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) May 3, 1996
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)
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").
Pier One Imports Store - Sioux Falls, South Dakota
On May 3, 1996, the Company purchased the land and a 10,834 square
foot building underlying a Pier One Imports store (the "Pier 1
Property"), located in Sioux Falls, South Dakota from P. One Sioux
Falls Investors, Inc., an unaffiliated party, for $1,375,000 plus
closing costs. The Pier 1 Property has been leased to Pier One
Imports, Inc. ("Pier 1") for an initial term of 10 years ending
February 28, 2006.
The Pier 1 Property will be operated by Pier 1 and the Company will
be a landlord only and will not participate in the operations of
the store.
Pier One Imports, Inc.
Pier 1 is a speciality retail chain based in Fort Worth, Texas,
consisting of retail stores selling a wide variety of furniture,
decorative home furnishings, dining and kitchen goods, home
accessories and distinctive casual clothing and fashion
accessories. As of February 25, 1995, Pier 1 operated 603 stores
in 46 states in the United States, and Puerto Rico, and 25 stores
in Canada as well as international operations in the United Kingdom
and Mexico. Pier One Imports stores are generally located in strip
shopping centers or are free standing buildings, predominately
located near or in suburbs of metropolitan areas. Pier 1 had
shareholders' equity of $225 million as of February 25, 1995. Pier
1 is a publicly-traded company and is listed on the New York Stock
Exchange.
Pier 1 Property
The Pier 1 Property is located on a parcel of land at West 49th
Street across the street from the Empire Mall, the largest regional
mall in South Dakota. The Empire Mall attracts more than 14
million visitors a year and the shopping district around the mall
attracts shoppers from a three-state area. The Pier 1 Property
consists of a 10,834 square foot, one story building situated on a
46,300 square foot lot. Approximately $887,000 of the basis of the
Pier 1 Property is anticipated to be allocated to building and
$543,000 to land. For Federal tax purposes, depreciation will be
based on MACRS 39 years.
Terms of the Acquisition
The purchase price of the Pier 1 Property was $1,375,000 and was
paid in cash at closing. The purchase price was supported by an
MAI appraisal. The Company acquired fee simple title to the Pier
1 Property. The aggregate fees paid to the Advisor in connection
with the acquisition was $55,158.
The Lease
The Pier 1 Property is leased to Pier 1, under an approximate
ten-year triple net lease (subject to the last sentence of this
paragraph) with two five-year extension options. The lease
requires Pier 1 to pay a minimum base rent each month in the amount
of $13,046. In addition to rental payments, Pier 1 is required to
pay directly or indirectly for all expenses related to the Pier 1
Property, including real estate taxes, insurance premiums and
repairs and maintenance costs related to the Pier 1 Property. The
Company is responsible for the roof and structural components of
the building and parking lot excluding normal maintenance.
Risk of Ownership
The possibility exists that Pier 1 may be unable to fulfill its
obligations pursuant to the terms of the lease, including making
base rent payments to the Company. Furthermore, the Company may be
unable to successfully locate a substitute tenant due to the fact
that the building has been designed primarily to house the current
operations. Thus, the Pier 1 Property may not be readily
marketable to a new tenant without substantial capital improvements
or remodeling. Such improvements may require the expenditure of
Company funds otherwise available for distribution or require the
sale of the Pier 1 Property. Moreover, pursuant to provisions of
the Pier 1 lease it is required to maintain certain property
insurance coverage. The Company believes the Pier 1 Property to be
adequately covered by insurance. See "Risk Factors" in the
Prospectus.
Item 7. Financial Statements and Exhibits
(a)(1) Financial Information
No historical financial statements are required to be
presented because the Pier 1 Property is newly
constructed.
Item 7. Financial Statements and Exhibits
(2) Forecasted Financial Information
BRAUVIN NET LEASE V, INC.
FORECASTED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDING APRIL 30, 1997
(INCLUDING ALL ACQUISITIONS)
(Unaudited)
INCOME:
Rental (Note 1) $ 984,912
Interest 75,556
Total Income 1,060,468
EXPENSES (Note 2):
Director fees 20,000
Advisory fees 78,000
General and administrative 84,832
Management Fees (Note 3) 9,849
Total Expenses 192,681
Operating Cash Flow 867,787
Less:
Depreciation (Note 4) 156,747
Net Taxable Income Before
Distributions (Note 5) $ 711,040
See Notes to Forecasted Statement of Operations.
