SecProbe.io

CORRESP
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corresp

March 11, 2005

By EDGAR

Securities and Exchange Commission

450 Fifth Street, NW

Washington, DC 20549

    Attention:

    Karen J. Garnett

    Michael McTiernan

    Re:

    Commercial Net Lease Realty, Inc.

    Registration Statement on Form S-4

    File No. 333-1221445

Ladies and Gentlemen:

     On behalf of our client, Commercial Net Lease Realty, Inc., a Maryland corporation (the
“Company”), please find enclosed for filing Amendment No. 1 to the above-referenced registration
statement (the “Registration Statement”), which we have marked to show changes from the
Registration Statement filed by the Company on January 19, 2005.

     We have amended the Registration Statement in response to your letter, dated February 16, 2005
(the “Comment Letter”), with respect to the Registration Statement. For your convenience, included
below is the text of each comment from the Comment Letter followed by the Company’s response to
each such comment.

     Capitalized terms used in this letter and not otherwise defined herein have the meanings
provided in the Registration Statement.

    General

    1.
    Please confirm that you will file with the Commission all materials used to
aid in the solicitation of proxies. Please supplementally provide us with copies of
these materials and indicate the date they were first used. Please provide us with a
form of the proxy card.

    The Company will file with the Securities and Exchange Commission (the
“Commission”) all materials used to aid in the solicitation of proxies. A form of
the proxy card was filed as Exhibit 99.2 to the Registration Statement; for your
convenience, we have supplementally provided the form of proxy card
as Annex A.

Securities and Exchange Commission

March 11, 2005

Page 2

    2.
    Supplementally, please provide us with any pictures, graphics or artwork that
will be used in the prospectus.

    The Company will not be using any artwork in the Prospectus.

    3.
    Please provide the information about NNN required by the following items, or
advise us where it is already disclosed in or incorporated into the registration
statement:

    •
    Information required by Item 12 of Form S-11;

    •
    Information required by Item 13 of Form S-11; and

    •
    Information required by Item 14, Instruction 3 of Form S-11.

    The Company will include the requested information in Item 1 of its Annual Report
on Form 10-K for the fiscal year ended December 31, 2004, which will be filed on
March 14, 2005. We have supplementally provided the language that will be included in the Form 10-K as Annex B.

    4.
    Please include the information required by Item 403 of Regulation S-K with
respect to the security ownership of NNN. Also, please disclose that none of the
existing officers and directors of NAPE will serve as a director or an executive
officer of NNN following the merger.

    The information required by Item 403 of Regulation S-K with respect to the security
ownership of NNN will be included in the Company’s 2005 proxy statement, which will
be filed with the Commission before the Company requests effectiveness of the
Registration Statement. The Company will incorporate this information by reference
into its Form 10-K for the fiscal year ended December 31, 2004, which will be
incorporated by reference into the Registration Statement.

    In “THE COMPANIES -— NNN’s Management and Additional Information” on
page 46, the Company discloses that none of the existing officers and directors of
NAPE will serve as a director or an executive officer of NNN following the merger.

Securities and Exchange Commission

March 11, 2005

Page 3

    Prospectus Cover Page

    5.
    Please disclose the trading market and the ticker symbol of the common stock
offered pursuant to this prospectus. Refer to Item 501(b)(4) of Regulation S-K.

    Complied with.

    6.
    Please disclose the value of the NNN shares to be received for each share of
NAPE based on the NNN trading price immediately prior to the execution of the merger
agreement. In addition, please disclose the special dividend.

    Complied with.

    7.
    Please highlight the risk factors cross reference by prominent type or in
another manner. Refer to Item 501(b)(5) of Regulation S-K.

    Complied with.

    Questions and Answers About the Merger, page iii

    8.
    Please revise so that the Q&A section does not repeat information in the
summary. Refer to the direction provided in Rule 421 of Regulation C and Release
33-7497.

    Complied with.

    What will I receive in the Merger for my Shares?, page iii

    9.
    Please expand the disclosure to state the price per share of NAPE common
stock on January 14, 2005. Also disclose the price per share of both companies as of
the most recent date practicable.

    Complied with.

    Why is NAPE proposing to merge with NAPE Acquisition, Inc.? How will I
benefit?, page iii

    10.
    Please revise your discussion of dividends to refer to total dividends paid
to shareholders or the respective historical dividend yields, rather than the dividend
per share.

    Complied with.

Securities and Exchange Commission

March 11, 2005

Page 4

    Why is the board of directors recommending that I vote for the merger?, page
iv

    11.
    Please summarize the referenced factors.

    The Company elected to delete this information because it does not materially
enhance the quality of the information that is provided on page 19.

