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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 20, 1997
Brauvin Net Lease V, Inc.
(Exact name of registrant as specified in its charter)
Maryland 0-28332 36-3913066
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
organization) Number)
150 South Wacker Drive, Suite 3200, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 443-0922
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Capitalized terms not otherwise defined herein will have the same
meaning as in the prospectus of Brauvin Net Lease V, Inc. (the
"Company") dated February 25, 1994 as supplemented to date (the
"Prospectus").
Jiffy Lube & Firestone Facilities - East Norriton Township, Pennsylvania
On February 20, 1997, effective as of January 20, 1997 the Company,
through a wholly-owned subsidiary intended to qualify as a
qualified REIT subsidiary purchased the land and two buildings (the
"Property") consisting of a 6,580 square foot building underlying
a Firestone Tire & Service Center facility (the "Firestone
Facility") and a 2,440 square foot building underlying a Jiffy Lube
oil change facility (the "Jiffy Lube Facility"), located in East
Norriton Township from Germantown Associates, L.P., an unaffiliated
party, for $1,450,000 plus closing costs. The Firestone Facility
has been leased to Bridgestone/Firestone Inc. ("Firestone") for an
initial term of 25 years ending January 31, 2013. The Jiffy Lube
Facility has been leased to Jiffy Lube International of Maryland,
Inc. for an initial term of 20 years ending May 8, 2007.
Both the Firestone Facility and the Jiffy Lube Facility will be
operated by the respective lessees and the Company will be a
landlord only and will not participate in the operations of the
facilities.
Bridgestone/Firestone, Inc.
Bridgestone/Firestone, Inc., based in Nashville, Tennessee,
develops, manufactures, markets and retails tires for almost every
kind of motorized vehicle. Firestone has approximately 1500
Firestone Tire & Service Centers nationwide which sell automotive
aftermarket tires and services the undercarriage needs of the
average vehicle owner. Firestone Tire & Service Centers are
usually free-standing buildings predominately located near or in
suburbs of metropolitan areas. Bridgestone/Firestone is the
principal subsidiary of Bridgestone Corporation, listed on the
Tokyo Stock Exchange, the world's largest tire and rubber company.
Jiffy Lube International of Maryland, Inc.
Jiffy Lube International of Maryland, Inc. ("Jiffy Lube") is a
wholly-owned subsidiary of Jiffy Lube International, Inc. ("Jiffy
Lube International"). Jiffy Lube International, 100% owned by
Pennzoil Corporation (a NYSE listed company), is the guarantor on
the lease and the nation's largest operator of quick automotive
lubrication service centers. As of December 31, 1996, Jiffy Lube
International operated or franchised 1,403 Jiffy Lube International
service units throughout the United States. Jiffy Lube
International service centers are usually free-standing buildings
predominately located near or in suburbs of metropolitan areas.
The Property
The Property is located on a parcel of land in a regional shopping
district on Germantown Pike near the intersection of Germantown
Pike and Dekalb Pike, a major intersection in eastern Montgomery
County, Pennsylvania. Montgomery County is the wealthiest county
in the State of Pennsylvania on a per capita basis. The Property
consists of two free-standing buildings, the Firestone Facility of
6,580 square feet and the Jiffy Lube Facility of 2,440 square feet
on an approximately 1.49 acre lot. Approximately $1,070,068 of the
basis of the Property is anticipated to be allocated to building
and $441,985 to land including acquisition fees and closing costs.
For Federal tax purposes, depreciation will be based on MACRS
schedule of 39 years.
Terms of the Acquisition
The purchase price of the Property was $1,450,000 and was paid in
cash at closing. The purchase price was supported by an MAI
appraisal. The Company acquired fee simple title to the Property.
The aggregate fees paid to the Advisor in connection with the
acquisition was $50,750. The Company, through its wholly-owned
subsidiary, also agreed to indemnify the seller against claims
which may be brought against the seller by a potential purchaser of
the Property.
The Leases
The Firestone Facility is leased to Firestone (the "Firestone
Lease"), under an initial twenty five year lease with two five year
options. The Firestone Lease requires Firestone to pay a minimum
base rent each month in the amount of $7,975. In addition to
rental payments, Firestone is required to pay directly or
indirectly for all expenses related to the Firestone Facility and
its pro-rata share of expenses relating to the common area between
the Firestone Facility and the Jiffy Lube Facility including real
estate taxes, insurance premiums and repairs and maintenance costs
related to the Firestone Facility.
