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, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 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, 1996: 10,478,971
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS 1996 1995
Cash and Cash Equivalents $ 4,582,945 $ 5,500,215
Interest Receivable on
Investments 14,783 70,352
Interest Receivable on
Mortgage Loans --- 60,780
Accounts Receivable 1,036,596 528,029
------------ ------------
5,634,324 6,159,376
------------ ------------
Mortgage Loans
Receivable (Net of
Unamortized Discount) --- 5,433,094
Investment in Real Estate,
at cost:
Land 15,206,094 12,809,994
Building 76,968,668 74,343,233
Building Improvements 4,485,390 3,046,838
------------ ------------
96,660,152 90,200,065
Less: Accumulated
Depreciation (4,039,316) (2,337,095)
------------ ------------
92,620,836 87,862,970
------------ ------------
Investment in Real Estate
Venture 8,969,801 8,895,678
Deferred Financing Costs
(Net of Accumulated
Amortization of
$563,131 and $224,020,
respectively) 1,486,046 1,188,174
Other Assets 1,536,886 1,225,480
------------ ------------
Total Assets $110,247,893 $110,764,772
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
1996 1995
Liabilities
Accounts Payable and
Accrued Expenses $ 1,193,444 $1,346,708
Accrued Real Estate Taxes 1,177,327 703,919
Mortgage Loans Payable 43,885,005 43,522,181
Bond Payable 5,500,000 5,500,000
Accrued Interest Payable --- 93,325
Unearned Revenue 138,428 94,002
Security Deposit
Liabilities 481,505 439,135
------------ ------------
Total Liabilities 52,375,709 51,699,270
------------ ------------
Minority Interest in
Consolidated
Partnerships 2,340,281 2,190,098
Shareholders' Equity
Shares of Beneficial Inter-
rest, No Par Value, Un-
limited Authorization;
12,001,620 and 11,999,787
Shares Issued, respec-
tively 106,694,912 106,687,212
Accumulated Deficit (43,797,060) (42,445,859)
Treasury Shares at Cost,
1,522,649 Shares (7,365,949) (7,365,949)
------------ ------------
Total Shareholders' Equity 55,531,903 56,875,404
------------ ------------
Total Liabilities and Share-
holders' Equity $110,247,893 $110,764,772
============ ============
Book Value Per Share of
Beneficial Interest
(10,478,971 and
10,477,138 Shares
Number of Outstanding,
respectively) $ 5.30 $ 5.43
============ ============
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, 1996 AND 1995
(UNAUDITED)
1996 1995
REVENUE
Rental Income $ 13,742,193 $ 6,606,765
Operating Cost Reimbursement 1,446,692 565,219
Miscellaneous Tenant Income 166,095 139,938
Interest and Amortized
Discount on Mortgage Loans 441,725 761,181
Income on Investments 105,667 548,092
----------- -----------
Total Revenue 15,902,372 8,621,195
----------- -----------
EXPENSES
Operating Property Expenses 3,147,342 1,897,504
Repairs and Maintenance 1,636,915 866,604
Real Estate Taxes 1,272,835 745,134
Interest Expense 2,976,172 911,109
Ground Lease Expense 648,025 106,452
Depreciation and Amorti-
zation 1,760,892 874,146
General and Administrative 1,903,225 1,467,700
Amortization of Deferred
Loan Fees and Financing
Costs 351,963 172,057
Recovery of Losses on
Loans, Notes and Interest
Receivable (14,059) (155,834)
----------- -----------
Total Expenses 13,683,310 6,884,872
----------- -----------
Income Before Minority
Interest and Income
(Loss) from Operations
of Real Estate Ventures 2,219,062 1,736,323
Minority Interest in
Consolidated Partnerships (349,390) (80,359)
Income (Loss) from Operations
of Real Estate Ventures (77,365) 649,274
----------- -----------
Net Income $ 1,792,307 $ 2,305,238
=========== ===========
Earnings Per Share of
Beneficial Interest
(10,478,222 and
10,473,048 Weighted
Average Number of Shares
Outstanding, respectively) $ 0.17 $ 0.22
=========== ===========
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, 1996 AND 1995
(UNAUDITED)
1996 1995
REVENUE
Rental Income $ 4,761,231 $ 2,731,001
Operating Cost Reimbursement 347,556 294,163
Miscellaneous Tenant Income 49,301 36,500
Interest and Amortized
Discount on Mortgage Loans 85,824 260,104
Income on Investments 41,030 131,855
----------- -----------
Total Revenue 5,284,942 3,453,623
----------- -----------
EXPENSES
Operating Property Expenses 1,138,109 674,734
Repairs and Maintenance 584,437 377,126
Real Estate Taxes 377,823 288,707
Interest Expense 996,667 453,266
Ground Lease Expense 218,286 106,452
Depreciation and Amortization 614,509 366,662
General and Administrative 606,779 475,516
Amortization of Deferred Loan
Fees and Financing Costs 129,983 59,261
Recovery of Losses on Loans,
Notes and Interest
Receivable (14,059) ---
----------- -----------
Total Expenses 4,652,534 2,801,724
----------- -----------
Income Before Minority
Interest and Income
from Operations of Real
Estate Ventures 632,408 651,899
Minority Interest in
Consolidated Partnerships (128,903) (55,896)
Income from Operations of
Real Estate Ventures 19,649 256,674
----------- -----------
Net Income $ 523,154 $ 852,677
=========== ===========
Earnings Per Share of
Beneficial Interest
(10,478,971 and
10,476,876 Weighted
Average Number of
Shares Outstanding,
respectively) $ 0.05 $ 0.08
=========== ===========
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, 1996
(UNAUDITED)
<CAPTION>
Shares of
Beneficial Interest Accumulated Treasury
Shares Amount Deficit Shares Total
<S> <C> <C> <C> <C> <C>
Shareholders'
Equity,
December 31, 1995
11,999,787 $106,687,212 $(42,445,859) $(7,365,949) $56,875,404
Award Shares
Issued 1,833 7,700 --- --- 7,700
Net Income --- --- 1,792,307 --- 1,792,307
Dividends
Paid --- --- (3,143,508) --- (3,143,508)
