BANYAN STRATEGIC REALTY TRUST, 10-Q, 1997-08-11

BANYAN STRATEGIC REALTY TRUST
10-Q, 1997-08-11
REAL ESTATE INVESTMENT TRUSTS

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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 June 30, 1997

[ ] 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 August 11, 1997: 10,575,127

<PAGE>

<TABLE>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)

<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,809,713 $ 3,805,260
Interest Receivable on Investments . . . . . . . . . . . . . . . . . . . . . . 28,726 46,313
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,333,360 1,194,425
------------ ------------
6,171,799 5,045,998
------------ ------------

Investment in Real Estate, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,293,413 16,956,094
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,399,188 85,210,415
Building Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,838,721 5,015,673
------------ ------------
142,531,322 107,182,182
Less: Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . (5,502,865) (4,692,455)
------------ ------------
137,028,457 102,489,727
------------ ------------

Investment in Real Estate Venture. . . . . . . . . . . . . . . . . . . . . . . 4,770,143 5,713,759

Deferred Financing Costs (Net of Accumulated Amortization
of $1,050,942 and $722,925, respectively). . . . . . . . . . . . . . . . . . 1,478,228 1,326,489
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,369,013 1,958,232
------------ ------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $151,817,640 $116,534,205
============ ============

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996 (CONTINUED)
(UNAUDITED)

JUNE 30, DECEMBER 31,
1997 1996
------------- ------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . . . $ 2,584,229 $ 2,481,253
Accrued Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,333,206 763,238
Mortgage Loans Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,471,775 48,181,023
Bond Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,504,794 10,900,000
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 379,745 237,922
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,462 248,748
Security Deposit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 728,596 473,758
------------ ------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,312,807 63,285,942
------------ ------------

Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . 2,421,971 2,313,825

Shareholders' Equity
Shares of Beneficial Interest, No Par Value,
Unlimited Authorization; 12,097,776 and 12,001,620 Shares
Issued, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,091,532 106,694,912
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49,642,721) (48,394,525)
Treasury Shares at Cost, 1,522,649 Shares. . . . . . . . . . . . . . . . . . . (7,365,949) (7,365,949)
------------ ------------
Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . 50,082,862 50,934,438
------------ ------------

Total Liabilities and Shareholders' Equity . . . . . . . . . . . . . . . . . . $151,817,640 $116,534,205
============ ============

Book Value Per Share of Beneficial Interest
(10,575,127 and 10,478,971 Shares Outstanding,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.74 $ 4.86
============ ============

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)

<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
REVENUE
Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,126,342 $ 8,980,962
Operating Cost Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,179,755 1,099,136
Miscellaneous Tenant Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,114 116,794
Interest and Amortized Discount on Mortgage Loans. . . . . . . . . . . . . . . . . -- 355,901
Income on Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,217 64,637
----------- -----------
Total Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,640,428 10,617,430
----------- -----------
EXPENSES
Operating Property Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,314,442 2,009,233
Repairs and Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,169,174 1,052,478
Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 948,634 895,012
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,771,035 1,979,505
Ground Lease Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440,938 429,739
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,555,456 1,146,383
General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,007,978 1,621,446
Amortization of Deferred Loan Fees and Financing Costs . . . . . . . . . . . . . . 328,017 221,980
----------- -----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,535,674 9,355,776
----------- -----------
Income Before Minority Interest, Income (Loss) from Operations
of Real Estate Venture and Gain on Disposition of Investment
in Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,104,754 1,261,654

Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . . . (311,726) (220,487)
Income (Loss) from Operations of Real Estate Venture . . . . . . . . . . . . . . . . 50,782 (97,014)
Gain on Disposition of Investment in Real Estate . . . . . . . . . . . . . . . . . . 3,788 --
----------- -----------
Net Income $ 847,598 $ 944,153
=========== ===========
Earnings Per Share of Beneficial Interest (10,535,521 and 10,477,847
Weighted Average Number of Shares Outstanding, respectively) . . . . . . . . . . . $ 0.08 $ 0.09
=========== ===========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)

<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
REVENUE
Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,980,834 $ 4,521,852
Operating Cost Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 561,045 669,721
Miscellaneous Tenant Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,514 44,613
Interest and Amortized Discount on Mortgage Loans. . . . . . . . . . . . . . . . . -- 177,405
Income on Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,149 27,186
----------- -----------
Total Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,746,542 5,440,777
----------- -----------
EXPENSES
Operating Property Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,111,769 1,000,417
Repairs and Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644,094 555,461
Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468,181 435,426
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,570,794 1,029,510
Ground Lease Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,362 215,865
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . 835,796 587,606
General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,138,822 860,054
Amortization of Deferred Loan Fees and Financing Costs . . . . . . . . . . . . . . 186,351 99,185
----------- -----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,183,169 4,783,524
----------- -----------
Income Before Minority Interest, Income (Loss) from Operations
of Real Estate Venture and Gain on Disposition of Investment
in Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563,373 657,253

Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . . . (144,983) (117,934)
Income (Loss) from Operations of Real Estate Venture . . . . . . . . . . . . . . . . 20,419 (58,707)
----------- -----------
Net Income $ 438,809 $ 480,612
=========== ===========
Earnings Per Share of Beneficial Interest (10,574,635 and 10,478,548
Weighted Average Number of Shares Outstanding, respectively) . . . . . . . . . . . $ 0.04 $ 0.05
=========== ===========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

Shares of
Beneficial Interest
---------------------------- Accumulated Treasury
Shares Amount Deficit Shares Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Shareholders' Equity,
December 31, 1996. . . . . . 12,001,620 $106,694,912 $(48,394,525) $(7,365,949) $50,934,438

Net Income . . . . . . . . . -- -- 847,598 -- 847,598

Issuance of Shares . . . . . 521 2,126 -- -- 2,126

Award Shares Issued. . . . . 95,635 394,494 -- -- 394,494

Distributions Paid . . . . . -- -- (2,095,794) -- (2,095,794)
----------- ------------ ----------- ----------- -----------

Shareholders' Equity,
June 30, 1997. . . . . . . . 12,097,776 $107,091,532 $(49,642,721) $(7,365,949) $50,082,862
=========== ============ ============ =========== ===========

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 847,598 $ 944,153
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities:
Gain on Disposition of Investment in Real Estate . . . . . . . . . . . . . . . . . (3,788) --
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,883,473 1,368,363
Net Loss (Income) From Operation of Real Estate Ventures . . . . . . . . . . . . . (50,782) 97,014
Minority Interest Participation in
Consolidated Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,726 220,487
Incentive Compensation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 613,098 29,452
Net Change In:
Interest Receivable on Investments . . . . . . . . . . . . . . . . . . . . . . . . 17,587 92,933
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (138,714) (405,174)
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220,253) (55,073)
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . . . . . (111,276) 738,634
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,823 (46,508)
Accrued Real Estate Tax Payable. . . . . . . . . . . . . . . . . . . . . . . . . . 302,210 588,747
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,714 4,674
Security Deposit Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,094 (8,930)
------------ ------------

Net Cash Provided By Operating Activities. . . . . . . . . . . . . . . . . . . . . . 3,780,510 3,568,772
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Real Estate Assets. . . . . . . . . . . . . . . . . . . . . . . . . (41,599,762) (5,015,140)
Investment In Real Estate Ventures, Net. . . . . . . . . . . . . . . . . . . . . . 26,001 (16,869)
Additions to Investment in Real Estate . . . . . . . . . . . . . . . . . . . . . . (730,037) (788,347)
Proceeds From Sale of Mortgage Loans Receivable. . . . . . . . . . . . . . . . . . -- 745,047
Proceeds From Sale of Investment in Real Estate. . . . . . . . . . . . . . . . . . 6,141,719 --
Proceeds from Sale of Investment in Real Estate Venture. . . . . . . . . . . . . . 968,397 --
Payment of Liabilities Assumed at Acquisition of Real Estate Assets. . . . . . . . 315,030 (264,392)
Purchase of Investment Securities. . . . . . . . . . . . . . . . . . . . . . . . . -- (839,680)
Proceeds From Sale and Maturities of Investment Securities . . . . . . . . . . . . -- 817,314
Principal Payments on Investment Securities. . . . . . . . . . . . . . . . . . . . -- 22,365
Principal Collections on Mortgage Loans Receivable . . . . . . . . . . . . . . . . -- 14,742
----------- ------------
Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . . . . . (34,878,652) (5,324,959)
----------- ------------

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (CONTINUED)
(UNAUDITED)

1997 1996
------------ -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Bonds and Mortgage Loans Payable . . . . . . . . . . . . . . . . . . 41,928,727 4,295,000
Distributions to Minority Partners . . . . . . . . . . . . . . . . . . . . . . . . (219,527) (183,102)
Deferred Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (479,756) (579,538)
Principal Payments on Bonds and Mortgage Loans Payable . . . . . . . . . . . . . . (7,033,181) (160,757)
Distributions Paid to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . (2,095,794) (2,095,611)
Shares Issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,126 --
------------ ------------
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . . . . 32,102,595 (1,275,992)
------------ ------------
Net Increase (Decrease) In Cash and Cash Equivalents . . . . . . . . . . . . . . . 1,004,453 (480,195)

Cash and Cash Equivalents at Beginning of Period . . . . . . . . . . . . . . . . . 3,805,260 5,500,215
------------ ------------
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . . . . . . . $ 4,809,713 $ 5,020,020
============ ============

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 1996 which are included in the Trust's 1996
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
1996 consolidated financial statements in order to provide comparability
with the 1997 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 June 30,
1997. All adjustments made to the financial statements, as presented, are
of a normal recurring nature to the Trust. Net income for the six and
three months ended June 30, 1996 have been reduced by $325,000 and
$162,500, respectively, from amounts originally reported to reflect the
adjusted incentive compensation earned by the Trust's president which was
recorded during the fourth quarter of 1996. This allocation adjustment had
no effect on net income for the year ended December 31, 1996. No other
allocation adjustments have been made to the 1996 operating results.

EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Trust will be required to change the
method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. As the
Trust has not issued stock options as of June 30, 1997, management believes
there is no material impact of Statement No. 128 on the consolidated
financial statements.

2. MORTGAGE LOANS PAYABLE

LINE OF CREDIT

On December 13, 1994, the Trust executed a loan agreement which
provides for a revolving line of credit 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 amendment to the aforesaid loan agreement,
modifying the revolving line of credit by increasing the amount the Trust
was permitted to borrow from $15,000,000 to $30,000,000. On January 7,
1997, the Trust and ANB entered into a further amendment to the loan
agreement modifying the line of credit by decreasing the amount that the
Trust was permitted to borrow from $30 million to $20 million (the
"Modified Line"). As of December 31, 1996, the Trust had utilized
approximately $8,400,000 of the $20,000,000 available under the Modified
Line. On January 15, 1997, the Trust borrowed $5,500,000 under the
Modified Line for the acquisition of the Phoenix Business Park property.
On February 19, 1997, the Trust borrowed $1,200,000 under the Modified Line

<PAGE>

for general corporate needs of the Trust. On March 11, 1997, the Trust
sold its interest in the Hallmark Village Apartments ("Hallmark"). (See
Note 5 for details). On March 19, 1997, the Trust used a portion of its
share of the Hallmark net sales proceeds to pay down $5,720,000 of the
Modified Line. On April 30, 1997, the Trust borrowed $14,400,000 under the
Amended Line (see discussion below) primarily for the acquisition of the
Butterfield Office Plaza property. On May 22, 1997, the Trust borrowed
$4,180,000 under the Amended Line primarily for the acquisition of the four
apartment complexes located in Oklahoma. (See Note 4 below for further
detail regarding the Trust's 1997 acquisitions). On April 18, 1997, the
Trust paid down $1,000,000 of the Amended Line resulting primarily from the
proceeds received from the March 20, 1997 sale of a portion of the H Street
Assemblage. See Note 6 for further details.

On April 29, 1997, the Modified Line was revised with ANB increasing
the amount that the Trust is permitted to borrow from $20 million to $30
million (the "Amended Line"). Pursuant to the Amended Line, the term was
extended from May 31, 1997 to November 30, 1997 and provides for a six
month extension, at the Trust's option, until May 31, 1998. Upon
expiration, the Amended Line will convert to a one year, interest only,
term loan. The Trust paid the bank an extension fee of $87,500 at the
closing of the Amended line and will be required to pay an additional
$37,500 if the Trust exercises the option to extend the term for six
months.

As a result of the above transactions, as of June 30, 1997, the Trust
had an outstanding balance of $26,960,000 of the $30,000,000 available
under the Amended Line.

3. TRANSACTIONS WITH AFFILIATES

Effective January 1, 1997, the Trust began paying employees directly
in contrast to the prior practice of reimbursing Banyan Management Corp. on
an hourly basis for the services of its personnel. In prior years, these
payroll costs along with administrative costs were allocated to the Trust
and other entities to which BMC provided 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. In 1997, the Trust continues to share certain administrative items
such as office rent and office expenses with other companies for which BMC
provides services. These costs are shared based upon the total hours
worked by employees of the Trust relative to total hours worked by
employees of BMC and the Trust combined. The Trust's allocable share of
costs for the six months ended June 30, 1997 and 1996 aggregated $403,100
and $703,274, respectively. As one of its administrative services, BMC
serves as the paying agent for general and administrative costs of the
Trust. As of June 30, 1997, the Trust had a net receivable due from BMC of
$828. The net receivable is included in Other Assets in the Trust's
Consolidated Balance Sheet.

4. INVESTMENT IN REAL ESTATE

PHOENIX BUSINESS PARK

On January 15, 1997, the Trust acquired a 100% fee ownership interest
in a three-building office/industrial complex known as Phoenix Business
Park located in northeast Atlanta, Georgia, for a purchase price of
approximately $5,494,000. At acquisition, the Trust assumed liabilities of
approximately $33,000. The three buildings contain approximately 110,600
square feet of gross leasable area. The Phoenix Business Park property was
constructed in 1979 and was 100% occupied with thirteen tenants at the time
of acquisition. The Trust funded the acquisition price by making a draw on
its line of credit.

<PAGE>

BUTTERFIELD OFFICE PLAZA

On April 30, 1997, the Trust acquired a 100% fee ownership interest in
a three-story office building known as Butterfield Office Plaza located in
Oak Brook, Illinois (metropolitan Chicago) for a purchase price of
approximately $15,056,000. At acquisition, the Trust assumed liabilities
of approximately $653,000. The office building is situated on ten acres of
land and contains approximately 200,800 square feet of gross leasable area.

The Butterfield Office Plaza was constructed in 1974 and was 92% occupied
with fifty tenants at the time of acquisition. The Trust funded the
acquisition price by drawing on its line of credit.

WOODRUN VILLAGE APARTMENTS

On May 22, 1997, the Trust acquired a 100% fee ownership interest in a
garden style apartment complex known as Woodrun Village Apartments (the
"Woodrun property") located in Yukon, Oklahoma (approximately twenty miles
south of Oklahoma City) for a purchase price of approximately $4,582,000.
At acquisition, the Trust assumed liabilities of approximately $31,000,
paid deferred financing costs of approximately $24,000 and funded
approximately $22,000 into an escrow account for real estate taxes and
insurance reserves. The Woodrun property was built in 1985 and consists of
192 rental units in twelve buildings and one clubhouse on a total of
approximately eight acres of land. The unit mix is 144 one-bedroom units
and forty-eight two-bedroom units. The Woodrun property is 97% occupied as
of June 30, 1997. The Trust utilized approximately $74,000 of cash
reserves for the acquisition and assumed Oklahoma Housing Financing Agency
Revenue bond financing with a combination of fixed rate, tax-exempt and
taxable bonds, with an outstanding principal balance totaling approximately
$3,622,000. The remaining balance of the acquisition price was provided
for by a draw upon the Trust's line of credit in the amount of
approximately $901,000.

The bonds mature on October 1, 2025 and require monthly payment of
principal and interest at a fixed interest rate of 7.3% until the bonds are
remarketed in November of 2005. A prepayment penalty exists on the bonds
for any unscheduled principal payments made prior to September 30, 2005.
The prepayment penalty is currently approximately 9.8% of the total
outstanding principal balance and decreases each year through September
2005 by approximately one percent. There is no prepayment penalty after
September 30, 2005.

COUNTRY CREEK APARTMENTS

On May 22, 1997, the Trust acquired a 100% fee ownership interest in a
garden style apartment complex known as Country Creek Apartments (the
"Country Creek property") located in Oklahoma City, Oklahoma for a purchase
price of approximately $7,487,000. At acquisition, the Trust assumed
liabilities of approximately $59,000, paid deferred financing costs of
approximately $36,000 and funded approximately $50,000 into an escrow
account for real estate taxes and insurance reserves. The Country Creek
property was built in 1985 and consists of 320 rental units in twenty
buildings and one clubhouse on a total of approximately twelve acres of
land. The unit mix is 240 one-bedroom units and eighty two-bedroom units.
The Country Creek property is 90% occupied as of June 30, 1997. The Trust
utilized approximately $74,000 of cash reserves for the acquisition and
assumed Oklahoma Housing Financing Agency Revenue bond financing with a
combination of fixed rate, tax-exempt and taxable bonds with an outstanding
principal balance totaling approximately $5,931,000. The remaining balance
of the acquisition price was provided for by a draw upon the Trust's line
of credit in the amount of approximately $1,509,000.

