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BANYAN STRATEGIC REALTY TRUST
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<PAGE>
BANYAN STRATEGIC REALTY TRUST
1997 ANNUAL REPORT
We Search for Properties in
Stable Communities
with Good Local
Economies and
Strong Growth Prospects
1
<PAGE>
CORPORATE PROFILE
-----------------
BANYAN STRATEGIC REALTY TRUST (BSRTS-Nasdaq)
IS AN EQUITY REAL ESTATE INVESTMENT TRUST
(REIT) that identifies investment opportunities throughout the country,
focusing primarily on mid-size markets having strong local economies. As of
December 1997, the Trust's portfolio included 22 properties, which are
represented by the flex/industrial, suburban office, retail and
multi-family apartment sectors. These properties are located primarily in
the Midwest and Southeast United States with aggregate acquisition prices
in excess of $150 million.
TABLE OF CONTENTS
Financial Highlights. . . . . . . . . . . . . . . . . . 3
Growth Strategy . . . . . . . . . . . . . . . . . . . . 5
Letter to Shareholders. . . . . . . . . . . . . . . . . 7
Current Portfolio . . . . . . . . . . . . . . . . . . . 11
Acquisitions and Developments . . . . . . . . . . . . . 12
10-K
Part I . . . . . . . . . . . . . . . . . . . . . .
Part II. . . . . . . . . . . . . . . . . . . . . .
Part III . . . . . . . . . . . . . . . . . . . . .
Part IV. . . . . . . . . . . . . . . . . . . . . .
Shareholder Information . . . . . . . . . . . . . . . .
SAFE HARBOR STATEMENT
Some of the statements contained in this report are forward-looking
statements. Words such as "believes," "intends," "anticipates," "expects,"
and similar expressions are intended to identify forward-looking statements
which are subject to a number of risks and uncertainties, including, among
other things, general real estate investment risks, lack of operating
history associated with recent acquisitions, potential inability to repay
or refinance indebtedness at maturity, increases in interest rates,
competition for property acquisitions, adverse consequences of failure to
qualify as a REIT, and possible environmental liabilities. Actual results
could differ materially from those projected in these forward-looking
statements. Reference is made to the annual report on Form 10-K filed by
the Trust, specifically under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Factors Affecting
the Trust's Business Plan" for a more complete discussion of these risk
factors. The Trust undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.
2
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
--------------------
<CAPTION>
For the Years Ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING DATA
- --------------
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . $28,784,900 $21,404,318 $12,902,369
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . 3,546,282 (1,757,260) 2,600,045
Net Income (Loss) Per Share (Basic and Diluted)*. . . . . 0.32 (0.17) 0.25
Funds From Operations (FFO) . . . . . . . . . . . . . . . 5,843,472 3,689,010 3,333,940
FFO Per Share (Basic and Diluted)*. . . . . . . . . . . . 0.52 0.35 0.32
Real Estate Net Operating Income. . . . . . . . . . . . . 14,339,311 9,497,917 5,360,807
BALANCE SHEET DATA
(at year end)
- ------------------
Mortgage Loans Receivable, Net of Discount. . . . . . . . $ -- $ -- $ 5,433,094
Investment in Real Estate, Net of Depreciation. . . . . . 149,385,842 102,489,727 87,862,970
Investment in Real Estate Ventures. . . . . . . . . . . . -- 5,713,759 8,895,678
Total Assets. . . . . . . . . . . . . . . . . . . . . . . 159,633,628 116,534,205 110,764,772
Mortgage Loans and Bonds Payable. . . . . . . . . . . . . 92,117,777 59,081,023 49,022,181
Shareholders' Equity. . . . . . . . . . . . . . . . . . . 62,315,210 50,934,438 56,875,404
OTHER DATA
- ----------
Number of Property Interests Owned. . . . . . . . . . . . 22 15 13
Weighted Average Number of Shares . . . . . . . . . . . . 11,149,982 10,478,410 10,474,079
Cash Distribution Per Share of
Beneficial Interest . . . . . . . . . . . . . . . . . . $ 0.40 $ 0.40 $ 0.40
<FN>
* For the periods presented, Basic and Diluted Per Share are equivalent.
