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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to__
Commission file number: 1045281
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CAPTEC NET LEASE REALTY, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
38-3368333
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(IRS Employer Identification Number)
24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(734) 994-5505
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(Registrant's telephone number)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the registrant's classes of common equity, as of the
latest practicable date.
9,508,108 shares of Common Stock, $.01 par value, outstanding as of
May 14, 1999.
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CAPTEC NET LEASE REALTY, INC.
AND SUBSIDIARIES
CONTENTS
ITEM NO. PAGE
-------- ----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statement of Changes in Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Consolidated Notes to Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Report on Form 8-K 13
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAPTEC NET LEASE REALTY, INC. AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1999 1998
---- ----
ASSETS (unaudited)
Cash and cash equivalents $ 2,267,840 $ 4,488,565
Investments:
Properties subject to operating leases, net 223,459,520 221,349,661
Properties subject to financing leases, net 4,284,685 3,128,824
Loans to affiliates, collateralized by mortgage loans 8,257,089 8,915,523
Investment in affiliated limited partnerships 4,395,000 4,395,000
Other loans, related party 400,845 405,775
------------ ------------
Total investments 240,797,139 238,194,783
Short-term loans to affiliates 3,163,728 2,505,294
Unbilled rent, net 4,356,166 3,710,487
Accounts receivable 102,396 144,642
Due from affiliates 1,338,244 1,242,675
Other assets 1,591,881 1,724,283
------------ ------------
Total assets $253,617,394 $252,010,729
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable $116,484,988 $113,984,988
Accounts payable and accrued expenses 854,619 1,428,041
Due to affiliates 24,038 76,513
Federal income tax payable 719,000 719,000
Security deposits held on leases 280,906 194,406
------------ ------------
Total liabilities 118,363,551 116,402,948
Stockholders' Equity:
Common stock, ($.01 par value) authorized: 40,000,000
shares; issued and outstanding: 9,508,108 95,081 95,081
Paid in capital 134,711,056 134,711,056
Retained earnings 447,706 801,644
------------ ------------
Total stockholders' equity 135,253,843 135,607,781
------------ ------------
Total liabilities and stockholders' equity $253,617,394 $252,010,729
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
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CAPTEC NET LEASE REALTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
---------------------------------------
1999 1998
---- ----
(unaudited)
Revenue:
Rental income from operating leases $ 6,005,078 $ 4,819,470
Earned income from financing leases 152,207 47,880
Interest income on loans to affiliates 322,705 494,830
Other income 555,641 261,421
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Total revenue 7,035,631 5,623,601
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Expenses:
Interest 2,239,880 1,070,321
Management fees, affiliates, net (68,013) 253,315
General and administrative 430,905 350,362
Depreciation and amortization 833,409 661,119
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Total expenses 3,436,181 2,335,117
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Net income before loss on sale of
properties and accounting change 3,599,450 3,288,484
Loss on sale of properties (50,973) (47,588)
----------- -----------
Net income before accounting change 3,548,477 3,240,896
Cumulative effect of accounting change (336,875) -
----------- -----------
Net Income $ 3,211,602 $ 3,240,896
=========== ===========
Basic and Diluted EPS:
Income before accounting change $ 0.37 $ 0.34
=========== ===========
Accounting change $ (0.03) $ -
=========== ===========
Net Income $ 0.34 $ 0.34
=========== ===========
Weight average number of common shares
outstanding 9,508,108 9,508,108
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
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CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(unaudited)
Common Stock Total
------------------------ Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
BALANCE, JANUARY 1, 1999 9,508,108 $95,081 $134,711,056 $ 801,644 $ 135,607,781
Net Income - - - 3,211,602 3,211,602
Common stock dividends ($0.375 per share) - - - (3,565,540) (3,565,540)
--------- ------- ------------ ----------- -------------
BALANCE, MARCH 31, 1999 9,508,108 $95,081 $134,711,056 $ 447,706 $ 135,253,843
========= ======= ============ =========== =============
The accompanying notes are an integral part of the consolidated
financial statements.