    12.
    The discussion of the reasons why management and the board of directors is
recommending approval of the merger should be presented in a balanced format to
present the detriments of the offer. The detriments should be presented in a question
immediately following this question or within this question and presented in the same
format as the benefits are being presented.

    See response to comment 11 above.

    Introduction, page vii

    13.
    The information under this heading appears to repeat information that you
have already provided on the proxy statement/prospectus cover page, in the Q&A, and in
the summary. Please remove this section from your document or tell us why you believe
it is material to investors.

    Complied with by deleting the heading and the information under the heading.

    Risk Factors, page 26

    14.
    Please include risk factors that discuss the following characteristics of the
merger:

    •
    The exchange ratio is fixed so that the value of the consideration to be
paid in the merger may fluctuate.

    •
    There are potential conflicts of interest, including payments to NAPE
executive officers.

    •
    There is no assurance that NNN will continue to pay dividends at historical
rates.

    Complied with.

Securities and Exchange Commission

March 11, 2005

Page 5

    15.
    Please include risk factors that discuss the following characteristics of
NNN’s business and organization:

    •
    Property vacancies;

    •
    Investments in office properties generally, and the recent office
investment in particular;

    •
    Mezzanine lending; and

    •
    REIT qualification.

    Complied with; however, the Company has not included a risk factor that discusses
investments in office properties generally because such investments
do not, and are not expected to, constitute a material part of the Company’s
business strategy.

    Vote Required, page 13

    16.
    Please revise to quantify the vote required to approve the merger.
Currently, you state that the merger must be approved by NAPE shareholders, but the
percentage of votes needed for approval is not clear.

    Complied with.

    The Merger, page 13

    Background, page 13

    17.
    Please describe the reasons why Mr. Di Paglia initially contacted NNN to
discuss a potential transaction. Indicate whether he discussed this contact with the
NAPE board or if he made the initial contact independently. Also, discuss
alternatives to a transaction with NNN that the NAPE board considered, if any, and the
reasons the board did not pursue those alternatives.

    Complied with by expanding the disclosure under “THE MERGER —Background”
on pages 16 and 17.

Securities and Exchange Commission

March 11, 2005

Page 6

    18.
    Please provide a more detailed description of the unsolicited third party
indication of interest that NAPE received on November 16, 2004. Identify the
bidder or describe in reasonable detail the business, size, and other relevant
information about the bidder. Describe the reasons the board determined that offer
was inadequate and indicate whether the bid was submitted to the entire board for
approval.

    Complied with by expanding the disclosure under “THE MERGER —Background”
on page 18.

    19.
    With respect to each stage of the negotiations, please disclose the
involvement, if any, of third party financial advisors, including the preparation of
financial analyses. Also, please clarify the date on which NAPE engaged Houlihan
Lokey as its financial advisor.

    Complied with by expanding the disclosure under “THE MERGER —Background”
on pages 17 and 18.

    20.
    Please disclose the extent to which the NAPE board of directors was briefed
on the negotiations prior to December 17, 2004.

    Complied with by expanding the disclosure under “THE MERGER —Background”
on page 17.

    NAPE’s Reasons for the Merger, page 15

    21.
    Refer to the third negative factor listed on page 16. Please revise to
quantify the costs that NAPE will incur if the merger is not completed. Similarly,
please quantify the costs to NNN referenced in the first bullet point on page 17.

    Complied with.

    NNN’s Reasons for the Merger, page 16

    22.
    Please revise the third bullet point to quantify the accretion to FFO and net
income that NNN’s management anticipates as a result of the merger. If the NNN board
did not quantify the amount of accretion, please disclose that fact and explain how
the board determined that the transaction would be immediately accretive. Similarly,
please revise the fifth bullet point to quantify the anticipated cost savings and
reductions in expenses

    Complied with.

Securities and Exchange Commission

March 11, 2005

Page 7

    Opinion of NAPE’s Financial Advisor, page 17

    23.
    Please supplementally provide us with copies of any materials prepared by or
for the financial advisor in connection with its fairness opinions, including, among
other things, any “board books,” drafts of fairness opinions provided to the board of
directors and any summaries of presentations made to the board of directors. We may
have further comment on your disclosure once we have had the opportunity to review
those materials.

    The requested materials are supplementally provided as Annex C.

    24.
    Please summarize the process by which you selected your financial advisor.

    Complied with by expanding the disclosure under “THE MERGER —Opinion of
NAPE’s Financial Advisor” on page 21.