----------- ------------ ------------ ----------- -----------
Shareholders'
Equity,
September 30,
1996 12,001,620 $106,694,912 $(43,797,060) $(7,365,949) $55,531,903
=========== ============ ============ =========== ===========
<FN> The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME $ 1,792,307 $ 2,305,238
Adjustments to Reconcile Net
Income to Net Cash
Provided By Operating
Activities:
Amortization of Premium
on Investment Securities --- 10,596
Recovery of Losses on Loans,
Notes and Interest
Receivable (14,059) (155,834)
Depreciation and Amortization 2,112,855 1,046,203
Amortization of Discount on
Mortgage Loans Receivable (34,547) (272,890)
Net Loss (Income) From
Operation of Real Estate
Ventures 77,365 (649,274)
Minority Interest Particip-
ation in Consolidated
Partnerships 349,390 80,359
Incentive Compensation
Expense 50,887 ---
Net Change In:
Interest Receivable on
Mortgage Loans and
Investments 116,349 (11,291)
Accounts Receivable (508,567) (226,630)
Other Assets (316,427) 69,331
Accounts Payable and
Accrued Expenses 102,482 313,931
Accrued Interest Payable (93,325) (26,005)
Accrued Real Estate
Tax Payable 468,356 180,464
Unearned Revenue 47,990 556
Security Deposit Liability 6,275 9,743
----------- -----------
Net Cash Provided By
Operating Activities 4,157,331 2,674,497
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets (5,021,535) (26,060,265)
Investment In Real Estate
Ventures, Net (151,488) (57,935)
Proceeds From Sale of
Investment in Real Estate
Venture --- 1,931,467
Proceeds From Sale of
Mortgage Loans Receivable 5,440,047 ---
Additions to Investment in
Real Estate (1,438,552) (531,214)
Payment of Liabilities
Assumed at Acquisition
of Real Estate Assets (315,000) 51,408
Recovery of Losses on Loans,
Notes and Interest
Receivable 14,059 155,834
Purchase of Investment
Securities (839,679) (1,493,360)
Proceeds From Sale and
Maturities of Investment
Securities 817,314 2,500,000
Principal Payments on
Investment Securities 22,365 ---
Principal Collections on
Mortgage Loans Receivable 14,742 32,610
Due from Affiliates --- 730,229
----------- -----------
Net Cash Used In Investing
Activities (1,457,727) (22,741,226)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds From Mortgage
Loans Payable 11,545,000 15,706,807
(Distributions To) Invest-
ment From Minority
Partners (199,207) 1,525,671
Deferred Financing Costs (636,983) (198,271)
Principal Payments on
Mortgage Loans Payable (11,182,176) (125,328)
Dividends Paid to
Shareholders (3,143,508) (3,142,538)
----------- ----------
Net Cash (Used In)
Provided By Financing
Activities (3,616,874) 13,766,341
----------- -----------
Net Decrease In Cash and
Cash Equivalents (917,270) (6,300,388)
Cash and Cash Equivalents
at Beginning of Period 5,500,215 14,769,170
----------- -----------
Cash and Cash Equivalents
at End of Period $ 4,582,945 $ 8,468,782
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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, 1995 which are included in the Trust's 1995 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 Venture is accounted for on the equity method.
FINANCIAL STATEMENT PRESENTATION
Certain reclassifications have been made to the previously reported 1995
consolidated financial statements in order to provide comparability with the
1996 consolidated financial statements. 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, 1996 and for the nine and
three months ended September 30, 1996 and 1995. All adjustments made to the
financial statements, as presented, are of a normal recurring nature to the
Trust. Net income for the nine and three months ended September 30, 1995 have
been reduced by $208,592 and $104,425, respectively, from amounts originally
reported to reflect adjusted allocation of administration costs from Banyan
Management Corp. This allocation adjustment had no effect on net income for the
year ended December 31, 1995. No other allocation adjustments have been made to
the 1995 operating results.
2. MORTGAGE LOANS PAYABLE
FLORIDA POWER AND LIGHT
On March 13, 1996, the Trust executed a nonrecourse first mortgage loan
collateralized by the Florida Power and Light office building. The loan, in the
amount of $6,200,000, bears interest at a fixed rate of 7.21% per annum, matures
on April 1, 2003 and requires monthly payments of principal based upon a twenty-
three year amortization schedule with a balloon payment of approximately
$5,255,000 due upon maturity. The loan proceeds were utilized to reduce
borrowings under the Trust's revolving line of credit with American National
Bank in the amount of $6,200,000 as discussed below.
WOODCREST OFFICE PARK
On July 15, 1996, BSRT Woodcrest Office Park Limited Partnership
("BWOPLP"), a limited partnership between a subsidiary of the Trust, as general
partner, and Mr. Daniel Smith as a limited partner, executed a nonrecourse first
mortgage loan collateralized by the Woodcrest Office Park property. The loan,
in the amount of $7,250,000, bears interest at a fixed rate of 8.25% per annum,
matures on August 1, 2003 and requires monthly payments of principal based upon
a twenty-five year amortization schedule with a balloon payment of approximately
$6,435,000 due upon maturity. The loan proceeds were utilized to reduce
borrowings under the Trust's revolving line of credit with American National
Bank in the amount of $7,000,000 as discussed below. The loan contains a
prepayment penalty of 7% of the outstanding principal balance in year one,
decreasing by 1% thereafter through the loan's maturity date of August 1, 2003.