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CAPTEC NET LEASE REALTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
March 31,
----------------------------------------
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,211,602 $ 3,240,896
Adjustments to net income:
Depreciation and amortization 833,409 661,119
Accounting change 336,875 -
Amortization of debt issuance costs 142,160 138,611
Loss on sale of property 50,973 47,588
Increase in unbilled rent (645,679) (403,520)
Increase in accounts receivable and other assets (454,920) (194,937)
Decrease in accounts payable and accrued expenses (573,422) (922,723)
----------- ------------
Net cash provided by operating activities 2,900,998 2,567,034
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of properties subject to operating leases (3,446,346) (24,015,896)
Advances on loans to affiliates, collateralized by
mortgage loans - (51,942)
Acquisition of properties subject to financing leases (1,196,152) -
Collections on short-term loans to affiliates (658,434) 51,942
Proceeds from the disposition of properties 454,594 1,046,025
Collections on loans to affiliates, collateralized by
mortgage loans 658,434 -
Collection of principal on other loans 4,930 6,005
Collection of principal on financing leases 40,291 -
Lease security deposits 86,500 52,514
----------- ------------
Net cash used in investing activities (4,056,183) (22,911,352)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on common stock (3,565,540) (1,854,082)
Borrowings of notes payable 2,500,000 63,984,988
Debt issuance costs - (1,357,408)
Repayments of notes payable - (42,746,189)
----------- ------------
Net cash (used in) provided by financing activities (1,065,540) 18,027,309
----------- ------------
NET CASH FLOWS (2,220,725) (2,317,009)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,488,565 3,528,129
----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,267,840 $ 1,211,120
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,782,887 $ 1,122,681
=========== ============
The accompanying notes are an integral part of the consolidated financial
statements.
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CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION: Captec Net Lease Realty, Inc., a Delaware corporation
(the "Company"), which operates as a real estate investment trust
("REIT"), was formed in August 1997 to invest in high-quality
freestanding properties leased principally on a long-term triple-net
basis to national and regional franchised restaurants and retailers.
The Company completed its initial public offering in November 1997 and
has subsequently operated as a REIT.
UNAUDITED INTERIM FINANCIAL INFORMATION: The consolidated balance sheet
as of March 31, 1999 and the consolidated statements of operations and
cash flows for the three months ended March 31, 1999 have not been
audited. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been reflected therein. Results of operations for the interim
periods are not necessarily indicative of results for the full year.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 filed
with the Securities and Exchange Commission on March 30, 1999, as
amended by its Annual Report on Form 10-K/A filed with the Securities
and Exchange Commission on April 9, 1999.
NEW PRONOUNCEMENTS: In June 1998 the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
is effective for all quarters of all fiscal years beginning after June
15, 1999 (January 1, 2000 for the Company). The statement requires that
all derivative instruments be recorded at fair value on the balance
sheet with changes in fair value recorded each period in current
earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. Management of the Company has not yet
determined the impact that the adoption of the statement will have on
its earnings or statement of financial position.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities". This statement requires start-up activities and
organization costs to be expensed as incurred. In accordance with the
provisions of the statement, the Company has recorded a $337,000
non-cash charge during the three months ended March 31, 1999 for the
balance of unamortized organization costs.
RECLASSIFICATIONS: Certain prior period financial statement amounts
have been reclassified to conform to the 1999 presentations.
2. PROPERTIES SUBJECT TO OPERATING LEASES:
The Company's real estate portfolio is leased to tenants under
long-term net operating leases. The lease agreements generally provide
for monthly rents based upon a percentage of the property's cost. The
initial term of the leases typically ranges from 15 to 20 years,
although the Company in certain cases will enter into leases with terms
that are shorter or longer. Most leases also provide for one or more
five year renewal options. In addition, certain leases provide the
tenant one or more options to purchase the properties at a
predetermined price, generally only during stated window periods during
the fifth to seventh lease years.
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CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company's investment in real estate includes capitalized
acquisition and interest costs which have been allocated between land
and buildings and improvements on a pro rata basis. The net investment
in properties subject to operating leases as of March 31, 1999 is
comprised of the following:
Land $ 82,415,699
Buildings and improvements 132,302,561
Construction draws on properties 14,226,708
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228,944,968
Less accumulated depreciation (5,485,448)
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Total $ 223,459,520
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The Company periodically invests in properties under construction. All
construction draws are subject to the terms of a standard lease
agreement with the Company which fully obligates the tenant to the
long-term lease for all amounts advanced under construction draws. At
March 31, 1999 the Company had approximately $6.9 million of unfunded
commitments on properties under construction.
