in the financial statements.
<PAGE>
Earnings Per Share
For the six months ended June 30, 1996 and 1995, net income per
share is based on the average shares outstanding of 1,268,348 and
737,351, respectively, and net income of $345,126 and $192,566,
respectively. For the three months ended June 30, 1996 and 1995,
net income per share is based on the average shares outstanding of
1,302,089 and 839,873, respectively, and net income of $185,196 and
$126,244, respectively.
Reclassifications
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 presentation. This has not
affected the previously reported results of operations.
3. Related Party Transactions
Fees, commissions and other expenses incurred and payable to
the Advisor or its affiliates for the six months ended June 30,
1996 and 1995 were as follows:
1996 1995
Payable Payable
Incurred (Receivable) Incurred (Receivable)
Selling commissions$ 76,214 $ -- $246,495 $17,089
Due diligence fees 11,820 -- 6,555 (7,333)
Advisory fees 38,590 -- 23,515 4,549
Dividend
Reinvestment fees 844 -- -- --
Management fees 4,667 -- 2,248 --
Nonaccountable fees 32,485 -- 104,165 1,125
Acquisition fees
and expenses 116,750 -- 227,907 --
$281,370 $ -- $610,885 $15,430
<PAGE>
4. Dividends
Below is a table summarizing the dividends declared:
Declaration Record Payment Dividend
Date(a) Dates Date Rate (b) Amount
11/1/94 7/1/94-9/30/94 11/15/94 .08525% $ 13,566
2/3/95 10/1/94-12/31/94 2/15/95 .01096 36,000
5/4/95 1/1/95-3/31/95 5/15/95 .01370 78,681
8/3/95 4/1/95-6/30/95 8/15/95 .01781 136,467
11/2/95 7/1/95-9/30/95 11/15/95 .01918 169,235
1/25/96 10/1/95-12/31/95 2/15/96 .01918 196,106
5/2/96 1/1/96-3/31/96 5/15/96 .01918 216,247
8/1/96 4/1/96-6/30/96 8/15/96 .01918 227,068
(a) Dividends were declared on a daily basis.
(b) The dividend rate is presented on a per day basis.
The dividend reinvestment plan ("Reinvestment Plan") is
available to the stockholders so that stockholders, if they so
elect, may have their distributions from the Fund invested in
shares and make additional cash contributions. The price per share
purchased through the Reinvestment Plan shall equal $10 per share
with the purchase of partial shares allowed. Funds raised through
the Reinvestment Plan will be utilized to (i) purchase shares from
existing stockholders who have notified the Fund of their desire to
sell their shares or held for subsequent redemptions or (ii)
purchase additional properties. The stockholders electing to
participate in the Reinvestment Plan will be charged a service
charge, in an amount equal to 1% of their distributions, which will
be paid to an affiliate of the Advisor to defray the administrative
costs of the Reinvestment Plan. As of June 30, 1996, there were
approximately 17,670 shares purchased through the Reinvestment
Plan.
In order to qualify as a REIT, the Fund is required to
distribute dividends to its stockholders in an amount at least
equal to 95% of REIT taxable income of the Fund. The Fund intends
to make quarterly distributions to satisfy all annual distribution
requirements.
<PAGE>
5. Subsequent Events
On August 1, 1996, the Fund declared an ordinary income
dividend on a per share basis of $0.0001918 per day for each day
investors were admitted between April 1, 1996 and June 30, 1996.
The dividend aggregated $227,068 payable to stockholders of record
on June 30, 1996 and will be paid on August 15, 1996.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Liquidity and Capital Resources
The Fund commenced an offering to the public on February 25,
1994 of 5,500,000 shares, 500,000 of which were available through
the dividend reinvestment plan (the "Reinvestment Plan"). The
offering closed on February 25, 1996 having received $12,865,680 in
gross proceeds with an additional $133,861 of shares purchased by
stockholders through the Reinvestment Plan. As of June 30, 1996,
the Fund had received $11,953,201 in connection with the sale of
shares, net of selling commissions and other offering costs,
including $200,000 paid by the Advisor for a share of stock as
disclosed in the Prospectus. The Fund purchased one property
during the six months ended June 30, 1996. Except for certain
acquisition costs related to the foregoing property, at June 30,
1996 the Fund had no material capital commitments. In the opinion
of management of the Fund, each property is adequately covered by
insurance. At June 30, 1996, approximately $2,500,000 of proceeds
from the sale of common stock and from the Reinvestment Plan is
available and is intended for investment in real estate.
Cash Flows
The Fund's cash flows during the six months ended June 30, 1996
resulted principally from financing activities relating to the
issuance of stock, which generated $1,353,714 less costs related
thereto such as selling commissions and other costs aggregating
$120,519 and dividends to stockholders of $412,353. Cash flows
provided by operating activities were $412,754 due principally to
cash generated from property operations. Cash flows used in
investing activities were $1,498,132 relating principally to the
acquisition of the Pier One Imports store purchased during the six
months ended June 30, 1996. The Fund anticipates that operating
activities will continue to provide sources of cash as the Fund
invests available proceeds in real estate.
The Fund's cash flows during the six months ended June 30,
1995, resulted principally from financing activities relating to
the issuance of stock, which generated $4,313,644, less costs
related thereto such as selling commissions and other costs
aggregating $397,239 and dividends to stockholders of $114,680.
Cash flows provided by operating activities were $243,084 due
principally to cash generated from property operations. Cash flows
used in investing activities were $5,967,740 relating principally
to the acquisition of an On The Border restaurant, a Blockbuster
Video store, a Chili's restaurant and a Just For Feet store.