LINE OF CREDIT
On December 13, 1994, the Trust executed a Revolving Line of Credit (the
"Original Line") with American National Bank of Chicago ("ANB") in the amount of
$15,000,000. On December 15, 1995, the Trust and ANB entered into an agreement
modifying the Original Line by increasing the amount the Trust can borrow from
$15,000,000 to $30,000,000 (the "Modified Line"). As of December 31, 1995, the
Trust had utilized approximately $25,725,000 of the $30,000,000 available under
the Modified Line. On March 13 and July 15, 1996, in conjunction with obtaining
mortgage loans collateralized by the Florida Power and Light and Woodcrest
Office Park properties as discussed above, the Trust paid down the revolving
line of credit in the amounts of $6,200,000 and $7,000,000, respectively. In
addition, on April 15, 1996, the Trust replaced a $5,624,315 letter of credit
previously issued by ANB which had been collateralized by the Modified Line with
an irrevocable letter of credit in the like amount by Citizen's National Bank of
Evansville (See Note 6, Letter of Credit, for details). The Trust borrowed
$1,000,000 under the Modified Line for the acquisition of the Midwest Office
Park property in April 1996. (See Note 4, Investment in Real Estate, for
further details.) On June 28 and July 31, 1996, the Trust sold its interest in
the Karfad loan portfolio (See Note 5, Mortgage Loans Receivable, for further
details). On August 1, 1996, the Trust used a portion of the Karfad loan
portfolio net sales proceeds to pay down $3,900,000 of the Modified Line. As a
result of the above transactions, as of September 30, 1996, the Trust had an
outstanding balance of $4,000,000 of the $30,000,000 available under the
Modified Line.
3. TRANSACTIONS WITH AFFILIATES
Administrative costs, primarily salaries and general and administrative
expenses are incurred on the Trust's behalf by 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 in relation to the total
number of BMC personnel hours. The Trust's allocable share of costs for the
nine months ended September 30, 1996 and 1995 aggregated $985,820 and $832,074,
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, 1996, the Trust had a net payable due to BMC of $2,395. The
net payable is included in accounts payable and accrued expenses in the Trust's
Consolidated Balance Sheet.
4. INVESTMENT IN REAL ESTATE
On April 18, 1996, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"),
a joint venture between a subsidiary of the Trust, which is a general partner of
BMMLP, and an affiliate of Morgan Realty Partners ("Morgan"), a general partner
of BMMLP, acquired the Midwest Office Center property (the "Midwest Property"),
a single-story office building which consists of approximately 77,000 square
feet of gross leasable area located in Oakbrook Terrace, Illinois (metropolitan
Chicago) for a purchase price, including liabilities assumed at acquisition, of
approximately $4,987,000. The Trust contributed capital in BMMLP upon
acquisition of the property of approximately $1,692,000 of which the Trust
borrowed $1,000,000 under its line of credit as discussed above. The Trust
contributed an additional $147,000 for cash reserves which are held by BMMLP for
improvements and lease-up at the property. The Trust is entitled to receive a
cumulative preferred return of 12% compounded annually on its total capital
contribution to BMMLP. After the Trust receives its preferred return, the
excess cash, if any, from operations is distributed 85% to BSRT and 15% to
Morgan. The acquisition was made subject to a nonrecourse first mortgage loan
collateralized by the property in the principal amount of $3,295,000 which bears
interest at a fixed rate of 7.13% per annum, matures on May 1, 2003, and
requires monthly payments of principal based upon a twenty-two year amortization
schedule. The loan requires a balloon payment for the remaining unpaid
principal balance of approximately $2,733,000 at maturity.
5. MORTGAGE LOANS RECEIVABLE
Karfad Associates (the "Borrower"), which was indebted to the Trust
pursuant to its Karfad loan in the original principal amount of $5,849,266 (the
"Loan"), failed to make the required interest payments due on the first of each
month from January through May of 1996 with a foreclosure and a direct action
against the grantors pending. On May 17, 1996, the Trust entered into a
Settlement Agreement (the "Agreement") and two loan sale agreements with the
Borrower and a party affiliated with the Borrower pursuant to which the Karfad
Loan, as well as four related loans to parties affiliated with Karfad Associates
(collectively the "Loan Portfolio"), were sold at an amount equal to the Trust's
December 31, 1995 carrying values totalling approximately $5,440,000. On June
28 and July 31, 1996, the Trust completed the sale of these loans. In addition,
the Agreement required the Borrower to make all interest payments due pursuant
to the terms of the original remaining four loans in the Loan Portfolio and the
Karfad Loan from January 1, 1996 through the date of sale in the amount of
approximately $407,000. As a result of the Agreement, the Trust terminated the
recognition of income from the amortization of the Loan's purchase discount
effective January 1, 1996. As of July 31, 1996, the Trust has no further
interest in the Loan Portfolio.
6. LETTER OF CREDIT
On April 15, 1996, the Trust replaced a letter of credit issued by
American National Bank and Trust Company in the face amount of $5,624,315 which
served as collateral for the multi-family housing bonds issued by the County of
Franklin, Ohio in the amount of $5,500,000 with an irrevocable letter of credit
in the amount of $5,624,315 issued by Citizens National Bank of Evansville
("Replacement LOC"). The bonds are also secured by a first mortgage on the
Colonial Courts Apartments property. The Replacement LOC is confirmed by an
irrevocable direct pay letter of credit in the amount of $5,624,315 provided by
the Federal Home Loan Bank of Indianapolis ("FHLB"). The Replacement LOC and
the FHLB letter of credit have a term of five years with an option for an
additional five year term. The annual fee for the Replacement LOC is equal to
one percent (1%) of the letter of credit amount or $56,243. The annual fee for
the FHLB letter of credit is approximately $2,800. In consideration of its
assistance in obtaining the Replacement LOC and in accordance with the Trust's
obligations under the partnership agreement, the Trust increased the limited
partnership interest of PHC General Partnership in the BSRT Colonial Courts
Limited Partnership from 10% to 25%.