</TABLE>
3
<PAGE>
[GRAPHIC - NET REAL ESTATE ASSETS (in millions) - bar graph indicating
$88 for 1995; $102 for 1996; $149 for 1997]
NET REAL ESTATE ASSETS
(in millions)
Investment real estate has increased 89% since 1995.
[GRAPHIC - FFO PER SHARE (in dollars) - bar graph indicating
$0.32 for 1995; $0.35 for 1996;
$0.52 for 1997; $0.70 for 1998*]
FFO PER SHARE
(in dollars)
The growth in FFO is expected to further increase in 1998.
* estimate
[GRAPHIC - REVENUES (in millions) - bar graph indicating
$12.9 for 1995; $21.4 for 1996; $28.8 for 1997]
REVENUES
(in millions)
Revenues have increased 123% since 1995.
4 1997 Annual Report
<PAGE>
GROWTH STRATEGY
---------------
Our growth strategy is straightforward. We intend to fully utilize our
highly experienced management team to seek quality properties in stable
communities with good economic fundamentals and growth prospects.
[GRAPHIC - LINE CHART INDICATING AS SHOWN BELOW]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
NAREIT Equity
Index. . . . . . .
S&P 500 Index . . .
Banyan Strategic
Realty Trust . . .
Banyan Strategic Trust's Five-Year Cumulative Total Return
as Compared to the Standard & Poor's 500 (S&P)
and the National Association of Real Estate
Investment Trust (NAREIT)
(assumes an investment of $100 on 1-1-92)
5 Banyan Strategic Realty Trust
<PAGE>
[GRAPHIC - PHOTO presenting the MANAGEMENT GROUP]
From left: Jay E. Schmidt, Vice President/Investments; Leonard G.
Levine, President; Neil D. Hansen, First Vice President; Robert G. Higgins,
Vice President and Secretary/General Counsel; Joel L. Teglia, Vice
President/Chief Financial Officer.
Current markets include Sarasota, Tampa and Tallahassee, Florida; Atlanta,
Morrow and Norcross, Georgia; Memphis, Tennessee; Louisville and Lexington,
Kentucky; Oklahoma City, Lawton and Yukon, Oklahoma; suburban Chicago,
Illinois; Milwaukee, Wisconsin; and Huntsville, Alabama.
Our growth plan hinges on diversity-geographic as well as type of property-
and improving the operations and where feasible, increasing the occupancy
levels of our properties. Importantly, we leverage our expertise and search
for opportunities in mid-size markets. We carefully scrutinize each
transaction and each second-tier market, and our decisions are driven by
local real estate conditions such as occupancy, rental rate trends and
competition from existing properties, as well as potential new
developments.
6 1997 Annual Report
<PAGE>
TO OUR SHAREHOLDERS
-------------------
LAST YEAR, I began my letter to you by describing our targets for 1997. We
were, as I told you, "aiming for substantially improved revenue and cash
flow." I am pleased to report that we have achieved those goals, and we
continue to see substantial expansion ahead-in 1998 and beyond.
The year 1997 was one of significant accomplishments, including
substantially higher revenues and FFO. Total revenues in 1997 were $28.8
million, up 35% from 1996's $21.4 million. FFO climbed 58% to $5.84 million
from $3.69 million in 1996. On a per-share basis, FFO totaled 52 cents in
1997, up 49% from the prior year's 35 cents. On a "same store" basis-that
is comparing the results of operations of the properties the Trust owned
during 1997 with the results of operations of the same properties owned
during 1996-total property revenues increased by approximately $1.2 million
or 7.2%.
For the fourth quarter of 1997, total revenues were $8.3 million, up 50%
from the prior year's period. Funds From Operations (FFO) for the fourth
quarter totaled $2 million, or 15.5 cents per share, versus $0.8 million,
or seven cents per share in the final quarter of 1996.
PROPERTIES ACQUIRED IN 1997
We acquired 10 additional properties in 1997, approximating $59 million
worth of real estate, adding 578,000 square feet of office space, 110,600
square feet of flex/industrial space and 864 apartment units to our
investment portfolio. The total square footage of our investment portfolio
at year-end 1997 was 2,876,600, versus 2,257,500 at year-end 1996, which
itself was up 21% from 1995. Very importantly, the average occupancy rate
of our properties continues to be quite high-an average of 95% at December
31, 1997, against 93% at December 31, 1996, and 91% at December 31, 1995.
