<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 March 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
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 May 14, 1996 was $12,999,531. As of May 14, 1996, the issuer
had 1,299,954 shares of common stock outstanding.
Transitional Small Business Disclosure Format: Yes No X .
<PAGE>
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . .3
Balance Sheet at March 31, 1996. . . . . . . . . . . . . . . .4
Statements of Income for the three months
ended March 31, 1996 and 1995. . . . . . . . . . . . . . . . .5
Statements of Cash Flows for the three months
ended March 31, 1996 and 1995. . . . . . . . . . . . . . . . .6
Notes to Financial Statements. . . . . . . . . . . . . . . . .7
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. Submissions of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Balance Sheet as of March 31, 1996, Statements of
Income for the three months ended March 31, 1996 and 1995 and
Statements of Cash Flows for the three months ended March 31, 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)
March 31,
1996
ASSETS
Investment in real estate, at cost:
Land $ 2,622,337
Buildings 5,185,796
7,808,133
Less: accumulated depreciation (129,016)
Net investment in real estate 7,679,117
Cash and cash equivalents 4,195,922
Organization costs (net of accumulated
amortization of $14,583) 20,417
Tenant receivables 19,074
Prepaid expenses and deferred
acquisition costs 74,465
Total Assets $11,988,995
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 6,508
Prepaid rent 16,292
Due to affiliates 6,500
Total Liabilities 29,300
Stockholders' Equity:
Preferred stock, $.01 par value,
1,000,000 shares authorized; none issued --
Common stock, $.01 par value,
9,000,000 shares authorized;
1,299,954 shares issued and outstanding 13,000
Additional paid-in capital 11,911,667
Retained earnings 35,028
Total Stockholders' Equity 11,959,695
Total Liabilities and Stockholders' Equity $11,988,995
See notes to financial statements.
<PAGE>
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $228,230 $79,523
Interest 41,184 36,469
Total Income 269,414 115,992
EXPENSES
Directors fees 6,999 6,001
Advisory fees 19,048 10,463
Management fees 2,131 549
General and administrative 16,331 11,091
Acquisition costs 30,814 8,729
Depreciation and amortization 34,161 12,837
Total Expenses 109,484 49,670
Net Income $159,930 $66,322
Net Income Per Share $ 0.13 $ 0.10
See notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
Cash flows from operating activities
Net income $ 159,930 $ 66,322
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of organization costs 1,750 1,750
Depreciation 32,411 11,087
Acquisition costs charged off 30,814 8,729
Changes in operating assets
and liabilities:
Decrease (increase) in prepaid expenses 3,999 (199)
Increase in tenant receivables (19,074) --
Decrease in accounts payable and
accrued expenses (11,992) (9,753)
(Decrease) increase in prepaid rent (3,000) 12,292
Increase in due to affiliates 6,480 10,531
Net cash provided by operating activities 201,318 100,759
Cash flows from investing activities
Purchase of properties (23,447) (2,585,681)
Acquisition costs (49,008) (74,493)
Cash used in investing activities (72,455) (2,660,174)
Cash flows from financing activities
Issuance of stock 1,321,538 2,992,756
Selling commissions and other
offering costs (116,877) (274,272)
Dividends (196,106) (36,000)
Net cash provided by financing activities 1,008,555 2,682,484
Net increase in cash and cash equivalents 1,137,418 123,069
Cash and cash equivalents at
beginning of period 3,058,504 3,455,715
Cash and cash equivalents at
end of period $4,195,922 $3,578,784
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
For the year ended December 31, 1996, 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 three months ended March 31, 1996 and 1995, net income
per share is based on the average shares outstanding of 1,237,518
and 634,907, respectively, and net income of $159,930 and $66,322,
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. Subscription Contingency
During the period from February 15, 1995 through March 2, 1995
(the "Supplement Period") the Fund sold approximately $221,100 of
shares to a total of eight investors pursuant to a prospectus dated
February 25, 1994 which contained audited financial statements
dated October 14, 1993 and Prospectus Supplements Numbers 1 and 2
dated December 9, 1994 and February 6, 1995. Federal securities
laws require that when a prospectus is used more than nine months
after the effective date of the registration statement of which it
is a part, information contained therein shall be as of a date no
more than sixteen months prior to such use. Investors who
purchased shares in the Fund during the Supplement Period were not
afforded access to the Fund's updated audited financial statements
(the "Updated Financial Information") as of December 31, 1994 and
1993 and for the year ended December 31, 1994. The Fund had no
operations during 1993 and acquired its first property in late
November 1994. A possibility exists that any or all of the eight
investors could request a return of their investment, in which
event such amounts, aggregating $221,100, would be required to be
paid from the Fund's available cash resources. The Fund believes
that the possibility that such investors would request their
investment returned is remote because the Fund has since provided
such investors (as well as other stockholders during the relevant
period) with the Updated Financial Information, the Fund has
conducted its operations in a manner consistent with the terms of
the prospectus and the Fund has had no such request from any of the
investors. The Fund believes that the return of such amounts would
not adversely affect the financial condition or liquidity of the
Fund.
