UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2003 [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from N/A to N/A Commission File Number 0-28332 BRAUVIN NET LEASE V, INC. (Exact name of small business issuer in its charter) Maryland 36-3913066 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 North LaSalle Street, Chicago, Illinois 60602 (Address of principal executive offices) (Zip Code) (312)759-7660 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . As of November 15, 2003, the registrant had 1,286,163 shares of Common Stock outstanding. Transitional Small Business Disclosure Format(check one) Yes No X . BRAUVIN NET LEASE V, INC. (a Maryland corporation) INDEX PART I - FINANCIAL INFORMATION Page Item 1. Consolidated Financial Statements. . . . . . . . . . . . . . 3 Consolidated Balance Sheet at September 30, 2003 . . . . . . 4 Consolidated Statements of Operations for the nine months ended September 30, 2003 and 2002. . . . . . . . 5 Consolidated Statements of Operations for the three months ended September 30, 2003 and 2002 . . . . . . . 6 Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002. . . . . . . . 7 Notes to Consolidated Financial Statements . . . . . . . . . 8 Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . .21 Item 3. Controls and Procedures . . . . . . . . . . . . . . . . . .25 PART II - OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .26 Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . .26 Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . .26 Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . . .26 Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . .26 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 BRAUVIN NET LEASE V, INC. (a Maryland corporation) PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The following Consolidated Balance Sheet as of September 30, 2003, Consolidated Statements of Operations for the nine months ended September 30, 2003 and 2002, Consolidated Statements of Operations for the three months ended September 30, 2003 and 2002 and Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002 for Brauvin Net Lease V, Inc. (the "Fund") are unaudited but reflect, in the opinion of the management, all adjustments necessary to make the consolidated financial statements not misleading. All such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Fund's 2002 Annual Report on Form 10-KSB. BRAUVIN NET LEASE V, INC. (a Maryland corporation) CONSOLIDATED BALANCE SHEET (Unaudited) September 30, 2003 ASSETS Investment in real estate, at cost: Land $ 3,965,746 Buildings 6,790,916 10,756,662 Less accumulated depreciation (1,052,182) Net investment in real estate 9,704,480 Cash and cash equivalents 526,684 Intangibles assets, net 294,941 Tenant receivables 23,788 Deferred rent receivable 246,624 Prepaid expenses 8,961 Total Assets $10,805,478 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 37,700 Rents received in advance 7,950 Security deposits 9,794 Due to affiliates 820 Total Liabilities 56,264 Stockholders' Equity: Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued -- Common stock, $.01 par value, 9,000,000 shares authorized; 1,286,163 shares issued and outstanding 12,862 Additional paid-in capital 11,526,203 Accumulated deficit (789,851) Total Stockholders' Equity 10,749,214 Total Liabilities and Stockholders' Equity $10,805,478 See notes to consolidated financial statements. BRAUVIN NET LEASE V, INC. (a Maryland corporation) CONSOLIDATED STATEMENTS OF OPERATIONS For the nine months ended September 30, (Unaudited) 2003 2002 INCOME Rental $931,494 $ 713,058 Lease termination fee -- 200,000 Other charges to tenants 23,788 41,319 Interest and other 6,022 11,660 Total income 961,304 966,037 EXPENSES Directors fees 9,000 9,000 Advisory fees 141,647 108,747 Management fees 9,312 10,412 General and administrative 94,848 95,441 Real estate taxes 23,788 41,946 Depreciation and amortization 137,470 126,760 Total expenses 416,065 392,306 Net income before property sale 545,239 573,731 Gain on sale of property -- 628,113 Net income $545,239 $1,201,844 Net income per share (based on average shares outstanding of 1,286,163) $ 0.42 $ 0.93 See notes to consolidated financial statements. BRAUVIN NET LEASE V, INC. (a Maryland corporation) CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended September 30, (Unaudited) 2003 2002 INCOME Rental $326,129 $ 286,853 Other charges to tenants 23,788 17,564 Interest and other -- 4,807 Total income 349,917 309,224 EXPENSES Directors fees 3,000 3,000 Advisory fees 36,209 36,249 Management fees 2,880 3,304 General and administrative 41,552 32,507 Real estate taxes 23,788 17,563 Depreciation and amortization 49,976 39,815 Total expenses 157,405 132,438 Net income $192,512 $ 176,786 Net income per share (based on average shares outstanding of 1,286,163) $ 0.15 $ 0.14 See notes to consolidated financial statements. BRAUVIN NET LEASE V, INC. (a Maryland corporation) CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended September 30, (Unaudited) 2003 2002 Cash Flows From Operating Activities: Net income $ 545,239 $1,201,844 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 137,470 126,760 Gain on sale of property -- (628,113) Amortization of acquired above market lease 13,953 -- Changes in: Tenant receivables (2,298) 31,305 Deferred rent receivable (21,682) 190,291 Prepaid expenses (2,957) (4,942) Accounts payable and accrued expense 7,880 4,346 Due from affiliates -- (14,110) Prepaid rent (39,592) 18,334 Security deposits 9,794 -- Due to affiliates (347) (23,538) Net cash provided by operating activities 647,460 902,177 Cash Flows From Investing Activities: Proceeds from the sale of property -- 3,850,038 Purchase of property (956,568) (2,187,519) Net cash (used in)provided from investing activities (956,568) 1,662,519 Cash Flows From Financing Activities: Dividends (723,708) (1,274,091) Net cash used in financing activities (723,708) (1,274,091) Net (decrease)increase in cash and cash equivalents (1,032,816) 1,290,605 Cash and cash equivalents at beginning of period 1,559,500 298,835 Cash and cash equivalents at end of period $ 526,684 $1,589,440 See notes to consolidated financial statements. BRAUVIN NET LEASE V, INC. (a Maryland corporation) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Brauvin Net Lease V, Inc. (the "Fund") is a Maryland corporation formed on October 14, 1993, which operates as a real estate investment trust ("REIT") under federal tax laws. The Fund has acquired properties that are leased to creditworthy corporate operators of nationally or regionally established businesses primarily in the retail and family restaurant sectors. All of the leases are on a long-term "triple net" basis generally requiring the corporate tenant to pay both base annual rent with mandatory escalation clauses and all operating expenses. The Fund acquired properties subject to leases with a Country Harvest Buffet Restaurant during the year ended December 31, 1994; an On the Border Restaurant, a Blockbuster Video, A Chili's Restaurant, a Just for Feet and a Video Watch during the year ended December 31, 1995; a Pier 1 Imports and a Taylor Rental during the year ended December 31, 1996; a Jiffy Lube and Firestone facility during the year ended December 31, 1997; a Golden Corral Restaurant during the year ended December 31, 2002; and three Dollar General stores during the quarter ended June 30, 2003. The On the Border Restaurant, and the Just for Feet property were sold during the year ended December 31, 2002. The Chili's Restaurant in Birmingham, Alabama was exchanged for a similar property located in Tucker, Georgia during the year ended December 31, 2002. The advisory agreement provides for Brauvin Realty Advisors V, L.L.C. (the "Advisor"), an affiliate of the Fund, to be the advisor to the Fund. The Fund registered the sale of up to 5,000,000 shares of common stock at $10.00 per share in an initial public offering filed with the Securities and Exchange Commission ("Registration Statement") and the issuance of 500,000 shares pursuant to the Fund's dividend reinvestment plan. On August 8, 1994, the Fund sold the minimum 120,000 shares required under its Registration Statement and commenced its real estate activities. The offering period for the sale of common stock terminated on February 25, 1996. At September 30, 2003, the gross proceeds raised were $12,881,903, net of liquidations of $663,172, and includes $200,000 invested by the Advisor ("Initial Investment"), before reduction for selling commissions and other offering costs. On November 6, 2003 the Board of Directors approved the adoption of a plan of liquidation which contemplates the sale of all of the Fund's assets within a twenty four month period. SIGNIFICANT ACCOUNTING POLICIES Management's Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Accounting Method The accompanying consolidated financial statements have been prepared using the accrual method of accounting. Rental Income Rental income is recognized on a straight line basis over the life of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are credited or charged, as applicable, to deferred rent receivable. Federal Income Taxes The Fund intends to be treated as a REIT under Internal Revenue Code Sections 856-860. A REIT will generally not be subject to federal income taxation to the extent that it distributes at least 90% of its taxable income to its shareholders and meets certain asset and income tests as well as other requirements. The Fund continues to qualify as a real estate investment trust and, accordingly, no provision has been made for Federal income taxes in the financial statements. Consolidation of Subsidiary The Fund owns a 100% interest in one qualified REIT subsidiary, Germantown Associates, Inc., which owns one Firestone/JiffyLube property. The accompanying financial statements have consolidated 100% of the assets, liabilities, operations and stockholder's equity of Germantown Associates, Inc. All significant intercompany accounts have been eliminated. Investment in Real Estate The Fund's rental properties are stated at cost including acquisition costs. Depreciation is recorded on a straight-line basis over the estimated economic lives of the properties, which approximate 40 years. The Fund has performed an analysis of its long-lived assets, and the Fund's management determined that there were no events or changes in circumstances that indicated that the carrying amount of the assets may not be recoverable at September 30, 2003. Accordingly, no impairment loss has been recorded in the accompanying financial statements for the nine months ended September 30, 2003. