BFC FINANCIAL CORP, 10-K, 1995-03-31

BFC FINANCIAL CORP
10-K, 1995-03-31
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Fiscal Year Ended Commission File Number
December 31, 1994 0-9811
------------------------- ----------------------

BFC FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Florida 59-2022148
----------------------- ---------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)

1750 E. Sunrise Boulevard
Ft. Lauderdale, Florida 33304
------------------------- --------
(Address of Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (305) 760-5200
Securities registered pursuant to Section 12(b) of the Act:

Common Stock $.01 par Value NONE
--------------------------- --------------------------------------
(Title of Class) (Name of Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

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 such filing
requirements for the past 90 days.

Yes X No
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendments to
this form 10-K. [X]

State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant: as of March 17, 1995, $4,878,000

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:

Common stock of $.01 par value, 2,305,682 shares outstanding.

Documents Incorporated by Reference in Part IV of this Form 10-K:

Proxy Statement - Prospectus dated June 20, 1980; Annual Report on Form 10-K for
the year ended December 31, 1987 of BFC Financial Corporation; Annual Report on
Form 10-K for the year ended December 31, 1994 of BankAtlantic Bancorp, Inc.

PART I
------

ITEM 1. BUSINESS
----------------

General Description of Business
-------------------------------
BFC Financial Corporation is a savings bank holding company owning approximately
48% of BankAtlantic Bancorp, Inc. ("BBC"). BBC was formed in April 1994 under
the laws of the State of Florida and is the holding company for BankAtlantic, A
Federal Savings Bank ("BankAtlantic"). On July 13, 1994 BankAtlantic
consummated a reorganization into a holding company structure and BankAtlantic
Bancorp, Inc. ("BBC") became a unitary savings bank holding company. The
reorganization resulted in BankAtlantic becoming a wholly-owned subsidiary of
BBC with BFC becoming a shareholder of BBC on the same proportionate basis as
was the Company's ownership in BankAtlantic. BFC Financial Corporation and its
subsidiaries are collectively identified herein as the "Registrant", "BFC" or
the "Company". The Company acquired control of BankAtlantic in 1987 for a total
investment of approximately $43 million. From 1987 through June 1993, BFC
increased its ownership in BankAtlantic and BankAtlantic was consolidated in BFC
Financial Corporation's financial statements since October 1987 through November
1993. During November 1993, BankAtlantic sold in a public offering of 2,070,000
million shares of BankAtlantic common stock at a price of $13.50 per common
share was consummated. Of the shares sold, 1,400,000 shares were sold by BFC
Financial Corporation. Net proceeds to BFC Financial Corporation from the sale
amounted to approximately $17.7 million. Upon the sale of the 2,070,000 shares,
BFC Financial Corporation's ownership of BankAtlantic decreased from 77.83% to
48.17%. With the Company's ownership position less than 50%, BankAtlantic is no
longer consolidated in BFC Financial Corporation's financial statements.
BankAtlantic represented approximately 97% of the Company's consolidated assets
when it was consolidated with the Company. Now based on the equity method of
accounting for the Company's investment in BankAtlantic, the investment
represents approximately 48% of the Company's consolidated assets. At September
30, 1994, BankAtlantic ranked sixth in size among all savings institutions
headquartered in the State of Florida and first in size among all financial
institutes headquartered in Broward County, Florida based on its total assets at
such date.

During March 1992, BFC, which was formerly known as BankAtlantic Financial
Corporation changed its name to BFC Financial Corporation.

In addition to its investment in BankAtlantic, the Company owns and manages real
estate. Since its inception in 1980, and prior to the acquisition of control of
BankAtlantic, the Company's primary business was the organization, sale and
management of real estate investment programs. Effective as of December 31,
1987, the Company ceased the organization and sale of new real estate investment
programs, but continues to manage the real estate assets owned by its existing
programs. Subsidiaries of the Company continue to serve as the corporate
general partners of 3 public limited partnerships which file periodic reports
with the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Subsidiaries of the Company also serve as
corporate general partners of a number of private limited partnerships formed in
prior years.

During 1989, the Company exchanged (the "1989 Exchange") approximately $30
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 21,
I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real Estate Fund, Ltd. -
Series 24. The major assets and liabilities of these partnerships consisted
principally of fourteen commercial real estate properties and related non-
recourse mortgage debt, of which one is still owned by the company.

During 1991, the Company exchanged (the "1991 Exchange") approximately $15.4
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 25,
I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real Estate Income Fund,
Ltd. The major assets and liabilities of these partnerships consisted
principally of eight commercial real estate properties and related non-recourse
mortgage debt, of which one is still owned by the Company.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers. Settlement of the litigation against the Company
that arose in connection with the 1991 Exchange was approved by the District
Court in May 1994. The settlements required BFC Financial Corporation to
establish a settlement fund equal to 81.359% of the original face amount of the
debenture distributed in connection with the 1991 Exchange to the 1991 Exchange
Class Members. Settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. The settlement required BFC to establish a
settlement fund equal to 56% of the original face amount of the debentures
issued to the class members in the Purcell Litigation (the Purcell Class").
Settlement of the litigation brought against the Company in connection with the
1989 Exchange by the plaintiffs who voted yes (the "Meador Litigation") was
approved by the District Court in December 1994. The settlement agreement in
the Meador litigation contains the same financial terms as those in the
description of the settlement of the Purcell Litigation. The terms of the
agreement for the above settlements are further outlined in Item 3. "Legal
Proceedings", "Liquidity and Capital Resources" in Management's' Discussion and
Analysis and in note 3 of notes to consolidated financial statements. As
discussed above, BFC sold 1.4 million BBC shares in November 1993. The proceeds
from such sale provided BFC with the current resources necessary to allow it to
resolve these lawsuits.

As indicated above, during 1987, the Company acquired a controlling interest in
BankAtlantic and became a savings bank holding company. Although the Company's
current ownership in BBC is less than 50%, the Company's principal business is
still the ownership of the savings bank through BBC. A description of BBC and
BankAtlantic is incorporated herein by refrence.

Holding Company Regulation
--------------------------
As the holder of approximately 48% of BBC's Common Stock, BFC is a non-
diversified savings and loan holding company within the meaning of the National
Housing Act of 1934, as amended. As such, BFC is registered with and is subject
to examination and supervision by the OTS as well as subject to certain
reporting requirements. As an FDIC-insured subsidiary of a savings bank holding
company, BankAtlantic is subject to certain restrictions in dealing with BFC and
with other persons affiliated with BFC.

Capital Maintenance Agreement
-----------------------------
Pursuant to an agreement entered into on May 10, 1989 between BFC, its
affiliates and BankAtlantic's primary regulator, BFC was obligated to infuse
additional capital into BankAtlantic in the event that BankAtlantic's net
capital (as defined) falls below the lesser of the industry's minimum capital
requirement (as defined) or 6% of BankAtlantic's assets. This obligation
expired ten years from the date of the agreement, or at such earlier time as
BankAtlantic's net capital exceeded its fully phased-in capital requirement (as
defined) for a period of two consecutive years. BankAtlantic's capital has
exceeded its fully phased-in capital requirement since December 31, 1992, and
BFC has notified the OTS that, in BFC's opinion, the capital maintenance
agreement is no longer in effect.

Dividend Restrictions
---------------------
Prior to 1993, BankAtlantic had not paid any regular dividend on its common
stock. In August 1993, BankAtlantic declared and paid a quarterly cash dividend
to its common stockholders and has paid a regular quarterly dividend since that
time. Subject to the results of operations and regulatory capital requirements,
BBC will seek to declare regular quarterly cash dividends of $0.06125 per share
on its common stock. A 15% common stock dividend was declared in May 1993.
Currently, the source of funds for payment of dividends by BBC is the dividends
by BankAtlantic. In the future, BBC may incur debt which may have an impact on
its ability to pay dividends to the Company.

An OTS regulation, effective August 1, 1990, limits all capital distributions
made by savings institutions, including cash dividends, by permitting only
institutions that meet specified capital levels to make capital distributions
without prior OTS approval. The regulation established a three-tiered system,
with the greatest flexibility afforded to well-capitalized institutions. An
institution that meets all of its fully phased-in capital requirements and is
not in need of more than normal supervision would be a "Tier 1 Institution". An
institution that meets its minimum regulatory capital requirements but does not
meet its fully phased-in capital requirements would be a "Tier 2 Institution".
An institution that does not meet all of its minimum regulatory capital
requirements would be "Tier 3 Institution". A Tier 1 Institution may, after
prior notice but without the approval of the OTS, make capital distributions
during a calendar year up to 100% of net income earned to date during the
current calendar year plus 50% of its capital surplus ("surplus" being the
amount of capital over its fully phased-in capital requirement). Any additional
capital distributions would require prior regulatory approval. A Tier 2
Institution may, after prior notice but without the approval of the OTS, make
capital distributions of between 50% and 75% of its net income over the most
recent four-quarter period (less any dividends previously paid during such four-
quarter period) depending on how close the institution is to its fully phased-in
risk-based capital requirement. A Tier 3 Institution would not be authorized to
make any capital distributions without the prior approval of the OTS.
Notwithstanding the provision described above, the OTS also reserves the right
to object to the payment of a dividend on safety and soundness grounds.

Real Estate and Other Activities
--------------------------------
As discussed in "General Description of Business", the Company prior to its
investment in BankAtlantic had been primarily engaged in the real estate
business. From 1981 through 1987, eleven public real estate partnerships were
formed for which the Company provided property management, for fees, and
administrative and accounting services, for cost reimbursements. In March 1989,
February 1991 and June 1991, the assets and liabilities of six partnerships were
exchanged for subordinated debentures of the Company. Three other partnerships
have been or are in the process of being liquidated. It is the Company's intent
to liquidate the assets acquired in the Exchanges and at December 31, 1994 only
two of the twenty-two properties acquired in the 1989 and 1991 Exchanges remain.

In addition to its investment in BBC and unrelated to the public limited
partnership programs and its property management activities noted in the
paragraphs above, the Company holds mortgage notes receivable of approximately
$4.9 million which were received in connection with the sale of properties
previously owned by the Company.

In June 1994, an entity controlled by the Company acquired from an independent
third party 23.7 acres of unimproved land know as the "Cypress Creek" property
located in Fort Lauderdale, Florida for a purchase price of approximately $3.6
million. The Company has agreed to pay John E. Abdo and certain of his
affiliates (the "Abdo Group") fifty percent of the profits (as defined), if any,
received on the sale of the property. At December 31, 1994, the Company had a
contract to sell the Cypress Creek property for approximately $9.7 million.
Consummation of the sale of the property pursuant to the contract is subject to
a number of conditions and there is no assurance that the property will be sold
on that basis.

In December 1994, an entity controlled by the Company acquired from unaffiliated
seller 60.1 acres of unimproved land know as the "Centerport" property in
Pompano Beach, Florida for the purchase price of approximately $6.3 million. The
Abdo Group has an interest in the entity which holds this property entitling the
Abdo Group to a fifty percent interest in the profits of the entity after a
priority return in favor of the Company.
The Cypress Creek and Centerport properties serve as collateral for an $8.08
million loan from an unaffiliated lender. The loan provides for a release price
of $5.0 million upon the sale of the Cypress Creek property.

Federal and State Taxation
--------------------------
The Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act") was passed by
Congress and signed into law by the President during August 1993. The Omnibus
Act increased the maximum federal income tax rate applicable to BFC from 34% to
35% retroactive to January 1, 1993. BBC may also be impacted by other provisions
of the Omnibus Act either directly as a consequence of additional provisions
applicable to it or indirectly as a consequence of their impact on the economy
in general.

The State of Florida imposes a corporate income tax at the rate of 5.5% on
taxable income as determined for Florida income tax purposes. Taxable income for
this purpose is based on federal taxable income in excess of $5,000 as adjusted
by certain items.

Employees
---------
At December 31, 1994, BFC Financial Corporation employed 5 full-time and 1 part-
time employee. Management believes that its relations with its employees are
satisfactory. The employee benefits offered by the Company are considered by
management to be generally competitive with employee benefits provided by other
major employers in Florida. The Company's employees are not represented by any
collective bargaining group.

ITEM 2. Properties
-------------------
Effective January 31, 1994, BFC relocated its offices to approximately 1,500
square feet located in BBC's executive offices. The space is leased pursuant to
a lease with BankAtlantic on terms no less favorable than could be obtained from
an independent third party and expires December 20, 1995. Prior to January 31,
1994, BFC's principal executive offices of approximately 6,200 square feet of
office space was located at 1320 South Dixie Highway, Coral Gables, Florida. The
space was leased pursuant to a lease expiring upon the giving of six (6) months
written notice to landlord and was utilized by the Company and its affiliates
other than BankAtlantic and BBC.

The commercial properties listed below are not utilized by the Company but are
held by the Company as investments. All are zoned for their current uses. Lease
terms do not include options.

Land Approximately subject to an
Springfield, Massachusetts 5 acres estate for
years
expiring in
2006

Land and Restaurant Building 5,000 square subject to a
Galesburg, Illinois foot building net lease
expiring
in 1995

Land 12.73 Acres owned
Birmingham, Alabama

Land (Cypress Creek) 23.7 acres owned
Fort Lauderdale, Florida

Land (Centerport)
Pompano Beach, Florida 60.1 acres owned

Burlington Manufacturers 277,965 square owned
Outlet Center feet leasable
Burlington, NC

Delray Industrial Park 134,147 square owned
Delray Beach, Florida feet leasable

ITEM 3. LEGAL PROCEEDINGS
-------------------------
The following is a description of certain lawsuits to which the Company is a
party.

Timothy J. Chelling vs. BFC Financial Corporation, Alan B. Levan, I.R.E.
Advisors Series 21, Corp. and First Equity Corporation, U.S. District Court,
Southern District of Florida Case No. 89-1850-Civ-Ryscamp. John D. Purcell and
Debra A. Purcell vs. BFC Financial Corporation, Alan B. Levan, Scott Kranz,
Frank Grieco, I.R.E. Advisors Series 23, Corp. and First Equity Corporation,
U.S. District Court, Southern District of Florida, Case No. 89-1284-Civ-Ryskamp.
William A. Smith and Else M. Smith vs. BFC Financial Corporation, Alan B. Levan
and I.R.E. Advisors Series 24, Corp. and First Equity Corporation, U.S. District
Court, Southern District of Florida, Case No. 89-1605-Civ-Ryscamp.

These actions were filed by the plaintiffs as class actions during September
1989, June 1989 and August 1989, respectively. The actions arose out of an
Exchange Offer made by the Company to the limited partners of I.R.E. Real Estate
Fund, Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, and I.R.E.
Real Estate Fund, Ltd. - Series 24. The plaintiffs were limited partners of the
above named partnerships who did not consent to the Exchange Offer. The
Exchange Offer was made through the solicitation of consents pursuant to a Proxy
Statement/Prospectus dated February 14, 1989 and was approved by the holders of
a majority of the limited partnership interests of each of the Partnerships in
March 1989. Messrs. Levan, Grieco and Kranz served as individual general
partners of each of the Partnerships, and Mr. Levan is the President and a
director of the Company.

The plaintiffs alleged that the Proxy Statement/Prospectus contained material
misstatements and omissions, that defendants violated the federal securities
laws in connection with the offer and Exchange, that the Exchange breached the
respective Limited Partners Agreement and that the defendants violated the
Florida Limited Partnership statute in effectuating the Exchange. The complaint
also alleged that the defendant general partners violated their fiduciary duties
to the plaintiffs.

Subsequently, the court entered summary judgment in favor of the defendants on
all claims of misrepresentations or omissions except with respect to the
statement in the Proxy Statement/Prospectus to the effect that BFC, Alan Levan
and the Managing General Partners believed the Exchange transaction was fair.
That issue was tried in December 1992, and the jury returned a verdict in favor
of the Plaintiffs in the amount of $8 million but extinguished approximately $16
million of debentures held by the plaintiffs. Both parties appealed.

In June 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately fifty-six percent (56%) of the face
amount of the outstanding debentures held by class members and the debentures
will be canceled pursuant to the procedures outlined in the agreement. Fifty
percent (50%) of the settlement amount, plus interest thereon at 7%, can be
deferred, at the option of the Company until December 1996. On September 12,
1994, the Court approved the settlement, vacated, set aside, dissolved and
nullified the earlier judgment entered following the jury verdict t and entered
judgment dismissing the action with prejudice. The American Broadcasting
Companies, Inc. and William H. Wilson, who attempted and were both denied the
right to intervene in this action, appealed the Court's judgment as well as the
Court's order denying their right to intervene.

Arthur Arrighi, et al. vs. KPMG Peat Marwick, BFC Financial Corporation; Alan B.
Levan; Frank V. Grieco; Glen Gilbert; Al DiBenedetto; BankAtlantic, A Federal
Savings Bank; Georgeson & Company, Inc.,; First Equity Corporation of Florida;
I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.; I.R.E.
Income Advisors, Corp.; and National Realty Consultants, in the United States
District Court for the District of New Jersey, Case No. 92-1206-CDR. This case
was filed on March 20, 1992 by more than 2,000 former limited partners in Series
25, Series 27 and Income Fund. The complaint alleged that BFC and certain other
defendants developed a fraudulent scheme commencing in 1972 to sell the
plaintiffs limited partnership units with the undisclosed goal of later taking
over the assets of the partnerships in exchange for securities in a new entity
in which the defendant Alan B. Levan would be a major shareholder. The
complaint further alleged that the defendants made material misrepresentations
and omissions in connection with the sale of the original limited partnership
units in the 1980s and in connection with the 1991 Exchange, and fraudulently
tallied the votes in connection with the 1991 Exchange and Solicitation of
Consents described above.

On March 2, 1994, the parties entered into an agreement to settle this action
pursuant to which BFC will pay approximately eighty-one percent (81%) of the
face amount of the outstanding debentures held by plaintiffs and the debentures
will be canceled pursuant to the procedures outlined in the agreement. On May
20, 1994, the Court entered an order approving the settlement and dismissing the
plaintiffs' claims with prejudice. The parties have also exchanged releases.

This action was filed as a class action during October 1991 and is brought on
behalf of all persons who were limited partners in (a) I.R.E. Real Estate Fund,
Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, or I.R.E. Real
Estate Fund, Ltd. -Series 24 on the effective date of the 1989 Exchange
Transaction not otherwise included in the action by limited partners who voted
against the Exchange; or (b) were limited partners in I.R.E. Real Estate Fund,
Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 27 or I.R.E. Real
Estate Income Fund, Ltd. on the effective dates of the 1991 Exchange
Transactions. The action alleges breach of the limited partnership agreements,
breach of fiduciary duty, aiding and abetting a breach of fiduciary duty by BFC
Financial Corporation and BankAtlantic, and negligent misrepresentation by all
defendants. The action sought damages, imposition of a constructive trust on
the assets of the exchanging partnerships, attorney's fees, costs and such other
relief as the courts may deem appropriate. Plaintiffs have voluntarily
dismissed all claims which arose out of or related to the 1991 Exchange.

On September 23, 1994, the parties entered into an agreement to settle this
action pursuant to which BFC will pay approximately fifty-six percent (56%) of
the face amount of the outstanding debentures held by class members and the
debentures will be canceled pursuant to the procedures outlined in the
agreement. Fifty percent (50%) of the settlement amount, plus interest thereon
at 7%, can be deferred, at the option of the Company until December 1996. On
December 19, 1994, the Circuit Court approved the settlement and dismissed all
claims against the defendants.

