UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 0-15465
Banyan Strategic Realty Trust
(Exact name of Registrant as specified in its charter)
Massachusetts 36-3375345
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (312) 553-9800
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 beneficial interest outstanding as of November 14, 1995: 10,477,138
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Consolidated Consolidated
ASSETS 1995 1994
Cash and Cash Equivalents $ 8,468,782 $ 14,769,170
Interest Receivable on
Investments 92,673 82,180
Interest Receivable on Mortgage
Loans 55,904 55,106
Accounts Receivable 334,302 107,672
Due from Affiliates --- 730,229
Investment Securities --- 1,017,236
------------ ------------
8,951,661 16,761,593
------------ ------------
Mortgage Loans Receivable (Net
of unamortized discount of
$1,535,826 and $1,808,716,
respectively) 5,352,924 5,136,229
Investment in Real Estate, at
cost:
Land 8,044,994 6,182,494
Building 57,350,354 33,152,589
Building Improvements 2,394,433 1,863,219
------------ ------------
67,789,781 41,198,302
Less: Accumulated Depreciation (1,888,365) (1,036,890)
------------ ------------
65,901,416 40,161,412
------------ ------------
Investment in Real Estate
Ventures 9,473,533 10,697,791
Deferred Financing Costs (Net of
Accumulated Amortization of
$169,883 and $21,411,
respectively) 843,448 793,649
Other Assets 1,111,643 533,677
------------ ------------
Total Assets $ 91,634,625 $ 74,084,351
============ ============
Consolidated Consolidated
1995 1994
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts Payable and Accrued
Expenses $ 950,397 $ 802,335
Accrued Real Estate Taxes 953,642 666,567
Mortgage Loans Payable 23,482,174 7,900,695
Bond Payable 5,500,000 5,500,000
Accrued Interest Payable --- 26,005
Unearned Revenue 39,954 39,198
Security Deposit Liability 364,507 203,659
Other Liability 686,169 290,331
------------ ------------
Total Liabilities 31,976,843 15,428,790
------------ ------------
Minority Interest in
Consolidated Partnerships 1,820,879 214,849
Shareholders' Equity
Shares of Beneficial Interest,
No Par Value, Unlimited
Authorization; 11,999,787 and
11,993,751 Shares Issued,
respectively 106,687,212 106,662,313
Accumulated Deficit (41,484,360) (40,855,652)
Treasury Shares at Cost,
1,522,649 Shares (7,365,949) (7,365,949)
------------ ------------
Total Shareholders' Equity 57,836,903 58,440,712
------------ ------------
Total Liabilities and Share-
holders' Equity $ 91,634,625 $ 74,084,351
============ ============
Book Value Per Share of Bene-
ficial Interest (10,477,138
and 10,471,102 Shares
Outstanding, respectively) $ 5.52 $ 5.58
============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION)
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Supplemental Information
Investment
Investment Activities
Activities
ASSETS 1995 1994
Cash and Cash $ 6,368,283 $ 13,077,182
Equivalents
Interest Receivable on
Investments 45,861 58,422
Interest Receivable on
Mortgage 55,904 55,106
Loans
Accounts Receivable 334,302 107,672
Due from Affiliates --- ---
Investment Securities --- 1,017,236
------------ ------------
6,804,350 14,315,618
------------
------------
Mortgage Loans
Receivable (Net
of unamortized
discount of 5,352,924 5,136,229
$1,535,826 and
$1,808,716,
respectively)
Investment in Real
Estate, at
cost:
Land 8,044,994 6,182,494
Building 57,350,354 33,152,589
Building Improvements 2,394,433 1,863,219
------------ ------------
67,789,781 41,198,302
Less: Accumulated (1,888,365) (1,036,890)
Depreciation ------------ ------------
65,901,416 40,161,412
------------ ------------
Investment in Real
Estate --- ---
Ventures
Deferred Financing
Costs (Net of
Accumulated
Amortization of 843,448 793,649
$169,883 and $21,411,
respectively)
Other Assets 839,003 408,353
------------ ------------
Total Assets $ 79,741,141 $ 60,815,261
============
============
Supplemental Information
Investment
Investment Activities
Activities
1995 1994
LIABILITIES
Liabilities
Accounts Payable and
Accrued $ 773,583 $ 621,966
Expenses
Accrued Real Estate 953,642 666,567
Taxes
Mortgage Loans Payable 23,482,174 7,900,695
Bond Payable 5,500,000 5,500,000
Accrued Interest --- 26,005
Payable
Unearned Revenue 39,954 39,198
Security Deposit 364,507 203,659
Liability
Other Liability --- ---
------------ ------------
Total Liabilities 31,113,860 14,958,090
------------ ------------
Minority Interest in
Consolidated 1,820,879 214,849
Partnerships
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION)
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Supplemental Information
Foreclosed Foreclosed
Activities Activities
ASSETS 1995 1994
Cash and Cash Equivalents $ 2,100,499 $ 1,691,988
Interest Receivable on
Investments 46,812 23,758
Interest Receivable on
Mortgage --- ---
Loans
Accounts Receivable --- ---
Due from Affiliates --- 730,229
Investment Securities --- ---
------------ ------------
2,147,311 2,445,975
------------ ------------
Mortgage Loans Receivable --- ---
Investment in Real Estate, at
cost:
Land --- ---
Building --- ---
Building Improvements --- ---
------------ ------------
--- ---
Less: Accumulated --- ---
Depreciation ------------ ------------
--- ---
------------ ------------
Investment in Real Estate
Ventures 9,473,533 10,697,791
Deferred Financing Costs --- ---
Other Assets 272,640 125,324
------------ ------------
Total Assets $ 11,893,484 $ 13,269,090
============ ============
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
LIABILITIES
Liabilities
Accounts Payable and Accrued
Expenses $ 176,814 $ 180,369
Accrued Real Estate Taxes --- ---
Mortgage Loans Payable --- ---
Bond Payable --- ---
Accrued Interest Payable --- ---
Unearned Revenue --- ---
Security Deposit Liability --- ---
Other Liability 686,169 290,331
------------ ------------
Total Liabilities 862,983 470,700
------------ ------------
Minority Interest in
Consolidated
Partnerships --- ---
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Consolidated Consolidated
INCOME 1995 1994
Income From Property Operating
Activities:
Industrial $ 1,921,973 $ 1,561,948
Residential 2,472,308 2,346,027
Commercial 2,161,285 1,495,252
Retail 756,356 ---
----------- -----------
Total Income From Property
Operating Activities 7,311,922 5,403,227
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans 761,181 713,547
Income on Investments 548,092 275,794
----------- -----------
Total Income From Lending
and Investing Activities 1,309,273 989,341
----------- -----------
Total Income 8,621,195 6,392,568
----------- -----------
EXPENSES
Expenses from Property
Operating
Activities:
Operating Property Expenses 378,861 240,613
Repairs and Maintenance 866,604 609,042
Real Estate Taxes 745,134 625,119
Interest and Ground Lease 996,856 237,081
Expense
Property Management Fees 276,552 200,608
Payroll Expense 327,284 378,334
Utilities Expense 498,552 412,741
Depreciation and
Amortization 874,146 627,174
----------- -----------
Total Expenses From Property
Operating Activities 4,963,989 3,330,712
----------- -----------
Other Expenses:
Shareholder Expenses 148,364 153,341
Trustees' Fees, Expenses
and Insurance 316,010 314,563
Other Professional Fees 156,917 153,313
General and Administrative 1,074,777 909,645
Amortization of Deferred Loan
Fees and Financing Costs 172,057 36,955
Recovery of Losses on Loans,
Notes and Interest
Receivable
and Class Action Settlement (155,834) (134,986)
Costs and Expenses ----------- -----------
Total Other Expenses 1,712,291 1,432,831
----------- -----------
Consolidated Consolidated
1995 1994
Total Expenses 6,676,280 4,763,543
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 1,944,915 1,629,025
Minority Interest in
Consolidated Partnerships (80,359) (28,014)
Income (Loss) from Operations
of 649,274 (46,064)
Real Estate Ventures ----------- -----------
Net Income (Loss) $ 2,513,830 $ 1,554,947
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,473,048
and 10,471,102 Weighted $ 0.24 $ 0.15
Average =========== ===========
Shares Outstanding,
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Investment Investment
Activities Activities
1995 1994
INCOME
Income From Property Operating
Activities:
Industrial $1,921,973 $1,561,948
Residential 2,472,308 2,346,027
Commercial 2,161,285 1,495,252
Retail 756,356 ---
----------- ----------
Total Income From Property
Operating Activities 7,311,922 5,403,227
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans 761,181 713,547
Income on Investments 439,242 165,154
----------- -----------
Total Income From Lending
and Investing Activities 1,200,423 878,701
----------- -----------
Total Income 8,512,345 6,281,928
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property Expenses 378,861 240,613
Repairs and Maintenance 866,604 609,042
Real Estate Taxes 745,134 625,119
Interest and Ground Lease
Expense 996,856 237,081
Property Management Fees 276,552 200,608
Payroll Expense 327,284 378,334
Utilities Expense 498,552 412,741
Depreciation and
Amortization 874,146 627,174
----------- -----------
Total Expenses From Property