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid instruments with an original maturity within three months from date of purchase and approximate their fair value. Rent Receivable Rent receivables are comprised of (a) billed but uncollected amounts due for monthly rents and other charges, (b) estimated unbilled amounts due for tenant reimbursement of common area maintenance charges and property taxes and (c) amounts due for scheduled rent increases for which rentals have been earned and will be collected in the future under the terms of the leases. Receivables are recorded at management's estimate of the amounts that will ultimately be collected. Allowance for doubtful accounts is based on specific identification of uncollectible accounts and the Fund's historical collection experience. Estimated Fair Value of Financial Instruments Disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments." The estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies. However, considerable judgement is necessarily required in interpreting market data to develop estimates of fair value. The fair value estimates presented herein are based on information available to management, but may not necessarily be indicative of the amounts that the Fund could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts of the following items are reasonable estimates of fair value: cash and cash equivalents; tenant receivable; deferred rent receivable; accounts payable and accrued expense; rents received in advance; security deposits; and due to affiliates. Derivatives and Hedging Instruments In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which requires that all derivatives be recognized as assets and liabilities in the balance sheet and be measured at fair value. SFAS 133 also requires changes in fair value of derivatives to be recorded each period in current earnings or comprehensive income depending on the intended use of the derivatives. In June, 2000, the FASB issued SFAS 138, which amends the accounting and reporting standards of SFAS 133 for certain derivatives and certain hedging activities. SFAS 133 and SFAS 138 were adopted by the Fund effective January 1, 2001. The Fund has no derivatives in 2003 and 2002. Recent Accounting Pronouncements In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 requires the purchase method of accounting for business combinations initiated after July 30, 2001 and eliminates the pooling-of-interests method. In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), which was effective January 1, 2002. SFAS 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing intangibles, reassessment of the useful lives of existing intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. Implementation of SFAS 141 and 142 resulted in the recognition of additional intangible assets (acquired in place lease origination costs aggregating $125,000 at December 31, 2002 with an additional $75,000 recognized in the second quarter of 2003 and an above market lease in the amount of $141,000 (unchanged from December 31, 2002)). The intangible assets are being amortized over the remaining term of the acquired leases. For the nine months ended September 30, 2003, amortization expense includes $15,619 of origination costs and rental revenue has been charged with $13,953 of amortization of the above market lease value. Application of SFAS 141 and 142 to future acquisitions, if any, could result in the recognition, upon acquisition, of additional intangible assets (acquired in place lease origination costs and acquired above market leases) and liabilities (acquired below market leases) which would be amortized over the remaining term of the leases. In June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), which was effective for years beginning after June 15, 2002. SFAS requires recognition of a liability and associated asset for the fair value of costs arising from legal obligations associated with the retirement of tangible long-lived assets. The asset is to be allocated to expense over its estimated useful life. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which was effective for fiscal years beginning after December 15, 2001. SFAS 144 supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 144 retains the recognition and measurement requirements of SFAS 121, but resolves significant SFAS 121 implementation issues. In addition, it applies to a segment of a business accounted for as a discontinued operation. In April 2002, FASB issued Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, Amendment of FASB No. 13, and Technical Corrections" ("SFAS 145"). Generally, the rescission of FASB No. 4, "Reporting Gains and Losses from Extinguishment of Debt" would require that debt extinguishment costs are to no longer be treated as extraordinary items. The amendment to FASB No. 13, "Accounting for Leases" requires sale-leaseback accounting for certain lease modifications that have the economic effects