UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 - QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission File Number 1-9043
BANYAN HOTEL INVESTMENT FUND
(Exact name of Registrant as specified in its charter)
Delaware 36-3361229
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Penn Plaza, Suite 1531, New York, N.Y. 10119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 736-7880
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 .
Shares of common stock outstanding as of July 23, 1996, 12,403,565
Transitional Small Business Disclosure Format. Yes . No X .
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN HOTEL INVESTMENT FUND
BALANCE SHEETS
June 30, 1996 and December 31,1995
(Unaudited)
1996 1995
---- ----
ASSETS
Cash and Cash Equivalents $ 448,129 $ 736,897
Investment Securities 835,875 891,096
Interest Receivable on Cash
and Cash Equivalents, Investment
Securities and Mortgages 9,094 7,916
Mortgages Receivable 609,836 371,723
Prepaid Insurance & Expenses 9,617 ---
Other Assets 8,533 10,343
----------------------------
Total Assets $1,921,084 $2,017,975
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued
Expenses $ 64,887 $ 82,910
Commitments and Contingencies ...... --- ---
----------------------------
Stockholders' Equity
Shares of Common Stock. $0.01
Par Value, 20,000,000 shares
Authorized, 12,403,565 shares
Issued 87,477,847 $87,477,847
Accumulated Deficit (85,558,073) (85,534,593)
Treasury Stock, at Cost, for 32,757
Shares of Common Stock (8,189) (8,189)
Unrealized loss on Investment Sec. (55,388) ---
----------------------------
Total Stockholders' Equity $1,856,197 $1,935,605
----------- -----------
Total Liabilities & Stockholders'
Equity $1,921,084 $2,017,975
----------- -----------
----------- -----------
Book Value per Share of Common Stock
(12,403,565 shares outstanding $ 0.15 $ 0.16
----------------------------
----------------------------
The accompanying notes are an integral part of the financial statements
2
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENTS OF INCOME AND EXPENSES
FOR THE SIX MONTHS ENDED JUNE 30,1996 and 1995
(UNAUDITED)
1996 1995
INCOME
Interest Income on Cash and Cash
Equivalents $ 10,953 9,121
Interest Income on Mortgages Receivable 31,018 ---
Interest Income on Investment Securities 32,792 45,876
---------- ------------
Total Income $ 74,763 $ 54,997
---------- ------------
EXPENSES
Stockholder Expenses $ 10,740 $ 49,732
Directors' Fees, Expenses and
Insurance --- 78,968
Other Professional Fees 3,716 73,096
General and Administrative 86,456 256,593
---------- ------------
Total Other Expenses $ 100,912 $ 458,389
(Recovery of) Class Action
Settlement Costs and Expenses (2,669) (29,582)
---------- ------------
Total Expenses $ 98,243 $ 428,807
---------- ------------
Net Income (Loss) $ (23,480) $ (373,810)
---------- ------------
---------- ------------
Net Income (Loss) Per Share of
Common Stock (Based on Shares
Outstanding of 12,403,565 $ (0.00) $ (0.03)
---------- ------------
---------- ------------
The accompanying notes are an integral part of the Financial Statements.
