UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 0-15465
BANYAN STRATEGIC REALTY TRUST
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Massachusetts 36-3375345
- ----------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, IL 60606
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (312) 553-9800
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [ X ]. NO [ ].
Shares of beneficial interest outstanding
as of November 11, 1999: 13,510,742.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN STRATEGIC REALTY TRUST
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
<S> <C> <C>
ASSETS
- ------
Investment in Real Estate, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,600 $ 38,600
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,554 172,554
Building Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 13,234 9,654
---------- ----------
224,388 220,808
Less: Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . (15,847) (11,399)
---------- ----------
208,541 209,409
---------- ----------
Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . . . . . . 2,587 3,731
Restricted Cash - Capital Improvements . . . . . . . . . . . . . . . . . . 1,948 1,407
Restricted Cash - Other. . . . . . . . . . . . . . . . . . . . . . . . . . 2,087 1,250
Interest and Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 1,155 1,544
Deferred Financing Costs (Net of Accumulated Amortization of
$1,442 and $1,246, respectively) . . . . . . . . . . . . . . . . . . . . 1,704 1,893
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,097 3,356
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 222,119 $ 222,590
========== ==========
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Balance Sheets - CONTINUED
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities
Mortgage Loans Payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 122,006 $ 123,108
Bonds Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,989 21,140
Unsecured Loan Payable . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 7,400
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . 2,475 2,625
Accrued Real Estate Taxes Payable. . . . . . . . . . . . . . . . . . . . . 2,000 967
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . 742 636
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,047 758
Security Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,392 1,373
---------- ----------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,051 158,007
---------- ----------
Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . 2,180 2,149
Shareholders' Equity
Shares of Beneficial Interest, No Par Value, Unlimited
Authorization; 15,032,542 and 14,912,495 Shares Issued,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,497 119,872
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . (51,243) (50,072)
Treasury Shares at Cost, 1,522,649 Shares. . . . . . . . . . . . . . . . . (7,366) (7,366)
---------- ----------
Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 61,888 62,434
---------- ----------
Total Liabilities and Shareholders' Equity . . . . . . . . . . . . . . . . $ 222,119 $ 222,590
========== ==========
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Operations
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
REVENUE
Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,611 $ 25,093
Operating Cost Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . 2,831 2,605
Miscellaneous Tenant Income. . . . . . . . . . . . . . . . . . . . . . . . . . 865 889
Income on Investments and Other Income . . . . . . . . . . . . . . . . . . . . 113 186
---------- ----------
Total Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,420 28,773
---------- ----------
EXPENSES
Property Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,043 4,223
Repairs and Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,327 2,985
Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,237 2,037
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,719 6,879
Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704 699
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . 4,916 3,706
General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 3,229 3,456
Amortization of Deferred Financing Costs . . . . . . . . . . . . . . . . . . . 196 207
---------- ----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,371 24,192
Income Before Minority Interest and Extraordinary Item . . . . . . . . . . . . . 4,049 4,581
Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . (381) (449)
---------- ----------
Income Before Extraordinary Item . . . . . . . . . . . . . . . . . . . . . . . . 3,668 4,132
Extraordinary Item, Net of Minority Interest of $25. . . . . . . . . . . . . . . -- (141)
---------- ----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,668 $ 3,991
========== ==========
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Operations - Continued
1999 1998
---------- ----------
Earnings Per Share of Beneficial Interest - Basic:
Income Before Extraordinary Item . . . . . . . . . . . . . . . . . . . . . . . $ 0.27 $ 0.31
========== ==========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.27 $ 0.30
========== ==========
Earnings Per Share of Beneficial Interest - Diluted:
Income Before Extraordinary Item . . . . . . . . . . . . . . . . . . . . . . . $ 0.27 $ 0.30
========== ==========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.27 $ 0.29
========== ==========
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Operations
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
REVENUE
Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,277 $ 9,090
Operating Cost Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . 910 1,035
Miscellaneous Tenant Income. . . . . . . . . . . . . . . . . . . . . . . . . . 295 356
Income on Investments and Other Income . . . . . . . . . . . . . . . . . . . . 27 71
---------- ----------
Total Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,509 10,552
---------- ----------
EXPENSES
Property Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 1,512
Repairs and Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,055 1,109
Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 764 798
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,940 2,649
Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 229
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . 1,682 1,401
General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 1,035 1,280
Amortization of Deferred Financing Costs . . . . . . . . . . . . . . . . . . . 65 66
---------- ----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,180 9,044
Income Before Minority Interest. . . . . . . . . . . . . . . . . . . . . . . . . 1,329 1,508
Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . (126) (151)
---------- ----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,203 $ 1,357
========== ==========
Earnings Per Share of Beneficial Interest - Basic and Diluted:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.09 $ 0.10
========== ==========
<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 Nine Months Ended September 30, 1999
(Unaudited)
(Dollars in thousands)
<CAPTION>
Shares of
Beneficial Interest
---------------------------- Accumulated Treasury
Shares Amount Deficit Shares Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Shareholders' Equity,
January 1, 1999 . . . . . 14,912,495 $ 119,872 $ (50,072) $ (7,366) $ 62,434
Issuance of Shares,
net of issuance costs. . 120,047 625 -- -- 625
Net Income . . . . . . . . -- -- 3,668 -- 3,668
Distributions Paid . . . . -- -- (4,839) -- (4,839)
---------- ---------- ---------- ---------- ----------