3. FINANCING LEASES:
The net investment in financing leases as of March 31, 1999 is
comprised of the following:
Minimum lease payments to be received $ 10,519,387
Estimated residual value -
--------------
Gross investment in financing leases 10,519,387
Unearned income (6,234,702)
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Net investment in financing leases $ 4,284,685
==============
4. NOTES PAYABLE:
The Company's credit facility, as amended December 1, 1998 (the "Credit
Facility"), provides up to $125 million for the acquisition of
properties and working capital. The Credit Facility has a three year
term and is subject to certain borrowing base restrictions. The Company
had approximately $116 million of aggregate outstanding borrowings
under the Credit Facility at March 31, 1999.
5. EARNINGS PER SHARE:
Stock options currently outstanding under the Company's Long-Term
Incentive Plan were excluded from the computation of diluted earnings
per share because their exercise price was in excess of the average
market price of the Company's Common Stock during the three months
ended March 31, 1999.
6. RELATED PARTY TRANSACTIONS:
The Company and Captec Net Lease Realty Advisors, Inc. ("Captec
Advisors"), an affiliate, are parties to an Advisory Agreement whereby
the Company pays to Captec Advisors a management fee. In December 1998
the Advisory Agreement was amended to reduce the management fee
otherwise payable by the Company to Captec Advisors by the amount of
acquisition and other fees paid directly to Captec Advisors by, and as
a result of acquisitions made by, affiliates of the Company. During the
three months ended March 31, 1999 the Company incurred $253,000 in
management fees prior to reductions. Captec Advisors earned
approximately $321,000 of fees resulting in an equal reduction in the
management fee paid by the Company to Captec Advisors.
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CAPTEC NET LEASE REALTY, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. SUBSEQUENT EVENTS:
In April 1999, the Company declared dividends to its shareholders
of $3,613,081, or $0.38 per share of common stock, which was paid on
April 15, 1999.
In April 1999, the Company invested $2,395,600, through the
contribution of property, in the formation of a joint venture for the
purpose of developing and acquiring net-leased restaurant and retail
properties similar to those which the Company develops and acquires.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company, which operates as a REIT, acquires, develops and owns
freestanding properties which are leased on a long-term triple-net
basis to operators of national and regional chain restaurants and
retailers (the "Lessees"). The Company's triple-net leases (the
"Leases") generally impose on the Lessee responsibility for all
operating costs and expense of the property, including the costs of
repairs, maintenance, real property taxes, assessments, utilities and
insurance. The Company's Leases typically provide for minimum rent plus
specified fixed periodic rent. Other revenues are derived primarily
from interest income on loans to affiliates and fee income earned from
affiliates.
As of March 31, 1999, the Company owned 163 properties, located in 30
states, subject to long-term net Leases with 54 different Lessees under
major restaurant and retail concepts including Bennigan's, Applebee's,
Denny's, Best Buy, Athlete's Foot, Blockbuster Video, and Office Depot.
RESULTS OF OPERATIONS
During the three months ended March 31, 1999 (the "Quarter") total
revenue increased 25% to $7.0 million as compared to $5.6 million for
the three months ended March 31, 1998 (the "1998 Quarter"). Rental
revenue from operating Leases for the Quarter increased 25% to 6.0
million as compared to $4.8 million for the 1998 Quarter primarily from
the benefit of a full period of rental revenue from properties acquired
and leased in preceeding periods. Earned income from financing leases
for the Quarter increased 218% to $152,000 as compared to $48,000 for
the 1998 Quarter principally from the addition of four financing leases
that began lease payments on January 1, 1999. Interest income on loans
to affiliates decreased 35% to $323,000 for the Quarter as compared to
$495,000 for the 1998 Quarter as a result of principal payments
received on loans to affiliates in preceeding periods. Interest and
other income increased 113% to $556,000 for the Quarter as compared to
$261,000 for the 1998 Quarter primarily due to fee income earned from
the Company's affiliates.