For a closer look at these new properties, please see the Property
Acquisitions and Sales section of this report on pages 9-13.
7 Banyan Strategic Realty Trust
<PAGE>
$30 MILLION DEBT AND EQUITY INFUSION
The company also enjoyed a significant infusion of capital this past year
as a result of an agreement with Morgens, Waterfall, Vintiadis & Co., as
agent for a group of institutional investors. With the Morgens transaction,
the Trust obtained a $20 million unsecured convertible loan commitment and
issued and sold 2,192,501 shares of beneficial interest at $5 per share,
which netted the Trust approximately $10 million in cash. These funds were
used to repay $9 million borrowed under the Trust's line of credit and for
general working capital needs. The proceeds will be reborrowed under the
line of credit to acquire additional real estate.
SELECTIVE, SECOND-TIER MARKETS
Our strategy has been to establish a diversified portfolio of properties,
with emphasis on the suburban office and service center/light industrial
market sectors, which we feel provide the most favorable opportunities for
capital appreciation. We have focused this strategy in strong but generally
smaller local markets where we are not competing head-to-head with larger
real estate companies and institutional buyers and where we are able to
purchase properties at favorable prices with attractive yields.
Additionally, we look for properties in major urban markets, but only if
they present unique opportunities where competition is not overinflating
price.
Foremost in our strategy is the property itself, as it relates to its
immediate environment, the larger community which surrounds it, the health
and vitality of the local economy, and the quality of the income stream
that the property generates. Location is obviously critical because
location and cost competitiveness are the principal forces that drive a
transaction. A REIT must lease its buildings at competitive prices and in
order to achieve that goal we must have a cost structure in place that
permits aggressive rental rates.
[GRAPHIC - INVESTMENT PORTFOLIO SQUARE FOOTAGE (in millions) -
bar graph indicating - 0.53 for 1993; 0.69 for 1994;
1.85 for 1995; 2.25 for 1996; 2.87 for 1997]
INVESTMENT PORTFOLIO SQUARE FOOTAGE - 1993-1997
(in millions)
Property square footage is up 442% since 1993.
8 1997 Annual Report
<PAGE>
Historically, we have concentrated on the Midwest and the Southeast. As we
continue to grow, we anticipate that we will expand our activities to a
national level, picking our spots with care, and moving judiciously.
BALANCE SHEET
In terms of our balance sheet, we had total assets at year-end 1997 of
159.6 million, up 37% from $116.5 million at December 31, 1996. The Trust's
net investment in real estate totaled $149.4 million at the end of 1997, up
46% from $102.5 million at the end of 1996, and 70% up from the $87.9
million reported for year-end 1995.
Our debt at year-end 1997 was approximately $92 million-an increase of 55%
from $59 million reported at year-end 1996. As a result of the proceeds
received from the Morgens transaction, our debt to total assets increased
to 58% at year-end 1997 from 50% at year-end 1996.
GROWTH IN 1998
For the year 1998, barring unforeseen developments in the economy such as a
major hike in interest rates, we foresee an approximate 35% to 40% growth
in funds from operations to a level of $0.70 to $0.73 per share from $0.52
in 1997, and $0.35 in the prior year.
I am also pleased to report that our activities during the past year have
contributed soundly to providing ever-increasing shareholder value. Our
external growth from new acquisitions and internal growth from improved
revenues and operations at our existing properties-along with several key
dispositions-have translated into a consistently higher average share
price. Additionally, on March 16, 1998 we announced an increase in the
quarterly cash distribution to $0.12 per share, or $0.48 per share
annually, from $0.10 per share quarterly, or $0.40 per share annually.
Banyan continues to be exceptionally well-positioned to enjoy ongoing
revenue and cash-flow growth for 1998 and 1999. We expect to acquire new
real estate assets during 1998 in excess of those purchased in 1997-and to
accomplish this in a fashion which continues to augment shareholder value.
We were also proactive in our efforts to "tell our story" directly to
analysts, fund managers and the financial news media in 1997, and we will
continue to do so this year. As a result of these efforts and our strong
performance, we are enjoying an increasing share price and growth in the
institutional ownership of the Trust's shares.