Shareholders' Equity,
September 30, 1999 . . . 15,032,542 $ 120,497 $ (51,243) $ (7,366) $ 61,888
========== ========== ========== ========== ==========
<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 Nine Months Ended September 30, 1999 and 1998
(Unaudited)
(Dollars in thousands)
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,668 $ 3,991
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities:
Extraordinary Items, Net of Minority Interest. . . . . . . . . . . . . . . . . -- 141
Depreciation and Amortization. . . . . . . . . . . . . . . . . . . . . . . . . 5,112 3,913
Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . 381 449
Net Change In:
Restricted Cash - Other. . . . . . . . . . . . . . . . . . . . . . . . . . . (837) (946)
Interest and Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . 389 (385)
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,209) (1,350)
Accounts Payable and Accrued Expenses. . . . . . . . . . . . . . . . . . . . (150) 595
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . 106 510
Accrued Real Estate Taxes Payable. . . . . . . . . . . . . . . . . . . . . . 1,033 1,130
Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 348
Security Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 649
---------- ----------
Net Cash Provided By Operating Activities. . . . . . . . . . . . . . . . . . . . 8,801 9,045
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Real Estate Assets. . . . . . . . . . . . . . . . . . . . . . -- (55,878)
Additions to Investment in Real Estate . . . . . . . . . . . . . . . . . . . (3,580) (4,048)
Earnest Money Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (75)
Restricted Cash - Capital Improvements . . . . . . . . . . . . . . . . . . . (541) (562)
---------- ----------
Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . . . . . (4,121) (60,563)
---------- ----------
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Cash Flows - Continued
1999 1998
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Bonds and Loans Payable. . . . . . . . . . . . . . . . . . . . . -- 106,550
Investments From (Distributions to) Minority Partners. . . . . . . . . . . . . (350) 416
Deferred Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (903)
Principal Payments on Mortgage Loans and Bonds Payable . . . . . . . . . . . . (1,253) (52,152)
Prepayment Penalties on Early Extinguishment of Debt . . . . . . . . . . . . . -- (136)
Distributions Paid to Shareholders . . . . . . . . . . . . . . . . . . . . . . (4,839) (4,515)
Shares Issued, Net of Issuance Costs . . . . . . . . . . . . . . . . . . . . . 625 671
---------- ----------
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . . . . (5,824) 49,931
---------- ----------
Net Decrease In Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . . (1,144) (1,587)
Cash and Cash Equivalents at Beginning of Period . . . . . . . . . . . . . . . . 3,731 4,429
---------- ----------
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . . . . . . $ 2,587 $ 2,842
========== ==========
Supplemental Disclosure of Cash Flow Information:
Interest Paid During the Period. . . . . . . . . . . . . . . . . . . . . . . . $ 8,613 $ 6,369
========== ==========
Supplemental Disclosure of Non-Cash Financing Activity:
Financing Assumed Upon Acquisition of Real Estate. . . . . . . . . . . . . . . $ -- $ 3,675
========== ==========
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Notes to Consolidated Financial Statements
September 30, 1999
(Unaudited)
(Dollars in thousands, except per share data)
1. FINANCIAL STATEMENT PRESENTATION
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, 1998 which are included in the Trust's 1998
Form 10-K, as certain footnote disclosures which would substantially
duplicate those contained in such audited statements have been omitted from
this report.
RECLASSIFICATIONS
Certain reclassifications have been made to the previously reported
1998 consolidated financial statements in order to provide comparability
with the 1999 consolidated financial statements. These reclassifications
have not changed the 1998 results. In the opinion of management, all
adjustments necessary for a fair presentation have been made to the
accompanying consolidated financial statements as of September 30, 1999.
All adjustments made to the financial statements, as presented, are of a
normal recurring nature to the Trust.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share for the nine months ended September 30, 1999 and 1998:
Nine Months Ended
------------------------
9/30/99 9/30/98
---------- ----------
Numerator:
Income Before Extraordinary Item . . . . . $ 3,668 $ 4,132
Extraordinary Item, Net of
Minority Interest. . . . . . . . . . . . -- (141)
---------- ----------
Net Income . . . . . . . . . . . . . . $ 3,668 $ 3,991
========== ==========
Denominator:
Denominator for basic earnings per
weighted-average shares. . . . . . . . . 13,448,713 13,287,537
Effect of dilutive securities:
Employee stock options . . . . . . . . . 6,769 35,727
Convertible debt . . . . . . . . . . . . -- 604,423
Dilutive potential common shares . . . . . 6,769 640,150
---------- ----------
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions . . . . 13,455,482 13,927,687
========== ==========
Basic Earnings Per Share:
Income Before Extraordinary Item . . . . . $ 0.27 $ 0.31
Extraordinary Item, Net of
Minority Interest. . . . . . . . . . . . -- (0.01)
---------- ----------
Net Income . . . . . . . . . . . . . . $ 0.27 $ 0.30
========== ==========
<PAGE>
Nine Months Ended
------------------------
9/30/99 9/30/98
---------- ----------
Diluted Earnings Per Share:
Income Before Extraordinary Item . . . . . $ 0.27 $ 0.30
Extraordinary Item, Net of
Minority Interest. . . . . . . . . . . . -- (0.01)
---------- ----------
Net Income . . . . . . . . . . . . . . $ 0.27 $ 0.29
========== ==========
The following table sets forth the computation of basic and diluted
earnings per share for the three months ended September 30, 1999 and 1998:
Three Months Ended
------------------------
9/30/99 9/30/98
---------- ----------
Numerator:
Net Income . . . . . . . . . . . . . . . . $ 1,203 $ 1,357
========== ==========
Denominator:
Denominator for basic earnings
per weighted-average shares. . . . . . . 13,488,570 13,327,166
Effect of dilutive securities:
Employee stock options . . . . . . . . . 8,370 39,683
Convertible debt . . . . . . . . . . . . -- 596,145
---------- ----------
Dilutive potential common shares . . . . . 8,370 635,828
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions . . . . 13,496,940 13,962,994
========== ==========
Basic and Diluted Earnings Per Share:
Net Income . . . . . . . . . . . . . . . . $ 0.09 $ 0.10
========== ==========
3. BUSINESS SEGMENTS
The Trust acquires and operates real estate properties located
principally in the Midwest and Southeast United States. The Trust has four
operating segments corresponding to the four property types comprising its
real estate assets: flex/industrial, office, residential and retail. As
of September 30, 1999, the flex/industrial segment consisted of thirteen
complexes with long-term leases to approximately 220 tenants; the office
segment consisted of fourteen office sites with long-term leases to
approximately 270 tenants; the residential segment consisted of four
apartment complexes with 864 units leased principally for six months; and
the retail segment consisted of one retail center with long-term leases to
approximately 50 tenants. The Trust's long-term tenants are in a variety
of businesses and no individual tenant is significant to the Trust's
business when considered as a whole.