3
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED JUNE 30,1996 and 1995
1996 1995
INCOME
Interest Income on Cash and
Cash Equivalents $ 4,611 $ 5,263
Interest Income on Mortgages Receivable 17,198 ---
Interest Income on Investment
Securities 16,396 24,780
-------- ------------
Total Income $ 38,205 $ 30,043
-------- ------------
EXPENSES
Stockholders' Expenses 4,991 3,085
Directors' Fees, Expenses
and Insurance --- 18,992
Other Professional Fees 1,169 19,372
General and Administrative 48,518 43,915
-------- ------------
Total Other Expenses $ 54,678 $ 85,364
(Recovery of) Class Action Settlement
Costs and Expenses (2,669) ---
-------- ------------
Total Expenses $ 52,009 $ 85,364
-------- ------------
Net Income (Loss) $(13,804) $(55,321)
-------- ------------
-------- ------------
Net Income (Loss) Per Share
of Common Stock Based on
12,403,565 Shares Outstanding $ 0.00 $ 0.00
-------- ------------
-------- ------------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE><CAPTION>
BANYAN HOTEL INVESTMENT FUND
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
Common Stock Accumulated Treasury Unrealized Total
Shares Amount Deficit Stock Loss
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' Equity
(Deficit) Dec.31,1995 12,403,565 $87,477,847 $(85,534,593) $(8,189) -0- $1,935,065
Net Loss -- -- $ ( 23,480) -- -- $ ( 23,480)
Market Adjustment
June 30, 1996 -- -- -- -- $(55,388) $ ( 55,388)
----------------------------------------------------------------------------------------
12,403,565 $87,477,847 $(85,558,073) $(8,189) $(55,388) $1,856,197
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
The Accompanying notes are an integral part of the financial statements
5
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,1996 and 1995
(UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (23,480) $ (373,810)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
(Used in) Operating Activities:
Amortization of Premium or Discount
on Investment Securities (166) 793
Net Change In:
Interest Receivable on Cash
and Cash Equivalents and
Investment Securities (1,178) 7,862
Prepaid Insurance and Expenses (9,618) (281,524)
Other Assets 1,810 27,365
Accounts Payable and
Accrued Expenses (18,023) (44,542)
----------- -----------
Net Cash Used in Operating Activities $ (50,655) $ (663,856)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Mortgages - Net of
Amortization Received $(238,113) $ ---
Proceeds from or Sale of
Investment Securities --- 355,539
----------- -----------
$(288,768) $ (308,317)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of
Common Stock --- 450,509
----------- -----------
Net (Decrease) Increase in Cash
and Cash Equivalents $(288,768) $ 142,192
Cash and Cash Equivalents at
Beginning of Period 736,897 275,161
----------- -----------
Cash and Cash Equivalents at End
of Period $ 448,129 $ 417,353
----------- -----------
----------- -----------
The accompanying notes are an integral part of the financial statements
6
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
Readers of this quarterly report should refer to the Banyan Hotel
Investment Fund's (the "Fund's") audited financial statements for the year
ended December 31, 1995, as certain footnote disclosures which would
substantially duplicate those contained in such audited statements have
been omitted from this report.
!. FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements include the accounts of the Fund
and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation. In the opinion of
management, all adjustments necessary for a fair presentation have been
made to the accompanying financial statements as of June 30, 1996 and for
the three months ended June 30, 1996 and 1995. These adjustments made to
the financial statements, as presented, are all of a normal recurring
nature to the fund unless otherwise indicated.
2. CHANGE IN CONTROL
On February 15, 1995, a change in control of the Fund occurred pursuant
to the closing of the sale of shares of common stock in the Fund to Mr.
Harvey Polly per the terms of a purchase agreement. A tender offer
conducted by Mr. Polly, which commenced on December 28, 1994, concluded on
January 26, 1995, and resulted in the tender to Mr. Polly of 1,288,217
shares of common stock, or 12.5% of the Fund's then outstanding shares of
common stock, for a cash price of $0.35 per share. Subsequent to the
closing of the tender offer, the terms of the purchase agreement also
required Mr. Polly to purchase from the Fund a number of shares sufficient
to allow Mr. Polly to own, by virtue of the combination of the shares
acquired through the tender offer and the shares purchased directly from
the Fund, not less than 3,335,000 and not more than 40% of the shares of
common stock after giving effect to the shares issued in connection with
the purchase. On February 15, 1995, per the purchase agreement, Mr. Polly
purchased 2,047,766 newly issued shares of common stock of the Fund for a
cash price of $0.22 per share. Upon the acquisition of the aforesaid shares
from the Fund, when combined with the shares of common stock previously
owned and acquired pursuant to the tender offer, Mr. Polly is the
beneficial owner of 3,335,983 shares or approximately 27% of the Fund's
outstanding voting shares of common stock.
3. TRANSACTIONS WITH AFFILIATES
Prior to the February 15, 1995 acquisition of the Fund by Mr. Polly,
administrative costs, primarily salaries and general and administrative
expenses, were reimbursed by the Fund to Banyan Management Corp. ("BMC").