4. Related Party Transactions
Fees, commissions and other expenses incurred and payable to
the Advisor or its affiliates for the three months ended March 31,
1996 and 1995 were as follows:
1996 1995
Payable Payable
Incurred (Receivable) Incurred (Receivable)
Selling commissions $73,856 $ -- $167,578 $ --
Due diligence fees 11,606 -- 2,900 (7,333)
Advisory fees 19,048 6,500 10,463 18,734
Dividend
reinvestment fees 411 -- 68 84
Management fees 2,131 -- 549 --
Nonaccountable fees 31,413 -- 74,649 988
Acquisition fees and
expenses 67,875 -- 105,713 --
$206,340 $6,500 $361,920 $12,473
5. 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
(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. 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
March 31, 1996, there were approximately 13,400 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.
6. Subsequent Events
On May 2, 1996, the Fund declared an ordinary income dividend
on a per share basis of $0.00001918 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 will be paid on May 15, 1996.
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, intends to 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.
<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 March 31, 1996,
the Fund had received $11,924,667 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 did not acquire any property
during the three months ended March 31, 1996. Subsequent to March
31, 1996, the Fund purchased a property, from an unaffiliated
party, for $1,375,000 plus closing costs. Except for certain
acquisition costs related to the foregoing property, at March 31,
1996 the Fund had no material capital commitments. In the opinion
of management of the Fund, each property is adequately covered by
insurance. At March 31, 1996, approximately $3,900,000 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 three months ended March 31,
1996 resulted principally from financing activities relating to the
issuance of stock, which generated $1,321,538 less costs related
thereto such as selling commissions and other costs aggregating
$116,877 and dividends to stockholders of $196,106. Cash flows
provided by operating activities were $201,318 due principally to
cash generated from property operations. Cash flows used in
investing activities were $72,455 relating principally to the
acquisition of the property purchased subsequent to March 31, 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 three months ended March 31,
1995, resulted principally from financing activities relating to
the issuance of stock, which generated $2,992,756, less costs
related thereto such as selling commissions and other costs
aggregating $274,272 and dividends to stockholders of $36,000.
Cash flows provided by operating activities were $100,759 due
principally to cash generated from property operations. Cash flows
used in investing activities were $2,660,174 relating principally
to the acquisition of an On The Border restaurant and a Blockbuster
Video store.
Results of Operations
Results of operations for the three months ended March 31, 1996
reflected rental income of $228,230. Rental income represented
three months of rental income for the six properties held for the
entire three months. Total income was $269,414 which consisted
primarily of rental income and interest income earned on
subscriptions invested in interest bearing accounts. Total
expenses were $109,484 and net income was $159,930.
Results of operations for the three months ended March 31, 1995
reflected rental income of $79,523. Total rental income for the
single property held for the entire three months was $25,313.
Total income was $115,992 which consisted primarily of rental
income and interest income earned on subscriptions invested in
interest bearing accounts. Total expenses were $49,670 and net
income was $66,322 at March 31, 1995.
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, intends to 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
results of operations.
On January 25, 1996, the Fund declared an ordinary income
dividend on a per share basis of $0.00001918 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 which was paid on February 15, 1996.
On May 2, 1996, the Fund declared an ordinary income dividend
on a per share basis of $0.00001918 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 will be paid on May 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.
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports On Form 8-K.
Exhibit 27. Financial Data Schedule
<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: May 14, 1996
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: May 14, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,195,922
<SECURITIES> 0
<RECEIVABLES> 19,074
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,808,133 <F1>
<DEPRECIATION> 129,016
<TOTAL-ASSETS> 11,988,995
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 13,000
<OTHER-SE> 11,946,695
<TOTAL-LIABILITY-AND-EQUITY> 11,988,995
<SALES> 0
<TOTAL-REVENUES> 269,414 <F2>
<CGS> 0
<TOTAL-COSTS> 109,484 <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> 159,930
<EPS-PRIMARY> 0.13
<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>