<PAGE>
Information by business segments is set forth below:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenue
Flex/Industrial. . . . . $ 2,988 $ 3,013 $ 8,576 $ 7,676
Office . . . . . . . . . 5,241 5,132 15,937 14,202
Residential. . . . . . . 1,116 1,045 3,274 3,140
Retail . . . . . . . . . 1,157 1,317 3,580 3,646
Corporate/Other. . . . . 7 45 53 109
-------- -------- -------- --------
$ 10,509 $ 10,552 $ 31,420 $ 28,773
======== ======== ======== ========
Income (Loss) Before
Extraordinary Item
Flex/Industrial. . . . . $ 714 $ 983 $ 1,882 $ 2,722
Office . . . . . . . . . 1,217 1,259 3,913 3,883
Residential. . . . . . . 213 139 634 512
Retail . . . . . . . . . 116 260 503 504
Corporate/Other. . . . . (1,057) (1,284) (3,264) (3,489)
-------- -------- -------- --------
$ 1,203 $ 1,357 $ 3,668 $ 4,132
======== ======== ======== ========
As of As of
Septem- Decem-
ber 30, ber 31,
1999 1998
-------- --------
Total Assets
Flex/Industrial. . . . . $ 74,748 $ 74,513
Office . . . . . . . . . 105,451 105,049
Residential. . . . . . . 20,833 21,038
Retail . . . . . . . . . 18,246 18,359
Corporate/Other. . . . . 2,841 3,631
-------- --------
$222,119 $222,590
======== ========
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
Depreciation and
Amortization
Flex/Industrial. . . . . $ 576 $ 481 $ 1,669 $ 1,201
Office . . . . . . . . . 826 649 2,415 1,693
Residential. . . . . . . 146 134 430 396
Retail . . . . . . . . . 134 129 402 393
Corporate/Other. . . . . -- 8 -- 23
-------- -------- -------- --------
$ 1,682 $ 1,401 $ 4,916 $ 3,706
======== ======== ======== ========
<PAGE>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
Interest
Flex/Industrial. . . . . $ 931 $ 773 $ 2,705 $ 1,780
Office . . . . . . . . . 1,382 1,226 4,128 3,146
Residential. . . . . . . 296 300 890 901
Retail . . . . . . . . . 331 334 996 1,005
Corporate/Other. . . . . -- 16 -- 47
-------- -------- -------- --------
$ 2,940 $ 2,649 $ 8,719 $ 6,879
======== ======== ======== ========
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
Additions to Investment
in Real Estate
Flex/Industrial. . . . . $ 473 $ 6,547 $ 1,399 $ 32,648
Office . . . . . . . . . 462 13,600 1,922 30,648
Residential. . . . . . . 53 61 220 243
Retail . . . . . . . . . -- -- 39 62
-------- -------- -------- --------
$ 988 $ 20,208 $ 3,580 $ 63,601
======== ======== ======== ========
4. SUBSEQUENT EVENTS
DISTRIBUTIONS
On October 6, 1999, the Trust declared a cash distribution for the
quarter ended September 30, 1999 of $0.12 per share payable November 22,
1999 to shareholders of record on October 22, 1999.
FINANCING
On October 8, 1999, the Trust entered into a loan agreement with
LaSalle Bank N.A. in the amount of $7,800. The loan, which is
collateralized by the Trust's Lexington Business Center property, bears
interest at a variable rate equal to LIBOR plus 2% and is payable monthly.
The loan principal is pre-payable without penalty and has an initial
maturity date of May 31, 2000. The Trust has two options to extend the
term of the loan for one year each at the same interest rate by paying a
fee of $19.5 for each extension. The proceeds from the loan were utilized
to repay the loan previously collateralized by the Lexington Business
Center and for other general purposes.
DISPOSITION
On November 4, 1999, the Trust sold its interest in Quantum Business
Centre, a multi-tenant, flex/industrial property located in Jefferson
County, Kentucky, to a private investor for a sales price of $6,100. The
net cash proceeds to the Trust from a sale of the property are
approximately $3,600.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Certain statements in this quarterly report that are not historical
in fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are
based on our current expectations, estimates and projections. These
statements are not a guaranty of future performance. Without limiting the
foregoing, 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 raise capital by either equity or debt;
. 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. See "Managements's Discussion and Analysis of
Financial Condition and Results of Operations - Risk Factors" in the annual
report on Form 10-K for the year ended December 31, 1998 for a more
complete discussion.
We are a self-administered infinite life real estate investment trust
("REIT"), organized as a Massachusetts business trust, that acquires, owns
and operates primarily office and flex/industrial properties. We operate
principally through BSRT UPREIT Limited Partnership, referred to as the
Operating Partnership, and its subsidiaries, and BSRT UPREIT Corp., the
General Partner of the Operating Partnership. As of September 30, 1999, we
were the sole owner of both BSRT UPREIT Limited Partnership and BSRT UPREIT
Corp.
We have historically centered our acquisition activities on certain
major metropolitan areas such as Atlanta, Georgia and Chicago, Illinois as
well as smaller markets such as Huntsville, Alabama; Louisville, Kentucky;
Memphis, Tennessee; and Orlando, Florida. Because we consider ourselves an
"opportunistic" investor, we may expand our target areas to include other
cities or regions in the continental United States that exhibit
characteristics similar to our existing market areas. We believe that each
of the market areas where we currently own or would consider owning is
characterized by stable or increasing population and employment. We
believe economic growth in these markets will lead to an increase in the
demand for office and industrial space.