Operating Activities 4,963,989 3,330,712
----------- -----------
Supplemental Information
Investment Investment
Activities Activities
1995 1994
Other Expenses:
Shareholder Expenses 46,999 22,239
Trustees' Fees, Expenses
and Insurance 19,665 17,875
Other Professional Fees 102,193 100,502
General and Administrative 785,403 656,575
Amortization of Deferred
Loan Fees and Financing
Costs 172,057 36,955
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses --- ---
----------- -----------
Total Other Expenses 1,126,317 834,146
----------- -----------
Total Expenses 6,090,306 4,164,858
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 2,422,039 2,117,070
Minority Interest in
Consolidated Partnerships (80,359) (28,014)
Income (Loss) from Operations
of Real Estate Ventures --- ---
----------- -----------
Net Income (Loss) $ 2,341,680 $ 2,089,056
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,473,048
and 10,471,102 Weighted
Average $ 0.22 $ 0.20
Shares Outstanding, =========== ===========
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
INCOME
Income From Property Operating
Activities:
Industrial $ --- $ ---
Residential --- ---
Commercial --- ---
Retail --- ---
----------- -----------
Total Income From Property
Operating Activities --- ---
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans --- ---
Income on Investments 108,850 110,640
----------- -----------
Total Income From Lending
and Investing Activities 108,850 110,640
----------- -----------
Total Income 108,850 110,640
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property Expenses --- ---
Repairs and Maintenance --- ---
Real Estate Taxes --- ---
Interest and Ground Lease
Expense --- ---
Property Management Fees --- ---
Payroll Expenses --- ---
Utilities Expense --- ---
Depreciation and --- ---
Amortization ----------- -----------
Total Expenses From Property
Operating Activities --- ---
----------- -----------
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
Other Expenses:
Shareholder Expenses 101,365 131,102
Trustees' Fees, Expenses
and Insurance 296,345 296,688
Other Professional Fees 54,724 52,811
General and Administrative 289,374 253,070
Amortization of Deferred
Loan --- ---
Fees and Financing Costs
Recovery of Losses on Loans,
Notes and Interest
Receivable
and Class Action Settlement (155,834) (134,986)
Costs and Expenses ----------- -----------
Total Other Expenses 585,974 598,685
----------- -----------
Total Expenses 585,974 598,685
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures (477,124) (488,045)
Minority Interest in
Consolidated Partnerships --- ---
Income (Loss) from Operations
of Real Estate Ventures 649,274 (46,064)
----------- -----------
Net Income (Loss) $ 172,150 $ (534,109)
=========== ============
Earnings (Loss) Per Share of
Beneficial Interest
(10,473,048
and 10,471,102 Weighted $ 0.02 $ (0.05)
Average ============ ============
Shares Outstanding,
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
ConsolidatedConsolidated
INCOME 1995 1994
Income From Property
Operating
Activities:
Industrial $ 726,917 $ 540,047
Residential 833,174 790,641
Commercial 745,217 718,902
Retail 756,356 ---
----------- -----------
Total Income From Property
Operating Activities 3,061,664 2,049,590
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage 260,104 242,313
Loans
Income on Investments 131,855 88,473
----------- -----------
Total Income From Lending
and Investing Activities 391,959 330,786
----------- -----------
Total Income 3,453,623 2,380,376
----------- -----------
EXPENSES
Expenses from Property
Operating
Activities:
Operating Property Expenses 151,134 91,670
Repairs and Maintenance 377,126 248,342
Real Estate Taxes 288,707 241,111
Interest and Ground Lease 559,718 78,600
Expense
Property Management Fees 101,715 71,732
Payroll Expense 127,004 146,358
Utilities Expense 178,875 166,370
Depreciation and
Amortization 366,662 243,944
----------- -----------
Total Expenses From
Property 2,150,941 1,288,127
Operating Activities ----------- -----------
Other Expenses:
Shareholder Expenses 32,460 29,314
Trustees' Fees, Expenses
and Insurance 98,065 109,695
Other Professional Fees 55,445 44,196
General and Administrative 301,127 297,072
Amortization of Deferred
Loan 59,261 12,407
Fees and Financing Costs
Recovery of Losses on
Loans,
Notes and Interest
Receivable --- ---
and Class Action ----------- -----------
Settlement
Costs and Expenses
Total Other Expenses 546,358 492,684
----------- -----------
ConsolidatedConsolidated
1995 1994
Total Expenses 2,697,299 1,780,811
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 756,324 599,565
Minority Interest in
Consolidated Partnerships (55,896) (9,368)
Income (Loss) from Operations
of 256,674 (20,913)
Real Estate Ventures ----------- -----------
Net Income (Loss) $ 957,102 $ 569,284
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,476,876
and 10,471,102 Weighted $ 0.09 $ 0.05
Average =========== ===========
Shares Outstanding,
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Investment Investment
Activities Activities
1995 1994
INCOME
Income From Property Operating
Activities:
Industrial $ 726,917 $ 540,047
Residential 833,174 790,641
Commercial 745,217 718,902
Retail 756,356 ---
----------- ----------
Total Income From Property
Operating Activities 3,061,664 2,049,590
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans 260,104 242,313
Income on Investments 121,992 43,870
----------- -----------
Total Income From Lending
and Investing Activities 382,096 286,183
----------- -----------
Total Income 3,443,760 2,335,773
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property Expenses 151,134 91,670
Repairs and Maintenance 377,126 248,342
Real Estate Taxes 288,707 241,111
Interest and Ground Lease
Expense 559,718 78,600
Property Management Fees 101,715 71,732
Payroll Expense 127,004 146,358
Utilities Expense 178,875 166,370
Depreciation and
Amortization 366,662 243,944
----------- -----------
Total Expenses From Property
Operating Activities 2,150,941 1,288,127
----------- -----------
Supplemental Information
Investment Investment
Activities Activities
1995 1994
Other Expenses:
Shareholder Expenses 21,728 4,114
Trustees' Fees, Expenses
and Insurance 6,665 5,563
Other Professional Fees 39,957 27,571
General and Administrative 244,422 209,302
Amortization of Deferred
Loan Fees and Financing
Costs 59,261 12,407
Recovery of Losses on Loans,
Notes and Interest
Receivable and Class Action
Settlement Costs and
Expenses --- ---
----------- -----------
Total Other Expenses 372,033 258,957
----------- -----------
Total Expenses 2,522,974 1,547,084
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 920,786 788,689
Minority Interest in
Consolidated Partnerships (55,896) (9,368)
Income (Loss) from Operations
of Real Estate Ventures --- ---
----------- -----------
Net Income (Loss) $ 864,890 $ 779,321
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,476,876
and 10,471,102 Weighted
Average $ 0.08 $ 0.07
Shares Outstanding, =========== ===========
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
INCOME
Income From Property
Operating
Activities:
Industrial $ --- $ ---
Residential --- ---
Commercial --- ---
Retail --- ---
----------- -----------
Total Income From Property
Operating Activities --- ---
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage --- ---
Loans
Income on Investments 9,863 44,603
----------- -----------
Total Income From Lending
and Investing Activities 9,863 44,603
----------- -----------
Total Income 9,863 44,603
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property --- ---
Expenses
Repairs and Maintenance --- ---
Real Estate Taxes --- ---
Interest and Ground Lease
Expense --- ---
Property Management Fees --- ---
Payroll Expenses --- ---
Utilities Expense --- ---
Depreciation and --- ---
Amortization ----------- -----------
Total Expenses From
Property --- ---
Operating Activities ----------- -----------
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
Other Expenses:
Shareholder Expenses 10,732 25,200
Trustees' Fees, Expenses
and Insurance 91,400 104,132
Other Professional Fees 15,488 16,625
General and Administrative 56,705 87,770
Amortization of Deferred
Loan --- ---
Fees and Financing Costs
Recovery of Losses on
Loans,
Notes and Interest
Receivable --- ---
and Class Action ----------- -----------
Settlement
Costs and Expenses
Total Other Expenses 174,325 233,727
----------- -----------
Total Expenses 174,325 233,727
----------- -----------
Income (Loss) Before
Minority
Interest and Income (Loss)
from Operations of Real (164,462) (189,124)
Estate Ventures
Minority Interest in
Consolidated Partnerships --- ---
Income (Loss) from
Operations 256,674 (20,913)
of Real Estate Ventures ----------- -----------
Net Income (Loss) $ 92,212 $
(210,037)
=========== ============
Earnings (Loss) Per Share of
Beneficial Interest
(10,476,876
and 10,471,102 Weighted
Average $ 0.01 $ (0.02)
Shares Outstanding, ============ ============
respectively)
The accompanying notes are an integral part of the
consolidated financial statements.
