As filed with the Securities and Exchange Commission on May 16, 1996
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
BRAUVIN NET LEASE V, INC.
(Exact name of registrant as specified in its charter)
Maryland 150 South Wacker Drive 36-3913066
(State or other Suite 3200 (I.R.S. Employer
jurisdiction of Chicago, Illinois 60606 Identification No.)
incorporation or (312) 443-0922
organization) (Address, including zip code,
and telephone number, including
area code of registrant's principal
executive offices)
James L. Brault
Brauvin Realty Advisors V, L.L.C.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
(312) 443-0922
(Name, address, including zip code,
and telephone number, including area code of
agent for service)
copy to:
Alan B. Patzik, Esq.
Saitlin, Patzik, Frank & Samotny Ltd.
150 South Wacker Drive
Suite 900
Chicago, Illinois 60606
(312) 551-8300
Approximate date of commencement of proposed sale to the public: On or
after May 15, 1996 (first dividend payment date after effective date)
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. X
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective registration amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title and class Proposed maximum Proposed maximum
of securities Amount to be offering price aggregate offering Amount of
to be registered registered per unit price Registration fee
<S> <C> <C> <C> <C>
Shares of Common Stock, 200,000
$.01 par value per share shares $10.00 $2,000,000 $690
</TABLE>
<PAGE>
PROSPECTUS
BRAUVIN NET LEASE V, INC.
DIVIDEND REINVESTMENT PLAN
200,000 SHARES OF COMMON STOCK
($0.01 par value per share)
The Board of Directors of Brauvin Net Lease V, Inc. (the "Company") has
approved the registration of additional shares of Common Stock (the
"Shares") for the existing Brauvin Net Lease V, Inc. Reinvestment Plan (the
"Reinvestment Plan"). The Reinvestment Plan provides a method for holders
of the Shares ("Stockholders") to conveniently reinvest the dividends
payable to them in additional Shares and to invest in additional shares of
Common Stock by making optional additional cash contributions as described
herein. See "Description of the Reinvestment Plan-Offering Price" for a
discussion of the price at which Shares will be issued pursuant to the
Reinvestment Plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY
IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY
INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED, OR
INCORPORATED BY
REFERENCE, IN THIS PROSPECTUS. INFORMATION OR REPRESENTATIONS NOT
CONTAINED
OR INCORPORATED BY REFERENCE HEREIN, IF GIVEN OR MADE, MAY NOT BE
RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
SHALL NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOR
SHALL
THERE BE ANY SALE OF ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER,
SOLICITATION OR SALE IN SUCH JURISDICTION.
NEITHER DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE THROUGH
ITS USE,
SHALL UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
AFFAIRS OF
THE COMPANY HAVE BEEN UNCHANGED SINCE THE DATE HEREOF. SEE
"DOCUMENTS
INCORPORATED BY REFERENCE."
The date of this Prospectus is May 16, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and in
accordance therewith, files reports and other information with the
Securities and Exchange Commission (the "Commission").
The Company has filed with the Commission a registration statement
(Registration Statement Number 333-________ and herein referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Shares described in this Prospectus.
This Prospectus, which constitutes part of the Registration Statement, does
not contain all the information set forth in the Registration Statement and
the exhibits relating thereto, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Shares, reference is made to
the Registration Statement and the exhibits filed as a part thereof.
Statements made in this Prospectus as to the contents of any agreement
orother document are not necessarily complete and, in each instance,
reference is made to the copy of such agreement or document filed or
incorporated by reference as an exhibit to the Registration Statement.
Reports, proxy statements and other information filed by the Company can be
inspected and copied (at prescribed rates) at the Public Reference Room
maintained by the Commission, 450 Fifth Street, N.W., Washington D.C. 20549,
and at its regional offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and Suite 1400, 75 Park Place, New York, New York
10007. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington D.C. 20549,
at prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The documents listed below have been filed with the Commission pursuant
to the Exchange Act and are hereby incorporated by reference and made a part
of this Prospectus:
1. The Annual Report on Form 10-K of the Company for the fiscal year
ended December 31, 1995.
2. The Quarterly Report on Form 10-QSB for the fiscal quarter ended
March 31, 1996.
3. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report
referred to in 1. above.
4. The description of Common Stock of the Company which is contained
in the registration statement of the Company filed under the Exchange Act,
including any amendment or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to
be incorporated by reference into the Prospectus and to be a part hereof
from the date of filing of such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide, without charge, to each
person to whom a copy of this Prospectus has been delivered, upon the
written or oral request of such person, any or all of the documents or
information which may have been or may be incorporated by reference herein
and not delivered
with this Prospectus, other than exhibits to the documents or information
that are incorporated herein, unless such exhibits are specifically
incorporated by reference into the document or information that is
incorporated herein by reference. Requests for such copies should be
directed to James L. Brault, Corporate Secretary, Brauvin Net Lease V, Inc.,
150 South Wacker Drive, Suite 3200, Chicago, Illinois 60606, telephone (312)
443-0922.
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . 2
BRAUVIN NET LEASE V, INC.. . . . . . . . . . . . . . . . . . . 4
DESCRIPTION OF THE REINVESTMENT PLAN . . . . . . . . . . . . . 4
Offering Price. . . . . . . . . . . . . . . . . . . . . . 4
Administration of the Reinvestment Plan . . . . . . . . . 5
Fees and Charges. . . . . . . . . . . . . . . . . . . . . 5
Reports . . . . . . . . . . . . . . . . . . . . . . . . . 5
Operation of the Reinvestment Plan. . . . . . . . . . . . 5
Taxation of Shares Purchased Through The Reinvestment Plan 6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Risks . . . . . . . . . . . . . . . . . . . . . . 7
Investment Risks. . . . . . . . . . . . . . . . . . . . . 9
Risks of Real Estate Ownership. . . . . . . . . . . . . . 10
Tax Risks . . . . . . . . . . . . . . . . . . . . . . . . 12
ERISA Risks . . . . . . . . . . . . . . . . . . . . . . . 13
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . 14
TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . 15
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 15
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 15
Limitation of Liability and Indemnification . . . . . . . 15
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 17
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
REINVESTMENT PLAN. . . . . . . . . . . . . . . . . . . . . . .A-1
<PAGE>
BRAUVIN NET LEASE V, INC.
Brauvin Net Lease V, Inc. (the "Company") is a Maryland corporation
which operates as a real estate investment trust ("REIT") under federal tax
laws. The Company has acquired six properties that have been leased to
credit worthy 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.
On August 8, 1994, the Company sold the minimum (120,000) shares
required under its initial public offering (the "Offering") and commenced
its real estate activities. As of February 25, 1996, the date of
termination of the Offering, the Company had raised $12,865,680 in gross
proceeds including $200,000 invested by Brauvin Realty Advisors V, L.L.C.
(the "Advisor"), before reduction for selling commissions and other offering
costs with an additional $133,861 of shares purchased by stockholders
through the Reinvestment Plan. At March 31, 1996, the Company had total
assets of approximately $12.0 million.
The principal executive offices of the Company are located at 150 South
Wacker Drive, Suite 3200, Chicago, Illinois 60606, telephone number (312)
443-0922.
DESCRIPTION OF THE REINVESTMENT PLAN
The following sets forth a summary of the Reinvestment Plan which is
attached as Exhibit A to this Prospectus and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the
Reinvestment Plan. The Reinvestment Plan provides Stockholders with a
convenient means of automatically re-investing dividends paid on the
Company's Common Stock and making optional additional investments.
Participation in the Reinvestment Plan will only be available if
registration of such shares is effective in the state in which the investor
resides at the time of such participation or if an exemption from
registration is available. Initially, the Company has retained Brauvin
Securities, Inc., an affiliate of the Company and the Advisor, as an agent
for the Reinvestment Plan (the "Agent") who will act as agent for those
Stockholders who wish to participate in the Reinvestment Plan. The Agent
will be paid fees for its services by
the Company and will be a broker-dealer registered under the Exchange Act.
Participants may contribute cash to the Reinvestment Plan in an amount
of not less than $1,000 and not more than $25,000 per quarter ("Additional
Cash Contributions"). Additional Cash Contributions shall be made to the
Agent no later than 10 days prior to the end of the quarter. Dividends are
currently paid on the 15th day of February, May, August and November. If
the 15th day of such month does not occur on a business day, the dividends
are paid on the immediately following business day. Dividend payment dates
may be changed by the Company from time to time. Additional Cash
Contributions will not be permitted by residents of Pennsylvania.
Offering Price
Until February 25, 1999, the third anniversary of the termination of
the Offering, the price per Share purchased pursuant to the Reinvestment
Plan shall be $10.00, the same price as in the Offering, and thereafter,
until the Shares are listed for trading on an exchange or market, at a price
determined on the basis of the annual valuation of the Company's assets.
