SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-NUMBER 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 30, 1997
BANYAN STRATEGIC REALTY TRUST
(Exact name of Registrant as specified in its charter)
Massachusetts 0-15465 36-3375345
(State of or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
This document consists of 16 pages.
Exhibit index is located on page 2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Financial Statements and Pro Forma Financial Information:
(i) Butterfield Office Plaza (See attached).
(ii) Phoenix Business Park (See attached).
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 hereunto duly authorized.
Date: June 26, 1997 BANYAN STRATEGIC REALTY TRUST
(Registrant)
By: /s/ Joel L. Teglia
Vice President, Chief Financial and
Accounting Officer
RREEF MA-I
BUTTERFIELD OFFICE PLAZA, INC.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
INDEPENDENT AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Stockholders of RREEF MA-I Butterfield Office Plaza, Inc.:
We have audited the statement of revenues and certain expenses of RREEF MA-I
Butterfield Office Plaza, Inc. for the year ended December 31, 1996. This
financial statement is the responsibility of RREEF MA-I Butterfield Office
Plaza, Inc.'s management. Our responsibility is to express an opinion on the
financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K of Banyan Strategic
Realty Trust as a result of the acquisition of this property). Material
amounts, described in Note 1 to the statement of revenues and certain expenses,
that would not be comparable to those resulting from future operations of the
acquired property are excluded and the statement is not intended to be a
complete presentation of the acquired property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of RREEF MA-1
Butterfield Office Plaza, Inc. for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
June 11, 1997
RREEF MA-I BUTTERFIELD OFFICE PLAZA, INC.
STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
REVENUES:
Rental income $2,642,400
Recoverable expenses 173,458
Other income 33,864
----------
Total revenues 2,849,722
CERTAIN EXPENSES:
Property operating 1,057,172
Real estate taxes 260,174
Management fees 152,064
----------
Total certain expenses 1,469,410
----------
REVENUES IN EXCESS OF
CERTAIN EXPENSES $1,380,312
==========
</TABLE>
[FN] See notes to statement of revenues and certain expenses.
RREEF MA-I BUTTERFIELD OFFICE PLAZA, INC.
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Butterfield Office Plaza, a suburban office building located in Oak Brook,
Illinois ("Butterfield") was acquired by BSRT Butterfield Office Plaza, Corp., a
subsidiary of Banyan Strategic Realty Trust, effective April 30, 1997. The
statement of revenues and certain expenses includes information related to the
operations of Butterfield for the period from January 1, 1996 through December
31, 1996 as recorded by the office building's previous owner, RREEF MA-I
Butterfield Office Plaza, Inc.
The accompanying historical financial statement information is presented
in conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statement is not representative of the actual
operations for the year ended December 31, 1996 as certain expenses, which may
not be comparable to the expenses expected to be incurred in the future
operations of the acquired property, have been excluded. Expenses excluded
consist of interest, income taxes, depreciation and amortization, and other
costs not directly related to the future operations of the acquired property.
Management's Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Rental Income - Rental income is recognized on a straight-line basis over
the terms of the related leases.
Property Operating Expenses - Property expenses consist primarily of
utilities, insurance, repairs and maintenance, security and safety, cleaning,
and other administrative expenses.
Management Fees - The property was managed by RREEF Management Company for
a property management fee paid monthly based on an annual rate of 5% of cash
receipts less tenant services income.
2. OPERATING LEASES
Operating revenue is principally obtained from tenant rentals under
noncancelable operating leases. Future minimum rentals under noncancelable
operating leases as of December 31, 1996 are approximately as follows:
<TABLE>
<S> <C>
1997 $2,525,430
1998 2,081,050
1999 1,467,263
2000 759,754
2001 438,274
Thereafter 1,173,152
----------
Total $8,444,923
==========
</TABLE>
BUTTERFIELD OFFICE PLAZA
ESTIMATED PRO FORMA STATEMENT OF NET OPERATING INCOME
YEAR ENDED DECEMBER 31, 1996
(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).