<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<CAPTION>
Shares of
Beneficial Interest Accumulated Treasury
Shares Amount Deficit Shares Total
<S> <C> <C> <C> <C> <C>
Shareholders'
Equity,
December 31, 1994
11,993,751 $106,662,313 $(40,855,652) $(7,365,949) $58,440,712
Award Shares
Issued 6,036 24,899 --- --- 24,899
Net Income --- --- 2,513,830 --- 2,513,830
Dividends
Paid --- --- (3,142,538) --- (3,142,538)
----------- ------------ ------------ ----------- -----------
Shareholders'
Equity,
September 30, 11,999,787 $106,687,212 $(41,484,360) $(7,365,949) $57,836,903
1995 =========== ============ ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Consolidated
Consolidated
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ 2,513,830 $ 1,554,947
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In) Operating
Activities:
Amortization of Premium on
Investment Securities 10,596 66,474
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) ---
Depreciation and Amortization 1,046,203 664,129
Amortization of Discount on
Mortgage Loans Receivable (272,890) (225,663)
Net (Income) Loss From
Operation of Real Estate
Ventures (649,274) 46,064
Minority Interest Participation
in Consolidated Partnerships 80,359 28,014
Net Change In:
Interest Receivable on Mortgage
Loans and Investments (11,291) 26,789
Accounts Receivable (226,630) 147,004
Due from Affiliates --- ---
Other Assets (85,148) (193,646)
Accounts Payable and Accrued
Expenses (160,919) (137,011)
Accrued Interest Payable (26,005) (424)
Accrued Real Estate Tax Payable 180,464 581,308
Unearned Revenue 556 11,145
Security Deposit Liability 9,743 20,086
----------- -----------
Net Cash Provided By (Used In)
Operating Activities 2,253,760 2,589,216
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets (26,060,265) (18,710,648)
Proceeds From Sale of
Investment in Real
Estate Venture 1,931,467 ---
Investment In Real Estate
Ventures, Net (57,935) (64,380)
Additions to Investment in
Real Estate (531,214) (517,657)
Payment of Liabilities Assumed
at Acquisition of Real Estate
Assets 51,408 (413,525)
Other Liability 395,838 ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses 155,834 ---
Purchase of Investment
Securities (1,493,360) ---
Proceeds From Sale and
Maturities of Investment
Securities 2,500,000 14,363,649
Principal Collections on
Mortgage Loans Receivable 32,610 26,127
Investment in Mortgage Loans
Receivable --- (4,771)
Due from Affiliates 730,229 (418,111)
Transfer of Equity From
Sale of Investment in
Real Estate Venture --- ---
----------- -----------
Net Cash (Used In) Provided By
Investing Activities (22,345,388) (5,739,316)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds From Mortgage Loans
Payable 15,706,807
Minority Interest Share of
Real Estate Investments 1,525,671 (56,561)
Deferred Financing Costs (198,271) ---
Reductions to Deferred
Financing Costs --- 5,864
Principal Payments on Mortgage
Loans Payable (125,328) (63,614)
Dividends Paid to Shareholders (3,142,538) (3,141,331)
Issuance of Common Stock 24,899 ---
----------- -----------
Net Cash Provided By (Used In)
Financing Activities 13,791,240 (3,255,642)
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents (6,300,388) (6,405,742)
Cash and Cash Equivalents at
Beginning of Period 14,769,170 13,621,820
----------- -----------
Cash and Cash Equivalents at End
of Period $ 8,468,782 $ 7,216,078
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(SUPPLEMENTAL INFORMATION)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Investment
Activities Investment
Activities
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ 2,341,680 $ 2,089,056
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In)
Operating
Activities:
Amortization of Premium on
Investment Securities 10,596 66,474
Recovery of Losses on Loans,
Notes and Interest
Receivable
and Class Action Settlement --- ---
Costs and Expenses
Depreciation and Amortization 1,046,203 664,129
Amortization of Discount on
Mortgage Loans Receivable (272,890) (225,663)
Net (Income) Loss From
Operation of Real Estate
Ventures --- ---
Minority Interest
Participation 80,359 28,014
in Consolidated Partnerships
Net Change In:
Interest Receivable on
Mortgage 11,763 47,447
Loans and Investments
Accounts Receivable (226,630) 147,004
Due From Affiliates --- ---
Other Assets 62,168 (182,511)
Accounts Payable and Accrued
Expenses (157,364) (90,177)
Accrued Interest Payable (26,005) (424)
Accrued Real Estate Tax 180,464 581,308
Payable
Unearned Revenue 556 11,145
Security Deposit Liability 9,743 20,086
----------- -----------
-
Net Cash Provided By (Used In)
Operating Activities 3,060,643 3,155,888
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets (26,060,265 (18,710,648)
)
Proceeds from Sale of Invest-
ment in Real Estate Venture --- ---
Investment In Real Estate
Ventures, Net --- ---
Additions to Investment in
Real Estate (531,214) (517,657)
Payment of Liabilities Assumed
at Acquisition of Real
Estate Assets 51,408 (413,525)
Other Liability --- ---
Recovery of Losses on Loans,
Notes and Interest
Receivable
and Class Action Settlement ---
Costs and Expenses ---
Purchase of Investment
Securities (1,493,360) ---
Proceeds From Sale and
Maturities of Investment
Securities 2,500,000 14,363,649
Principal Collections on
Mortgage Loans Receivable 32,610 26,127
Investment in Mortgage Loans
Receivable --- (4,771)
Due from Affiliates --- ---
Transfer of Equity From
Sale of Investment in Real
Estate Venture 1,940,039 ---
----------- -----------
Net Cash (Used In) Provided By
Investing Activities (23,560,782 (5,256,825)
) -----------
-----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds From Mortgage Loans
Payable 15,706,807 ---
Minority Interest Share of
Real Estate Investments 1,525,671 (56,561)
Deferred Financing Costs (198,271) ---
Reductions to Deferred
Financing Costs --- 5,864
Principal Payments on Mortgage
Loans Payable (125,328) (63,614)
Dividends Paid to Shareholders (2,387,057)
(3,142,538)
Issuance of Common Stock 24,899 ---
----------- -----------
Net Cash Provided By (Used In)
Financing Activities 13,791,240 (2,501,368)
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents (6,708,899) (4,602,305)
Cash and Cash Equivalents at
Beginning of Period 13,077,182 10,332,184
-----------
-----------
Cash and Cash Equivalents at End
of Period $ 6,368,283 $ 5,729,879
===========
===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(SUPPLEMENTAL INFORMATION)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Foreclosed Foreclosed
Activities Activities
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ 172,150 $
(534,109)
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In) Operating
Activities:
Amortization of Premium on
Investment Securities --- ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) ---
Depreciation and Amortization --- ---
Amortization of Discount on
Mortgage Loans Receivable --- ---
Net (Income) Loss From
Operation of Real Estate
Ventures (649,274) 46,064
Minority Interest Participation
in Consolidated Partnerships --- ---
Net Change In:
Interest Receivable on Mortgage
Loans and Investments (23,054) (20,658)
Accounts Receivable --- ---
Due from Affiliates --- ---
Other Assets (147,316) (11,135)
Accounts Payable and Accrued
Expenses (3,555) (46,834)
Accrued Interest Payable --- ---
Accrued Real Estate Tax Payable --- ---
Unearned Revenue --- ---
Security Deposit Liability --- ---
----------- -----------
Net Cash Provided By (Used In)
Operating Activities (806,883) (566,672)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets --- ---
Proceeds From Sale of
Investment in Real Estate
Venture 1,931,467 ---
Investment In Real Estate
Ventures, Net (57,935) (64,380)
Additions to Investment in
Real Estate --- ---
Payment of Liabilities Assumed
at Acquisition of Real Estate
Assets --- ---
Other Liability 395,838 ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses 155,834 ---
Purchase of Investment
Securities --- ---
Proceeds From Sale and
Maturities of Investment
Securities --- ---
Principal Collections on
Mortgage Loans Receivable --- ---
Investment in Mortgage Loans
Receivable --- ---
Due from Affiliates 730,229 (418,111)
Transfer of Equity From
Sale of Investment in
Real Estate Venture (1,940,039) ---
----------- -----------
Net Cash (Used In) Provided By
Investing Activities 1,215,394 (482,491)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Mortgage Loans
Payable --- ---
Minority Interest Share of
Real Estate Investments --- ---
Deferred Financing Costs --- ---
Reductions to Deferred
Financing Costs --- ---
Principal Payments on Mortgage
Loans Payable --- ---
Dividends Paid to Shareholders --- (754,274)
Issuance of Common Stock --- ---
----------- -----------
Net Cash Provided By (Used In)
Financing Activities --- (754,274)
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents 408,511 (1,803,437)
Cash and Cash Equivalents at
Beginning of Period 1,691,988 3,289,636
----------- -----------
Cash and Cash Equivalents at End
of Period $2,100,499 $ 1,486,199
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
Readers of this quarterly report should refer to Banyan Strategic Realty
Trust's (the "Trust") audited consolidated financial statements for the year
ended December 31, 1994 which are included in the Trust's 1994 Annual Report and
Form 10-K, as certain footnote disclosures which would substantially duplicate
those contained in such audited statements have been omitted from this report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Trust, its wholly-owned subsidiaries and its controlled partnerships. All
intercompany balances and transactions have been eliminated in consolidation.
Investment in Real Estate Ventures are accounted for on the equity method.
FINANCIAL STATEMENT PRESENTATION
Effective January 1, 1993, the Trust elected to provide supplemental
financial information in a format that segregates financial condition, results
of operations and cash flows between the Trust's new investments in real estate
assets (the "Investment Activities") and the real estate assets acquired in
prior years through foreclosure (the "Foreclosed Activities").
Certain reclassifications have been made to the previously reported 1994
financial statements in order to provide comparability with the 1995
consolidated financial statements. These reclassifications have not changed the
1994 operating results. In the opinion of management, all adjustments necessary
for a fair presentation have been made to the accompanying consolidated
financial statements as of September 30, 1995 and for the three and nine months
ended September 30, 1995 and 1994. These adjustments made to the financial
statements, as presented, are all of a normal recurring nature to the Trust.
2. INVESTMENT IN REAL ESTATE
WILLOWBROOK INDUSTRIAL COURT PROPERTY
On June 16, 1995, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"), a
joint venture between a subsidiary of the Trust, which is the general partner,
and Morgan Realty Partners ("Morgan"), acquired the Willowbrook Industrial Court
property (the "Willowbrook Property") which consists of a three-building
office/warehouse complex with a total of approximately 84,000 square feet of
leasable space located in the metropolitan Chicago area for a purchase price,
including liabilities assumed at acquisition, of approximately $3,922,000. The
Trust and Morgan contributed additional capital of approximately $1,030,000 and
$370,000 to BMMLP for their 85% and 15% ownership interest in BMMLP,
respectively, which includes $200,000 in reserves held by BMMLP for property
improvements and lease-up. The acquisition was made subject to a nonrecourse
first mortgage loan collateralized by the property in the amount of $2,650,000
which bears interest at a fixed rate of 8.5%, matures on July 1, 2002, and
requires monthly payments based upon a twenty-two and a half year amortization
schedule. The loan requires a balloon payment for the remaining unpaid
principal balance at maturity. Upon acquisition, the Willowbrook Property was
93% leased.