The $10.00 per Share price may be either greater than (in which case the
purchasing Stockholder will be disadvantaged) or less than (in which case
the purchasing Stockholder will be advantaged) the underlying value of the
properties or the book value per Share of the Company. Upon the listing of
the Shares, whether prior to or subsequent to the third anniversary of the
termination of the Offering, the Shares to be acquired for the Reinvestment
Plan will be acquired through such market and the price per Share will be
the then-prevailing market price on the exchange or market at the date of
purchase. The Company is unable to predict the effect which such a
proposedlisting would have on the price of the Shares acquired through the
Reinvestment Plan. Stockholders should note that there is no assurance that
the Shares will be listed on an exchange or included for listing on a formal
market. Listing of the shares is subject to the Company satisfying the then
applicable listing requirements and the determination of the Company's Board
of Directors that such action to be in the best interests of the Company.
Administration of the Reinvestment Plan
In administering the Reinvestment plan, the Agent will use any
dividends paid on the Shares of participants ("Reinvested Dividends") and
Additional Cash Contributions to purchase additional Shares for participants
in conformity with the terms outlined above. All Reinvested Dividends and
Additional Cash Contributions will be paid directly to the Agent which will
deposit such amounts in a non-interest bearing bank account pending issuance
of Shares. The bank account shall be specifically designated as being for
the benefit of participants in the Reinvestment Plan and disbursements shall
be permitted from such account only for the purchase of Shares until Shares
are issued to the Stockholders. Thereafter, such funds, including funds
attributable to fractional shares, will be held in the Company's general
business accounts. If a participant's Reinvested Dividends or Additional
Cash Contribution is not equally divisible by the price of a full Share, the
Participant will be credited with fractional Shares computed to five decimal
places.
Experience under the Reinvestment Plan may indicate that changes are
desirable. The Company's Articles of Incorporation ("Articles") give the
Directors broad powers to renew, modify, extend, consolidate or cancel the
Company's Reinvestment Plan without the consent of Stockholders.
Accordingly, the Company reserves the right to amend any aspect of the
Reinvestment Plan effective with respect to any dividend paid subsequent to
the notice provided the notice is sent to participants in the Reinvestment
Plan at least 10 days before the record date for a dividend. The Company
also reserves the right to terminate the Reinvestment Plan or to change the
Agent for the Reinvestment Plan, if applicable, for any reason at any time
by sending written notice of termination or change to all participants.
Fees and Charges
At the time Shares are purchased with Reinvested Dividends and
Additional Cash Contributions, each participant will pay a service charge of
1.0% of the amount purchased to the Agent. Shares received pursuant to the
Reinvestment Plan will entitle participants to the same rights and be
treated in the same manner as those issued pursuant to the Offering.
Accordingly, consistent with the terms of the Offering, to the extent such
Reinvested Dividends and Additional Cash Contributions are used to acquire
properties, the Company will pay Acquisition Expenses of 0.75% of Gross
Proceeds and Acquisition Fees of 3.50% of Gross Proceeds to the Advisor.
Accordingly, in addition to the 1.0% fee paid by participants, fees and
other charges in the aggregate of up to 4.75% of the proceeds from the
Reinvested Dividends and Additional Cash Contributions will be paid by the
Company. No selling commissions or other transaction based compensation
will be paid to entities which are not registered under the Exchange Act.
For a discussion of the foregoing fees and charges, please see the
definitions included in item 15 of Exhibit A attached hereto.
Reports
Following the purchase of Shares, each participant will be sent a
detailed statement and accounting showing the dividends received or cash
contributed, the service charge, the number and price of Shares purchased,
and total Shares held under the Reinvestment Plan for such participant's
account. See "Description of the Reinvestment Plan - Taxation of Shares
Purchased Through the Reinvestment Plan."
Operation of the Reinvestment Plan
Stockholders may become participants at any time by completing or
authorizing his or her registered representative at a Placement Agent to
complete the appropriate authorization form which will be available from the
Company, the Placement Agent or the Agent. Participation in the
Reinvestment Plan will become effective with the next dividend payable after
receipt of a participant's authorization or Additional Cash Contributions,
provided that the election is received by the Company or the Agent no later
than 10 days prior to the end of the quarter. A participant will be able to
terminate his or her participation in the Reinvestment Plan quarterly by
delivering written notice to the Company or the Agent which will become
effective with the next dividend payable after receipt of a participant's
authorization, provided that the election is received by the Company or the
Agent no later than 10 days prior to the end of the quarter. A participant
must terminate his or her entire participation in the Reinvestment Plan and
will not be allowed to partially terminate. Additional Cash Contributions
will not be accepted subsequent to termination of participation. If a
participant terminates his or her participation, the Agent will send him or
her a check in payment for any fractional Shares in his or her account based
on the then market price of the Shares and the record books of the Company
will be revised to reflect the ownership of records of his or her whole
Shares. There are no fees associated with participants terminating their
interest in the Reinvestment Plan. A terminating participant will be
forwarded certificates representing Shares beneficially owned by him or her
through the Reinvestment Plan immediately following such termination.
Stockholders who desire to sell their Shares in addition to terminating
their participation in the Reinvestment Plan are required to comply with the
provisions set forth under the section entitled "Redemption of Shares."
Stockholders who desire to transfer their Shares received upon termination
of their participation in the Reinvestment Plan are required to comply with
the provisions set forth under the section entitled "Transfer of Shares." A
participant in the Reinvestment Plan who terminates his or her interest in
the Reinvestment Plan will be allowed to again participate in the
Reinvestment Plan by notifying the Agent and completing any required forms.
Taxation of Shares Purchased Through The Reinvestment Plan
Stockholders that participate in the Reinvestment Plan will be taxed in
the same manner as if they received their Company dividends in cash; thus
participants may incur a tax liability even though they do not receive a
distribution of cash. Specifically, Stockholders will be treated as if they
have received the dividend distribution from the Company and then applied
such dividend distribution to purchase Shares in the Reinvestment Plan. A
Stockholder designating a dividend for reinvestment will be taxed on the
amount of such distribution as ordinary income to the extent such
distribution is from current or accumulated earnings and profits unless the
Company has designated the distribution as a capital gain dividend. In such
case, the dividend will be taxed as long term capital gain.
A participant will not incur a tax liability, other than as described
above, on the receipt of whole shares credited to a participant's
Reinvestment Plan account, either upon the participant's request for
distribution of certain f those shares or upon withdrawal from or
termination of the Reinvestment Plan. A participant who receives a cash
payment for a fractional share credited to the participant's account will,
however, realize a gain or loss for income tax purposes on the "deemed sale"
of the fractional share. A participant will also realize a gain or loss
upon the sale or exchange of shares. The amount of gain or loss will be
equal to the difference between the amount which the Stockholder receives
for each whole or fractional share and the Stockholder's tax basis for the
whole or fractional share. Any gain or loss will be a capital gain or loss
if the shares sold were held as capital assets. Under the Internal Revenue
Code of 1986, as amended (the "Code"), capital gain or loss will be long
term if the participant held the shares sold for more than one year, and
otherwise, will be short term. A participant's holding period for Shares
will begin on the day after the date of purchase.
The Agent will report to participants, and to the Internal Revenue
Service (the "Service"), if required, the amount of dividend income received
by participants on a calendar year basis. If a participant, including a
foreign Stockholder, is subject to federal income tax withholding on
dividend income, the amount of tax to be withheld will be deducted from the
dividend before reinvestment in additional shares for the participant's
Reinvestment Plan account will be made. The Agent will also send each
participant a statement after the close of each calendar year which will
show total dividends paid on shares held of record. A participant should
retain the statements for tax reporting purposes.
The Reinvestment Plan has not been qualified under Section 401 of the
Code or the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
The above discussion is merely a summary of the federal income tax
consequences of participating in the Reinvestment Plan. Each Stockholder
who contemplates becoming a participant in the Reinvestment Plan should
consult his or her own tax advisor regarding the tax consequences of
participation in the Reinvestment Plan.
RISK FACTORS
Purchase of Shares offered hereby involves various substantial risk
factors. Participants should consider, among others, the following factors:
Company Risks
"Triple Net" Lease Risks. The Company has acquired six properties
and intends to acquire additional properties under long-term "triple net"
lease agreements. "Triple net" leases typically require that lessees
(tenants) pay all real estate taxes, special assessments sales and use
taxes, utilities, insurance and building repairs as well as make lease
payments to the lessor. The Company is, therefore, subject to the risk that
tenants, as well as lease guarantors, if any, may be unable to make their
lease payments. A default by a lessee, the failure of a guarantor to
fulfill its obligations or another premature termination of a lease could,
depending on the size of the property and the Advisor's ability to
successfully find a substitute tenant, have an adverse effect on the
financial position of the Company. Should the Company acquire a leasehold
interest in a property and the lessee defaults in its obligations pursuant
to the lease, the Company may be responsible to pay the rent due to the
owner of the underlying land, which payments would reduce income and cash
available for dividends. The acquisition of a leasehold interest in a
property by the Company presents an additional risk due to the fact that the
owner of the land underlying the leasehold interest may have certain rights
in the event of an event of default under the lease which may require the
Company to cure the default in order to protect its interest. For these
reasons, the Company's objective is to acquire properties in fee and in
prior programs sponsored by Affiliates of the Advisor, leasehold interests
have been avoided.