The Jiffy Lube Facility is leased to Jiffy Lube (the "Jiffy Lube
Lease"), under an initial twenty year lease with two five year
options. The Jiffy Lube Lease requires Jiffy Lube to pay a
minimum base rent each month in the amount of $6,570. In addition
to rental payments, Jiffy Lube is required to pay directly or
indirectly for all expenses related to the Jiffy Lube Facility and
its pro-rata share of expenses relating to the common area between
the Firestone Facility and the Jiffy Lube Facility including real
estate taxes, insurance premiums and repairs and maintenance costs
related to the Jiffy Lube Facility.
Risk of Ownership
The possibility exists that Jiffy Lube and/or Firestone may be
unable to fulfill their respective obligations pursuant to the
terms of their respective leases, including making base rent
payments to the Company. Furthermore, the Company may be unable to
successfully locate a substitute tenant(s) due to the fact the that
buildings have been designed primarily to house the current
operations of each tenant. Thus, the Property may not be readily
marketable to a new tenant without substantial capital improvements
or remodeling. Such improvement may require the expenditure of
Company funds otherwise available for distribution or require the
sale of the Property. See "Risk Factors" in the Prospectus.
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Item 7. Financial Statements and Exhibits
(a)(1) Financial Information
Summary financial information regarding the tenants at the
Property are not currently available and will be filed by
the Company not later than sixty days after the date of
the report.
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Item 7. Financial Statements and Exhibits
(2) Forecasted Financial Information
BRAUVIN NET LEASE V, INC.
FORECASTED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDING FEBRUARY 28, 1998
(INCLUDING ALL ACQUISITIONS)
(Unaudited)
INCOME:
Rental (Note 1) $ 1,310,026
Interest 14,078
Total Income 1,324,104
EXPENSES (Note 2):
Director fees 16,000
Advisory fees 175,000
General and administrative 93,000
Management Fees (Note 3) 12,325
Total Expenses 296,325
Operating Cash Flow 1,027,779
Less:
Depreciation (Note 4) 188,410
Net Income $ 839,369
See Notes to Forecasted Statement of Operations.
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BRAUVIN NET LEASE V, INC.
NOTES TO FORECASTED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDING FEBRUARY 28, 1998
(INCLUDING ALL ACQUISITIONS)
(Unaudited)
1. Rental Income
Forecasted rental income is based on monthly rent billed to all
tenants of approximately $102,710. Forecasted rental income
includes the monthly rent of the Company's acquisitions of one
Country Harvest Buffet restaurant, acquired November 21, 1994, one
On The Border restaurant, acquired January 9, 1995, one Blockbuster
Video store, acquired January 31, 1995, one Chili's restaurant,
acquired April 13, 1995, one Just For Feet store, acquired June 15,
1995, one Video Watch store, acquired July 31, 1995, one Pier One
Imports store, acquired May 3, 1996, one Taylor Rental store,
acquired November 22, 1996, and one Firestone and Jiffy Lube store,
acquired on February 20, 1997 (the "Firestone/Jiffy Lube
Property") (collectively, the "Properties").
Forecasted rental income is recognized on a straight-line basis
over the life of the related leases. Differences between rental
income earned and amounts due the respective lease agreements are
credited or charged as applicable to deferred rent receivable.
2. Property Operating Expenses
The Properties are each triple net leased to the respective tenant,
by which the tenant is responsible for paying all real estate
taxes, insurance premiums and repairs and maintenance costs. The
Company is, therefore, not responsible for operating expenses
attendant to the ownership of the Properties except for management
fees. Pursuant to the terms of the Pier One store lease, the
Company is responsible for the roof and structural components of
the building and parking lot excluding normal maintenance.
3. Management Fee Expense
A management fee is payable to an affiliate of the Company in the
amount of 1% of gross revenues derived from the operations of the
Properties.
4. Depreciation
For presenting forecasted depreciation, approximately $7,485,237 of
the basis of the Properties will be allocated to building and
$3,946,501 to land. Tax basis depreciation will be based on MACRS
39 years. Book depreciation is recorded on a straight-line basis
over a period of 40 years.
5. Taxable Income
The Company intends to qualify as a real estate investment trust
and therefore is required to distribute substantially all of its
taxable income to its stockholders.
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Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Statements.
The pro forma information included herein is presented for
the year ended December 31, 1995 and as of and for the
nine months ended September 30, 1996, corresponding to the
period of the Company's annual and quarterly financial
statements most recently filed with the Securities and
Exchange Commission.
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BRAUVIN NET LEASE V, INC.