Our goal is to maximize the value of our shareholders' investment
through growth in Funds from Operations and Funds Available for
Distribution (as defined below). We seek to accomplish this goal through a
combination of internal growth achieved by carefully and aggressively
managing our assets, external growth achieved by making attractive
acquisitions, selectively disposing of properties and strategically
managing our debt structure.
RESULTS OF OPERATIONS
As of September 30, 1999, we owned individually, or, in some cases
through joint ventures, thirty-two properties consisting of:
. thirteen flex/industrial properties totaling 1,841,000 rentable
square feet;
<PAGE>
. fourteen office properties totaling 1,545,600 rentable square
feet;
. four apartment complexes containing 864 units;
. one retail center which contains 321,600 rentable square feet.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1999 TO NINE MONTHS
ENDED SEPTEMBER 30, 1998
During the nine months ended September 30, 1999 and 1998 our net
income totaled approximately $3.7 million ($0.27 per basic common share)
and approximately $4.0 million ($0.30 per basic common share), respective-
ly. The approximate $0.3 million decrease resulted primarily from expense
growth of approximately $3.2 million reduced by revenue growth of
approximately $2.6 million. In particular, our total revenues increased by
approximately $2.6 million or 9.0% to approximately $31.4 million from
approximately $28.8 million, due to an increase in the number of properties
that we own. On a "same-store" basis (comparing the results of operations
of the properties owned during the entire nine months ended September 30,
1999 with the results of the same properties owned during the entire nine
months ended September 30, 1998) net operating income decreased by
approximately $0.6 million with total revenues decreasing by approximately
$1.1 million offset by a decrease in total operating expenses of
approximately $0.5 million. The decrease in same store revenues was caused
by a decrease in the occupancy at three of our properties, the Lexington
Business Center, Elmhurst Metro Court, and Airways Plaza Office Center.
These properties' average occupancy levels were 66%, 65%, and 47% during
the nine months ended September 30, 1999, respectively, compared to 94%,
78%, and 100% average occupancy levels during the nine months ended
September 30, 1998. The occupancy at these three properties, as well as
for our overall portfolio, was lower than our historical levels as a result
of the termination of several leases during 1998 and 1999. Our ability to
achieve "same-store" growth in revenue in the future will be dependent upon
the time it takes to re-lease these and future vacant spaces and the rental
rates at which we obtain new tenants. Furthermore, property acquisitions
completed during 1998 significantly contributed to our revenue growth in
the nine months ended September 30, 1999. Our ability to make acquisitions
in the future will depend upon our ability to raise additional equity
through realizing gains on the sale of properties, selling additional
shares of beneficial interest and/or issuing operating partnership units in
the Operating Partnership.
Our total expenses increased by approximately $3.2 million primarily
due to an increase in the number of properties that we own. Our total
operating expenses, which include property operating, repairs and
maintenance, real estate taxes, and ground lease increased by approximately
$0.4 million to approximately $10.3 million from approximately $9.9 million
in 1998. On a "same-store" basis, total operating expenses decreased by
approximately $0.5 million or 5.5% to approximately $8.6 million from
approximately $9.1 million. Interest expense increased by approximately
$1.8 million to approximately $8.7 million from approximately $6.9 million,
primarily due to an increase in the amount we have borrowed in connection
with the acquisitions that we completed in 1998. General and
Administrative expense decreased by approximately $0.2 million to
approximately $3.2 million from approximately $3.4 million. Depreciation
and Amortization expense increased by approximately $1.2 million to
approximately $4.9 million from approximately $3.7 million which accounts
for the remaining net increase in total expenses.
<PAGE>
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1999 TO THREE MONTHS
ENDED SEPTEMBER 30, 1998
During the three months ended September 30, 1999 and 1998 our net
income totaled approximately $1.2 million ($0.09 per basic common share)
and approximately $1.4 million ($0.10 per basic common share),
respectively. The approximate $0.2 million decrease resulted from an
increase in total expenses. On a "same-store" basis (comparing the results
of operations of the properties owned during the entire three months ended
September 30, 1999 with the results of the same properties owned during the
entire three months ended September 30, 1998) net operating income
decreased by approximately $0.1 million with total revenues decreasing by
approximately $0.4 million offset by a decrease in total operating expenses
of approximately $0.3 million. The decrease in same store revenues was
caused by a decrease in the occupancy at two of our properties, the
Lexington Business Center and Airways Plaza Office Center. These
properties were 70% and 26% occupied at September 30, 1999, respectively,
compared to 95% and 97% occupancy levels at September 30, 1998. The
occupancy at these two properties, as well as for our overall portfolio,
was lower than our historical levels as a result of the termination of
several leases during 1998 and 1999. Our ability to achieve "same-store"
growth in revenue in the future will be dependent upon the time it takes to
re-lease these and future vacant spaces and the rental rates at which we
obtain new tenants. Our ability to make acquisitions in the future will
depend upon our ability to raise additional equity through realizing gains
on the sale of properties, selling additional shares of beneficial interest
and/or issuing operating partnership units in the Operating Partnership.
Our total expenses increased by approximately $0.2 million primarily
due to an increase in the number of properties that we own. Our total
operating expenses decreased by approximately $0.1 million to approximately
$3.5 million from approximately $3.6 million in 1998. On a "same-store"
basis, total operating expenses decreased by approximately $0.3 million or
8.3% to approximately $3.3 million from approximately $3.6 million.
Interest expense increased by approximately $0.3 million to approximately
$2.9 million from approximately $2.6 million, primarily due to an increase
in the amount we have borrowed in connection with the acquisitions that we
completed in 1998. General and Administrative expense decreased by
approximately $0.3 million to approximately $1.0 million from approximately
$1.3 million. Depreciation and Amortization expense increased by
approximately $0.3 million to approximately $1.7 million from approximately
$1.4 million which accounts for the remaining net increase in total
expenses.