Potential Additional Costs in Connection with Acquiring Single-Use
Properties. Certain of the properties may be designed or built primarily
for a particular tenant or a specific type of use. If the Company is
holding such a property upon the termination of the lease and the tenant
fails to renew, or such tenant defaults on its lease obligations, the
property may not be readily marketable to a new tenant without substantial
capital improvements or remodeling. Such improvements might require
expenditure of Company funds otherwise available for distribution or require
the sale of such property at a below-market price.
Lack of Reserves. Although the Company may establish working
capital reserves, the Advisor does not intend to establish such reserves.
Thus, if amounts are required to meet any unanticipated cash needs of the
Company, the Company would have to obtain financing from either affiliated
or unaffiliated sources to service such cash needs. However, there is no
assurance that such sums will be available.
Borrowings May Increase the Company's Business Risks. Under
certain circumstances, the Company may borrow for the purpose of maintaining
the operations of the Company. Borrowing may increase the Company's
business risks because debt service increases the expenses of operation.
Lenders to the Company may require restrictions on future borrowings,
distributions and operating policies. The maximum amount of borrowing by
the Company in relation to its Net Assets shall, in the absence of a
satisfactory showing that a higher level of borrowing is appropriate, not
exceed 300%. "Net Assets" shall mean the total assets of the Company (other
than intangibles) at cost before deducting depreciation or other non-cash
reserves less total liabilities of the Company, calculated at least
quarterly on a basis consistently applied.
Seller Financing by Company May Delay Liquidation. The Company
intends to use its best efforts to sell Company properties for cash.
However, to the extent the Company has made borrowings for the purposes
outlined above, the Company may sell the properties either subject to or
upon the assumption of the then outstanding mortgages, if any, or
alternatively may provide financing to purchasers with terms advantageous to
the Company. A purchase money obligation secured by a mortgage may be taken
as part payment, and there are no limitations or restrictions on the Company
taking such purchase money obligations. The terms of payment to the Company
will be affected by custom in the area in which the property being sold is
located and the then prevailing economic conditions. To the extent the
Company receives notes and other property instead of cash from sales, such
proceeds (other than any interest payable thereon) will not be included in
net sale proceeds until and to the extent the notes or other property are
actually paid, sold, refinanced or otherwise disposed of and, therefore, the
distribution of the proceeds of a sale to the Stockholders may be delayed
until such time. In many cases, the Company will receive payments (cash and
other property) in the year of sale in an amount less than the selling
price, and subsequent payments will be spread over a number of years.
Although it is the Company's intention to sell its properties seven to nine
years after acquisition, there is no limitation on the period of
liquidation.
Risk of Joint Ventures. Some of the Company's investments may be
owned by joint ventures between the Company and another real estate program
sponsored by an Affiliate of the Advisor. Investments in joint ventures
which own properties may involve risks not otherwise present, including, for
example, risks that the Company's co-venturer might become bankrupt, that
such co-venturer may at any time have economic or business interests or
goals which are inconsistent with the interests or goals of the Company or
that such co-venturer may be in a position to take action contrary to the
Company's instructions, requests, policies or objectives. Among other
things, actions by such co-venturer might subject property owned by the
joint venture to liabilities in excess of those contemplated by the terms of
the joint venture or other adverse consequences.
Competition with Others for the Acquisition of Properties. The
Company will compete in the acquisition of properties with other entities
engaged in real estate investment activities, some of which have greater
resources than the Company. In addition, the number of entities and the
amount of funds available for investment in properties of a type suitable
for investment by the Company may increase, resulting in increased
competition for such investments and possible increases in the prices paid
therefor.
Dependence on the Directors and Advisor. The Directors will have
sole control over virtually all aspects of the Company's operations. The
success of the Company will depend to a large extent on the quality of the
management provided by the Advisor.
Indemnification. The Directors and the Advisor are held harmless
and indemnified for certain actions taken by them in good faith and without
negligence or misconduct pursuant to the Articles or Advisory Agreement,
respectively. As a result, the Company and the Stockholders may have more
limited rights against the Directors and the Advisor than they would
otherwise have under common law and, furthermore, may be obligated to fund
the defense of the Directors and the Advisor in certain cases. See
"Indemnification."
Competition with Affiliate Sponsored Programs - Conflicts of
Interest. The Company's acquisition process may be delayed in the event
that certain prior public real estate programs with investment objectives
substantially identical to the Company have funds available for investment.
The Company anticipates that it may enter into forward commitment contracts
for the acquisition of properties. Forward commitment contracts bind the
Company to acquire properties at a future point in time when prespecified
conditions have been met. However, the Company will not enter into any
forward commitments for such properties if doing so would violate any
restrictions imposed by prior programs. In this respect, such prior
programs contain provisions which state that no subsequent program sponsored
by an Affiliate of the Advisor may acquire similar properties until such
prior program shall have invested at least 75% of gross proceeds available
for investment. In addition, should two public real estate programs with
the same investment objectives have offering proceeds in excess of 10% of
the gross proceeds of either program's offering available for investment in
properties, the program which first offered its investment interests for
sale will have the opportunity to commit for the purchase of properties
prior to the subsequent real estate program making any commitments for
properties. All prior programs have satisfied the 75% threshold and the 10%
threshold. Accordingly, as of the date of this Prospectus, no prior program
sponsored by Affiliates of the Advisor could impact the timing of the
Company's investments.
Lack of Independent Counsel for Investors. The investors in the
Reinvestment Plan have not been separately represented by independent
counsel. The attorneys and other experts who have performed services for
the Company have
also performed the same or similar services for the Advisor and some of its
Affiliates.
Use of Leverage to Pay Dividends. Although the Company intends to
acquire its properties on an all-cash basis, the Company may incur
indebtedness if necessary to satisfy the requirement that the Company
distribute at least 95% of its REIT Taxable Income or otherwise, as is
necessary or advisable to assure that the Company maintains its
qualification as a REIT for federal income tax purposes. In such an event,
it is possible that the Company will be making distributions in excess of
its earnings and profits and accordingly such distributions may constitute a
return of capital. The annual report provided to Stockholders will provide
information as to whether such distributions were in fact a return of
capital. "REIT Taxable Income" shall mean the taxable income as computed
for a corporation which is not a REIT, (i) without the deductions allowed by
sections 241 through 247, 249 and 250 of the Code (relating generally to the
deduction for dividends received); (ii) excluding amounts equal to (a) the
net income from foreclosure property, and (b) the net income derived from
prohibited transactions; (iii) deducting amounts equal to (x) any net loss
derived from prohibited transactions, and (y) the tax imposed by section
857(b)(5) of the Code upon a failure to meet the 95% and/or the 75% gross
income tests; and (iv) disregarding the dividends paid, computed without
regard to the amount of the net income from foreclosure property which is
excluded from REIT Taxable Income.
Subscriptions Subject to Refund. During the period from February
15, 1995 through March 2, 1995 (the "Supplement Period") the Company 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 Nos. 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 Company
during the Supplement Period were not afforded access to the Company'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 Company 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
Company's available cash resources. The Company believes that the
possibility that such investors would request their investment returned is
remote because the Company has since provided such investors (as well as
other Stockholders during the relevant period) with the Updated Financial
Information, the Company has conducted its operations in a manner consistent
with the terms of the Prospectus and the Company has had no such request
from any of the investors. Because of the limited amount, the Company
believes that the return of such amounts would not adversely effect the
financial condition or liquidity of the Company.
Investment Risks
Limited Liquidity. There is currently no public trading market
for the Shares, and no assurance exists that one will develop.
Risk of Recharacterization of Sale and Leaseback Transactions. In
addition to the purchase of properties subject to "triple net" leases from
unaffiliated sellers, the Company intends to enter into sale and leaseback
transactions, pursuant to which the Company will purchase a property from an
entity and lease such property to such entity. In the event of the
bankruptcy of such a lessee, a transaction structured as a sale and
leaseback may be recharacterized as either a financing or as a joint venture
which may result in adverse consequences to the Company. To the extent the
sale and leaseback is treated as a financing, the Company might not be
considered the owner of such property and as such would have the status of a
creditor with respect to the property in question. As this is an evolving
area of the law, the Company intends to monitor such laws and take
commercially reasonable steps to protect itself from any potential adverse
impact thereof.
Operations of Prior Programs and Property Transfers to Lenders by
Prior Leveraged Offerings. The Brauvin organization has sponsored ten
public real estate programs and one private program, four of which have
investment objectives and acquisition criteria substantially identical to
that of the Company and seven of which have property acquisition criteria
which is substantially different from those of the Company. The seven
Brauvin-sponsored programs with investment objectives similar to those of
the Company have acquisition criteria substantially different than the
Company and have acquired multi-tenant commercial properties on a leveraged
basis. Five of such leveraged programs each transferred one property to the
lenders of such properties after negotiations with the lenders did not
achieve the results sought by the Affiliates of the Advisor. In addition,
one leveraged program transferred title to a property in its portfolio to an
unaffiliated third party when the mortgage matured and it was determined the
property required substantial capital improvements and the value of the
property was below the current loan amount. The Advisor believes such
difficulties were due to overbuilding in the areas where properties were
acquired subsequent to the acquisition by such leveraged programs and a
decline in the oil industry. Affiliates of the Advisor have exclusively
since 1987 sponsored programs acquiring for all cash, free-standing
properties which were "triple net" leased.