9 Banyan Strategic Realty Trust
<PAGE>
[GRAPHIC - PHOTO - Leonard G. Levine, President]
Management increased its commitment to the Trust and further aligned its
interests to those of the shareholders in two key ways during 1997. First,
I was issued 400,000 shares in September 1997, in lieu of long-term cash
incentive compensation pursuant to my previous employment agreement.
Secondly, at the annual meeting held on July 8, 1997, the Trust's
shareholders approved the 1997 Omnibus Stock and Incentive Plan which was
established to award non-qualified stock and incentive options to the
Trust's employees and Trustees.
On another note, during 1997 we introduced enhanced features to the
Distribution Reinvestment and Share Purchase Plan (DRIP) which enables
shareholders of record to increase their ownership in the company by
reinvesting distributions at a discount from market prices and without
incurring any brokerage commissions or service fees.
Additionally, the Plan offers shareholders the convenience of purchasing
additional shares via voluntary cash payments and/or automatic electronic
monthly deductions.
Since the enhanced features were introduced in June 1997, we have raised
approximately $550,000 in additional capital as a result of shareholder
participation. Currently, 36% of the company's registered shareholders are
participating in the Plan. Shareholders can obtain a prospectus and
enrollment form for the Distribution Reinvestment and Share Purchase Plan,
free of charge, by returning the business reply card located at the end of
this report. You can also find the prospectus and Plan Summary at Banyan's
website on the Internet. Go to http://www.banyanreit.com and click on
"Distribution Reinvestment and Share Purchase Plan." In addition to the
DRIP Plan, our website includes all of the Trust's financial reports, press
releases and individual property information. Please "visit" us!
On March 2, 1998, the Trust's shares listed on the Nasdaq Stock Market
began trading under our new symbol-"BSRTS." We feel the move to "BSRTS"
from "VLANS" will make it easier to locate us, and therefore enhance our
accessibility to the investment community.
Finally, as we move ahead, I would like to call your attention to the very
important proxy materials enclosed with this report. There are eight
proposals upon which you are being asked to vote. Your support of these
proposals is key to the continued success of the Trust and will enhance our
ability to move forward with our business plan and maximize shareholder
value. Thank you.
/s/ LEONARD G. LEVINE
- ---------------------
Leonard G. Levine
President and Chief Executive Officer
April 15, 1998
10 1997 Annual Report
<PAGE>
PROPERTY PORTFOLIO
(as of March 30, 1998)
----------------------
The Trust's current investment portfolio represents acquisitions
approximating $159 million. We will continue to seek out quality
properties with good economic fundamentals and growth prospects.
Sq. ft./
Property Name* Location Occupancy Units
- ------------- ------------- --------- --------
MIDWEST
Milwaukee Industrial
Properties. . . . . . . . . Milwaukee, WI 83% 235,800
Elmhurst Metro Court. . . . . Elmhurst, IL 90% 140,800
Willowbrook Industrial
Court . . . . . . . . . . . Willowbrook, IL 100% 84,300
Midwest Office Center . . . .Oakbrook Terrace, IL 89% 77,000
Butterfield Office Plaza. . . Oak Brook, IL 98% 200,800
Country Creek Apartments. . . Oklahoma City, OK 95% 320 units
Willowpark Apartments . . . . Lawton, OK 97% 160 units
Winchester Run
Apartments. . . . . . . . . Oklahoma City, OK 94% 192 units
Woodrun Village
Apartments. . . . . . . . . Yukon, OK 97% 192 units
MID-CENTRAL
Quantum Business Centre . . . Louisville, KY 87% 182,200
Lexington Business
Center. . . . . . . . . . . Lexington, KY 93% 308,800
Newtown Business Center . . . Lexington, KY 92% 87,100
6901 Riverport Drive. . . . . Louisville, KY 100% 322,100
Airways Plaza Office
Center. . . . . . . . . . . Memphis, TN 100% 87,800
SOUTHEAST
Colonial Penn Building. . . . Tampa, FL 100% 79,200
Commerce Center . . . . . . . Sarasota, FL 100% 83,100
Woodcrest Office Park . . . . Tallahassee, FL 93% 265,900
Northlake Tower
Shopping Center . . . . . . Atlanta, GA 99% 321,800
Peachtree Pointe
Office Park . . . . . . . . Norcross, GA 92% 72,000
Phoenix Business Park . . . . Atlanta, GA 94% 110,600
Southlake Corporate
Center. . . . . . . . . . . Morrow, GA 96% 56,200
Avalon Center Office
Park. . . . . . . . . . . . Norcross, GA 65% 52,000
University Square
Business Center . . . . . . Huntsville, AL 94% 184,700
Technology Center . . . . . . Huntsville, AL 100% 48,500
* Property photos, addresses and exact locations for each can be found
on our website http://www.banyanreit.com-click on "Property Portfolio."