The terms of the BMMLP Partnership Agreement as originally established at
the time of the acquisitions of the Milwaukee Industrial and the Elmhurst Metro
Court properties, were amended effective July 1, 1995 as a result of the
Willowbrook Property acquisition by BMMLP. Pursuant to the amended BMMLP
Partnership Agreement, any excess cash flow from operations, after each of the
Trust and Morgan receives its 12% and 11% preferred return, respectively, on
contributed equity, will be allocated 85% to the Trust and 15% to Morgan. The
amendment was adopted as a result of the increase in additional equity
contributed by Morgan of approximately $370,000. The results of operations for
the Willowbrook Property are included in the Trust's investment activities for
financial reporting purposes. The BMMLP ownership percentage changes which
occurred upon acquisition of the Willowbrook Property, as mentioned above, will
become effective July 1, 1995 for financial reporting purposes.
NORTHLAKE TOWER SHOPPING CENTER
On July 28, 1995, BSRT/M&J Northlake Limited Partnership ("BMJNLP"), a
joint venture between a subsidiary of the Trust and M&J Wilkow Retail Ltd.
("Wilkow"), acquired a shopping center known as the Northlake Tower Shopping
Center ("Northlake Property") located in northeast suburban Atlanta, Georgia for
a purchase price, including liabilities assumed at acquisition, of approximately
$17,079,000. The Northlake Property consists of six structures containing
approximately 322,000 rentable square feet built in 1984. The Trust contributed
$6,000,000 to BMJNLP for an approximate 80% interest, while Wilkow contributed
approximately $1,500,000 for the remaining 20% interest, which includes
approximately $550,000 in reserves held by BMJNLP for property improvements,
lease-up and other closing prorations. The Northlake Property was acquired
pursuant to a ground lease with a remaining term of sixty-two years. The ground
lease requires annual lease payments of $600,000 through October 4, 2007 plus 7%
of total annual gross rental income commencing when gross rental income exceeds
$2,000,000 from the operations of the Northlake Property. The ground lease also
requires that BMJNLP pay for expenses incurred on the Northlake site, including
real estate taxes. The Northlake Property was financed by BMJNLP utilizing a
non-recourse leasehold mortgage loan from the seller in the amount of
$10,350,000. The mortgage loan requires monthly payments of interest only at a
fixed rate of 8.5% per annum. The leasehold mortgage loan matures on July 1,
2005 and may be repaid at any time during its term without any prepayment
penalty.
Pursuant to the terms of the BMJNLP Partnership Agreement, cash flow from
operations will be distributed first to the Trust until it has received a 12%
cumulative return on its capital contribution and then to Wilkow until it has
received a 12% cumulative return on its capital contribution. Any excess cash
flow will be allocated pro-rata to the Trust and Wilkow based on their
respective capital contributions. Proceeds from the sale or refinancing of the
Northlake Property, after the payment of any debt or expense associated with the
sale or refinancing, will be distributed first to the Trust to the extent that
the 12% annual preferred return has not been received. Next, distributions will
be made to the Trust and Wilkow on a pro-rata basis in an amount equal to their
respective equity contributions. Thereafter, distributions will be made to
Wilkow to the extent that its 12% annual preferred return has not been
received. In the event there are any remaining proceeds to be distributed
and the average annual return to the Trust during the period that BMJNLP
owned the Northlake Property is equal to or greater than 15%, Wilkow will
receive 30% of any remaining proceeds. The results of operations for the
Northlake Property are included in the Trust's Investment Activities
for financial reporting purposes.
BLUEGRASS CORPORATE CENTER
On September 26, 1995, a subsidiary of the Trust acquired a 100% ownership
interest in a seven building office/industrial complex known as the Bluegrass
Corporate Center (the "Bluegrass Property") located in Jefferson County,
Kentucky (suburban Louisville), for a purchase price, including liabilities
assumed at acquisition, of approximately $5,059,000. The seven buildings
contain approximately 182,000 net rentable square feet. The Bluegrass Property
was built during 1976-77 and 1979-80 and was 91% leased with 43 tenants upon
acquisition. The acquisition was made subject to a nonrecourse first mortgage
loan collateralized by the property in the amount of approximately $2,707,000,
bears interest at a fixed rate of 8%, matures on April 25, 2001, and requires
monthly payments based upon a twenty year amortization schedule with a balloon
payment of approximately $2,320,000 upon maturity. The results of operations
for the Bluegrass Property are included in the Trust's Investment Activities for
financial reporting purposes.
3. INVESTMENT IN JOINT VENTURES
H STREET ASSEMBLAGE
The summary income statement information for the H Street Assemblage
unconsolidated venture for the nine months ended September 30, 1995 and 1994 is
as follows:
1995 1994
Total Revenues $ 409,991 $ 301,943
========== ===========
Net Income (Loss) $ 372,281 $ (355,601)
========== ===========
PLAZA AT WESTMINSTER
The Trust owned a 30.7% participation interest in the Westminster
property. On June 22, 1995, the Westminster property was sold to an
unaffiliated third party for $7,525,000 which resulted in a net gain of
approximately $1,333,000 after prorations for closing costs of approximately
$1,235,000. The Trust's share of the cash proceeds was approximately $1,931,000
which resulted in the Trust's share of the net gain of approximately $409,000.
The Trust's share of income generated from operations of Westminster for the
nine months ended September 30, 1995 was $42,675 (prior to sale) as compared to
$142,405 for the same period in 1994.
4. TRANSACTIONS WITH AFFILIATES
Administrative costs, primarily salaries and general and administrative
expenses, are reimbursed by the Trust to Banyan Management Corp. ("BMC"). These
costs are allocated to the Trust and other entities to which BMC provides
administrative services based upon the actual number of hours spent by BMC
personnel on matters related to that particular entity. The Trust's allocable
share of costs for the nine months ended September 30, 1995 and 1994 aggregated
$832,074 and $809,987, respectively. As one of its administrative services, BMC
serves as the paying agent for general and administrative costs of the Trust.
As part of providing this payment service, BMC maintains a bank account on
behalf of the Trust. As of September 30, 1995, the Trust had a net receivable
due from BMC of $43,654.
The Trust's allocated charges related to Investment Activities and
Foreclosed Activities for the nine months ended September 30, 1995 were $615,879
and $216,195, respectively. The Trust's allocated charges related to Investment
Activities and Foreclosed Activities for the nine months ended September 30,
1994 were $601,087 and $208,900, respectively.
5. RECOVERY OF LOSSES ON LOANS, NOTES AND INTEREST RECEIVABLE AND CLASS
ACTION SETTLEMENT COSTS AND EXPENSES
On February 9, 1995, the Trust received a cash distribution of $551,672
related to its interest in a liquidating trust established for the benefit of
the unsecured creditors of VMS Realty Partners and its affiliates ("VMS"). For
the nine months ended September 30, 1995, the Trust recorded $155,834 of this
distribution as a recovery of losses on mortgage loans, notes and interest
receivable on its consolidated statement of income and expenses. The $155,834
net recovery recorded in 1995 represents the $551,672 distribution received net
of an estimated $395,838 due to the Class Action Settlement Fund representing
the Trust's share of amounts due per the terms of the previously settled VMS
securities litigation. As of September 30, 1995, the Trust has recorded
$686,169 as an Other Liability as the total estimated amount due to the Class
Action Settlement Fund per the terms of the settlement.
On January 25, 1994, the Trust received net proceeds of $134,986 as a
recovery of payments previously made into an escrow established as part of the
1992 Class Action Settlement of the VMS securities litigation. The escrow was
established to provide trustees of the Trust with monies to fund the cost of any
litigation in which they might be named as defendants following settlement of
the class action. Subsequently, the trustees have released the proceeds from
the escrow and the Trust has purchased an insurance policy to cover the officers
and trustees.
6. DIVIDEND AND DISTRIBUTIONS PAID
On October 5, 1995, the Trust declared a cash dividend for the quarter
ended September 30, 1995 of $0.10 per share payable November 17, 1995 to
shareholders of record on October 20, 1995.
On July 5, 1995, the Trust issued 6,036 shares of its beneficial interest
("Award Shares") to Leonard G. Levine, its President, pursuant to Mr. Levine's
amended employment agreement, representing 20% of Mr. Levine's 1994 incentive
compensation earned on the performance of the Investment Activities. The 6,036
Award Shares are valued at $4.125 per share or $24,899. All incentive amounts
are due Mr. Levine on or before March 15, of the year following the period for
which the incentive is earned. The Award Shares are held for Mr. Levine by the
Trust subject to certain vesting requirements as stipulated under his amended
employment agreement. With respect to the Award Shares, Mr. Levine is entitled
to receive any cash distributions of the Trust with respect to his share of
beneficial interest between the date earned (March 15) and the date that any
Award Shares are sold or forfeited by Mr. Levine. Therefore, the distributions
paid by the Trust on May 20, 1995 and August 18, 1995 represented $0.10 per
share based on 10,477,138 shares for a total cash distribution by the Fund
aggregating $2,095,428. The Award Shares are included in the total shares
outstanding of the Trust effective July 5, 1995 when calculating Net Income Per
Share of Beneficial Interest Based on Weighted Average Number of Shares
Outstanding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Banyan Strategic Realty Trust (the "Trust") was originally established to
make mortgage loans principally to entities affiliated with VMS Realty Partners
which planned to acquire and develop strategically located properties not then
at their highest and best use. The Trust has ceased funding such mortgage
loans. The current business plan of the Trust is to invest its cash and cash
equivalents into additional real estate assets and to manage these real estate
assets in a manner which will increase the Trust's cash flow over time. From
May 1993 through September 30, 1995, the Trust obtained a line of credit,
completed mortgage financing on the Elmhurst, Milwaukee, Willowbrook, Northlake
and Bluegrass properties (see Results of Operations below for details regarding
the acquisitions and financing of Willowbrook, Northlake and Bluegrass
properties) and secured enhancement of a bond financing on the Colonial Courts
property. The cash proceeds generated pursuant to these transactions provide
the Trust with additional capital for the continued acquisition of income
producing properties, the potential acquisition of mortgage loans and for
general corporate needs. On June 22, 1995, the Trust sold its interest in the
Plaza at Westminster property (see Results of Operations for details). The
Trust will reinvest the net sales proceeds of approximately $1,931,000 into new
real estate investments. The Trust further intends to liquidate its interest in
the H Street Assemblage which was acquired through foreclosure and to reinvest
the proceeds from its liquidation into additional real estate investments as
well.
