SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 22, 1997
BANYAN STRATEGIC REALTY TRUST
(Exact name of Registrant as specified in its charter)
Massachusetts 0-15465 36-3375345
(State of or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
This document consists of 6 pages.
Exhibit index is located on page 4.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 22, 1997, Banyan Strategic Realty Trust (the "Trust") acquired a
100% ownership interest in the Oklahoma Apartment Portfolio. The terms
regarding the Trust's acquisition, the asset description, and other information
is contained below.
OKLAHOMA APARTMENT PORTFOLIO
The Oklahoma Apartment Portfolio consists of four separate garden style,
multi-family residential properties consisting of an aggregate 864 units and
totals approximately 521,900 square feet. Three of the properties in the
portfolio are located in Oklahoma City, Oklahoma and the surrounding suburbs,
and one property is located in Lawton, Oklahoma, approximately 90 miles
southwest of Oklahoma City. The properties were built in 1985 and consist of
wood frame buildings with lap-siding and brick veneer. The unit mix is 648 one-
bedroom and 216 two-bedroom units. The portfolio had an average occupancy of 97
percent at the time of acquisition. The average rental rate for the four
residential properties is $376 per month.
The portfolio was acquired by the Trust for an aggregate purchase price of
approximately $20.9 million, including closing costs and other liabilities
assumed at acquisition, which was based upon consideration of a number of
factors including recent appraisals, market studies, and other internal
valuations. The Trust utilized approximately $70,000 of cash reserves for the
acquisition and assumed bond financing with a combination of fixed rate, tax-
exempt and taxable bonds, with an outstanding principal balance totaling
approximately $16,650,000. The remaining balance of the acquisition price was
provided for by a draw upon the Trust's line of credit in the amount of
$4,180,000 which was established with American National Bank and Trust Company
of Chicago in late 1994. The line of credit is currently collateralized by the
Trust's interest in the Newtown Distribution Center, Lexington Business Center,
Colonial Penn, Butterfield Office Plaza and Phoenix Business Park properties.
Draws under the line of credit require monthly payment of interest only until
its maturity in May 1998, and it currently bears interst at a blend of thirty,
ninety and one hundred and twenty day LIBOR rates plus 2.25% per annum. The
interest rate on the Trust's line of credit for April 1997 was 7.94%.
Approximately $14.6 million of the acquisition debt assumed is tax-exempt and
matures on October 1, 2025. From the date of acquisition until November 1, 2005
the tax-exempt portion of the bonds do not amortize. On November 1, 2005, the
interest rate will be reset based upon current rates at that time and the
principal balance will amortize over the remaining twenty years of the term of
the bonds. The taxable portion of approximately $2.05 million is fully
amortizing over the ten years ending November 2005. The combined effect of the
financing provides a fixed interest rate of 7.3 percent, and a debt constant of
8.2 percent from the acquisition date until November 1, 2005. A prepayment
penalty exists on the bonds for any 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. No prepayment penalty applies on the bonds after
September 30, 2005.
The Oklahoma Apartment Portfolio's day-to-day operations are managed by
Precor Realty Advisors, Inc. ("Precor") which receives a management fee each
month equal to 3.5% of rent collected at the property for these management
services. The term of the management agreement is for two years, cancelable
with or without cause by either the Trust or Precor after one year with thirty
days written notice. The management agreement is thereafter renewable for
additional terms of one year at the Trust's option.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Trust is currently unable to provide the financial statements and pro
forma financial information as part of this report as required under Item 7
Financial Statements, Pro Forma Financial Information and Exhibits (a)(b) of
Form 8-K as of the date hereof. As of the date of this filing, the Trust's
independent accountants had not completed the audit of the 1996 operating
results of the Property on which the Trust bases its pro forma operating
estimates. The Trust currently anticipates completion of the audit and filing
of all required financial statements and pro forma financial information for the
Property within sixty days of the date of this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 11, 1997 BANYAN STRATEGIC REALTY TRUST
(Registrant)
By: /s/ Joel L. Teglia
Vice President, Chief Financial and
Accounting Officer