[GRAPHIC - States represented marking residential, office,
retail and flex/industrial property locations]
11 Banyan Strategic Realty Trust
<PAGE>
ACQUISITIONS AND SALES
----------------------
Banyan Strategic Realty Trust's acquisition strategy remains basically
unchanged-finding and buying quality properties, with an emphasis on the
suburban office and light industrial sectors, in strong economic markets
that provide good cash flow and the likelihood of significant appreciation.
Although we have historically concentrated on geographic areas that have
served us well, namely the Midwest and Southeastern U.S., we anticipate
that our acquisition activities will be expanded to a more national basis
as the company continues to grow and we continue to attract additional
capital.
In addition to seeking new acquisition opportunities, we will also adhere
to our goal of improving the operations of our existing properties. At the
same time, we will debt-finance where appropriate and strategically seek to
dispose of properties to maximize shareholder value and return.
Banyan's Portfolio-diversified and boasting high occupancy levels-has grown
more than four-fold, or 442% since 1993. For the full calendar year 1997,
the Trust acquired 10 properties at an approximate cost of $59 million,
including the Phoenix Business Park in Atlanta in January 1997, which was
reported in last year's annual report. All told, at year-end 1997, the
Trust had 2.9 million square feet of flex/industrial, office and retail
properties and 864 residential apartment units in eight states, with a
combined net carrying value of approximately $149 million.
12 1997 Annual Report
<PAGE>
[GRAPHIC - PHOTO - University Square Business Center at Huntsville, AL]
MEMPHIS, TENNESSEE
In December 1997, the Trust purchased a multi-tenant office property
located in Memphis, Tennessee. The property, known as AIRWAYS PLAZA OFFICE
CENTER, consists of five one-story buildings containing approximately
87,800 net rentable square feet. It was acquired for approximately $3.2
million ($35 per square foot), including closing costs and related
expenses.
The purchase price of Airways Plaza Office Center equates to a
capitalization rate of 16% on projected 1998 net operating income. The
property is currently 100% leased to three tenants, with 87% of the space
leased to various divisions of Federal Express whose lease expires in March
1999. While the Trust expects that several of the Federal Express divisions
will continue to occupy the leased space, it is likely that a portion of
the space will be vacated when Federal Express relocates certain of its
divisions to a new facility now under construction. The Trust factored in
the risk associated with re-leasing the Federal Express space in
determining the purchase price. Management believes that any space vacated
by Federal Express will be leased at rates comparable to market rents.
Funding for this acquisition was provided by a draw upon the Trust's line
of credit.
OKLAHOMA
In May 1997, the Trust purchased a portfolio of four separate multi-family
residential properties, with a total 864 units. Currently, the average
occupancy level of these apartment complexes is 95%.
Three of the properties are located in the greater Oklahoma City, Oklahoma
market, and one property is located in Lawton, approximately 90 miles
southwest of Oklahoma City.
The Trust bought these properties for approximately $21 million, including
closing costs and related expenses. The purchase price equates to a
capitalization rate of 11% on projected 1998 net operating income.
13 Banyan Strategic Realty Trust
<PAGE>
FAVORABLE FINANCING TERMS - In addition to providing the Trust with a
presence in the Oklahoma market, the Trust was able to secure favorable
financing for each of the properties via a combination of fixed rate,
tax-exempt and taxable bonds, totaling approximately $16.6 million.
Approximately $14.6 million, or 88% of the total acquisition debt is
tax-exempt over a term of 30 years, with no principal payments due until
November 2005. At that time, the debt can be remarketed based on the then
current interest rates and the principal will be repaid over the following
20 years.