that are similar to sale-leaseback transactions. This statement is generally effective for the year ending December 31, 2003. In November 2002, FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued and clarifies that a guarantor is required to recognize, at inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of FIN 45 are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN 45 are effective for periods ending after December 15, 2002. In January 2003, FASB issued interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). FIN 46 addresses consolidation by business enterprises of certain variable interest entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies to variable interest entities created after January 31, 2003 and to such entities in which the interest was acquired prior to February 1, 2003 commencing with financial statements issued after December 15, 2003. The adoption of SFAS 143, 144, 145 and FIN 45 and 46 has not had a significant impact on the Fund's financial statements. (2) RELATED PARTY TRANSACTIONS The Fund is required to pay certain fees to the Advisor or its affiliates pursuant to various agreements set forth in the Prospectus and described below. Pursuant to the terms of the Selling Agreement, Brauvin Securities, Inc. ("BSI"), an affiliate of the Advisor, was entitled to placement charges of 5.50% of the gross proceeds of the Fund's offering, all of which were reallowed to placement agents. In addition, BSI was entitled to a marketing and due diligence expense allowance fee equal to 0.50% of the gross proceeds to reimburse marketing and due diligence expenses, some portion of which may be reallowed to placement agents. Pursuant to the terms of the Advisory Agreement, the Advisor was entitled to a non-accountable expense allowance in an amount equal to 2.5% of the gross proceeds of the offering. Pursuant to the terms of the Advisory Agreement, the Advisor is entitled to receive acquisition fees for services rendered in connection with the selection or acquisition of any property however designated as real estate commissions, selection fees, development fees, or any fees of a similar nature. Such acquisition fees may not exceed the lesser of (a) such compensation as is customarily charged in arm's-length transactions by others rendering similar services as an ongoing business in the same geographic locale and for comparable properties or (b) 3.5% of the gross proceeds of the Fund's offering. The Fund will also reimburse the Advisor an amount estimated to be 0.75% of the gross proceeds of the offering in connection with any expenses attendant to the acquisition of properties whether or not acquired. Pursuant to the terms of the Advisory Agreement, the Advisor is entitled to an annual advisory fee until the fifth anniversary of the termination of the offering, payable monthly, in an amount equal to 0.60% of the gross proceeds during the offering. Following the termination of the offering, the annual advisory fee is an amount equal to the greater of: (i) .60% of gross proceeds, or (ii) $175,000. In February 2001, the independent directors reviewed the Advisory Agreement, and modified the annual amount of the advisory fee to $145,000. The $145,000 represents approximately 1.4% of invested assets. In 2002, the independent directors again reviewed the Advisory Agreement, and the advisory fee was renewed for a one year period at an annual amount of $145,000. The independent directors reviewed the terms of the agreement in May of 2003, and renewed it on the same terms for one year. In November 2002, the independent directors approved a one- time payment of $76,000 payable to the Advisor as an advisory fee in connection with the acquisition of Golden Corral. In June 2003, the independent directors approved a one-time payment of $32,900 payable to the Advisor as an advisory fee in connection with the acquisition of Dollar General. Pursuant to the terms of the Management Agreement, Brauvin Management Company ("BMC"), an affiliate of the Advisor, provides leasing and re-leasing services to the Fund in connection with the management of the Fund's properties. The property management fee payable to an affiliate of the Advisor shall not exceed the lesser of: (a) fees that are competitive for similar services in the geographical area where the properties are located; or (b) 1% of the gross revenues of each property. Fees, commissions and other expenses incurred and payable to the Advisor or its affiliates for the nine months ended September 30, 2003 and 2002 were as follows: 2003 2002 Advisory fees $141,647 $108,747 Reimbursable office expenses 28,805 12,669 Management fees 9,312 10,412 $179,764 $ 131,828 As of September 30, 2003 the Fund made all payments to affiliates except for $820 for management fees. (3) DIVIDENDS Below is a table summarizing the dividends declared since January 1, 2001: Annualized Declaration Record Payment Dividend Date Dates Date Rate Amount 2/15/01 10/1/00-12/31/00 2/15/01 8.00% $262,106 5/10/01 1/1/01-3/31/01 5/15/01 8.00% 256,556 8/09/01 4/1/01-6/30/01 8/15/01 8.00% 256,528 11/15/01 7/1/01-9/30/01 11/15/01 9.98% 323,745 1/24/02 10/1/01-12/31/01 2/15/02 8.25% 267,452 5/08/02 1/1/02-3/31/02 5/15/02 