    25.
    Please revise to identify the change of control acquisitions that Houlihan
Lokey considered in the “Comparable Transaction” approach. Expand the tabular
presentation to include multiples for each transaction considered, in addition to the
high, low, median, and mean numbers you have already provided.

    Complied with.

    26.
    Please revise the “Concluded Equity Value” range disclosed on page 19 to
conform to the immediately preceding sentence.

    Complied with.

    27.
    Please briefly describe how the financial advisor selected the respective
discount and terminal cap rates used in the “Sum of the Parts” approach.

    Complied with by expanding the disclosure in “THE MERGER —Opinion of
NAPE’s Financial Advisor” on pages 24 and 25.

    28.
    Please briefly describe how the range of values shown in the “Sum of the
Parts” and “Discounted Cash Flow Approach” subsections is calculated. In particular,
please explain why the value is presented in a range if the discount rate and terminal
cap rates are fixed.

    Complied with by expanding the disclosure in “THE MERGER —Opinion of
NAPE’s Financial Advisor” on pages 24 and 25.

    29.
    Please disclose the EBITDA multiples for each comparable company.

    Complied with.

Securities and Exchange Commission

March 11, 2005

Page 8

    Interests of Certain Persons in the Merger, page 22

    30.
    Please disclose who negotiated the terms of the release and whether it was
approved by NAPE’S independent board members.

    Complied with by expanding the disclosure in “THE MERGER — Interests of Certain
Persons in the Merger” on page 28.

    31.
    Please disclose the date on which the Di Paglia employment agreement was
approved by the NAPE board of directors.

    Complied with by expanding the disclosure in “THE MERGER — Interests of Certain
Persons in the Merger” on page 28.

    32.
    Please supplementally advise us whether the Di Paglia employment agreement
has been filed as an exhibit to NAPE’S Exchange Act filings.

    The Di Paglia employment agreement and all exhibits thereto will be filed as
exhibits to NAPE’s Form 10-K for the fiscal year ended December 31, 2004.

    33.
    Please disclose the initial effective date and termination date of Mr. Di
Paglia’s employment agreement. Also, please clarify what you mean by the Phrase “10
year contract.” The annual renewal feature suggests hat this may be a one-year
contract under which Mr. Di Paglia will receive 10 years of compensation in the event
of a termination other than for disability or cause.

    Complied with by expanding the disclosure in “THE MERGER — Interests of Certain
Persons in the Merger” on page 28.

    34.
    Please provide additional detail on the calculation of the amounts to be paid
to Mr. Di Paglia and Ms. Fasano. In particular, please disclose the amount of broker’s
or finder’s fees to which each of them would be entitled. In addition, please disclose
the lump sum fee that would be required to be paid under Mr. Di Paglia’s agreement.

    Complied with by expanding the disclosure in “THE MERGER — Interests of Certain
Persons in the Merger” on page 28.

    Comparison of Stockholder Rights, page 40

    Restrictions on Business Combinations, page 44

Securities and Exchange Commission

March 11, 2005

Page 9

    35.
    Please disclose the opt in/opt out features of the Maryland business
combination and control share statutes, the current status of NNN and the ability of
NNN to change that status without shareholder approval.

    Complied with.

    Financial Statements

    36.
    Supplementally explain how you considered SAB Topic T.1.B.3 with regards to
the $20.8 million dividend to be issued by NAPE in conjunction with the merger.

    The Company did not initially consider SAB Topic T.1.B.3 because it addresses
financial statements of subsidiaries. However, the effects of the $20.8 million
dividend are reflected in the table under the heading “HISTORICAL, PRO FORMA
CONSOLIDATED AND PRO FORMA EQUIVALENT PER SHARE DATA,” which is on page 13.
Specifically, the effects are reflected in the line items indicating
NAPE’s Equivalent Pro Forma Book Value and NNN’s
Pro Forma Book Value. The Company added footnote disclosure to the table to
clarify these effects.

    Commercial Net Lease Realty, Inc. Form 10-Q for the nine-month period ended
September 30, 2004

    Note 1.   Basis of Presentation

    Principles of Consolidation, page 6

    37.
    You state that under the guidelines of FIN 46 R, Services met the criteria of
a variable interest entity which requires consolidation of NNN. Also, you state that
you hold a variable interest in, but are not the primary beneficiary of CNL, Plaza
Ltd. and CNL Commercial Finance, Inc., both of which are variable interest entities.
In a supplemental letter, explain to us your basis in determining that Services, CNL
Plaza Ltd. and CNL Commercial Finan