The taxable portion of the financing-approximately $2 million-will be
repaid ratably through November, 2005. The combined effect of the taxable
and tax-exempt portions of the financing provides a blended fixed interest
rate of 7.3%.
HUNTSVILLE, ALABAMA
In late August of 1997, Banyan purchased two multi-tenant office properties
in Huntsville, Alabama. The UNIVERSITY SQUARE BUSINESS CENTER consists of
six one-story office buildings containing approximately 184,700 net
rentable square feet and was purchased for approximately $7.4 million,
including closing costs and related expenses. The purchase price equates to
a capitalization rate of 13% on projected 1998 net operating income.
Currently, the property is 94% leased and has 55 tenants. Upon acquisition,
the Trust assumed an existing mortgage loan from Wells Fargo Bank. The loan
has a current balance of $4,938,255, bears interest at 8.89% and matures in
January of 2007. The balance of the acquisition funding was provided by a
draw upon the Trust's line of credit.
TECHNOLOGY CENTER is a three-story office building containing approximately
48,500 net rentable square feet. The Trust acquired the property for
approximately $2.5 million, including closing costs and related expenses, a
price which equates to a capitalization rate of 13% on net operating
income. Technology Center is currently 100% leased to two tenants. Funding
for the acquisition was provided by a draw upon the Trust's line of credit.
[GRAPHIC - PHOTO - Technology Center at Huntsville, AL]
14 1997 Annual Report
<PAGE>
[GRAPHIC - PHOTO - Butterfield Office Plaza at Oak Brook, IL]
WEST SUBURBAN CHICAGO, ILLINOIS
The Trust purchased BUTTERFIELD OFFICE PLAZA, located in Oak Brook,
Illinois, in April 1997 for $15.1 million including closing costs and
related expenses. Butterfield Office Plaza contains some 200,800 square
feet of gross leasable area and today is 98% leased with 50 tenants. The
property acquisition was funded by a draw upon the Trust's line of credit.
In August 1997, the Trust secured permanent financing for the property with
Allstate Life Insurance Company. The $10 million Allstate loan bears
interest at 7.67% with a term of seven years, amortized over a 25-year
schedule. Proceeds from this permanent financing were used to pay down
amounts previously borrowed to purchase Butterfield Office Plaza under the
Trust's line of credit.
GREATER ATLANTA, GEORGIA
In 1997's first quarter, the Trust acquired a three-building
office/industrial complex, PHOENIX BUSINESS PARK, located in northeast
Atlanta. These buildings contain 110,600 square feet of gross leasable area
and are 94% occupied. The site was constructed in 1979.
Later in the year, the company also purchased SOUTHLAKE CORPORATE CENTER,
located six miles south of Hartsfield International Airport in Morrow,
Georgia, a suburb of Atlanta. The Trust's purchase price was $4.5 million,
including closing costs and related expenses. The property consists of a
three-story office building that contains 56,200 square feet of gross
leasable space on 3.3 acres. The property is currently 96% leased with 16
tenants. The price equates to a capitalization rate of 11% on projected
1998 net operating income and was funded from a draw upon the Trust's line
of credit.
[GRAPHIC - PHOTO - Southlake Corporate Center at Morrow, GA]
15 Banyan Strategic Realty Trust
<PAGE>
[GRAPHIC - PHOTO - Commerce Center at Sarasota, FL]
Subsequent to year-end 1997, The Trust purchased five one-story office
buildings known as PEACHTREE POINTE OFFICE PARK located in Norcross,
Georgia - a northeast suburb of Atlanta - in January 1998. Banyan acquired
this property for a total purchase price of $4.5 million, which equates to
a capitalization rate of 10% on projected 1998 net operating income. The
property contains approximately 72,000 square feet of gross leasable space
and is 92% occupied with 23 tenants. Approximately $3.4 million of the
acquisition price was funded by a draw upon the Trust's line of credit.
In March, 1998 the Trust purchased the AVALON CENTER OFFICE PARK located in
Norcross, Georgia for $5.1 million, including anticipated tenant
improvements and other related expenses. The property, newly constructed in
1997, includes two single-story office buildings containing approximately
52,446 square feet of gross leasable space-of which 65% is currently
leased. The acquisition was funded by a draw upon the Trust's line of
credit.