<PAGE>

WILLOWPARK APARTMENTS

On May 22, 1997, the Trust acquired a 100% fee ownership interest in a
garden style apartment complex known as Willowpark Apartments (the
"Willowpark property") located in Lawton, Oklahoma (approximately ninety
miles southwest of Oklahoma City) for a purchase price of approximately
$4,470,000. At acquisition, the Trust assumed liabilities of approximately
$28,000, paid deferred financing costs of approximately $23,000 and funded
approximately $20,000 into an escrow account for real estate taxes and
insurance reserves. The Willowpark property was built in 1985 and consists
of 160 rental units in ten buildings and one clubhouse on a total of
approximately six acres of land. The unit mix is 120 one-bedroom units and
forty two-bedroom units. The Willowpark property is 87% occupied as of
June 30, 1997. The Trust utilized approximately $74,000 of cash reserves
for the acquisition and assumed Oklahoma Housing Financing Agency Revenue
bond financing with a combination of fixed rate, tax-exempt and taxable
bonds, with an outstanding principal balance totaling approximately
$3,533,000. The remaining balance of the acquisition price was provided
for by a draw upon the Trust's line of credit in the amount of
approximately $878,000.

WINCHESTER RUN APARTMENTS

On May 22, 1997, the Trust acquired a 100% fee ownership interest in a
garden style apartment complex known as Winchester Apartments (the
"Winchester property") located in Oklahoma City, Oklahoma for a purchase
price of approximately $4,506,000. At acquisition, the Trust assumed
liabilities of approximately $30,000, paid deferred financing costs of
approximately $24,000 and funded approximately $23,000 into an escrow
account for real estate taxes and insurance reserves. The Winchester
property was built in 1985 and consists of 192 rental units in twelve
buildings and one clubhouse on a total of approximately seven acres of
land. The unit mix is 144 one-bedroom units and forty-eight two-bedroom
units. The Winchester property is 89% occupied as of June 30, 1997. The
Trust utilized approximately $74,000 of cash reserves for the acquisition
and assumed Oklahoma Housing Financing Agency Revenue bond financing with a
combination of fixed rate, tax-exempt and taxable bonds, with an
outstanding principal balance totaling approximately $3,563,000. The
remaining balance of the acquisition price was provided for by a draw upon
the Trust's line of credit in the amount of approximately $886,000.

<PAGE>

5. DISPOSITION OF INVESTMENT IN REAL ESTATE

HALLMARK VILLAGE APARTMENTS

On September 28, 1993, BSRT Hallmark Village Limited Partnership,
("BHVLP"), a limited partnership consisting of the Trust, a subsidiary of
the Trust and HVA General Partnership, acquired the Hallmark Village
Apartments for a purchase price of approximately $6 million. On March 11,
1997, BHLVLP sold the Hallmark property to an unaffiliated third party for
a sales price of approximately $6.5 million, after credits made to the
purchaser at closing. The Trust and its subsidiary received net sales
proceeds of approximately $6.1 million of which a portion was used to pay
down the Trust's revolving line of credit (see Note 2 above for details).
The Trust recognized a gain on disposition of approximately $3,800 as a
result of the sale.

6. DISPOSITION OF INVESTMENT IN REAL ESTATE VENTURE

On December 11, 1990, the Trust acquired title to the property known
as the Victor Building located in Washington D.C. pursuant to an agreement
with Banyan Strategic Land Fund II ("BSLFII"). On June 5, 1992, the Trust
and BSLFII executed a formal joint venture agreement (the "Venture"). The
Trust had a 53% interest in the Venture while BSLFII owned the remaining
47%. This property consists of 36,100 square feet of undeveloped land in
downtown Washington, D.C. plus an approximately 55,900 square foot office
building.

On March 20, 1997, the Venture sold approximately 3,500 square feet of
the Venture's land to the United States General Services Administration on
behalf of the United States of America ("GSA") for a purchase price of
$1,680,000. GSA also paid the Venture $150,000 as reimbursement of
expenses that the Venture incurred in anticipation of this transaction.
The Venture received net proceeds of approximately $1,827,000 of which
approximately $968,000 was distributed to the Trust. The Trust recognized
no gain or loss on the sale. The Venture obtained all required approvals
from various governmental agencies for the modifications necessary to the
existing approved design for the proposed building on the Venture's
remaining property that had been necessitated by this sale.

7. OMNIBUS STOCK AND INCENTIVE PLAN

On May 14, 1997, the Board of Trustees (the "Board") adopted and on
July 8, 1997, the shareholders of the Trust approved the 1997 Omnibus Stock
and Incentive Plan (the "Plan") to allow the Trust to make stock-based
awards as part of its employee and Trustee compensation program. Under the
Plan, the Trust is authorized to issue up to one million shares of the
Trust's beneficial interest in the form of incentive stock options, non-
statutory stock options, stock appreciation rights, performance shares and
units.

Under the Plan, each person serving as a Trustee on the tenth business
day after the final adjournment of the Trust's annual meeting will receive
options to acquire 2,000 shares. Stock options granted to the Trustees
will vest and be exercisable in installments as follows: (i) 50% of the
number of shares commencing on the first anniversary of the date of grant;
and (ii) the remaining 50% of shares commencing on the second anniversary
of the date of grant. On July 22, 1997, each of the three Trustee's
received options to acquire 2,000 shares at $4.50 per share (the closing
price on the day of the grant of options).

<PAGE>

The Board administers the Plan and has the authority to determine,
among other things, the individuals to be granted options, the exercise
price at which shares may be acquired, the number of shares subject to
options and the exercise period of each option. The Board is granted
discretion to determine the term of each option granted under the Plan to
employees, executives and Trustees, but in no event will the term exceed
ten years and one day from the date of the grant. On July 8, 1997, the
Board granted initial options to purchase a total of 41,000 shares at an
exercise price of $4.08 per share (the closing price on the day of the
grant of options) to various executives and employees of the Trust
exclusive of Leonard G. Levine, who receives performance based compensation
pursuant to his Employment Agreement. Pursuant to the terms of the Plan,
options for all shares granted under the Plan to executives and employees
will generally be exercisable and vest in installments as follows: (i)
33.3% of the number of shares commencing on the first anniversary of the
date of grant; (ii) an additional 33.3% of the shares commencing on the
second anniversary of the date of the grant; and (iii) the remainder of the
shares commencing on the third anniversary of the date of grant.

8. DISTRIBUTION REINVESTMENT AND SHARE PURCHASE PLAN

On April 23, 1997, the Trust filed a Registration Statement on Form S-
3 under the Securities Act of 1933 in order to register the Trust's Shares
issuable pursuant to its Distribution Reinvestment and Share Purchase Plan
(the "DRIP Plan"). The DRIP Plan allows shareholders of the Trust to: (i)
automatically reinvest the cash distributions on all, or part, of the
shares registered in their names and (ii) make cash investments of not less
than $5.00 per investment nor more than $120,000 per calendar year. Shares
purchased pursuant to the DRIP Plan will be issued directly by the Trust at
either (i) 97% of the average closing sales price of the shares as reported
on the NASDAQ National Market on the last five business days preceding the
relevant investment date in the case of reinvested cash distributions or
(ii) 100% of the aforementioned average closing price in the case of cash
investments. For the quarter ended June 30, 1997, the Trust issued 521
shares at $4.08 per share pursuant to the DRIP Plan.

9. AWARD SHARES AND WEIGHTED AVERAGE SHARES OUTSTANDING

Pursuant to the March 19, 1997 Amendment to the Second Amended and
Restated Employment Agreement of Leonard G. Levine, the Trust's president,
all incentive compensation earned on the performance of the Trust's assets
acquired subsequent to January 1, 1993 ("Reinvestment Activities") for the
fiscal years ended December 31, 1996 and 1997 will be paid in shares of the
Trust's stock ("Award Shares") in the year following the period for which
the incentive is earned. All of the Award Shares issued prior to January
1, 1997 and 20% of Award Shares issued thereafter will be 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. Eighty percent of
the Award Shares issued after January 1, 1997 vest immediately upon
issuance in accordance with the shareholder approval which was received at
the Trust's July 8, 1997 annual meeting. On July 9, 1997, the Trust issued
95,635 Award Shares effective retroactively to March 15, 1997 to Mr.
Levine, representing Mr. Levine's incentive compensation earned on
Reinvestment Activities for the fiscal year ending December 31, 1996 (the
"1996 Award Shares"). The 95,635 Award Shares are valued at $4.125 per
share, or $394,494. The 1996 Award Shares 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.

<PAGE>

lack of employment is due to death, permanent disability or termination
without just cause. Mr. Levine will be entitled to all distributions paid
on shares held by the Trust for his benefit. For the six months ended June
30, 1997, the Trust has accrued an estimated $613,000 of incentive
compensation, $600,000 of which will be converted to Award Shares.

10. SUBSEQUENT EVENTS

DIVIDEND AND DISTRIBUTIONS PAID

On July 3, 1997, the Trust declared a cash distribution for the
quarter ended June 30, 1997 of $0.10 per share payable August 20, 1997 to
shareholders of record on July 21, 1997.

COLONIAL COURTS OF WESTLAND APARTMENTS

On June 17, 1993, BSRT Colonial Courts Limited Partnership, a limited
partnership consisting of the Trust, a subsidiary of the Trust and PHC
General Partnership ("PHC"), acquired the Colonial Courts of Westland
Apartments (the "Colonial Courts" property) located in Columbus, Ohio for a
purchase price of approximately $3,698,000. The Colonial Courts property
is pledged to secure bond financing in the outstanding principal amount of
$5.5 million. The Trust and its subsidiary hold a 75% ownership interest
and PHC holds the remaining 25% ownership interest. On July 25, 1997, the
Trust entered into a sales contract to sell its interest in the Colonial
Courts property to Colonial LLC, an entity affiliated with PHC. The sales
contract is subject to lender approval and is scheduled to close during the
third or fourth quarter of 1997. The Trust is expected to receive cash
proceeds of approximately $1.25 million, after credits made to Colonial LLC
at closing. The Trust will use the cash proceeds resulting from this sale
to pay down a portion of the Trust's line of credit with ANB.

SOUTHLAKE CORPORATE CENTER

On July 30, 1997, the Trust acquired a 100% fee ownership interest in
a three-story office building known as 3000 Corporate Center at Southlake
(the "Southlake property") located in Morrow, Georgia (a suburb
approximately twenty miles south of Atlanta), for a purchase price of
approximately $4,450,000 and assumed liabilities at acquisition of
approximately $35,000. The Southlake property contains approximately
56,200 square feet of gross leasable area and is situated on approximately
three acres of land. The purchase price was funded by a draw upon the
Trust's line of credit in the amount of $4,450,000. At acquisition, the
property is 100% occupied with 16 tenants.

INVESTMENT IN REAL ESTATE VENTURE

On July 29, 1997, the H Street Venture sold the remaining land and the
Victor Building to an unaffiliated third party for $9 million. The Trust
received net sales proceeds of approximately $4.5 million and recognized a
gain on disposition of approximately $189,700. As of July 29, 1997, the
Trust has no further ownership interest in the H Street Assemblage
property.

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

The Registrant, Banyan Strategic Realty Trust, is a Massachusetts
business trust. The Trust is a diversified real estate investment trust
that focuses on industrial, suburban office and apartment properties
throughout the country, where management sees strong local economies and
investment opportunities. As of June 30, 1997, the Trust's portfolio
contained twenty properties, which are located chiefly in the Midwest and
the Southeast United States. The Trust's current business plan is to
invest its cash equivalents and cash proceeds generated by financing
secured by existing 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.

Certain statements in this quarterly report that are not historical
fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Without limiting the
foregoing, words such as "anticipates," "expects," "intends," "plans" and
similar expressions are intended to identify forward-looking statements.
These statements are subject to a number of risks and uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements. The Trust undertakes no obligation to update these forward-
looking statements to reflect future events or circumstances. See below
"Factors Affecting the Trust's Business Plan" for further discussion.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents consist of cash and short-term investments.
The Trust's cash and cash equivalents balance at June 30, 1997 and December
31, 1996 was $4,809,713 and $3,805,260, respectively. The increase in
total cash and cash equivalents of $1,004,453 is due to $3,780,510 of cash
provided from operating activities and $32,102,592 of cash provided by
financing activities amounts which exceed the $34,878,655 of cash used in
investing activities.

Cash Flows From Operating Activities: Net cash provided by operating
activities increased by $211,738 for the six months ended June 30, 1997 to
$3,780,510 from $3,568,772 for the same period in 1996 due primarily to the
Trust's acquisitions of six real estate assets in the first six months of
1997. (See below for detail.) See Results of Operations below for further
discussion of the operations of the Trust's real estate assets.

The Trust's objective is to provide cash distributions to its
shareholders from cash generated from the Trust's operations. Cash flow
generated from operations is not equivalent to the Trust's net operating
income as determined under generally accepted accounting principles
("GAAP"). The unique operating characteristic of a real estate company is
that in accordance with GAAP, it is required to record depreciation and
amortization related to its real estate assets while in fact these assets
generally appreciate in value. As a result of this, the real estate
investment trust ("REIT") industry has adopted a standard which it believes
more accurately 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, less extraordinary, unusual and
nonrecurring items, excluding gains (or losses) from debt restructuring and
sales of property plus depreciation and amortization and after adjustments
for unconsolidated partnerships and joint ventures in which the REIT holds
an interest. The Trust cautions shareholders 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 the REIT's capacity to pay distributions. However,
a REIT's distribution may 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.

<PAGE>

For the six months ended June 30, 1997 and 1996, the Trust's
operations generated FFO of $2,300,026 and $2,018,507, respectively. FFO
increased for the six months ended June 30, 1997 as a result of the Trust's
property acquisitions in mid-1996 and 1997. For the three months ended
June 30, 1997 and 1996, the Trust's operations generated FFO of $1,222,496
and $1,032,999, respectively.

FFO for the six months ended June 30, 1997 and 1996 is calculated as
follows:

1997 1996
---------- ----------

Net Income . . . . . . . . . . . . . . . . $ 847,598 $ 944,153

Plus:
Depreciation expense . . . . . . . . . . 1,464,203 1,112,990
Depreciation included in
Operations of Real Estate
Ventures . . . . . . . . . . . . . . . 15,238 15,238
Lease Commission Amortization. . . . . . 91,253 33,393

Less:
Minority Interest Share of
Depreciation Expense . . . . . . . . . (129,118) (102,824)
Minority Interest Share of
Lease Commission
Amortization . . . . . . . . . . . . . (10,360) (4,443)

Franchise Tax Fees Accrued . . . . . . . . 25,000 20,000

Gain on Disposition of
Investment in Real Estate. . . . . . . . (3,788) --
---------- ----------

Funds From Operations. . . . . . . . . . . $2,300,026 $2,018,507
========== ==========

Cash Flow From Investing Activities: During the six months ended June
30, 1997, the Trust utilized $34,878,652 from investing activities compared
to utilizing $5,324,959 from investing activities for the same period in
1996. Cash flow was utilized during the six months ended June 30, 1997 to
acquire the Phoenix Business Park property in January 1997, the Butterfield
Office Plaza in April 1997 and the four Oklahoma apartment complexes
acquired in May 1997, for an aggregate purchase price of approximately
$41.6 million. In addition, the Trust made capital improvements at its
various properties in the amount of approximately $730,000 during the same
six month period. These outflows of cash were partially offset by the $6.1
million in proceeds received from the March 11, 1997 sale of the Trust's
interest in the Hallmark Village property and approximately $968,000
received from the sale of a portion of the H Street Assemblage land parcel.

During the same period in 1996, the Trust acquired the Midwest Office
Center property for approximately $5 million, made capital improvements of
approximately $788,000 and paid approximately $264,000 of liabilities
assumed at the acquisition of various real estate assets. These outflows
of cash for the six months ended June 30, 1996 were offset by the receipt
of approximately $745,000 as a result of the sale of a portion of the
Trust's interest in the Karfad Loan Portfolio. See below for further
discussion of the assets purchased or sold during 1997.

<PAGE>

of acquisition. The Trust funded the acquisition price by making a draw on
its line of credit. The Phoenix Business Park property serves as
collateral for the Trust's Amended Line with American National Bank of
Chicago and Trust Company ("ANB"). (See below for further details.)

On September 28, 1993, BSRT Hallmark Village Limited Partnership,
("BHVLP"), a limited partnership consisting of the Trust, a subsidiary of
the Trust and HVA General Partnership, acquired the Hallmark Village
Apartments for a purchase price of approximately $6 million. On March 11,
1997, BHLVLP sold the Hallmark property to an unaffiliated third party for
a sales price of approximately $6.5 million, after credits made to the
purchaser at closing. The Trust and its subsidiary received net sales
proceeds of approximately $6.1 million of which a portion was used to pay
down the Trust's revolving line of credit (See below for details). The
Trust recognized a gain on disposition of approximately $3,800 as a result
of the sale.

On April 30, 1997, the Trust acquired a 100% fee ownership interest in
a three-story office building known as Butterfield Office Plaza located in
Oak Brook, Illinois (metropolitan Chicago), for a purchase price of
approximately $15,056,000. At acquisition, the Trust assumed liabilities
of approximately $653,000. The office building is situated on ten acres of
land and contains approximately 200,800 square feet of gross leasable area.

The Butterfield Office Plaza was constructed in 1974 and was 92% occupied
with fifty tenants at the time of acquisition. The Trust funded the
acquisition price by drawing on its line of credit. The Butterfield Office
Plaza property serves as collateral for the Trust's Amended Line with ANB.
See below for further details.

<PAGE>

utilized approximately $74,000 of cash reserves for the acquisition and
assumed Oklahoma Housing Financing Agency Revenue bond financing with a
combination of fixed rate, tax-exempt and taxable bonds with an outstanding
principal balance totaling approximately $5,931,000. The remaining balance
of the acquisition price was provided for by a draw upon the Trust's line
of credit in the amount of approximately $1,509,000.