8.25% 261,639 8/08/02 4/1/02-6/30/02 8/15/02 23.17% 745,000 11/12/02 7/1/02-9/30/02 11/15/02 5.44% 175,000 1/23/03 10/1/02-12/31/02 1/30/03(a) 6.94% 225,000 5/8/03 1/1/03-3/31/03 5/15/03 8.00% 253,708 8/7/03 4/1/03-6/30/03 8/15/03 7.46% 245,000 11/06/03 7/1/03-9/30/03 11/15/03 7.46% 245,000 (a) An $80,000 payment was made on 1/30/03 and a $145,000 payment was made on 1/31/03 for a total payment of $225,000. A dividend reinvestment plan ("Reinvestment Plan") was available to the stockholders so that stockholders, if they so elected, may have their distributions from the Fund invested in shares. Until the third anniversary of the termination of the offering, the price per share purchased through the Reinvestment Plan shall equal $10 per share with the purchase of partial shares allowed. The Fund has registered 200,000 shares for distribution solely in connection with the Reinvestment Plan. Funds raised through the Reinvestment Plan will be utilized to: (i) purchase shares from existing stockholders who have notified the Fund of their desire to sell their shares or held for subsequent redemptions; or (ii) purchase additional properties. The stockholders electing to participate in the Reinvestment Plan were charged a service charge, in an amount equal to 1% of their distributions, which was paid to an affiliate of the Advisor to defray the administrative costs of the Reinvestment Plan. At September 30, 2003 there were approximately 68,797 shares purchased through the Reinvestment Plan. In accordance with the Fund's original investment objective, during the first quarter of 2000, the Board of Directors approved a plan to have the Fund's shares listed on the OTC Bulletin Board under the symbol "yyBNL". In order to qualify as a REIT, the Fund is required to distribute dividends to its stockholders in an amount at least equal to 90% of REIT taxable income of the Fund. The Fund intends to make annual distributions to satisfy all annual distribution requirements. Effective February 13, 2001, the Board of Directors discontinued the Dividend Reinvestment Plan. Subsequently, dividends have been paid in cash. (4) CHILI'S PROPERTY EXCHANGE In 2001, Brinker expressed a desire to close the facility located in Birmingham, Alabama and exchange this property for a better performing property that Brinker owned in Tucker, Georgia. The Fund and Brinker agreed to this exchange and in the second quarter of 2002, the like kind property exchange was completed. As a result of this exchange the base rent remains the same, but the percentage rent breakpoint was reduced by approximately $200,000 and the Fund's percentage of revenue in excess of the breakpoint was reduced from 6% to 4.75%. The Fund's expenses related to this transaction were primarily related to legal and title fees. These expenses were recorded as general and administrative expenses. (5) PROPERTY SALES On April 29, 2002, the Fund sold the On The Border Restaurant property to an unaffiliated third party for a sales price of $1,385,000 (exclusive of an additional $200,000 tenant lease buyout fee). The net proceeds received including the buyout was approximately $1,475,000. On May 16, 2002, the Fund sold the Just For Feet property to an unaffiliated third party for a sales price of $2,675,000. The net proceeds received was approximately $2,575,000. (6) PROPERTY ACQUISITION On July 19, 2002, with the approval of the Fund's Board of Directors and in accordance with the Fund's acquisition guidelines, the Fund purchased a 9,611 square foot restaurant building situated on a two acre parcel located in Bradenton, Florida for approximately $2,174,000 plus closing costs (the "Bradenton Property"). The Bradenton Property has been leased to Corral of Bradenton LP, which operates a Golden Corral Restaurant, under a triple net lease, for a remaining term ending October 19, 2019. The lease requires Corral of Bradenton LP to pay base rent each month in the amount of $19,227 beginning August 1, 2002 with periodic rental increases starting November 1, 2002. On June 18, 2003, with the approval of the Fund's Board of Directors and in accordance with the Fund's acquisition guidelines, the Fund purchased three Dollar General stores located in Lake Charles, Houma and Chauvin, Louisiana for approximately $940,000 plus closing costs. The Lake Charles property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending January 31, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $3,000. The Houma property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending February 28, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $3,000. The Chauvin property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending January 31, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $2,850. Item 2. Management's Discussion and Analysis or Plan of Operations General Certain statements in this Quarterly Report that are not historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, words such as "anticipates," "expects," "intends," "plans" and similar expressions are intended to identify forward-looking statements. These statements are subject to a number of risks and uncertainties, including, without limitation, tenant defaults which could