PROPERTY INTERESTS SOLD
In 1997, the Trust completed the sale of its interest in the COLONIAL
COURTS OF WESTLAND property located in Columbus, Ohio to Colonial LLC, an
entity affiliated with the Trust's former minority joint venture partner in
the property. The Trust received approximately $1.2 million in proceeds and
recognized a net gain in excess of $900,000.
Also in 1997, the Trust sold its interest in the HALLMARK VILLAGE
APARTMENTS, an apartment complex located in Clarksville, Indiana, receiving
net proceeds of approximately $5.8 million, which were used to pay down a
portion of the Trust's line of credit. The Trust recognized a $3,800 gain
on the disposition of this property.
In two separate transactions, the H-STREET VENTURE, of which Banyan owned a
53% interest, sold the remaining land parcel and office building located in
Washington D.C. to two unaffiliated third parties for a total price of
$10.8 million. Net of closing costs and related expenses, the Trust's
portion of the sale proceeds totaled approximately $5.5 million. These
proceeds have been used to invest in additional income-producing assets.
The sale of the H-Street interest represents the final disposition of all
of the Trust's assets acquired through foreclosure.
16 1997 Annual Report
<PAGE>
<TABLE>
QUARTERLY SUMMARY
-----------------
<CAPTION>
The following is a summary of the quarterly results of operations for the years ended December 31, 1997 and 1996.
1997
For the three months ended:
----------------------------------------------------------
March 31 June 30 Sept 30 Dec 31
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total Revenue . . . . . . . . . . . . . . . . $5,893,886 $6,746,542 $7,875,130 $8,269,342
Recovery of Losses on Loans, Notes and
Interest Receivable. . . . . . . . . . . . . -- -- -- 161,539
Operating Expenses. . . . . . . . . . . . . . (5,352,505) (6,183,169) (7,051,112) (7,077,394)
Operating Income. . . . . . . . . . . . . . . 541,381 563,373 824,018 1,353,487
Gain (Loss) on Disposition of Investment
in Real Estate, Disposition of Investment
in Real Estate Venture and Disposition of
Partnership Interest . . . . . . . . . . . . 3,788 -- 1,071,858 (194,271)
Minority Interest in Consolidated
Partnerships . . . . . . . . . . . . . . . . (166,743) (144,983) (151,747) (126,850)
Income (Loss) of Real Estate Ventures . . . . 30,363 20,419 (13,656) --
Extraordinary Item (Net). . . . . . . . . . . -- -- -- (64,155)
Net Income. . . . . . . . . . . . . . . . . . 408,789 438,809 1,730,473 968,211
Earnings Per Share of Beneficial
Interest (Basic and Diluted)*. . . . . . . . 0.04 0.04 0.16 0.08
1996
For the three months ended:
----------------------------------------------------------
March 31 June 30 Sept 30 Dec 31
----------- ----------- ----------- -----------
Total Revenue . . . . . . . . . . . . . . . . $ 5,176,653 $ 5,440,777 $ 5,284,942 $ 5,501,946
Recovery of Losses on Loans,
Notes and Interest Receivable. . . . . . . . -- -- 14,059 2,510
Operating Expenses. . . . . . . . . . . . . . (4,572,252) (4,783,524) (4,829,093) (5,210,655)
Operating Income. . . . . . . . . . . . . . . 604,401 657,253 469,908 293,801
Minority Interest in Consolidated
Partnerships . . . . . . . . . . . . . . . . (102,553) (117,934) (128,903) (132,021)
Income (Loss) of Real Estate Ventures . . . . (38,307) (58,707) 19,649 (3,223,847)
Net Income (Loss) . . . . . . . . . . . . . . 463,541 480,612 360,654 (3,062,067)
Earnings (Loss) Per Share of Beneficial
Interest (Basic and Diluted)*. . . . . . . . 0.04 0.05 0.03 (0.29)
<FN>
* For the periods presented, Basic and Diluted Per Share amounts are equivalent.
[GRAPHIC - Bar graph - Weekly Stock Price and Volume - Fiscal Year - January 3, 1997 to December 31, 1997.]
</TABLE>
17 Banyan Strategic Realty Trust
<PAGE>
SHAREHOLDER INFORMATION
-----------------------
ANNUAL MEETING
The Trust's annual meeting will be held in Chicago, Illinois on June 18,
1998. Further information concerning the meeting is included in the proxy
materials enclosed with this report.