Results of Operations
Results of operations for the six months ended June 30, 1996
reflected rental income of $481,795. Rental income for the six
properties held for the entire six months was $456,963. Total
income was $567,230 which consisted primarily of rental income and
interest income earned on cash and cash equivalents in interest
bearing accounts. Total expenses were $222,104 and net income was
$345,126.
Results of operations for the six months ended June 30, 1995
reflected rental income of $224,420. Total rental income for the
single property held for the entire six months was $50,628. Total
income was $303,739 which consisted primarily of rental income and
interest income earned on cash and cash equivalents in interest
bearing accounts. Total expenses were $111,173 and net income was
$192,566 at June 30, 1995.
Results of operations for the three months ended June 30, 1996
reflected rental income of $253,565. Rental income for the six
properties held for the entire three months was $228,481. Total
income was $297,816 which consisted primarily of rental income and
interest income earned on cash and cash equivalents in interest
bearing accounts. Total expenses were $112,620 and net income was
$185,196.
Results of operations for the three months ended June 30, 1995
reflected rental income of $144,897. Total rental income for the
properties held for the entire three months was $92,952. Total
income was $187,747 which consisted primarily of rental income and
interest income earned on cash and cash equivalents in interest
bearing accounts. Total expenses were $61,503 and net income was
$126,244 at June 30, 1995.
On May 3, 1996, the Fund purchased a 10,843 square foot
building and the underlying land which is occupied by a Pier One
Imports store (the "Pier One Property") located in Sioux Falls,
South Dakota, from an unaffiliated party, for $1,375,000 plus
closing costs. The Pier One Property is leased to Pier One
Imports, Inc. under a triple net lease, for ten years with two
five-year extension options. The lease requires a minimum base
rent each month in the amount of $13,046.
On May 6, 1996, the Fund received a notice, dated April 30,
1996, which stated that the On The Border restaurant, located in
Stafford, Texas, would discontinue its operations on May 29, 1996.
However, Brinker Texas, L.P., the property's lease guarantor (and
a wholly-owned subsidiary of Brinker International) has stated its
intention to honor the lease and work with the Fund to remedy this
situation. The Fund will contemplate various alternatives
including subleasing the facility or "swapping" the asset for an
operating property. At this point in time, the Fund does not
anticipate that this situation will adversely effect the Fund's
cash flow, as rent is currently paid on the lease.
On January 25, 1996, the Fund declared an ordinary income
dividend on a per share basis of $0.0001918 per day for each day
investors were admitted between October 1, 1995 and December 31,
1995. The dividend aggregated $196,106 payable to stockholders of
record on December 31, 1995 and was paid on February 15, 1996.
On May 2, 1996, the Fund declared an ordinary income dividend
on a per share basis of $0.0001918 per day for each day investors
were admitted between January 1, 1996 and March 31, 1996. The
dividend aggregated $216,247 payable to stockholders of record on
March 31, 1996 and was paid on May 15, 1996.
On August 1, 1996, the Fund declared an ordinary income
dividend on a per share basis of $.0001918 per day for each day
investors were admitted between April 1, 1996 and June 30, 1996.
The dividend aggregated $227,068 payable to stockholders of record
on June 30, 1996 and will be paid on August 15, 1996.
The Fund qualifies as a REIT under Sections 856-860 of the
Internal Revenue Code, as amended (the "Code"). In order to
qualify, the Fund is required to make distributions of an amount
not less than 95% of its REIT taxable income during the year.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
ITEM 2. Changes in Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
(a) The Fund held an annual meeting of Stockholders on
June 13, 1996.
(b) The names of all Directors of the Fund are set
forth in (c) below. Each of the Directors set
forth in (c) below were Directors of the Fund
during the previous year and will continue as
Directors for the upcoming year.
(c) Two matters were voted upon and approved by the
stockholders. The presentation below briefly
describes the matters voted upon and results of
stockholders' votes.
1. Election of Directors:
By Nominee Votes For Votes Withheld
Jerome J. Brault 673,858.599 7,641.065
James L. Brault 673,858.599 7,641.065
Jeff A. Jacobson 673,858.599 7,641.065
Gregory S. Kobus 673,858.599 7,641.065
Kenneth S. Nelson 673,858.599 7,641.065
Hugh K. Zwieg 673,858.599 7,641.065
2. Ratification of Auditors
The Board of Directors has approved and the
stockholders have ratified the selection of Ernst
& Young LLP, independent public accountants, as
auditors of the Fund for the year ended December
31, 1996.
Votes For Votes Against Abstentions
674,845.688 900 5,753.976
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports On Form 8-K.
Exhibit 27. Financial Data Schedule
The Fund filed the following report on Form 8-K during
the three months ended June 30, 1996:
1. On May 17, 1996, the Fund filed Form 8-K dated May
3, 1996 which reported as Item 2 the closing of its
purchase of the Pier One Property and included as
Item 7 the pro forma financial statements.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRAUVIN NET LEASE V, INC.
BY: /s/ James L. Brault
James L. Brault
Executive Vice President
and Secretary
DATE: August 13, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer
DATE: August 13, 1996<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,793,968
<SECURITIES> 0
<RECEIVABLES> 42,282
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,240,246 <F1>
<DEPRECIATION> (165,085)
<TOTAL-ASSETS> 11,997,020
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 13,032
<OTHER-SE> 11,944,146
<TOTAL-LIABILITY-AND-EQUITY> 11,997,020
<SALES> 0
<TOTAL-REVENUES> 567,230 <F2>
<CGS> 0
<TOTAL-COSTS> 222,104 <F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 345,126
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0
<FN>
<F1> "PP&E" REPRESENTS INVESTMENT IN REAL ESTATE
<F2> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER INCOME
<F3> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
</FN>
</TABLE>