Shirley B. Daniels, Robert S. and Ruby L. Avans, and Dr. and Mrs. Czerny,
individually and on behalf of all others similarly situated, Plaintiffs, vs. BFC
Financial Corporation; BankAtlantic, A Federal Savings Bank; Alan B. Levan;
I.R.E. Advisors Series 25, Corp.; I.R.E. Advisors Series 27, Corp.; I.R.E.
Income Advisors Corp.; First Equity Corporation of Florida, Defendants, in the
United States District Court for the Southern District of Florida, Fort
Lauderdale Division, Case No. 92-6588-Civ-King. On January 18, 1991, BFC issued
a prospectus and solicitation of consents in which it offered to exchange up to
$17 million in subordinated unsecured debentures for all of the assets and
liabilities of I.R.E. Real Estate Fund, Ltd.- ("Series 25"), I.R.E. Real Estate
Fund, Ltd.- ("Series 27"), I.R.E. Real Estate ("Income Fund") and I.R.E. Pension
Investors, Ltd. the ("1991 Exchange"). The 1991 Exchange was approved by a
majority of the limited partners in all of the partnerships except I.R.E.
Pension Investors, Ltd. The Exchange subsequently was effectuated without
I.R.E. Pension Investors, Ltd.

In December 1992, plaintiffs filed an amended complaint, the result of which was
to enlarge the class to all limited partners in the 1991 Exchange. Plaintiffs
alleged that the defendants orchestrated the Exchange for their own benefit and
caused the issuance of the Exchange Offer and Solicitation of Consents, which
contained materially misleading statements and omissions. The complaint also
contained counts against BFC for violations of the Securities Act and the
Exchange Act.

Plaintiffs also alleged that Alan Levan and the managing general partners
breached the limited partnership agreements, breached fiduciary duties and that
BFC and BankAtlantic aided and abetted these alleged breach of fiduciary duties,
that Alan Levan, the managing general partners, BFC and BankAtlantic committed
fraud in connection with the 1991 Exchange and made certain negligent
misrepresentations to the plaintiffs. The complaint sought damages and
prejudgment interest in an unspecified amount, attorneys' fees and costs.

Alan B. Levan and BFC Financial Corporation v. Capital Cities/ABC, Inc. and
William H. Wilson, in the United States District Court for the Southern District
of Florida, Case No. 92-325-Civ-Atkins. On November 29, 1991, The ABC
television program 20/20 broadcast a story about Alan B. Levan and BFC which
purportedly depicted some securities transactions in which they were involved.
The story contained numerous false and defamatory statements about the Company
and Mr. Levan and, February 7, 1992, a defamation lawsuit was filed on behalf of
the Company and Mr. Levan against Capital Cities/ABC, Inc. and William H.
Wilson, the producer of the broadcast.

Cheryl and Wayne Hubbell, et al., vs. I.R.E. Advisors Series 26, Corp. et al.,
in the California Superior Court in Los Angeles, California, Case No. BC049913.
This action was filed as a class action during March 1992 on behalf of all
purchasers of I.R.E. Real Estate Fund, Ltd. - Series 25, I.R.E. Real Estate
Fund, Ltd. - Series 26, I.R.E. Real Estate Fund, Ltd. - Series 27, I.R.E. Real
Estate Growth Fund, Ltd. - Series 28 and I.R.E. Real Estate Income Fund, Ltd.
against the managing and individual general partners of the above named
partnerships and the officers and directors of those entities. The plaintiffs
allege that the offering materials distributed in connection with the promotions
of these limited partnerships contained misrepresentations of material fact and
that the defendants misrepresented and concealed material facts from the
plaintiffs during the time the partnerships were in existence. The complaint
asserts two causes of action for fraud, one of which is based on a claim for
intentional misrepresentation and concealment and one of which is based on a
claim of negligent misrepresentation. The complaint also contains a claim for
breach of fiduciary duty. The complaint seeks unspecified compensatory and
punitive damages, attorneys' fees and costs. Plaintiffs filed a third amended
complaint which defendants answered in April 1993. In May 1993, a motion to
dismiss was filed by the plaintiffs to dismiss all claims against all defendants
relation to I.R.E. Real Estate Fund, Ltd.-Series 25, I.R.E. Real Estate Fund,
Ltd.-Series 27 and I.R.E. Real Estate Income Fund, Ltd., whether exchange
related or not. This motion was approved by the Court in September 1994.

Martha Hess, et. al., v. I.R.E. Real Estate Income Fund, et al. In the
Appellate Court of Illinois, First District, and related cases, App. No. 90-107.
On or about May 20, 1988, an individual investor filed the above referenced
action against two individual defendants, who allegedly sold securities without
being registered as securities brokers in Illinois, two corporations organized
and controlled by such individuals, and against approximately sixteen publicly
offered limited partnerships, including two partnerships that the Company
acquired the assets and liabilities of in the 1991 Exchange transaction, (the
"predecessor partnerships") interests in which were sold by the individual and
corporate broker defendants.

Plaintiff alleged that the sale of limited partnership interests in the
predecessor partnerships (among other affiliated and unaffiliated partnerships)
by persons and corporations not registered as securities brokers under the
Illinois Securities Act constitutes a violation of such Act, and that the
Plaintiff, and all others who purchased securities through the individual or
corporate defendants, should be permitted to rescind their purchases and recover
their principal plus 10% interest per year, less any amounts received. The
predecessor partnerships' securities were properly registered in Illinois and
the basis of the action relates solely to the alleged failure of the Broker
Dealer to be properly registered.

In November 1988, Plaintiff's class action claims were dismissed by the Court.
Amended complaints, including additional named plaintiffs, were filed subsequent
to the dismissal of the class action claims. Motions to dismiss were filed on
behalf of the predecessor partnerships and the other co-defendants. In December
1989, the Court ordered that the predecessor partnerships and the other
co-defendants rescind sales of any plaintiff that brought suit within three
years of the date of sale. Under the Court's order of December 1989, one of the
predecessor partnerships rescinded sales of $41,500 of units.

Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale. In February
1993, the Appellate court ruled that the statute of limitations was tolled
during the pendency of the class action claims. Therefore, those investors that
brought suit within 3.6 years and potentially 4 years from the date of sale may
be entitled to rescission. Plaintiffs claims are now again pending in Circuit
Court. Plaintiffs filed a purported Class Action Amendment on March 24, 1994
seeking to consolidate and amend their claims. The amendment sought to continue
the claims against the predecessor partnerships along with their general
partners and sought to add BFC as a defendant. The plaintiffs also moved for
class certification. Motions to dismiss and to deny class certification have
been filed. Before plaintiffs responded or the motions were heard, plaintiffs
filed a new motion for leave to file consolidated class action amendments and a
new motion for class certification. In March 1995, defendants filed memoranda
opposing consolidation and opposing class certification. The individual and
corporate defendants sold a total of $1,890,500 of limited partnership interests
in the predecessor partnerships. Limited partners holding approximately
$1,042,800 of limited partnership interests have filed an action for recision.
Under the appellate decision, if recision was made to all limited partners that
filed an action, refunds, at March 31, 1995, (including interest payments
thereon) would amount to approximately $1,800,000 plus attorney's fees. If the
class is certified, refunds at March 31, 1995, (including interest payments and
estimated attorney's fees thereon) would be approximately $4.0 million. A
liability for such amount is included in the accompanying financial statements.

Short vs. Eden United, Inc., et al. in the Marion County Superior Court, State
of Indiana. Civil Division Case No. S382 0011. In January, 1982, an individual
filed suit against a subsidiary of the Company, Eden United, Inc. ("Eden"),
seeking return of an earnest money deposit held by an escrow agent and
liquidated damages in the amount of $85,000 as a result of the failure to close
the purchase and sale of an apartment complex in Indianapolis, Indiana. Eden
was to have purchased the apartment complex from a third party and then
immediately resell it to plaintiff. The third party was named as a co-defendant
and such third party also filed a cross claim against Eden, seeking to recover
the earnest money deposit. In September 1983, Plaintiff filed an amended
complaint, naming additional subsidiaries of the Company and certain officers of
the Company as additional defendants. The amended complaint sought unspecified
damages based upon alleged fraud and interference with contract. In
interrogatory answers served in September 1987, Plaintiff stated for the first
time that he was seeking damages in the form of lost profits in the amount of
approximately $6,350,000. The case went to trial during October 1988. On April
26, 1989, the Court entered a judgment against Eden, the Company and certain
additional subsidiaries of the Company jointly and severally in the sum of
$85,000 for liquidated damages with interest accruing at 8% per annum from
September 1, 1981, normal compensatory damages of $1.00, and punitive damages in
the sum of $100,000. The judgment also awarded the Plaintiff the return of his
$85,000 escrow deposit, and awards the third party $85,000 in damages plus
interest accruing from September 14, 1981 against Eden. The Company has charged
expense for the above amounts. Both Short and the Company appealed the judgment
and in June 1991, the appellate court reversed the trial court's decision on the
issue of compensatory damages, determined that Short might be entitled to an
award of compensatory damages and remanded the case to the trial court to
determine the amount of compensatory damages to be awarded. A hearing on remand
was held on February 3, 1993. On February 25, 1994, the court on remand awarded
plaintiff a judgment in the amount of $85,000 for liquidated damages for breach
of contract jointly and severally from the subsidiary, the Registrant and
certain named affiliates, plus prejudgment interest of $52,108 through May 1,
1989, plus post-judgment interest of 10% per annum thereafter until paid.
Additionally, plaintiff was awarded a judgment against the defendants in the
amount of $2,570,000 for tortious interference, plus prejudgment interest of
$469,400 through May 1, 1989, plus post-judgment interest of 10% per annum
thereafter until paid. The Company posted a $4.8 million appeal bond and
appealed the February 25, judgment. Such bond is collateralized by approximately
$4.8 million of securities available for sale. Oral arguments were presented on
the appeal in March 1995.

Scott Kranz and Investment Management Group, Inc. vs. Alan B. Levan, BFC
Financial Corporation, I.R.E. Investments, Inc., Frank V. Grieco, I.R.E.
Advisors Series 23, Corp., I.R.E. Advisors Series 24, Corp., I.R.E. Advisors
Series 25, Corp., I.R.E. Advisors Series 26, Corp., and I.R.E. Real Estate
Institutional Corp., in the Eleventh Judicial Circuit in and for Dade County,
Florida, Case No. 85-08751 (the "employment case"), Scott G. Kranz in the name
of I.R.E. Realty Advisory Group, Inc., vs. I.R.E. Realty Advisory Group, Inc. et
al in the Eleventh Judicial Circuit in and for Dade County, Florida, Case No.
84-40012 (CA25) (the "appraisal case"). On March 5, 1985 Scott Kranz and
Investment Management Group, Inc. filed suit seeking damages in excess of
$1,800,000 and punitive damages of at least $10,000,000 plus costs. Investment
Management Group, Inc. ("IMG") is a real estate development corporation of which
Scott Kranz is the President. Until his termination on August 1, 1984, Scott
Kranz was associated with Registrant and/or various of its affiliates either
individually or through IMG. The Complaint alleged that Alan B. Levan, acting
on his own behalf and on behalf of Registrant and certain unnamed affiliates and
in combination with one or more unnamed defendants wrongfully caused the
termination of certain contractual relationships between the Company and Scott
Kranz and IMG and of Scott Kranz as general partner of five publicly registered
real estate limited partnerships.

On October 29, 1984, Scott G. Kranz, a 10% shareholder of I.R.E. Realty Advisory
Group, Inc. ("RAG"), of which Registrant is a 50% shareholder, filed suit in the
name of RAG seeking a declaration of the rights and liabilities of the parties
in relation to a merger effective August 21, 1984 by and among Gables Advisors,
Inc., I.R.E. Real Estate Funds, Inc. and RAG. Plaintiff sought damages in the
amount of the fair market value of his shares in RAG as of the day before the
merger. He also sought punitive damages, attorneys fees and costs.

Plaintiff subsequently amended his complaint, to add claims of breach of
statutory duty and willful failure to submit the merger transactions to a vote
at a meeting of shareholders, a claim for punitive damages and a claim of
constructive fraud. This action was consolidated for trial with the action
described immediately above.

Defendants denied Plaintiff's claims and filed a counterclaim. The defendants
also filed a motion to strike all of Kranz's and IMG's pleadings in both cases
and to enter a default judgment against Kranz and IMG for gross and continuing
violations of discovery orders. By order dated June 26, 1990, the judge struck
all of the pleadings filed by Kranz and IMG including both of their complaints
and both of their answers to the Company's counterclaims. On February 12, 1991,
the trial judge entered final judgment in favor of the individual defendants,
Alan Levan and Frank Grieco, specifically reserving jurisdiction for further
proceedings as to the corporate entities to enter final judgment against the
plaintiffs on the complaint. Kranz and IMG appealed the judgment in favor of
the individual defendants and the judgment was affirmed. During 1994, this
matter was settled and the cases dismissed after Kranz agreed to transfer his
shares in BFC affiliates for retirement.
On March 21, 1988, an action captioned Elliot Borkson, et al. vs. Alan Levan,
Jack Abdo and BankAtlantic, Case No. 88-12063, was filed by a group of
approximately 54 shareholders of BankAtlantic in the Circuit Court of the
Eleventh Judicial Circuit in and for Dade County, Florida. The complaint
alleged that Messrs. Levan and Abdo breached their fiduciary duties as directors
of BankAtlantic by disregarding the rights of minority shareholders under a
certain option agreement between BFC and a third party dated April 9, 1986.
BankAtlantic was a nominal party to the proceeding. This lawsuit was dismissed
by the plaintiffs in February 1995 and an apology was given by the plaintiffs.

Elliot Borkson, et al vs. BFC Financial Corporation. Circuit Court of the 11th
Judicial Circuit in and for Dade County Florida. Case No. 88-11171 (CA 10). In
March 1988, a group of approximately 54 shareholders of BankAtlantic filed a
class action suit against Registrant alleging Registrant had breached its
agreement, contained in an option agreement ("the Pearce Agreement") pursuant to
which Registrant had purchased shares of BankAtlantic, to offer to acquire all
of the remaining outstanding shares of BankAtlantic at a price equal to the
greater of (i) $18 per share or (ii) an amount per share which, in the opinion
of an investment banking firm of recognized national standing, is fair to the
stockholders of BankAtlantic. Such obligation was subject to receipt of all
required regulatory approvals and was relieved if there occurred a material
adverse change in financial conditions affecting the savings and loan industry.
This lawsuit was dismissed by the plaintiffs in February 1995.

Marvin E. Blum, et al vs. BFC Financial Corporation; Alan B. Levan and Jack
Abdo. Case No. 88-6277, U.S. District Court for the Southern District of
Florida. This litigation was commenced on February 11, 1988, by International
Apparel Associates as a class action against BFC Financial Corporation and Alan
Levan. Subsequently, the Borkson plaintiffs and their counsel were substituted
for International Apparel, with Dr. Marvin Blum being designated as the class
representative. Jack Abdo was also added as a party defendant. The plaintiff
class was certified by the district court as "all persons, other than
defendants, and their affiliates, officers, and members of their immediate
family who owned shares of BankAtlantic common stock on February 6, 1988, or
their successors in interest".

The Second Amended Complaint asserted a claim for breach of contract and a claim
for violation of Section 10(b) of the Securities Exchange Act of 1934.
Plaintiffs alleged that they, as minority shareholders of BankAtlantic, A
Federal Savings Bank, are third party beneficiaries of an option agreement
between BFC Financial Corporation and Dr. Pearce requiring BFC Financial
Corporation to offer to purchase all their shares of BankAtlantic subject to
certain conditions. Plaintiffs claimed that none of the conditions set forth in
the Pearce Agreement arose to excuse BFC Financial Corporation from offering to
buy the shares; defendants claimed that those conditions did in fact occur and
that BFC Financial Corporation did not, therefore, have any obligation to offer
to purchase the shares. This lawsuit was dismissed by the plaintiffs in February
1995 and an apology was given by the plaintiffs.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

None.

INCORPORATION BY REFERENCE
--------------------------

Part I - Items 1 through 3 pertaining to BFC's significant subsidiary, BBC is
incorporated herein by reference to the annual report on Form 10-K of
BankAtlantic Bancorp, Inc. for the fiscal year end December 31, 1994.

PART II
-------

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

a) The following table sets forth the high bid and low offer prices on the
NASD OTC Bulletin Board of Registrant's common stock for the last three quarters
of 1993 and for the quarters in 1994, as reported to the Registrant by the
National Quotation Bureau, and the first quarter end market price of 1993, as
reported on the pink sheets.

Year:
High Low
Quarter Market Price Bid Offer
------- ------------ ----- -----
1993:
1st Quarter 2.25
2nd Quarter 3.00 2.25
3rd Quarter 5.00 2.00
4th Quarter 5.00 3.00

1994:
1st Quarter 3.00 2.50
2nd Quarter 2.50 2.00
3rd Quarter 4.00 1.50
4th Quarter 3.75 3.25

b) The approximate number of shareholders of record of common stock as of
March 17, 1995 was 1,400.

c) No dividends have been paid by Registrant since its inception.

There are no restrictions on the payment of dividends by Registrant except that
no dividends may be paid to the holders of any equity securities of the Company
while any deferred interest on the Company's Exchange debentures remains unpaid.
The Company has deferred the interest payments relating to the debentures
issued in both the 1989 Exchange and the 1991 Exchange, amounting to a total of
approximately $3.5 million at December 31, 1994.

As noted in Part I, Item I under "Business - Regulation - Dividend
Restrictions," there are restrictions on the payment of dividends by
BankAtlantic to BBC.

<TABLE>

<S> <C> <C> <C> <C> <C>
BFC FINANCIAL CORPORATION AND SUBSIDIARIES
Selected Consolidated Financial Data
(In thousands, except for per share data and percents.)