<PAGE>

Cash Flow From Financing Activities: For the six months ended June 30,
1997, the Trust generated cash flow from financing activities of
$32,102,595 compared to generating $1,275,992 for the same period in 1996.
The cash flow provided by financing activities for the six months ended
June 30, 1997 was primarily due to the receipt of approximately $41.9
million of proceeds from mortgage loans and bonds payable, which represents
draws on the Trust's line of credit with ANB primarily used to purchase the
Phoenix Business Park property, the Butterfield Office Plaza, and the four
Oklahoma apartment complexes for approximately $25.3 million (see below for
details) and the assumption of approximately $16.6 million of bonds payable
pursuant to the acquisitions of the four apartment complexes. Partially
offsetting these sources was the payment of principal on bonds and mortgage
loans in the amount of approximately $7 million, $5.7 million which
represents a pay down of the Trust's line of credit as a result of the
sales proceeds received from the Hallmark property sale in March 1997, $1
million which represents a pay down of the Trust's line of credit primarily
as a result of the H Street land parcel sales proceeds received in March
1997 and the balance represented principal payments in respect to other
bonds and mortgage loans. In addition, the Trust paid distributions
aggregating approximately $2.1 million and paid approximately $480,000 of
deferred financing costs. The cash flow provided by financing activities
for the six months ended June 30, 1996 was primarily due to the receipt of
approximately $4.3 million of proceeds from mortgage loans payable,
approximately $3.3 million of which consisted of proceeds from a first
mortgage loan secured by the Midwest Office Center property and the balance
of which reflected a draw on the Trust's line of credit. Offsetting this
source, the Trust paid distributions to shareholders of approximately $2.1
million and paid deferred financing costs of approximately $579,000.

On April 23, 1997, the Trust filed a Registration Statement on Form S-
3 under the Securities Act of 1933 in order to register the Trust's shares
issuable pursuant to its Distribution Reinvestment and Share Purchase Plan
(the "DRIP Plan"). The DRIP Plan allows shareholders of the Trust to: (i)
automatically reinvest the cash distributions on all, or part, of the
shares registered in their names and (ii) make cash investments of not less
than $5.00 per investment nor more than $120,000 per calendar year. Shares
purchased pursuant to the DRIP Plan will be issued directly by the Trust at
either (i) 97% of the average closing sales price of the shares as reported
on the NASDAQ National Market on the last five business days preceding the
relevant investment date in the case of reinvested cash distributions or
(ii) 100% of the aforementioned average closing price in the case of cash
investments. For the quarter ended June 30, 1997, the Trust issued 521
shares at $4.08 per share pursuant to the DRIP Plan.

<PAGE>

On April 29, 1997, the Trust modified its loan agreement which
provides for a revolving line of credit with American National Bank of
Chicago and Trust Company ("ANB") in the amount of $30,000,000, as modified
(the "Amended Line"). Pursuant to the Amended Line, the term was extended
from May 31, 1997 to November 30, 1997 and provides for a six month
extension, at the Trust's option, until May 31, 1998. Upon expiration, the
Amended Line will convert to a one year, interest only, term loan. The
Trust paid the bank a one time extension fee of $87,500 at the closing of
the Amended Line and will be required to pay an additional $37,500 if the
Trust exercises the option to extend the term for six months. As of
December 31, 1996, the Trust had utilized approximately $8,400,000 under
the line of credit. On January 15, 1997, the Trust borrowed $5,500,000
under the line of credit for the acquisition of the Phoenix Business Park
property. On February 19, 1997, the Trust borrowed $1,200,000 under the
line of credit for general corporate needs of the Trust. On March 11,
1997, the Trust sold its interest in the Hallmark Village Apartments
("Hallmark"). (See above for details). On March 19, 1997, the Trust used a
portion of its share of the Hallmark net sales proceeds to pay down
$5,720,000 of the line of credit. On April 30, 1997, the Trust borrowed
$14,400,000 under the Amended Line for the acquisition of the Butterfield
Office Plaza property. On May 22, 1997, the Trust borrowed $4,180,000
under the Amended Line primarily for the acquisition of the four apartment
complexes located in Oklahoma (See above for further detail regarding the
Trust's 1997 acquisitions). On April 18, 1997, the Trust paid down
$1,000,000 of the Amended Line resulting primarily from the proceeds
received from the March 20, 1997 sale of a portion of the H Street
Assemblage. See Results of Operations below for further details.

As a result of the above transactions, as of June 30, 1997, the Trust
had an outstanding balance of $26,960,000 of the $30,000,000 available
under the Amended Line.

The Trust expects to fund its future liquidity needs with the cash
flow obtained from its operating properties, cash proceeds derived from
mortgage financing either on a long term basis or utilizing the Amended
Line secured by certain of the Trust's properties which serve as collateral
for the Amended Line (Colonial Penn, Phoenix Business Park, Lexington,
Newtown, Butterfield Office Plaza and Southlake Corporate Center
properties), interest earned on the Trust's short-term investments and the
receipt of funds pursuant to the Trust's Distribution Reinvestment and
Share Purchase Plan (the "DRIP Plan"). See Liquidity and Capital Resources
for further details regarding the Plan. The Trust believes that these
sources, as well as the Trust's cash and cash equivalents, are sufficient
to meet the Trust's reasonably anticipated needs for liquidity and capital
resources in the near future and to provide cash proceeds for distributions
to shareholders.

The Trust's ability to make future distributions to its shareholders
is dependent upon, among other things: (i) sustaining the 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 Trust's level of operating expenses and (iii)
the operating performance of future acquisitions. The continuation of the
Trust's acquisition of real estate assets is dependent upon its ability to
(i) utilize the proceeds from the July 25, 1997 sale of its interest in the
H Street venture, (ii) reinvest proceeds, including gains as a result of
appreciation in value, from the disposition of selective properties in the
Trust's portfolio and (iii) borrow cash proceeds from mortgage financing
either on a long-term basis or utilizing the Amended Line. Once these
funding sources have been fully utilized, the Trust will need to access
additional sources of acquisition capital in order to continue to grow.

<PAGE>

RESULTS OF OPERATIONS

At June 30, 1997, the Trust owned seven industrial complexes
aggregating 1,361,100 square feet of gross leasable area, five apartment
complexes consisting of an aggregate 1,214 units, seven commercial office
properties consisting of 872,500 square feet of gross leasable area and one
retail center which contains 321,800 square feet of gross leasable area.
On April 18 and November 19, 1996, the Trust acquired interests in the
Midwest Office Center and 6901 Riverport Drive properties, respectively.
During June and July of 1996, the Trust sold its interest in the Karfad
loan portfolio to an unaffiliated third party. During the six months ended
June 30, 1997, the Trust acquired an ownership interest in the Phoenix
Business Park, Butterfield Office Plaza and four separate garden style
apartment complexes located in Oklahoma. On March 11, 1997, the Trust sold
its interest in the Hallmark Village Apartments property. On March 20,
1997, the H Street Venture, a partnership between the Trust and Banyan
Strategic Land Fund II owning the H Street Assemblage property, sold
approximately 3,500 square feet of the venture's land. For further
discussion regarding the assets purchased or sold during the first six
months of 1997, see Liquidity and Capital Resources above. Subsequent to
the end of the second quarter, the Trust acquired the Southlake Corporate
Center on July 30, 1997 (see Subsequent Events below) and sold its
remaining interest in the H Street Assemblage property on July 29, 1997.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS ENDED
JUNE 30, 1996

Real estate net 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 $5,019,948 in
1996 to $6,143,567 in 1997. The Trust's acquisitions during 1996 and 1997
described above accounted for approximately $1,463,000 of this increase
during the first six months of 1997. Negatively impacting this increase
was the elimination of approximately $356,000 in interest income and
amortized discount on mortgage loans realized during 1996 on the Karfad
loans. See below for further discussions of the changes in revenues and
expenses for the period.

Total revenues increased by approximately $2,023,000 to $12,640,428
from $10,617,430, due primarily to the acquisition and sale of certain
properties after January 1, 1996 accounting for approximately $1,769,000 of
this increase. On a "same-store" basis (comparing the results of
operations of the properties or mortgage loans receivable owned during the
six months ended June 30, 1997, with the results of operations of the same
real estate assets owned during the six months ended June 30, 1996), total
property revenues increased by approximately $610,000. This increase is
mainly due to an increase in total revenue at the Trust's Lexington
property of approximately $226,000 as a result of a new lease signed for
approximately 46,900 square feet of gross leasable area which increased the
occupancy by 15% at June 30, 1997 as compared to June 30, 1996. In
addition, total revenues increased by approximately $384,000 due primarily
to increases in total revenues at the Trust's commercial and industrial
properties.

Total expenses increased by approximately $2,180,000 to $11,535,674
from $9,355,776 due primarily to the 1996 and 1997 acquisitions and sales
mentioned above, which accounted for approximately $1,080,000 of this
increase. On a "same-store" basis, interest expense increased by
approximately $382,000 as a result of the Trust's execution of mortgage
loans during 1996, collateralized by the Florida Power and Light and
Woodcrest Office Park properties in the amounts of $6,200,000 and
$7,250,000, respectively. Total general and administrative expenses
increased by approximately $435,000 due to higher legal fees and payroll
costs of approximately $323,000 due to additional staffing required as a
result of acquiring and managing the additions to the Trust's real estate
portfolio. In addition, general and administrative costs increased
$112,000 due primarily to an increase in the accrual of incentive
compensation earned by Mr. Levine, the Trust's president, reflecting an

<PAGE>

increase in estimated unrealized gain on the Trust's assets. The remaining
increase in total expenses on a same-store basis of approximately $283,000
resulted primarily from an increase in deferred loan fee amortization and
depreciation and amortization expense at the Trust's various properties.

During the six months ended June 30, 1997, the Trust realized net
income from the operation of real estate venture of $50,782 compared to a
net loss of ($97,014) for the same period in 1996. The net income from
operations of real estate venture for the six months ended June 30, 1997
represents the income realized from the Trust's 53% interest in the real
estate venture known as the H Street Venture. The H Street Venture owned a
55,900 square foot office building (the "Victor Building") and an adjacent
land parcel consisting of 36,100 square feet (the "H Street Assemblage")
located in Washington, D.C. On March 20, 1997, the H Street Venture sold
approximately 3,500 square feet of the H Street Venture's land to the
United States General Services Administration on behalf of the United
States of America ("GSA") for a purchase price of $1,680,000. GSA also
paid the H Street Venture $150,000 as reimbursement of expenses that the H
Street Venture incurred in anticipation of this transaction. The H Street
Venture received net proceeds of approximately $1,827,000, of which
approximately $968,000 was distributed to the Trust. The Trust recognized
no gain or loss on this sale. The H Street Venture obtained all required
approvals from various governmental agencies for the modifications
necessary to the existing approved design for the proposed building on the
H Street Venture's remaining property that had been necessitated by this
sale. On July 29, 1997, the H Street Venture sold the remaining land and
the Victor Building to an unaffiliated third party for $9 million. The
Trust received net sales proceeds of approximately $4.5 million and
recognized a gain on disposition of approximately $189,700. The sales
proceeds generated as a result of this sale will be used to acquire new
real estate investments.

Pursuant to the March 19, 1997 Amendment to the Second Amended and
Restated Employment Agreement of Leonard G. Levine, the Trust's president,
all incentive compensation earned on the performance of the Trust's assets
acquired subsequent to January 1, 1993 ("Reinvestment Activities") for the
fiscal years ended December 31, 1996 and 1997 will be paid in shares of the
Trust's stock ("Award Shares") in the year following the period for which
the incentive is earned. All of the Award Shares issued prior to January
1, 1997 and 20% of Award Shares issued thereafter will be 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. Eighty percent of
the Award Shares issued after January 1, 1997 vest immediately upon
issuance in accordance with the shareholder approval which was received at
the Trust's July 8, 1997 annual meeting. On July 9, 1997 and effective
March 15, 1997, the Trust issued 95,635 Award Shares to Mr. Levine,
representing Mr. Levine's incentive compensation earned on Reinvestment
Activities for the fiscal year ending December 31, 1996 (the "1996 Award
Shares"). The 95,635 Award Shares are valued at $4.125 per share, or
$394,494. The 1996 Award Shares 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.

The Award Shares' price of $4.125 was based upon the average closing price
of the Trust's shares for the five business days ended prior to December
31, 1996. Twenty percent of Award Shares issued subsequent to January 1,
1997 and all previously issued Award Shares shall be forfeited by Mr.
Levine if he is not employed by the Trust on December 31, 1997, unless such
lack of employment is due to death, permanent disability or termination
without just cause. Mr. Levine will be entitled to all distributions paid
on shares held by the Trust for his benefit.

The factors discussed above resulted in consolidated net income of
$847,598 or $0.08 per share for the six months ended June 30, 1997 as
compared to consolidated net income of $944,153 or $0.09 per share for the
six months ended June 30, 1996.

<PAGE>

COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 TO THREE MONTHS
ENDED JUNE 30, 1996

Real estate net 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 $2,618,816 in
1996 to $3,424,191 in 1997 or by approximately $805,000. The Trust's
acquisitions during 1996 and 1997 described above, accounted for
approximately $979,000 of this increase during 1997. Negatively impacting
this increase was the elimination of approximately $177,000 in interest
income and amortized discount on mortgage loans which resulted from the
sale of the Karfad loans during 1996 as described above. See below for
further discussions of the changes in revenues and expenses for the period.

Total revenues increased by approximately $1,306,000 to $6,746,542
from $5,440,777 due primarily to the acquisition and sale of certain
properties after January 1, 1996, accounting for approximately $1,238,000
of this increase. On a "same-store" basis (comparing the results of
operations of the properties or mortgage loans receivable owned during the
three months ended June 30, 1997, with the results of operations of the
same real estate assets owned during the three months ended June 30, 1996),
total property revenues increased by approximately $246,000. Total revenue
at the Trust's Lexington property increased by approximately $118,000 as a
result of a new lease signed for approximately 46,900 square feet of gross
leasable area which increased the occupancy by 15% at June 30, 1997 as
compared to June 30, 1996. Total revenues further increased by
approximately $128,000 due primarily to increases in total revenues at the
Trust's commercial and retail properties.

Total expenses increased by approximately $1,400,000 to $6,183,169
from $4,783,524 due primarily to the 1996 and 1997 acquisitions and sale
mentioned above which accounted for approximately $638,000 of this
increase. On a "same-store" basis, interest expense increased by
approximately $148,000 as a result of the Trust's execution of a mortgage
loan during 1996 collateralized by the Woodcrest Office Park property in
the amount of $7,250,000. General and administrative expenses increased by
approximately $75,000 due primarily to an increase in the incentive
compensation accrual earned by Mr. Levine, the Trust's president,
reflecting an increase in estimated unrealized gain on the Trust's real
estate assets. General and administrative expenses increased further by
approximately $224,000 resulting in an increase in payroll costs due to
staffing required as a result of acquiring and managing the additions to
the Trust's real estate portfolio. The remaining increase in total
expenses on a same-store basis of approximately $477,000 resulted primarily
from an increase in deferred loan fee amortization and depreciation and
amortization expense at the Trust's various properties.

The factors discussed above resulted in consolidated net income of
$438,809 or $0.04 per share for the three months ended June 30, 1997 as
compared to consolidated net income of $480,612 or $0.05 per share for the
three months ended June 30, 1996.

The Trust paid distributions equal to $0.10 per share on May 22, 1997
and May 22, 1996 for the first quarter of 1997 and 1996, respectively. On
July 3, 1997, the Trust declared a cash distribution for the second quarter
of 1997 of $0.10 per share payable August 20, 1997 to shareholders of
record on July 21, 1997.

SUBSEQUENT EVENTS

<PAGE>

$5.5 million. The Trust and its subsidiary hold a 75% ownership interest
and PHC holds the remaining 25% ownership interest. On July 25, 1997, the
Trust entered into a contract to sell its interest in the Colonial Courts
property to Colonial LLC, an entity affiliated with PHC. The sales
contract is subject to lender approval and is scheduled to close during the
third and fourth quarter of 1997. The Trust is expected to receive cash
proceeds of approximately $1.25 million, after credits made to Colonial LLC
at closing. The Trust will use the cash proceeds resulting from this sale
to pay down a portion of the Trust's line of credit with ANB.

FACTORS AFFECTING THE TRUST'S BUSINESS PLAN

GENERAL FACTORS AFFECTING SHARE PRICE. The market price of the Shares
may fluctuate in response to a variety of factors, including but not
limited to: (i) variations in the Trust's quarterly operating results
including changes in FFO; (ii) the gain or loss of tenants at Trust
properties; (iii) general risks, changes or trends in the real estate
industry; (iv) increased competition with other entities or persons engaged
in the same business; (v) legislative or regulatory changes; and (vi) a
change in management of the Trust. In addition, the stock market has in the
past experienced extreme price and volume fluctuations which have affected
the market price of securities of companies for reasons frequently
unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the Shares.

FACTORS AFFECTING OPERATING RESULTS. In addition to the factors
discussed above in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," other factors may affect the Trust's
liquidity and capital resources as well as results of operations including
but not limited to: (i) the Trust's ability to secure mortgage financing
for its Lexington, Newtown and Butterfield properties on terms acceptable
to the Trust; (ii) the Trust's ability to deploy cash available for
investment in operating properties generating yields greater than the
interest rate paid by the Trust on its indebtedness; (iii) the continued
occupancy by, and the financial solvency of, the major tenants at the
Trust's Colonial Penn, Florida Power and Light, Woodcrest Office Park and
6901 Riverport Drive properties; (iv) ability to re-lease space as leases
expire on terms at least as favorable as the terms of existing leases since
approximately 15% of the tenant leases at the Trust's properties are
scheduled to expire in the remaining six months of 1997; and (v) market
conditions and rental rates where the Trust's properties are located.