Risks of Real Estate Ownership
General. All real property investments are subject to some degree
of risk. Equity real estate investments may limit the ability of the
Company to promptly vary its portfolio in response to changing economic,
financial and investment conditions. Such investments will be subject to
risks such as adverse changes in general economic conditions or local
conditions which reduce the demand for the goods or services of tenants.
Such investments also will be subject to other factors affecting real estate
values, including: (a) possible federal, state or local regulations and
controls affecting rents, prices of goods, fuel and energy consumption and
prices, water and environmental restrictions and other factors affecting new
construction; (b) increasing labor and material costs; and (c) the
attractiveness of the property to tenants in the neighborhood.
Uninsured Losses; Unavailability of Insurance. Each tenant shall
be responsible for arranging for or acquiring comprehensive insurance for
properties acquired by the Company, including casualty, liability, fire and
extended coverage customarily obtained for similar properties in amounts
which the Advisor determines are sufficient to cover reasonably foreseeable
losses. However, there are certain types of losses (generally of a
catastrophic nature, such as earthquakes, floods and wars) which are either
uninsurable or not economically insurable. Should such a disaster occur to,
or cause the destruction of, a property owned by the Company, the Company
could lose both its invested capital and anticipated profits from such
property.
In addition to fixed rent increases and/or increases related to
indices such as the Consumer Price Index, leases at selected Company
properties entitle the Company to participate in gross receipts of lessees
above fixed minimum amounts. Accordingly, the success of the Company will
depend in part on the ability of those lessees to compete with similar
businesses in the vicinity.
Hazardous Waste, Environmental Liens and Other Governmental
Regulations. Recent federal and state statutes impose liability on property
owners or operators for the clean-up or removal of hazardous substances
found on their property. Additionally, such statutes allow the government
to place liens for such liabilities against affected properties, which liens
will be senior in priority to other liens. In addition, there are various
local, state and federal health and safety regulations under which the
Company could, under certain circumstances, have responsibility for
compliance and liability for fines or damages for noncompliance. For
example, certain properties to be acquired may be subject to the Americans
with Disabilities Act (the "ADA"), which generally requires that public
accommodations, including restaurants and retail stores, be made accessible
to disabled persons. Compliance with the ADA could entail substantial
expenditures for the removal of barriers to access and noncompliance could
result in the imposition of fines by the federal government or damage awards
to private litigants. Under the Company's "triple-net" leases, the tenant
typically is responsible for compliance with the ADA and other laws and
regulations or is required to indemnify the Company when the law or
regulation places the burden on the landlord. However, the Company could be
liable for violations of such laws and regulations to the extent the tenant
is not able to provide indemnification at the time of the violation. State
and federal laws in this area are constantly evolving, and the Company
intends to monitor such laws and take commercially reasonable steps to
protect itself from the impact thereof, including obtaining environmental
audits of each property before acquisition. However, there can be no
assurance that the Company will be fully protected from the impact of such
laws.
Potential Additional Costs in Connection with Acquiring
Newly-Constructed Properties. The Company intends primarily to acquire
existing or newly constructed property currently in operation. Although the
Company will only acquire newly-constructed buildings on a turnkey basis,
the builder's failure to perform may necessitate legal action by the Company
to rescind its purchase of a property, to compel performance or to sue for
damages. Any such legal action may result in increased costs to the
Company.
Mortgage Indebtedness and Unrelated Business Taxable Income
("UBTI"). The policy of the Company will be to acquire properties on an
all-cash basis and operate as a non-leveraged program. In certain
situations, however, the Company may subsequently incur mortgage
indebtedness relating to its properties in order to finance improvements to
properties. Plans qualifying for exemption from taxation pursuant to
Section 401(a) of the Code and which are exempt from taxation under Code
Section 501(a) ("Qualified Plans") may, under certain circumstances, be
subject to UBTI. Generally, a Qualified Plan which holds 10% or more, by
value, of the Company's Shares, would have a portion of its dividends from
the Company treated as UBTI if the Company were considered a "Pension-Held
REIT" and the Company had taxable income which was considered to be UBTI.
The Company does not intend to operate as a leveraged entity and does not
anticipate that it will incur indebtedness unless such indebtedness is
necessary to satisfy the requirement that the Company distribute at least
95% of its REIT Taxable Income, or otherwise is necessary or advisable to
assure that the Company maintains its qualifications as a REIT for federal
income tax purposes, or is necessary to improve a property acquired by the
Company. The Company anticipates that such mortgage indebtedness with
respect to any single property would not exceed 10% of its fair market
value.
The Code defines a Pension-Held REIT as any trust, corporation or
association which would not have qualified as a REIT but for reliance upon
provisions of the Code which treat each of the beneficiaries of the
Qualified Plan as an individual for purposes of the "five or fewer" rule and
such entity is predominantly held by Qualified Plans. A REIT is considered
to be predominantly held by Qualified Plans if at least one Qualified Plan
holds more than 25% (by value) of the interest in such REIT or one or more
Qualified Plans (each of whom own more than 10% by value of the interest in
such REIT) hold an aggregate of more than 50% (by value) of the interest in
such REIT. Accordingly, if the Company is a Pension-Held REIT, then any
Qualified Plan holding 10% or more of the interests in the Company (by
value) will be treated as having its dividends taxed as UBTI to the extent
of the ratio of the Company's income which is considered UBTI bears to the
Company's total gross income. The Company's taxable income will be treated
as UBTI to the extent that it finances the acquisition or improvement of its
properties with debt. Since the Company intends to incur little, if any,
debt, it is not anticipated that much, if any, of the Company's income will
be treated as UBTI. This provision of the Code may adversely affect
Qualified Plans who are investors in the Company. However, it cannot be
determined at this time whether the Company will be treated as a
Pension-Held REIT and no assurance can be given any Qualified Plan that a
portion of the dividend distributed to it will not constitute UBTI.
Incurring mortgage indebtedness increases the risk of possible
loss. If the Company defaults on its secured indebtedness, the lender may
foreclose; and the Company could lose its investment in the properties
securing such loan. Any such foreclosure would be treated as a sale of the
property for a purchase price equal to the outstanding mortgage, and if the
outstanding mortgage exceeds the basis of the property to the Company, there
could be taxable income upon a foreclosure. It has been and will be the
policy of the Company to seek to incur only non-recourse mortgage
indebtedness, if available, meaning that the Company will not be liable for
any mortgage repayment in an amount in excess of its investment in the
property.
Suitability of the Company's Investments for Qualified Pension and
Profit-Sharing Trusts. When considering participation in the Reinvestment
Plan by a Qualified Plan, a fiduciary should consider: (i) whether the
investment satisfies the diversification requirements of Section 404(a)(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA") or other
applicable restrictions imposed by ERISA; and (ii) whether the investment is
prudent, as there is anticipated to be only a limited market (prior to the
date of anticipated listing on a stock exchange or market) in which it can
sell or otherwise dispose of the Shares. The Advisor has not, and will not,
evaluate whether an investment in the Company is suitable for any particular
plan, but, subject to the disclosure included therein, will accept such
entities as Stockholders if an entity otherwise meets the suitability
standards.
If the Company is considered a Pension-Held REIT, as defined
above, an investment in the Company may also produce UBTI which may cause a
Qualified Plan holding 10% or more of the Company's Shares to pay a tax on a
portion of the income distributed to it by the Company.
Prior to the date of anticipated listing on a stock exchange or
market, Stockholders subject to ERISA will be provided with an annual
statement of value reporting the value of each Share based upon an estimated
amount they would receive if Company properties were sold as of the close of
the Company's fiscal year and if such proceeds (without reduction for
selling expenses), together with the other funds of the Company were
distributed in liquidation of the Company. The net asset value of each
Share will be deemed to be $10 for the first three annual statements of
value following termination of the Offering; thereafter, until the date of
listing on a stock exchange or market, the value of the Shares shall be
based on an annual valuation of the Shares to be calculated within 120 days
after the end of the most recent fiscal year. This annual valuation may be
reviewed by the Advisor from time to time. There can be no assurance that,
(i) such value could or will actually be realized by the Company or by
Stockholders upon liquidation (in part because estimates of value do not
necessarily indicate the price at which assets could be sold and because no
attempt will be made to estimate the expenses of selling any asset of the
Company), (ii) Stockholders could realize such value if they were to sell
their Shares, or (iii) such value would comply with the ERISA requirements.