Years Ended December 31,
---------------------------------------------------
1994 (l) 1993 (l) 1992 1991 1990
------- ------- ------- ------- -------
Revenues $ 8,790 5,051 142,236 166,645 199,722
Costs and expenses 13,917 17,118 131,026 189,230 214,264
Earnings (loss) before income tax
expense, cumulative effect of
change in accounting for income
taxes and extraordinary items 2,913 (1,303) 11,210 (22,585) (14,542)
Income tax expense (benefit) (2,009) - 9,201 (4,876) (1,976)
Extraordinary items, net of income
taxes and minority interest 22,744 (g (501) (k 548(d 350(e 40 (f)
) ) ) )
Net income (loss) 27,666 (1,804) 2,557 (17,359) (12,526)
Earnings (loss) per common share 3
before extraordinary items 2.39 (1.18) 0.78 (10.71) (7.49)
Net earnings (loss) per common share 13.45 (1.47) 1.10 (10.51) (7.47)
Ratio of earnings to fixed charges (h) 0.47 (0.30) (0.09) (0.21) (0.35)
Dollar deficiency of earnings to
fixed charges (h) 4,374 11,796 10,126 10,783 8,551

December 31,
-----------------------------------------------------------
1994 (l) 1993 (l) 1992 1991 1990
--------- --------- --------- --------- ---------
Investment in BankAtlantic
Bancorp, Inc. ("BBC") 43,768 36,436 42,984 30,301 36,790
Loans receivable, net 4,904 9,179 566,023 739,287 976,007
Mortgage-backed securities - - 486,886 457,038 434,957
Securities available for sale (j) 5,869 20,373 125,047 110,667 116,427
Real estate acquired in
debenture exchanges, net (i) 11,169 18,315 20,330 37,810 15,087
Real estate investments (c) 9,912 - - - -
Total assets 91,291 87,495 1,340,465 1,512,146 1,927,084
Customer deposits - - 1,108,115 1,255,573 1,456,050
Advances from Federal Home Loan Bank - - 66,100 37,277 62,993
Securities sold under agreements to
repurchase - - 21,532 57,132 246,979
Capital notes and other
subordinated debentures - - 7,928 14,856 25,185
Exchange debentures, net 6,616 35,651 38,996 38,818 26,946
Mortgage payables and other borrowings 26,618 30,367 32,168 46,748 24,902
Deferred interest on the exchange
debentures 3,494 12,049 4,985 1,140 -
Redeemed debenture liability 18,395 - - - -
Redeemable common stock - 5,776 5,776 5,776 5,776
Stockholders' equity (deficit) 26,532 (6,988) (4,916) (7,473) 9,939
Book value per share excluding
redeemable common stock n/a (4.11) (2.89) (4.39) 5.78
Book value per share including
redeemable common stock 12.91 (0.59) 0.42 (0.83) 7.58
Return on assets (a) 30.8 % (2.1)% 0.2 % (1.0)% (0.6)%
Return on equity excluding
redeemable common stock (a) n/a (51.0)% (30.6)% (556.7)% (78.6)%
Return on equity including
redeemable common stock (a) 327.9 % (237.1)% (99.2)% (195.2)% (57.7)%
Equity to assets ratio excluding
redeemable common stock (a) n/a (5.9)% (0.6)% 0.2 % 0.9 %
Equity to assets ratio including
redeemable common stock (a) 9.4 % 0.9 % (0.2)% 0.5 % 1.1 %

</TABLE>

(a) Ratios were computed using quarterly averages.

(b) Since its inception, the Company has not paid any dividends.

(d) Utilization of state net operating loss carryforwards net of minority
interest of $208,000.

(e) Gain on early retirement of capital notes, net of applicable income taxes
of $340,000 and minority interest of $197,000.

(f) Gain on purchase of debentures less applicable income taxes of $24,000.

(g) Gain on settlements of 1991 and 1989 Exchanges litigation, net of
applicable income taxes of approximately $214,000.

(h) The operations of BBC have been eliminated since there is a dividend
restriction between BBC's primary subsidiary, BankAtlantic, and BBC.

(i) Real estate acquired in debenture exchange, net represents the properties
acquired in the 1989 and 1991 Exchange.

(j) Excludes Federal Home Loan Bank stock. Includes interest-beaing deposits
in other banks, and securities purchased under agreement to resell.

(k) Income taxes

(l) Since 1993, BBC is not included in the consolidated amounts due to the
Company's ownership position in BBC less than 50%. BBC is carried on the
equity method.

ITEM 7. BFC FINANCIAL CORPORATION'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General - BFC Financial Corporation ("BFC" or "the Company") became a savings
-------

bank holding company during 1987 by acquiring a controlling interest in
BankAtlantic, A Federal Savings Bank ("BankAtlantic"). On July 13, 1994
BankAtlantic consummated a reorganization into a holding company structure and
BankAtlantic Bancorp, Inc. ("BBC") became a unitary savings bank holding
company. The reorganization resulted in BankAtlantic becoming a wholly-owned
subsidiary of BBC with BFC becoming a shareholder of BBC on the same
proportionate basis as was the Company's ownership in BankAtlantic. Any
reference to BBC contained herein for periods prior to the July reorganization
would relate to BankAtlantic. The Company's ownership interest in BBC has been
recorded by the purchase method of accounting. On November 12, 1993, in a
public offering of 1.8 million common shares; 1.8 million shares of BankAtlantic
common stock were sold. 400,000 of such shares were sold by BankAtlantic and 1.4
million shares were sold by the Company. On November 10, 1993, the underwriters
exercised the option to purchase an additional 270,000 shares of BankAtlantic's
common stock from BankAtlantic. As a consequence of the offering, the Company's
ownership of BankAtlantic was reduced to 48.17%. At December 31, 1994, the
Company's ownership of BBC was 48%. Since 1993, the Company's ownership in BBC
has been carried on the equity method rather than consolidated because the
Company's ownership interest in BBC is less than 50%. Therefore, the discussion
in Management's Discussion and Analysis of Financial Condition and Results of
Operations which follows relates to the changes experienced by BFC Financial
Corporation and subsidiaries excluding BBC. The following table presents
comparative information for 1992 as if BBC was carried on the equity basis for
that period also. For information relating to changes affecting BBC for 1994,
1993 and 1992, see Management's Discussion and Analysis of Financial Condition
and Results of Operations of BBC incorporated herein by reference to BBC's
Annual Report on Form 10-K. See note 2 of notes to consolidated financial
statements for a discussion of the Company's investment in BBC.

1994 1993 1992
------- ------- -------
Revenues:
Interest on loans $ 657 767 913
Interest and dividends on
other investment securities 743 299 257
Earnings on real estate
operations, net 1,735 2,617 3,827
Gain (loss) on disposition of
real estate, net 2,791 - (67)
Gain on sale of BankAtlantic
common stock - 1,050 -
Insurance settlement 2,500 - -
Other income, net 364 318 335
------- ------- -------
Total revenues 8,790 5,051 5,265
------- ------- -------
Costs and expenses:
Interest on exchange debentures 5,777 6,031 5,163
Interest on mortgages payable 2,499 3,032 4,309
Provision for loss on real estate
acquired in debenture exchange 531 - 89
Provision for loan losses 624 - -
Provision for litigation 2,200 4,034 1,800
Employee compensation and benefits 1,166 1,453 1,416
Occupancy and equipment 60 331 159
General and administrative 1,060 2,237 2,455
------- ------- -------
Total cost and expenses 13,917 17,118 15,391
------- ------- -------
(Loss) before equity in earnings of
of BBC cumulative effect of change in
accounting for income taxes and
extraordinary items (5,127) (12,067) (10,126)
Equity in earnings of BBC 8,040 10,764 12,683
------- ------- -------
Income (loss) before income taxes,
cumulative effect of change
in accounting for income
taxes and extraordinary items 2,913 (1,303) 2,557
Benefit for income taxes (2,009) - -
------- ------- -------
Income (loss) before cumulative
effect of change in accounting for
income taxes and extraordinary items 4,922 (1,303) 2,557
Cumulative effect of change in
accounting for income taxes - (501) -
Extraordinary items:
Gain on settlements of 1991 and
1989 Exchange litigation, net of
income taxes of $214,000 22,744 - -
------- ------- -------
Net income (loss) $ 27,666 (1,804) 2,557
======= ======= =======

In addition to its investment in BBC, the Company owns and manages real estate.
Since its inception in 1980 and prior to the acquisition of control of
BankAtlantic in 1987, the Company's primary business was the organization, sale
and management of real estate investment programs. Effective as of December 31,
1987, the Company ceased the organization and sale of new real estate investment
programs, but continues to own and manage real estate assets. At December 31,
1994, subsidiaries of the Company continue to serve as the corporate general
partners of 3 public limited partnerships which file periodic reports with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Subsidiaries of the Company also serve as corporate general partners of
a number of private limited partnerships formed in prior years.

Results of Operations
---------------------

Net income for the year ended December 31, 1994 was approximately $27.7 million
compared to a net loss of approximately $1.8 million in 1993 and net income of
approximately $2.6 million in 1992. Operations for 1994 included an
extraordinary item of approximately $22.7 million attributable to the gain on
the settlement of litigation relating to the 1989 and 1991 Exchanges. Operations
for 1993 included a charge aggregating $501,000 for the cumulative effect of a
change in accounting for income taxes from APB Opinion 11 to FAS 109.

One of the components of the 1994, 1993 and 1992 periods related to the
Company's ownership position in BBC. Net earnings of BBC for the year ended
December 31, 1994, 1993 and 1992 was approximately $8.0 million, $10.8 million
and $12.7 million, respectively. Exclusive of the Company's ownership of BBC,
the Company and its other subsidiaries generated net income in 1994 of
approximately $19.6 million, compared to net losses in 1993 and 1992 of
approximately $12.6 million and $10.1 million, respectively. As indicated above
the 1994 operations included the gain on the settlement of litigation relating
to the 1989 and 1991 Exchanges of approximately $22.7 million. Operations in
1994 also included the gain on disposition of real estate, net, of approximately
$2.8 million and insurance proceeds of $2.5 million associated with expenses
incurred by the Company in connection with the 1989 and 1991 Exchanges. Such
expenses were incurred and expensed by the Company in prior years.
Approximately $5.8 million, $6.0 million and $5.2 million of 1994, 1993 and 1992
operations, respectively, related to interest expense on the debentures issued
in the 1989 and 1991 Exchange. Approximately $531,000 and $89,000 of 1994 and
1992 operations related to provision for loss on real estate acquired in the
1989 and 1991 Exchange Transactions and approximately $624,000 of 1994
operations related to provision for loss on loans receivables. Operations in
1993 included a provision of approximately $4.0 million relatied to the Short
litigation and approximately $2.2 million and $1.8 million of 1994 and 1992
operations related to a provision arising in connection with court decisions in
the Hess litigation. (See item 3. "Legal Proceedings.") Operations for the
fourth quarter 1993 and year 1993 included the gain on the sale of 1.4 million
shares of BankAtlantic common stock as discussed further in note 2 of notes to
consolidated financial statements.

Revenues - The Company reported revenues of approximately $8.8 million, $5.1
--------

million and $5.3 million for the years ended December 31, 1994, 1993 and 1992,
respectively. The increase in revenues for the 1994 period as compared to the
1993 and 1992 periods was primarily due to the gain on disposition of real
estate, net, increase in interest and dividends on other investment securities
and insurance proceeds of $2.5 million associated with the expenses incurred by
the Company in connection with the 1989 and 1991 Exchange litigation. Such
expenses were incurred and expensed by the Company in prior years. The increase
in revenues was offset by decreases in interest on loans and earnings on real
estate operations, net. Revenues for the year 1993 included the gain on the
sale of 1.4 million shares of BankAtlantic common stock of approximately $1.1
million.

Interest on loans decreased in 1994 as compared to the 1993 and 1992 periods
primarily due to the elimination of five wrap mortgage receivables from
affiliated limited partnerships. (See note 5 of the notes to the consolidated
financial statements.)

Interest on dividends on other investment securities increased in 1994 as
compared to the 1993 and 1992 periods primarily due to interest earned on funds
held in escrow in connection with the settlement of litigation and an increase
in the yields of other investments.
Earnings on real estate operations include earnings from the 1989 and 1991
Exchange properties, properties acquired in 1994 by subsidiaries of BFC and BFC
deferred profit recognition on sales of real estate by the Company and its
subsidiaries other than BBC (excluding the 1989 and 1991 Exchange properties).
Earnings on real estate operations for the years ended December 31, 1994, 1993
and 1992 amounted to approximately $1.7 million, $2.6 million and $3.8 million,
respectively. The 1994 decline in earnings on real estate operations, net as
compared to the 1993 period was primarily due to the loss of a tenant that
occupied approximately 81% of the leasable area at the IBM Executive Building in
Kingsport, Tennessee. In May 1994, this property was foreclosed by the lender.
In addition, during the quarter ended September 30, 1994 a property acquired in
the 1989 Exchange was foreclosed by the lender and three properties acquired in
the 1991 Exchange were sold to unaffiliated third parties. The decrease in
earnings on real estate operations for the 1993 period as compared to the 1992
period was primarily due to the disposal of properties acquired in the 1991
Exchange.

The 1994 gain on disposition of real estate, net of approximately $2.8 million
was attributable to the gain of approximately $2.7 million on the sale of three
properties acquired in the 1991 Exchange and the net gain of approximately
$92,000 on the foreclosure of two properties acquired in the 1989 Exchange.
Prior to 1994, the net gain (loss) on disposition of real estate acquired in the
1989 and 1991 Exchange transactions was deferred.

In connection with the 1993 sale of 1.4 million shares of BankAtlantic common
stock owned by the Company, net proceeds to BFC of approximately $17.7 million
and a net cost of approximately $16.6 million, including purchase accounting of
$1.4 million, was recorded on the sale, resulting in a net gain of approximately
$1.1 million on the sale.

Costs and Expenses - The Company reported costs and expenses of approximately
------------------

$13.9 million, $17.1 million and $15.4 million for the years ended December 31,
1994, 1993 and 1992, respectively. The 1994 decline in costs and expenses as
compared to 1993 and 1992 periods was primarily due to decreases in interest on
exchange debentures, interest on mortgages payable, provision for litigation,
employee compensation and benefits, occupancy and equipment and general and
administrative expenses. These decreases in costs and expenses were partially
offset by the provision for loss on real estate acquired in an Exchange
transaction of approximately $531,000 and a provision for loss on loans
receivable of approximately $624,000.

Interest on Exchange debentures decreased for the year ended December 31, 1994
as compared to the same period in 1993 primarily due to the 1991 and 1989
Exchange settlements during 1994. This decrease was offset in part with an
increase in the accrual of interest on the previously deferred interest relating
to the Exchange debentures and an increase in the interest rate to 13% and 12%
per annum on the debentures issued in the 1991 and 1989 Exchanges, respectively.
The increase in interest on Exchange debentures in the 1993 period as compared
to the 1992 period was primarily due to the accrual of interest on the
previously deferred interest relating to the debentures issued in both 1989 and
1991 Eexchange transactions.

The decrease in interest on mortgages payable during the three years ended
December 31, 1994 was due to the elimination of mortgage debt principally
related to the sale and foreclosure of properties acquired in the 1989 and 1991
exchange.

During 1994, the Company established a valuation allowance of approximately
$531,000 on the 12.73 acres of unimproved land located in Birmingham, Alabama
and recorded a provision for loss on loan receivables due from affiliated
limited partnerships of approximately $624,000 based upon the loans net carrying
value and estimated fair value of the underlying loan collateral. In 1993 a
valuation allowance of approximately $89,000 was recorded for the loss on real
estate acquired in the 1989 Exchange.
The 1993 provision for litigation was due to a $4.0 million provision in
connection with the court decision in the Short vs. Eden United, Inc. litigation
and the $2.2 million and $1.8 million 1994 and 1992 provision, respectively, was
attributable to an appellate court decision in the Hess litigation. (See Item
3, "Legal Proceedings".)

Employee compensation and benefits declined for the year ended December 31, 1994
as compared to the 1993 period primarily due to a reduction in personnel in
December 1993.

Occupancy and equipment decreased in 1994 as compared to 1993 due to the
Company's reduction in office space after its move to its new location in Fort
Lauderdale. In 1993 occupancy and equipment increased as compared to 1992
primarily due to the accrual of expenses in connection with the relocation of
the Company's offices.

General and administrative expense decreased in 1994 as compared to 1993
primarily due to the reversal in 1994 of previously accrued expenses that will
not be incurred as a result of the settlement of litigation of approximately
$348,000, the write-down in 1993 of advances to an affiliate of approximately
$127,000, decreases in legal fees associated with the 1989 and 1991 Exchange
litigation and decreases in leasing fees for the procurement of tenants for the
properties acquired in the 1989 and 1991 Exchange.

BBC's net income on common shares for the year ended December 31, 1994 was
approximately $16.0 million and for the year ended December 31, 1993 and 1992
was approximately $15.2 million. The Company's equity in BBC's net income for
the year ended December 31, 1994, 1993 and 1992 was approximately $8.0 million,
$10.8 million and $12.7 million, respectively. At December 31, 1994, the Company
owned approximately 48% of the outstanding common stock of BankAtlantic whereas
during the 1992 period and through October 1993 the Company owned approximately
77.83% of the outstanding common stock of BankAtlantic. In November 1993, the
Company sold approximately 1.4 million shares of BankAtlantic and BFC's
ownership of BankAtlantic decreased to 48.17% of the outstanding common stock of
BankAtlantic. The decline in the equity in earnings of BankAtlantic that would
have been reflected by the Company's decreased ownership was partially offset by
increased earnings by BankAtlantic.

Financial Condition
-------------------

BFC's total assets at December 31, 1994, and at December 31, 1993, were $91.3
million and $87.5 million, respectively. The majority of the difference at
December 31, 1994 as compared to December 31, 1993 was primarily due to
increases in (i) other assets of approximately $12.1 million, (ii) investment in
BBC of approximately $9.3 million and (iii) real estate investments of
approximately $9.9 million as described below. These increases were offset in
part by decreases in (i) securities available for sale of approximately $14.5
million, (ii) loans receivable, net of approximately $4.3 million and (iii) real
estate acquired in debenture exchanges, net of approximately $7.1 million.

The Cypress Creek and Centerport properties serve as collateral for an $8.08
million loan from an unaffiliated lender. The loan provides for a release price
of $5.0 million upon the sale of the Cypress Creek property.

The increase in other assets and decrease in securities available for sale at
December 31, 1994 was primarily attributable to the sale of the securities
available for sale to fund the escrow account required by the settlement of the
1991 Exchange litigation. Investment in BBC increased due to the equity in
earnings of BBC and reduced by the common stock dividends declared in 1994. The
decrease in loans receivable, net was due to the debt restructuring as discussed
in note 5 of notes to the consolidated financial statements. The decrease in
real estate acquired in the Exchange transactions, net was primarily due to (i)
the judicial transfers of the IBM Executive Office Building in Kingsport
Tennessee and Clinton Plaza Shopping Center in Knoxville, Tennessee, (ii) the
sales of Pinebrook Square in Charlotte, North Carolina, Lennar Medical
Professional Building in Miami, Florida and Professional Towers in Louisville,
Kentucky and (iii) the valuation allowance of approximately $531,000 on the
12.73 acres of unimproved land in Birmingham, Alabama. This decrease was offset
by an increase of approximately $7.5 million due to the adjustment of basis in
the property as a result of the settlement of the litigation relating to the
1991 and 1989 Exchanges.

At December 31, 1994, Exchange debentures, net decreased approximately $29.0
million and deferred interest on the Exchange debentures decreased approximately
$8.6 million due to the settlement of litigation relating to the 1991 and 1989
Exchanges. The decrease in deferred interest on the Exchange debentures was
partially offset by increases in the deferred interest on the 1989 Exchange and
1991 Exchange debentures pursuant to their terms.
At December 31, 1994, mortgages payable and other borrowing decreased
approximately $3.7 million due to the elimination of mortgage debt related to
the Judicial Transfers of two properties acquired in the 1989 Exchange, the sale
of three properties acquired in the 1991 Exchange and the debt restructuring
discussed in note 9 of notes to consolidated financial statements. The decrease
in mortgages payable and other borrowing was offset with an increase of
approximately $11.5 million due to the $8.08 million loan for the purchase of
two properties in Broward County, Florida and the $3.5 million loan for the
additional funding related to the settlement of the 1989 litigation.