Effective January 1, 1993, the Trust began providing supplemental
financial information in a format that presents the financial condition, results
of operations and cash flows from the investment of the Trust's cash into new
real estate opportunities (the "Investment Activities") and the management of
the real estate assets acquired through foreclosure or otherwise (the
"Foreclosed Activities"). Returns on Investment Activities include the interest
earned on investment securities and cash and cash equivalents and the new real
estate assets acquired from May 1993 through September 30, 1995 offset by the
incremental costs associated with the investment activities. Returns on
Foreclosed Activities include the results of managing the foreclosed real estate
assets plus the costs associated with maintaining the Trust.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments. The
Trust's cash and cash equivalents balance at September 30, 1995 and December 31,
1994 was $8,468,782 and $14,769,170, respectively. In addition, at December 31,
1994 the Trust held $1,017,236 in investment securities which were immediately
convertible to cash. The decrease in total cash, cash equivalents and
investment securities of approximately $7,318,000 is primarily due to the use of
$10,353,458 to acquire the Willowbrook, Northlake and Bluegrass properties,
payment of distributions to shareholders of $3,142,538, additions to investment
in real estate of $531,214 relating to investment activities, principal payments
on mortgage loans payable of $125,328, deferred financing costs paid in 1995 of
$198,271 and the payment of the Trust's operating expenses, excluding
depreciation and amortization, totalling approximately $5,786,000. Partially
offsetting these cash outflows was the Trust's receipt of cash proceeds from the
sale of the Trust's interest in the Plaza at Westminster property on June 22,
1995 of approximately $1,931,000, a $551,672 cash distribution in respect of the
Trust's interest in the liquidating trust (see below), a $730,229 repayment from
Banyan Strategic Land Fund II ("BSLFII") for advances made on behalf of BSLFII
for H Street Assemblage expenditures (see below), net income from operations of
real estate ventures of $649,274, the receipt of interest income from lending
and investing activities of approximately $1,309,000 and cash receipts from
property operations totalling approximately $7,312,000. See Results of
Operations for further details regarding the sale of the Plaza at Westminster
property and the acquisitions of the Willowbrook, Northlake and Bluegrass
properties.
The Trust has entered into a partnership agreement with BSLFII regarding the
ownership and operation of the H Street Assemblage (the "H Street Venture").
Under the terms of this Agreement, the Trust has the right, but is not
obligated, to advance expenditures on behalf of BSLFII. During 1994 and 1993,
the Trust advanced to the H Street Venture all funds expended on the H Street
Assemblage, including BSLFII's portion. As provided in the H Street partnership
agreement, all advances made by the Trust for BSLFII's share of the H Street
Venture's expenses bore interest at a rate of prime plus 2% per annum until
repaid. As of December 31, 1994, the Trust's total receivable from BSLFII was
approximately $730,000. On March 24, 1995, BSLFII repaid the December 31, 1994
outstanding balance of approximately $730,000 to the Trust. As of September 30,
1995, the H Street advances, and all interest thereon, made by the Trust have
been repaid in full by BSLFII.
On February 9, 1995, the Trust received a cash distribution of $551,672
related to its interest in a liquidating trust established for the benefit of
the unsecured creditors of VMS Realty Partners and its affiliates ("VMS"). For
the nine months ended September 30, 1995, the Trust recorded $155,834 of this
distribution as a recovery of losses on mortgage loans, notes and interest
receivable on its consolidated statement of income and expenses. The $155,834
net recovery recorded in 1995 represents the $551,672 distribution received net
of an estimated $395,838 due to the Class Action Settlement Fund representing
the Trust's share of amounts due per the terms of the previously settled VMS
securities litigation. As of September 30, 1995, the Trust has recorded
$686,169 as an Other Liability as the total estimated amount due to the Class
Action Settlement Fund per the terms of the settlement.
The Trust's future liquidity needs are expected to be funded from
operating cash flow from Investment Activities, the sale or refinancing of the
remaining asset acquired through foreclosure, interest earned on the Trust's
short-term investments and to a lesser extent the potential receipt of
distributions from the liquidating trust. Cash will be expended to maintain,
operate and dispose of the remaining "Foreclosed Activity" property. The
Trust's cash and cash equivalents, as well as cash flow from "Investment
Activity" properties, are expected to be sufficient to meet its reasonably
anticipated needs for liquidity and capital resources in the near future and
provide cash proceeds for distributions to shareholders. During 1995, the Trust
anticipates that it will likely continue making additional investments in
operating properties which could have an effect on future liquidity of the
Trust. Additional investments in operating properties will be made from
existing cash reserves, financing collateralized by existing operating
properties, cash available through the Trust's line of credit as well as
financing proceeds provided for upon future operating property acquisitions. In
addition, the Trust anticipates continuing the $0.10 per share quarterly
distribution for the remainder of 1995.
As of September 30, 1995 and December 31, 1994, the Trust's mortgage loan
portfolio consisted of five mortgage loans receivable with aggregate carrying
values totaling $5,352,924 and $5,136,229, respectively, net of $1,535,826 and
$1,808,716 of unamortized discounts, respectively. During the nine months ended
September 30, 1995, the Trust received principal and interest payments totalling
$32,610 and $487,493, respectively. During the nine months ended September 30,
1994, the Trust received principal and interest payments totalling $26,127 and
$489,758, respectively.
Management reviews the properties owned by the Trust on a quarterly basis
and, when it has been determined that a permanent impairment in the value of a
given property has occurred, the property's carrying value is then written down
to its fair value. On a quarterly basis, management also reviews each mortgage
loan in the Trust's portfolio and provides allowances as deemed necessary. The
estimate of the aggregate allowances is based upon a number of factors,
including analysis of the value of the collateral and, in certain cases,
evaluation of the disposition strategy which includes ongoing negotiations
regarding the disposition of this collateral as well as consideration of the
general business conditions affecting the Trust's portfolio. Management has
determined not to take any write downs for the quarter ended September 30, 1995.
The Trust's ability to make distributions to its shareholders is dependent
upon, among other things: (i) the operating performance of the existing and
future real estate investments; (ii) the ability to redeploy cash proceeds
derived from the sale of the remaining Foreclosed Activities asset into new
investments; (iii) increases in the underlying sales value realized upon the
sale of the Trust's properties; (iv) the potential receipt of cash distributions
from the liquidating trust; (v) the Trust's ability to control its operating
expenses; and (vi) the general improvement of conditions in the real estate
markets where the Trust's properties are located.
RESULTS OF OPERATIONS
Total income for the nine months ended September 30, 1995 increased to
$8,621,195 from $6,392,568 for the nine months ended September 30, 1994. The
increase for the nine months ended September 30, 1995 as compared to the same
period in 1994 is due primarily to increases in property operating revenue of
approximately $1,909,000 (see below) and interest income on investments of
approximately $272,000. Interest income on investments at September 30, 1995
increased when compared to the prior year's period due to the increase in cash
available for investment derived from the proceeds received or financing of the
Elmhurst and Colonial Courts properties which were held as cash reserves until
the 1995 acquisitions by the Trust of the Willowbrook, Northlake and Bluegrass
properties. A further increase in cash available for investment resulted from
the Trust's share of net proceeds received from the Westminster sale in June
1995. (See below for further details of the 1995 acquisitions and sale of the
Westminster property).
Industrial property operating revenue increased by approximately $360,000
which is primarily the result of an increase in rental income at the Trust's
Elmhurst Metro Court ("Elmhurst") property and the 1995 acquisitions of the
Willowbrook Industrial Court ("Willowbrook") and Bluegrass Corporate Center
("Bluegrass") properties. Rental income at Elmhurst increased by approximately
$151,000 due primarily to reductions in rental abatements of approximately
$35,000 with the remainder attributable to annual rent adjustments in 1995 made
pursuant to tenant lease agreements. The occupancy level as of September 30,
1995 and 1994 for the Elmhurst property was 91% and 96%, respectively. The
acquisition of the Willowbrook property on June 16, 1995 resulted in an increase
in total income of approximately $175,000. The occupancy level for the
Willowbrook property was 83% at September 30, 1995. In addition, the
acquisition of the Bluegrass property on September 26, 1995 resulted in an
increase in total income of approximately $12,000. The rental income and
occupancy level for the Milwaukee Industrial properties remained unchanged with
occupancy at 95% for September 30, 1995, when compared to the same period in
1994.
Residential property operating revenue increased by approximately $126,000
resulting primarily from an increase in income at the Hallmark Village
Apartments ("Hallmark") property. Income at Hallmark increased by approximately
$110,000 due primarily to the Trust's aggressive collection efforts in 1995
which reduced delinquent rental payments and an increase in occupancy to 96% at
September 30, 1995 as compared to 88% for the same period in 1994. The rental
income for Colonial Courts remained stable with the occupancy level at September
30, 1995 and 1994 at 91% and 90%, respectively.
Commercial property operating revenue increased by approximately $666,000
which is primarily attributable to including a full nine months of operating
results of the Colonial Penn and Florida Power and Light office buildings which
were acquired in late March of 1994. Occupancy levels at the Colonial Penn and
Florida Power and Light office buildings remained unchanged at September 30,
1995 of 100% and 90%, respectively, when compared to the same period in 1994.
Retail property operating revenue represents income generated pursuant to
the acquisition of the Northlake Tower Shopping Center ("Northlake") on July 28,
1995. The occupancy level for the Northlake property was 98% at September 30,
1995.