Loss on Dissolution and Termination. At the date of dissolution
or termination of the Company, the undistributed proceeds realized from the
liquidation of assets, if any, will be distributed to Stockholders but only
after the satisfaction of claims of creditors. Accordingly, a Stockholder's
ability to recover all of his or her investment under such circumstances
will depend on the amount of funds so realized and claims to be satisfied
therefrom. Tax Risks
General. There are various federal income tax risks associated
with an investment in the Company. Although the provisions of the Code
relevant to an investment in the Company are generally described in the
section entitled "Federal Income Tax Considerations" in the Company's
Prospectus dated February 25, 1994 which was distributed in connection with
the Offering, each potential investor is strongly urged to consult his or
her own tax advisor concerning the effects of federal income tax law on an
investment in the Company and on his or her individual tax situation. See
"Description of the Reinvestment Plan - Taxation of Shares Purchased Through
the Reinvestment Plan" for a discussion of the tax effects of participating
in the Reinvestment Plan.
Investors should recognize that many of the advantages and
economic benefits of an investment in the Company depend upon the continued
treatment of the Company as a REIT for federal income tax purposes. If the
Company were no longer taxed as a REIT, the Company would pay a corporate
level tax on its income whether or not distributed which would reduce its
cash available for distribution and would reduce the yield from an
investment in the Company. The continued treatment of the Company as a REIT
is dependent on present law and regulations, which are subject to change,
and on the Company's ability to continue to satisfy a variety of criteria.
Among the various risks associated with the federal income tax
aspects of the Company of which investors should be aware are:
Risk of Inability to Qualify as a REIT. The Company was organized
and intends to conduct its operations to enable it to qualify as a REIT
under the Code. To qualify as a REIT, and thereby avoid the imposition of
federal income tax on any income it distributes to Stockholders, the Company
must continually satisfy three income tests, two asset tests and one
distribution test.
If, in any taxable year, the Company should fail to distribute at
least 95% of its REIT Taxable Income, it could lose its election to be taxed
as a REIT, and distributions to its Stockholders would not be deductible in
computing the Company's taxable income for federal income tax purposes.
Timing differences may arise between the Company's realization of taxable
income and net cash flow (e.g., by reason of the differences between the
depreciation deductions allowed by the Code and the amortization of any debt
of the Company or the possible disallowance by the Service of deductions
claimed by the Company) and thereby cause the Company to have insufficient
cash or liquid assets at a particular time to distribute 95% of its REIT
Taxable Income. In such event, the Company could declare a consent dividend
or a deficiency dividend, borrow funds or liquidate a portion of its
investments to pay its expenses, make the required distributions to
Stockholders, or satisfy its tax liabilities, including the possible
imposition of a 4% excise tax. There can be no assurance that such funds
will be available in the amount and at the time required by the Company.
If the Company is no longer taxed as a REIT, the payment of
federal income tax by the Company would substantially reduce the funds
available for distribution to Stockholders or for reinvestment and, to the
extent that distributions had been made in anticipation of the Company's
qualification as a REIT, the Company might be required to borrow additional
funds or to liquidate certain of its investments in order to pay the
applicable tax. Moreover, should the Company's election to be taxed as a
REIT be terminated or voluntarily revoked, the Company may not be able to
elect to be treated as a REIT for the following five-year period.
Restrictions on Maximum Share Ownership. In order for the Company
to qualify as a REIT, no more than 50% of the outstanding Shares may be
owned, directly or indirectly, by five or fewer individuals at any time
during the last half of the Company's taxable year. To ensure that the
Company will not fail to qualify as a REIT under this test, the Company's
Articles grant the Directors the power to demand the sale of Shares or at
the Company's option, purchase such Shares. These restrictions may (i)
discourage a change of control of the Company; (ii) deter individuals and
entities from making tender offers for Shares, which offers may be
attractive to Stockholders; or (iii) limit the opportunity for Stockholders
to receive a premium for their Shares in the event an investor is making
purchases of Shares in order to acquire a block of Shares.
Possible Legislative or Other Actions Changing Anticipated Tax
Consequences. Investors should recognize that the present federal income
tax treatment of an investment in a REIT may be modified by legislative,
judicial or administrative action at any time and that any such action may
affect investments and commitments previously entered into. The rules
dealing with federal income taxation are constantly under review by the
Service, resulting in revisions of its regulations and revised
interpretations of established concepts. In addition, Congress has granted
the Service the right to promulgate legislative and/or interpretive
regulations in many areas.
ERISA Risks
Risk of Investment by Qualified Plans. In deciding whether to
purchase Shares, each fiduciary of an employee benefit plan subject to
ERISA, in consultation with its advisors, should carefully consider its
fiduciary responsibilities under ERISA, the prohibited transaction rules of
ERISA and the Code and the effect of the "plan asset" regulations issued by
the Department of Labor.
REDEMPTION OF SHARES
Any Stockholder who acquired Shares in the Reinvestment Plan (such
Shares, for so long as owned by the original holder, are called "Eligible
Shares") may present such Eligible Shares to the Company for redemption at
any time subject to the availability of proceeds in accordance with the
procedures outlined herein. Subject to the conditions described below, the
Company is required to redeem such Eligible Shares presented for redemption
for cash to the extent it has sufficient net proceeds ("Reinvestment
Proceeds") from the sale of Shares under the Reinvestment Plan. There is no
assurance that there will be investment proceeds available for redemption
and, accordingly, a Stockholder's Shares may not be redeemed. The full
amount of Reinvestment Proceeds for any quarter will be used to redeem
Eligible Shares presented for redemption for the following quarter. If the
full amount of Reinvestment Proceeds available for redemption for any given
quarter exceeds the amount necessary for such redemptions, the remaining
amount may be held for subsequent redemptions or may be invested by the
Company in additional properties. If the full amount of Reinvestment
Proceeds available for redemption for any given quarter is insufficient to
make all the requested redemptions, the Company will redeem the Eligible
Shares presented for redemption on a first come basis.
A Stockholder who wishes to have his or her Eligible Shares redeemed
must mail or deliver a written request executed by the Stockholder, its
trustee or authorized agent to the Company. Within 30 days following the
Company's receipt of the Stockholder's request, the Company will forward to
such Stockholder the documents necessary to effect the redemption, including
any signature guarantee the Company may require. The Company will effect
such redemption for the calendar quarter provided that the properly
completed redemption documents relating to Eligible Shares from the
Stockholder are received one calendar month prior to the last date of the
current calendar quarter and it has sufficient Reinvestment Proceeds to
redeem such Shares. The effective date of any redemption will be the last
date during a quarter during which the Company receives the properly
completed redemption documents. The Company anticipates that, assuming
sufficient Reinvestment Proceeds, the effective date of redemptions will be
no later than 30 days after the quarterly determination of the availability
of Reinvestment Proceeds.
Upon presentment of Eligible Shares to the Company for redemption, the
redemption price will be the offering price per Eligible Share ($10.00 per
Share) until February 25, 1999, the third anniversary of the termination of
the Offering, and thereafter at a price determined on the basis of the
annual valuation of the Company assets. The Directors, in their sole
discretion, may determine, prior to listing the Shares for trading on an
exchange or market, that it is appropriate to pay a higher price than
described above. In determining whether a price adjustment is appropriate,
the Board of Directors would consider a variety of factors, including
whether the Company's net book value is substantially less than a Share
valuation based on the Company's present and historic dividend rates and
underlying value of the properties. Any such price adjustment will be made
with respect to all Shares redeemed during the period the price adjustment
is in effect. The Board of Directors will announce any price adjustment and
the time period of its effectiveness as part of its regular communications
with Stockholders. Any Shares acquired pursuant to a redemption will be
retired and no longer available for issuance by the Company. Once the
Shares are listed for trading on an exchange or included for quotation on a
formal market, whether prior to or subsequent to February 25, 1999, the
redemption price will be the market price of the Shares on such exchange or
market and no price adjustment will be made.
A Stockholder may present less than all his or her Eligible Shares to
the Company for redemption, provided, however, that (i) the minimum number
of Shares which must be presented for redemption shall be the lesser of all
of his or her Eligible Shares or 250 Eligible Shares (100 Eligible Shares
for an Individual Retirement Account or Keogh Plan) for redemption, and (ii)
if such Stockholder retains any Eligible Shares, he or she must retain at
least 250 Eligible Shares (100 Eligible Shares for an Individual Retirement
Account or Keogh Plan).
The Directors, in their sole discretion, may amend or suspend the
provisions for redemption at any time they determine, in their sole
discretion, that such is in the best interest of the Company.
The Directors may suspend the redemption of Eligible Shares if (i) they
determine, in their sole discretion, that such redemption impairs the
capital or the operations of the Company; (ii) they determine, in their sole
discretion, that an emergency makes such redemption not reasonably
practical; (iii) any governmental or regulatory agency with jurisdiction
over the Company so demands for the protection of the Stockholders; (iv)
they determine, in their sole discretion, that such redemption would be
unlawful; or (v) they determine, in their sole discretion, that such
redemption, when considered with all other redemptions, sales, assignments,
transfers and exchanges of Shares in the Company, could cause direct or
indirect ownership of Shares of the Company to become concentrated to an
extent which would prevent the Company from qualifying as a REIT under the
REIT provisions of the Code.
TRANSFER OF SHARES
All Shares are fully transferable, subject only to restrictions which
would cause loss of REIT status. However, each person acquiring Shares must
notify the Company of any such transfer and provide his or her name,
address, taxpayer identification number, number of Shares acquired, IRS Form
W-9 and the name of the transferor Stockholder prior to any Share transfer
being recorded on the books and records of the Company. Additionally, the
transferee Stockholder must present the stock certificate representing such
Shares or an affidavit of lost certificate. Such documentation must be
presented one calendar month prior to the last date of the current quarter.