GENERAL REAL ESTATE INVESTMENT RISKS. Real property investments are
subject to certain risks that may not always be predicted or controlled.
The cash flow generated by, and capital appreciation realized from, real
property investments may be adversely affected by the national and regional
economic climate (which, in turn, may be adversely impacted by plant
closings, industry slow-downs, income tax rates, interest rates,
demographic changes and other factors), local real estate conditions (such

<PAGE>

as oversupply of, or reduced demand for rental space in the area), the
attractiveness of the properties, zoning and other regulatory restrictions,
competition from other land developers or developments, increased operating
costs (including maintenance costs, insurance premiums and real estate
taxes), perceptions by tenants or potential buyers of the safety,
convenience and attractiveness of the property and the willingness of the
owner of the property to provide capable management and adequate
maintenance. In light of the foregoing factors, there can be no assurance
that the cash flow generated by, and capital appreciation realized from,
the Trust's properties will be sufficient to cover expenses or recover
costs.

The cash flow generated by, or capital appreciation from, real
property investments may also be adversely affected by changes in
governmental regulations, zoning or tax laws, potential environmental or
other legal liabilities and changes in interest rates. Real estate
investments are also relatively illiquid. Therefore, the Trust's ability to
vary its portfolio promptly in response to changes in economic or other
conditions is limited, which may result in losses if the Trust is forced to
sell a property.

RISKS ASSOCIATED WITH THE RECENT ACQUISITION OF MANY OF THE
PROPERTIES; LACK OF OPERATING HISTORY. The Trust acquired all of its
properties within the last five years, and acquired fifteen of its
properties since June 1995. The most recently acquired properties may have
characteristics or deficiencies unknown to the Trust that may impact their
value or revenue potential. It is also possible that the operating
performance of the most recently acquired properties may decline under the
Trust's management.

The Trust is currently experiencing a period of rapid growth. As the
Trust acquires additional properties, the Trust will be subject to risks
associated with managing new properties, including lease-up and tenant
retention. In addition, the Trust's ability to manage its growth
effectively will require it to successfully integrate its new acquisitions
into its existing management structure. No assurances can be given that
the Trust will be able to successfully integrate such properties or
effectively manage additional properties, or that newly acquired properties
will perform as expected.

POTENTIAL INABILITY TO REPAY OR REFINANCE INDEBTEDNESS AT MATURITY.
The Trust is subject to risks normally associated with debt financing,
including the risk that the Trust's cash flow will be insufficient to meet
required payments of principal and interest, the risk that any indebtedness
will not be able to be refinanced or that the terms of any such refinancing
will be less favorable than the terms of the expiring indebtedness.

POTENTIAL EFFECT OF RISING INTEREST RATES ON TRUST'S VARIABLE RATE
DEBT. Advances under the Amended Line bear interest at variable rates and
the interest rate payable on bonds issued for the benefit of the Trust are
subject to periodic adjustments based on the then current market interest
rates. In addition, the Trust may incur other variable rate indebtedness
in the future. Increases in interest rates on such indebtedness would
increase the Trust's interest expense, which could adversely affect the
Trust's financial condition and results of operations. See "--Liquidity
and Capital Resources" above.

CONCENTRATION OF TENANTS AT SIGNIFICANT PROPERTIES. At each of the
Trust's Colonial Penn, Florida Power and Light, Woodcrest Office Park and
6901 Riverport Drive properties, one or two tenants occupy all or a
substantial majority of the leased space. If one or more of the tenants at
these properties were to default on its lease or file for bankruptcy or
reorganization, the Trust's revenues could be reduced, particularly if the
Trust were unable to re-lease the vacant space on comparable terms and
conditions. Therefore, the bankruptcy or default by one of these tenants
could have an adverse effect on the Trust's financial condition and results
of operations.

<PAGE>

COMPETITION FOR TENANTS. The Trust competes with numerous other
entities in attracting tenants to lease its space. Some of the competing
properties may be newer, better located or owned by parties better
capitalized than the Trust. An increase in the number of competitive
properties in a particular area could have a material adverse effect on:
(i) the ability to lease space in the properties (or in newly acquired or
developed properties); and (ii) the rents charged.

COMPETITION IN ACQUIRING PROPERTY. In seeking to acquire additional
property, the Trust competes with many other entities, some of which have
greater financial and managerial resources than the Trust. There can be no
assurance that the Trust will be able to acquire additional properties on
terms and conditions which are consistent with the Trust's business plan,
if at all.

RESTRICTIONS ON RE-LEASING SPACE. Tenant leases often grant tenants
the exclusive right to sell certain types of merchandise or provide certain
types of services within a property, or limit other tenants' right to sell
such merchandise or provide such services. Certain leases at Northlake
Tower Shopping Center contain these types of restrictions, which may limit
the number and types of prospective tenants for vacant space at this
property.

SUBSTANTIAL DEBT OBLIGATIONS. As of June 30, 1997, the Trust's
indebtedness aggregated approximately $94 million and the ratio of debt to
net assets for the Trust was 69%. The Trust's ability to service its debts
and other obligations when they become due depends on, among other things,
the Trust's ability to secure additional capital and the properties'
ability to generate sufficient cash flow to meet the Trust's cash needs for
operating expenses and debt service payments. Certain expenditures, such as
loan payments and real estate taxes, are not necessarily decreased by
events adversely affecting revenues or expenses at the property level. If
the Trust fails to make required payments on its indebtedness, the Trust
could lose the property securing these obligations, which would have a
material adverse effect on the Trust's financial condition and results of
operations.

ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT -- TAX
LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT. The Trust
has elected to be taxed as a REIT under Sections 856 through 860 of the
Code, and the Trust believes that it has been organized and has operated in
such a manner so as to qualify as a REIT for federal income tax purposes.
Although the Trust believes that it will remain organized and will continue
to operate so as the qualify as a REIT, no assurance can be given that the
Trust has so qualified or will be able to remain so qualified. Qualifica-
tion as a REIT involves the satisfaction of numerous requirements (in
certain instances, on an annual and quarterly basis) set forth in highly
technical and complex Code provisions for which there are only limited
judicial and administrative interpretations, and may be affected by various
factual matters and circumstances not entirely within the Trust's control.
In the case of a REIT, such as the Trust, that holds a substantial portion
of its assets in partnership form, the complexity of these Code provisions
and the applicable Treasury Regulations that have been promulgated
thereunder is even greater. Further, no assurance can be given that future
legislation, new Treasury Regulations, administrative interpretations or
court decisions will not significantly change the tax laws with respect to
qualification as a REIT or the federal income tax consequences of such
qualification. The Trust, however, is not aware of any pending proposal to
amend the tax laws that would materially and adversely affect its ability
to operate in such a manner so as to qualify as a REIT.

<PAGE>

If the Trust were to fail to qualify as a REIT with respect to any
taxable year, the Trust would not be allowed a deduction in computing its
taxable income from amounts distributed to its stockholders, and would be
subject to federal income tax (including any applicable alternative minimum
tax) on its taxable income at regular corporate rates. As a result, any
net earnings of the Trust available for investment or distribution to
stockholders would be reduced for the year or years involved because of the
Trust's additional tax liability, and distributions to stockholders would
no longer be required to be made. Moreover, unless entitled to relief
under certain statutory provisions, the Trust would also be ineligible for
qualification as a REIT for the four taxable years following the year
during which such qualification was lost. Although the Trust believes it
has operated and currently intends to operate in a manner designed to allow
it to continue to qualify as a REIT, future economic, market, legal, tax or
other considerations may cause it to determine that it is in the best
interests of the Trust and its stockholders to revoke the REIT election.

EFFECT OF REIT DISTRIBUTION REQUIREMENTS. To maintain its status as a
REIT for federal income tax purposes, the Trust generally will be required
each year to distribute to its stockholders at least 95% of its taxable
income (excluding any net capital gain and after certain adjustments). In
addition, the Trust will be subject to a 4% nondeductible excise tax on the
amount, if any, by which certain distributions paid by it with respect to
any calendar year are less than the sum of 85% of its ordinary income for
such year plus 95% of its capital gain net income for such year plus 100%
of its undistributed income from prior taxable years.

The Trust intends to make distributions to its stockholders to comply
with the 95% distribution requirement of the Code and to avoid the
nondeductible excise tax described above. The Trust anticipates that cash
flow from operations, will be sufficient to enable it to pay its operating
expenses and meet the distribution requirements of a REIT, but no
assurances can be given that this will be the case. In addition,
differences in timing between: (i) the actual receipt of income and the
actual payments of expenses; and (ii) the inclusion of such income and the
deduction of such expenses in arriving at taxable income of the Trust could
leave the Trust without sufficient cash to enable it to meet the REIT
distribution requirements. Accordingly, the Trust could be required to
borrow funds or liquidate investments on adverse terms to comply with such
requirements. The requirement to distribute a substantial portion of the
Trust's taxable income could also cause the Trust to have to distribute
amounts that would otherwise be spent on future acquisitions, unanticipated
capital expenditures or repayment of debt, which would require additional
borrowings or sales of assets to fund the costs of such items and could
restrict the Trust's ability to expand at a pace necessary to remain
competitive.

FINITE LIFE OF THE TRUST. The Trust is a finite life entity. Under
the Declaration of Trust, the Trustees are required to use reasonable
efforts to terminate the Trust by October 17, 2001; provided that the
Trustees are required to determine in good faith that the termination is in
the shareholders' best interest. Unless the Declaration of Trust is amended
to either extend the termination date or to eliminate the termination date
entirely, the Trust: (i) may be unable to obtain capital, either debt or
equity or renew existing financing on terms and conditions acceptable to
the Trust, if at all; (ii) may be forced soon after the termination date to
liquidate properties at prices below those which might prevail if the Trust
was not forced to liquidate its portfolio. Any of these factors could have
an adverse effect on the Trust's financial condition and results of
operations.

<PAGE>

POTENTIAL INCREASES IN CERTAIN TAXES AND REGULATORY COMPLIANCE COSTS.
Increases in income, service or transfer taxes are generally not passed
through to tenants under leases and may, therefore, adversely affect the
Trust's cash flow and its ability to make distributions to stockholders.
The Trust's properties are also subject to various federal, state and local
regulatory requirements, such as those imposed by the Americans with
Disabilities Act (the "ADA"), which require all public accommodations and
commercial facilities to meet certain federal standards related to access
and use by disabled persons, and state and local fire and life safety
standards. Failing to comply with the ADA could result in the imposition
of fines by governmental authorities or an award of damages to private
litigants. The Trust believes that its existing properties are in
substantial compliance with these regulatory requirements. However,
existing statutes or rules may be amended or new statutes or rules may be
adopted, each of which may have an adverse effect on the Trust's financial
condition and results of operations.

POSSIBLE ENVIRONMENTAL LIABILITIES. Under various federal, state and
local environmental laws, ordinances and regulations, a current or previous
owner or operator of real estate may be required to investigate and clean
up hazardous or toxic substances or petroleum product releases at the
property and may be held liable to a governmental entity or to third
parties for property damage and for investigation and clean-up costs that
these parties incur in connection with the contamination. These laws
typically impose clean-up responsibility and liability without regard to
whether the owner knew of or caused the presence of the contaminants, and
the liability under these laws has been interpreted to be joint and several
unless the harm is divisible and there is a reasonable basis for allocating
responsibility. The costs of investigating, remediating or removing
substances may be substantial, and the presence of these substances, or the
failure to properly remediate the contamination on a property, may
adversely affect the owner's ability to sell or rent the property or to
borrow using the property as collateral. Persons who arrange for the
disposal or treatment of hazardous or toxic substances at a disposal or
treatment facility also may be liable for the costs of removing or
remediating a release of hazardous or toxic substances at the disposal or
treatment facility, whether or not the person owns or operates the
facility. In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and costs incurred
in connection with the contamination. Finally, the owner of a site may be
subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from such site.

The Trust is not aware of any environmental liability that the Trust
believes would have a material adverse effect on the Trust's business,
assets or results of operations taken as a whole. There can be no
assurance, however, that the Trust would have knowledge of all conditions
giving rise to potential environmental liabilities subsequent to its
acquisition of a property since the Trust has ordered Phase I Environmental
Assessments only as part of its acquisition due diligence for each of its
properties and has only ordered Phase II Environmental Assessments in
limited circumstances when necessitated. Moreover, there can be no
assurance that: (i) future laws, ordinances or regulations will not impose
any material environmental liability; or (ii) the current environmental
condition of the Trust's properties will not be affected by tenants, by the
condition of land or operations in the vicinity of the Trust's properties
(such as the presence of underground storage tanks), or by third parties
unrelated to the Trust. Any expenditures associated with environmental
liabilities of the Trust could have an adverse effect on the Trust's
financial condition and results of operations.

OTHER INFORMATION

The following supplemental information has been provided by the Trust
to furnish the reader of this report an expanded understanding of the
properties owned as of June 30, 1997.

<PAGE>

<TABLE>

SUPPLEMENTAL INFORMATION
BANYAN STRATEGIC REALTY TRUST
PORTFOLIO SUMMARY AS OF
June 30, 1997

<CAPTION>
Scheduled
Lease
Expirations
----------------------
Net Carrying Value Occu- 7/1-
Square --------------------- pancy 12/31/ After
Location Footage Dollars Sq.Ft. % 1997 1998 1998
-------- ------- ----------- ------ ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
- ----------
Milwaukee Industrial
Portfolio. . . . . . . . . Milwaukee, Wisconsin 235,800 $ 5,701,000 $24.18 93% 22% 28% 43%
Elmhurst Metro Court . . . . Elmhurst, Illinois 140,800 5,066,000 35.98 96% 22% 31% 43%
Willowbrook Court. . . . . . Willowbrook, Illinois 84,300 3,858,000 45.77 100% 0% 48% 52%
Quantum Business Center. . . Louisville, Kentucky 182,200 4,998,000 27.43 82% 11% 38% 33%
Riverport Industrial . . . . Louisville, Kentucky 322,100 9,867,000 30.63 100% 0% 0% 100%
Lexington Business Center. . Lexington, Kentucky 308,800 7,187,000 23.27 95% 54% 13% 28%
Newtown Distribution
Center . . . . . . . . . . Lexington, Kentucky 87,100 3,481,000 39.97 85% 38% 36% 11%
--------- ------------ ------ ---- ---- ---- ----
Sub-Total. . . . . . 1,361,100 40,158,000 29.50 94% 23% 22% 39%
--------- ------------ ------ ---- ---- ---- ----
OFFICE
- ------
Colonial Penn Insurance. . . Tampa, Florida 79,200 7,952,000 100.40 100% 0% 0% 100%
Florida Power & Light. . . . Sarasota, Florida 83,100 9,474,000 114.01 98% 0% 0% 98%
Woodcrest Office Park. . . . Tallahassee, Florida 265,900 11,103,000 41.76 94% 5% 15% 74%
Midwest Office Center. . . . Oakbrook, Illinois 77,000 5,065,000 65.78 96% 22% 14% 60%
Phoenix Business Center. . . Atlanta, Georgia 110,600 5,453,000 49.30 100% 6% 7% 87%
Butterfield Office Plaza . . Oak Brook, Illinois 200,800 15,045,000 74.93 94% 6% 11% 77%
--------- ------------ ------ ---- ---- ---- ----
Sub-Total. . . . . . 816,600 54,092,000 66.24 95% 7% 11% 77%
--------- ------------ ------ ---- ---- ---- ----
RETAIL
- ------
Northlake Tower Festival
Shopping Center. . . . . . Atlanta, Georgia 321,800 16,732,000 52.00 99% 4% 1% 94%
--------- ------------ ------ ---- ---- ---- ----
Total/
Weighted Average . 2,499,500 $110,982,000 $44.40 95% 15% 16% 64%
========= ============ ====== ==== ==== ==== ====
</TABLE>

<PAGE>

<TABLE>

BANYAN STRATEGIC REALTY TRUST
PORTFOLIO SUMMARY AS OF JUNE 30, 1997 - CONTINUED

<CAPTION>
Net Carrying Value
Residen- ------------------------- Occu-
tial Per pancy
Location Units Dollars Unit %
-------- -------- ----------- ------ -----
<S> <C> <C> <C> <C> <C>
RESIDENTIAL
- -----------

Colonial Courts
of Westland. . . . . . . . Columbus, Ohio 350 $ 5,062,000 $14,463 94%
Country Creek. . . . . . . . Oklahoma City, Oklahoma 320 7,469,000 23,341 90%
Willowpark . . . . . . . . . Lawton, Oklahoma 160 4,454,000 27,838 87%
Winchester Run . . . . . . . Oklahoma City, Oklahoma 192 4,492,000 23,396 89%
Woodrun Village. . . . . . . Yukon, Oklahoma 192 4,570,000 23,802 97%
----- ------------ ------- ---

Total/Weighted
Average. . . . . . 1,214 $ 26,047,000 $21,456 92%
===== ============ =======
---
Portfolio Total. . . $137,029,000 94%
============ ===

</TABLE>

<PAGE>

BANYAN STRATEGIC REALTY TRUST
COMPARISON OF AVERAGE "IN PLACE" AND MARKET RENTS
AS OF JUNE 30, 1997

AVERAGE AVERAGE
SQUARE "IN PLACE" MARKET
FOOTAGE BASE BASE
(NOTE 1) RENTS RENTS
-------- ---------- --------
Industrial . . . . . . . . . . 1,335,700 $4.28 $ 4.49
Office . . . . . . . . . . . . 737,400 8.51 9.90
Retail . . . . . . . . . . . . 321,800 8.48 10.14
--------- ----- ------
Total/
Weighted Average . . . . 2,394,900 $6.12 $ 6.93
========= ===== ======

AVERAGE AVERAGE
"IN PLACE" MARKET
RENTS RENTS
--------- --------
RESIDEN-
TIAL PER UNIT
PROPERTY TYPE UNITS (NOTE 2) PER UNIT
- ------------- --------- --------- --------

Residential. . . . . . . . . . 1,214 $379 $439

- -------

Note 1 - The "In Place" Rents for approximately 105,000 square feet of
the portfolio have been excluded from the above calculation because the
lease terms relative to that space are unique compared to the market. It
is the Trust's view that inclusion of these rents in the above computation
would make the analysis less meaningful.