<TABLE>
<S> <C>
REVENUES:
Rental income $2,642,400
Recoverable expenses 173,458
Other income 33,864
----------
Total revenues 2,849,722
CERTAIN EXPENSES:
Property operating 1,052,372
Depreciation (See Note 2) 256,100
Real estate taxes 260,174
Management fees 142,486
----------
Total certain expenses 1,711,132
----------
Pro Forma revenues in excess
of certain expenses $1,138,590
==========
Pro Forma funds from operations
(see Note 4) $1,394,690
==========
</TABLE>
[FN] The accompanying notes are an integral part of the estimated pro forma
statement.
BUTTERFIELD OFFICE PLAZA
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, 1996 which were modified by Management for known
changes in the 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 $10,244,000 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 an
initial management fee of 5.0% of gross revenues.
4. 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 any extraordinary capital items.
STATEMENT OF REVENUE AND CERTAIN EXPENSES
PHOENIX BUSINESS PARK
DECEMBER 31, 1996
WITH REPORT OF INDEPENDENT AUDITORS
REPORT OF INDEPENDENT AUDITORS
Chief Financial Officer
Banyan Strategic Realty Trust
We have audited the Statement of Revenue and Certain Expenses of Phoenix
Business Park (the Property) for the year ended December 31, 1996. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the Statement of Revenue and Certain Expenses is free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the Statement of Revenue and Certain Expenses. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission as described in Note 2, and is not intended to be a complete
presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 2, for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
May 30, 1997
Chicago, Illinois
PHOENIX BUSINESS PARK
STATEMENT OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Year Ended
December 31,
1996
Revenue
Base rents $ 995,585
Tenant reimbursements 21,277
----------
Total revenue 1,016,862
----------
Expenses
Real estate taxes 66,230
General operating 34,842
Utilities 19,003
Contract services 69,092
Repairs and maintenance 39,179
Management fee 49,388
Insurance 15,294
----------
Total expenses 293,028
----------
Revenue in excess of
certain expenses $ 723,834
==========
</TABLE>
[FN] See accompanying notes.
PHOENIX BUSINESS PARK
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
Note 1. Business
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Phoenix Business Park (the Property). The Property was acquired
on January 15, 1997, by Banyan Strategic Realty Trust (Banyan). The Property
was previously owned by Insignia Financial Corporation.
As of December 31, 1996, the Property was 100% leased with thirteen tenants.
Three tenants (Channel 69/Viacom, Bethco, Inc., and the General Services
Administration department of the U.S. Government) account for approximately 70%
of base rents.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission. The statement is not representative of the actual
operations of the Property for the period presented nor indicative of future
operations as certain expenses, primarily depreciation, amortization, and net
interest expense, which may not be comparable to the expenses expected to be
incurred by Banyan in future operations of the Property, have been excluded.
Revenue and Expenses Recognition
Revenue is recognized in the period earned. Expenses are recognized in the
period incurred.
Use of Estimates
The preparation of the Statement of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Note 3 Rentals
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes in relation to their pro rata share
as defined.
Note 4 Management
During the year ended December 31, 1996, the Property was managed by a third-
party management company. The management agreement provided for a fee of 5% of
gross property revenues.
PHOENIX BUSINESS PARK
ESTIMATED PRO FORMA STATEMENT OF NET OPERATING INCOME
YEAR ENDED DECEMBER 31, 1996
(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).
<TABLE>
Year Ended
December 31,
1996
<S> <C>
REVENUE:
Base rents $ 995,585
Tenant reimbursements 21,277
----------
Total revenue 1,016,862
----------
EXPENSES:
Real estate taxes 66,230
General operating 34,842
Utilities 19,003
Contract services 69,092
Repairs and maintenance 39,179
Management fee 40,674
Depreciation (see Note 2) 94,100
Insurance 8,698
----------
Total expenses 371,818
----------
Pro Forma revenue in excess
of total expenses $ 645,044
==========
Pro Forma funds from
operations (See Note 4) $ 739,144
==========
</TABLE>
[FN] The accompanying notes are an integral part of the estimated pro forma
statement.
PHOENIX BUSINESS PARK
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, 1996 which were modified by Management for known
changes in the 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 $3,764,000 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 an
initial management fee of 4.0% of gross revenues.
4. 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 any extraordinary capital items.