In May 1989, Mr. Abdo, a member of the Company's Board of Directors, and certain
members of his family (the "Abdos") were issued 353,478 shares of the Company's
authorized but unissued Common Stock pursuant to the terms of a Stock Purchase
Agreement with the Company pursuant to which the Company acquired 282,782 shares
of BankAtlantic, owned by the Abdo family. In connection with the Stock
Purchase Agreement, the Company, the Abdos and Mr. Alan B. Levan, the President
of the Company, entered into a Shareholders' Agreement pursuant to which, among
other things, the Abdos had the right to require the Company to repurchase the
shares of Common Stock in the Company which they received for the higher of the
book value or the average market value (as defined) of the shares. Pursuant to
the Shareholders' Agreement, the Company and Mr. Levan had the right to require
the Abdos to sell to either of them such shares on the same terms. During the
first quarter of 1994, the parties mutually agreed to terminate the above
agreement. Therefore, the amount classified as redeemable common stock was
reclassified to additional paid-in capital in the statement of financial
condition.

Purchase Accounting - The acquisition of BankAtlantic has been accounted for as
-------------------

a purchase and accordingly, the assets and liabilities acquired have been
revalued to reflect market values at the dates of acquisition. The discounts and
premiums arising as a result of such revaluation are generally being accreted or
amortized (i.e. added into income or deducted from income), net of tax, using
the level yield or interest method over the remaining life of the assets and
liabilities. The net impact of such accretion, amortization and other purchase
accounting adjustments was to increase consolidated net earnings during 1994 by
approximately $366,000, decrease net loss during 1993 by approximately $191,000
and increase net earnings during 1992 by approximately $807,000.

Liquidity and Capital Resources - During 1989, the Company exchanged (the "1989
-------------------------------

Exchange") approximately $30 million (the "Original Principal Amount") of its
subordinated unsecured debentures (the "Debentures") for all of the assets and
liabilities of three affiliated limited partnerships, I.R.E. Real Estate Fund,
Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real
Estate Fund, Ltd. - Series 24. The major assets and liabilities of these
partnerships consisted principally of fourteen commercial real estate
properties, and related non-recourse mortgage debt, of which one is still owned
by the company. During 1991, the Company exchanged (the "1991 Exchange")
approximately $15.4 million (the "Original Principal Amount") of its
subordinated unsecured debentures (the "Debentures") for all of the assets and
liabilities of three affiliated limited partnerships, I.R.E. Real Estate Fund,
Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real
Estate Income Fund, Ltd. The major assets and liabilities of these partnerships
consisted principally of eight commercial real estate properties and related
non-recourse mortgage debt, of which one is still owned by the Company. The
Company is actively seeking buyers for the properties held by it with a view to
selling the properties and reducing mortgage indebtedness. See note 3 of notes
to consolidated financial statements for more information on these transactions.
Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange transactions.

Settlements of the litigation against the Company that arose in connection with
the 1991 Exchange (see item 3. "Litigation:, Arthur Arrighi, et. al. and Shirley
B. Daniels, Robert and Ruby Avans et. al.) was approved by the District Court in
May 1994. The settlements required BFC Financial Corporation to establish a
settlement fund equal to 81.359% of the original face amount of the debentures
distributed in connection with the 1991 Exchange to the 1991 Exchange Class
Members. The settlement fund will be available to 1991 Exchange Class Members
as follows: (a) those members still owning the BFC Financial Corporation
debentures distributed to them in connection with the 1991 Exchange ("1991
Exchange Class Members Still Owning Debentures") are entitled to receive 81.359%
of the original face amount of the debentures still owned by them, less the
attorneys' fees and costs; (b) those members who no longer own the BFC Financial
Corporation debentures distributed to them in connection with the 1991 Exchange
("1991 Exchange Class Members No Longer Owning Debentures") are entitled to
receive 81.359% of the original face value of the BFC Financial Corporation
debentures distributed to such persons, less the attorneys' fees and costs and
less the gross proceeds received by such persons on the sale or disposition of
their BFC Financial Corporation debentures, provided, however, that the
disposition price shall not be calculated as less than 25% of the original face
amount, regardless of the amounts actually received by such persons on the
disposition of such debentures. At December 31, 1994, based upon information
obtained from the debenture transfer agent, at least 93.21% of the outstanding
debentures are owned by 1991 Exchange Class Members Still Owning Debentures.
For purposes of establishing the settlement payable, it was assumed that all
persons in the remaining 6.79% of the outstanding debentures sold their
debentures and that all such members of that group received 25% of the original
face amount of the debentures as gross proceeds on the disposition of the
debentures. Therefore, upon the District Court's approval of the 1991 Exchange
settlement, the Company in 1994, recorded a redeemed debenture liability of
approximately $12.2 million and a related pre-tax gain on the extinguishment of
debt of approximately $9.2 million. If persons in the remaining 6.79% group are
ultimately deemed to belong to the group of 1991 Exchange Class Members Still
Owning Debentures because their transfer of ownership was not in fact a bona
fide sale transaction, (i.e., involved a transfer to street name or to a family
member) or if the proceeds from sale were greater than 25% of the original face
amount of the debenture, the redeemed debenture liability will be adjusted and
additional gain recognized. Additionally, under the settlement agreement, 1991
Exchange Class Members No Longer Owning Debentures have until May 20, 1995 to
file a claim. At December 31, 1994, approximately $588,000 is included in the
redeemed debenture liability with respect to 1991 Exchange Class Members No
Longer Owning Debentures. Any of such amount not refunded by May 20, 1995 will
be reflected in income.

Separately, the settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. Pursuant to the settlement, BFC will
establish a settlement fund equal to 56% of the original face amount of the
debentures issued to the class members in the Purcell Litigation (the"Purcell
Class"). The settlement fund will be available to the Purcell Class as follows:
(a) those members still owning the BFC Financial Corporation debentures
distributed to them in connection with the 1989 Exchange ("Purcell Class Still
Owning Debentures") are entitled to receive 56% of the original face amount of
the debentures still owned by them, less the attorneys' fees and costs awarded
by the District Court; (b) those members who no longer own the BFC Financial
Corporation debentures distributed to them in connection with the 1989 Exchange
("Purcell Class No Longer Owning Debentures") are entitled to receive 56% of the
original face value of the BFC Financial Corporation debentures distributed to
such persons, less the attorneys' fees and costs awarded by the District Court
and less the gross proceeds received by such persons on the sale or disposition
of their BFC Financial Corporation debentures, provided, however, that the
disposition price shall not be calculated as less than 22.5% of the original
face amount, regardless of the amounts actually received by such persons on the
disposition of such debentures. Upon the effectiveness of the settlement, the
Purcell Class will have the right to receive one-half the sums due to them
pursuant to the settlement upon surrender of the BFC debentures. No later than
thirty months after the execution of the settlement agreement and upon
effectiveness of the settlement, the Purcell Class shall have the right to
receive the remaining amount due to them, including seven percent interest on
the deferred amount. Based upon information obtained from the debenture
transfer agent, at least 76.8% of the outstanding debentures are owned by
Purcell Class Members Still Owning Debentures. For purposes of establishing the
settlement payable, it was assumed that all persons in the remaining 23.2% of
the outstanding debentures sold their debentures and that all such members of
that group received 22.5% of the original face amount of the debentures as gross
proceeds on the disposition of the debentures. Therefore, upon the District
Court's approval of the Purcell Litigation settlement, the Company recorded a
redeemed debenture liability of approximately $7.2 million and a related pre-tax
gain on the extinguishment of debt of approximately $6.4 million. If persons in
the remaining 23.2% group are ultimately deemed to belong to the group of
Purcell Class Still Owning Debentures because their transfer of ownership was
not in fact a bona fide sale transaction, (i.e., involved a transfer to street
name or to a family member) or if the proceeds from sale were greater than 22.5%
of the original face amount of the debenture, the redeemed debenture liability
will be adjusted and additional gain recognized. Additionally, under the
settlement agreement, Purcell Class No Longer Owning Debentures have until
September 12, 1995 to file a claim. At December 31, 1994, approximately $1.1
million is included in the redeemed debenture liability with respect to the
Purcell Class No Longer Owning Debentures. Any of such amount not refunded by
September 12, 1995 will be reflected in income.

The litigation brought by the plaintiffs who voted yes in connection with the
1989 Exchange (the "Meador Litigation") was approved by the District Court in
December 1994. The settlement agreement in the Meador Litigation contains the
same financial terms as those set forth in the description of the settlement of
the Purcell Litigation. Therefore, upon the District Court's approval of the
Meador Litigation settlement, the Company recorded a redeemed debenture
liability of approximately $7.8 million and a related pre-tax gain on the
extinguishment of debt of approximately $7.3 million. At December 31, 1994, the
amount included in redeemed debenture liability with respect to the Meador Class
No Longer Owning Debentures was $1.2 million and the date that claims have to be
made by is December 19, 1995.
At December 31, 1994 the redeemed debenture liability for the 1991 and 1989
Exchange litigation was approximately $3.4 million and $15.0 million,
respectively.

In June 1994, ABC Broadcasting Companies, Inc. and William H. Willson
(collectively "ABC") attempted to intervene in the Purcell Litigation. By
attempting to intervene, ABC sought, for the purposes of defending their conduct
in a defamation lawsuit brought against them by BFC and Alan B. Levan, to
prevent the settlement of the Purcell Litigation and to obtain the protection of
the judgment by the District Court following the jury's verdict. On June 30,
1994, the District Court entered an order denying ABC's motion to intervene. On
September 12, 1994, the District Court entered a final judgment which approved
and ratified the settlement agreement and set aside, vacated, dissolved and
nullified the December 18, 1992 jury verdict and the District Court's December
18, 1992 judgment (the "Final Judgment"). On October 5, 1994, ABC filed an
appeal of the Final Judgment and an appeal of the order entered by the District
Court denying ABC the right to intervene in the Purcell Litigation. All parties
to the Purcell Litigation believe that the appeals filed by ABC are without
merit. Nevertheless, until these appeals have been dismissed or are finally
resolved and the Final Judgment becomes final for appellate purposes, the
payment of amounts due to the Purcell Class pursuant to the settlement will be
delayed.

In connection with certain litigation related to the purchase and sale of an
apartment complex in Indiana (See item 3. "Litigation ", Short vs. Eden United,
Inc., et.al.), on February 25, 1994, the court on remand awarded plaintiff a
judgment totaling approximately $4.5 million, including interest. The Company is
appealing the trial court's order and has posted an appeal bond. The bond is
collateralized by approximately $4.8 million of securities available for sale.
The Company had accrued approximately $400,000 in prior years and based upon
this order, at December 31, 1993, accrued an additional $4.1 million for an
aggregate $4.5 million provision for this litigation.
In addition to the litigation discussed above, an appellate court entered an
order reversing a lower court decision in favor of the Company and its
affiliates which related to the sale of units in two partnerships which
participated in the 1991 Exchange. (See Item 3. "Litigation", Martha Hess,
et.al. vs. Gordon, Boula, et.al.). At December 31, 1994 and December 31, 1992,
the company accrued $2.2 million and $1.8 million, respectively. There is no
requirement for a bond in connection with pursuit of this matter.

As a result of the Exchange litigation settlements discussed above, the
Company's obligation to pay interest on debentures is limited to only those
debentures held by persons that acquired debentures in an arms length
transaction prior to the date on which settlements were agreed upon ("Holders in
Due Course"), or persons that opted out of the litigation. The Company's
ability to meet its obligations and to pay interest on the debentures issued in
the 1989 Exchange and the 1991 Exchange as discussed above is substantially
dependent on the earnings and regulatory capital position of BBC. However,
pursuant to the terms of the debentures issued in the 1989 Exchange and the 1991
Exchange, the Company may elect to defer interest payments on its subordinated
debentures if management of the Company determines in its discretion that the
payment of interest would impair the operations of the Company. Additionally,
until the Company can ascertain which debentures are held by Holders in Due
Course, interest will continue to be deferred. Such deferrals do not create a
default. Since December 31, 1991, the Company has deferred interest payments on
its subordinated debentures. The Company, not considering BBC, has sufficient
current liquidity to meet its normal operating expenses, but it is not
anticipated that it will make current payments of interest on the Exchange
debentures in the near term.

Much of the funds required currently for the litigation described above have
already been provided. Other funds required, in addition to those currently
available, may come from operations, borrowings against BBC stock, BBC
dividends, return of excess funds placed in escrow for litigation settlements,
return of the bond on the Short lawsuit, or sale and/or refinancing of real
estate and mortgages owned.

Pursuant to an agreement entered into on May 10, 1989 between BFC, its
affiliates and BankAtlantic's primary regulator, BFC was obligated to infuse
additional capital into BankAtlantic in the event that BankAtlantic's net
capital (as defined) fell below the lesser of the industry's minimum capital
requirement (as defined) or six percent of BankAtlantic's assets. This
obligation was to expire either ten years from the date of the agreement, or at
such earlier time as BankAtlantic's net capital exceeded its fully phased-in
capital requirement (as defined) for a period of two consecutive years.
BankAtlantic's capital has exceeded its fully phased-in capital requirements
since December 31, 1992 and BFC has notified the OTS that, in BFC's opinion the
capital maintenance agreement is no longer in effect.

Effective June 30, 1993, the Company exercised its warrants to purchase
1,126,327 shares of BankAtlantic's common stock by tendering approximately $2.0
million of BankAtlantic subordinated debentures, including accrued interest.
The purchase increased BFC's ownership percentage of BankAtlantic's common stock
to 77.83%. On November 1993, BFC decreased its ownership percentage of
BankAtlantic's common stock to 48.17% primarily due to the sale of 1.4 million
shares of BankAtlantic common stock.

On November 12, 1993, a public offering of 1.8 million BankAtlantic common
shares at a price of $13.50 per common share was closed. Of the 1.8 million
shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million shares
were sold by BFC. Net proceeds to BFC and BankAtlantic from the sale was
approximately $17.7 million and $4.6 million, respectively. In connection with
the public offering, BankAtlantic granted the underwriters a 30 day option to
purchase up to 270,000 additional shares of common stock to cover over-
allotments. On November 10, 1993, the underwriters exercised this option to
purchase the 270,000 shares, with a settlement date of November 18, 1993. The
additional net proceeds to BankAtlantic was approximately $3.4 million. Upon
the sale of the 2,070,000 shares, BFC's ownership of BankAtlantic decreased from
77.83% to 48.17%. Proceeds from such sales were utilized to fund the Exchange
settlements.

BankAtlantic is required to meet all capital standards promulgated pursuant to
FIRREA and FDICIA. Under FIRREA, capital standards are: core capital equal to
at least 3.0% of adjusted total assets, tangible capital equal to at least 1.5%
of adjusted total assets, and total capital equal to at least 8.0% of its risk-
weighted assets. To be considered "well capitalized" under FDICIA, a savings
institution must generally have a core capital ratio of at least 5%, a Tier 1
risk-based capital ratio of at least 6%, and a total risk-based capital ratio of
at least 10%. At December 31, 1994, BankAtlantic met all regulatory capital
requirements. and met the definition of "well capitalized."

BFC also owns 5,600 shares of BBC 12.25% Series A Preferred Stock, 529 shares of
BBC 10.00% Series B Preferred Stock and 7,245 shares of BBC 8.00% Series C
Preferred Stock. BBC has stated that it expects to continue monthly dividend
payments on its non-cumulative preferred stock.

Cash Flows - A summary of the Company's consolidated cash flows follows (in
----------
thousands):

December 31,
---------------------------------------
1994 1993 1992
---- ---- ----
Net cash provided (used) by:
Operating activities $ 948 (523) 17,638
Investing activities (11,438) 1,655 139,627
Financing activities 10,852 (932) (164,465)
------- ------- --------
Increase (Decrease) in cash
and cash equivalents $ 362 200 (7,200)
======= ======= ========

The changes in cash flow used or provided in operating activities are affected
by the changes in operations, which are discussed elsewhere herein, and by
certain other adjustments. These adjustments include additions to operating
cash flows for non-operating charges such as depreciation, valuation allowance
of real estate acquired in the debenture exchange and provision for loans
receivable. Cash flow from operating activities is also adjusted to reflect the
use or the providing of cash for increases and decreases, respectively, in
operating assets, decreases or increases, respectively of operating liabilities,
and increases in exchange debentures deferred interest. Accordingly, the changes
in cash flow from operating activities in the periods indicated above has been
impacted not only by the changes in operations during the periods but also by
these other adjustments.

The primary sources of funds to the Company, for the year ended December 31,
1994 were revenues from property operations, collections on mortgage
receivables, increase on borrowings, the sale of real estate and dividends from
BBC. These funds were primarily utilized for operating expenses at the
properties, capital improvements at the properties, mortgage payables on the
properties, increase in escrow and general and administrative expenses.

Investing activities for the year ended December 31, 1994 included inflows of
approximately $4.3 million from the sale of real estate acquired in the 1991
Exchange, a net decrease in securities available for sale of approximately $14.5
million and dividends from BBC. Investing activities for the 1994 period
included outflows of approximately $20.8 million to fund an escrow account to be
utilized in connection with the settlement of the 1991 and 1989 Exchange
Litigation and approximately $9.9 million utilized in connection with the
acquisition of real estate. Financing activities for the year ended December
31, 1994 includes the borrowing of $3.5 million that was utilized to fund
Exchange litigation settlements and the borrowing of $8.0 million to finance the
1994 acquisition of real estate.

Impact of Inflation - The financial statements and related financial data and
notes presented herein have been prepared in accordance with GAAP, which require
the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

Virtually all of the assets and liabilities of BankAtlantic are monetary in
nature. As a result, interest rates have a more significant impact on
BankAtlantic's performance than the effects of general price levels. Although
interest rates generally move in the same direction as inflation, the magnitude
of such changes varies. The possible effect of fluctuating interest rates is
discussed more fully in BBC's Management's Discussion and Analysis of Financial
Condition and Results of Operations under "Interest Rate Sensitivity", which is
incorporated herein by reference. BFC does not believe that inflation has had
any material impact on the Company, however, economic conditions generally have
had an adverse effect on the values and operations of its real estate assets.

ITEM 8. INDEX TO FINANCIAL STATEMENTS
-------------------------------------
Independent Auditors' Report

Financial Statements:

Consolidated Statements of Financial Condition - December 31, 1994 and 1993

Consolidated Statements of Operations - For each of the Years in the Three
Year Period ended December 31, 1994

Consolidated Statements of Stockholders' Equity (Deficit) - For each of the
Years in the Three Year Period ended December 31, 1994

Consolidated Statements of Cash Flows - For each of the Years in the Three
Year Period ended December 31, 1994

Notes to Consolidated Financial Statements

INDEPENDENT AUDITORS' REPORT

The Board of Directors
BFC Financial Corporation:

We have audited the accompanying consolidated statements of financial condition
of BFC Financial Corporation and subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the years in the three year period ended
December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards, require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of BFC Financial
Corporation and subsidiaries at December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted accounting
principals.

As discussed in notes 1 and 2 to the consolidated financial statements, in 1993
BFC Financial Corporation sold certain of its investment in the outstanding
common stock of BankAtlantic Bancorp, Inc. ("BBC") (formerly BankAtlantic, A
Federal Savings Bank, prior to reorganization) and, as a result, no longer
controlled a majority voting interest in BBC as of the date of sale. As a
result, the Company has utilized the equity method of accounting for its
investment in BBC in 1994 and 1993 and, accordingly, financial position, results
of operations and cash flows were not consolidated as in 1992.