Note 2 - A portion of the difference between the above "In Place"
Rents and Market Rents per unit is attributable to the difference in the
size of the Trust's rental units compared to the size of other similar
units in the market place. The Trust's "In Place" Rents adjusted for the
size differential are 5% to 7% below Market Rent.

<PAGE>

PART II - OTHER INFORMATION

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

The Trust held its 1996 Annual Meeting of Shareholders on July 8,
1997. There were five proposals considered at the Meeting:

Proposal #1 was to elect three Class A Trustees to hold office for one
year or otherwise as provided in the Trust's amended and restated
Declaration of Trust.

Proposal #2 was to concur in the selection of Ernst & Young LLP as the
Trust's independent public accountants for the fiscal year ended December
31, 1997.

Proposal #3 was to authorize the issuance of shares of the Trust's
beneficial interest to Leonard G. Levine, President, pursuant to the terms
of an agreement between the Trust and Mr. Levine.

Proposal #4 was to amend Section 3.3 of the Trust's Amended and
Restated Declaration of Trust to increase compensation and other
remuneration payable to the Class A Trustees.

Proposal #5 was to adopt the Trust's 1997 Omnibus Stock and Incentive
Plan.

Following are the vote totals in connection with the proposals:

PROPOSAL #1

FOR WITHHELD
SLATE OF TRUSTEES ELECTED

Walter E. Auch, Sr. 5,103,155 2,164,813
Norman M. Gold 5,110,611 2,157,357
Marvin A. Sotoloff 5,109,120 2,158,848
(all elected)

FOR AGAINST ABSTAIN

PROPOSAL #2 7,086,505 70,340 111,123
(carried)

FOR AGAINST ABSTAIN

PROPOSAL #3 3,457,429 2,527,370 314,584
(carried)

FOR AGAINST ABSTAIN

PROPOSAL #4 3,969,702 2,846,416 357,116
(not carried)

FOR AGAINST ABSTAIN

PROPOSAL #5 3,258,203 2,607,610 338,837
(carried)

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as part of this report:

Exhibits

Exhibit Number Description

Exhibit (10) Material Contracts

(i) Seventh Amendment to Loan Agreement dated
July 29, 1997 regarding the Registrant's Revolving Line of Credit with
American National Bank and Trust Company of Chicago.

(ii) 1997 Omnibus Stock and Incentive Plan dated
July 9, 1997.

(iii) Amendment to Second Amended and Restated
Employment Agreement of Leonard G. Levine dated March 19, 1997.

Exhibit (27) Financial Data Schedule

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 (3)(b) By-Laws dated March 13, 1986.

(3)(c)
and (3)(d) Amended and Restated Declaration of Trust dated as
of August 8, 1986, as amended on March 8,1991 and May 1, 1993.

(10) Material Contracts

(i) Amended Employment Agreement of Leonard G.
Levine dated January 1, 1990.

(ii) Second Amended and Restated Employment
Contract of Leonard G. Levine dated December 31, 1992.

(iii) Amendment to Loan Agreement dated December
1, 1994; Second Amendment to Loan Agreement dated December 21, 1994; Third
Amendment to Loan Agreement dated December 18, 1995; and Fourth Amendment
to Loan Agreement dated January 7, 1997 regarding the Registrant's
Revolving Line of Credit with American National Bank and Trust Company of
Chicago.

(iv) First Amendment to Note dated December 18,
1995 and Second Amendment to Note dated January 7, 1997 regarding the
Registrant's Revolving Line of Credit with American National Bank and Trust
Company of Chicago.

(v) Fifth Amendment to Loan Agreement dated
March 7, 1997 and Sixth Amendment to Loan Agreement dated April 29, 1997
regarding the Registrant's Revolving Line of Credit with American National
Bank and Trust Company of Chicago.

<PAGE>

(vi) Amended and Restated Note ($20,000,000)
dated April 29, 1997 and Note ($10,000,000) dated April 29, 1997 regarding
the Registrant's Revolving Line of Credit with American National Bank and
Trust Company of Chicago.

Exhibit (21) Subsidiaries of the Trust

(b) The following reports on Form 8-K were filed during the quarter
ended June 30, 1997:

A report on Form 8-K was filed on May 14, 1997 wherein Item 2
disclosed the Registrant's acquisitions of the Phoenix Business Park and
Butterfield Office Plaza properties.

A report on Form 8-K was filed on June 11, 1997 wherein Item 2
disclosed the Registrant's acquisition of the Oklahoma apartment portfolio.

<PAGE>

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: August 11, 1997
Leonard G. Levine, President

By: /s/ Joel L. Teglia Date: August 11, 1997
Joel L. Teglia, Vice President and
Chief Financial Officer

<PAGE>

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: ____________________________ Date: August 11, 1997
Leonard G. Levine, President

By: ____________________________ Date: August 11, 1997
Joel L. Teglia, Vice President and
Chief Financial Officer

EXHIBIT 10 (i)
- --------------
SEVENTH AMENDMENT TO LOAN AGREEMENT
-----------------------------------

THIS SEVENTH AMENDMENT TO LOAN AGREEMENT ("Sixth Amendment") is
dated as of July 29, 1997 by and between BANYAN STRATEGIC REALTY TRUST, a
Massachusetts business trust ("Borrower"), and AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO, a national banking association ("Lender").

WHEREAS, Borrower and Lender entered into a Loan Agreement dated as
of December 1, 1994 (the "Original Loan Agreement") relating to a loan made
by Lender to Borrower in the maximum principal amount outstanding at any
time not to exceed the lesser of (i) $15,000,000, and (ii) sixty percent
(60%) of the Collateral Value of all of the Designated Properties and
Designated Debt Instruments, as more fully set forth in the Original Loan
Agreement; and

WHEREAS, Borrower and Lender entered into that certain Amendment to
Loan Agreement dated as of December 1, 1994 (the "First Amendment")
pursuant to which certain Designated Properties, Designated Debt Properties
and Property Owners were withdrawn from the Original Loan Agreement; and

WHEREAS, Borrower and Lender entered into that certain Second
Amendment to Loan Agreement dated as of December 21, 1994 (the "Second
Amendment") pursuant to which a Designated Property and Property Owner were
withdrawn from the Original Loan Agreement; and

WHEREAS, Borrower and Lender entered into that certain Third Amended
Loan Agreement dated as of December 18, 1995 (the "Third Amendment")
pursuant to which, among other things, Borrower and Lender increased the
amount set forth in subclause (i) of the first Recital paragraph herein
from $15,000,000 to $30,000,000; and

WHEREAS, Borrower and Lender entered into that certain Fourth
Amendment to Loan Agreement dated as of January 7, 1997 (the "Fourth
Amendment") pursuant to which, among other things, (a) Borrower and Lender
further changed the amount set forth in subclause (i) of the first Recital
paragraph herein to $20,000,000 and (b) the Loan Maturity Date was extended
to May 31, 1998, and (c) the Loan Conversion Date was extended to May 31,
1997; and

WHEREAS, Borrower and Lender entered into that certain Fifth
Amendment to Loan Agreement dated as of March 7, 1997 (the "Fifth
Amendment") pursuant to which, among other things, there was reflected the
then current Designated Properties and Property Owners; and

WHEREAS, Borrower and Lender entered into that certain Sixth
Amendment to Loan Agreement dated as of April 29, 1997 (the "Sixth
Amendment") pursuant to which, among other things, Borrower and Lender (a)
increased the amount set forth in subclause (a) of the fifth Recital
paragraph herein from $20,000,000 to $30,000,000, (b) changed the date set
forth in subclause (b) of the fifth Recital paragraph herein from May 31,
1998 to November 30, 1998, subject to extension to May 31, 1999 as therein
provided and (c) further amended the Loan Agreement as therein set forth
(the Original Loan Agreement, as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment,
and the Sixth Amendment is hereinafter referred to as the "Loan
Agreement"); and

<PAGE>

WHEREAS, Borrower and Lender desire to further amend the Loan
Agreement as herein set forth.

NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained, Borrower and Lender do hereby agree as follows:

1. DEFINITIONS. Capitalized terms used in this Seventh Amendment but
not otherwise defined herein shall have the meaning ascribed to them in the
Loan Agreement.

2. ADDITIONAL DESIGNATED PROPERTY; ADDITIONAL PROPERTY OWNER.

a. The property listed on EXHIBIT "A" attached hereto and
made a part hereof (the "Morrow, Georgia Designated Property") shall be
considered a Designated Property in addition to the Designated Properties
previously identified in the Loan Agreement. Without limiting the
generality of the foregoing, and except as specifically set forth herein,
all representations, warranties, covenants, agreements and other provisions
of the Loan Agreement relating to Designated Properties shall be deemed to
be made on and as of the date hereof with respect to the Morrow, Georgia
Designated Property, as if the Morrow, Georgia Designated Property were
initially included as a Designated Property in the Loan Agreement.

b. BSRT Southlake L.L.C., an Illinois limited liability
company, being the property owner listed on EXHIBIT "A" hereto ("Morrow,
Georgia Property Owner") shall be considered a Property Owner in addition
to the other Property Owners identified in the Loan Agreement (and also,
therefore, included within the term Borrowing Entities). Without limiting
the generality of the foregoing, and except as specifically set forth
herein, all representations, warranties, covenants, agreements and other
provisions of the Loan Agreement relating to Property Owners shall be
deemed to be made on and as of the date hereof with respect to the Morrow,
Georgia Property Owner as if the Morrow, Georgia Property Owner were
initially included as a Property Owner in the Loan Agreement.

c. The Deed To Secure Debt, Assignment and Security
Agreement, Mortgage and Additional Collateral Documents executed pursuant
hereto, as they may be amended from time to time, shall be considered a
Mortgage and Additional Collateral Documents, respectively, under the Loan
Agreement, as amended hereby, in addition to the other Mortgages and
Additional Collateral Documents referred to thereunder. Without limiting
the generality of the foregoing, all representations, warranties,
covenants, agreements and other provisions in the Loan Agreement relating
to Mortgages and Additional Collateral Documents shall be deemed to be made
on and as of the date hereof with respect to the said Deed To Secure Debt,
Assignment and Security Agreement and Additional Collateral Documents being
executed pursuant hereto.

<PAGE>

d. After giving effect to the provisions of Section 8a and
8b hereof, the Designated Properties and the Property Owners shall be as
set forth on EXHIBIT "B" attached hereto and made a part hereof.

3. DELIVERIES. Concurrent herewith, Borrower will deliver or cause to
be delivered to Lender the following documents each in form, substance and
execution and showing solely matters satisfactory to Lender:

a. A Guaranty with respect to payments due under the
$10,000,000 Note and the Amended and Restated Note (jointly, the "Notes")
executed by the Morrow, Georgia Property Owner identified on EXHIBIT "A"
hereto.

b. Deed To Secure Debt, Assignment and Security Agreement
executed by the Morrow, Georgia Property Owner, subject only to the
Permitted Title Exceptions set forth on EXHIBIT C attached hereto.

c. UCC Financing Statements

d. An Assignment of Leases and Rents, with respect to the
Morrow, Georgia Designated Property, executed by the Morrow, Georgia
Property Owner.

e. A Pledge of Membership Interests in the Morrow, Georgia
Property Owner, executed by each Member, BSRT UPREIT Limited Partnership,
an Illinois limited partnership, and BSRT UPREIT Corp., an Illinois
corporation.

f. An Assignment of Licenses and Permits, with respect to
the Morrow, Georgia Designated Property executed by the Morrow, Georgia
Property Owner, in favor of Lender and consents thereto by all licensing
and permitting authorities.

g. An Assignment of Management Contract, with respect to the
Morrow, Georgia Designated Property, executed by the Morrow, Georgia
Property Owner in favor of Lender and a consent thereto by the managing
agent.

h. An Environmental Indemnity, with respect to the Morrow,
Georgia Designated Property, executed by Borrower and the Morrow, Georgia
Property Owner.

i. An ADA Indemnity, with respect to the Morrow, Georgia
Designated Property, executed by Borrower and the Morrow, Georgia Property
Owner.

j. A copy of any and all Tenant Leases with the Occupancy
Tenants at the Morrow, Georgia Designated Property, certified to Lender by
Borrower and the Morrow, Georgia Property Owner to be true, correct and
complete.

k. A copy of the Rent Roll for the Morrow, Georgia
Designated Property, certified to Lender by Borrower and the Morrow,
Georgia Property Owner to be true, correct and complete.

<PAGE>

l. Certified resolutions of the Trustees of Borrower
authorizing the execution of this Seventh Amendment, the documents provided
herein by Borrower and the Morrow, Georgia Property Owner and the rendering
of full performance therein.

m. A certified copy of the organizational documents and
operating agreement of the Morrow, Georgia Property Owner, and certified
corporate resolutions of the directors thereof, authorizing the execution
of the Deed To Secure Debt, Assignment and Security Agreement, Additional
Collateral Documents and/or amendments to any or all of the foregoing.

n. Copies of all recorded documents affecting the Morrow,
Georgia Designated Property.

o. Such estoppel certificates, subordination and attornment
agreements and other certificates, documents and assurances from and with
respect to the Occupancy Tenants at the Morrow, Georgia Designated Property
as Lender may require.

p. Such other papers, instructions and documents as the
Title Insurer may require for the issuance of title insurance commitments
or interim binders, for a mortgage title insurance policy or policies in
such forms and amounts, and with such endorsements as Lender reasonably may
require.

q. Such other documents and instruments as are required
pursuant hereto whether as conditions precedent to any of Lender's
obligations, or otherwise, or pursuant to any one or more of the Note, Deed
to Secure Debt, Assignment and Security Agreement, or any of them, any one
or more of the items of Additional Collateral Documents or any amendment to
any of the foregoing.

4. REPRESENTATIONS AND WARRANTIES. Without limitation of any
representations and warranties in the Loan Agreement, or of any of the
provisions hereof, Borrower hereby represents, warrants and covenants as
follows:

a. All representations and warranties made by Borrower in
the Loan Agreement are true and correct on and as of the date hereof. All
such representations and warranties, together with all covenants and
agreements of Borrower set forth in the Loan Agreement, are hereby remade
on and as of the date hereof.

b. The Morrow, Georgia Property Owner has good and
marketable fee simple title to the Morrow, Georgia Designated Property,
subject only to such exceptions as are shown on EXHIBIT "C" attached hereto
and made a part hereof. Borrower owns all of the issued and outstanding
shares of stock of the Morrow, Georgia Property Owner, free and clear of
any liens, claims or encumbrances (except to the extent shown on stock
certificates of the Morrow, Georgia Property owner in respect of customary
and mandatory restrictions under federal securities laws).

<PAGE>

c. Borrower has delivered to Lender true and correct copies
of the Tenant Leases relating to the Morrow, Georgia Designated Property.
Attached hereto as EXHIBIT "D" and made a part hereof is a true, correct
and complete Rent Roll for the Morrow, Georgia Designated Property listing
with respect to each Tenant Lease the security deposit, rent, expiration
date and, if applicable, any renewal options, purchase options, rights of
first offer or first refusal, termination rights and co-tenancy provisions,
other material conditions.

d. The representations and warranties made in Paragraph A of
Article II of the Original Loan Agreement apply to this Seventh Amendment
in the same manner as applicable therein to the Original Loan Agreement,
and also apply to the documents being executed pursuant hereto in the same
manner as applicable therein to the Notes, Reimbursement Agreement,
Mortgages and Additional Collateral Documents.

e. The funds advanced by Lender concurrent herewith have
been utilized and applied solely for the purchase price paid for the
acquisition of the Morrow, Georgia Designated Property by the Morrow,
Georgia Property Owner.

The representations and warranties contained in this Seventh
Amendment are true as of the date hereof and will be true and will be
deemed remade at and as of the date of any disbursement of the proceeds of
the Loan, except for the necessary effect of the transactions contemplated
by the Loan Agreement as amended by this Seventh Amendment.

5. AVAILABLE CASH. Until September 30, 1997, the reference to $3,000,000
in subparagraph 1 of Article III, Paragraph Q of the Original Loan
Agreement shall be $1,500,000. Commencing as of September 30, 1997 the said
amount shall automatically revert to $3,000,000.

6. COUNTERPARTS. This document may be executed in two (2) or more
counterparts, all of which taken together shall constitute one (1)
original.

7. HEADINGS. Section headings used herein are for reference and
convenience only and are not intended to be substantive and shall not be
deemed to limit or otherwise affect the interpretation of this Seventh
Amendment.

8. CONFLICT; INCONSISTENCY. Except as amended by this Seventh
Amendment, the Loan Agreement shall remain in full force and effect. In
the event of any conflict or inconsistency between the terms and provisions
of the Loan Agreement and the terms and provisions of this Seventh
Amendment, the terms and provisions of this Seventh Amendment shall control
to the extent necessary to resolve such conflict or inconsistency. Upon
full execution of this Seventh Amendment, any references herein or
elsewhere to the Loan Agreement shall be deemed to be references to the
Loan Agreement as amended by this Seventh Amendment.

9. SUCCESSORS; ASSIGNS; INTEGRATION; LAW. The provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors and assigns. This instrument
has been made, executed and delivered in the State of Illinois and shall be
governed by and construed in accordance with the laws of the State of
Illinois.

<PAGE>

IN WITNESS WHEREOF the parties have executed this Seventh Amendment
as of the day and year first above set forth.