Failure to provide such information could result in a transfer not being
recognized by the Company on a timely basis. Transfers of Shares shall be
effective and the transferee Stockholder will be recognized as the holder of
such Shares as of the first date of the following calendar quarter in which
the Company receives the properly executed document.
USE OF PROCEEDS
The Company has no basis for estimating either the number of Shares
that ultimately will be issued by the Company or the aggregate amount that
the Company will receive for such issued Shares. The proceeds received by
the Company from the issuance of Shares by the Company, if any, will be
applied first to satisfy any requirements to redeem Shares and then to
acquire additional properties consistent with its investment objectives.
See "Redemption of Shares."
INDEMNIFICATION
Limitation of Liability and Indemnification
The liability of the Directors and officers of the Company is limited
to the fullest extent permitted by Maryland General Corporation Law; and
accordingly the Directors and officers shall not be liable to the Company or
its Stockholders except that liability shall not be so limited (a) if it is
proved that the person actually received an improper benefit or profit in
money, property or services; and (b) to the extent that a judgment or other
final adjudication adverse to the person is entered in a proceeding based on
a finding in the proceeding that the person's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause
of action adjudicated in the proceeding.
The Company's Articles and By-laws authorize it to the fullest extent
permitted by Maryland statutory or decisional law, as amended or
interpreted, and, without limiting the generality of the foregoing, in
accordance with Section 2-418 of the Maryland General Corporation Law, to
indemnify and pay or reimburse reasonable expenses to, (a) any individual
who is a present or former director, officer, employee or agent of the
Company or (b) any individual who, while a director of the Company and at
the request of the Company, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or trustee, as the case may be,
provided, that (i) the Director, Advisor or other party seeking
indemnification has determined, in good faith, that the course of conduct
which caused the loss or liability was in the best interest of the Company;
(ii) the Director, Advisor or other person seeking indemnification was
acting on behalf of or performing services on the part of the Company; (iii)
such liability or loss was not the result of negligence or misconduct on the
part of the indemnified party, except that in the event the indemnified
party is or was an Independent Director, such liability or loss shall not
have been the result of gross negligence or wilful misconduct; and (iv) such
indemnification or agreement to be held harmless is recoverable only out of
the assets of the Company and not from the Stockholders. "Independent
Directors" shall mean the Directors who (i) are not affiliated, directly or
indirectly, with the Advisor, whether by ownership of, ownership interest
in, employment by, any material business or professional relationship with,
or service as an officer or director of the Advisor, or its Affiliates, (ii)
do not serve as a director for more than two other REITs organized by the
Sponsor, and (iii) perform no other services for the Company, except as
Directors. For this purpose, an indirect relationship shall include
circumstances in which a member of the immediate family of a Director has
one of the foregoing relationships with the Advisor or the Company.
The Company shall not indemnify a Director, the Advisor or its
Affiliates for losses, liabilities or expenses arising from or out of an
alleged violation of federal or state securities laws by such party unless
one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee; (ii) such claims
have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee; or (iii) a court of competent
jurisdiction approves the settlement and finds that indemnification of the
settlement and related costs should be made and the court considering the
request has been advised of the position of the Commission and the published
opinions of any state securities regulatory authority in which securities of
the Company were offered and sold as to indemnification for securities law
violations.
The Company may advance amounts to persons entitled to indemnification
hereunder for legal and other expenses and costs incurred as a result of
legal action instituted against or involving such person if: (i) the legal
action relates to the performance of duties or services by the indemnified
party for or on behalf of the Company; and (ii) the indemnified party
receiving such advances undertakes, in writing, to repay the advanced funds
to the Company, with interest at the rate determined by the Company, in
cases in which such party would not be entitled to indemnification; provided
however that the Board of Directors may deny the payment of advances to a
Director who is an Affiliate of the Company ("Affiliated Director") if a
majority of the Independent Directors shall determine, in the exercise of
their reasonable discretion, that the Affiliated Director seeking advances
would not be entitled to indemnification.
The Company shall have the power to purchase and maintain insurance on
behalf of an indemnified party against any liability asserted which was
incurred in any such capacity with the Company or arising out of such
status; provided, however, that the Company shall not incur the costs of any
liability insurance which insures any person against liability for which he,
she or it could not be indemnified under the Articles.
Neither the amendment nor the adoption of any other provision of the
Articles or the By-laws shall apply to or affect in any respect the
applicability of indemnification with respect to any act or failure to act
which occurred prior to such amendment, repeal or adoption.
To the extent that indemnification may apply to liabilities arising
under the Securities Act, the Company has been advised that, in the opinion
of the Commission, such indemnification is contrary to public policy, and
therefore unenforceable.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
<PAGE>
LEGAL MATTERS
The legality of Shares to be issued in connection with the Reinvestment
Plan and certain other legal matters will be passed upon for the Company by
Saitlin, Patzik, Frank & Samotny Ltd., 150 South Wacker Drive, Suite 900,
Chicago, Illinois 60606.
EXPERTS
The financial statements and schedule of Brauvin Net Lease V, Inc.
appearing in Brauvin Net Lease V, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements and
schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
<PAGE>
EXHIBIT A
REINVESTMENT PLAN
Brauvin Net Lease V, Inc. (the "Company"), pursuant to its Amended
Articles of Incorporation (the "Articles"), has adopted a Reinvestment Plan,
the terms and conditions of which follow.
The Company will retain an agent for the Reinvestment Plan (the
"Agent") who will act as agent for participants (the "Participants") in the
Reinvestment Plan. The initial agent for the Reinvestment Plan shall be an
Affiliate of the Company and will be a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Agent
will be paid fees for its services.
1. Commencing on February 25, 1994, the effective date of the
Offering of Shares (the "Effective Date of the Plan"), the Agent will
receive all dividends paid after the Effective Date of the Plan in respect
of Shares of the Company held by each Participant and in respect to any
Shares acquired under Plan. The Agent will hold and apply such funds, after
deducting applicable service charges and other expenses specified in
Paragraph 7 below, as follows.
Commencing with the first dividend paid after the Effective Date
of the Plan, and continuing until the termination of the Reinvestment Plan,
all dividends in respect of the Shares of the Participants will be paid over
to the Agent which will purchase additional Shares of the Company for the
Participant's accounts ("Reinvested Dividends"). Participants may
contribute cash to the Reinvestment Plan in an amount not less than $1,000
and not more than $25,000 per quarter ("Additional Cash Contributions").
Shares will be acquired directly from the Company at a price of $10.00 per
Share during the Offering and from February 25, 1996, the termination of the
Offering, until the third anniversary thereof. Thereafter, until Shares are
listed for trading on an exchange or market, at a price per Share determined
on the basis of an annual valuation of the Company's assets. Upon the
listing of the Shares on an exchange or market, whether prior or subsequent
to the third anniversary of the termination of the Offering, the price will
be the then prevailing market price on the exchange or market at the date of
purchase by the Agent.
2. Stockholders may become Participants in the Plan at any time by
completing, or authorizing their registered representatives at a Placement
Agent to complete the appropriate authorization form available from the
Company, the Selling Agent, the Placement Agent, if applicable, or the
Agent. Participation in the Reinvestment Plan will commence with the next
dividend payable after receipt of a Participant's authorization or
subscription; provided that the election is made no later than 10 days prior
to the end of the quarter.
3. In making purchases for the Participant's accounts, the Agent may
commingle the funds of any Participant with those of other Participants.
The price at which Shares shall have been acquired for a Participant's
account shall be the price at which they were acquired from the Company.
Reinvested Dividends and Additional Cash Contributions shall be invested by
the Agent promptly following the payment date with respect thereto, and in
no event later than 30 days from such receipt (or such longer period as may
be permitted). Under certain circumstances, observance of the rules and
regulations of the Securities and Exchange Commission may require temporary
suspension of such purchases or may require that purchases be spread over a
period of more than 30 days, in which event such purchases will be made or
resumed as or when permitted by such rules and regulations. The Company or
the Agent may rely and act upon an opinion of counsel in this respect, and
in such event will not be accountable for such inability to make all
purchases prior to the end of such 30-day period. The Agent will hold the
Shares of all Participants in one account in the name of its nominee. If a
Participant's Reinvested Dividend is not large enough to buy a full Share,
the Participant will be credited with fractional Shares, computed to five
decimal places.
Neither the Company nor the Agent shall have any responsibility or
liability as to the value of the Company's Shares or any change in value of
the Shares acquired for the Participant's account, provided however that no
liability of the Company or the Agent for violation of federal securities
laws shall be waived hereby.
4. Pending investment, funds shall be held in non-interest bearing
bank account maintained by the Agent. The bank account shall be
specifically designated as being for the benefit of Participants and
disbursements shall be permitted from such account only for purchases of
Shares until Shares are issued to Participants.