Total expenses for the nine months ended September 30, 1995 increased to
$6,676,280 from $4,763,543 for the nine months ended September 30, 1994. This
increase is due to an increase in expenses from property operating activities of
approximately $1,633,000 and an increase in total other expenses of
approximately $279,000. The increase in total expenses from property operating
activities for 1995 is primarily attributable to the acquisitions of the Trust's
properties during 1994 as discussed above and the acquisitions in 1995 of the
Willowbrook, Northlake and Bluegrass properties (as discussed below) which
accounted for approximately $960,000 of this change. In addition, total
expenses from property operating activities increased in 1995 due to interest
expense of approximately $433,000 relating primarily to the Trust's financing of
the Elmhurst and Colonial Courts properties in December 1994. Excluding the
Trust's acquisitions during 1994 and 1995, total expenses from property
operating activities increased further as a result of an increase of
approximately $68,000 in operating property expenses and an increase of
approximately $127,000 in repairs and maintenance expense. Property operating
expenses and repair and maintenance costs increased due to an increase in
general and administrative costs and higher unit turnover costs at the Hallmark
and Colonial Courts properties. Total other expenses increased due primarily to
an increase in general and administrative expenses and an increase in
amortization of deferred loan fees and financing costs. The change in general
and administrative expenses is attributable to additional expenses related to
the 1995 acquisitions (as discussed below). Amortization of deferred loan fees
and financing costs increased as a result of the financing of the Elmhurst and
Colonial Courts properties and costs associated with obtaining the Trust's line
of credit which occurred during the fourth quarter of 1994.
The factors discussed above resulted in consolidated net income of
$2,513,830 ($0.24 per share) for the nine months ended September 30, 1995 as
compared to a consolidated net income of $1,554,947 ($0.15 per share) for the
nine months ended September 30, 1994.
Total income for the three months ended September 30, 1995 increased to
$3,453,623 from $2,380,376 for the three months ended September 30, 1994. The
increase for the three months ended September 30, 1995 as compared to the same
period in 1994 is due primarily to increases in property operating revenue of
approximately $1,012,000 (see below) and interest income on investments of
approximately $43,000. Interest income on investments at September 30, 1995
increased when compared to the prior year's period due to the increase in cash
available for investment derived from the proceeds received on financing of the
Elmhurst and Colonial Courts properties which occurred prior to the 1995
acquisitions by the Trust of the Willowbrook, Northlake and Bluegrass
properties. A further increase in cash available for investment resulted from
the receipt of the Trust's share of net proceeds received from the Westminster
sale in June 1995. (See below for further details of the 1995 acquisitions and
sale of the Westminster property.)
Industrial property operating revenue increased by approximately $187,000
resulting from increases in rental income at the Trust's Elmhurst property and
acquisition of the Willowbrook property in June 1995 and the Bluegrass property
in September 1995. Rental income at Elmhurst increased by approximately $23,000
due to annual rent adjustments. The acquisition of the Willowbrook and Bluegrass
properties contributed to the increase in total income in the amounts of
approximately $145,000 and $12,000, respectively.
Residential property operating revenue increased by approximately $43,000
resulting primarily from an increase in rental income at the Hallmark property.
Rental income at the Hallmark property increased due to an increase in occupancy
as described above.
Commercial property operating revenue increased by approximately $26,000
which is attributable to an increase in rental income at the Colonial Penn and
Florida Power and Light Office buildings. The increase in rental income at both
properties was due to annual rent adjustments.
Retail property operating revenue represents income generated pursuant to
the acquisition of the Northlake property on July 28, 1995 as mentioned above.
Total expenses for the three months ended September 30, 1995 increased to
$2,697,299 from $1,780,811 for the three months ended September 30, 1994. This
increase is due to increases in expenses from property operating activities of
approximately $863,000 and an increase in total other expenses of approximately
$54,000. The increase in property operating expenses for the quarter ended
September 30, 1995 is primarily attributable to the acquisitions in the second
and third quarters of 1995 of the Willowbrook, Northlake and Bluegrass
properties (as discussed below) which accounted for approximately $651,000 of
this increase. Excluding the Trust's acquisitions during 1995, total expenses
from property operating activities for the quarter ended September 30, 1995
increased approximately $237,000 of which $160,000 is attributable to increases
in interest expense and approximately $77,000 is attributable to increases in
repairs and maintenance expense. Interest expense increased primarily to the
Trust's financing of the Elmhurst and Colonial Courts properties in December
1994. Repairs and maintenance costs increased due primarily to higher unit
turnover costs at the Colonial Courts and Hallmark properties. Total other
expenses increased due primarily to an increase in amortization of deferred loan
fees and financing costs which resulted from the Elmhurst and Colonial Courts
financing and costs associated with obtaining the Trust's line of credit which
occurred during the fourth quarter of 1994.
For the nine months ended September 30, 1995, the Trust recorded net
income from operations of real estate ventures of $649,274 as compared to a net
loss of $(46,064) for the same period in 1994. For the three months ended
September 30, 1995, the Trust recorded net income of $256,674 as compared to a
net loss of $(20,913) for the same period in 1994. The operations of real
estate ventures for the nine months ended September 30, 1995 resulted in income
from operations on the Plaza at Westminster and H Street Assemblage properties
of $451,966 and $197,308, respectively. The increase in the net income from the
operations of real estate ventures for the nine months ended September 30, 1995
as compared to the same period in 1994 is primarily due to the June 22, 1995
sale of the Plaza at Westminster property which resulted in a net gain to the
Trust of approximately $409,000. The Trust's share of the net income for the
nine months ended September 30, 1995 as compared to the same period in 1994 from
the H Street property increased by approximately $386,000. This increase in net
income for the H Street property is partially due to a reduction in legal costs
compared to 1994 relating to the successful real estate tax appeal which reduced
the property's assessed taxable value. During 1995, the Venture recorded
approximately $534,000 in real estate tax refunds and interest, thereon,
relating to taxes paid in 1992 and 1993, resulting in a decrease in real estate
tax expense of approximately $160,000 for the nine months ended September 30,
1995 when compared to the same period in 1994. In addition, legal and
entitlement costs for 1995 decreased when compared to 1994 since the costs
incurred during 1994 included nonrecurring payments for professional services
associated with obtaining the historic preservation rights in 1994. The Trust
has completed and obtained the zoning, entitlement and historic preservation
rights for the development of an approximately 300,000 square foot commercial
building on the H Street Assemblage. The H Street Venture has not made any
significant capital expenditures on this asset and is allowing occupancy to
decline by selectively retenanting the Victor building at the H Street
Assemblage with short term leases so that the building will be more marketable
to a potential buyer which would need to vacate the Victor building before its
redevelopment. The H Street Venture is currently marketing the H Street
Assemblage for sale. The current market for the sale of undeveloped land where
the H Street Assemblage is located is very limited. Further contributing to the
decline in demand for commercial development sites in the Washington, D.C.
market was the recent government decision to downsize various departments and
agencies and place a freeze on leasing of any additional office space.
Therefore, the H Street Venture currently anticipates its marketing efforts
could proceed slower than originally anticipated. Operations of real estate
ventures resulted in income from operations on the Plaza at Westminster property
of $142,405 which was offset by a loss from operations of $188,469 on the H
Street property for the nine months ended September 30, 1994.
The factors discussed above resulted in consolidated net income of
$957,102 ($0.09 per share) for the quarter ended September 30, 1995 as compared
to a consolidated net income of $569,284 ($0.05 per share) for the quarter ended
September 30, 1994.
The Trust owned a 30.7% participation interest in the Plaza at Westminster
("Westminster") property. On June 22, 1995, the Westminster property was sold
to an unaffiliated third party for $7,525,000 which resulted in a net gain of
approximately $1,333,000 after prorations for closing costs of approximately
$1,235,000. The Trust's share of the cash proceeds was approximately $1,931,000
which resulted in the Trust's share of the net gain of approximately $409,000.
On June 16, 1995, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"), a
joint venture between a subsidiary of the Trust, which is the general partner,
and Morgan Realty Partners ("Morgan"), acquired the Willowbrook Industrial Court
property (the "Willowbrook Property") which consists of a three-building
office/warehouse complex with a total of approximately 84,000 square feet of
leasable space located in the metropolitan Chicago area for a purchase price,
including liabilities assumed at acquisition, of approximately $3,922,000. The
Trust and Morgan contributed additional capital of approximately $1,030,000 and
$370,000 to BMMLP for their 85% and 15% ownership interest in BMMLP,
respectively, which includes $200,000 in reserves held by BMMLP for property
improvements and lease-up. The acquisition was made subject to a nonrecourse
first mortgage loan collateralized by the property in the amount of $2,650,000
which bears interest at a fixed rate of 8.5%, matures on July 1, 2002, and
requires monthly payments based upon a twenty-two and a half year amortization
schedule. The loan requires a balloon payment for the remaining unpaid
principal balance at maturity. Upon acquisition, the Willowbrook Property was
93% leased.
The terms of the BMMLP Partnership Agreement as originally established at
the time of the acquisitions of the Milwaukee Industrial and the Elmhurst Metro
Court properties, were amended effective July 1, 1995 as a result of the
Willowbrook Property acquisition by BMMLP. Pursuant to the amended BMMLP
Partnership Agreement, any excess cash flow from operations, after each of the
Trust and Morgan receives its 12% and 11% preferred return, respectively, on
contributed equity, will be allocated 85% to the Trust and 15% to Morgan. The
amendment was adopted as a result of the increase in additional equity
contributed by Morgan of approximately $370,000. The BMMLP ownership percentage
changes which occurred upon acquisition of the Willowbrook Property, as
mentioned above, will become effective July 1, 1995 for financial reporting
purposes.
On July 28, 1995, BSRT/M&J Northlake Limited Partnership ("BMJNLP"), a
joint venture between a subsidiary of the Trust and M&J Wilkow Retail Ltd.