BRAUVIN NET LEASE V, INC.
NOTES TO FORECASTED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDING APRIL 30, 1997
(INCLUDING ALL ACQUISITIONS)
(Unaudited)
1. Rental Income
Forecasted rental income is based on monthly rent of $82,076.
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 and one Pier One Imports store, acquired May 3, 1996 (the
"Pier 1 Property") (collectively, the "Properties").
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 1 Property lease, the
Company is responsible for the roof 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 total rental income.
4. Depreciation
For presenting forecasted depreciation, approximately $6,063,000 of
the basis of the Properties will be allocated to building and
$3,175,000 to land. Tax basis depreciation will be based on MACRS
39 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.
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 for the three months
ended March 31, 1996, corresponding to the period of the
Company's annual and quarterly financial statements most
recently filed with the Securities and Exchange
Commission.
BRAUVIN NET LEASE V, INC.
PRO FORMA BALANCE SHEET
December 31, 1995
(Unaudited)
Historical Pro Forma Pro Forma
Results Adjustments Results
ASSETS
Investment in real estate,
at cost (Note 2):
Land $ 2,614,673 $ 542,756 $ 3,157,429
Buildings 5,170,013 887,402 6,057,415
Total investment 7,784,686 1,430,158 9,214,844
Less: accumulated
depreciation (96,605) -- (96,605)
Net investment in real estate 7,688,081 1,430,158 9,118,239
Cash and cash
equivalents (Note 3) 3,058,504 (1,430,158) 1,628,346
Stock subscriptions held
in trust 65,000 -- 65,000
Organization costs 22,167 -- 22,167
Due from affiliates 1,625 -- 1,625
Prepaid expenses and deferred
acquisition costs 60,270 -- 60,270
Total Assets $10,895,647 $ -- $10,895,647
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
expenses $ 37,792 $ -- $ 37,792
Stock subscriptions held
in trust 65,000 -- 65,000
Due to affiliates 966 -- 966
Total Liabilities 103,758 -- 103,758
Stockholders' Equity
Preferred stock -- -- --
Common stock 11,678 -- 11,678
Additional paid-in capital 10,709,007 -- 10,709,007
Retained earnings 71,204 -- 71,204
Total Stockholders' Equity 10,791,889 -- 10,791,889
Total Liabilities &
Stockholders' Equity $10,895,647 $ -- $10,895,647
See Notes to Pro Forma Financial Statements.
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,
and Video and Video All
Watch Watch Properties
Historical Pro Forma Pro Forma Pier One Pro Forma
Results Adjustments Results Adjustments Results
INCOME:
Rental (Note 4) $631,467 $197,756 $829,223 $156,552 $985,775
Interest
(Note 5) 130,545 (38,826) 91,720 (35,754) 55,966
Total Income 762,012 158,930 920,942 120,798 1,041,741
EXPENSES:
Directors' fees 19,743 -- 19,743 -- 19,743
Advisory fees 55,525 -- 55,525 -- 55,525
Management fees
(Note 6) 6,386 1,978 8,364 1,566 9,930
General and
administrative 63,082 -- 63,082 -- 63,082
Acquisition costs 21,678 -- 21,678 -- 21,678
Depreciation and
amortization 101,908 34,388 136,296 16,451 152,747
Total Expenses 268,322 36,366 304,688 18,017 322,705
Net Income $493,690 $122,564 $616,254 $102,781 $719,036
Net Income per
Share (Note 7) $ 0.56 $ 0.14 $ 0.70 $ 0.11 $ 0.81
The historical results distribution, the pro forma distribution (all
Properties, excluding Pier 1 Property) and the pro forma distribution (all
Properties) per weighted average shares outstanding (assumed to be 883,012
shares for the period ending December 31, 1995) is $0.48 per share, $0.66 per
share and $0.77 per share, respectively. The pro forma distributions are
calculated using the weighted average shares outstanding at December 31,
1995. 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.
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 and one Video Watch
store; and (2) the acquisition of one Pier One Imports store (the
"Pier 1 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 Pier One Property is stated at its purchase price plus
acquisition fees. 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 Pier One Property.
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.