7. AWARD SHARES AND WEIGHTED AVERAGE SHARES OUTSTANDING
Pursuant to the amended employment agreement of the Trust's president,
Leonard G. Levine, all incentive amounts earned by Mr. Levine subsequent to
January 1, 1993 are paid 80% in cash in the year following the period for which
the incentive is earned and 20% in shares of beneficial interest of the Trust
("Award Shares"). During the nine months ended September 30, 1996, Mr. Levine
was paid $66,985 representing 80% of the incentive earned for the fiscal year
ended December 31, 1995. In addition, on April 22, 1996, the Trust issued 1,833
Award Shares to Mr. Levine, valued at $4.20 per share or $7,700, representing
20% of Mr. Levine's 1995 incentive compensation. 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 restricted as to transfer and held in
escrow by the Trust, pending satisfaction of the vesting requirements, for the
benefit of Mr. Levine until the earlier of: (i) December 31, 1997; (ii) the
termination of Mr. Levine's employment by the Trust without just cause; or (iii)
the permanent disability or death of Mr. Levine. The issue price of any Award
Shares is based upon the average closing price of the Trust's shares for the
five business days ended prior to December 31 of the year in question. All Award
Shares issued to Mr. Levine are included in the total shares outstanding of the
Trust when calculating Net Income Per Share of Beneficial Interest Based on
Weighted Average Number of Shares Outstanding. All Award Shares issued to Mr.
Levine will be forfeited by Mr. Levine if he fails to be employed by the Trust
on December 31, 1997, unless such failure is due to death or permanent
disability or termination without just cause. Mr. Levine is entitled to receive
his share (represented by the Award Shares) of any cash distributions paid by
the Trust in consideration of outstanding shares.
8. SUBSEQUENT EVENTS
DIVIDEND AND DISTRIBUTIONS PAID
On October 4, 1996, the Trust declared a cash distribution for the quarter
ended September 30, 1996 of $0.10 per share payable November 20, 1996 to
shareholders of record on October 21, 1996.
DISPOSITION OF INVESTMENT IN REAL ESTATE VENTURE
On October 4, 1996, the H Street Venture and the United States General
Services Administration ("GSA") entered into an agreement whereby GSA agreed to
purchase approximately 3,500 square feet of the Venture's land for a purchase
price of $1,680,000. GSA has also agreed to pay the Venture $150,000 in
consideration of the Venture's expenses in connection with this transaction.
The agreement is subject to certain contingencies including the Venture
obtaining appropriate approvals from various government agencies for the
modifications necessary to the existing approved design for the proposed
building on the Venture's remaining property that will be required as a result
of this sale. In the event the aforesaid approvals are not obtained, the
Venture is not obligated to complete the sale to GSA. The closing is scheduled
to take place no later than March 15, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Banyan Strategic Realty Trust (the "Trust") is a Massachusetts business
trust which owns, through various subsidiaries or partnerships which it
controls, interests in industrial, residential, commercial and retail real
estate assets located throughout the Midwestern and Southeastern portion of the
United States. The current business plan of the Trust is to invest its
remaining cash and cash equivalents and cash proceeds generated from the
financing of certain current property interests 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.
Some of the statements contained in this quarterly report are forward
looking and actual results may differ materially from those stated. In addition
to the factors discussed, among the other factors that may affect liquidity and
capital resources as well as results of operations are: (i) the Trust's ability
to secure mortgage financing for its Lexington and Newtown properties at terms
consistent with its permanent financing on other of its properties; (ii) the
Trust's ability, in respect of its interest in the H Street Venture, to sell the
property to a real estate developer or end user for end use as an office
building; (iii) the Trust's ability to invest the proceeds from either of the
aforementioned sources into operating properties at yields greater than the
Trust's weighted average interest rate on its mortgage loans and bonds payable
of 7.4% at September 30, 1996; (iv) the continued occupancy by and the financial
solvency of the major tenants at the Trust's Colonial Penn and Florida Power and
Light properties; (v) leasing and occupancy risks in light of the 26% of the
tenant leases that are scheduled for renewal during 1997 at the Trust's
properties; (vi) market conditions and rental rates where the Trust's properties
are located.
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, 1996 and December 31,
1995 was $4,582,945 and $5,500,215, respectively. The decrease in total cash
and cash equivalents of $917,270 is due to $4,157,331 cash provided from
operating activities, less $1,457,727 cash used in investing activities, less
$3,616,874 cash used in financing activities.
Cash Flows From Operating Activities: Net cash provided by operating
activities increased by approximately $1.5 million for the nine months ended
September 30, 1996 to approximately $4.2 million from approximately $2.7 million
for the same period in 1995. Primarily contributing to this increase was the
net operating income provided by the property acquisition in 1996 and the six
properties acquired in the final seven months of 1995.
Cash Flow From Investing Activities: During the nine months ended
September 30, 1996, the Trust utilized approximately $1.5 million in investing
activities compared to approximately $22.7 million for the same period in 1995.