LIQUIDITY AND CAPITAL RESOURCES
We expect to fund our short-term liquidity needs, including recurring
capital expenditures, from our working capital (including the restricted
cash which is available for capital expenditures, real estate taxes and
insurance), and from income derived primarily from our property operations
and our line of credit. We anticipate using these monies to fund periodic
tenant-related capital expenditures and other capital improvements. We
believe that our Funds Available for Distribution (as defined below) will
be sufficient for the twelve months after the date of this report to pay
quarterly distributions of $0.12 per common share.
We expect to fund our long-term liquidity needs, including monies
required to acquire and develop property and funds necessary for other non-
recurring capital improvements, from long-term secured and unsecured debt
and through issuing debt or equity securities, including issuing units in
the Operating Partnership in exchange for properties. We do not, however,
have any plans to do so in the near future and we may not be able to borrow
additional monies or sell additional equity in the future. We expect that
we will fund a portion of the cost of buying and improving properties in
the future by borrowing under our credit facilities or by mortgaging
properties we acquire.
<PAGE>
At September 30, 1999, our assets totaled approximately $222.1
million, a decrease of approximately $0.5 million from total assets at
December 31, 1998 of approximately $222.6 million. Our liabilities totaled
approximately $158.1 million at September 30, 1999 and approximately $158.0
at December 31, 1998. Our shareholders equity decreased by approximately
$0.5 million to approximately $61.9 million at September 30, 1999 from
approximately $62.4 million at December 31, 1998.
Cash and cash equivalents consist of cash and short-term investments.
Our cash and cash equivalents balance was approximately $2.6 million at
September 30, 1999 and approximately $3.7 million at December 31, 1998.
The decrease in total cash and cash equivalents resulted from using
approximately $4.1 million in investing activities and approximately $5.8
million in financing activities, while receiving approximately $8.8 million
from operating activities.
Cash Flows From Operating Activities: Net cash provided by operating
activities decreased by approximately $0.2 million for the nine months
ended September 30, 1999 to approximately $8.8 million from approximately
$9.0 million in 1998. This decrease is primarily due to period to period
changes in certain assets and liabilities including restricted cash, other
assets, accounts payable and other assets and liabilities effecting
operating activities. Net income adjusted for extraordinary items,
depreciation and amortization and minority interest increased by
approximately $0.7 million to approximately $9.2 million from approximately
$8.5 million for the nine months ended September 30, 1999 and 1998,
respectively. See Results of Operations above for further discussion of
the operations of our real estate assets.
Due to certain unique operating characteristics of real estate
companies, the National Association of Real Estate Investment Trusts
("NAREIT"), an industry trade group, has promulgated a standard known as
"Funds from Operations", or "FFO" for short, which it believes more
accurately reflects the operating property performance of a REIT such as
our company. As defined by NAREIT, FFO means net income computed in
accordance with generally accepted accounting principles ("GAAP"), 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. We have adopted the
NAREIT definition for computing FFO because we believe that, subject to the
following limitations, FFO provides a basis for comparing the performance
and operations of a REIT such as our company. The calculation of FFO may
vary from entity to entity in that capitalization and expense policies may
vary from entity to entity. Items which are capitalized do not decrease
FFO whereas items that are expensed decrease FFO. As such, our
presentation of FFO may not be comparable to other similarly titled
measures presented by other REIT's. We do not intend for FFO to be an
alternative to Net Income as an indication of our performance nor an
alternative to Cash Flows from Operating Activities (as calculated in
accordance with GAAP) as a measure of our capacity to pay distributions.
For the nine months ended September 30, 1999 and 1998, our properties
generated FFO of approximately $8.4 million and $7.6 million, respectively.
FFO increased on a year to year basis due primarily to an increase in the
number of properties owned from period to period.
<PAGE>
FFO for the nine months ended September 30, 1999 and 1998 is
calculated as follows:
1999 1998
-------- --------
(Dollars in thousands)
Net Income . . . . . . . . . . . . . . . . . . $ 3,668 $ 3,991
Plus:
Depreciation and Amortization Expense . . . 4,916 3,683
Less:
Minority Interest Share of Depreciation
and Amortization Expense . . . . . . . . . (226) (225)
Extraordinary Item, Net of Minority
Interest . . . . . . . . . . . . . . . . . . -- 141
-------- --------
Funds From Operations . . . . . . . . . . . . $ 8,358 $ 7,590
======== ========
Cash Flows Provided By (Used For):
Operating Activities . . . . . . . . . . . . $ 8,801 $ 9,045
Investing Activities . . . . . . . . . . . . $ (4,121) $(60,563)
Financing Activities . . . . . . . . . . . . $ (5,824) $ 49,931
Our ability to pay any distribution is influenced by the amount of
money that we have available to distribute known as Funds Available for
Distribution or "FAD" for short. The amount of FAD is dependent upon,
among other things:
. sustaining the operating performance of our existing real
estate investments through scheduled increases in base rents under existing
leases and through general improvement in the real estate markets where our
properties are located;
. the operating performance of future acquisitions; and
. our level of operating expenses.
FAD is calculated by increasing or decreasing FFO to give effect to
items such as the impact of straight-lining rents, lease commissions paid
and normalized reserves for capital improvements. The capital reserve is
$0.075 per square foot for flex/industrial properties, $0.10 per square
foot for office properties, $0.15 per square foot for retail property and
$200 per residential unit.