LENDER: BORROWER:
- ------ --------

AMERICAN NATIONAL BANK AND BANYAN STRATEGIC REALTY TRUST,
TRUST COMPANY OF CHICAGO, a Massachusetts business trust
a national banking association

By: executed signature By: executed signature
-------------------------- -------------------------
Its: Vice President Its: First Vice President

<PAGE>

EXHIBIT "A"
MORROW, GEORGIA DESIGNATED PROPERTY

PROPERTY PROPERTY OWNER
-------- --------------

3000 Corporate Center BSRT Southlake L.L.C., an
Morrow, Georgia Illinois limited liability
company

<PAGE>

EXHIBIT "B"
TO SEVENTH AMENDMENT TO LOAN AGREEMENT

DESIGNATED PROPERTY PROPERTY OWNER
- ------------------- --------------

Fountain Square Office Building BSRT Fountain Square Corporation, an
(Colonial Penn Building) Illinois corporation
(Tampa Florida)

Buildings A, C, D & F BSRT Lexington Trust, a Massachusetts
Lexington Business Center business trust
Lexington, Kentucky
("Kentucky I Property")

Building B BSRT Lexington B Corp.,
Lexington Business Center an Illinois corporation
1300 New Circle Road
Lexington, Kentucky
("Kentucky II Property")

Newtown Distribution Center BSRT Newtown Trust, a Massachusetts
Lexington, Kentucky business trust
("Newtown Property")

Phoenix Business Park BSRT Phoenix Business Park Corp., an
Atlanta, Georgia Illinois corporation

Butterfield Office Plaza BSRT Butterfield Office Plaza, Inc.,
Oak Brook, Illinois an Illinois corporation

3000 Corporate Center BSRT Southlake L.L.C., an
Morrow, Georgia Illinois limited liability company

DESIGNATED DEBT PROPERTY DESIGNATED DEBT PROPERTY OWNER
- ------------------------ ------------------------------

None None

<PAGE>

EXHIBIT "C"
PERMITTED TITLE EXCEPTIONS

1. General and special taxes or assessments for 1997 and subsequent
years not yet due and payable, and any additional taxes which may result
form a reassessment of caption property.

2. Easement from Mr. Fred M. Bell to Georgia Power Company, dated August
24, 1940, recorded in Deed Book 35, Page 158, Clayton County, Georgia
Records as depicted on the survey prepared by H.E. Harper, Land Surveyor,
April 21, 1995, revised July 28, 1997.

3. Easement from Fred M. Bell to Georgia Power Company, dated March 31,
1947, recorded in Deed Book 52, Page 600, aforesaid records as depicted on
the survey prepared by H.E. Harper, Land Surveyor, April 21, 1995, revised
July 28, 1997.

4. Drainage easement for Interstate 75 condemned by Order and Judgment
on Declaration of Taking, State Highway Department of Georgia vs. 20.26
acres of land; and a Drainage Easement, and Sara Ruby Barton Bell a/k/a
Sara Ruby Barton Bell Cowart, dated November 6, 1967, recorded under Civil
Action File Number 10035, aforesaid records.

5. Easement from Corporate Center, Inc. to Georgia Power Company, dated
November 12, 1990, recorded in Deed Book 1682, Page 494, aforesaid records.

(Not Plottable)

6. Declaration of Protective Covenants and Grant of Easements between
Georgia Federal Bank, FSB, successor in title to Ansley Development
Corporation, Corporate Center, Inc., and Corporate Center Development,
Inc., dated as of July 26, 1991, recorded in Deed Book 1728, Page 567,
aforesaid records.

7. Terms, Conditions and Provisions of the document creating the
easement described as Parcel II in Exhibit "A", together with the rights of
the adjoining owners in and to the concurrent use of said easement.

8. Rights of tenants, as tenants only, under unrecorded leases for
portions of the property, for the terms (and extension options) set forth
on Exhibit hereto, which leases do not contain rights of first refusal,
rights of first offer or options to purchase in respect of the subject
property.

<PAGE>

EXHIBIT "C"
PERMITTED TITLE EXCEPTION (CONT'D)

9. ALTA/ACSM title survey for B.S.R.T. Southlake, L.L.C., American
National Bank & Trust Company of Chicago and First American Title Insurance
Company dated April 21, 1995, last revised July 28, 1997 and bearing the
seal and certification of H.E. Harper, Georgia Registered Land Surveyor No.
1321, discloses the following:

(a) Sanitary sewer lines and manholes crossing the southwestern and
southern boundary lines of subject property and extending into the Ingress-
Egress Easement area.

(b) Abandoned telephone pole, telephone line and catch basin with
drop inlet located within the southwestern boundary line of subject
property.

(d) Corrugated metal pipes, drop inlet, junction boxes and headwall
located near the northeastern corner of subject property;

(e) Detention Pond located at the northeastern corner of subject
property and extending across the northeastern boundary line thereof onto
adjacent property by an undisclosed distance;

(f) Water meter located along the southeastern boundary line of
subject property; and

(g) Light poles, clean outs and water box located on subject
property.

(h) Curb encroachment from adjoining parcel of property over onto
Parcel I by an undisclosed distance.

The following item numbered 10 only affects title to the land, exclusive of
subject property, burdened by the proration of Protective Covenants and
Grant of Easements between Georgia Federal Bank, FSB, Ansley Development
Corporation, Corporate Center, Inc., and Corporate Center Development,
Inc., dated as of July 26, 1991 recorded in Deed Book 1728, Page 567,
Clayton County, Georgia Records;

Easement from Mrs. Ruby Barton Bell to Georgia Power Company, dated March
31, 1947, recorded in Deed Book 52, Page 597, aforesaid records (only
affects the Ingress/Egress Easement Area).

<PAGE>

EXHIBIT "D"
RENT ROLL

DATED AUGUST, 1997

FOR

3000 CORPORATE CENTER DRIVE PROPERTY

EXHIBIT 10 (ii)
- ---------------

BANYAN STRATEGIC REALTY TRUST (the "Company")
1997 OMNIBUS STOCK AND INCENTIVE PLAN

I. GENERAL.

The purpose of this 1997 Omnibus Stock and Incentive Plan (the
"Plan") is to link the personal interests of participants in the Plan to
those of the Company's stockholders by granting participants nonqualified
stock options, incentive stock options, stock appreciation rights,
restricted stock, performance shares and performance units. By doing so,
the Company believes it will be able to retain and attract those highly
competent individuals upon whose judgment, initiative and leadership the
Company's success in large measure depends. Subject to approval by the
holders of the Company's shares of beneficial interest, the Plan shall
become effective July 9, 1997 (the "Effective Date") and will
remain in effect, subject to the Board's right to terminate or amend at any
time until all the Shares subject to the Plan have been purchased or
acquired, but in no event may an award be granted on or after July 9,
2007.

II. ADMINISTRATION.

The Board shall have plenary authority in its discretion, but subject
to the express provisions of the Plan, to administer the Plan, including:
(i) determining the size and types of Awards as well as the terms and
conditions of each Award; (ii) determining which Persons may participate in
the Plan; (iii) prescribing, amending or rescinding rules and regulations
relating to the Plan; (iv) determining the terms and provisions (and
amendments thereof) of the respective Plan Agreements (which need not be
identical), including the terms and provisions (and amendments) as required
in the Board's judgment to conform to any change in law or regulation
applicable thereto; and (v) making all other determinations deemed
necessary or advisable for administrating the Plan. The Board may form a
committee to exercise its authority hereunder provided that the committee
must be comprised of no less than three Persons, all of whom must be
Independent Trustees.

Each Award granted hereunder must be evidenced by minutes of a
meeting or the unanimous written consent of the Board. Except for Awards
granted to the Independent Trustees, the Board may at any time, and from
time to time, amend or suspend the Plan. Except as otherwise provided in
the Plan, the Board may modify, extend, replace or renew outstanding Awards
under the Plan, or accept the surrender of outstanding Awards (to the
extent not yet otherwise exercised) and grant new Awards in substitution
therefore. Notwithstanding the foregoing, no amendment or suspension of
the Plan without the written consent of a Participant may alter or impair
the rights of the Participant under any Award previously granted to the
Participant. The Board's determination on the foregoing matters will be
conclusive.

III. ELIGIBILITY.

Except as provided herein, all Employees or Trustees of the Company
are eligible to participate in the Plan. The Board shall select, from
among the eligible Trustees and Employees, those Persons to whom Awards may
be granted.

<PAGE>

IV. TYPES OF AWARDS.

(A) STOCK OPTIONS

(i) GRANT/EXERCISE. The Board may grant Options to
Participants in number and on terms determined by the Board; provided,
however, that each Person serving as an Independent Trustee on the tenth
business day after final adjournment of the Company's annual meeting
convened on July 8, 1997 shall receive an Option to acquire 2,000
Shares, and provided further that each Person serving as an Independent
Trustee ten business days after the final adjournment of each succeeding
annual meeting will be granted an Option to purchase 2,000 Shares.

Each grant of an Option must be evidenced by a Plan Agreement
specifying the Exercise Price, the duration of the Option, the number of
Shares to which the Option pertains, and such other provisions as the Board
determines. The Plan Agreement will also specify whether the Option is
intended to be an ISO within the meaning of Code Section 422, or
alternatively an NQSO not covered by Code Section 422; provided that an ISO
may only be granted to Employees. The Exercise Price for each grant of an
Option under this Plan may not be less than one hundred percent (100%) of
the Fair Market Value of a Share on the date of grant and provided further
that: (i) the Fair Market Value with respect to an ISO may not exceed the
maximum limitation in Section 422 of the Code in the first year that the
option may be exercised; provided that the incentive options exceeding the
limitations will be treated as non-qualified stock options; (ii) the
exercise price may not be less than 100% of Fair Market Value on the date
of grant with respect to an ISO granted to any individual who at the time
of grant owns more than 10% of the total voting power of the Company (a
"10% Owner").

Options granted hereunder will be exercisable at such times and
be subject to such restrictions and conditions as the Board may determine
in each instance. These terms and conditions need not be the same for each
grant or for each Participant. Each Option granted to an Employee will
expire at the time determined by the Board at the time of the grant;
provided, however, that no Option may be exercised later than the tenth
(10th) anniversary date of its grant, or in the case of ISOs granted to a
10% Owner, five (5) years.

(ii) PAYMENT. Options must be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Exercise Price must be paid in either:
(a) cash or its equivalent; (b) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the
total Exercise Price (provided that the Shares which are tendered must have
been held by the Participant for at least six (6) months prior to their
tender to satisfy the Option Price); or (c) by a combination of (a) and
(b). The Board also may allow cashless exercise as permitted under the
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Board determines to be
consistent with the Plan's purpose and applicable law. Subject to any
governing rules or regulations, as soon as practicable after receipt of a
written notification of exercise and full payment, the Company will deliver
Share certificates in an appropriate amount based upon the number of Shares
purchased under the Option(s) to the Participant, in the Participant's
name.

<PAGE>

(iii) RESTRICTIONS ON TRANSFERABILITY. The Board, in its sole
discretion, may impose restrictions on the transfer of any Shares acquired
pursuant to the exercise of an Option. Further, no ISO granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All ISOs granted to a Participant under the Plan will be
exercisable during the lifetime of the Participant, only by the Participant
or in the event of Disability by the Participant's legal representative.
Except as otherwise provided in a Participant's Plan Agreement, no NQSO
granted hereunder may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. All NQSOs granted to a Participant hereunder will be
exercisable during the lifetime of the Participant, only the Participant or
in the event of Disability by the Participant's legal representative.

(iv) TERMINATION. Each Plan Agreement will set forth the
extent to which the Participant may exercise Options following termination
of the Participant's employment or trusteeship with the Company. These
provisions need not be uniform among all Plan Agreements and may reflect
distinctions based on the reasons for termination, all in the Board's
discretion.

(b) STOCK APPRECIATION RIGHTS

(i) GRANT/EXERCISE. The Board may grant SARs to any Employee
Participants in number and on terms and conditions determined by the Board.

The Board may grant Freestanding SARs, Tandem SARs or any combination of
these forms. The grant price of a Freestanding SAR will be equal to the
Fair Market Value of a Share on the date of grant of the SAR. The grant
price of Tandem SARs will be equal to the Exercise Price of the related
Option. Tandem SARs may be exercised for all or part of the Shares subject
to the related Option upon the surrender of the right to exercise the
equivalent portion of the related Option. A Tandem SAR may be exercised
only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection with an ISO:
(a) the Tandem SAR will expire no later than the expiration of the
underlying ISO; (b) the value of the payout with respect to the Tandem SAR
may not exceed one hundred percent (100%) of the difference between the
Exercise Price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR is
exercised; and (c) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Exercise Price of
the ISO. Freestanding SARs may be exercised on terms and conditions set
forth by the Board. Each grant of an SAR will be evidenced by a Plan
Agreement specifying the grant price, the term of the SAR, and such other
provisions as the Board determines. The term of an SAR granted under the
Plan as determined by the Board, in it sole discretion, may not, in any
event, exceed ten (10) years.

(ii) PAYMENT. Upon exercise of an SAR, the Company will pay
the Participant an amount determined by multiplying:

(a) the difference between the Fair Market Value of a
Share on the date of exercise over the grant price; by

(b) the number of Shares with respect to which the SAR
is exercised.

At the Board's discretion, the Company may pay amounts due a
Participant on exercise of any SAR in cash, Shares of equivalent value, or
in some combination thereof. The Board's determination regarding the form
of SAR payout will be set forth in the Plan Agreement pertaining to the
grant of the SAR.

<PAGE>

(iii) TERMINATION. Each Plan Agreement relating to an SAR will
set forth the extent to which a Participant may exercise the SAR following
termination of the Participant's employment or trusteeship with the Company
and/or its Subsidiaries. These provisions will be determined in the
Board's discretion and need not be uniform among all SARs issued pursuant
to the Plan and may reflect distinctions based on the reasons for
termination.

(iv) RESTRICTIONS ON TRANSFERABILITY. Unless provided
otherwise in a Participant's Plan Agreement, no SAR granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All SARs granted to a Participant under the Plan will be
exercisable during the Participant's lifetime, only by the Participant or
in the event of Disability by the Participant's legal representative.

(i) GRANT. The Board may grant Shares of Restricted Stock to
any Employee Participants in amounts determined by the Board. Each grant
of Restricted Stock must be evidenced by a Plan Agreement specifying the
Restricted Period, the number of Shares of Restricted Stock granted, and
such other provisions as determined by the Board.

(ii) RESTRICTIONS. Except as provided in the Participant's
Plan Agreement, the Shares of Restricted Stock granted hereunder may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Restricted Period established
by the Board. All rights with respect to the Restricted Stock granted to a
Participant under the Plan will be available during the Participant's
lifetime, and only to the Participant. The Board may also impose such
other conditions and/or restrictions on any Shares of Restricted Stock as
it deems advisable, including requiring that Participants pay a stipulated
purchase price for each Share of Restricted Stock or that the Company or
individual achieve certain performance goals or other restrictions under
applicable federal or state securities laws. The Company may retain the
certificates representing Shares of Restricted Stock in the Company's
possession until all of the conditions and/or restrictions applicable to
these Shares have been satisfied.

Except as provided in the Participant's Plan Agreement, the
Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan will become freely transferable by the Participant after the
last day of the applicable Restricted Period.

(iii) VOTING RIGHTS/DISTRIBUTIONS. Participants holding Shares
of Restricted Stock granted hereunder may be granted the right to exercise
full voting rights with respect to those Shares during the Restricted
Period. During this time, Participants holding Shares of Restricted Stock
may be credited with regular cash dividends paid in respect of the
underlying Shares. The Board may apply any restrictions to the dividends
that it deems appropriate. Without limiting the generality of the
preceding sentence, if the grant or vesting of Restricted Shares granted to
a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Board may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to the
Restricted Stock, such that the dividends and/or the Restricted Stock
maintain eligibility for the Performance-Based Exception.

<PAGE>

(iv) TERMINATION. Each Plan Agreement will set forth the
extent to which the Participant may receive unvested Restricted Stock
following termination of the Participant's employment or trusteeship with
the Company. These provisions will be determined in the Board's
discretion, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination; provided, however, that, except in the cases of terminations
connected with a Change in Control and terminations by reason of death or
disability, the vesting of Shares of Restricted Stock which qualify for the
Performance-Based Exception and which are held by Covered Employees will
occur at the time they otherwise would have, but for the termination.

(d) PERFORMANCE UNITS AND PERFORMANCE SHARES

(i) GRANT/VALUE. The Board may grant Performance Units
and/or Performance Shares to any Employee Participant in such amounts and
upon such terms as determined by the Board. Each Performance Unit will
have an initial value that is established by the Board at the time of
grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Board will set
performance goals in its discretion which will determine the number and/or
value of Performance Units/Shares paid to a Participant. For these
purposes, the time period during which the performance goals must be met
will be called a "Performance Period."

(ii) EARNING OF PERFORMANCE UNITS/SHARES. After the
applicable Performance Period has ended, the holder of Performance
Units/Shares will be entitled to receive a payout on the number and value
of Performance Units/Shares earned by the Participant over the Performance
Period.

(iii) TIME AND FORM OF PAYMENT. Payment of Performance
Units/Shares earned by a Participant will be made in a single lump sum
following the close of the applicable Performance Period. The Board, in
its sole discretion, may cause the Company to pay any Performance
Units/Shares in the form of cash or in Shares (or in a combination thereof)
which have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period.

Any such Shares may be granted subject to any restrictions deemed
appropriate by the Board. The determination of the Board with respect to
the form of payout will be set forth in the Participant's Plan Agreement.