The cash flow utilized in investing activities for the nine months ended
September 30, 1996 was due to the acquisition of the Midwest Office Center
property for approximately $5 million (the "Midwest Property") (see below for
further detail), $315,000 in payment of liabilities assumed at acquisition of
real estate and capital improvements at its various properties in the amount of
approximately $1,439,000 offset by proceeds from the sale of mortgage loans
receivable in the amount of approximately $5,440,000. (See below for further
discussion regarding the 1996 sale of the Trust's interest in the Karfad Loan
Portfolio). During the same period in 1995, the Trust paid approximately $26
million to complete the acquisitions of the Willowbrook, Northlake and Bluegrass
properties and approximately $531,000 for capital improvements at its properties
offset by approximately $1.9 million of proceeds from the sale of the Plaza at
Westminster property (proceeds from the sale of investment in real estate
venture), approximately $1 million in net proceeds from the sale of investment
securities, $730,229 in repayment of amounts due from affiliates and $155,834
received in respect of its interest in a liquidating trust.
Cash Flow From Financing Activities: For the nine months ended September
30, 1996, the Trust utilized cash flow from financing activities of
approximately $3.6 million compared to generating approximately $13.8 million
for the same period in 1995. The cash flow used for financing activities for
the nine months ended September 30, 1996 was primarily for principal payments on
mortgage loans in the amount of approximately $11.2 million, $10.9 million of
which represents a paydown of the Trust's line of credit and the balance
represented principal payments of other mortgage loans. In addition, the Trust
paid $636,983 of deferred financing costs, paid dividends to shareholders of
approximately $3.1 million and received contributions by minority partners of
approximately $1.5 million in connection with the July 1995 acquisition of the
Northlake property. Offsetting these uses was the receipt of approximately
$11.5 million of proceeds from mortgage loans payable, approximately $7.3
million which consisted of proceeds from a first mortgage loan on the Woodcrest
property, approximately $3.3 million of which consisted of proceeds from a first
mortgage loan on the Midwest property and the balance of which was drawn on the
Trust's line of credit (see below). During the period, the Trust also executed
a first mortgage loan collateralized by the Florida Power and Light building in
the amount of $6.2 million and utilized these proceeds to reduce its borrowing
on its line of credit. (See below for details). For the nine months ended
September 30, 1995, the Trust received approximately $15.7 million of proceeds
from mortgage loans payable which were utilized to acquire the Willowbrook,
Northlake and Bluegrass properties. Primarily offsetting these proceeds were
dividends paid to shareholders in the amount of approximately $3.1 million.
An objective of the Trust is to provide cash distributions to its
shareholders from cash generated from the Trust's 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 which it
believes better reflects operating property performance. Funds From Operations
("FFO") is defined by the National Association of Real Estate Investment Trusts
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. The Trust cautions that the calculation of FFO may vary from entity
to entity and as such the presentation of FFO by the Trust may not be comparable
to other similarly titled measures of other reporting companies. FFO is not
intended to be a measure of the cash generated by a REIT nor its distribution
paying capacity. However, a REIT's distribution can be analyzed in comparison
to FFO in a similar manner as a company that is not a REIT would compare its
distribution to net operating income.
For the nine months ended September 30, 1996 and 1995, the Trust's
operations generated FFO of $3,390,766 and $2,587,775, respectively. For the
quarter ended September 30, 1996 and 1995, the Trust's operations generated FFO
of $1,067,259 and $1,198,126, respectively. FFO increased for the nine and
three months ended September 30, 1996 as a result of the Trust's 1995 and 1996
property acquisitions.
FFO for the nine months ended September 30, 1996 and 1995 is calculated as
follows:
1996 1995
Net Income $1,792,307 $2,305,238
Plus:
Depreciation expense 1,702,221 851,475
Depreciation included
in Operations of
Real Estate Ventures 22,856 42,763
Lease Commission
Amortization 58,671 22,671
Less:
Minority Interest
Share of Depreci-
ation Expense (163,491) (66,610)
Minority Interest
Share of Lease
Commission
Amortization (7,739) (2,638)
Recovery of Losses
on Loans, Notes
and Interest
Receivable (14,059) (155,834)
Gain on Disposition
of Investment in
Real Estate Venture --- (409,290)
----------- -----------
Funds From Operations $3,390,766 $2,587,775
========== ==========
On April 18, 1996, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"),
a joint venture between a subsidiary of the Trust, which is a general partner of
BMMLP, and an affiliate of Morgan Realty Partners ("Morgan"), a general partner
of BMMLP, acquired the Midwest Property, a single-story office building which
consists of approximately 77,000 square feet of gross leasable area located in
Oakbrook Terrace, Illinois (metropolitan Chicago) for a purchase price,
including liabilities assumed at acquisition, of approximately $4,987,000. The
Trust contributed capital in BMMLP upon acquisition of the property of
approximately $1,692,000, of which the Trust borrowed $1,000,000 under its line
of credit. The Trust contributed an additional $147,000 for cash reserves which
are held by BMMLP for improvements and lease-up at the property. The Trust is
entitled to receive a cumulative preferred return of 12% compounded annually on
its total capital contribution to BMMLP. After the Trust receives its preferred
return, the excess cash, if any, from operations is distributed 85% to BSRT and
15% to Morgan. The acquisition was made subject to a nonrecourse first mortgage
loan collateralized by the property in the principal amount of $3,295,000 which
bears interest at a fixed rate of 7.13% per annum, matures on May 1, 2003, and
requires monthly payments of principal based upon a twenty-two year amortization
schedule. The loan requires a balloon payment for the remaining unpaid
principal balance of approximately $2,733,000 at maturity.