FAD for the nine months ended September 30, 1999 and 1998 is
calculated as follows:
1999 1998
-------- --------
(Dollars in thousands)
Funds From Operations. . . . . . . . . . . . . $ 8,358 $ 7,590
Straight-line Rents. . . . . . . . . . . . . . (187) (367)
Lease Commissions. . . . . . . . . . . . . . . (944) (536)
Capital Reserve. . . . . . . . . . . . . . . . (386) (365)
-------- --------
Funds Available for Distribution . . . . . . . $ 6,841 $ 6,322
======== ========
Cash Flows From Investing Activities: During the nine months ended
September 30, 1999, we used approximately $4.1 million in investing
activities compared to approximately $60.6 million in the same period in
1998. Cash flow was primarily used during the nine months ended
September 30, 1999 to make capital improvements at our various properties
in the amount of approximately $3.6 million. In comparison, during the
same period in 1998, we acquired four office and six flex/industrial
properties for a total of approximately $55.9 million and made capital
improvements in the amount of approximately $4.0 million.
<PAGE>
Cash Flows From Financing Activities: During the nine months ended
September 30, 1999, financing activities used approximately $5.8 million
compared to receiving approximately $49.9 million in the same period in
1998. During the nine months ended September 30, 1999, we used cash
primarily to pay distributions to shareholders of approximately $4.8
million and make principal payments on mortgage loans and bonds payable of
approximately $1.3 million. The cash flows provided by financing
activities for the nine months ended September 30, 1998 resulted primarily
from approximately $54.4 million of net proceeds from bonds and mortgage
loans reduced by distributions paid to shareholders of approximately $4.5
million.
IMPACT OF THE YEAR 2000
The Year 2000 issue, or Y2K for short, is the result of computer
programs utilizing two digits rather than four digits to define the
applicable year. Any of our computer programs or hardware that have date-
sensitive software or embedded chips may therefore recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a
system failure or in miscalculations causing disruptions of real estate
operations, such as the functioning of property mechanical systems, and
other activities, such as a temporary inability to process transactions,
generate invoices or reports, manage our portfolio, comply with regulatory
requirements or engage in similar normal business activities.
We have formed a Y2K Compliance Committee consisting of at least one
representative from each of our departments: legal, accounting, asset
management, investor relations and acquisitions. Our Y2K Compliance
Committee, in accordance with the Year 2000 Information and Readiness
Disclosure Act, has formulated the following Year 2000 Readiness
Disclosure:
We believe that the members of our committee, drawing upon their
various disciplines and resources available to them through professional
organizations and contacts, will collectively be able to formulate the
necessary initial questionnaires and inquiries described below and to
develop a comprehensive plan for testing and evaluating responses to our
inquiries.
Our committee has retained and will retain, as circumstances dictate,
third party consultants and professionals to assist it in evaluating
technical issues or making strategic recommendations for remedial action,
if necessary.
We have established a plan for assessing and mitigating our exposure
to Y2K matters. The plan consists of several elements including a complete
upgrade of our computer hardware and software programs; assessing Y2K
compliance programs at each property and each property's reliance on
computer programs in operations; and inquiry and dialogue with our
significant suppliers, vendors and tenants as to their Y2K compliance
initiatives.
We have upgraded our networking, financial analysis, general ledger
and accounts payable software programs in order to minimize the potential
impact of Y2K at our headquarters. In addition, we expect to complete
testing procedures that will ensure that all upgraded systems will operate
subsequent to December 31, 1999. These testing procedures will include
simulating operating all systems at a date after December 31, 1999. As of
September 30, 1999, we have expended $47,000 on Y2K compliance issues. The
vast majority of these funds have been expended on the network and computer
software upgrades.
We anticipate a total expenditure of less than $75,000 on Y2K
compliance at our corporate headquarters. Based upon discussions with our
ten property managers, we do not presently anticipate significant expenses
at the property level. However, if there are significant expenditures at
the property level, we will revise our projection of Y2K related costs, and
report in the annual report.
<PAGE>
We have assessed the operations at each of our properties in an
effort to diagnose the impact that Y2K may have on property operations,
particularly mechanical systems. We are taking action at our Butterfield
Office Plaza property to retrofit the building's mechanical system, an
ancillary benefit of which will be to remedy an apparent Y2K issue. We are
not aware of any other Y2K issues at our properties.
We rely on various third parties to provide property level and other
administrative functions. We have sent a questionnaire to each of our
property managers inquiring about their ability to address the effect of
the Y2K issue on their own operations. To date, we have received responses
from all of our ten property managers. Of the ten property managers, nine
have systems that, in their view, are Y2K compliant, and the remaining one
is substantially compliant and expects to be fully compliant by year end.
We have concluded that no further testing of our property managers'
operations is warranted. The computerized aspect of the relationship
between us and our property managers is most prevalent in the accounting
and reporting functions from the property level to our headquarters. We
believe that the potential impact of a non-compliant property manager is
minimized because we have the right to cancel our property management
contracts generally on 30-day notice at no cost to us. Therefore, any
property managers who may not be Y2K compliant can be replaced with a
manager that has Y2K compliant systems. In the event any property manager
is unable to perform accounting functions after December 31, 1999, we
expect to have the internal capability to process all accounting
transactions and to produce financial statements needed to manage the
properties and comply with our reporting requirements.
We have also received Y2K reports from our payroll processing service
provider, our transfer agent and our principal bank. Our payroll service
provider has represented that it processes our payroll using Y2K compliant
software. Our principal bank represented that as of September 30, 1999,
its Y2K renovation, testing and implementation of all of its systems was
complete. Our transfer agent has represented that all of its "mission
critical" systems and nearly all of its "non-mission critical" systems have
been tested for Y2K readiness. Furthermore, it continues to develop
Business Resumption Contingency Plans for each line of its business that
will ensure operations will continue with minimum disruption.