5. The Agent will distribute to Participants proxy solicitation
material received by it from the Company which is attributable to Shares
held in the Plan. The Agent will vote any Shares that it holds for the
account of a Participant in accordance with the Participant's written
instructions. If a Participant gives a proxy to person(s) representing the
Company covering Shares registered in the Participant's name, such proxy
will be deemed to be an instruction to the Agent to vote the full Shares in
the Participant's account in like manner. If a Participant does not direct
the Agent as to how the Shares should be voted and does not give a proxy to
person(s) representing the Company covering these Shares, the Agent will not
vote said Shares.
6. The Agent will mail to each Participant a statement of account
describing the Reinvested Dividends and Additional Cash Contributions
received, the service charge, the number and price of Shares purchased and
total Shares held under the Plan as soon as practicable after all Reinvested
Dividends paid on any payment date with respect thereto have been invested
(and also as soon as practicable after the sale of Shares described in
Paragraph 10). No certificate representing Shares will be issued for Shares
credited to an account until the Account is terminated unless the
Participant requests otherwise. Such requests must be made in writing. No
certificates will be issued for fractional Shares.
7. The service charge payable by each Participant to the Agent, at
the time of investment for the administrative services of the Agent shall be
1% of the amount of the Reinvested Dividends and Additional Cash
Contributions. To the extent that Reinvested Dividends and Additional Cash
Contributions are used in the acquisition of properties, the Company will
pay Acquisition Expenses of .75% of Gross Proceeds and Acquisition Fees of
3.50% of Gross Proceeds to the Advisor. In addition to the 1% fee paid by
participants, fees and other charges in the aggregate of up to 4.75% of the
proceeds from the Reinvested Dividends and Additional Cash Contributions,
will be paid by the Company.
8. No Participant shall have any right to draw checks or drafts
against the Participant's account or to give instructions to the Agent
except as expressly provided herein.
9. It is understood that reinvestment of dividends does not relieve a
Participant of any income tax liability which may be payable on such
dividends.
10. A Participant may terminate his or her entire account at any time
without penalty by written notice to Brauvin Net Lease V, Inc., 150 South
Wacker Drive, Suite 3200, Chicago, Illinois 60606, Attn: Reinvestment
Plan, or such other address as may be specified by the Agent in writing.
Partial terminations by a Participant will not be allowed. Termination will
become effective with the next dividend payable after receipt of a
Participant's notice; provided that the notice is received by the Company or
the Agent no later than 10 days prior to the end of the quarter. The
Company reserves the right to amend any aspect of the Plan effective with
respect to any dividend paid subsequent to the notice, provided that the
notice is sent to Participants in the Plan at least 10 days before the
record date for a dividend, mailed to a Participant, or to all Participants,
as the case may be, at the address or addresses shown on their account or
such more recent address as a Participant may furnish to the Company or to
the Agent in writing. The Company also reserves the right to terminate or
change the Agent for the Plan, for any reason at any time, by sending
written notice of termination or change to all Participants. Upon
termination of the Plan, or upon termination of an individual Participant's
involvement in the Plan, the Agent will, as soon as practicable, pay, in
cash, the value of any fractional Shares standing to the credit of a
Participant's account based upon the market price of Shares, determined as
set forth above and the record books of the Company will be revised to
reflect the ownership of record of his or her whole shares. Certificates
representing such Shares will be forwarded to the terminating Participant.
There are no fees associated with termination of an interest in the Plan by
a Participant. A Participant who terminates his or her participation in the
Plan may request that the Shares be submitted to the Company for redemption.
11. Neither the Company nor the Agent shall be liable for any act done
in good faith, or for any good faith omission to act, including, without
limitation, any claims or liability (a) arising out of failure to terminate
a Participant's account upon such Participant's death prior to receipt of
notice in writing of such death, and (b) with respect to the time and the
prices at which Shares are purchased or sold for a Participant's account.
To the extent that indemnification may apply to liabilities arising under
the Securities Act of 1933 or the securities act of a state, the Company and
Agent have been advised that, in the opinion of the Securities and Exchange
Commission and certain state securities commissioners, such indemnification
is contrary to public policy and therefore unenforceable.
12. Each Participant agrees to notify the Company or the Agent
promptly in writing of any change of address. Notices to the Participant
may be given by letter addressed to the Participant in his or her last
address of record the Company, or with the Agent, as the case may be.
13. These terms may be amended or supplemented by an agreement between
any agent and the Company at any time, including but not limited to an
amendment to the Plan to add a voluntary cash contribution feature or to
substitute a new Agent to act as agent for the Participants, by mailing an
appropriate notice at least 10 days prior to the effective date thereof to
each Participant at his or her last address of record. Such amendment or
supplement shall be deemed conclusively accepted by each Participant except
those Participants from whom the Company, or the Agent, as the case may be,
receives written notice of termination prior to the effective date thereof.
14. This Plan and a Participant's election to participate in the Plan
shall be governed by the laws of the State of Illinois.
15. The definitions used in this Reinvestment Plan are set forth
below:
"Acquisition Expenses" shall mean expenses related to the
Company's selection and acquisition of properties, whether or not
acquired, including but not limited to legal fees and expenses,
travel and communications expenses, cost of appraisals,
non-refundable option payments on property not acquired,
accounting fees and expenses, title insurance and miscellaneous
expenses related to the selection and acquisition of properties.
"Acquisition Fees" shall mean the total of all fees and
commissions, however designated, paid by any party to any person
or entity in connection with the selection or acquisition of any
property by the Company. Included in the computation of such fees
or commissions shall be any real estate commission, selection fee,
development fee, nonrecurring management fee, or any fee of a
similar nature, however designated. Excluded shall be development
fees and construction fees paid to persons not affiliated with the
Advisor in connection with the actual development and construction
of a project.
"Additional Cash Contributions" shall mean optional investments by
participants in the Reinvestment Plan to purchase Shares.
"Advisor" shall mean the person(s) or entity responsible for
directing or performing the day-to-day business affairs of the
Company, including a person or entity to which an Advisor
subcontracts substantially all such functions. Initially the
Advisor shall be Brauvin Realty Advisors V, L.L.C. or anyone which
succeeds it in such capacity.
"Affiliate" shall mean (i) any person directly or indirectly
controlling, controlled by or under common control with another
person, (ii) any person owning or controlling 10% or more of the
outstanding voting securities or beneficial interest of such other
person, (iii) any officer, director, trustee, general partner of
such person, and (iv) if such other person is an officer,
director, trustee or partner of another entity, then the entity
for which that person acts in any such capacity.
"Agent" shall mean the person retained by the Company to undertake
the duties provided herein.
"Articles" shall mean the Company's Amended Articles of
Incorporation.
"Company" shall mean Brauvin Net Lease V, Inc.
"Effective Date of the Plan" shall mean February 24, 1994, the
effective date of the Offering of Shares.
"Gross Offering Proceeds" shall mean the total proceeds from the
sale of Shares during the initial public offering period
(excluding Shares issued pursuant to the Reinvestment Plan during
such period) before deductions for organization and offering
expenses. For purposes of calculating Gross Offering Proceeds,
the purchase price for all Shares, including those for which
volume discounts apply, shall be deemed to be $10.00 per Share.
"Gross Proceeds" shall mean the total proceeds from the sale of
Shares during the initial public offering period (including Shares
issued pursuant to the Reinvestment Plan during such period),
before deductions for Organization and Offering Expenses. For
purposes of calculating Gross Proceeds, the purchase price for all
Shares, including those for which volume discounts apply, shall be
deemed to be $10.00 per Share.
"Offering" shall mean the offering of Shares pursuant to the
Prospectus dated February 24, 1994.
"Organization and Offering Expenses" shall mean those expenses
incurred by and to be paid from the assets of the Company in
connection with and in preparing the Company for registration and
subsequently offering and distributing it to the public,
including, but not limited to, total underwriting and brokerage
discounts and commissions (including fees of the underwriters'
attorneys), expenses for printing, engraving, mailing, salaries of
employees while engaged in sales activity, charges of transfer
agents, registrars, trustees, escrow holders, depositaries,
experts, expenses of qualification of the sale of the securities
under Federal and State laws, including taxes and fees,
accountants' and attorneys' fees.
"Participant" shall mean a Stockholder electing to participate in
the Reinvestment Plan.
"Placement Agents" shall mean the dealer members of the National
Association of Securities Dealers, Inc. designated by the Selling
Agent and the Advisor.
"Reinvested Dividends" shall mean those dividends which have been
designated to purchase Shares under the Reinvestment Plan.
"Selling Agent" shall mean Brauvin Securities, Inc., an Affiliate
of the Advisor.
"Shares" shall mean the common stock, par value $0.01 per share,
of the Company.
"Stockholder" shall mean a person holding Shares of the Company.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses of issuance and distribution of the securities registered
hereby are estimated to be as follow:
Expense Amount
Securities and Exchange Commission Registration Fee $ 690
Printing and Engraving Expenses . . . . . . . . . . . 1,000*
Blue Sky Fees and Expenses (including counsel fees) . 1,800*
Legal Fees and Expenses . . . . . . . . . . . . . . . 5,000*
Accounting Fees and Expenses. . . . . . . . . . . . . 2,000*
Miscellaneous . . . . . . . . . . . . . . . . . . . . 1,010*
Total . . . . . . . . . . . . . . . . . . . . . . . $11,500*
_______________________
*Estimated
Item 15. Indemnification of Directors and Officers.
