| Captec Net Lease Realty, Inc. | |||
| Ticker: | CRRR | 24 Frank Lloyd Wright Drive | |
| Exchange: | NASDAQ-National Market | Ann Arbor, MI 48106 | |
| Industry: | Financial (SIC Code 6798) | (313) 994-5505 | |
| # of Employees: | 3 | ||
| Type of Shares: | Common Shares | Filing Date: | 9/5/97 | |
| U.S. Shares: | 8,000,000 | Offer Date: | 11/13/97 | |
| Non-U.S. Shares: | 0 | Filing Price: | $15.00 | |
| Primary Shares: | 8,000,000 | Offer Price: | $18.00 | |
| Secondary Shares: | 0 | Gross Spread: | $1.26 | |
| Offering Amount: | $120,000,000 | Selling: | $0.75 | |
| Expenses: | $1,000,000 | Reallowance: | $0.10 | |
| Shares Out After: | 13,273,773 |
| Manager | Tier | Phone |
| CS First Boston | Lead Manager | (212) 325-2000 |
| Bear, Stearns & Co. Inc. | Co-manager | (212) 272-4850 |
| Prudential Securities Incorporated | Co-manager | (212) 778-5420 |
| Issuer's Law Firm: | Baker & Hostetler |
| Bank's Law Firm: | Latham & Watkins |
| Auditor: | Coopers & Lybrand |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $6.92 | $5.83 | $2.68 | Assets: | $123.08 |
| Net Income: | -$4.52 | -$2.35 | -$2.64 | Curr Assets: | |
| EPS: | -$3.43 | -$1.78 | -$2.01 | Liabilities: | $74.65 |
| Prior EPS: | -$2.08 | $2.19 | $0.71 | Curr Liabilities: | |
| Cash Flow/Oper: | $3.99 | $22.39 | $20.59 | Equity: | $48.43 |
| Cash Flow/Fin: | $51.17 | -$26.90 | -$21.50 | Cash: | $1.54 |
| Cash Flow/Inv: | -$53.27 | -$26.90 | |||
| Business Description |
| The company is a real estate investment trust, (REIT). The company rents 79 properties to the operators of 24 different restaurant and retail chains and franchises, including 27 Boston Chicken, Inc. Boston Markets and nine Flagstar Cos. Denny's. The Company generally acquires properties from operators or developers in locations which have exhibited growth in retail sales and population. Upon acquiring a property, the Company normally enters into a long-term triple-net Lease (typically 15 to 20 years plus one or more five-year renewal options) with the Lessee who will operate the property. Under the terms of a typical Lease, the Lessee is responsible for all operating costs and expenses including repairs, maintenance, real property taxes, assessments, utilities and insurance. In addition, the Lease generally provides for minimum rent plus specified fixed periodic rent increases or, in certain circumstances, indexation to the Consumer Price Index ("CPI") and/or percentage rent. The Company believes that the structure of its Leases provides steady periodically escalating long-term revenue while reducing operating expenses and capital costs, and that its underwriting standards reduce the risk of default or non-renewal. The Existing Properties average four years of age and are subject to Leases with an average remaining term of 16 years. |
| Competition |
| The restaurant and retail chain finance industry is characterized by intense competition. The Company will compete with other restaurant and retail finance companies (some of which are REITs), commercial banks, other financial institutions and certain franchisors which offer financing services directly to their franchisees. The Company considers Franchise Finance Corporation of America, Realty Income Trust and Commercial Net Lease Realty, Inc. to be its primary competitors among REITs. Some of these competitors for investment opportunities have substantially greater financial resources than the Company. These entities generally may be able to accept more risk than the Company prudently can manage, including risk with respect to the creditworthiness of lessees or risk related to geographic or other concentration of investment. Such competition may reduce the number of suitable investment properties available to the Company and increase the bargaining position of the owners of those properties. |
| Business Plan |
| The Company intends to maximize total returns to stockholders by increasing cash flow per share and the value of its property portfolio. The Company believes it can achieve these objectives primarily by acquiring additional properties and structuring net leases on advantageous terms. As of September 1, 1997, the Company had agreements in principle to acquire the 62 Acquisition Properties for approximately $94.5 million. The Company utilizes procedures and methodologies which have been developed and refined by the Advisor to identify, acquire and manage net leased properties, and seeks to avoid utilizing real estate brokers or other commissioned intermediaries to reduce acquisition costs. The Company's principal growth strategies include: ACQUISITIONS FROM OPERATORS ACQUISITIONS FROM DEVELOPERS INCREASES IN REVENUES AND OPERATING MARGINS |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to redeem preferred stock and pay accumulated dividends repay indebtedness, working capital and for general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| Patrick L. Beach | 47.00% | 4.70% |
| W. Ross Martin | 21.40% | 2.10% |
| Captec Financial Group, Inc. | 14.60% | 1.50% |
| William H. Krul, II | 10.10% | 1.00% |
| Officer Name | Title | Age |
| Patrick L. Beach | Chairman of the Board of Directors, President and Chief Executive Officer | 41 |
| W. Ross Martin | Director, Executive Vice President, Chief Financial Officer and Treasurer | 37 |
| Ronald Max | Vice President and Chief Investment Officer | 40 |