Our property managers have inquired of various utilities to ascertain
availability of service after December 31, 1999. Virtually no utility has
given absolute assurance of compliance although none have indicated that
problems are expected. Because utilities are not easily replaced, we
consider the possibility of an interruption of service at one or more of
our buildings to be our most significant Y2K risk. No amount of
contingency planning can reasonably address this possibility. The future
success of our operations is not closely tied to any other third party
vendor, supplier or service provider. As such, if any of these third
parties fails to conduct business due to Y2K related problems, we expect to
be able to contract with other third parties without experiencing any
material disruption of our operations or financial condition. We have
concluded that no further inquiry of our other vendors and service
providers is warranted.
We cannot quantify the potential costs and uncertainties associated
with potential Y2K program flaws at this time as they may relate to other
organizations that we rely upon but we do not anticipate that the effect of
this potential computer program flaw upon our operations will be
significant.
<PAGE>
As of September 30, 1999, we had over 500 tenants. Our ten (10)
largest tenants account for approximately twenty percent (20%) of our total
projected revenues for 1999 based on properties owned as of September 30,
1999. Because of our broad tenant base, our future operations,
particularly our ability to collect rent, is not closely tied to the
ability of any one particular tenant to pay rent or other charges. We
currently believe that there will not be a material adverse effect upon our
operations or financial condition if any one tenant or small group of
tenants ceases to conduct business (and pay rent) or is simply unable to
pay rent on a timely-basis due to Y2K problems. However, if a large number
of tenants, particularly several of the ten largest tenants, fail to pay
rent for an extended period of time, our cash flow may be adversely
effected. During the first quarter of 1999, we initiated contact with our
68 largest tenants to survey their plans to address Y2K related issues.
This sampling includes all tenants whose annual rental payments are greater
than $100,000. As of September 30, 1999, we have received responses from
35 of these tenants with 14 reporting compliance and the remainder
indicating testing in progress or other non-committal responses.
We have formulated a contingency plan to address potential failures:
- at our home office;
- at our properties;
- regarding our property managers;
- regarding our tenants;
- regarding our suppliers and vendors.
- regarding communicating with our officers and Trustees.
We focused our efforts on determining a contingency plan for what we
believe to be the most likely worst case scenario - an isolated failure in
one or two of the categories described above. For example, there is the
possibility that we may be unable to provide an adequate working
environment for some of our tenants due to the failure of utility services
or the failure of building mechanical, life safety or security systems.
Furthermore, the worst case scenario includes Y2K problems inhibiting our
ability to collect rent or preventing some of our tenants from paying rent
caused by Y2K issues unrelated to property operations. We could be subject
to litigation for failing to provide an adequate working environment for
our tenants as a result of Y2K computer system disruptions. More
immediately, the tenants may cease paying rent which could impact our cash
flow. The amount of potential liability and lost revenue cannot be
reasonably estimated at this time.
We have not focused our contingency planning on a "doomsday" scenario
in which a near-universal malfunction of computers would have a sweeping
effect upon all businesses. It is unlikely that any planning we could
presently formulate would assist in the vast recovery process necessitated
by this event.
OTHER INFORMATION
As of September 30, 1999, we owned interests, directly or indirectly
through our wholly owned subsidiaries, in the properties set forth in the
table below:
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
Portfolio Summary
September 30, 1999
<CAPTION>
Scheduled Lease Expirations
Occu- -------------------------------
Date Square pancy After
Acquired Footage % 1999 2000 2001 2001
-------- ------- -------- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FLEX/INDUSTRIAL
- ---------------
Milwaukee Industrial Properties
Milwaukee, WI. . . . . . . . . 4/30/93 235,800 89% 11% 20% 11% 47%
Elmhurst Metro Court
Elmhurst, IL . . . . . . . . . 11/30/93 140,800 72% 14% 12% 30% 16%
Willowbrook Industrial Court
Willowbrook, IL. . . . . . . . 6/16/95 84,300 91% 3% 26% 17% 45%
Quantum Business Centre
Louisville, KY . . . . . . . . 9/26/95 182,300 91% 4% 26% 18% 43%
Lexington Business Center
Lexington, KY. . . . . . . . . 12/05/95 308,800 70% 1% 16% 10% 43%
Newtown Business Center
Lexington, KY. . . . . . . . . 12/05/95 87,100 80% 5% 5% 37% 33%
6901 Riverport Drive
Louisville, KY . . . . . . . . 11/19/96 322,100 100% 0% 45% 0% 55%
Avalon Ridge Business Park
Norcross, GA . . . . . . . . . 4/24/98 57,400 100% 0% 0% 0% 100%
Tower Lane Business Park
Bensenville, IL. . . . . . . . 4/27/98 95,900 88% 7% 33% 15% 33%
Metric Plaza
Winter Park, FL. . . . . . . . 4/30/98 32,000 100% 0% 0% 0% 100%
Park Center
Orlando, FL. . . . . . . . . . 4/30/98 47,400 80% 0% 9% 25% 46%
<PAGE>
Scheduled Lease Expirations
Occu- -------------------------------
Date Square pancy After
Acquired Footage % 1999 2000 2001 2001
-------- ------- -------- ---- ---- ---- -----
University Corporate Center
Winter Park, FL. . . . . . . . 4/30/98 127,800 84% 5% 20% 33% 26%