STOCK MARKET INFORMATION
Banyan Strategic Realty Trust is included for quotation on the Nasdaq
National Market System under the new ticker symbol BSRTS. At February 27,
1998, there were 3,808 record holders of the Trust's shares of beneficial
interest. The quarterly high/low bid prices for the Trust during the years
ended December 31, 1997, and 1996, were as follows:
1997 1996
----------------- -----------------
Fiscal Quarter High Low High Low
- -------------- ---- --- ---- ---
First . . . . . . . . . $5.00 $3.75 $4.87 $3.75
Second. . . . . . . . . $4.62 $3.62 $4.50 $3.93
Third . . . . . . . . . $5.50 $4.00 $4.62 $4.00
Fourth. . . . . . . . . $6.87 $5.06 $5.00 $3.87
CASH DISTRIBUTIONS
The Trust paid four quarterly distributions during 1997, each in the amount
of $0.10 per share.
SHAREHOLDER INQUIRIES
A copy of the annual report, filed with the Securities and Exchange
Commission on Form 10-K is included in this report. Additional copies are
available to shareholders, without charge, upon written request to the
Trust's Investor Relations Department. Please send written requests for
materials and direct all inquiries to:
Banyan Strategic Realty Trust
c/o Investor Relations Department
150 S. Wacker Drive, Suite 2900
Chicago, Illinois, 60606
or telephone 312/683-3671.
e-mail [email protected]
INTERNET/WORLD WIDE WEB
The Trust's annual report on Form 10-K and quarterly reports on Form 10-Q,
as filed with the Securities and Exchange Commission, as well as all of the
Trust's news releases, are available to shareholders via the Trust's home
page on the Internet/World Wide Web. The address is
http://www.banyanreit.com
AUDITORS
Ernst & Young LLP
Chicago, Illinois
18
<PAGE>
TRANSFER AGENT AND REGISTRAR/ADMINISTRATIVE INQUIRIES
For assistance relating to lost certificates, change of address or
ownership, cash distributions, distribution reinvestment or stock
transfers, please write to:
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, New Jersey 07303-2500
or telephone 201/324-0498.
TRUSTEES AND EXECUTIVE OFFICERS
Walter A. Auch, Sr., 76, Trustee
Norman M. Gold, 67, Trustee
Marvin A. Sotoloff, 54, Trustee
Leonard G. Levine, 51, President
Neil D. Hansen, 51, First Vice President
Robert G. Higgins, 46, Vice President and Secretary/General Counsel
Joel L. Teglia, 36, Vice President/Chief Financial Officer
Jay E. Schmidt, 46, Vice President/Investments
BANYAN STRATEGIC REALTY TRUST
150 S. Wacker Drive, Suite 2900
Chicago, Illinois 60606
Ticker symbol: BSRTS
150 South Wacker Drive
Suite 2900
Chicago, IL 60606
312 683 3671
www.banyanreit.com
19
<PAGE>
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[ ] News releases
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[ ] Please add me to the Banyan Strategic Realty Trust mailing list.
(Please print)
Name ____________________________________________________
Title ____________________________________________________
Company ____________________________________________________
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[ADDRESS CARD]
BANYAN STRATEGIC REALTY TRUST
150 S. Wacker Drive . Suite 2900 . Chicago, IL 60606
Telephone/Investor Relations: 312 683 3671
e-mail: [email protected]
Web Site: www.banyanreit.com
Stock Ticker Symbol: BSRTS (Nasdaq)
Transfer Agent:
First Chicago Trust Company of New York
P.O. Box 2500 . Jersey City, NJ 07303-2500
Shareholder Services: 201 324 0498
[ADDRESS CARD - DIFFERENT SIZE]
BANYAN STRATEGIC REALTY TRUST
150 S. Wacker Drive . Suite 2900 . Chicago, IL 60606
Telephone/Investor Relations: 312 683 3671
e-mail: [email protected]
Web Site: www.banyanreit.com
Stock Ticker Symbol: BSRTS (Nasdaq)
Transfer Agent:
First Chicago Trust Company of New York
P.O. Box 2500 . Jersey City, NJ 07303-2500
Shareholder Services: 201 324 0498