These costs were charged to the Fund and certain other entities for which
BMC provides administrative services based upon the actual number of hours
spent by BMC personnel on matters related to those entities. The Fund's
7
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
reimbursement to BMC for the expenses during the three months ended March
31, 1995 totaled $83,674, representing the Fund's portion of
BMC costs from January 1, 1995 through February 15, 1995, which included a
one-time termination fee of $46,354 paid pursuant to the terms of an
Administrative Services Agreement between the Fund and BMC. During the
second quarter of 1995, the Fund paid $181 to BMC and $4,647 to Oak Realty
Group, Inc., for administrative costs during the management transition.
4. MORTGAGE LOANS RECEIVABLE
On October 10, 1995, the Fund made a first mortgage loan in the amount
of $375,000 which is secured by a commercial property in New York City, as
well as by a personal guaranty of one of the principals of the borrower.
The loan calls for interest of 12% per annum with monthly payments based on
a ten (10) year amortization schedule and a balloon payment of the total
balance in five (5) years.
On February 13, 1996, the Fund made a first mortgage loan in the amount
of $150,000 which is secured by a commercial property in New York City. The
loan represents less than 17% of the appraised value of the property, bears
interest at the rate of 10% per annum and calls for monthly payments on a
five year self-liquidating basis.
On February 29, 1996, the Fund made a first mortgage loan in the
approximate amount of $106,000, which is secured by an industrial property
in Lake Worth, Florida. The property securing the mortgage is controlled by
Harvey Polly, who has personally guaranteed the mortgage. The loan calls
for 10% interest per annum, payable monthly, with a balloon payment of
principal after five years.
The carrying amount of the above three mortgage loans approximates
their fair values.
8
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
5- INVESTMENT IN PARTNERSHIP
In 1991, in connection with a release from liability related to a loan
made by the Fund, the Fund acquired a 50% limited partnership interest in
the partnership which owns the Santa Barbara Biltmore Resort. The Fund did
not record losses related to its interest in the Santa Barbara Biltmore
during 1996 and 1995 since the carrying value of the partnerhsip interest
was reduced to zero as of December, 1992, and the Fund has no obligation to
make additional capital contributions to, or to pay the liabilities of, the
partnership.
6. INVESTMENT SECURITIES
The Fund's investment securities portfolio at June 30, 1996 is
as follows:
Amortized Cost
Net of
Principal Estimated
Paydowns Market Value
Title of Each Issue Received at June 30,
and Name of Issuer June 30, 1996 1996, (2)
Federal National
Mortgage Assn. (1)
7.25%,- 3/1/93-5/25/22 $ 891,263 $ 835,875
--------- ---------
$ 891,263 $ 835,875
--------- ---------
--------- ---------
(1) The Guaranteed Remic Pass-Through Certificates are guaranteed
as to timely payment of principal and interest by the Federal
National Mortgage Association. The maturity of the principal
of the above investment securities is dependent upon the re-
payments of the underlying U.S. Agency sponsored mortgages. The
rate of repayment is dependent upon the current market level of
interest rates on mortgage loans as it relates to the interest
rates of the mortgages underlying each REMIC security. The
stated maturity of these investment securities, under the market
conditions of the second quarter of 1996, is expected to be from
February 25, 2005 to February 25, 2011. These expectations may
change as interest rates on mortgage loans change.
(2) The Fund has recorded a market adjustment of $55,388 representing
unrealized losses on its investment securities based on current
market values at June 30, 1996.