The Company's Articles and By-laws authorize it to the fullest extent
permitted by Maryland statutory or decisional law, as amended or
interpreted, and, without limiting the generality of the foregoing, in
accordance with Section 2-418 of the Maryland General Corporation Law, to
indemnify and pay or reimburse reasonable expenses to, (a) any individual
who is a present or former director, officer, employee or agent of the
Company or (b) any individual who, while a director of the Company and at
the request of the Company, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or trustee, as the case may be,
provided, that (i) the Director, Advisor or other party seeking
indemnification has determined, in good faith, that the course of conduct
which caused the loss or liability was in the best interest of the Company;
(ii) the Director, Advisor or other person seeking indemnification was
acting on behalf of or performing services on the part of the Company; (iii)
such liability or loss was not the result of negligence or misconduct on the
part of the indemnified party, except that in the event the indemnified
party is or was an Independent Director, such liability or loss shall not
have been the result of gross negligence or wilful misconduct; and (iv) such
indemnification or agreement to be held harmless is recoverable only out of
the assets of the Company and not from the Stockholders.
The Company shall not indemnify a Director, the Advisor or its
Affiliates for losses, liabilities or expenses arising from or out of an
alleged violation of federal or state securities laws by such party unless
one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee; (ii) such claims
have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee; or (iii) a court of competent
jurisdiction approves the settlement and finds that indemnification of the
settlement and related costs should be made and the court considering the
request has been advised of the position of the Commission and the published
opinions of any state securities regulatory authority in which securities of
the Company were offered and sold as to indemnification for securities law
violations.
The Company may advance amounts to persons entitled to indemnification
hereunder for legal and other expenses and costs incurred as a result of
legal action instituted against or involving such person if: (i) the legal
action relates to the performance of duties or services by the indemnified
party for or on behalf of the Company; and (ii) the indemnified party
receiving such advances undertakes, in writing, to repay the advanced funds
to the Company, with interest at the rate determined by the Company, in
cases in which such party would not be entitled to indemnification; provided
however that the Board of Directors may deny the payment of advances to a
Director who is an Affiliate of the Company ("Affiliated Director") if a
majority of the Independent Directors shall determine, in the exercise of
their reasonable discretion, that the Affiliated Director seeking advances
would not be entitled to indemnification.
The Company shall have the power to purchase and maintain insurance on
behalf of an indemnified party against any liability asserted which was
incurred in any such capacity with the Company or arising out of such
status; provided, however, that the Company shall not incur the costs of any
liability insurance which insures any person against liability for which he,
she or it could not be indemnified under the Articles.
Neither the amendment nor the adoption of any other provision of the
Articles or the By-laws shall apply to or affect in any respect the
applicability of indemnification with respect to any act or failure to act
which occurred prior to such amendment, repeal or adoption.
To the extent that indemnification may apply to liabilities arising
under the Securities Act of 1933, the Company has been advised that, in the
opinion of the Commission, such indemnification is contrary to public
policy, and therefore unenforceable.
Item 16. Exhibits.
INDEX TO EXHIBITS
Exhibit
No.
Description of Document
*4 Specimen Stock Certificate
5 Opinion of Saitlin, Patzik, Frank & Samotny Ltd. regarding
legality
23(a) Consent of Independent Auditors
23(b) Consent of Saitlin, Patzik, Frank & Samotny Ltd. (included in
Exhibit 5)
______________
* Incorporated by reference from the exhibits filed with the
Company's registration statement (Registration Number 33-70550) on
Form S-11 filed under the Securities Act of 1933, as amended.
Item 17. Undertakings.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d)of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has fully caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois on the
16th day of May, 1996.
BRAUVIN NET LEASE V, INC.
By: /s/ Jerome J. Brault
Jerome J. Brault, Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Jerome J. Brault Chairman, President and Chief May 16, 1996
Jerome J. Brault Executive Officer
/s/ James L. Brault Director, Executive Vice President May 16, 1996
James L. Brault and Secretary
/s/ Thomas J. Coorsh Chief Financial Officer (Principal May 16, 1996
Thomas J. Coorsh Accounting Officer)
/s/ Jeff A. Jacobson Director May 16, 1996
Jeff A. Jacobson
/s/ Gregory S. Kobus Director May 16, 1996
Gregory S. Kobus
Director
Philip S. Moreau
/s/ Kenneth S. Nelson Director May 16, 1996
Kenneth S. Nelson
/s/ Hugh K. Zwieg Director May 16, 1996
Hugh K. Zwieg
<PAGE>
INDEX TO EXHIBITS
Exhibit
No.
Description of Document
*4 Specimen Stock Certificate
5 Opinion of Saitlin, Patzik, Frank & Samotny Ltd. regarding
legality
23(a) Consent of Independent Auditors
23(b) Consent of Saitlin, Patzik, Frank & Samotny Ltd. (included in
Exhibit 5)
_________________
* Incorporated by reference from the exhibits filed with the
Company's registration statement (Registration Number 33-70550) on
Form S-11 filed under the Securities Act of 1933, as amended.
Law Offices
SAITLIN, PATZIK, FRANK & SAMOTNY LTD.
150 South Wacker Drive
Suite 900
Chicago, Illinois 60606
_________
TELEPHONE: (312) 551-8300
FACSIMILE: (312) 551-1101
_________
May 15, 1996 1345-046-A
The Board of Directors of
Brauvin Net Lease V, Inc.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
Re: Brauvin Net Lease V, Inc.: Registration
Statement on Form S-3
Gentlemen:
We have acted as legal counsel to Brauvin Net Lease
V, Inc., a Maryland corporation (the "Registrant"), in
connection with the preparation of the Registration
Statement filed on or about May 15, 1996 on Form S-3 with
exhibits with the Securities and Exchange Commission (the
"Registration Statement"), relating to the registration
of 200,000 shares of the Registrant's common stock $0.01
par value ("Common Stock"). The Registration Statement
relates to the registration of additional shares for the
dividend reinvestment plan (the "Plan"). We have
reviewed such records, documents and matters of law as we
have deemed reasonably necessary to render this opinion.
We have also participated in conversations with officers
of the Registrant during which facts material to the
opinions expressed herein were discussed. We have
assumed such factual matters to be true and correct.
In making our examination, we have assumed the
genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to
originals of all documents submitted to us as certified
or photostatic copies and the capacity of each party
executing a document to so execute such document. We
have also relied upon representations from the Registrant
that (i) the total number of shares of Common Stock
issued by the Registrant to the Plan will not be in
excess of the number of shares of Common Stock currently
reserved for issuance by the Registrant's Board of
Directors to be issued to the Plan, unless subsequently
increased as authorized by the Registrant's Board of
Directors out of authorized but unissued shares of the
Common Stock and (ii) that upon issuance of such shares,
that such shares when combined with the then existing
number of outstanding shares of Common Stock will not
exceed the then authorized number of shares of Common
Stock.
An opinion of counsel is predicated upon all of the
facts and conditions as set forth therein and is based
upon counsel's analysis of the statutes, regulatory
interpretations and case law in effect as of the date of
this opinion. It is neither a guarantee of the current
status of the law nor should it be accepted as a
guarantee that a court of law or an administrative agency
will concur in the opinion.
Based upon the foregoing and assuming the accuracy
of the statements regarding the Registrant and the
conduct of its business all as set forth in its
Registration Statement, it is our opinion that the Common
Stock, when issued as provided under applicable Maryland
law, the Registration Statement, and the Registrant's
Articles of Incorporation, will be validly issued, fully
paid and non-assessable.
We do not purport to cover herein the application of
the securities or "Blue Sky" laws of the various states
to the issuance of the Common Stock.
This opinion is furnished to you in connection with
the filing of the Registration Statement, and is not to
be used, circulated, quoted or otherwise relied upon for
any other purpose.
We are licensed to practice only in Illinois and no
opinion is expressed by us herein as to laws of other
jurisdictions. This opinion is limited to the matters
expressly set forth herein, and no opinion is to be
implied or may be inferred beyond the others expressly so
stated.
We hereby consent to the references to this firm and
the inclusion of the legality opinion as an exhibit to
the Registration Statement.
Very truly yours,
SAITLIN, PATZIK, FRANK & SAMOTNY LTD.
/s/ Saitlin, Patzik, Frank & Samotny Ltd.
SPFS:bmt
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the
caption "Experts" in the Form S-3 Registration
Statement and related Prospectus of Brauvin Net Lease
V, Inc. and to the incorporation by reference therein
of our report dated March 27, 1996, with respect to the
financial statements and schedule of Brauvin Net Lease
V, Inc. included in its Annual Report (Form 10-K) for
the year ended December 31, 1995, filed with the
Securities and Exchange Commission
ERNST & YOUNG LLP
Chicago, Illinois
May 15, 1996