As discussed in note 10 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's SFAS No. 109,
"Accounting for Income Taxes".

KPMG PEAT MARWICK LLP

Fort Lauderdale, Florida
March 24, 1995

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition

December 31, 1994 and December 31, 1993
(in thousands, except share data)

ASSETS
---------

1994 1993
-------- --------
Cash and cash equivalents $ 711 349
Securities available for sale 5,869 20,373
Investment in BankAtlantic Bancorp, Inc. ("BBC") 43,768 36,436
Mortgage notes and related receivables, net 4,904 9,179
Real estate acquired in debenture exchanges, net 11,169 18,315
Real estate investments 9,912 -
Other assets 14,958 2,843
-------- --------
Total assets $ 91,291 87,495
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------------

Exchange debentures, net 6,616 35,651
Mortgage payables and other borrowings 26,618 30,367
Deferred interest on the exchange debentures 3,494 12,049
Redeemed debenture liability 18,395 -
Other liabilities 9,636 8,602
Deferred income taxes - 2,038
-------- --------
Total liabilities 64,759 88,707

Commitments and contingencies

Redeemable common stock (353,478 shares in 1993)
(redemption amount $299 in 1993) - 5,776

Stockholders' equity (deficit):
Preferred stock of $.01 par value; authorized
10,000,000 shares; none issued - -
Special class A common stock of $.01 par value;
authorized 20,000,000 shares; none issued - -
Common stock of $.01 par value; authorized
20,000,000 shares; issued 2,351,021 in 1994 and 1993 17 17
Additional paid-in capital 21,025 15,264
Retained earnings (deficit) 5,677 (21,989)
Less: treasury stock (45,339 shares for 1994 and 1993) (280) (280)
-------- --------
Total stockholders' equity (deficit) before
BBC, Inc. net unrealized appreciation on
mortgage-backed securities available for
sale-net of deferred income taxes 26,439 (6,988)

BBC, Inc. net unrealized appreciation
on mortgage-backed securities available for
sale-net of deferred income taxes 93 -
-------- --------
Total stockholders equity (deficit) 26,532 (6,988)
-------- --------
Total liabilities and stockholders' equity
(deficit) $ 91,291 87,495
======= =======

See accompanying notes to consolidated financial statements.

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Operations
For each of the years in the three year period ended
December 31,1994
(in thousands, except per share data)

1994 1993 1992
------- ------- ------
-
REVENUES:
Interest and fees on loans $ 657 767 63,181
Interest on mortgage-backed
securities -- -- 37,170
Interest on mortgage-backed
securities available for sale -- -- 642
Interest and dividends on tax
certificates and other
investment securities 743 299 17,320
Earnings on real estate
operations, net 1,735 2,617 3,827
Gain on disposition of
real estate, net 2,791 -- --
Gain on sale of BankAtlantic
common stock -- 1,050 --
Insurance settlement 2,500 -- --
Loan servicing and
other loan fees -- -- 3,189
Gain on sales of loans -- -- 976
Gain on sales of mortgage-
backed securities -- -- 8,116
Gain on sales of
investment securities -- -- 143
Other income, net 364 318 7,672
------- ------- -------
Total revenues 8,790 5,051 142,236
------- ------- -------
COSTS AND EXPENSES:
Interest on exchange debentures 5,777 6,031 5,163
Interest on mortgages payable 2,499 3,032 4,309
Interest on deposits -- -- 47,393
Interes on advances from FHLB -- -- 3,697
Interest on securities sold under
agreements to repurchase -- -- 2,881
Interest on capital notes
and other subordinated debentures -- -- 1,440
Provision for loss on real estate
acquired in debenture exchange 531 -- 89
Provision for loan losses 624 -- 6,650
Provision for litigations 2,200 4,034 1,800
Federal insurance premium -- -- 2,772
Advertising and promotion -- -- 480
Loss from joint venture
investments -- -- 245
Foreclosed asset activity -- -- 4,390
(Recovery) write-down of dealer
reserve -- -- (2,739

Employee compensation and benefits 1,166 1,453 20,618
Occupancy and equipment 60 331 8,747
Minority interest in BankAtlantic -- -- 3,964
General and administrative 1,060 2,237 19,127
------- ------- ------
Total cost and expenses 13,917 17,118 131,02
------- ------- ------

(Loss) before equity in earnings
of BBC, cumulative effect
of change in accounting
for income taxes and
extraordinary items (5,127) (12,067) 11,210
Equity in earnings of BBC 8,040 10,764 --
------- ------- ------
Income (loss) before cumulative effect
of change in accounting for income
taxes and extraordinary items 2,913 (1,303) 11,210
Provision (benefit) for income taxes (2,009) -- 9,201
------- ------- ------

Income (loss) before cumulative
effect of change in accounting for
income taxes and extraordinary items 4,922 (1,303) 2,009
Cumulative effect of change in
accounting for income taxes -- (501) --
Extraordinary items:
Utilization of state net
operating loss carryforwards,
net of minority interest of $208,000 -- -- 548
Gain on settlements of 1991 and
1989 Exchanges litigation, net
of income taxes of $214,000 22,744 -- --
------- ------- ------
NET INCOME (LOSS) $ 27,666 (1,804) 2,557
======= ======= ======

INCOME (LOSS) PER SHARE:
Income (loss) before cumulative
effect of change in accounting
for income taxes and
extraordinary items $ 2.39 (1.18) 0.78
Cumulative effect of change in
accounting for income taxes - (0.29) -
Extraordinary items 11.06 - 0.32
------- ------- ------
Net income per share $ 13.45 (1.47) 1.10
======= ======= ======

Weighted average number of shares
outstanding 2,056 1,702 1,702
======= ======= ======

See accompanying notes to consolidated financial statements.

BFC Financial Corporation and Subsidiaries

Consolidated Statements of Stockholders' Equity (Deficit)
For each of the years in the three year period ended December 31, 1994
(in thousands)

Addi-
tional Accu- Trea-
Common Paid-in mulated sury
Stock Capital Deficit Stock Other Total
------- ------- ------- ------ ------ -------
Balance at
December 31, 1991 $ 17 15,532 (22,742) (280) -- (7,473)

Net income -- -- 2,557 -- -- 2,557
------- ------- ------- ------ ------ -------
Balance at
December 31, 1992 17 15,532 (20,185) (280) -- (4,916)

Effect of issuance
of BBC's common
stock to BBC's
minority
shareholders -- (268) -- -- -- (268)

Net (loss) -- -- (1,804) -- -- (1,804)
------- ------- ------- ------ ------ -------
Balance at
December 31, 1993 17 15,264 (21,989) (280) -- (6,988)

Transfer from
redeemable
common stock -- 5,776 -- -- -- 5,776

Effect of issuance
of BBC's common
stock to BBC's
minority
shareholders -- (15) -- -- -- (15)

BBC net
unrealized
appreciation -- -- -- -- 93 93

Net income -- -- 27,666 -- -- 27,666
------- ------- ------- ------ ----- -------
Balance at
December 31, 1994 $ 17 21,025 5,677 (280) 93 26,532
====== ======= ======== ====== ===== =======

See accompanying notes to consolidated financial statements.

BFC Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flow

For each of the years in the three year period ended December 31, 1994
(In thousands)

1994 1993 1992
-------- -------- --------
OPERATING ACTIVITIES:
Income (loss) before extraordinary items $ 4,922 (1,303) 2,009
Adjustments to reconcile income (loss)
before extraordinary items and
cumulative effect of change in
accounting for income taxes to net cash
provided (used) by operating activities:
Equity in earnings of BBC
before cumulative effect of change
in accounting for income taxes (8,040) (10,764) --
Provision for loan losses -- -- 6,650
Provision for declines in real estate 531 -- 3,916
owned
FHLB stock dividends -- -- (498)
Depreciation 1,441 1,658 4,998
Amortization of purchased servicing rights -- -- 2,573
Increase (decrease) in deferred income (2,009) -- 1,775
taxes
Utilization of net operating loss
carryforwards before minority interest -- -- 756
Net accretion of securities -- -- (456)
Net amortization of deferred loan
origination fees -- -- (41)
Accretion on exchange debentures
and mortgage payables 118 285 505
Tax effect of real estate acquired
in debenture exchange (20) (92) (136)
Amortization of discount on
loans receivable (58) (70) (107)
Gain on sales of real estate owned -- -- (602)
Proceeds from loans originated for sale -- -- 37,030
Origination of loans for sale -- -- (39,888)
Write-off of office properties
and equipment -- -- 600
Provision to state mortgage
receivable at net realizable value 624 -- 408
Gain on sales of loans -- -- (976)
Gain on sales of mortgage-backed
securities available for sale -- -- (8,116)
Gain on sale BankAtlantic common stock -- (1,050) --
Gain on sales of investment securities -- -- (143)
Loss on sales of office
properties and equipment -- -- 71
Loss from joint venture operations -- -- 245
Decrease in drafts payable -- -- (9,410)
Decrease in accrued interest -- -- 2,257
Increase in exchange debentures
deferred interest 5,604 5,923 4,985
Increase (decrease) in other liabilities (824) 354 (1,444)
Decrease (increase) in other assets (443) 502 (4,236)
Accrued interest income on escrow accounts (307) -- --
Minority interest of BankAtlantic -- -- 3,964
Purchase accounting adjustments:
Amortization of excess cost over fair
value of net assets acquired -- -- 320
Amortization (accretion) of purchase
accounting adjustments, net -- -- 1,263
Amortization of dealer reserve -- -- 6,406
Gain on disposition of real estate (2,791) -- --
Provision for tax certificate losses -- -- 1,160
Provision for litigation 2,200 4,034 1,800
-------- -------- --------
Net Cash Provided (Used) By
Operating Activities 948 (523) 17,638
-------- -------- --------

Investing Activities:
Proceeds from the sales of real estate
acquired in debenture exchanges 4,283 -- 5,563
Proceeds from the sale of
BankAtlantic common stock -- 17,691 --
Increase in BankAtlantic investment
in common stock -- (1,971) --
Common stock dividends received
from BBC 753 271 --
Proceeds from sales of
investment securities -- -- 2,137
Increase in securities available for sale (5,701) (13,974) (129,415)
Decrease in securities available for sale 20,205 -- 111,070
Increase in the 1989 Exchange escrow
to fund settlement liability (20,840) -- --
Principal reduction on loans 220 252 299,347
Loans originated -- -- (136,179)
Proceeds from sales of mortgage-backed
securities available for sale -- -- 155,243
Mortgage-backed securities purchased -- -- (271,041)
Principal collected on mortgage-backed
securities -- -- 95,266
Proceeds from sales of real estate owned -- -- 12,589
Real estate investments (9,912) -- --
Additions to office
properties and equipment (12) (32) (748)
Sales of office equipment -- -- 105
Advances to joint ventures -- -- (26)
Repayments of advances to joint ventures -- -- 77
FHLB stock sales -- -- 142
FHLB stock purchased -- -- (65)
Improvements to real estate acquired in -- --
debenture exchanges (434) (582) (606)
Servicing rights purchased -- -- (3,832)
-------- -------- --------
Net Cash Provided (Used) By Investing
Activities (11,438) 1,655 139,627
-------- -------- --------
Financing Activities:
Net decrease in deposits -- -- (190,907)
Interest credited to deposits -- -- 43,509
Proceeds from FHLB advances -- -- 107,300
Repayments of FHLB advances -- -- (78,400)
Net decrease in securities sold
under agreement to repurchase -- -- (35,600)
Redemption of capital notes -- -- (7,022)
Receipts of advances by borrowers for
taxes and insurance, net -- -- 33,933
Payment for advances by borrowers for
taxes and insurance -- -- (33,220)
Increase in borrowings 11,500 -- --
Repayments of borrowings (648) (932) (4,058)
-------- -------- --------
Net Cash Provided (Used) By
Financing Activities 10,852 (932) (164,465)
-------- -------- --------
Increase (Decrease) In Cash And
Cash Equivalents 362 200 (7,200)
Cash And Cash Equivalents At
Beginning Of Period 349 149 38,557
-------- -------- --------
Cash And Cash Equivalents At
End Of Period $ 711 349 31,357
======== ======== ========

See accompanying notes to consolidated financial statements.

BFC Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 1994, 1993 and 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------

Basis of Financial Statement Presentation - The financial statements have been
-----------------------------------------
prepared in conformity with generally accepted accounting principles ("GAAP").
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the statements of consolidated financial condition and income and
expenses for the periods presented. Actual results could differ significantly
from those estimates.

Material estimates that are particularly susceptible to significant change in
the next year relate to the determination of the allowance for real estate
acquired in connection with the Exchange transactions and in connection with the
settlements of exchange litigation, the percentages used to estimate class
members no longer owning debentures.

The financial statements and notes to consolidated financial statements of
BankAtlantic, Bancorp, Inc. and Subsidiaries ("BBC"), are incorporated herein by
reference. Differences in amounts between those financial statements and these
financial statements would primarily pertain to amounts related to BFC Financial
Corporation ("BFC" or "the Company") or purchase accounting adjustments
discussed in note 2 of the notes to consolidated financial statements of BFC.

Principles of Consolidation - BFC Financial Corporation is a savings and loan
---------------------------
holding company as a consequence of its ownership of the common stock of
BankAtlantic, Bancorp, Inc. On July 13, 1994 BankAtlantic, A Federal Savings
Bank ("BankAtlantic") consummated a reorganization into a holding company
structure and BankAtlantic Bancorp, Inc. acquired all the capital stock of
BankAtlantic thereby becoming a unitary savings bank holding company. The
reorganization resulted in BankAtlantic becoming a wholly-owned subsidiary of
BBC with BFC becoming a shareholder of BBC on the same proportionate basis as
was the Company's ownership in BankAtlantic. The consolidated financial
statements reflect the activities of BFC Financial Corporation and its wholly
owned subsidiaries ("BFC"). Because the Company's ownership in BBC was less
than 50% beginning in 1993, the Company's investment in BBC has been carried on
the equity method since the year 1993. The consolidated financial statements
for 1992 include the accounts of BFC Financial Corporation, its majority-owned
subsidiary, and its wholly owned subsidiaries. Prior to 1993 the adjustments to
operations relating to changes in the Company's percentage ownership of BBC are
reflected in minority interest. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Cash Equivalents - Cash equivalents include liquid investments with original
----------------
maturities of three months or less.

Securities Available for Sale - The Company's securities are available for
------------------------------
sale. In accordance with Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities ("FAS 115")
issued in May 1993 by the Financial Accounting Standards Board ("FASB"), these
securities are carried at fair value, with any related unrealized appreciation
or and depreciation reported as a separate component of stockholders' equity.
The Company adopted FAS 115 prospectively on January 1, 1994. The impact upon
the 1994 financial statements was immaterial because the cost of available for
sale securities approximated their fair value in 1994.

Mortgage Notes and Related Receivables, net - Mortgage notes and related
-------------------------------------------
receivables, net, are carried at the lower of cost or net realizable value.

Real Estate Owned - Real estate acquired in the Exchange transactions and real
-----------------
estate investments are stated at the lower of cost or net realizable value in
the accompanying statements of financial condition. Land is carried at the
lower of cost or net realizable value in the accompanying statements of
financial condition.

Depreciation is computed on the straight-line method over the estimated useful
lives of the assets which generally range up to 31.5 years for buildings and 5
years for tenant improvements.

Income Taxes - The Company does not include BBC and its subsidiaries in its
------------
consolidated income tax return with its wholly-owned subsidiaries, since the
Company owns less than 80% of the outstanding stock of BBC. Current income
taxes are provided on the Company's interest in the portion of the BBC's
earnings not subject to the 80% dividends received exclusion. Deferred income
taxes are provided on elements of income that are recognized for financial
accounting purposes in periods different than such items are recognized for
income tax purposes.

In February 1992, the Financial Accounting Standard Board ("FASB") issued
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). FAS 109 requires a change from the deferred method to the
asset and liability method to account for income taxes. Under the asset and
liability method of FAS 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to the differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
FAS 109, the effect of a change in tax rates on deferred tax assets and
liabilities is recognized in the period that includes the statutory enactment
date. BFC adopted FAS 109, as of January 1, 1993. The cumulative effect of
this change in accounting for income taxes was a charge aggregating
approximately $501,000.

Pursuant to the deferred method under APB Opinion 11, which was applied in 1992
and prior years, deferred income taxes were recognized for income and expense
items that were reported in different years for financial reporting purposes and
income tax purposes using the tax rates applicable for the year of the
calculation. Under the deferred method, deferred taxes are not adjusted for
subsequent changes in tax rates.

The Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act") was passed by
Congress and signed into law by the President during August 1993. The Omnibus
Act increased the maximum federal income tax rate applicable to BFC from 34% to
35% retroactive to January 1, 1993. This change did not have a material impact
on the Company.

Excess Cost Over Fair Value of Net Assets Acquired (Goodwill) - The ownership
-------------------------------------------------------------
position in BankAtlantic was acquired at different times. At the February 1987,
October 1989, June 1990, October 1990 and November 1991 acquisitions, the fair
market value of the net assets of BankAtlantic were greater than the Company's
cost. At other increases in ownership, the Company's cost was in excess of the
fair market value of BankAtlantic's net assets. The excess of fair market value
over cost was recorded as a reduction to the fair market value of non-current
assets, including identified intangible assets. The excess of cost over fair
market value was recorded as goodwill and is being amortized on the straight
line basis over a 15 year period. Identified intangibles consist of loan
servicing and escrows. These intangibles are amortized over the remaining life
of the applicable loan and escrow accounts using the level yield method and at
the end of 1993 had been completely amortized. The minor 3.3%, 4%, 0.5% and
2.4% increases in ownership of BankAtlantic in October 1989, June 1990, October
1990 and November 1991 were recorded utilizing BankAtlantic's cost basis of
assets and liabilities as fair market value. The excess of such cost basis over
the Company's purchase price was recorded as a reduction to property and
equipment and is being amortized on a straight-line basis over a ten year
period.

Redeemable Common Stock - In May 1989, the Company exchanged with Mr. Abdo, a
-----------------------
member of the Company's Board of Directors, and certain members of his family
(the "Abdos"), among other things, 353,478 shares of its common stock (including
117,483 shares of treasury stock) for 282,782 shares of common stock of
BankAtlantic. (See also Note 2). The exchange ratio for the shares was 1.25 to
1. The Abdos had the right to require the Company, at any time, to purchase
such shares for the higher of (i) their book value as of the date of notice or
(ii) the average market value of such shares. The Company and Alan B. Levan,
individually, had the right to buy and to require the Abdos to sell such shares
to each, respectively, on the same terms indicated above. At the transaction
date the book value of the shares was greater than their market value.
Accordingly, the amount initially recorded for this redeemable common stock,
$5,776,000, was at book value. Amounts subsequently reflected in the Company's
statements of financial condition were to be adjusted to reflect the maximum
liability based on the higher of either the market price or the book value of
the shares. However, such liability was not to be reduced from the amount
initially reflected at the time of acquisition. There were no adjustment to the
amount stated since the May 1989 acquisition date. In February 1994, the
parties mutually agreed to cancel the agreement with respect to the requirement
to buy and or sell shares. Therefore, during the first quarter of 1994, the
amount classified as redeemable common stock was reclassified to the
stockholders' equity (deficit) section of the statement of financial condition.

