<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 September 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 November 13, 1996 was $12,989,979. As of November 13, 1996, the
issuer had 1,298,999 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 September 30, 1996. . . . . . . . . . . . . .4
Statements of Income for the Nine Months
Ended September 30, 1996 and 1995. . . . . . . . . . . . . . .5
Statements of Income for the Three Months
Ended September 30, 1996 and 1995. . . . . . . . . . . . . . .6
Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995. . . . . . . . . . . . . . .7
Notes to Financial Statements. . . . . . . . . . . . . . . . .8
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . 14
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Balance Sheet as of September 30, 1996, Statements of
Income for the nine and three months ended September 30, 1996 and
1995 and Statements of Cash Flows for the nine months ended
September 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
September 30, 1996
(Unaudited)
ASSETS
Investment in real estate, at cost:
Land $ 3,176,192
Buildings 6,064,576
9,240,768
Less: Accumulated depreciation (202,987)
Net investment in real estate 9,037,781
Cash and cash equivalents 2,692,076
Organization costs (net of accumulated
amortization of $18,083) 16,917
Tenant receivables 69,792
Prepaid expenses and deferred
acquisition costs 111,294
Total Assets $11,927,860
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 18,000
Due to affiliates 56,557
Prepaid rent 12,292
Total Liabilities 86,849
Stockholders' Equity:
Preferred stock, $.01 par value,
1,000,000 shares authorized; none issued --
Common stock, $.01 par value,
9,000,000 shares authorized;
1,298,999 shares issued and outstanding 12,990
Additional paid-in capital 11,894,714
Accumulated deficit (66,693)
Total Stockholders' Equity 11,841,011
Total Liabilities and Stockholders' Equity $11,927,860
See notes to financial statements.
<PAGE>
STATEMENTS OF INCOME
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $750,274 $424,378
Interest 118,364 102,499
Total Income 868,638 526,877
EXPENSES
Directors fees 16,999 17,742
Advisory fees 114,631 38,418
Management fees 6,799 4,340
General and administrative 78,748 42,777
Acquisition costs 38,306 17,081
Depreciation and amortization 111,632 67,834
Total Expenses 367,115 188,192
Net Income $501,523 $338,685
Net Income Per Share $ 0.39 $ 0.42
See notes to financial statements.
<PAGE>
STATEMENTS OF INCOME
For the Three Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $268,479 $199,959
Interest 32,929 23,180
Total Income 301,408 223,139
EXPENSES
Directors fees 5,001 5,740
Advisory fees 76,041 14,903
Management fees 2,132 2,092
General and administrative 14,781 16,863
Acquisition costs 7,404 4,926
Depreciation and amortization 39,652 32,496
Total Expenses 145,011 77,020
Net Income $156,397 $146,119
Net Income Per Share $ 0.12 $ 0.15
See notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
Cash flows from operating activities
Net income $ 501,523 $ 338,685
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of organization costs 5,250 5,250
Depreciation 106,382 62,584
Acquisition costs charged off 38,306 17,081
Changes in operating assets
and liabilities:
Decrease in prepaid expenses 5,999 5,742
Increase in tenant receivables (69,792) (527)
Decrease in accounts payable and
accrued expenses (500) (8,986)
(Decrease) increase in prepaid rent (7,000) 22,292
Increase (decrease) in due to
affiliates 56,538 (8,271)
Net cash provided by operating activities 636,706 433,850
Cash flows from investing activities
Purchase of properties (1,456,083) (6,837,363)
Acquisition costs (95,328) (19,587)
Cash used in investing activities (1,551,411) (6,856,950)
Cash flows from financing activities
Issuance of stock, net of liquidations 1,311,985 5,671,887
Selling commissions and other
offering costs (639,421) (511,209)
Dividends (124,287) (251,148)
Net cash provided by financing activities 548,277 4,909,530
Net decrease in cash and cash equivalents (366,428) (1,513,570)
Cash and cash equivalents at
beginning of period 3,058,504 3,455,715
Cash and cash equivalents at
end of period $2,692,076 $1,942,145
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 nine months ended September 30, 1996 and 1995, net
income per share is based on the average shares outstanding of
1,270,712 and 811,632, respectively, and net income of $501,523 and
$338,685, respectively. For the three months ended September 30,
1996 and 1995, net income per share is based on the average shares
outstanding of 1,305,203 and 957,770, respectively, and net income
of $156,397 and $146,119, 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 nine months ended September
30, 1996 and 1995 were as follows:
1996 1995
Incurred Payable Incurred Payable
Selling commissions $ 78,652 $ -- $315,351 $18,544
Due diligence fees 12,042 -- 28,982 --
Advisory fees 114,631 56,537 38,418 --
Dividend
reinvestment fees 1,291 20 562 20
Management fees 6,799 -- 4,340 --
Nonaccountable fees 35,218 -- 141,955 --
Acquisition fees
and expenses 164,625 -- 261,202 --