Interest expense for the Quarter increased 109% to $2.2 million as
compared to $1.1 million for the 1998 Quarter. The increase was
principally due to the increased borrowings under the Company's Credit
Facility used to fund the acquisition and development of properties.
General and administrative expenses, including management fees to
affiliates, decreased 40% to $363,000 for the Quarter as compared to
$604,000 for the 1998 Quarter primarily due to offsetting reductions in
management fees to affiliates due to acquisitions and other fees earned
by Captec Advisors (see Note 6 to the Financial Statements).
The Company sold one property during the Quarter, collecting gross
proceeds of $455,000 and reflecting a loss of $51,000 on the sale of
this property.
As a result of the foregoing, the Company's net income before
accounting change increased 9% to $ 3.5 million for the Quarter as
compared to $3.2 million for the 1998 Quarter.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities". This statement requires start-up activities and
organization costs to be expensed as incurred. In accordance with the
provisions of the statement, the Company has recorded a $336,875
non-cash charge during the three months ended March 31, 1999 for the
balance of unamortized organization costs which resulted in net income
for the Quarter of $3.2 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal use of funds is for property development and
acquisition, payment of interest on its outstanding indebtedness, and
payment of operating expenses and dividends. Historically, interest
expense,
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operating expenses and dividends have been paid out of cash flows from
operations. Property acquisitions have been typically funded out of
proceeds from borrowings. The Company expects to meet its liquidity
requirements (principally property development and acquisition) through
a variety of future sources of capital, including long-term secured and
unsecured indebtedness, the issuance of additional equity or debt
securities and "off-balance sheet" financing through the formation of
joint ventures.
The Company's Leases generally provide for specified periodic rent
increases including fixed increase amounts, and in limited
circumstances indexation to CPI and/or percentage rent. In addition,
most of the Company's leases require the Lessee to pay all operating
costs and expenses including repairs, maintenance, real property taxes,
assessments, utilities and insurance, thereby substantially reducing
the Company's exposure to increases in costs and operating expenses.
Based upon these factors, the Company does not anticipate significant
capital demands related to the management of its properties other than
potential costs of re-leasing vacant Boston Chicken properties.
At March 31, 1999 the Company had cash and cash equivalents of $2.3
million. For the Quarter, the Company generated cash from operations of
$2.9 million as compared to $2.6 million for the 1998 Quarter. Cash
generated from operations provides funds for distributions to
shareholders in the form of quarterly dividends. Any excess cash from
operations may also be used for investment in properties.
CREDIT FACILITY. In February 1998, the Company entered into a credit
facility (the "Credit Facility"), which is used to provide funds for
the acquisition and development of properties and working capital, and
repaid all amounts outstanding under a prior credit facility. On
December 1, 1998 the Company amended the Credit Facility to provide up
to $125.0 million of debt which is secured by the Company's properties.
At March 31, 1999 the Company had $116.5 million of aggregate
outstanding borrowings under the Credit Facility.
The Credit Facility has a three year term and the revolving credit
borrowings are subject to borrowing base restrictions. The Credit
Facility is subject to covenants which, among other restrictions,
require the Company to maintain a minimum net worth, a maximum leverage
ratio, and specified interest and fixed charge coverage ratios. The
Credit Facility bears interest at an annual rate of LIBOR plus a spread
ranging from 1.25% to 1.75%, set quarterly depending on the Company's
leverage ratio, or at the Company's option, the bank's base rate. In
connection with the Credit Facility the Company incurred issuance costs
of $1.7 million and is also required to pay an unused commitment fee
ranging from .125% to .20% per annum on the unused amount of the
commitment.
The Credit Facility expires in February 2001 and may be renewed
annually thereafter, one year in advance of maturity subject to the
consent of the lender. Upon expiration, the entire outstanding balance
of the Credit Facility will mature and become immediately due and
payable. At that time, the Company expects to refinance such debt
either through additional debt financings secured by individual
properties or groups of properties, by unsecured private or public debt
offerings or by additional equity offerings.