Earnings (Loss) Per Common Share - Earnings per common share for the year ended
--------------------------------
December 31, 1993 was computed using the more dilutive of (a) the weighted
average number of shares outstanding, or (b) the weighted average number of
shares outstanding assuming that the shares of redeemable common stock are
reacquired for debt, from the later of their date of issuance (May 10, 1989) or
the beginning of the computation period, at the greater of the amount originally
recorded, or the then book value. Computation (b) was utilized, assuming a rate
of 12% on indebtedness for 1993.

In connection with the acquisition of shares of BankAtlantic in 1989, a
shareholders agreement was entered into between the Company, the Abdo family
(including John E. Abdo, Vice Chairman of the Board) and Mr. Alan B. Levan, the
President of the Company. During the first quarter of 1994, the parties
mutually agreed to terminate the agreement with respect to the requirement to
buy and or sell shares. Therefore, during the first quarter of 1994, the amount
classified as redeemable common stock was reclassified to the stockholders'
equity (deficit) section of the Statement of Financial Condition and earnings
per share for the year ended December 31, 1994 was computed based upon the
weighted average number of shares outstanding.

For all periods, the shares issued in connection with a 1984 acquisition are
considered outstanding after elimination of 250,000 shares, representing the
Company's 50% ownership of the shares issued in the acquisition.

Reclassifications - For comparative purposes, certain prior year balances have
-----------------
been reclassified to conform with the 1994 financial statement presentation.

New Accounting Standards - During May 1993, the Financial Accounting Standards
------------------------
Board approved Financial Accounting Standards No. 114 - Accounting by Creditors
for Impairment of a Loan ("FAS 114"). FAS 114 addresses the collectibility of
both contractual interest and contractual principal of all receivables when
assessing the need for a loss accrual. This standard requires that unpaid loans
be measured at the a) present value of expected cash flows by discounting those
cash flows at the loan's effective interest rate or b) the estimated fair value.
FAS 114 must be adopted by 1995, prospectively. The Company intends to
implement FAS 114 as of January 1, 1995. Upon adoption, the effect of
implementation of this standard on the Company is estimated to be immaterial.

In October 1994, FASB issued Statement of Financial Accounting Standards No.
119, Disclosures about Derivative Financial Instruments and Fair Value of
Financial Instruments ("FAS 119"). FAS 119 must be implemented for financial
statements issued for fiscal years ending after December 15, 1994. At December
31, 1994, BFC did not have any financial instruments that meet the definition
for FAS 119.

2. INVESTMENTS IN BANKATLANTIC BANCORP, INC.
---------------------------------------------
The Company has acquired its current 48% ownership of BBC through various
acquisitions and sales as follows (Amounts adjusted for June 1993 15% stock
dividend):

Cumulative
Shares Ownership %
---------- ------------
Prior to 1987 333,155 9.9%
February 1987 1,214,952 43.7%
October 1987 345,000 53.4%
May 1989 325,199 62.3%
October 1989 495,506 65.6%
June 1990 541,430 69.6%
October 1990 24,150 70.1%
November 1991 115,000 72.5%
June 1993 1,126,327 77.8%
November 1993 (1,400,000) 48.2%
December 1994 - 48.0%

The Company's ownership of BankAtlantic has been recorded by the purchase method
of accounting. From January 1, 1987 to December 1992, the accounts of
BankAtlantic were consolidated with those of the Company. The shares in the May
1989 acquisition were acquired from Mr. John Abdo, vice chairman of the
Company's Board of Directors and certain members of his family ("Mr. Abdo") in
exchange for, among other things, 353,478 shares of the Company's common stock.

The shares in the October 1989 acquisition were acquired directly from
BankAtlantic in connection with an offering by BankAtlantic of 500,000 units, at
$12.00 per unit, to its existing stockholders. Each unit consisted of one share
of its common stock and three warrants, with each warrant entitling the holder
to purchase one share of common stock at an exercise price of $10.00 at any time
prior to May 31, 1991.

On June 30, 1990, BFC exercised its warrants and converted $2.5 million of
subordinated debt of BankAtlantic to 541,430 shares of BankAtlantic common
stock, increasing BFC's ownership percentage of BankAtlantic to 69.6%.

In October 1990, the Company increased its ownership of BankAtlantic to 70.12%
by purchasing 24,150 shares of BankAtlantic common stock from the BankAtlantic
Security Plus Plan (the "Plan") at a cost of $2.625 per share (average of bid
and asked price on date of purchase). The Plan disposed of these shares in
order to meet employees withdrawal requests.

In November 1991, BFC purchased 115,000 shares of BankAtlantic common stock from
an unaffiliated third party at a cost of approximately $0.761 per share,
increasing BFC's ownership of BankAtlantic to 72.5%.

In June 1993, the Company exercised its right to purchase 1,126,327 shares of
BankAtlantic's common stock at the exercise price of $1.75 per share, for a
total purchase price of $1,971,072. The payment of $1,971,072 was through the
tender of subordinated debentures held by BFC as of February 28, 1993 and the
related accrued interest as of that date. The debentures were issued to BFC in
connection with the use of funds from an escrow account established by BFC to
make preferred stock dividend payments, and in connection with the related
accrued interest on the debentures through February 1993. As a result of the
above transaction, BFC increased its ownership in BankAtlantic to 77.83% of
BankAtlantic's outstanding common stock. During July 1993, BFC received $83,704
for the interest accrued on the subordinated debentures from February 28, 1993
to June 30, 1993. Share and exercise price were adjusted subject to the
dilution provisions contained in the subordinated debt agreement to reflect
BankAtlantic's 15% common stock dividend of June 7, 1993.

The aggregate purchase price allocation for the June 30, 1993 acquisition of
BankAtlantic's common stock was as follows (in thousands):

Company's interest in net assets of BankAtlantic
(book value on dates of acquisition) $ 3,550
Company's ownership interest of capital contributions 1,530
Adjustment to net assets:
Accretion on investment and mortgage-
backed securities 1,099
Accretion loans receivable 684
Increase in other assets 39
Premium on deposits (553)
Premium on FHLB advances (43)
Increase in other liabilities (5)
Increase in deferred income taxes (80)
Decrease in office properties and equipment (4,250)
-------
Purchase price of interest in BankAtlantic's
common stock $ 1,971
=======

The adjustment to net assets indicated above were non-cash investing and
financing activities.

On November 12, 1993, a public offering of 1.8 million BankAtlantic common
shares at a price of $13.50 per common share was closed. Of the 1.8 million
shares sold, 400,000 shares were sold by BankAtlantic and 1.4 million shares
were sold by BFC. Net proceeds to BFC and BankAtlantic from the sale were
approximately $17.7 million and $4.6 million, respectively. In connection with
the public offering, BankAtlantic granted the underwriters a 30 day option to
purchase up to 270,000 additional shares of common stock to cover over-
allotments. On November 10, 1993, the underwriters exercised this option to
purchase the 270,000 shares, with a settlement date of November 18, 1993. The
additional net proceeds to BankAtlantic was approximately $3.4 million. Upon
the sale of the 2,070,000 shares, BFC's ownership of BankAtlantic decreased to
48.17%. The sale of the BankAtlantic shares provided the Company with the
current liquidity to enable it to hold settlement discussions on the Exchange
litigation discussed in note 3 of notes to the consolidated financial
statements.

The decrease in the ownership percentage at December 31, 1994 from 48.2% to
48.0% results from additional shares of BBC common stock being issued in
connection with BBC's stock option plan.

The acquisition of BankAtlantic has been accounted for as a purchase and
accordingly, the assets and liabilities acquired have been revalued to reflect
market values at the dates of acquisition. The discounts and premiums arising as
a result of such revaluation are generally being accreted or amortized (i.e.
added into income or deducted from income), net of tax, using the level yield or
interest method over the remaining life of the assets and liabilities. The net
impact of such accretion, amortization and other purchase accounting adjustments
was to increase consolidated net earnings during 1994 by approximately $366,000,
decrease net loss during 1993 by approximately $191,000 and increase net
earnings during 1992 by approximately $807,000. Assuming no sales or
dispositions of the related assets or liabilities, the Company does not believe
the net increase (decrease) in earnings resulting from the net
amortization/accretion of the adjustments to net assets acquired resulting from
the use of the purchase method of accounting will be significant in future
years.

Excess cost over fair value of net assets acquired at December 31, 1994 and
1993, was approximately $945,000 and $1,068,000, respectively. As a result of
the deconsolidation in 1993, excess cost over fair value of net assets acquired
at December 31, 1994 and 1993 is included in the investment of BBC in the
accompanying statements of financial condition.

A reconciliation of the carrying value in BBC to BBC's Stockholders equity at
December 31, 1994 and December 31, 1993 is as follows:

December 31,
1994 1993
------- ------
BBC stockholders' equity $ 105,520 90,652
Preferred stock (7,030) (7,036)
------- -------
BankAtlantic common stockholders' equity 98,490 83,616
Partnership percentage 48.00% 48.17%
------- ------
47,275 40,278
Purchase accounting adjustments (3,507) (3,842)
------- ------
Investment in BankAtlantic $ 43,768 36,436
======= =======

BFC also owns 5,600 shares of BBC 12.25% Series A Preferred Stock, 529 shares of
BBC 10.00% Series B Preferred Stock and 7,245 shares of BBC 8.00% Series C
Preferred Stock. The aggregate purchase price relating to the acquisition of
these shares was approximately $143,000 and is included in securities available
for sale, net in the accompanying statements of financial condition.

Prior to 1993, BankAtlantic had not paid any regular dividend on its common
stock. In August 1993, BankAtlantic declared and paid a quarterly cash dividend
to its common stockholders and has paid a regular quarterly dividend since that
time. Subject to the results of operations and regulatory capital requirements,
BBC will seek to declare regular quarterly cash dividends of $0.06125 per share
on its common stock. A 15% common stock dividend was declared in May 1993.
Currently, the source of funds for payment of dividends by BBC is the dividends
by BankAtlantic. In the future, BBC may incur debt which may have an impact on
its ability to pay dividends to the Company.

3. EXCHANGE TRANSACTIONS
-------------------------
During 1991, the Company exchanged (the "1991 Exchange") approximately $15.4
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 25,
I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real Estate Income Fund,
Ltd. The major assets and liabilities of these partnerships consisted
principally of eight commercial real estate properties and related non-recourse
mortgage debt, of which one is still owned by the Company.

During 1989, the Company exchanged (the "1989 Exchange") approximately $30
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships, I.R.E. Real Estate Fund, Ltd. - Series 21,
I.R.E. Real Estate Fund, Ltd. - Series 23 and I.R.E. Real Estate Fund, Ltd. -
Series 24. The major assets and liabilities of these partnerships consisted
principally of fourteen commercial real estate properties, and related non-
recourse mortgage debt, of which one is still owned by the company.

Numerous lawsuits were filed against the Company in connection with both the
1989 and 1991 Exchange offers. Settlements of the litigation against the Company
that arose in connection with the 1991 Exchange (see item 3. "Litigation:,
Arthur Arrighi, et. al. and Shirley B. Daniels, Robert and Ruby Avans et. al.)
was approved by the District Court in May 1994. The settlements required BFC
Financial Corporation to establish a settlement fund equal to 81.359% of the
original face amount of the debentures distributed in connection with the 1991
Exchange to the 1991 Exchange Class Members. The settlement fund will be
available to 1991 Exchange Class Members as follows: (a) those members still
owning the BFC Financial Corporation debentures distributed to them in
connection with the 1991 Exchange ("1991 Exchange Class Members Still Owning
Debentures") are entitled to receive 81.359% of the original face amount of the
debentures still owned by them, less the attorneys' fees and costs; (b) those
members who no longer own the BFC Financial Corporation debentures distributed
to them in connection with the 1991 Exchange ("1991 Exchange Class Members No
Longer Owning Debentures") are entitled to receive 81.359% of the original face
value of the BFC Financial Corporation debentures distributed to such persons,
less the attorneys' fees and costs and less the gross proceeds received by such
persons on the sale or disposition of their BFC Financial Corporation
debentures, provided, however, that the disposition price shall not be
calculated as less than 25% of the original face amount, regardless of the
amounts actually received by such persons on the disposition of such debentures.
At December 31, 1994, based upon information obtained from the debenture
transfer agent, at least 93.21% of the outstanding debentures are owned by 1991
Exchange Class Members Still Owning Debentures. For purposes of establishing
the settlement payable, it was assumed that all persons in the remaining 6.79%
of the outstanding debentures sold their debentures, that all such members of
that group received 25% of the original face amount of the debentures as gross
proceeds on the disposition of the debentures and in addition that the Company
is still liable for 6.79% of the exchage debentures and related interest.
Therefore, upon the District Court's approval of the 1991 Exchange settlement,
the Company in 1994, recorded a redeemed debenture liability of approximately
$12.2 million and a related pre-tax gain on the extinguishment of debt of
approximately $9.2 million. If persons in the remaining 6.79% group are
ultimately deemed to belong to the group of 1991 Exchange Class Members Still
Owning Debentures because their transfer of ownership was not in fact a bona
fide sale transaction, (i.e., involved a transfer to street name or to a family
member) or if the proceeds from sale were greater than 25% of the original face
amount of the debenture, the redeemed debenture liability will be adjusted and
additional gain recognized. Additionally, under the settlement agreement, 1991
Exchange Class Members No Longer Owning Debentures have until May 20, 1995 to
file a claim. At December 31, 1994, approximately $588,000 is included in the
redeemed debenture liability with respect to 1991 Exchange Class Members No
Longer Owning Debentures. Any of such amount not refunded by May 20, 1995 will
be reflected in income.

The components of the 1991 Exchange settlement are as follows (in thousands):

Adjustment of basis in the properties acquired in
debenture exchange, net $ 6,713
Decrease in other assets (323)
Decrease in exchange debentures, net 9,630
Decrease in deferred interest on the exchange debentures 5,454
-------
21,474
Redeemed debenture liability (12,240)
-------
Pre-tax gain on the 1991 Exchange settlement $ 9,234
=======

Separately, the settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against the
transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. Pursuant to the settlement, BFC will
establish a settlement fund equal to 56% of the original face amount of the
debentures issued to the class members in the Purcell Litigation (the"Purcell
Class"). The settlement fund will be available to the Purcell Class as follows:
(a) those members still owning the BFC Financial Corporation debentures
distributed to them in connection with the 1989 Exchange ("Purcell Class Still
Owning Debentures") are entitled to receive 56% of the original face amount of
the debentures still owned by them, less the attorneys' fees and costs awarded
by the District Court; (b) those members who no longer own the BFC Financial
Corporation debentures distributed to them in connection with the 1989 Exchange
("Purcell Class No Longer Owning Debentures") are entitled to receive 56% of the
original face value of the BFC Financial Corporation debentures distributed to
such persons, less the attorneys' fees and costs awarded by the District Court
and less the gross proceeds received by such persons on the sale or disposition
of their BFC Financial Corporation debentures, provided, however, that the
disposition price shall not be calculated as less than 22.5% of the original
face amount, regardless of the amounts actually received by such persons on the
disposition of such debentures. Upon the effectiveness of the settlement, the
Purcell Class will have the right to receive one-half the sums due to them
pursuant to the settlement upon surrender of the BFC debentures. No later than
thirty months after the execution of the settlement agreement and upon
effectiveness of the settlement, the Purcell Class shall have the right to
receive the remaining amount due to them, including seven percent interest on
the deferred amount. Based upon information obtained from the debenture
transfer agent, at least 76.8% of the outstanding debentures are owned by
Purcell Class Members Still Owning Debentures. For purposes of establishing the
settlement payable, it was assumed that all persons in the remaining 23.2% of
the outstanding debentures sold their debentures, that all such members of that
group received 22.5% of the original face amount of the debentures as gross
proceeds on the disposition of the debentures and in addition that the Company
is still liable for 23.2% of the exchage debentures and related interest.
Therefore, upon the District Court's approval of the Purcell Litigation
settlement, the Company recorded a redeemed debenture liability of approximately
$7.2 million and a related pre-tax gain on the extinguishment of debt of
approximately $6.4 million. If persons in the remaining 23.2% group are
ultimately deemed to belong to the group of Purcell Class Still Owning
Debentures because their transfer of ownership was not in fact a bona fide sale
transaction, (i.e., involved a transfer to street name or to a family member) or
if the proceeds from sale were greater than 22.5% of the original face amount of
the debenture, the redeemed debenture liability will be adjusted and additional
gain recognized. Additionally, under the settlement agreement, Purcell Class No
Longer Owning Debentures have until September 12, 1995 to file a claim. At
December 31, 1994, approximately $1.1 million is included in the redeemed
debenture liability with respect to the Purcell Class No Longer Owning
Debentures. Any of such amount not refunded by September 12, 1995 will be
reflected in income.

The litigation brought by the plaintiffs who voted yes in connection with the
1989 Exchange (the "Meador Litigation") was approved by the District Court in
December 1994. The settlement agreement in the Meador Litigation contains the
same financial terms as those set forth in the description of the settlement of
the Purcell Litigation. Therefore, upon the District Court's approval of the
Meador Litigation settlement, the Company recorded a redeemed debenture
liability of approximately $7.8 million and a related pre-tax gain on the
extinguishment of debt of approximately $7.3 million. At December 31, 1994, the
amount included in redeemed debenture liability with respect to the Meador Class
No Longer Owning Debentures was $1.2 million and the date that claims have to be
made by is December 19, 1995.
The components of the 1989 Exchange litigation for the Purcell and Meador
litigation are as follows (in thousands):

Adjustment of basis in the properties acquired
in debenture exchange, net $ 756
Decrease in other assets (292)
Decrease in exchange debentures, net 19,515
Decrease in deferred interest on exchange debentures 8,705
-------
28,684
Redeemed debenture liability (14,960)
-------
Pre-tax gain on the 1989 Exchange litigation $ 13,724
=======

At December 31, 1994 the aggregate redeemed debenture liability for the 1991 and
1989 Exchange litigation was approximately $3.4 million and $15.0 million,
respectively. Additionally, at December 31, 1994, included in other assets in
the accompanying financial statements was approximately $12.2 million in escrow
accounts for payment under the above settlements. The settlement agreements
provide for a release from the escrow any balances remaining at the end of two
years from the date of the settlement agreements

In connection with the settlements and proposed settlement of the above
litigation, the Company collected $2.5 million from its insurance carrier under
its liability coverage. Such insurance proceeds were utilized to reimburse the
Company for expenses previously incurred and expensed with respect to the above
litigation.

As a result of the exchange litigation settlements discussed above, the
Company's obligation to pay interest on debentures is limited to only those
debentures held by persons that acquired debentures in an arms length
transaction prior to the date on which settlements were agreed upon ("Holders in
Due Course"), or debentures held by persons that opted out of the litigation.
The Company's ability to meet its obligations and to pay interest on the
debentures issued in the 1989 Exchange and the 1991 Exchange as discussed above
is substantially dependent on the earnings and regulatory capital position of
BBC. However, pursuant to the terms of the debentures issued in the 1989
Exchange and the 1991 Exchange, the Company may elect to defer interest payments
on its subordinated debentures if management of the Company determines in its
discretion that the payment of interest would impair the operations of the
Company. Additionally, until the Company can ascertain which debentures are
held by Holders in Due Course, interest will continue to be deferred. Such
deferrals do not create a default.