9
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLES
AND CLASS ACTION COSTS AND EXPENSES
During the first six months of 1996 and 1995, the Fund received cash
distributions of $4,270 and $47,331 related to its interest in a
liquidating trust established for the benefit of the previously un-secured
creditors of VMS Realty Partners and its affiliates ("VMS"). For the
periods ended June 30, 1996 and 1995, the Fund recorded recoveries of
$2,669 and $29,582 of losses on mortgage loans, notes and interest
receviable on its consolidated statement of income and expenses related to
the distribution received from the liquidating trust. The $2,669 net
recovery recorded in 1996 represents the $4,270 distribution received net
of an estimated $1,601 due to the Class Action Settlement Fund for the
Fund's share of amounts due per the terms of the previously settled VMS
securities litigation. The $29,582 net recovery recorded in 1995 represents
the $47,331 distribution received net of an estimated $17,749 due to the
Class Action Settlement Fund for the Fund's share of amounts due per the
terms of the previously settled VMS securities litigation. At June 30,
1996, the Fund has a total liability to the Class Action Settlement of
$32,730.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
Banyan Hotel Investment Fund (the "Fund"), was formed to make mortgage
loans to affiliates of VMS Realty Partners, ("VMS"), secured by hotel and
resort properties. The Fund has been adversely affected as a result of the
non-payment of amounts due from these borrowers on mortgage loans and notes
receivable. As a result of these defaults, the Fund suspended distributions
to shareholders.
In early 1990, the Fund implemented a business plan focused on
preservation of its assets and managing its properties acquired through
foreclosure until they could be disposed of in an orderly manner (the
"Principal Recovery Plan").
On January 28, 1992, the Board of Directors of the Fund authorized the
preparation of a formal plan of liquidation which was subsequently adopted
on April 7, 1992 (the "Plan"). The Plan contemplated the Fund liquidating
its assets and distributing the proceeds to its stockholders. The Fund
estimated that its liquidation value was between $.15 and $.20 per share.
After the adoption of the Plan, Management of the Fund completed the
workout of liquidation of certain assets and considered alternatives to the
announced plan of liquidation which could provide greater stockholder
value, including a number of unsolicited proposals from various third
parties. Based upon Management's review of these various proposals, the
Board of Directors resolved that one proposal was in the best interest of
the Fund and its stockholders because it allowed every stockholder an
opportunity to sell his shares at an amount in excess of the projected
liquidation value. The Board of Directors, by unanimous written consent
dated June 15, 1994, authorized the Fund to execute and deliver a non-
binding letter of intent with Mr. Harvey Polly.
On August 3, 1994 the Fund entered into a Purchase Agreement (the
"Purchase Agreement") with Mr. Polly providing, among other things, for an
all cash tender offer, under which Mr. Polly agreed to offer to purchase
100% of the shares of common stock of the Fund for $0.35 per share. The
Purchase Agreement was subsequently amended on November 4, 1994, December
19, 1994 and February 15, 1995. The Purchase Agreement provided, among
other things, for the following events to occur at or before closing: (i)
the resignation of the current officers and directors; (ii) the purchase by
the Fund of "run-off" directors' and officers' liability insurance coverage
for the current officers and directors; (iii) the termination of the
employment contract of Leonard C. Levine and payment of the severence
compensation associated therewith; (iv) the termination of the
Administrative Services Agreement with Banyan Management Corp. and payment
of the termination fee associated therewith; and (v) the assignment by the
Fund of its ownership interest in Banyan Management Corp.
On February 15, 1995, a change in control of the fund occurred pursuant
to the closing of the sale of shares of common stock in the Fund to Mr.
Polly per the terms of the Purchase Agreement. Mr. Polly's tender offer,
which commenced on December 28, 1994, concluded on
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
January 26, 1995, and resulted in the tender to Mr. Polly of 1,288,217
shares of common stock, or 12.5% of the Fund's then outstanding shares of
common stock, for a cash price of $0.35 per share. Subsequent to the
closing of the tender offer, the terms of the Purchase Agreement also
required Mr. Polly to purchase from the Fund a number of shares sufficient
to allow Mr. Polly to own, by virtue of the combination of the shares
acquired pursuant to the tender offer and the shares purchased directly
from the Fund, not less than 3,335,000 shares and not more than 40% of the
shares of common stock of the Fund after giving effect to the shares issued
in connection with the Purchase. On February 15, 1995, per the Purchase
Agreement, Mr. Polly purchased 2,047,766 newly issued shares of common
stock of the Fund for a cash price of $0.22 per share. Upon the acquisition
of the aforesaid shares from the Fund, when combined with the shares of
common stock previously owned and acquired pursuant to the tender offer,
Mr. Polly is the beneficial owner of 3,335,983 shares, or approximately 27%
of the Fund's outstanding voting shares of common stock.