("Wilkow"), acquired a shopping center known as the Northlake Tower Shopping
Center ("Northlake Property") located in northeast suburban Atlanta, Georgia for
a purchase price, including liabilities assumed at acquisition, of approximately
$17,079,000. The Northlake Property consists of six structures containing
approximately 322,000 rentable square feet built in 1984. The Trust contributed
$6,000,000 to BMJNLP for an approximate 80% interest, while Wilkow contributed
approximately $1,500,000 for the remaining 20% interest which includes
approximately $550,000 in reserves held by BMJNLP for property improvements,
lease-up and other closing prorations. The Northlake Property was acquired
pursuant to a ground lease with a remaining term of sixty-two years. The ground
lease requires annual lease payments of $600,000 through October 4, 2007 plus 7%
of total annual gross rental income commencing when gross rental income exceeds
$2,000,000 from the operations of the Northlake Property. The ground lease also
requires that BMJNLP pay for expenses incurred on the Northlake site, including
real estate taxes. The Northlake Property was financed by BMJNLP utilizing a
non-recourse leasehold mortgage loan from the seller in the amount of
$10,350,000. The mortgage loan requires monthly payments of interest only at a
fixed rate of 8.5% per annum. The leasehold mortgage loan matures on July 1,
2005 and may be repaid at any time during its term without any prepayment
penalty. Upon acquisition, the property was 97% leased with sixteen national
and regional credit tenants leasing 84% of the leased space.
Pursuant to the terms of the BMJNLP Partnership Agreement, cash flow from
operations will be distributed first to the Trust until it has received a 12%
cumulative return on its capital contribution and then to Wilkow until it has
received a 12% cumulative return on its capital contribution. Any excess cash
flow will be allocated pro-rata to the Trust and Wilkow based on their
respective capital contributions. Proceeds from the sale or refinancing of the
Northlake Property, after the payment of any debt or expense associated with the
sale or refinancing, will be distributed first to the Trust to the extent that
the 12% annual preferred return has not been received. Next, distributions will
be made to the Trust and Wilkow on a pro-rata basis in an amount equal to their
respective equity contributions. Thereafter, distributions will be made to
Wilkow to the extent that its 12% annual preferred return has not been
received. In the event there are any remaining proceeds to be distributed
and the average annual return to the Trust during the period that BMJNLP
owned the Northlake Property is equal to or greater than 15%, Wilkow will
receive 30% of any remaining proceeds.
On September 26, 1995, a subsidiary of the Trust acquired a 100% ownership
interest in a seven building office/industrial complex known as the Bluegrass
Corporate Center (the "Bluegrass Property") located in Jefferson County,
Kentucky (suburban Louisville), for a purchase price, including liabilities
assumed at acquisition, of approximately $5,059,000. The seven buildings
contain approximately 182,000 net rentable square feet. The Bluegrass Property
was built during 1976-77 and 1979-80 and was 91% leased with 43 tenants upon
acquisition. The acquisition was made subject to a nonrecourse first mortgage
loan collateralized by the property in the amount of approximately $2,707,000,
bears interest at a fixed rate of 8%, matures on April 25, 2001, and requires
monthly payments based upon a twenty year amortization schedule with a balloon
payment of approximately $2,320,000 upon maturity.
An objective of the Trust is to provide cash distributions to the
shareholders from cash generated from the Trust's consolidated operations as
discussed above. Cash generated from operations is not equivalent to the
Trust's net operating income as determined under generally accepted accounting
principles. Due to certain unique operating characteristics of real estate
companies, the real estate investment trust ("REIT") industry has adopted a
standard for reflecting operating property performance and comparing operating
performance within the industry. Funds from operations ("FFO") is defined by
the National Association of Real Estate Investment Trust as net income computed
in accordance with generally accepted accounting principles, excluding
extraordinary, unusual and nonrecurring items, excluding gains (or losses) from
debt restructuring and sales of property plus depreciation and amortization from
real property and after adjustments for unconsolidated partnerships and joint
ventures in which the REIT holds an interest. FFO is not intended to be a
measure of the cash generated by a REIT nor its dividend paying capacity.
However, a REIT's dividend can be analyzed in comparison to FFO in a similar
manner as a company that is not a REIT would compare its dividend to net
operating income.
The Trust provides supplemental information on the results from the
Investment Activities as well as on the consolidated results. For the nine
months ended September 30, 1995 and 1994, the Trust's Investment Activities,
including interest received on the Karfad Loan Portfolio, generated FFO of
$3,146,578 ($0.30 per share) and $2,683,515 ($0.26 per share), respectively.
For the nine months ended September 30, 1995 and 1994, the Trust's consolidated
activities generated FFO of $2,513,343 ($0.24 per share) and $2,066,727 ($0.20
per share), respectively. For the quarter ended September 30, 1995 and 1994,
the Trust's Investment Activities, including interest received on the Karfad
Loan Portfolio, generated FFO of $1,193,439 ($0.11 per share) and $1,011,861
($0.10 per share), respectively. For the quarter ended September 30, 1995 and
1994 the Trust's consolidated activities generated FFO of $1,019,527 ($0.10 per
share) and $819,260 ($0.08 per share), respectively. Excluding the effect of
the 1994 and 1995 property acquisitions, FFO related to Investment Activities
decreased by approximately $316,000 for the nine months ended September 30, 1995
as compared to the same period in 1994. This decrease in FFO is primarily due
to the increase in interest expense and amortization of deferred loan fees and
financing costs for the nine months ended September 30, 1995 of approximately
$500,000 as a result of the December 1994 financing of the Elmhurst and Colonial
Courts properties and obtaining the Trust's line of credit. The decrease in FFO
related to reinvestment activities was partially offset by increased operating
performance of the Trust's properties. Excluding the effect of interest
expense, amortization of deferred loan fees and financing costs and the 1994 and
1995 acquisitions, FFO relating to reinvestment activities increased by
approximately $184,000 for the nine months ended September 30, 1995 as compared
to the same period in 1994.
FFO for the nine months ended September 30, 1995 is calculated as follows:
Investment Consolidated
Net Income $2,341,680 $2,513,830
Plus:
Depreciation expense 851,475 851,475
Depreciation inclu-
ded in Operations
of Real Estate
Ventures --- 42,763
Lease Commission
Amortization 22,671 22,671
Less:
Minority Interest
Share of Depre-
ciation Expense (66,610) (66,610)
Minority Interest
Share of Lease
Commission
Amortization (2,638) (2,638)
Recovery of Losses on
Mortgage Loans,
Notes and Interest
Receivable --- (155,834)
Gain on Disposition of
Investment in Real
Estate Venture --- (409,290)
Real Estate Tax
Rebates from
Operations of Real
Estate Venture --- (283,024)
---------- ----------
Funds From Operations $3,146,578 $2,513,343
========== ==========
The Trust paid dividends equal to $0.10 per share on August 18, 1995 and
August 15, 1994 for the second quarter of 1995 and 1994, respectively. On
October 5, 1995, the Trust declared a cash dividend for the third quarter of
1995 of $0.10 per share payable November 17, 1995 to shareholders of record on
October 20, 1995.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits- Financial Statements and Pro Forma Financial Information
(i) Northlake Tower Shopping Center (TO BE FILED BY
AMENDMENT
(ii) Bluegrass Corporate Center
(b) No current reports on Form 8-K were filed during the quarter ended
September 30, 1995.
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 STRATEGIC REALTY TRUST
By: /s/ Leonard G. Levine Date: November 14, 1995
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: November 14, 1995
Joel L. Teglia, Vice President
Finance and Administration, Chief
Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from
Banyan Strategic Realty Trust's Form 10Q for the nine months ended
September 30, 1995 and is qualified in its entirety by reference
to such Form 10Q."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 8,468,782
<SECURITIES> 0
<RECEIVABLES> 482,879
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,951,661
<PP&E> 67,789,781
<DEPRECIATION> 1,888,365
<TOTAL-ASSETS> 91,634,625
<CURRENT-LIABILITIES> 2,630,162
<BONDS> 5,500,000
<COMMON> 57,836,903
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 91,634,625
<SALES> 0
<TOTAL-REVENUES> 8,621,195
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,835,258
<LOSS-PROVISION> (155,834)
<INTEREST-EXPENSE> 996,856
<INCOME-PRETAX> 2,513,830
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,513,830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,513,830
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
EXHIBIT (ii)
INDEPENDENT AUDITOR'S REPORT
The Partners
Bluegrass Corporate Centers III and IV Partners
Louisville, Kentucky
We have audited the accompanying balance sheets of Bluegrass Corporate Centers
III and IV Partners as of December 31, 1994 and 1993, and the related
statements of operations, partners' deficit and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership'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 financial statements referred to above present fairly, in
all material respects, the financial position of Bluegrass Corporate Centers
III and IV Partners as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ CARPENTER & MOUNTJOY, PSC
Louisville, Kentucky
February 1, 1995
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
BALANCE SHEETS
December 31,
ASSETS 1994 1993
Property And Improvements-
Notes A and B
Land $ 441,515 $ 441,515
Buildings and improvements 5,015,745 5,002,302
----------- -----------
5,457,260 5,443,817
Less accumulated 3,602,951 3,277,908
depreciation ----------- -----------
1,854,309 2,165,909
Other Assets
Cash and equivalents-Note F 238,030 298,368
Accounts receivable --- 9,320
<PAGE>
Other current assets 21,806 5,566
Deferred assets, net of
accumulated amortization-
Note A 111,223 19,916
----------- -----------
371,059 333,170
----------- -----------
$ 2,225,368 $ 2,499,079
=========== ===========
LIABILITIES AND PARTNERS'
DEFICIT
Debt-Note B $ 2,789,129 $ 2,805,488
Other Liabilities
Accounts payable- Note D 6,937 1,984
Accrued interest 17,663 24,280
Unearned rent 12,046 12,183
Security deposits 33,714 32,408
----------- -----------
70,360 70,855
Partners' Deficit (634,121) (377,264)
----------- -----------
$ 2,225,368 $ 2,499,079
=========== ===========
See notes to financial statements.