The Debentures in the 1991 Exchange bear interest at a rate equal to 10.5% per
annum until March 31, 1992, 11.5% per annum thereafter until March 31, 1993 and
12.5% per annum thereafter until maturity on July 1, 2011. The Debentures in
the 1989 Exchange bear interest at a rate equal to 8% per annum until June 30,
1990, 9% per annum thereafter until June 30, 1991, and 10% thereafter until
maturity on July 1, 2009. Interest on the Debentures in the 1991 and 1989
Exchange are due at maturity but is anticipated to be paid quarterly unless
management reasonably determines that such quarterly interest payments would
impair the operations of the Company. Any interest not paid quarterly by the
Company ("Deferred Interest") will accrue interest at the same rate as the
Debentures until paid. In the event the Company determines not to pay interest
on the Debentures for eight quarters, the interest rate on the Debentures in the
1991 and 1989 Exchanges will increase to, and remain at, 13% and 12%,
respectively, per annum until maturity. No dividends may be paid to the holders
of any equity securities of the Company while any deferred interest remains
unpaid. Since December 31, 1991, the Company has deferred the interest payments
relating to the debentures issued in both the 1989 Exchange and the 1991
Exchange and therefore, the interest on the debentures in the 1991 and 1989
Exchange is now 13% and 12%, respectively per annum. The deferred interest on
the exchange debentures was approximately $3.5 million and $12 million at
December 31, 1994 and 1993, respectively. Debenture holders are also entitled
to receive 100% of the aggregate Net Proceeds (as defined in the Debenture)
received by the Company in excess of the Original Principal Amount of the
Debentures issued, payable on the Distribution Date (as defined below) in cash
or additional Debentures (the "Additional Consideration"). The Distribution
Date is the earlier of February 1995 or 90 days after the sale of all of the
real estate acquired in the 1991 Exchange. It is not anticipated that there will
be any Additional Consideration in connection with the 1991 Exchange. The
Distribution Date was June 1993 for the 1989 Exchange. At that time, there was
no Additional Consideration due with respect to the 1989 Exchange. Any
Debentures issued in payment of the Additional Consideration will be identical
to the Debentures originally issued, except there will be no further Additional
Consideration payable with respect thereto.
For financial statement purposes, the Debentures in the 1991 and 1989 Exchange
have been discounted to yield 19% and 12%, respectively, over their term and the
non-recourse mortgage debt has been discounted to yield 11% over its term. Such
mortgage debt in the 1991 Exchange: a) had original aggregate outstanding stated
principal balances of approximately $37.0 million; b) had maturities at various
dates between 1991 and 2009; c) had stated interest rates ranging from 8.75% to
12.0%; and d) required aggregate monthly payments of approximately $376,000 for
principal and interest. Such mortgage debt in the 1989 Exchange: a) had
original aggregate outstanding stated principal balances of approximately $28.7
million; b) had maturities at various dates between 1991 and 2003; c) had stated
interest rates ranging from 7.75% to 13.5%; and d) required aggregate monthly
payments of approximately $275,000 for principal and interest. No value has been
assigned to the Additional Consideration in the 1991 Exchange. However, future
financial statements will reflect accruals as a "Cost of Sale", to the extent
appropriate, for any anticipated Additional Consideration payable based on sales
of properties received by the Company in this transaction, through the date of
the financial statements. To the extent Additional Consideration is payable on
the Distribution Date relating to unsold properties, the basis in such
properties will be increased at such time by the fair value of the Additional
Consideration payable as a consequence thereof. For purposes of determining Net
Proceeds, such unsold properties will be appraised by an independent certified
appraisal firm within 90 days of the Distribution Date.

Through December 31, 1994, six properties acquired in the 1991 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales price
of approximately $41.6 million. Stated mortgage debt of approximately $25.7
million was eliminated including the remaining $2.0 million balance on a $5.0
million note that was also secured by 2,370,846 shares of BankAtlantic stock
owned by BFC. Cash proceeds from the sales, after prorations and closing costs,
of approximately $12.5 million was received.

Through December 31, 1994, ten properties acquired in the 1989 Exchange were
sold to unaffiliated third parties. The properties had an aggregate sales price
of approximately $42.3 million. Stated mortgage debt of approximately $21.1
million was eliminated and cash proceeds, after prorations and closing costs, of
approximately $20.0 million was received. No Additional Consideration is
estimated to be payable with respect to these sales.

4. SECURITIES AVAILABLE FOR SALE
---------------------------------
Included in securities available for sale at December 31, 1994 was approximately
$5,639,000 and $230,000 of U.S. Treasury Bills and other investments,
respectively. Included in securities available for sale at December 31, 1993
was approximately $3,304,000, $16,881,000 and $188,000 of U.S. Treasury Bills,
Commercial Paper and other investments, respectively. Market value at December
31, 1994 and 1993 approximates book value. Approximately $4.8 million is
pledged as collateral to secure a Letter of Credit issued in connection with the
Short vs. Eden United, Inc. litigation.

5. MORTGAGE NOTES AND RELATED RECEIVABLES - NET
------------------------------------------------
Mortgage notes and related receivables as of December 31, 1994 and 1993 are
summarized below (in thousands):

1994 1993
------- -------
Originating from:
Investment properties $ 6,021 12,064
Less: Principally, deferred profit (1,625) (3,982)
Valuation allowance (575) -
------- -------
3,821 8,082
Other 1,083 1,097
------- -------
Total 4,904 9,179
======= =======

The Company attempted to negotiate an extension of a $1 million balloon payment
on a note payable that matured in June 1993. However, the lender exercised the
acceleration provision in the note and in September 1994, sold the underlying
security that consisted of five wrap mortgage receivables from affiliated
limited partnerships. Accordingly, in September 1994 the Company removed the
five wrap mortgage receivables of approximately $5.5 million, the deferred
profit of approximately $2.3 million and the underlying mortgages payable of
approximately $2.8 million.

6. REAL ESTATE ACQUIRED IN DEBENTURE EXCHANGE
----------------------------------------------
Real estate acquired in debenture exchange consists of the following (in
thousands):

December 31
---------------------------
Estimated Lives 1994 1993
--------------- -------- -------
Land - $ 1,414 3,912
Buildings and improvements 14 to 31.5 years 13,052 29,509
-------- -------
14,466 33,421
Less:
Accumulated depreciation 2,610 5,295
Deferred profit 687 7,957
Allowance for real estate owned (a) - 1,854
-------- -------
3,297 15,106
-------- -------
$ 11,169 18,315
======== =======

(a) The Company provided an allowance for three properties' net carrying value
based on their estimated sales price. The allowance declined because in 1993
one of the property was deeded back to the lender and in 1994 two properties
were deeded back to their respective lender.

In connection to the properties deeded back to their lenders the following 1993
and 1994 non-cash items were removed from the financial statements:

1994 1993
-------- -------
Land $ 236 162
Building 7,493 2,200
Less: accumulated depreciation 2,256 281
----- -----
5,473 2,081
Less: allowance for real
estate owned 1,854 1,117
----- -----
3,619 964
Mortgage payables eliminated 3,494 954
Other liabilities and receivables 217 10
----- -----
Net gain on disposition of real estate 92 -
===== =====

Condensed operations and significant cash flows for real estate acquired in the
debenture Exchange is as follows for the year ended December 31, 1994, 1993 and
1992 (in thousands) (a):

1994 1993 1992
-------- -------- -------
Operating Information:
----------------------
Revenues:
Property operations $ 5,079 6,805 9,724
Net gain (loss) on dispositions
of real estate 2,988 - 2,935
Deferred (gain) loss dispositions
of real estate (197) - (2,935)
-------- -------- -------
Net revenues 7,870 6,805 9,724
-------- -------- -------

Cost and expenses:
Mortgage interest 1,951 2,514 3,524
Depreciation 1,403 1,633 2,239
Property operating expenses 2,217 3,483 4,250
Provision to state real estate
at net realizable value 531 - 89
-------- -------- -------
Total costs and expenses 6,102 7,630 10,102
-------- -------- -------
Excess (deficit) of revenues
over expenses 1,768 (825) (378)
======== ======== =======
Cash Flow Information:
---------------------
Operating activities:
Excess (deficit) of revenues
over expenses $ 1,768 (825) (378)
Depreciation 1,403 1,633 2,239
Net gain on dispositions of
real estate (2,791) - -
Write down of real estate 531 - 89
------- ------- ------
Cash provided by
operating activities 911 808 1,950
------- ------- ------
Investing activities:
Proceeds from sales of
real estate 4,283 - 5,563
Property improvements (436) (582) (606)
------- -------- ------
Net cash provided by
investing activities 3,847 (582) 4,957
------- -------- ------
Total cash provided $ 4,758 226 6,907
======= ======== ======

(a) Operating and cash flow information does not include interest expense for
the debentures issued in connection with the acquisition of this real estate.
Interest on mortgages payable, interest on other investment securities, gain on
dispositions of real estate, provision for loss on real estate and legal fees
associated with the 1989 and 1991 Exchange are not included in "Earnings on real
estate operation, net" in the accompanying statements of consolidated
operations. See also note 3 for additional information on the debenture
Exchange and sale of properties.

7. REAL ESTATE INVESTMENTS
---------------------------
In June 1994, an entity controlled by the Company acquired from an independent
third party 23.7 acres of unimproved land know as the "Cypress Creek" property
located in Fort Lauderdale, Florida for a purchase price of approximately $3.6
million. The Company has agreed to pay John E. Abdo and certain of his
affiliates (the "Abdo Group") fifty percent of the profits (as defined), if any,
received on the sale of the property. At December 31, 1994, the Company had a
contract to sell the Cypress Creek property for approximately $9.7 million.
Consummation of the sale of the property pursuant to the contract is subject to
a number of conditions and there is no assurance that the property will be sold
on that basis.

8. OTHER ASSETS
----------------
A detail of other assets at December 31, 1994 and 1993 follows (in thousands):

1994 1993
---- ----
Funds in escrow for payments of
redeemed debenture liability $ 12,223 -
Receivables 165 112
Other Escrows 482 511
Recoverable costs 822 535
Dividends declared from BBC 191 187
Other 1,075 1,498
------ ------

$ 14,958 2,843
====== ======

9. MORTGAGES PAYABLE AND OTHER BORROWINGS
------------------------------------------
Mortgages payable and other borrowings at December 31, 1994 and 1993 are
summarized as follows (in thousands):

Approximate
Type of Debt Maturity Interest Rate 1994 1993
------------ -------- ------------- ---- ----
Related to mortgage 6% - Prime
receivables 1995-2010 plus 1% $ 2,118 5,105
Related to real estate 1995-1997 7.75%- Prime
plus 1.5% 20,759 24,312
Other borrowings 1995 Prime
plus 1% 3,741 950
------ ------
$ 26,618 30,367
======= ======

All mortgage payables and other borrowings above are from unaffiliated parties.
Included in 1994 and 1993 amounts related to other borrowings is approximately
$3.7 million and $950,000, respectively due to financial institutions. At
December 31, 1993, $3,266,000 included above in "related to real estate" was in
default. In 1994, the lender agreed to extend the mortgage to May 1997 and the
interest rate was changed to 1.5% above prime rate. At December 31, 1994,
$241,000 included above in other borrowings is in default. The lender has
exercised the acceleration provision in the note and the Company attempted to
negotiate an extension of a $1 million balloon payment on a note payable that
matured in June 1993. However, the lender exercised the acceleration provision
in the note and in September 1994, sold the underlying security that consisted
of five wrap mortgage receivables from affiliated limited partnerships. The
sale price was $720,000. The Company may be liable for the difference between
the sale price and the original note amount plus interest and attorneys' fees,
approximately $367,000. Since the sale price was more than the carrying value
of the underlying security, there is a gain on debt restructuring. The
components of the gain are as follows (in thousands):

Decrease in mortgage receivables, net $ (3,213)
Increase in other assets 72
Decrease in underlying mortgages payable 2,757
Reduction of note payable 720
Decrease in other liabilities 20
-------
$ 356
=======

Since the Company is still negotiating with the lender, the gain is being
deferred for financial statement purposes.

At December 31, 1994 the aggregate principal amount of the above indebtedness
maturing in each of the next five years is approximately as follows (in
thousands):
Years ended
December 31, Amount
------------ ------
1995 $ 839
1996 9,586
1997 11,411
1998 149
1999 3,599
Thereafter 1,034
------
$26,618
======

The majority of the Company's marketable securities, mortgage receivables and
real estate acquired in the 1989 and 1991 debenture Exchange are as to real
estate and marketable securities, encumbered by, or, as to mortgages receivable,
subordinate to mortgages payable and other debt.

In May 1994, the Company borrowed $3.5 million that was utilized to fund
Exchange litigation settlements. The loan bears interest at a rate of 1% above
the prime rate, matures in September 1999 and is collateralized by 435,252
shares of BBC common stock.

The Cypress Creek and Centerport properties and 154,989 shares of BBC common
stock serve as collateral for an $8.08 million loan from an unaffiliated lender.
The loan provides for a release price of $5.0 million upon the sale of the
Cypress Creek property, bears interest at a rate of 1% above the prime rate and
matures in December 1997.

In December 1994, the Company established a broker line of credit in the amount
of $850,000 which is collateralized by 170,000 shares of BankAtlantic Bancorp,
Inc. common stock. At December 31, 1994, the Company has not borrowed from the
above account and the market value of the collateral was approximately $2.6
million.

10. INCOME TAXES
----------------
The provision for income tax expense (benefit) consists of the following (in
thousands):
For the Years Ended
December 31,
--------------------------------------
1994 1993 1992
---- ---- ----
Current:
Federal $ 29 - 6,469
State - - 201
------ ----- -----
$ 29 - 6,670
------ ----- -----
Deferred :
Federal (2,038) - 1,792
State - - (17)
------ ----- -----
(2,038) - 1,775
------ ----- -----
Utilization of net operating
loss carryforwards (1)
Federal - - (389)
State - - 1,145
------ ----- -----
- - 756
------ ----- -----
Total $ (2,009) - 9,201
====== ===== ======

(1) In 1992, the utilization of net operating loss carry forwards is before
minority interest of $208,000.
A reconciliation from the statutory federal income tax rates of 35% in 1994 and
1993, and 34% in 1992 to the effective tax rate is as follows (in thousands):

Year ended December 31,
-----------------------

1994 (1) 1993 (1) 1992 (1)
-------- -------- --------

Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------

Expected tax expense
(benefit) 1,020 35.0 (456) (35.0) 5,159 34.0
Provision for state
taxes net of federal
benefit 104 3.6 -- -- 877 5.8
Purchase accounting -- -- -- -- 274 1.8
Taxes related to
subsidiaries not
consolidated for
income tax purposes -- -- -- -- 894 5.9
Tax exempt interest
and dividend
received deduction -- -- -- -- (115) (0.8)
Tax benefit not
recognized -- -- -- -- 2,549 16.8
Change in beginning of
the year of the
valuation allowance
as a result of items
other than
extraordinary (2) (3,133) (107.6) -- -- -- --
Other, net -- - 456 35.0 (437) (2.9)

(2,009) (69.0) -- -- 9,201 60.6

(1) Expected tax is computed based upon earnings (loss) before minority
interest in BBC and extraordinary items.

(2) The remaining charge in the deferred tax asset valuation allowance in 1994
relates to income generated from the extraordinary item.

The tax effects of temporary differences that give rise to significant
components of the deferred tax assets and tax liabilities at December 31, 1994
and 1993 were (in thousands):

1994 1993
---- ----

Deferred tax assets:
Alternative Minimum Tax Credit carryforward $ 244 -
Real estate, net 893 4,999
Deferred interest on the exchange debentures 519 -
Mortgages receivable 460 540
Litigation accruals 3,107 2,430
Other liabilities 224 534
Net operating loss carryforwards 3,634 10,354
----- ------
Total gross deferred tax assets 9,081 18,857
Less:
Valuation allowance 2,314 14,253
------ ------
Deferred tax assets after
valuation allowance 6,767 4,604

Deferred tax liabilities:
Other assets 391 46
Investment in BankAtlantic 5,885 3,057
Exchange Debentures 491 3,539
------ ------
Total gross deferred tax liabilities 6,767 6,642
------ ------
Net deferred tax liability - 2,038
Less deferred income tax at
beginning of period 2,038 2,038
------ ------
(Benefit) for deferred income taxes $(2,038) -
====== ======

The Company believes it will utilize its deferred tax assets after valuation
allowance through taxable income generated in future years by the reversal of
deferred tax liabilities existing as of December 31, 1994. BFC adopted FAS 109
as of January 1, 1993. The cumulative effect of this change in accounting for
income taxes was a charge aggregating approximately $501,000.

At December 31, 1994, the Company had estimated state net operating loss carry
forwards for state income tax purposes of approximately $9,506,000 of which
$937,000 expires in 2005, $2,001,000 expires in 2006, $4,235,000 expires in 2007
and $2,332,000 expires in 2008. The Company also has a net operating loss carry
forward for federal income tax purposes of approximately $9,659,000 of which
$6,337,000 expires in 2007 and $3,322,000 expires in 2008. BBC is not included
in the Company's consolidated tax return.

The Company made income tax payments of approximately $117,000 and $1,900 during
the years ended December 31, 1994 and 1993, respectively.

11. STOCKHOLDERS' EQUITY
------------------------
The Company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of $.01 par value preferred stock. The Board of Directors has
the authority to divide the authorized preferred stock into series or classes
having the relative rights, preferences and limitations as may be determined by
the Board of Directors without the prior approval of shareholders. The Board of
Directors has the power to issue this preferred stock on terms which would
create a preference over the Company's common stock with respect to dividends,
liquidation and voting rights. No further vote of security holders would be
required prior to the issuance of the shares.

The Company's Articles of Incorporation authorize the Company to issue
20,000,000 shares of Special Class A Common Stock, par value $.01 per share. To
the extent permitted by law, the Special Class A Common Stock may be issued in
one or more series as determined from time to time by the Board of Directors and
having the relative rights and preferences determined by the Board of Directors
which are set forth in the Articles of Incorporation. However, in no event will
the voting rights of shares of Special Class A Common Stock equal or exceed the
voting rights of the Company's present Common Stock. At such time as the Board
of Directors authorizes the issuance of the newly created Special Class A Common
Stock the Company's presently outstanding Common Stock will be automatically
redesignated Class B Common Stock and holders thereof shall have the right at
any time to convert their shares to shares of the Special Class A Common Stock
on a one-for-one basis at the holder's sole election.

12. EARNINGS ON REAL ESTATE OPERATIONS
--------------------------------------
Following are the components of earnings on real estate operations for each of
the years in the three year period ending December 31, 1994 (in thousands) (a):

1994 1993 1992
------ ------ ------
Deferred profit recognized $ 58 70 67
Operations of properties acquired in
debenture Exchange (see note 6) 1,648 2,547 3,760
Other property operations 29 - -
------ ------ ------
$ 1,735 2,617 3,827
====== ====== ======

(a) The above amounts relate entirely to the company and its subsidiaries other
than BankAtlantic.