$413,258 $56,557 $790,810 $18,564
<PAGE>
4. Dividends
Below is a table summarizing the dividends declared:
Declaration Record Payment Dividend
Date(a) Dates Date Rate (b) Amount
11/01/94 07/01/94-09/30/94 11/15/94 .08525% $ 13,566
02/03/95 10/01/94-12/31/94 02/15/95 .01096 36,000
05/04/95 01/01/95-03/31/95 05/15/95 .01370 78,681
08/03/95 04/01/95-06/30/95 08/15/95 .01781 136,467
11/02/95 07/01/95-09/30/95 11/15/95 .01918 169,235
01/25/96 10/01/95-12/31/95 02/15/96 .01918 196,106
05/02/96 01/01/96-03/31/96 05/15/96 .01918 216,247
08/01/96 04/01/96-06/30/96 08/15/96 .01918 227,068
10/31/96 07/01/96-09/30/96 11/15/96 .01918 229,621
(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 September 30, 1996, there
were approximately 22,106 shares purchased through the Reinvestment
Plan and approximately 9,675 shares were liquidated with proceeds
from 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>
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 $124,309 of shares purchased by
stockholders through the Reinvestment Plan, net of liquidations
through September 30, 1996. As of September 30, 1996, the Fund had
received $11,907,704 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 nine months
ended September 30, 1996. Except for certain acquisition costs
related to the foregoing property, at September 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
September 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 nine months ended September
30, 1996 resulted principally from financing activities relating to
the issuance of stock, which generated $1,311,985, net of
liquidations of $96,750, less costs related thereto such as selling
commissions and other costs aggregating $124,287 and dividends to
stockholders of $639,421. Cash flows provided by operating
activities were $636,706 due principally to cash generated from
property operations. Cash flows used in investing activities were
$1,551,411 relating principally to the acquisition of the Pier One
Imports store purchased during the nine months ended September 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 nine months ended September
30, 1995, resulted principally from financing activities relating
to the issuance of stock, which generated $5,671,887, less costs
related thereto such as selling commissions and other costs
aggregating $511,209 and dividends to stockholders of $251,148.
Cash flows provided by operating activities were $433,850 due
principally to cash generated from property operations. Cash flows
used in investing activities were $6,837,363 relating principally
to the acquisition of an On The Border restaurant, a Blockbuster
Video store, a Chili's restaurant, a Just For Feet store and a
Video Watch store.
Results of Operations
Results of operations for the nine months ended September 30,
1996 reflected rental income of $750,274. Rental income for the
six properties held for the entire nine months was $686,303. Total
income was $868,638 which consisted primarily of rental income and
interest income earned on cash and cash equivalents in interest
bearing accounts. Total expenses were $367,115 and net income was
$501,523.
Results of operations for the nine months ended September 30,
1995 reflected rental income of $424,378. Total rental income for
the single property held for the entire nine months was $75,938.
Total income was $526,877 which consisted primarily of rental
income and interest income earned on cash and cash equivalents in
interest bearing accounts. Total expenses were $188,192 and net
income was $338,685 at September 30, 1995.
Results of operations for the three months ended September 30,
1996 reflected rental income of $268,479. All properties were held
for the three months ended September 30, 1996. Total income was
$301,408 which consisted primarily of rental income and interest
income earned on cash and cash equivalents in interest bearing
accounts. Total expenses were $145,011 and net income was
$156,397.
Results of operations for the three months ended September 30,
1995 reflected rental income of $199,959. Total rental income for
the properties held for the entire three months was $183,090.
Total income was $223,139 which consisted primarily of rental
income and interest income earned on cash and cash equivalents in
interest bearing accounts. Total expenses were $77,020 and net
income was $146,119 at September 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.
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: November 13, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer
DATE: November 13, 1996<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,692,076
<SECURITIES> 0
<RECEIVABLES> 69,792
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,240,768 <F1>
<DEPRECIATION> 202,987
<TOTAL-ASSETS> 11,927,860
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 12,990
<OTHER-SE> 11,828,021
<TOTAL-LIABILITY-AND-EQUITY> 11,927,860
<SALES> 0
<TOTAL-REVENUES> 868,638 <F2>
<CGS> 0
<TOTAL-COSTS> 367,115 <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> 501,523
<EPS-PRIMARY> .039
<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>