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
STATEMENTS OF OPERATIONS
Year ended December 31,
1994 1993
Revenues $ 767,402 $ 725,552
Operating Expenses
Depreciation expense 325,042 337,760
Interest expense 241,197 295,145
Repairs and maintenance 64,349 66,373
Property taxes 41,592 35,688
Management fee 34,166 32,167
Amortization 22,755 36,451
Utilities 16,504 16,450
Leasing fees 14,776 23,758
Insurance 9,210 8,921
Professional fees 4,194 5,193
Miscellaneous expenses 2,399 1,928
----------- -----------
776,184 859,834
----------- -----------
Loss from operations (8,782) (134,282)
Other Income
2
<PAGE>
Interest income 746 1,993
Other 1,179 4,124
----------- -----------
Total other income 1,925 6,117
----------- -----------
Net loss $ (6,857) $ (128,165)
=========== ===========
See notes to financial statements.
<TABLE>
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
STATEMENTS OF PARTNERS' DEFICIT
<CAPTION>
Years ended December 31, 1994 and 1993
Sturgeon-
LHI Thornton
Development Bluegrass
Inc. Partners Total
<S> <C> <C> <C>
Partners' Deficit at December
31, 1992 $ (108,616) $ (140,483) $ (249,099)
1993 Net loss (121,102) (7,063) (128,165)
---------- ---------- ----------
Partners' Deficit at December
31, 1993 (229,718) (147,546) (377,264)
1994 Net loss (24,062) 17,205 (6,857)
1994 Distributions (200,000) (50,000) (250,000)
---------- ---------- ----------
Partners' Deficit at December
31, 1994 $ (453,780) $ (180,341) $ (634,121)
========== ========== ==========
See notes to financial statements.
</TABLE>
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
STATEMENTS OF OPERATIONS
Year ended December 31,
1994 1993
Cash Flows From Operating
Activities
Net loss $ (6,857) $ (128,165)
Adjustments to reconcile
net loss to cash
provided
by operating activities:
Depreciation and
amortization 347,797 374,211
3
<PAGE>
Changes in assets and
liabilities:
Deferred assets (108,784) ---
Other assets (12,197) 25,409
Other liabilities (495) (39,293)
---------- ----------
Total adjustments 226,321 360,327
Net cash provided by
operating activities 219,464 232,162
Cash Flows From Investing
Activities
Purchase of fixed assets (13,443) (19,215)
Cash Flows From Financing
Activities
Principal payments on
long- (2,805,488) (72,500)
term debt
Proceeds from long-term
debt refinancing 2,789,129 ---
Distributions to partners (250,000) ---
---------- ----------
Net Cash used in financing
activities (266,359) (72,500)
Net increase (decrease) in
cash and equivalents (60,338) 140,447
Cash and equivalents at
beginning of year 298,368 157,921
---------- ----------
Cash and equivalents at end
of year $ 238,030 $ 298,368
========== ==========
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Partnership Activities: The Partnership derives its revenues from the leasing
of commercial office building space in Louisville, Kentucky.
Accounts Receivable: Accounts receivable consist of rents due from tenants.
The partnership considers all of these to be collectible and as such, no
allowance has been recorded on the books.
Building and Improvements: Property is recorded at cost with depreciation
provided over its estimated useful lives using the straight-line method.
Deferred Assets: Deferred leasing commissions and capitalized leasing costs
are being amortized over the life of the related lease using the straight-line
4
<PAGE>
method. Loan costs are being amortized over the life of the note. At December
31, 1994 and 1993, deferred assets consisted of the following:
1994 1993
Capitalized leasing costs $ 1,341 $ 1,341
Deferred leasing commissions 18,133 17,124
Deferred loan costs 150,056 41,273
--------- ---------
169,530 59,738
Less accumulated amortization (58,307) (39,822)
--------- ---------
$ 111,223 $ 19,916
========= =========
Statement of Cash Flows: For purposes of the statement of cash flows, the
Partnership considers all short-term highly liquid investments purchased with
a maturity of three months or less to be cash equivalents. Cash paid for
interest was $241,197 and $295,145 for 1994 and 1993, respectively.
Continued
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
NOTES TO FINANCIAL STATEMENTS-CONTINUED
December 31, 1994 and 1993
NOTE B--LONG-TERM DEBT
Long-term debt consists of the following:
December 31
1994 1993
9.75% mortgage note payable due
in monthly installments of
$11,528, including interest.
Note refinanced on April 25,
1994. $ --- $ 1,022,639
10.75% mortgage note payable
due in monthly installments of
$19,687, including interest.
Note refinanced on April 25,
1994. --- 1,782,849
7.6% mortgage note payable due
in monthly installments of
$26,582, including interest.
Final lump sum payment due
April 25, 2001. 2,789,129 ---
----------- -----------
$ 2,789,129 $ 2,805,488
=========== ===========
Maturities on long-term debt
are as follows:
1995 $ 110,526
1996 119,224
5
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1997 128,608
1998 138,730
1999 149,648
2000 and thereafter 2,142,393
-----------
$ 2,789,129
===========
NOTE C--INCOME TAXES
Income taxes on net earnings are payable by the partners pursuant to the
provision of Subchapter K of the Internal Revenue Code. Accordingly, no
provision has been made for income taxes.
Continued
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
NOTES TO FINANCIAL STATEMENTS-CONTINUED
December 31, 1994 and 1993
NOTE D--TRANSACTIONS WITH RELATED PARTIES
The Partnership has entered into a building management contract with Sturgeon
and Associates to manage the project. The owner of Sturgeon and Associates is
also a partner of Sturgeon-Thornton Bluegrass Partners, which is a 20% partner
in the Partnership. The management fee, which amounted to $34,166 and $32,167
for 1994 and 1993, respectively, is 4.5% of the monthly gross rents collected.
The Partnership also pays leasing commissions to Sturgeon and Associates at
3.5% on new tenant leases and 1.5% on renewal. These commissions amounted to
$14,776 for 1994 and $23,758 for 1993.
Another related party is a tenant of the Partnership and paid rent of $2,667
in 1994 and $8,000 in 1993. The lease expired April 30, 1994 and was not
renewed.
Included in accounts payable at December 31, 1994 is a payable to Sturgeon and
Associates of $3,600.
NOTE E--FUTURE MINIMUM RENTALS
At December 31, 1994, the Partnership had the following future minimum rentals
under noncancellable operating leases, not including renewal options or any
re-leasing:
Year ended December 31,
1995 $ 614,028
1996 372,652
1997 212,174
1998 107,536
1999 28,800
2000 and thereafter 12,000
-----------
$ 1,347,190
===========
6
<PAGE>
Continued
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS
NOTES TO FINANCIAL STATEMENTS-CONTINUED
December 31, 1994 and 1993
NOTE F--CONCENTRATIONS OF CREDIT RISK
Cash is insured by the Federal Deposit Insurance Corporation (FDIC) up to
$100,000. At December 31, 1994, the Company had bank balances exceeding
individual FDIC insurance limits as follows:
<TABLE>
<CAPTION>
Amount
Financial in Excess
Statement Reconciling Bank of FDIC
Balance Items Balance Insurance
<S> <C> <C> <C> <C>
Cash deposit in
excess of FDIC insurance
limit $ 238,030 $ 5,841 $ 243,921 $ 143,921
=========== ========== ========== ==========
</TABLE>
BLUEGRASS CORPORATE CENTER
Estimated Pro Forma Statement
of Net Operating Income
(Unaudited)
The Estimated Pro Forma Statement of Net Operating Income represents the
amount of estimated income which would be realized by the Registrant during
twelve months of ownership of the Property, based upon the assumptions set
forth in the accompanying notes (See Note 1).
Revenue:
Rental Income $815,000
Other Income 7,000
--------
Total Revenues $822,000
--------
Property Operating 71,000
Utilities 17,000
Real Estate Taxes 44,000
Depreciation (See
Note 2) 104,000
Insurance 10,000
Management Fee (See
Note 3) 33,000
Repairs and Maintenance 119,000
Interest (See Note 4) 213,000
7
<PAGE>
Administration and
Other 7,000
--------
Total Expenses 618,000
--------
Pro Forma Revenue in
Excess of Expenses $204,000
========
Pro Forma Funds from
Operations (See Note 5) $308,000
========
The accompanying notes are an integral part of the estimated pro forma
statement.
Bluegrass Corporate Center
Notes to Estimated Pro Forma Statement
1) This statement does not propose to forecast actual operating
results for any period in the future and thus, the following
assumptions may not be valid for future years and actual results
may differ. These statements should be read in conjunction with
the Statement of Revenue and Certain Expenses for the year ended
December 31, 1994 which were modified by Management for known
changes in revenues and expenses associated with the Registrant's
ownership of the Property in order to estimate the pro forma
statement.
2) Depreciation expense which represents a non-cash expenditure has
been included for informational purposes only. Depreciation is
calculated on a depreciable basis of approximately $4,160,000
using the straight line method based on a useful life of 40 years.
3) The Property will be managed by an unaffiliated third party for
initial management fee of 4.0% of gross revenues.
4) The Bluegrass Corporate Center serves as collateral for a
nonrecourse first mortgage loan in the amount of approximately
$2,707,000 which bears interest at a fixed rate of 8%, matures on
April 25, 2001, and requires monthly payments of principal and
interest based upon a twenty year amortization schedule. The loan
requires a balloon payment for the remaining unpaid principal
balance upon its maturity.
5) Funds From Operations (or "FFO") has been provided in the Pro
Forma Statement as supplemental information to the property's
projected operating results. FFO is used by the real estate
investment trust industry as a measure of a property's performance
and is defined as net operating income from a property's
operations, plus certain non-cash items including depreciation and
amortization and excluding an extraordinary capital items.
8
<PAGE>