materially decrease the Fund's rental income. Actual results could differ materially from those projected in the forward-looking statements. The Fund undertakes no obligation to update these forward-looking statements to reflect future events or circumstances. Liquidity and Capital Resources As of September 30, 2003, the Fund had received $11,539,065 in connection with the sale of shares, net of selling commissions and other offering costs, including $200,000 paid by the Advisor for a share of stock as disclosed in the Prospectus and liquidations of $663,172. Compliance with 90% REIT taxable income test The Fund is required, under the Internal Revenue Code, to make distributions of an amount not less than 90% of its REIT taxable income during the year. Property sales On April 29, 2002, the Fund sold the On The Border Restaurant property to an unaffiliated third party for a sales price of $1,385,000 (exclusive of an additional $200,000 tenant lease buyout fee). The net proceeds received including the buyout was approximately $1,467,000. On May 16, 2002, the Fund sold the Just For Feet property to an unaffiliated third party for a sales price of $2,675,000. The net proceeds received was approximately $2,575,000. The Fund has replaced the sold properties in accordance with the acquisition guidelines of the Fund. Property Purchases On July 19, 2002, with the approval of the Fund's Board of Directors and in accordance with the Fund's acquisition guidelines, the Fund purchased a 9,611 square foot restaurant building situated on a two acre parcel located in Bradenton, Florida for a gross purchase price of $2,174,000. The current lease at this property expires in October 2019, and has two 10 year options. The lease requires a minimum base rent each month in the amount of $19,227 beginning August 1, 2002 plus periodic increases every three years beginning November 1, 2002. Additionally, the Fund will receive a percentage of gross sales above a certain sales level. On June 18, 2003, with the approval of the Fund's Board of Directors and in accordance with the Fund's acquisition guidelines, the Fund purchased three Dollar General stores located in Lake Charles, Houma and Chauvin, Louisiana for approximately $940,000 plus closing costs. The Lake Charles property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending January 31, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $3,000. The Houma property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending February 28, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $3,000. The Chauvin property has been leased to Dolgencorp, Inc. which operates a Dollar General store, under a triple net lease, for a remaining term ending January 31, 2013. The lease requires Dolgencorp, Inc. to pay base rent each month in the amount of $2,850. Chili's Property Exchange In 2001, Brinker expressed a desire to close the facility located in Birmingham, Alabama and exchange this property for a better performing property that Brinker owned in Tucker, Georgia. In the second quarter of 2002, the Fund agreed to this exchange. As a result of this exchange the base rent remains the same, but the percentage rent breakpoint was reduced by approximately $200,000 and the Fund's percentage of revenue in excess of the breakpoint was reduced from 6% to 4.75%. The former property did not generate any percentage rent. However, the Fund anticipates that the exchanged property will generate percentage rents. Adoption of a Plan of Liquidiation On November 6, 2003, the Board of Directors approved a Plan of Liquidation for the Fund. The Plan of Liquidation contemplates the sale of all of the Fund's assets, either individually or in a group, within a twenty four month period. Limitation on Total Operating Expenses For the twelve month period ended September 30, 2003, the Fund's Total Operating Expenses exceeded the greater of 2% of the Average Invested Assets of the Fund or 25% of the Fund's Net Income. The Independent Directors determined that the Fund's Total Operating Expenses are justifiable based on the gains that have been achieved in prior periods and the redeployment of property sale proceeds at slightly lower investment returns than the original property investments. In addition, the Independent Directors discussed that as a result of carrying out the Plan of Liquidation the Fund's Total Operating Expenses will likely exceed the stated percentages as a result of a declining asset base and declining revenues. The Independent Directors will continue to review Total Operating Expenses on a quarterly basis. Results of Operations - 9 months - 2003 Compared to 2002 The Fund generated net income of $545,000 for the nine months ended September 30, 2003 as compared to net income of $1,202,000 for the nine months ended September 30, 2002. Total income for the nine months ended September 30, 2003 was $961,000 as compared to $966,000 for the same nine month period in 2002, a decrease of $5,000. The $5,000 decrease was due to a decrease in lease termination fees of $200,000, a decrease in other charges to tenants of $18,000 related to real estate taxes, and a decrease in interest and other income of $5,000, partially offset by an increase in