PRO FORMA STATEMENT OF INCOME
For the Year Ended December 31, 1995
(Unaudited)
On The Border, On The Border,
Blockbuster Blockbuster
Video, Chili's, Video, Chili's,
Just For Feet, Just For Feet,
Video Watch, Video Watch,
Pier One Pier One
and Taylor and Taylor All
Rental Rental Firestone Properties
Historical Pro Forma Pro Forma Jiffy Lube Pro Forma
Results Adjustments Results Adjustments Results
INCOME:
Rental (Note 4) $631,467 $502,328 $1,133,795 $174,540 $1,308,335
Interest
(Note 5) 130,545 (91,836) 38,709 (37,801) 908
Total Income 762,012 410,492 1,172,504 136,739 1,309,243
EXPENSES:
Directors' fees 19,743 -- 19,743 -- 19,743
Advisory fees 55,525 -- 55,525 -- 55,525
Management fees
(Note 6) 6,386 4,241 10,627 1,745 12,372
General and
administrative 63,082 -- 63,082 -- 63,082
Acquisition costs 21,678 -- 21,678 -- 21,678
Depreciation and
amortization 101,908 59,750 161,658 26,752 188,410
Total Expenses 268,322 63,991 332,313 28,497 360,810
Net Income $493,690 $346,501 $840,191 $108,242 $948,433
Net Income per
Share (Note 7) $ 0.56 $ 0.28 $ 0.67 $ 0.09 $ 0.76
The historical results distribution per weighted average share outstanding
(883,012 shares for the period ended December 31, 1995) is $.48. The pro
forma distribution (all Properties, excluding Firestone/Jiffy Lube Property)
and the pro forma distribution (all Properties), calculated assuming that
1,249,968 shares were outstanding (the minimum number of shares necessary to
provide proceeds sufficient for the Company to acquire all Properties), is
$0.64 per share and $0.72 per share, respectively. The historical results
distribution per share is based on actual distributions paid in 1995 and the
pro forma distributions assume distributions of 95% of the real estate
investment trust taxable income and that the "Net Income" equals real estate
investment trust taxable income for the period. The pro forma results
distribution would be taxable as ordinary income.
See Notes to Pro Forma Financial Statements.
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BRAUVIN NET LEASE V, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
1. Basis of Presentation
The unaudited pro forma financial statements are based upon the
Company's audited financial statements for the year ended December
31, 1995 with pro forma adjustments based on (1) the acquisitions
of one On The Border restaurant, one Blockbuster Video store, one
Chili's restaurant, one Just For Feet store, one Video Watch store,
one Pier One Imports store, and one Taylor rental store; and (2)
the acquisition of one Firestone/Jiffy Lube store (the "Firestone/
Jiffy Lube Property") (collectively, the "Properties").
The pro forma adjustments reflect the financial effect of the
acquisitions as if they had been consummated on January 1, 1995.
These adjustments are described in detail by the following
footnotes.
2. Investment Properties
The Firestone/Jiffy Lube Property is stated at its purchase price
plus acquisition fees and closing costs. Depreciation is recorded
on a straight-line basis over a period of 40 years.
3. Cash and Cash Equivalents
The pro forma adjustments represent the amount of cash used in
acquiring the Firestone/Jiffy Lube Property. It is assumed that
sufficient funds were available for the acquisitions at the
commencement of operations although funds were raised through
February, 1996.
4. Rental Income
The pro forma adjustments assume that the Properties were acquired
on January 1, 1995 and twelve months of rental income has been
recognized in 1995.
Proforma rental income is recognized on a straight-line basis over
the life of the related leases. Differences between rental income
earned and amounts due the respective lease agreements are credited
or charged as applicable to deferred rent receivable.
5. Interest Income
The pro forma adjustment to reduce interest income assumes that the
funds used in acquiring the Properties were not invested in 2.5%
interest-bearing deposits throughout the period.
6. Management Fees
A management fee is payable to an affiliate of the Company in the
amount of 1% of gross revenues derived from the operations of the
Properties.
7. Earnings Per Share
The historical results earnings per share per weighted average
share is calculated based on 883,012 shares for the year ended
December 31, 1995. The earnings per share pro forma results (all
Properties, excluding Firestone/Jiffy Lube Property only) and the
pro forma results (all Properties) is calculated assuming the
shares outstanding at December 31, 1995 were a sufficient number of
shares (1,249,968 shares) to acquire all Properties.
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BRAUVIN NET LEASE V, INC.