At the Board's discretion, Participants may be entitled to
receive any dividends declared with respect to Shares which have been
earned in connection with the grant of Performance Units/Shares which have
been earned, but not yet distributed to Participants, provided that these
dividends will be subject to the same accrual, forfeiture, and payout
restrictions applicable to dividends earned in respect of Shares of
Restricted Stock. In addition, Participants may, at the discretion of the
Board, be entitled to exercise voting rights with respect to these Shares.

(iv) TERMINATION. Unless determined otherwise by the Board,
if a Participant is terminated by reason of death, disability, or
retirement during a Performance Period, the Participant will receive a
payout of the Performance Units/Shares which is prorated, as specified by
the Board in its discretion. If a Participant is terminated for any
reason, all Performance Units/Shares will be forfeited by the Participant
to the Company unless determined otherwise by the Board. Generally,
payment of Performance Units/Shares earned by a Participant will be made at
a time specified by the Board in its sole discretion and set forth in the
Participant's Plan Agreement. Notwithstanding the foregoing, with respect
to Covered Employees who retire during a Performance Period, payments will
be made at the same time as payments are made to Participants who did not
terminate employment during the applicable Performance Period.

<PAGE>

(v) RESTRICTIONS ON TRANSFER. Except as otherwise provided
in a Participant's Plan Agreement, Performance Units/Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All SARs granted to a Participant under the Plan will be
exercisable during the Participant's lifetime, only by the Participant or
in the event of Disability by the Participant's legal representative.

V. SHARES SUBJECT TO THE PLAN, MAXIMUM AWARDS, RESTRICTIONS AND
VALUATION.

(a) NUMBER OF SHARES

The stock subject to the Awards granted under this Plan will be the
Company's shares of beneficial interest, par value $0.01, and any other
stock or security resulting from the adjustment thereof or substitution
therefor. There shall be 1.0 million Shares reserved and available for
Awards granted hereunder. The Shares issued upon exercise of an Award may
be authorized and unissued Shares, or Shares issued and reacquired by the
Company.

(b) RELEASE OF SHARES

If any Award granted hereunder is cancelled, expires or terminates
for any reason without having been exercised in full, the Shares subject to
the Award will not thereafter be available for grant under this Plan except
if and to the extent issued to a Participant under the Plan in replacement
for outstanding Awards surrendered by the Participant.

In addition to the restrictions on transfer which the Board may
impose on the Shares issuable on exercise of an Award or on the Award
itself, all Shares issued upon the exercise of an Award and the Awards will
be subject to applicable federal and state laws, rules and regulations
including, as may be required, approval by any government or regulatory
agency. The Company may cause any Shares or Awards to be properly marked
with a legend or other notation reflecting the limitations on transfer.
Fractional Shares will not be delivered, but will be rounded to the next
lower number of Shares.

(d) STOCK VALUATION

Any determination of the value or closing price of the Shares
required by the Plan shall be determined in accordance with the following
provisions, as applicable (which value or closing price shall be referred
to herein as the "Fair Market Value per Share," or for a group of Shares a
total "Fair Market Value"):

(i) if, on the relevant date, the Shares are traded on a
national or regional securities exchange or on the NASDAQ National Market,
on the basis of the closing sale price on the principal securities exchange
on which the Shares may then be traded or, if there is no sale on the
relevant date, then on the last previous day on which a sale was reported;

(ii) if, on the relevant date, the Shares are not listed on
any securities exchange or traded on the NASDAQ National Market, but
otherwise are publicly-traded and reported on NASDAQ, on the basis of the
mean between the closing bid and asked quotations in the over-the-counter
market as reported by NASDAQ; but if there are no bid and asked quotations
in the over-the-counter market as reported by NASDAQ on that date, then the
mean between the closing bid and asked quotations in the over-the-counter
market as reported by NASDAQ on the last previous day any bid and asked
prices were quoted; and

(iii) if, on the relevant date, the Shares are not publicly-
traded as described in (i) or (ii), in good faith by the Board.

<PAGE>

VI. PLAN AGREEMENTS, VESTING AND CANCELLATION PROVISIONS.

(a) PLAN AGREEMENTS

Each Award granted hereunder will be evidenced by a written Plan
Agreement specifying, among other things, the period for which the Award is
granted, the number of Shares covered by the Award, the Exercise Price and
the exercise schedule. The grant and exercise of Awards hereunder are sub-
ject to all applicable federal, state and local laws, rules and regulations
and, if required, any approvals by any government or regulatory agency.

(b) EXERCISE OF AWARDS

Except for Stock Options awarded to the Independent Trustees, Awards
granted hereunder will generally vest and be exercisable in installments as
follows: (i) to the extent of 33.3% of the number of Shares commencing on
the first anniversary of the date of grant; (ii) to the extent of an
additional 33.3% of Shares commencing on the second anniversary of the date
of grant; and (iii) to the extent of an additional 33.4% of Shares
commencing on the third anniversary of the date of grant; provided that the
Board may accelerate vesting in the event of a participant's death,
permanent disability or retirement in accordance with the Company's
retirement policy or where acceleration of vesting is, in the Board's
judgment, in the Company's best interest provided further that no Award
will vest if, to do so, would create a situation in which would result in
an "excess parachute payment" within the meaning of Section 280G of the
Code. Stock Options granted to the Independent Trustees hereunder will
vest and be exercisable in installments as follows: (i) to the extent of
50.0% of the number of Shares commencing on the first anniversary of the
date of grant; and (ii) to the extent of 50.0% of the number of Shares
commencing on the second anniversary of the date of grant. If the
Participant does not, in any given period, purchase all of the Shares
subject to the Award, the Participant's right to purchase any Shares not
purchased in the period will continue until the expiration or sooner
termination of the Award, except to the extent provided otherwise in the
Plan Agreement. Except as otherwise provided herein or in a Plan
Agreement, as a condition to the grant of an award to any Employee, the
Participant must remain in the continuous employ of the Company or its
subsidiaries for the period of time specified by the Board in the Plan
Agreement. To exercise an Award, the Participant must give written notice
to the Company's Vice President General Counsel at the Company's office at
Suite 2900, 150 South Wacker Drive, Chicago, Illinois 60606 (or the office
which is the successor main office or which is otherwise designated as the
office to which notice is to be given) of the number of Shares to be
acquired and make any arrangements with the Vice President General Counsel
as are acceptable to the Vice President General Counsel to satisfy the
Participant's federal, state and local tax withholding obligations and
satisfy the Participant's obligation under the Plan and the Plan Agreement.

(k) CANCELLATION OF AWARDS

Except as otherwise provided, Awards granted to Employees are
exercisable only prior to "termination of employment" as defined herein. A
Person will be considered to incur a "termination of employment" on the
latest date on which the Person no longer is, for whatever reason, an
officer or Employee of the Company or its subsidiaries ("Termination of
Employment"). Notwithstanding anything herein to the contrary, if a
Participant incurs a Termination of Employment due to death or permanent
and total disability or retirement in accordance with the Company's
retirement policy, all Awards granted under the Plan and outstanding on the
date of the Termination of Employment will be exercisable to the extent
provided in the Participant's Plan Agreement. Stock options granted to an
Independent Trustee are exercisable only so long as the individual con-
tinues to hold office; provided, however, that if the individual ceases to
hold office due to death, permanent and total disability or expiration of
the individual's term of office after the individual attains his 75th
birthday, all Awards granted under the Plan will be exercisable in
accordance with the individual's Plan Agreement.

<PAGE>

VII. PROVISIONS APPLICABLE TO THE PLAN.

(a) INVESTMENT REPRESENTATION

If the disposition of Shares acquired on exercise of any Award is not
covered by a then current registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), and is not otherwise exempt
from registration, the Shares will be restricted against transfer to the
extent required by the Securities Act or regulations thereunder. Each Plan
Agreement will contain a requirement that, on demand by the Board, the
individual exercising an Award will state in writing, as a condition
precedent to each exercise, that the Participant is acquiring the Shares
for investment only and not for resale or with a view to distribution. The
Board may set forth in a Plan Agreement other terms and conditions relating
to the registration or qualification of the Shares under federal or state
securities laws as it desires.

(b) EFFECT OF CERTAIN CHANGES

(i) ADJUSTMENTS. If the Company declares a stock dividend,
stock split, combination or exchange of shares, recapitalization or other
change in the capital structure (including, but not limited to, a split-up,
spin-off, split-off or distribution to Company stockholders other than a
normal cash dividend), sells all or a substantial portion of its assets (if
measured on either a stand-alone or consolidated basis), undertakes a
reorganization, rights offering, share offering, partial or complete
liquidation, or any other corporate transaction or event involving the
Company and having an effect similar to any of the foregoing, then the
Board may adjust or substitute, as the case may be, the number of Shares
available for Awards under the Plan, the number of Shares covered by
outstanding Awards, the exercise price per Share of outstanding Awards, any
target Fair Market Value per Share that the Shares are required to reach
for all or a portion of any Awards to vest, and any other characteristics
or terms of the Awards as the Board deems necessary or appropriate to
equitably reflect the effects of those changes to the Award holders;
provided, however, that any fractional Shares resulting from the adjustment
shall be eliminated by rounding to the next lower whole number of Shares
with appropriate payment for the fractional Shares as determined by the
Board. The Board may waive any limitations set forth in or imposed
pursuant to the terms and conditions of the Plan or a Plan Agreement so
that all Awards, from and after a date prior to the effective date of an
event specified above or a Change in Control (as defined herein), will be
exercisable in full.

(ii) DISSOLUTION, LIQUIDATION, TRUST SEPARATION OR DIVISION.
If the Board proposes to dissolve or liquidate the Company or the Company
is involved in any other corporate transaction or event and having effects
on the Awards similar to any of the foregoing, the Board may terminate each
outstanding Award granted under the Plan as of a date fixed by the Board;
provided, however, that not less than thirty (30) days prior written notice
of the date so fixed shall be given to each Participant (or Beneficiary),
who shall have the right, during the thirty (30) days preceding such date,
to exercise all Awards, whether or not otherwise exercisable, as to all or
any part of the Shares covered thereby.

(iii) MERGER, CONSOLIDATION, OR SALE OF ASSETS. If the Company
is merged into or consolidated with another entity under circumstances
where the Company is not the surviving corporation, or the Company sells or
otherwise disposes of all or a substantial portion of its assets or is
involved in any other transaction or event which has an effect on the
Shares or Awards similar to the foregoing, then all Awards outstanding
under the Plan will immediately vest and become exercisable at that time
and the Board may cancel all outstanding Awards as of the effective date of
any

<PAGE>

transaction or event; provided that not less than thirty (30) days
prior written notice of the date so fixed for cancellation shall be given
to each Participant (or Beneficiary), who shall have the right, during the
thirty (30) days preceding the effective date of the transaction or event,
to exercise all Awards, whether or not otherwise exercisable, as to all or
any part of the Shares covered thereby.

(iv) CERTAIN MERGERS AND CONSOLIDATIONS. The provisions of
this Section VII(b) will not apply to a merger or consolidation in which
the Company is the surviving entity and Shares are not converted into or
exchanged for stock, securities of any other entity, cash or any other
thing of value.

(v) DEFINITION OF SHARES. In the event of a change in the
Company's Shares as presently constituted, the Shares resulting from any
change shall be deemed to be the Shares within the meaning of the Plan.

(vi) DETERMINATION OF THE BOARD. The Board shall make all
adjustments required under this Section VII(b). All adjustments shall be
final, binding and conclusive.

(vii) LIMITATIONS. The grant of an Award pursuant to the Plan
will not in any way affect the Company's right or power to make
adjustments, reclassifications, reorganizations or changes to its capital
or business structures or to merge or to consolidate or to dissolve,
liquidate, sell or transfer all or part of its business or assets.

The Participant or Beneficiary may satisfy any withholding obligation
under the Plan or a Plan Agreement by requesting the Company to withhold
and not transfer or issue Shares with a Fair Market Value equal to the
withholding obligation, otherwise issuable or transferable to the
Participant pursuant to the exercise of an Award. The provisions of this
Section VII(c) will apply and be available to any Participant who, on the
date of exercise of an Award may be subject, in the Company's opinion, to
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder (a "Section 16(b)
Optionee") only if, and to the extent that: (i) the Participant requests
withholding of the Shares not earlier than six (6) months subsequent to the
date of the grant of the Participant; or (ii) the election by the
Participant otherwise complies with the exemptive provisions of Rule 16b-3
under the Exchange Act as determined in the sole opinion of the Company's
General Counsel. If a Participant is issued Shares without making an
election as described in this Section VII(b) and if the date on which the
amount of tax withholding is determined is deferred until at least six
months after the exercise date of the Award, the Board may require as a
condition to issuance of Shares that the Participant tender to the Company
the proper number of Shares to satisfy the withholding obligation on the
date the tax withholding is determined. Any right or election of a
Participant under this Section VII(b) will be subject to the approval of
the Board. With respect to persons subject to Section 16 of the Exchange
Act, transitions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of this Plan or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Board.

(d) RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT

The Plan and any Award granted under the Plan will not confer upon
any Participant any right to continued employment by the Company or its
subsidiaries, nor shall the Plan or any Plan Agreement interfere in any way
with the right of the Company or its subsidiaries, subject to other
agreements with the Participant, to terminate a Participant's employment at
any time.

<PAGE>

(e) NOTICE TO THE COMPANY OF OPTIONEE'S ELECTION

Any Participant exercising an election under Section 83 of the Code
to have the receipt of Shares hereunder taxed currently, without regard to
the restrictions imposed under the Plan or a Plan Agreement or law, must
give notice to the Company of the election immediately upon making the
election.

(f) INDEMNIFICATION OF THE BOARD

In addition to such other rights of indemnification as they may have
as Board members, and to the extent permitted by law, the members of the
Board shall be indemnified and held harmless by the Company and each direct
or indirect subsidiary of the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with
any appeal thereof, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan
or any Award granted thereunder, and against all amounts paid by them in
settlement thereof (provided the settlement is approved by the Company's
legal counsel) or paid by them in satisfaction of a judgment in any action,
suit or proceeding, except if the Board member is found, in a non-
appealable decision, to have been grossly negligent in performing its
duties or where the Board member's misconduct is found to be gross, wanton
or willful; provided that within sixty (60) days after institution of any
action, suit or proceeding a Board member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the
action.

(g) BENEFICIARY DESIGNATION

Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
the Participant's death before the Participant receives any or all of the
benefits. Each designation will revoke all prior designations by the same
Participant, and must be in a form prescribed by the Company and will be
effective only when filed by the Participant in writing with the Company
during the Participant's lifetime. In the absence of any designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.

(h) DEFERRALS

The Board may permit or require a Participant to defer the receipt of
cash or the delivery of Shares that would otherwise be due to the
Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the
satisfaction of any requirements or goals with respect to Performance
Units/Shares. If a Participant makes any deferral, the Board shall, in its
discretion, establish rules and procedures before paying the deferred
amounts.

(i) AMENDMENT, MODIFICATION AND TERMINATION

Subject to the terms of the Plan, the Board may alter, amend, suspend
or terminate the Plan in whole or in part. The Board may make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations or accounting principles, whenever the Board determines that
such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan; provided that no such adjustment may be
authorized to the extent that such authority would be inconsistent with the
requirements of Section 162(m) of the Code, as from time to time amended.
No termination, amendment or modification of the Plan shall adversely
affect in any material way any Award previously granted under the Plan,
without the written consent of the Participant holding the Award.

<PAGE>

(j) COMPLIANCE WITH CODE SECTION 162(m)

At all times when Code Section 162(m) is applicable, all Awards
granted under this Plan must comply with the requirements of Code
Section 162(m); provided, however, that if the Board determines that
compliance is not desired with respect to any Award or Awards available for
grant under the Plan, then compliance with Code Section 162(m) will not be
required. In addition, if changes are made to Code Section 162(m) to
permit greater flexibility with respect to any Award or Awards available
under the Plan, the Board may, subject to this Article 15, make any
adjustments it deems appropriate.

(k) PLAN BINDING ON SUCCESSORS

Except as provided herein, the Plan shall be binding on the
successors and assigns of the Company.

(l) INTERPRETATION AND GOVERNING LAW

Whenever necessary or appropriate in this Plan and where the context
admits, the singular term and the related pronouns shall include the plural
and the masculine and feminine gender. The Plan shall be construed and
enforced according to the internal laws of the State of Delaware.

VIII. DEFINITIONS

(a) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations of the Exchange Act.

(b) "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or Performance
Units.

(c) "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

(d) "Board" or "Board of Trustees" means the Board of Trustees of
the Company.

(e) "Change of Control" shall mean that the members of the Board of
Trustees of the Company as of the date of the relevant Plan Agreement fail
to constitute a majority of the members of the Board of Trustees of the
Company; provided, however, that if a Participant has consented to the
appointment or election of an individual who becomes a new member of the
Board of Trustees, for purposes of this definition, the new member shall be
treated as if he were a member of the Board of Trustees as of the date of
the Plan Agreement.

(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

(g) "Committee" means any committee appointed by the Board to
administer Awards to Participants. Any such committee shall be comprised
entirely of Trustees.

(h) "Company" means Banyan Strategic Realty Trust, a Massachusetts
business trust, including any and all Subsidiaries and Affiliates, and any
successor thereto as provided herein.

(i) "Covered Employee" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.

<PAGE>

(j) "Disability" shall have the meaning ascribed to such term in
the Participant's governing long-term disability plan or, if no such plan
exists, at the discretion of the Board.

(k) "Effective Date" shall have the meaning ascribed to such term
in Section I hereof.

(l) "Employee" means any employee of the Company or its
Subsidiaries or Affiliates. Trustees who are employed by the Company shall
be considered Employees under this Plan.

(m) "Employee Participant" shall mean any Participant who is an
Employee.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

(o) "Exercise Price" means the price at which a Share may be
purchased by a Participant pursuant to an Award.