The Trust did not have any mortgage loans receivable outstanding as of
September 30, 1996. As of December 31, 1995, the Trust's mortgage loan
portfolio consisted of five mortgage loans receivable with an aggregate carrying
value totaling $5,433,094. During the nine months ended September 30, 1996, the
Trust received principal and interest payments totalling $14,742 and $467,958,
respectively. During the nine months ended September 30, 1995, the Trust
received principal and interest payments totalling $32,610 and $487,493,
respectively. Karfad Associates (the "Borrower"), which was indebted to the
Trust pursuant to its Karfad loan in the original principal amount of $5,849,266
(the "Loan"), failed to make the required interest payments due on the first of
each month from January through May of 1996 with a foreclosure and a direct
action against the grantors pending. On May 17, 1996, the Trust entered into a
Settlement Agreement (the "Agreement") and two loan sale agreements with the
Borrower and a party affiliated with the Borrower pursuant to which the Karfad
Loan, as well as four related loans to parties affiliated with Karfad Associates
(collectively the "Loan Portfolio"), were sold at an amount equal to the Trust's
December 31, 1995 carrying values totalling approximately $5,440,000. On June 28
and July 31, 1996, the Trust completed the sale of these loans. In addition,
the Agreement required the Borrower to make all interest payments due pursuant
to the terms of the original remaining four loans in the Loan Portfolio and the
Karfad Loan from January 1, 1996 through the date of sale in the amount of
approximately $407,000. As of July 31, 1996, the Trust has no further interest
in the Loan Portfolio.
On March 13, 1996, the Trust executed a nonrecourse first mortgage loan
collateralized by the Florida Power and Light office building. The loan, in the
amount of $6,200,000, bears interest at a fixed rate of 7.21% per annum, matures
on April 1, 2003 and requires monthly payments of principal based upon a twenty-
three year amortization schedule with a balloon payment of approximately
$5,255,000 due upon maturity. The loan proceeds were utilized to reduce
borrowings under the Trust's revolving line of credit with American National
Bank in the amount of $6,200,000 as discussed below.
On July 15, 1996, BSRT Woodcrest Office Park Limited Partnership
("BWOPLP"), a limited partnership between a subsidiary of the Trust, as general
partner, and Mr. Daniel Smith as a limited partner, executed a nonrecourse first
mortgage loan collateralized by the Woodcrest Office Park property. The loan,
in the amount of $7,250,000, bears interest at a fixed rate of 8.25% per annum,
matures on August 1, 2003 and requires monthly payments of principal based upon
a twenty-five year amortization schedule with a balloon payment of approximately
$6,435,000 due upon maturity. The loan proceeds were utilized to reduce
borrowings under the Trust's revolving line of credit with American National
Bank in the amount of $7,000,000 as discussed below. The loan contains a
prepayment penalty of 7% of the outstanding principal balance in year one,
decreasing by 1% thereafter through the loan's maturity date of August 1, 2003.
On December 13, 1994, the Trust executed a Revolving Line of Credit (the
"Original Line") with American National Bank of Chicago ("ANB") in the amount of
$15,000,000. On December 15, 1995, the Trust and ANB entered into an agreement
modifying the Original Line by increasing the amount the Trust can borrow from
$15,000,000 to $30,000,000 (the "Modified Line"). During the initial term and
any extension, the Trust must pay interest only at the rate of LIBOR plus 2.25%
or Prime plus .25% at the election of the Trust. In addition, the Trust is
required to pay the Bank an unused facility fee of one-half of one percent per
annum multiplied by the average portion of the Modified Line's maximum
commitment that is undrawn from time to time. As of December 31, 1995, the
Trust had utilized approximately $25,725,000 of the $30,000,000 available under
the Modified Line. On March 13, 1996, the Trust reduced its borrowing under the
Modified Line in the amount of $6,200,000. In addition, on April 15, 1996, the
Trust replaced a $5,624,315 letter of credit previously issued by ANB which had
been collateralized by the Modified Line with an irrevocable letter of credit in
the like amount issued by Citizen's National Bank of Evansville. The Trust
borrowed $1,000,000 under the Modified Line for the acquisition of the Midwest
Office Park property in April 1996. On July 15, 1996, the Trust reduced its
borrowing under the Modified Line in the amount of $7,000,000. On August 1,
1996, the Trust used a portion of the Karfad loan portfolio net sales proceeds
to pay down $3,900,000 of the Modified Line. As a result of the above
transactions, as of September 30, 1996, the Trust had an outstanding balance of
$4,000,000 under the Modified Line.
The Trust's future liquidity needs are expected to be funded from cash
flow from its operating properties, cash proceeds derived from the mortgage
financing of certain property interests, borrowings pursuant to its Modified
Line with American National Bank, the sale of the H Street Assemblage property
and interest earned on the Trust's short-term investments. These sources, as
well as the Trust's cash and cash equivalents, are expected to be sufficient to
meet its reasonably anticipated needs for liquidity and capital resources in the
near future and to provide cash proceeds for distributions to shareholders.
The Trust currently plans to continue making additional investments in
operating properties utilizing cash proceeds to be provided from the financing
sources described above. In the event additional financing cannot be obtained,
the Trust's ability to make future real estate acquisitions would be impaired.
The other sources of cash described above are expected to provide the Trust with
the cash necessary to meet its operating expenses and other general corporate
needs and to continue the $0.10 per share quarterly distribution for the
remainder of 1996 and throughout 1997. The Trust's ability to make
distributions to its shareholders is dependent upon, among other things: (i)
the improvement in operating performance of its existing real estate investments
through scheduled increases in base rents under existing leases and through
general improvement in the real estate markets where the Trust's properties are
located reflected in changes in base rents attributable to new or replacement
leases; (ii) the operating performance of future acquisitions funded by the
redeployment of financing and cash proceeds derived from the sale of its
interest in the H Street Venture and (iii) the Trust's level of operating
expenses.