PRO FORMA BALANCE SHEET
September 30, 1996
(Unaudited)
Historical Pro Forma Pro Forma
Results Adjustments Results
ASSETS
Investment in real estate,
at cost (Note 2):
Land $ 3,176,192 $ 770,309 $ 3,946,501
Buildings 6,064,576 1,420,661 7,485,237
Total investment 9,240,768 2,190,970 11,431,738
Less: accumulated
depreciation (202,987) -- (202,987)
Net investment in
real estate 9,037,781 2,190,970 11,228,751
Cash and cash
equivalents (Note 3) 2,692,076 (2,190,970) 501,106
Organization costs 16,917 -- 16,917
Tenant receivables 69,792 -- 69,792
Prepaid expenses and deferred
acquisition costs 111,294 -- 111,294
Total Assets $11,927,860 $ -- $11,927,860
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
expenses $ 18,000 $ -- $ 18,000
Prepaid rent 12,292 -- 12,292
Due to affiliates 56,557 -- 56,557
Total Liabilities 86,849 -- 86,849
Stockholders' Equity
Preferred stock -- -- --
Common stock 12,990 -- 12,990
Additional paid-in capital 11,894,714 -- 11,894,714
Retained earnings (66,693) -- (66,693)
Total Stockholders' Equity 11,841,011 -- 11,841,011
Total Liabilities &
Stockholders' Equity $11,927,860 $ -- $11,927,860
See Notes to Pro Forma Financial Statements.
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BRAUVIN NET LEASE V, INC.
PRO FORMA STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(Unaudited)
Pier One Pier One
and Taylor and Taylor All
Rental Rental Firestone Properties
Historical Pro Forma Pro Forma Jiffy Lube Pro Forma
Results Adjustments Results Adjustments Results
INCOME:
Rental (Note 4) $750,274 $105,755 $ 856,029 $130,905 $ 986,934
Interest
(Note 5) 118,364 (28,048) 90,316 (28,351) 61,965
Total Income 868,638 77,707 946,345 102,554 1,048,899
EXPENSES:
Directors' fees 16,999 -- 16,999 -- 16,999
Advisory fees 114,631 -- 114,631 -- 114,631
Management fees
(Note 6) 6,799 1,057 7,856 1,309 9,165
General and
administrative 78,748 -- 78,748 -- 78,748
Acquisition costs 38,306 -- 38,306 -- 38,306
Depreciation and
amortization 111,632 14,096 125,728 20,064 145,792
Total Expenses 367,115 15,153 382,268 21,373 403,641
Net Income $501,523 $ 62,554 $564,077 $81,181 $645,258
Net Income per
Share (Note 7) $ 0.39 $ 0.05 $ 0.44 $ 0.06 $ 0.51
The historical results distribution, the pro forma distribution (all
Properties, excluding the Firestone/Jiffy Lube Property) and the pro forma
distribution (all Properties) per weighted average shares outstanding
(assumed to be 1,270,712 shares for the period ending September 30, 1996) is
$0.53 per share, $0.42 per share and $0.48 per share, respectively. The pro
forma distributions are calculated using the weighted average shares
outstanding at September 30, 1996. The historical results distribution per
share is based on actual distributions paid in 1996 and the pro forma
distributions assume distributions of 95% of the real estate investment trust
taxable income and that the "Net Income" equals real estate investment trust
taxable income for the period. The pro forma results distribution would be
taxable as ordinary income.
See Notes to Pro Forma Financial Statements.
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BRAUVIN NET LEASE V, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. Basis of Presentation
The unaudited pro forma financial statements are based upon the
Company's unaudited financial statements for the nine months ended
September 30, 1996 with pro forma adjustments based on the
acquisition of one Pier One Imports store, one Taylor Rental store
and one Firestone/Jiffy Lube store (the "Firestone/Jiffy Lube
Property") (collectively, the "Properties").
The pro forma adjustments reflect the financial effect of the
acquisitions as if they had been consummated on January 1, 1996.
These adjustments are described in detail by the following
footnotes.
2. Investment Properties
The Taylor rental and Firestone/Jiffy Lube stores are stated at
their purchase price plus acquisition fees and estimated closing
costs. Depreciation is recorded on a straight-line basis over a
period of 40 years.
3. Cash and Cash Equivalents
The pro forma adjustments represent the amount of cash used in
acquiring the Taylor rental and Firestone/Jiffy Lube stores.
4. Rental Income
The pro forma adjustments assume that the Properties were acquired
on January 1, 1996 and that nine months of rental income has been
recognized in 1996.
Proforma rental income is recognized on a straight-line basis over
the life of the related leases. Differences between rental income
earned and amounts due the respective lease agreements are credited
or charged as applicable to deferred rent receivable.
5. Interest Income
The pro forma adjustment to reduce interest income assumes that the
funds used in acquiring the Properties were not invested in 2.5%
interest-bearing deposits throughout the three month period.
6. Management Fees
A management fee is payable to an affiliate of the Company in the
amount of 1% of gross revenues derived from the operations of the
Properties.
7. Earnings Per Share
The historical results and the pro forma results earnings per share
per weighted average share are calculated based upon 1,270,712
shares for the period ending September 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, there unto duly authorized.
BRAUVIN NET LEASE V, INC.
By: /s/ Jerome J. Brault
Jerome J. Brault
President and Chief Executive Officer
Dated: March 5, 1997
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