13. RELATED PARTY TRANSACTIONS
-------------------------------
(a) Related party transactions arise from transactions with affiliated
entities. In addition to transactions described in notes 1, 2, 5 and 7, a
summary of significant originating related party transactions is as follows
(in thousands):

Year Ended December 31,
------------------------
1994 1993 1992
------ ------ ------
Property management fee revenue $ 76 69 69
===== ====== ======

Reimbursement revenue for
administrative, accounting
and legal services $ 112 114 143
====== ====== ======

(b) The Company has a 49.5% interest and affiliates and third parties have a
50.5% interest in a limited partnership formed in 1979, for which the
Company's Chairman serves as the individual General Partner. The
partnership's primary asset is real estate subject to net lease agreements.
The Company's cost for this investment (approximately $441,000) and was
written off in 1990 due to the bankruptcy of the entity leasing the real
estate. Any recovery will be recognized in income when received.

(c) Included in other assets at December 31, 1994 and 1993, was approximately
$201,000 and $129,000, respectively due from affiliates.

(d) Alan B. Levan, President and Chairman of the Board of the Company also
serves as Chairman of the Board and Chief Executive Officer of
BankAtlantic.

(e) John E. Abdo, a director of the Company also serves as Vice Chairman of the
Board of Directors of BankAtlantic and President of BankAtlantic
Development Corporation a wholly owned subsidiary of BankAtlantic.

(f) In May 1986, the Company issued 895 shares of stock to an officer. The
aggregate price, which was at the then market value of $19.00 per share,
was approximately $17,000 and payment for the shares is in the form of a
non-interest bearing note that matures in May 1996 and is secured by
collateral other than the stock issued.

(g) Florida Partners Corporation acquired 100,000 of the 850,000 shares of the
common stock sold by the Company in February 1987 and, in June 1990,
acquired in a privately negotiated transaction, an additional 33,314 shares
of the Company's common stock. Alan B. Levan is the principal shareholder
and Chairman of the Board of Florida Partners Corporation. Other members of
the Company's Board of Directors also hold positions with Florida Partners
Corporation.

(h) The trustee for the escrow account with respect to the redeemed debenture
liability maintains such account at BankAtlantic.

14. EMPLOYEE BENEFIT PLANS
---------------------------
The Company's Stock Option Plan provides for the grant of stock options to
purchase up to 500,000 shares of Company's common stock. The plan provided for
the grant of both incentive stock options and non-qualifying options. The
exercise price of a stock option will not be less than the fair market value of
the common stock on the date of the grant. At December 31, 1994, non-qualifying
stock options for 210,000 shares of common stock have been granted including
10,000 shares to non-employee directors and incentive stock options for 25,000
shares of common stock have been granted. The exercise price of the options
issued is from $4.50 to $4.95 per share. At December 31, 1994, options for
74,998 shares of common stock were exercisable. 10,000 of the options expire in
2003 and 215,999 of the options expire in 2004.

The Company has an employee's profit-sharing plan which provides for
contributions to a fund of a sum as defined, but not to exceed the amount
permitted under the Internal Revenue Service Code as deductible expense. The
provision charged to operations was approximately $2,500 for the year ended
December 31, 1994 and $5,000 for each of the years ended December 31, 1993 and
1992. Contributions are funded on a current basis.

15. LITIGATION
---------------
The following is a description of certain lawsuits to which the Company is or
has been a party.

In a memorandum opinion and order dated December 17, 1991, the Court granted, in
part, the defendant's motion for summary judgment, ruling that the Exchange did
not violate the partnership agreements or the Florida partnership statute. In
July 1992, the Court granted an additional summary judgment in favor of the
defendants and dismissed the plaintiffs' claims for breach of fiduciary duty.
Subsequently, the court entered summary judgment in favor of the defendants on
all claims of misrepresentations or omissions except with respect to the
statement in the Proxy Statement/Prospectus to the effect that BFC, Alan Levan
and the Managing General Partners believed the Exchange transaction was fair.
That issue was tried in December 1992, and the jury returned a verdict in favor
of the Plaintiffs in the amount of $8 million but extinguished approximately $16
million of debentures held by the plaintiffs. Both parties appealed.

Marjory Meador, Shirley B. Daniels, Robert A. and Ruby L. Avans, and Dr. and
Mrs. Czerny, individually and on behalf of all others similarly situated,
Plaintiffs, vs. BFC Financial Corporation; BankAtlantic, A Federal Savings Bank;
Alan B. Levan; I.R.E. Advisors Series 21, Corp.; I.R.E. Advisors Series 23,
Corp.; I.R.E. Advisors Series 24, Corp.; I.R.E. Advisors Series 25, Corp.;
I.R.E. Advisors Series 27, Corp.; I.R.E. Income Advisors Corp.; and First Equity
Corporation of Florida; Defendants, in the Circuit Court of the Seventeenth
Judicial Circuit in and for Broward County, Florida, Case No. 91-29892 (CA-17).
This action was filed as a class action during October 1991 and is brought on
behalf of all persons who were limited partners in (a) I.R.E. Real Estate Fund,
Ltd. - Series 21, I.R.E. Real Estate Fund, Ltd. - Series 23, or I.R.E. Real
Estate Fund, Ltd. -Series 24 on the effective date of the 1989 Exchange
Transaction not otherwise included in the action by limited partners who voted
against the Exchange; or (b) were limited partners in I.R.E. Real Estate Fund,
Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 27 or I.R.E. Real
Estate Income Fund, Ltd. on the effective dates of the 1991 Exchange
Transactions. The action alleges breach of the limited partnership agreements,
breach of fiduciary duty, aiding and abetting a breach of fiduciary duty by BFC
Financial Corporation and BankAtlantic, and negligent misrepresentation by all
defendants. The action sought damages, imposition of a constructive trust on
the assets of the exchanging partnerships, attorney's fees, costs and such other
relief as the courts may deem appropriate. Plaintiffs have voluntarily
dismissed all claims which arose out of or related to the 1991 Exchange.

Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale. In February
1993, the Appellate court ruled that the statute of limitations was tolled
during the pendency of the class action claims. Therefore, those investors that
brought suit within 3.6 years and potentially 4 years from the date of sale may
be entitled to rescission. Plaintiffs claims are now again pending in Circuit
Court. Plaintiffs filed a purported Class Action Amendment on March 24, 1994
seeking to consolidate and amend their claims. The amendment sought to continue
the claims against the predecessor partnerships along with their general
partners and sought to add BFC as a defendant. The plaintiffs also moved for
class certification. Motions to dismiss and to deny class certification have
been filed. Before plaintiffs responded or the motions were heard, plaintiffs
filed a new motion for leave to file consolidated class action amendments and a
new motion for class certification. In March 1995, defendants filed memoranda
opposing consolidation and opposing class certification. The individual and
corporate defendants sold a total of $1,890,500 of limited partnership interests
in the predecessor partnerships. Limited partners holding approximately
$1,042,800 of limited partnership interests have filed an action for recision.
Under the appellate decision, if recision was made to all limited partners that
filed an action, refunds, at March 31, 1995, (including interest payments
thereon) would amount to approximately $1,800,000 plus attorney's fees. If the
class is certified, refunds at March 31, 1995, (including interest payments and
attorney's fees thereon) would be approximately $4.0 million. A liability for
such amount is included in the accompanying financial statements.

16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
------------------------------------------------
Following is quarterly financial information for the years ended 1994 and 1993
(in thousands, except per share data):
<TABLE>
<S> <C> <C> <C> <C> <C>
Quarter Ended
--------------------------------------------------------------------------------
1994: March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ ------
Revenues $ 1,008 3,610 1,902 2,270 8,790
Costs and expenses 2,968 4,625 2,418 3,906 13,917
Income (loss) before
extraordinary item 28 889 1,540 2,465 4,922
Net income (loss) 28 8,643 7,972 11,023 27,666
====== ====== ===== ===== ======

Earnings (loss) per share before
extraordinary item $ .01 .43 .75 1.20 2.39
Extraordinary item - 3.77 3.13 4.16 11.06
------ ----- ----- ---- ----
Net earnings (loss) per share $ .01 4.20 3.88 5.36 13.45
====== ===== ===== ==== ====

Quarter Ended
--------------------------------------------------------------------------------
1993: March 31, June 30, September 30, December 31, Total
--------- -------- ------------- ------------ ------

Revenues $ 1,092 866 814 2,279 5,051
Costs and expenses 3,079 3,003 3,113 7,923 17,118
Income (loss) before cumulative effect
of change in accounting for
income taxes 32 1,095 793 (3,223) (1,303)
Net (loss) (469) 1,095 793 (3,223) (1,804)
======= ======= ====== ===== =======
(Loss) per share before
cumulative effect of change in
accounting for income taxes $ (0.08) 0.53 0.36 (1.99) (1.18)
Cumulative effect of change in
accounting for income taxes (0.29) - - - (.29)
------- ------- ------ ----- -------
Net income (loss) per share $ (0.37) 0.53 0.36 (1.99) (1.47)
======= ======= ====== ===== =======
</TABLE>
During the fourth quarter of 1994, the Courts approved the settlement of
litigation in connection with the 1989 Exchange. In connection therewith, the
Company recognized an extraordinary pre-tax gain of approximately $7.8 million.

During the fourth quarter of 1993, the company's ownership interest in
BankAtlantic's decreased from 77.83% to 48.17% with the ownership percentage
less than 50% the accounts of BankAtlantic have been removed from the
consolidated financial statement and the company's investment in BankAtlantic is
recorded using the equity methods. The effect of this change has been applied
effective January 1, 1993. The company's quarterly filings for the first three
quarters of 1993 were done with the accounts of BankAtlantic on a consolidated
basis but are reflected herein without the inclusion of the accounts of
BankAtlantic.

On July 13, 1994 BankAtlantic, A Federal Savings Bank ("BankAtlantic")
consummated a reorganization into a holding company structure and BankAtlantic
Bancorp, Inc. ("BBC") acquired all the capital stock of BankAtlantic thereby
becoming a unitary savings bank holding company. The reorganization resulted in
BankAtlantic becoming a wholly-owned subsidiary of BBC with BFC becoming a
shareholder of BBC on the same proportionate basis as was the Company's
ownership in BankAtlantic.

17. CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------
In addition to the non-cash investing and financing activities described in
notes 2, 6 and 9, other non-cash investing and financing activities are as
follows:
December 31,
--------------------
1994 1993 1992
------ ------ ------
The reclassification of redeemable
common stock to additional paid-in
capital due to the cancellation
of a shareholder agreement 5,776 - -
The net gains associated with the
settlement of the 1991 and 1989 Exchange
litigation, net of income taxes 22,744 - -
The increase in stockholders' equity
resulting from the Company's
proportionate share of BBC's net
unrealized appreciation on
mortgage-backed securities available for
for sale, less related deferred income taxes 93 - -
Deferred gain on debt restructuring 356 - -
The decrease in the redeemed debenture
liability transferred from the escrow
accounts to fund the 1991 Exchange 8,923 - -
Loans transferred to REO and other
repossessed assets - - 7,994
Effect of issuance of BankAtlantic
common stock to BankAtlantic minority
stockholders 15 268 -
Loan charge-offs - - 12,679
Costs of assets transferred to
available for sale - - 305,731
Mortgages eliminated in connection with the
disposition of real estate acquired
in debenture Exchanges 11,112 - 8,821
Real estate owned charge-offs - - 2,398
BankAtlantic dividends on common stock
declared and not received 191 187 -
Interest paid on borrowings 2,323 2,948 59,933

18. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------------
The information set forth below provides disclosure of the estimated fair value
of the Company's financial instruments presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" (FAS 107) issued by the
FASB.

Management has made estimates of fair value discount rates that it believes to
be reasonable. However, because there is no market for many of these financial
instruments, management has no basis to determine whether the fair value
presented would be indicative of the value negotiated in an actual sale. The
Company's fair value estimates do not consider the tax effect that would be
associated with the disposition of the assets or liabilities at their fair value
estimates.

1993 fair value for the 1989 Exchange debentures was based upon the value
established in a December 1992 jury verdict in connection with litigation
regarding that transaction. With respect to the 1991 Exchange debentures, fair
value was determined based upon the amount included in a settlement agreement
regarding litigation pertaining to those debentures.

The following table presents information for the Company's financial instruments
as of December 31, 1994 and 1993 (in thousands):

1994 1993
-------------- --------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- ------- -------
Financial assets:
Cash and cash equivalents $ 711 711 349 349
Securities available for sale 5,869 5,869 20,373 20,373
Mortgage notes and related
receivables, net 4,904 4,904 9,179 9,179

Financial liabilities:
Mortgage payables and other
borrowings 26,618 26,618 30,367 30,367
Exchange debentures, net 6,616 6,616 35,651 29,166
======== ====== ======= =======

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III
--------

Items 10 through 13 is incorporated by reference to the Company's definitive
proxy statement to be filed with the Securities and Exchange Commission, no
later than 120 days after the end of the year covered by this Form 10-K, or,
alternatively, by amendment to this Form 10-K under cover of Form 8 not later
than the end of such 120 day period.

Item 14 (d), financial statements of subsidiaries not consolidated and fifty
percent or less owned persons, is incorporated by reference to the annual report
on Form 10-K of BankAtlantic Bancorp, Inc. for the fiscal year end December 31,
1994, Commission File Number 33-81972, filed with the Securities and Exchange
Commission.

PART IV
-------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)-1 Financial Statements - See Item 8

(a)-2 Financial Statement Schedules - All schedules are omitted as the required
information is either not applicable or presented in the financial
statements or related notes.

(a)-3 Index to Exhibits
-----------------

(3) Articles of Incorporation, as amended - See Exhibit (3) of Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989. By-laws
- See Exhibit E of Proxy Statement/Prospectus dated June 20, 1980.

(4) Instruments defining the rights of security holders, including indentures
- Not applicable.

(9) Voting trust agreement - Not applicable.

(10) Material contracts: - Not applicable.

(11) Statement re computation of per share earnings - Not applicable.

(12) Statement re computation of ratios - Ratio of earnings to fixed charges -
attached as Exhibit 12.
(13) Annual Report to security holders, Form 10-Q or quarterly report to
security holders - Not applicable.

(16) Letter re change in certifying accountant - Not applicable.

(18) Letter re change in accounting principles - Not applicable.

(19) Previously unfiled documents - Not applicable.

(22) Subsidiaries of the registrant:
State of
Name Organization
---- ------------
BankAtlantic Bancorp, Inc. Florida
Realty 2000 Corporation Florida
Eden Services, Inc. Florida
Eden United, Inc. Florida
First Pensacola Mortgage Company, Inc. Florida
U.S. Capital Securities, Inc. Florida
I.R.E. Property Analysts, Inc. Florida
I.R.E. Realty Advisory Group, Inc. Florida
I.R.E. Real Estate Investments, Inc. Florida
I.R.E. Real Estate Investments, Series 2, Inc. Florida
I.R.E. Property Management, Inc. Florida
I.R.E. Real Estate Funds, Inc. Florida
I.R.E. Advisors Series 21, Corp. Florida
I.R.E. Advisors Series 23, Corp. Florida
I.R.E. Advisors Series 24, Corp. Florida
I.R.E. Advisors Series 25, Corp. Florida
I.R.E. Advisors Series 26, Corp. Florida
I.R.E. Advisors Series 27, Corp. Florida
I.R.E. Advisors Series 28, Corp. Florida
I.R.E. Advisors Series 29, Corp. Florida
I.R.E. Income Advisors Corp. Florida
I.R.E. Pension Advisors, Corp. Florida
I.R.E. Pension Advisors II, Corp. Florida

(23) Published report regarding matters submitted to vote of security holders -
Not applicable.

(24) Consents of experts and counsel - Not applicable.

(25) Power of attorney - Not applicable.

(27) Financial data schedule - Attached as Exhibit 27.

(28) Additional exhibits - Not applicable.

(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

(d) Financial statements of subsidiaries not consolidated and fifty percent or
less owned persons:

Annual report on Form 10-K for the fiscal year end December 31, 1994 of
BankAtlantic Bancorp, Inc.

SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.

BFC FINANCIAL CORPORATION
Registrant

By: /S/ Alan B. Levan
------------------------------
Alan B. Levan, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

/S/ Alan B. Levan March 27, 1994
----------------------------------------
ALAN B. LEVAN, Director and
Principal Executive Officer

/S/ Glen R. Gilbert March 27, 1994
----------------------------------------
GLEN R. GILBERT, Chief Financial Officer

/S/ John E. Abdo March 27, 1994
----------------------------------------
JOHN E. ABDO, Director

/S/ Earl Pertnoy March 27, 1994
----------------------------------------
EARL PERTNOY, Director

/S/ Carl E.B. McKenry, Jr. March 27, 1994
----------------------------------------
CARL E. B. McKENRY, JR., Director

<TABLE>

BFC FINANCIAL CORPORATION Exhibit 12
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
-
(In thousands)

<S> <C> <C> <C> <C> <C>
Year ended Year ended Year ended Year ended Year ended
December December December December December
31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
---------- ---------- ---------- ---------- ----------
(1) (1) (1)
Fixed Charges:
Interest $ 8,276 9,063 64,883 99,944 133,533
Eliminate Bankatlantic - - (55,567) (90,998) (127,218)
---------- ---------- ---------- ---------- ----------
8,276 9,063 9,316 8,946 6,315
========== ========== ========== ========== ==========

Earnings (Loss):
Pretax Earnings 2,913 (1,303) 11,210 (22,585) (14,542)
Minority Interest In
Bankatlantic - - 3,964 (2,977) (2,202)
---------- ---------- ---------- ---------- ----------
Pretax Earnings (Loss) Before
Minority Interest 2,913 (1,303) 15,174 (25,562) (16,744)
Eliminate Bankatlantic (8,040) (10,764) (25,300) 14,779 8,193
Bankatlantic Dividends 753 271 - - -
Fixed Charges 8,276 9,063 9,316 8,946 6,315
---------- ---------- ---------- ---------- ----------
$ 3,902 (2,733) (810) (1,837) (2,236)
========== ========== ========== ========== ==========

Ratio 0.47 (0.30) (0.09) (0.21) (0.35)
========== ========== ========== ========== ==========

COVERAGE DEFICIENCY $ 4,374 11,796 10,126 10,783 8,551
========== ========== ========== ========== ==========

(1) The operations of BBC have been eliminated
since there is a dividend restriction between
BBC and BankAtlantic and all of BBC's earnings
in 1994 were derived from BankAtlantic.

</TABLE>

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE DECEMBER 31, 1994 FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000315858
<NAME> BFC FINANCIAL CORPORATION
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 711
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5869
<INVESTMENTS-CARRYING> 5869
<INVESTMENTS-MARKET> 5869
<LOANS> 5479
<ALLOWANCE> 575
<TOTAL-ASSETS> 91291
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 9636
<LONG-TERM> 33234
<COMMON> 17
0
0
<OTHER-SE> 26532
<TOTAL-LIABILITIES-AND-EQUITY> 91291
<INTEREST-LOAN> 657
<INTEREST-INVEST> 743
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1400
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 8276
<INTEREST-INCOME-NET> (6876)
<LOAN-LOSSES> 624
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2286
<INCOME-PRETAX> 2913
<INCOME-PRE-EXTRAORDINARY> 4922
<EXTRAORDINARY> 22744
<CHANGES> 0
<NET-INCOME> 27666
<EPS-PRIMARY> 13.45
<EPS-DILUTED> 13.45
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 276
<CHARGE-OFFS> 325
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 575
<ALLOWANCE-DOMESTIC> 575
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0

</TABLE>