RESULTS OF OPERATIONS
At September 30, 1996, the Trust owned six industrial complexes
aggregating 1,046,400 square feet of gross leasable area, two apartment
complexes consisting of a total of 822 units, five commercial office properties
consisting of 561,100 square feet of gross leasable area and one retail center
which contains 321,800 square feet of gross leasable area. During 1995, the
Trust acquired six of these assets including Willowbrook Industrial Court,
Northlake Tower Shopping Center, Quantum Business Center, Lexington Distribution
Center, Newtown Distribution Center and the Woodcrest Office Park property.
During 1996, the Trust acquired an interest in the Midwest Office Center
property and sold its interest in the Karfad loan portfolio to an unaffiliated
third party. For further discussion regarding the asset purchased or sold during
1996 see Liquidity and Capital Resources above.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
Real estate operating income before interest expense (herein defined as
total revenue excluding income on investments less operating property expenses,
repairs and maintenance, real estate taxes, ground lease expense and
depreciation and amortization) increased from $3,583,263 in 1995 to $7,330,696
in 1996. The Trust's acquisitions during 1995 and 1996 mentioned above,
accounted for approximately $4,138,000 of this increase during 1996. Negatively
impacting this increase was a decrease of approximately $320,000 in interest and
amortized discount on mortgage loans which resulted from the sale of the Karfad
loans described above. See below for further discussions of the changes in
revenues and expenses for the period.
Total revenues increased by approximately $7.3 million to $15,902,372 from
$8,621,195 due primarily to the properties acquired after January 1, 1995
accounting for approximately $7.7 million of this increase. On a "same-store"
basis (comparing the results of operations of the properties owned during the
nine months ended September 30, 1996, with the results of operations of the same
properties owned during the nine months ended September 30, 1995), property
revenues increased by approximately $321,000, a 5% increase. This increase in
revenue was due primarily to an increase in average occupancy at the Colonial
Courts of Westland apartments to 93% for the nine months ended September 30,
1996 as compared to an average occupancy of 89% for the same period one year ago
and additional tenant recovery income charges related to increased property
expenses during 1996. Partially offsetting these improvements was a decrease in
interest and amortized discount on mortgage loans of approximately $320,000 and
a decrease in income on investments of approximately $442,000. Interest and
amortized discount on mortgage loans decreased due to the Trust's termination of
the amortization of the purchase discount as of January 1, 1996 on the Karfad
Loan and sale of the loan portfolio as discussed above. Interest income on
investments decreased due to the reduction in cash available for investment
resulting primarily from the investment of cash in the assets acquired in 1996
and during the last seven months of 1995 and the paydown of the Modified Line.
See Liquidity and Capital Resources for further discussion regarding the Trust's
April 1996 acquisition of the Midwest Office Center property and the sale of the
Trust's interest in the Karfad Loan Portfolio.
Total expenses increased by approximately $6.8 million to $13,683,310 from
$6,884,872 due primarily to the 1995 and 1996 acquisitions mentioned above which
accounted for approximately $5.4 million of this increase. On a "same-store"
basis interest expense increased by approximately $246,000 as a result of the
Trust's execution of a mortgage loan in the amount of $6,200,000 collateralized
by the Florida Power and Light property in March 1996. General and
administrative expenses increased due to an increase in expenses incurred on the
Trust's behalf by Banyan Management Corp. in connection with supervising the
newly acquired assets and an increase in executive incentive compensation earned
on the performance of the Trust's investment activities. Amortization of
deferred loan fees and financing costs increased primarily due to costs
associated with the Modified Line of credit during the fourth quarter of 1995
and with the replacement of a letter of credit collateralized by the Colonial
Courts property in April 1996. Further contributing to the increase in total
expenses was a decrease in charges against recovery of losses on loans, notes,
and interest receivable of $155,834 during 1995 as compared to $14,059 during
1996 which resulted from distributions in respect of the Trust's interest in the
liquidating trust. The remaining increase in total expenses on a "same-store"
basis resulted from increases in repairs and maintenance and depreciation
expense for the properties owned by the Trust prior to January 1, 1995.
During the nine months ended September 30, 1996, the Trust realized a net
loss from the operation of real estate ventures of ($77,365) compared to income
of $649,274 for the same period in 1995. The net loss from operations of real
estate ventures for the nine months ended September 30, 1996 of $77,365
represents the losses incurred from the Trust's 53% interest in the real estate
venture known as the H Street Venture. The H Street Venture owns an
approximately 55,900 square foot office building (the "Victor Building") and an
adjacent land parcel consisting of 17,000 square feet (the "H Street
Assemblage") located in Washington, D.C. The net income from operations of real
estate ventures of $649,274 for the nine months ended September 30, 1995
resulted from the income from operations and gain on the sale of the Plaza at
Westminster property of $451,966 and income from operations of $197,308 on the H
Street Assemblage. The Plaza at Westminster property was sold in June 1995 to
an unaffiliated third party. During the nine months ended September 30, 1996
and 1995, the Venture recorded a reduction in real estate tax expense of
approximately $200,000 and $459,000, respectively, for real estate tax refunds,
and interest thereon, relating to 1992, 1993 and 1994 tax years. In addition,
real estate tax expense increased by approximately $159,000 for the nine months
ended September 30, 1996 as compared to the same period in 1995 resulting from a
property reassessment during 1996 of the H Street Assemblage. The Venture is
currently appealing this reassessment. The H Street Venture is currently
marketing the H Street Assemblage for sale. The Venture will continue to try to
find ways to limit holding costs at the H Street Assemblage while attempting to
sell the property. Upon the sale of the H Street Assemblage, it is the Trust's
intent to redeploy its portion of all cash proceeds derived from this sale into
new real estate investments.