(p) "Fair Market Value" shall have the meaning set forth in
Section V(D) hereof.

(q) "Freestanding SAR" means an SAR that is granted independently
of any Options.

(r) "Incentive Stock Option" or "ISO" means an option to purchase
Shares and which is designated as an Incentive Stock Option intended to
meet the requirements of Code Section 422.

(s) "Independent Trustee" shall mean a member of the Board who is
not an Employee or officer of the Company or its Subsidiaries and who is
not an Affiliate of the Company or its Subsidiaries except by virtue of
being a member of the Board.

(t) "Insider" shall mean an individual who is, on the relevant
date, an officer, trustee or ten percent (10%) beneficial owner of any
class of the Company's equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under Section 16 of the
Exchange Act.

(u) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares which is not intended to meet the requirements of Code
Section 422.

(v) "Option" means an Incentive Stock Option or Nonqualified Stock
Option.

(w) "Participant" means an Employee or Trustee who has been
selected to receive an Award or who has outstanding an Award granted under
the Plan.

(x) "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).

(y) "Performance Share" means an Award of Shares subject to
performance standards.

(z) "Performance Unit" means an Award of Shares, options or other
securities subject to performance standards granted to a Participant.

(aa) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.

<PAGE>

(bb) "Plan Agreement" means the individual agreements entered into
between the Company and each Participant receiving grants hereunder and
setting forth the terms and conditions applicable to the relevant Award.

(cc) "Restricted Period" means the period during which the transfer
of Shares of Restricted Stock is limited in some way and the Shares are
subject to a substantial risk of forfeiture, as provided herein.

(dd) "Restricted Stock" means an Award Shares subject to
restrictions on transfer granted to a Participant.

(ee) "Retirement" shall have the meaning ascribed to such term in
the Company's tax-qualified retirement plan or as determined by the Board.

(ff) "Shares" means the shares of beneficial interest of the
Company.

(gg) "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR.

(hh) "Subsidiary" means any corporation, partnership, joint venture,
or other entity in which the Company has a majority voting interest.

(ii) "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which requires forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased
under the Option, the Tandem SAR shall similarly be canceled).

(jj) "Trustee" shall mean a member of the Company's Board of
Trustees.

EXHIBIT 10 (iii)
- ----------------
AMENDMENT
TO
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

This Amendment to Second Amended and Restated Employment Agreement
(this "Amendment") is made and entered into as of March 19, 1997 by and
between Leonard G. Levine (the "Executive") and Banyan Strategic Realty
Trust (the "Fund").

RECITALS:

A. The parties previously entered into a Second Amended and
Restated Employment Agreement made as of December 31, 1992 (the "Employment
Agreement").

B. The parties desire to amend certain provisions of the
Employment Agreement.

NOW THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Fund and
the Executive agree as follows:

1. AMENDMENT OF EMPLOYMENT AGREEMENT. Subject to the conditions
set forth in Section 2 hereof, the Employment Agreement is amended as
follows:

a. SECTION 6(c) is deleted in its entirety and replaced by
the following:

Payment of the Additional Compensation computed under this
Section 6 shall be made on March 15 of the year following the period for
which the award is made. One hundred percent (100%) of the award shall be
paid in shares of the Fund ("Award Shares"), provided that for fiscal years
ended prior to January 1, 1996; the Additional Compensation shall be paid
80% in cash and 20% in Award Shares. The Award Shares issued pursuant to
this Section 6(c) shall not be transferred prior to the date which is
seventy-five (75) days after the Computation Date (as defined in
Section 6(d) (the "Vesting Date")); provided that eighty percent (80%) of
the Award Shares distributed to the Executive in respect of Additional
Compensation earned for the fiscal year ended December 31, 1996 shall
immediately vest upon Stockholder Approval as defined in SECTION 2 of this
Amendment (the "Additional Incentive Shares") and may be immediately
transferred, pledged or otherwise freely alienated in compliance with the
registration requirements of federal and state securities law or exemptions
therefrom following such Stockholder Approval. The Award Shares, except
for the Additional Incentive Shares, shall be subject to forfeiture in
accordance with the provisions of Section 6(d) and any Certificate
representing all or any portion of the Award Shares shall bear an
appropriate legend and shall be held by the Fund in trust for the Executive
pending the lapse of the forfeiture provisions under Section 6(d). At the
request of Executive, the Additional Incentive Shares may be separately
certificated. The number of Award Shares distributable to the Executive
shall be based upon the average closing price of the Fund's stock for the
five (5) business days ended prior to December 31 of the calendar year for
which the payments are made. Subject to the provisions of Section
2(b)(iii)-(iv) of this Amendment, the Executive shall be entitled to
receive and retain all dividends paid on the Award Shares held by him,
including those shares held in trust by the Fund for the Executive. The
Fund, at its sole cost, shall take all reasonable steps necessary to cause
the filing of a registration statement and listing application

<PAGE>

to be effective as soon after the Vesting Date as practical,
with respect to the Award Shares, with the appropriate regulatory bodies,
on terms more fully set forth in the Registration Rights Agreement to be
entered into pursuant to the provisions of Section 3 of this Amendment.

b. SECTION 6(d) shall be amended and restated in its
entirety as follows:

(d) As soon as practicable after December 31, 1997, or, if
earlier, upon the termination of the Executive's employment ("Computation
Date") the computation provided in Section 6(b) will be computed on a
cumulative basis covering the period January 1, 1993 through the
Computation Date; provided, however, that for such computation the Adjusted
Cash Flow shall also include all unrealized profits and gains generated in
connection with Reinvestment Activities. In connection therewith, the
parties further agree that the definition of "Net Income" in Section 6(a)
of the Employment Agreement shall exclude the financial accounting effect
of straight lining rents.

(i) In the event that the total cumulative Additional
Compensation as recomputed at the Computation Date exceeds the aggregate
Additional Compensation paid to the Executive, the Fund shall award to the
Executive, no later than the Vesting Date, a number of Award Shares equal
in value to this excess (the "Final Award Shares").

(ii) In the event that the cumulative Additional
Compensation as recomputed at the Computation Date is less than the
aggregate amount of the Additional Compensation paid to the Executive, all
or a portion of the Award Shares, except for the Additional Incentive
Shares (the "Forfeitable Shares"), shall be forfeited and returned to the
Fund. In determining the amount of the Forfeitable Shares, each Award
Share shall be valued at the average price at which the Shares were valued
when issued to the Executive under Section 6(c). For example, if the
Executive holds 100,000 Award Shares with an average value determined under
Section 6(c) at the time of issue of $3.00 and the cumulative Additional
Compensation at the Computation Date is determined to be $45,000 less than
the amount actually paid to the Executive, the Executive shall return up to
15,000 Forfeitable Shares to the Fund without regard to the actual current
value of those shares. Certificates representing the balance of any Award
Shares shall be delivered to the Executive promptly after the Vesting Date.

(iii) Payment of the Additional Compensation computed
under this Section 6(d) shall be made no later than the Vesting Date.
Except as provided herein, all of the Additional Compensation under this
Section 6(d) shall be payable in Award Shares. The number of Final Award
Shares to be issued pursuant to Section 6(d)(i) above shall be calculated
by dividing the Additional Compensation computed under Section 6(d) by
the average closing price of the Fund's stock for the five (5) business
days ended prior to December 31, 1997. The Final Award Shares shall:
(A) bear appropriate legends; and (B) be transferrable only in compliance
with the registration requirements of federal and state securities law or
exemptions therefrom.

<PAGE>

c. SECTION 17(a) is deleted in its entirety and replaced by
the following:

(a) NOTICE. Any notice required or permitted hereunder
shall be made in writing (i) either by actual delivery of the notice into
the hands of the party thereunder entitled, or (ii) by the mailing of the
notice in the United States mail, certified or registered mail, return
receipt requested, all postage prepaid and addressed to the party to who
the notice is to be given at the party's respective address set forth
below, or such other address as the parties may from time to time designate
by written notice as herein provided.

As addressed to the Fund:

Banyan Strategic Realty Trust
Suite 2900
150 South Wacker Drive
Chicago, Illinois 60606

With a copy to:

Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attention: Michael J. Choate

As addressed to the Executive:

Leonard G. Levine
Suite 2900
150 South Wacker Drive
Chicago, Illinois 60606

With a copy to:

Saitlin Patzik Frank & Samotny Ltd.
150 S. Wacker Drive
Suite 900
Chicago, Illinois 60606
Attention: Alan B. Patzik

The notice shall be deemed to be received in case (i) on the date of
its actual receipt by the party entitled thereto and in case (ii) on the
date of its mailing.

<PAGE>

2. APPROVALS.

a. Effectiveness of the Amendment is subject, to the extent
required, to: (i) approval of the Fund's stockholders on or before thirty
days after the Fund's Annual Meeting, including any adjournments or
postponements thereof (the "Final Approval Date"), at which the issuance of
the Award Shares is submitted to a vote of the Fund's Stockholders
("Stockholder Approval"), unless extended by agreement of the parties; and
(ii) approval of the Nasdaq of the inclusion of the Award Shares and the
Final Award Shares in the Nasdaq National Market System ("Nasdaq
Approval"). The Fund shall use its best efforts to promptly obtain
Stockholder Approval and Nasdaq Approval, as well as any other consents or
approvals which may be required. Pending Stockholder Approval and Nasdaq
Approval, the Fund shall issue the Award Shares issuable in respect of the
Additional Compensation for the year ended December 31, 1996 into escrow to
be held for the Executive's benefit pending such approvals. The Executive
shall be entitled to all distributions paid by the Fund in respect of the
shares held in escrow. If Stockholder Approval and NASDAQ Approval is
obtained by the Final Approval Date, the Fund shall release the Additional
Incentive Shares from escrow to the Executive as soon as practicable, but
in no event later than five (5) business days after receipt of the last
approval. These shares may not be transferred by the Executive except in
compliance with federal and state securities law or an exemption therefrom.

These shares shall have the benefit of the Registration Rights Agreement
described in Section 3 hereof.

b. If either Stockholder Approval or Nasdaq Approval is not
obtained by the Final Approval Date then: (i) the amendments contemplated
by SECTION 1 hereof shall be null and void and the terms and conditions of
the Employment Agreement shall remain in full force and effect unless
amended, waived or altered by the parties; (ii) the Additional Incentive
Shares shall be immediately cancelled (the "Cancelled Shares");
(iii) Executive shall be paid, in cash, an amount equal to the Additional
Compensation which had been previously paid through the issuance of the
Cancelled Shares, and thereafter, all Additional Compensation due in
connection with the Agreement shall be paid 20% in the form of Award Shares
and 80% in cash; and (iv) Executive shall be entitled to be paid interest
on the Additional Compensation paid to it pursuant to (iii) above in
respect of the Cancelled Shares at the same rate as dividends are then
being paid in respect of the Fund's shares, with any dividends theretofore
received in respect of the Cancelled Shares credited against the interest
due. For purposes of this paragraph, the rate at which dividends are then
being paid on the Fund's shares shall be deemed to be the percentage which
the dividend payable with respect to the Cancelled Shares bears to the cash
value. For this purpose, cash value shall mean eighty percent (80%) of the
Additional Compensation payable under SECTION 6(c).

c. If the Executive is not employed by the Fund on
January 1, 1998, pursuant to a new Employment Agreement with the Fund
acceptable to Executive, then, notwithstanding the provisions of
SECTION 6(d), as amended, the Executive shall have the option, exercisable
in his sole discretion, to require the Fund to pay the Executive 80% of the
Additional Compensation for the fiscal year ended December 31, 1997 and/or
all of the Additional Compensation due Executive under SECTION 6(c) AND
6(d) in cash no later than the Vesting Date.

<PAGE>

3. REGISTRATION RIGHTS. Subject to the provisions of
SECTION 6(c), as soon as practicable, the parties shall enter into a
registration rights agreement on usual and customary terms and conditions
granting the Executive the right to cause the Fund to register any or all
of the Award Shares or the Final Award Shares for resale by the Executive.
The Registration Rights Agreement shall generally provide for the
following:

a. Each registration shall be effected by the Fund at its
expense;

b. The Executive shall be entitled to a separate
registration statement with regard to the shares issued under each of (i)
Section 6(c) hereof in 1997 and relating to the Fund's 1996 performance and
(ii) Section 6(c) issued in 1998 and relating to the Fund's 1997
performance and shares issued under Section 6(d);

c. The Executive shall have reasonable piggyback rights; and

d. The Fund shall maintain these registration statements in
effect, and update registration statements as required, to enable Executive
to periodically sell, in his discretion, shares thereunder until such time
as the subject shares are freely saleable pursuant to the provisions of
Rule 144 promulgated under the Securities Act of 1933, as amended.

In the event the parties hereto fail to enter into a mutually
agreeable Registration Rights Agreement by the Final Approval Date,
Executive may, at its option, elect to treat this Amendment as if one of
the approvals required by Section 2(b) hereof had not been received and
effect a termination of this Amendment as set forth therein.

4. AGREEMENTS AS TO PAST CALCULATIONS AND METHODOLOGIES.

a. PREVIOUS CALCULATIONS AND METHODOLOGIES. The parties
hereto agree and acknowledge that each has been represented by competent
professionals and together with these professionals has had an opportunity
to review the formulas set forth in the Employment Agreement for use in
calculating the compensation payable to Executive pursuant to Sections 5
and 6 thereunder, the methodology pursuant to which those formulas have
been applied to calculate the compensation and the amounts determined to be
due to Executive through the date hereof as a result of such formulas and
the applied methodology. In connection therewith, the parties hereto
acknowledge and agree that the formulas set forth in the Agreement for
calculating the compensation, the methodology applied (to date) in
calculating the amounts due pursuant to those formulas and the amounts
calculated to date have been due and payable to Executive through the date
hereof are accurate and each waives any and all rights he or it may have to
recalculate the formulas, modify the methodology applied in the calculation
or alter the amount of the compensation heretofore paid.

b. FUTURE CALCULATIONS AND METHODOLOGIES. The parties
hereto acknowledge and agree that the formulas set forth in the Agreement
for purposes of determining the compensation payable to Executive pursuant
to Sections 5 and 6 of the Employment Agreement and the methodology applied
by the Fund in its prior calculations of the amounts due is appropriate and
the parties hereto further agree and acknowledge that all future
calculations of amounts due Executive for additional compensation pursuant
to Sections 5 and 6 of the Employment Agreement shall be calculated using
the formula set forth therein, applying the methodology utilized in the
past as modified by this Amendment to the Employment Agreement. In
connection therewith, the parties hereto specifically acknowledge the
existence of a memo dated October 17, 1996 from

<PAGE>

Joel L. Teglia to the Board of Trustees of the Fund and agree
that the methodology and calculations set forth therein are appropriate and
shall be applied, on a consistent basis, in all future calculations of
amounts due as compensation pursuant to the Sections 5 and 6 of the
Employment Agreement.

5. MISCELLANEOUS PROVISIONS.

a. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois.

b. Further Assurances. Each party agrees to execute and
deliver such additional instruments and documents and to take all such
other actions as any of the other parties may reasonably request from time
to time in order to effect the provisions, purposes and intent of this
Amendment.

c. ENTIRE AGREEMENT; EFFECT ON OTHER AGREEMENTS. This
Amendment constitutes the entire understanding of the parties with respect
to the amendment of the Employment Agreement and may be modified only in
accordance with the provision of the Employment Agreement governing
amendments. Upon execution of this Amendment, all references in the
Employment Agreement, and any document executed or delivered in connection
therewith, shall be deemed to be references to the Employment Agreement as
amended, supplemented or modified by this Amendment.

d. SEVERABILITY. If any provision of this Amendment shall,
for any reason, be held unenforceable, such provision shall be severed from
this Amendment unless, as a result of such severance, this Amendment fails
to reflect the basic intent of the parties. If this Amendment continues to
reflect the basic intent of the parties, then the invalidity of such
specific provision shall not affect the enforceability of any other
provision herein, and the remaining provisions shall remain in full force
and effect.

e. COUNTERPARTS. This Amendment may be executed in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute
one and the same Amendment.

f. HEADINGS. The descriptive headings of this Amendment are
inserted for convenience only and do not constitute a part of this
Amendment.

g. NO STRICT CONSTRUCTION. This Amendment has been mutually
negotiated and drafted by the parties and no presumption or rule of
contract construction or interpretation by or against a party shall be made
on the basis of the party which might otherwise be charged with drafting
this Amendment.

h. REFERENCES. As used herein, all provisions shall include
the masculine, feminine, neuter, singular and plural thereof, wherever the
context and facts require such construction.

i. RECITALS. The recitals set forth in this Amendment are
incorporated by reference herein and made a part hereof, as if fully
rewritten.

<PAGE>

IN WITNESS WHEREOF, this Amendment is entered into on the day and year
first written above.

BANYAN STRATEGIC REALTY TRUST

By: /s/ Robert G. Higgins
Name: Robert G. Higgins
Title: Vice President General Counsel

EXECUTIVE:

/s/ Leonard G. Levine
Leonard G. Levine

"This schedule contains summary financial information extracted from Banyan
Strategic Realty Trust's Form 10-Q for the six months ended June 30, 1997
and is qualified in its entirety by reference to such Form 10-Q."
</LEGEND>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,809,713
<SECURITIES> 0
<RECEIVABLES> 1,362,086
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,171,799
<PP&E> 142,531,322
<DEPRECIATION> 5,502,865
<TOTAL-ASSETS> 151,817,640
<CURRENT-LIABILITIES> 5,002,136
<BONDS> 27,504,794
<COMMON> 49,688,368
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 151,817,640
<SALES> 0
<TOTAL-REVENUES> 12,640,428
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,764,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,771,035
<INCOME-PRETAX> 847,598
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 847,598
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08

</TABLE>