Upon the closing of the sale of shares of common stock of the Fund on
February 15, 1995, the Purchase Agreement provided for the resignation of
the Fund's then current directors and officers. Accordingly, all of the
then current directors and officers resigned and were replaced with Mr.
Polly's designees. Subsequent to the resignation of the directors and
officers of the Fund, no further arrangements or understandings existed
among the Fund and its officers and directors.
On February 15, 1995, Messrs. Leo Yarfitz, Morton I. Kalb, Willis Ryckman
and Harvey Polly were appointed as new Directors of the Fund. In addition,
the new Directors appointed Mr. Harvey Polly as President and Chief Execu-
tive Officer. Mr. Morton I. Kalb as Vice President and Chief Financial
Officer, Ms. Celia Zisfein as Secretary and Mr. William L. Weiss as Assist-
ant Secretary. Effective February 15, 1995, the address of the Fund's
principal executive office is One Penn Plaza,Suite 1531,New York, NY 10119.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments.
The Fund's cash and cash equivalents balance at June 30, 1996 and December
31, 1995 was $448,129 and $736,897, respectively. This decrease in cash and
cash equivalents is due primarily to the investment of approximately
$238,113 in mortgage investments. At June 30, 1996 and December 31, 1995,
the Fund also held investment securities with a carrying value of $835,875
and $891,096, respectively. The decrease in investment securities is due
primarily to the unrealized loss on investment securities, which is
reflected in the accompanying statements.
At this time, there are no material commitments for capital
expenditures. The Fund's cash and cash equivalents are sufficient to meet
its needs for anticipated operating expenses. The Fund deems its liquidity
to be adequate.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
AS Of December 31, 1995, the Fund's mortgage loan portfolio consisted
of one loan, for which the Fund has recorded a provision for losses on the
loan representing its full carrying balance. During the third quarter of
1995, the Fund received $75,000 for assignment of its interest in this
mortgage.
As of June 30, 1996, the Fund had an investment of $609,836 (net of
principal payments received) in three mortgages. These mortgage loans are
more fully described in Item 4, on Page 8 of this report.
On June 26, 1996, the Fund received a cash distribution of $4,270
related to its interest in a liquidating trust established for the benefit
of the previously unsecured creditors of VMS. For the quarter ended June
30, 1996, the Fund recorded a $2,669 recovery of the provision for loan
losses on mortgage loans, notes and interest receivable on its consolidated
statement of income and expenses related to the distribution received from
the liquidating trust. The $2,669 net recovery recorded in 1996 represents
the $4,270 distribution received net of an estimated $1,601 due to the
Class Action Settlement Fund for the Fund's share of amounts due per the
terms of the previously settled VMS securities litigation.
On February 9, 1995, the Fund received a cash distribution of $47,331
related to its interest in a liquidating trust established for the benefit
of the previously unsecured creditors of VMS. For the quarter ended March
31, 1995, the Fund recorded a $29,582 recovery of the provision for loan
losses on mortgage loans, notes and interest receivable on its consolidated
statement of income and expenses related to the distribution received from
the liquidating trust. The $29,582 net recovery recorded in 1995 represents
the $47,331 distribution received net of an estimated $17,749 due to the
Class Action Settlement Fund for the Fund's share of amounts due per the
terms of the previously settled VMS securities litigation.
The Fund's ultimate return of cash to its stockholders is dependent
upon, among other things: (i) the activities undertaken by the Fund; (ii)
interest earned from the investment of cash and cash equivalents and
investment securities; (iii) the Fund's ability to control its operating
expenses; and (iv) possible recoveries from the Santa Barbara Biltmore
Hotel, and the liquidating trust, if any.