PROPERTY ACQUISITIONS AND COMMITMENTS. During the three months ended
March 31, 1999 the Company acquired properties for an aggregate
acquisition cost of $4.6 million. As of March 31, 1999, the Company had
entered into commitments to acquire 58 properties totaling $99.4
million. The commitments are subject to various conditions to closing
which are described in the contracts or letters of intent relating to
these properties. In addition, in the ordinary course of business the
Company is in negotiations regarding the proposed acquisition of other
properties and related co-development opportunities. The Company may
enter into commitments to acquire some of these prospective properties
in the future. The Company expects to finance its acquisition
commitments through a variety of sources of capital, including
borrowings under the Credit Facility, other long-term secured and
unsecured indebtedness, "off-balance sheet" financing through the
formation of joint ventures and the issuance of additional equity or
debt securities.
Property acquisition commitments are expected to generate the primary
demand for additional capital in the future.
DIVIDENDS. The Company intends to pay a regular quarterly dividend on
its common stock of $.38 per share (which if annualized would be $1.52
per share). Dividends of $3,613,081 were paid on April 15, 1999 related
to
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the first quarter declared dividend. The Company expects to pay future
dividends from cash available for distributions. The Company believes
that cash from operations will be sufficient to allow the Company to
make distributions necessary to enable the Company to continue to
qualify as a REIT.
YEAR 2000
The Year 2000 issue is a result of the way computer programs
historically manipulate date information based on a two-digit year
("99" instead of "1999"). The issue is that the "00" year designation
can potentially cause miscalculations or failures within the computer
system if "00" is misinterpreted as the year 1900 instead of the year
2000. These failures could potentially lead to temporary disruption of
operations and the inability to conduct normal business activities.
The Company predominantly uses standard application software supported
by third party vendors. Information has been obtained from key
third-party financial software vendors that comprise the core business
applications indicating the core software systems are currently Year
2000 compliant.
The Company is in the process of obtaining Year 2000 compliance updates
from its key business partners, such as financial institutions and
Lessees, to assess their Year 2000 readiness. Upon completion of the
assessment process, a strategy on how to address each partner will be
developed based on the relative importance of each relationship.
Documentation regarding the state of readiness of business partners
will be compiled as the assessment progresses.
The Company's major software applications are currently Year 2000
compliant, and the core computing infrastructure including personal
computers and network server hardware and software are all compliant.
Therefore, the Company does not anticipate the total cost of Year 2000
compliance to have a material adverse effect on the Company's business
or results of operations. The Company has incurred minimal costs to
date related to Year 2000 compliance.
The failure to identify and correct material Year 2000 problems
adequately could result in an interruption to or failure of certain
normal business activities or operations. These interruptions or
failures could adversely affect the Company's financial condition;
however, the extent of the impact can not presently be determined. The
Company is dependent upon the Year 2000 readiness information provided
by its vendors and external business partners, and their ability to
achieve Year 2000 compliance with their computer systems.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES. None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
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ITEM 5. OTHER INFORMATION. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
Exhibit 10.14 FC Venture I, LLC Limited Liability
Company Agreement*
Exhibit 27.1 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
The Registrant filed the following Current Reports on Form
8-K during the three months ended March 31, 1999:
Current Report on Form 8-K dated April 12, 1999 included
information regarding the formation of a joint venture, FC
Venture I, LLC, with an affiliate of Fidelity Management
Trust Company.
---------------
* Incorporated by reference from the Company's Current Report
on Form 8-K filed with the Commission on April 22, 1999.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain "forward-looking statements" which
represent the Company's expectations or beliefs, including, but not
limited to, statements concerning industry performance and the
Company's operations, performance, financial condition, plans, growth
and strategies. Any statements contained in this Form 10-Q which are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words
such as "may," "will," "expect," "anticipate," intent," "could,"
estimate" or continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks
and uncertainties, certain of which are beyond the Company's control,
and actual results may differ materially depending on a variety of
important factors many of which are beyond the control of the Company.
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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 thereunto duly authorized.
CAPTEC NET LEASE REALTY, INC.
May 14, 1999 By: /s/ Patrick L. Beach
-------------------------
Patrick L. Beach
Chief Executive Officer and President
May 14, 1999 By: /s/ W. Ross Martin
-----------------------
W. Ross Martin
Chief Financial Officer and
Executive Vice President
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1 Financial Data Schedule