rental income of $218,000. In 2002, rental income was affected by the reversal of deferred rental income as a result of the two property sales. For the nine months ended September 30, 2003, total expenses were $416,000 as compared to $392,000 for the same nine month period in 2002, an increase of $24,000. The increase is the result of an increase in advisory fees of $33,000, and an increase in depreciation and amortization of $11,000, offset by a decrease in general and administrative expense of $1,000 and a decrease in real estate tax expense of $18,000 corresponding to the decrease in other charges to tenants of $18,000. Management fees also decreased $1,000. Results of Operations - 3 months - 2003 Compared to 2002 The Fund generated net income of $192,000 for the three months ended September 30, 2003 as compared to net income of $177,000 for the three months ended September 30, 2002. Total income for the three months ended September 30, 2003 was $350,000 as compared to $309,000 for the same three month period in 2002, an increase of $40,000. The $40,000 increase was primarily due to an increase in rental income of $39,000. Rental income increased as a result of receiving income from additional properties purchased to replace the two sold properties in 2002. Other charges to tenants increased $6,000 and interest and other income decreased $5,000. For the three months ended September 30, 2003, total expenses were $157,000 as compared to $132,000 for the same three month period in 2002, an increase of $25,000. The increase is primarily due to an increase in depreciation and amortization $10,000 as a result of owning more properties during 2003 when compared to 2002. Additionally impacting expense was an increase in general and administrative expense of $9,000, and an increase in real estate tax expense of $6,000 corresponding to the increase in other charges to tenants of $6,000. Item 3. Controls and Procedures. Evaluation of Disclosure Controls and Procedures The Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Funds disclosure controls and procedures (as defined in Exchange Act Rules 240.13a- 14(c) and 15d-14(c)) as of a date within 90 days before the filing date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Fund's current disclosure controls and procedures are effective and timely, providing all material information relating to the Fund required to be disclosed in reports filed or submitted under the Exchange Act. Changes in Internal Controls There have not been any significant changes in the Fund's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses, therefore no corrective actions were taken. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. None. ITEM 2. Changes in Securities. None. ITEM 3. Defaults Upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders. ITEM 5. Other Information None. ITEM 6. Exhibits and Reports On Form 8-K. Exhibit 99. Certification of Officers SIGNATURES Pursuant to the 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, thereunto duly authorized. BRAUVIN NET LEASE V, INC. BY: /s/ James L. Brault James L. Brault Executive Vice President and Secretary DATE: November 14, 2003 BY: /s/Thomas E. Murphy Thomas E. Murphy Chief Financial Officer DATE: November 14, 2003 CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER OF BRAUVIN NET LEASE V, INC. I, Jerome J. Brault, Chief Executive Officer of the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of BRAUVIN NET LEASE V, INC; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and statement of changes in net assets in liquidation of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)for the small business issue and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under ourt supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to aversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. BY:/s/ Jerome J. Brault Jerome J. Brault Chief Executive Officer DATE: November 14, 2003 CERTIFICATE OF THE CHIEF FINANCIAL OFFICER OF BRAUVIN NET LEASE V, INC. I, Thomas E. Murphy, Chief Financial Officer of the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Brauvin Net Lease V, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and statement of changes in net assets in liquidation of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)for the small business issue and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under ourt supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to aversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. BY: BRAUVIN NET LEASE V, INC. BY:/s/ Thomas E. Murphy Thomas E. Murphy Chief Financial Officer DATE: November 14, 2003 Exhibit 99 SECTION 906 CERTIFICATION The following statement is provided by the undersigned to accompany the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed pursuant to any provisions of the Securities Exchange Act of 1934 or any other securities law: Each of the undersigned certifies that the foregoing Report on Form 10-QSB fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of BRAUVIN NET LEASE V, INC. BY: /s/ Jerome J. Brault Jerome J. Brault Chief Executive Officer DATE: November 14, 2003 BY: /s/ Thomas E. Murphy Thomas E. Murphy Chief Financial Officer DATE: November 14, 2003