RESULTS OF OPERATIONS
Total income for the six months ended June 30, 1996 and 1995 was
$74,763 and $54,997 respectively. The increase in total income for the six
months ended June 30, 1996 when compared to the same period in 1995 is due
primarily to approximately $31,000 of interest earned on mortgage
investments; less approximately $11,000 in lower earnings on cash and
investment securities.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Operating expenses for the six months ended June 30, 1996 decreased
substantially when compared to the same period in 1995. This substantial
decrease is the result of reductions in all areas of operating expenses,
and the elimination of all Directors' fees and expenses. It should be noted
that the 1995 period included costs attributable to the tender offer which
resulted in a change in control of the Fund as discussed above, including
stock listing fees, legal and other professional expenses and required
termination payments to the Fund's former President and Banyan Management
Corp.
During the periods ended June 30, 1996 and June 30, 1995, the Fund
recorded net recoveries of $2,669 and $29,582 respectively from the
liquidating trust established for the benefit of unsecured creditors of VMS
Realty Partners.
The above changes for the six months ended June 30, 1996, when compared
to the same period in 1995, resulted in a decrease in the net loss to
$23,480 ($0.00 per share) from $373,810 ($0.03 per share). In addition to
the expense reductions, discussed above, an increase of approximately
$20,000 in interest income helped to reduce the net loss; while a reduction
of approximately $27,000 in recoveries from the VMS Liquidating Trust,
discussed above, increased the net loss.
The Fund does not, at present, satisfy certain American Stock Exchange
("AMEX") criteria for continued listing of its stock on the Exchange. On
February 7, 1996 the Fund was notified by the AMEX that its stock would be
delisted by March 29, 1996, unless it completes a "satisfactory acqui-
sition" by that date. On April 1, 1996, the Fund notified the AMEX that it
would appeal the delisting. A hearing on this appeal was held on June 12,
1996, the result of which is pending at present.
On June 9, 1996 the Fund issued a press release announcing the execu-
tion of A Letter of Intent to acquire a portfolio of operating retail
shopping centers, encompassing approximately 2.6 million square feet,
located throughout the Southwestern United States. The purchase price for
the portfolio will be $80 million, which will be financed through a
combination of new equity, bank and seller note financing. The Fund
anticipates that it will close this transaction in the fourth quarter of
this year, however, the closing is subject to negotiation and execution of
definitive agreements and subject to obtaining the necessary level of
financing required.
An additional hearing, on the delisting, is scheduled for July 30, 1996
at which time the Fund's management and other parties involved in the above
described transaction will discuss details of the proposed acquisition.
Management hopes to maintain the listing, however, there can be no
assurances that the listing will be continued. Mr. Polly has indicated that
he has no present intention of taking the Fund private, but a one for five
reverse stock stock split, subject to shareholder approval, is being
considered.
14
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are included with this Report.
(b) On January 17, 1995, a current report on Form 8-K was filed
under Item 5. Other information reporting the terms of a
Tender Offer of the Registrant's shares of common stock by
Mr. Harvey Polly.
On February 22, 1995, a current report on Form 8-K was filed under
Item 6. Registration of the Registrant's Directors reporting the
Resignation of the Registrant's Directors on February 15, 1995
pursuant to a change in control of the Registrant.
On February 28, 1995, a current report on Form 8-K was filed under
Item 1. Change in Control of the Registrant reporting a change in
control of the Registrant on February 15, 1995 pursuant to the closing
of the sale of shares of stock in the Registrant to Mr. Harvey Polly.
15
<PAGE>
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.
BANYAN HOTEL INVESTMENT FUND
by: /s/ Harvey Polly Date: July 23, 1996
-------------------------------------
Harvey Polly, Director, President
and Chief Executive Officer
/s/ Morton I. Kalb Date: July 23, 1996
-------------------------------------
Morton I. Kalb, Director, Vice Pres.
and Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 448,129
<SECURITIES> 835,875
<RECEIVABLES> 609,836
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,302,715
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,921,084
<CURRENT-LIABILITIES> 64,887
<BONDS> 0
0
0
<COMMON> 87,477,847
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,921,084
<SALES> 0
<TOTAL-REVENUES> 74,763
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 98,243
<LOSS-PROVISION> 0
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