The factors discussed above resulted in consolidated net income of
$1,792,307 or $0.17 per share for the nine months ended September 30, 1996 as
compared to consolidated net income of $2,305,238 or $0.22 per share for the
nine months ended September 30, 1995.
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1996 TO THREE MONTHS ENDED
SEPTEMBER 30, 1995
Total revenues increased approximately $1.8 million from $3,453,623 to
$5,284,942 due to the Trust's acquisitions since January 1, 1995.
Total expenses increased approximately $1.9 million to $4,652,534 from
$2,801,724 due to the Trust's 1995 and 1996 acquisition activity which accounted
for approximately $1.5 million of this increase. The remaining $400,000
increase in total expenses is primarily due to increases in interest expense,
general and administrative expenses and amortization of deferred loan fees and
financing costs as discussed in the comparison of the nine month results
discussed above.
For the three months ended September 30, 1996, the Trust recorded net
income from operations of real estate ventures of $19,649 as compared to net
income of $256,674 for the same period in 1995. The above comparison and
description of the operations of the H Street Venture for the nine months ended
September 30, 1996 compared to the same period in 1995 applies to the three
month periods ended September 30, 1996 and September 30, 1995.
The factors discussed above resulted in consolidated net income of
$523,154 or $0.05 per share for the three months ended September 30, 1996 as
compared to consolidated net income of $852,677 or $0.08 per share for the three
months ended September 30, 1995.
The Trust paid distributions equal to $0.10 per share on August 20, 1996
and August 18, 1995 for the second quarter of 1996 and 1995, respectively. On
October 4, 1996, the Trust declared a cash distribution for the third quarter of
1996 of $0.10 per share payable November 20, 1996 to shareholders of record on
October 21, 1996.
SUPPLEMENTAL INFORMATION
Effective January 1, 1993, the Trust began providing supplemental
financial information in order to highlight the impact that a future sale of the
Trust's interests in the H Street Venture and other assets acquired through
foreclosure might have on the liquidity and results of operations of the Trust.
This presentation is not intended to provide a better measure of the Trust's
historical economic performance than the financial statements included in the
report. It is intended only to provide a pro-forma view of how the Company
would perform if it were able to sell the H Street Property and invest the net
proceeds into operating real estate assets similar to those currently held by
the Trust. Although the format with which this information has been presented
over the past periods has changed, the objective of the presentation has not.
The Trust's new real estate opportunities (the "Investment Activities") include
the net operations of the Trust's interest in real estate assets comprised of
six industrial buildings, two apartment complexes, five commercial office
buildings, a retail center and a portfolio of mortgage loans, income from the
Trust's investment securities and other expenses representing the incremental
costs of managing these assets. Excluded from Investment Activities are the
operations of the Trust's interest in the H Street Venture, income generated on
the allocated portion of cash and cash equivalents considered sufficient for
costs associated with the ongoing operations of the H Street Venture and
expenses required with maintaining the Trust which are not allocated to
Investment Activities.
For the nine months ended September 30, 1996, the Trust's Investment
Activities generated net income of approximately $2.5 million or $0.24 per share
compared to approximately $2.1 million or $0.20 per share for the same period in
1995. For the same period, the Trust's Investment Activities generated Funds
from Operations of approximately $4.1 million in 1996 compared to approximately
$2.9 million in 1995. For the quarter ended September 30, 1996, the Trust's
Investment Activities generated net income of approximately $683,000 or $0.07
per share compared to approximately $760,000 or $0.07 per share for the same
period in 1995. For the same period, the Trust's Investment Activities
generated Funds from Operations of approximately $1.2 million in 1996 compared
to approximately $1.1 in 1995.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are incorporated by reference from the Trust's
Annual Report on Form 10K for the year ended December 31, 1995:
Exhibits
The following exhibits are incorporated by reference from the Trust's
Registration Statement on Form S-11 (file number 33-4169), referencing the
exhibit number used in such Registration Statement.
Exhibit Number Description
(3)(b) By-Laws
(3)(c) Amended and Restated Declaration of Trust
(10) Material Contracts
(i) Second Amendment of Leonard G. Levine's Employment
Contract dated December 31, 1992.
(ii) Amendment to Loan Agreement dated December 1,
1994; Second Amendment to Loan Agreement dated December
21, 1994; and Third Amendment to Loan Agreement dated
December 18, 1995 regarding the Registrant's $30,000,000
Revolving Line of Credit with American National Bank of
Chicago.
(iii) First Amendment to Note dated December 18, 1995
regarding the Registrant's $30,000,000 Revolving Line of
Credit with American National Bank of Chicago.
(21) Subsidiaries of the Trust
(b) No current reports on Form 8-K were filed during the quarter ended
September 30, 1996.
SIGNATURES
PURSUANT to the requirements 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, 1996
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: November 14, 1996
Joel L. Teglia, Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial
information extracted from Banyan Strategic
Realty Trust Form 10-Q for the period ended
September 30, 1996 and is qualified in its
entirety by reference to such 10-Q."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,582,945
<SECURITIES> 0
<RECEIVABLES> 1,051,379
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,634,324
<PP&E> 96,660,152
<DEPRECIATION> 4,039,316
<TOTAL-ASSETS> 110,247,893
<CURRENT-LIABILITIES> 2,509,199
<BONDS> 5,500,000
0
0
<COMMON> 55,531,903
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 110,247,893
<SALES> 0
<TOTAL-REVENUES> 15,902,372
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,707,138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,976,172
<INCOME-PRETAX> 1,792,307
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,792,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,792,307
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