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
The pro forma adjustments assume the recognition of management fees
by an affiliate of the Company at a rate of 1% of the rental
income.
7. Earnings Per Share
The historical results, the pro forma results (all Properties,
excluding Pier 1 Property only) and the pro forma results (all
Properties) earnings per share per weighted average share are
calculated based upon 883,012 shares for the period ending December
31, 1995.
BRAUVIN NET LEASE V, INC.
PRO FORMA BALANCE SHEET
March 31, 1996
(Unaudited)
Historical Pro Forma Pro Forma
Results Adjustments Results
ASSETS
Investment in real estate,
at cost (Note 2):
Land $ 2,622,337 $ 542,756 $ 3,165,093
Buildings 5,185,796 887,402 6,073,198
Total investment 7,808,133 1,430,158 9,238,291
Less: accumulated
depreciation (129,016) -- (129,016)
Net investment in real estate 7,679,117 1,430,158 9,109,275
Cash and cash
equivalents (Note 3) 4,195,922 (1,430,158) 2,765,764
Organization costs 20,417 -- 20,417
Tenant receivables 19,074 -- 19,074
Prepaid expenses and deferred
acquisition costs 74,465 -- 74,465
Total Assets $11,988,995 $ -- $11,988,995
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued
expenses $ 6,508 $ -- $ 6,508
Prepaid rent 16,292 -- 16,292
Due to affiliates 6,500 -- 6,500
Total Liabilities 29,300 -- 29,300
Stockholders' Equity
Preferred stock -- -- --
Common stock 13,000 -- 13,000
Additional paid-in capital 11,911,667 -- 11,911,667
Retained earnings 35,028 -- 35,028
Total Stockholders' Equity 11,959,695 -- 11,959,695
Total Liabilities &
Stockholders' Equity $11,988,995 $ -- $11,988,995
See Notes to Pro Forma Financial Statements.
BRAUVIN NET LEASE V, INC.
PRO FORMA STATEMENT OF INCOME
For the Three Months Ended March 31, 1996
(Unaudited)
Historical Pro Forma Pro Forma
Results Adjustments Results
INCOME:
Rental (Note 4) $228,230 $39,138 $267,368
Interest (Note 5) 41,184 (8,939) 32,245
Total Income 269,414 30,199 299,613
EXPENSES:
Directors' fees 6,999 -- 6,999
Advisory fees 19,048 -- 19,048
Management fees
(Note 6) 2,131 391 2,522
General and
administrative 16,331 -- 16,331
Acquisition costs 30,814 -- 30,814
Depreciation and
amortization 34,161 5,484 39,645
Total Expenses 109,484 5,875 115,359
Net Income $159,930 $24,324 $184,254
Net Income per
Share (Note 7) $ 0.13 $ 0.02 $ 0.15
The historical results distribution and the pro forma results
distribution per weighted average shares outstanding (assumed to be
1,237,518 shares for the period ending March 31, 1996) is $0.16 per share
and $0.14 per share, respectively. The pro forma distributions are
calculated using the weighted average shares outstanding at March 31,
1996. The historical results distribution per share is based on actual
distributions paid during the three months ended March 31, 1996 and the
pro forma distribution 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.
BRAUVIN NET LEASE V, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. Basis of Presentation
The unaudited pro forma financial statements are based upon the
Company's unaudited financial statements for the three months ended
March 31, 1996 with pro forma adjustments based on the acquisition
of one Pier One Imports store (the "Property").
The pro forma adjustments reflect the financial effect of the
acquisition as if it had been consummated on January 1, 1996.
These adjustments are described in detail by the following
footnotes.
2. Investment Properties
The Property is stated at its purchase price plus acquisition fees.
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 Property.
4. Rental Income
The pro forma adjustments assume that the Property was acquired on
January 1, 1996 and that three months of rental income has been
recognized in 1996.
5. Interest Income
The pro forma adjustment to reduce interest income assumes that the
funds used in acquiring the Property were not invested in 2.5%
interest-bearing deposits throughout the three month period.
6. Management Fees
The pro forma adjustments assume the recognition of management fees
by an affiliate of the Company at a rate of 1% of the rental
income.
7. Earnings Per Share
The historical results and the pro forma results earnings per share
per weighted average share are calculated based upon 1,237,518
shares for the period ending March 31, 1996.
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: May 17, 1996