Johns Creek Office and
Industrial Park
Duluth and Suwanee, GA . . . . 8/14/98 119,300 100% 0% 0% 50% 50%
---------- ----- ----- ----- ----- -----
Sub-total. . . . . . . . . . 1,841,000 87% 4% 21% 17% 45%
---------- ----- ----- ----- ----- -----
OFFICE
- ------
Colonial Penn Building
Tampa, FL. . . . . . . . . . . 3/22/94 79,200 100% 0% 28% 0% 72%
Commerce Center f/k/a
Florida Power & Light Building
Sarasota, FL . . . . . . . . . 3/22/94 81,100 100% 0% 0% 11% 89%
Woodcrest Office Park
Tallahassee, FL. . . . . . . . 12/19/95 264,900 90% 9% 28% 12% 41%
Midwest Office Center
Oakbrook Terrace, IL . . . . . 4/18/96 77,000 94% 12% 30% 13% 39%
Phoenix Business Park
Atlanta, GA. . . . . . . . . . 1/15/97 110,600 57% 0% 2% 13% 42%
Butterfield Office Plaza
Oak Brook, IL. . . . . . . . . 4/30/97 200,800 96% 5% 27% 16% 48%
Southlake Corporate Center
Morrow, GA . . . . . . . . . . 7/30/97 56,200 87% 0% 9% 32% 46%
University Square Business Center
Huntsville, AL . . . . . . . . 8/26/97 184,700 89% 11% 19% 25% 34%
Technology Center
Huntsville, AL . . . . . . . . 8/26/97 48,500 100% 0% 35% 65% 0%
Airways Plaza Office Center
Memphis, TN. . . . . . . . . . 12/10/97 87,800 26% 0% 16% 4% 6%
<PAGE>
Scheduled Lease Expirations
Occu- -------------------------------
Date Square pancy After
Acquired Footage % 1999 2000 2001 2001
-------- ------- -------- ---- ---- ---- -----
Peachtree Pointe Office Park
Norcross, GA . . . . . . . . . 1/20/98 71,700 90% 13% 16% 15% 46%
Avalon Center Office Park
Norcross, GA . . . . . . . . . 3/20/98 53,300 100% 0% 0% 0% 100%
Sand Lake Tech Center
Orlando, FL. . . . . . . . . . 4/30/98 84,100 77% 0% 0% 0% 77%
Technology Park
Norcross, GA . . . . . . . . . 8/14/98 145,700 100% 17% 9% 26% 48%
---------- ----- ----- ----- ----- -----
Sub-total. . . . . . . . . 1,545,600 87% 6% 18% 16% 47%
---------- ----- ----- ----- ----- -----
RETAIL
- ------
Northlake Tower Shopping Center
Atlanta, GA. . . . . . . . . . 7/28/95 321,600 97% 2% 17% 2% 76%
---------- ----- ----- ----- ----- -----
Total. . . . . . . . . . . . . 3,708,200 88% 5% 19% 15% 49%
---------- ----- ----- ----- ----- -----
RESIDENTIAL
- -----------
Country Creek Apartments
Oklahoma City, OK. . . . . . . 5/22/97 320 96%
Willowpark Apartments
Lawton, OK . . . . . . . . . . 5/22/97 160 91%
Winchester Run Apartments
Oklahoma City, OK. . . . . . . 5/22/97 192 97%
Woodrun Village Apartments
Yukon, OK. . . . . . . . . . . 5/22/97 192 98%
-------- -----
Total. . . . . . . . . . . 864 96%
======== =====
PORTFOLIO TOTAL (a). . . . . . 89%
=====
- --------------------
<FN>
(a) For purposes of calculating the weighted average occupancy for the portfolio, we converted the number
of residential apartments to an equivalent square footage amount for each residential property.
</TABLE>
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Comparison of Average Rents
Average Average
"In Place" Market
Square Net Rents Net Rents
Property Type Footage (1) (2)
- ------------- --------- ---------- ---------
Flex/Industrial. . . . . . 1,841,000 $5.05 $5.30
Office . . . . . . . . . . 1,545,600 9.10 10.04
Retail . . . . . . . . . . 321,600 10.79 11.73
---------- ------ ------
Total. . . . . . . . . 3,708,200 $ 7.23 $ 7.83
========== ====== ======
Average Monthly Monthly
"In Place" Rents Market Rents
------------------- -------------------
Units Per Square Foot Per Square Foot
----- ------------------- -------------------
Residential. . . 864 $0.67 $0.63
=== ===== =====
- --------------------
(1) Average "In Place" Net Rents represent net operating income per
square foot.
(2) Average Market Net Rents represent our good faith estimate of current
market rents, assuming standard tenant improvements.
<PAGE>
SUBSEQUENT EVENTS
FINANCING
On October 8, 1999, we entered into a loan agreement with LaSalle
Bank N.A. in the amount of $7.8 million. The loan, which is collateralized
by the Trust's Lexington Business Center property, bears interest at a
variable rate equal to LIBOR plus 2% and is payable monthly. The loan
principal is pre-payable without penalty and has an initial maturity date
of May 31, 2000. We have two options to extend the term of the loan for
one year each at the same interest rate by paying a fee of $19,500 for each
extension. We utilized the proceeds from the loan to repay the loan
previously collateralized by the Lexington Business Center and for other
business purposes.
On September 13, 1999, we amended our October 10, 1997 convertible
term loan agreement with the lenders for whom Morgens, Waterfall, Vintiadis
& Co., Inc. serves as agent to extend the date on which an annual fee of 2%
of the outstanding loan balance is both measured and payable, from
October 14, 1999 to November 15, 1999. This date was further postponed to
December 15, 1999, then to January 31, 2000, pursuant to subsequent
extension letters dated as of October 14, 1999 and November 9, 1999
received from Morgens, Waterfall, Vintiadis & Co., Inc.
DISPOSITION
On November 4, 1999, we sold Quantum Business Centre, a multi-tenant,
flex/industrial property located in Jefferson County, Kentucky, for a sales
price of approximately $6.1 million. We received approximately $3.6
million in net proceeds from the sale.
ITEM 3A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We do not engage in any hedge transaction nor in the ownership of any
derivative financial instruments. To mitigate the impact of fluctuations
in interest rates, we generally have maintained over 70% of our debt as
fixed rate in nature by borrowing on a long-term basis.
As of September 30, 1999, we had approximately $150.4 million of
outstanding long-term debt, of which $17.7 million bears interest at
variable rates that are adjusted on a monthly basis. As of September 30,
1999, the weighted-average interest rate on this variable rate debt was
6.72%. If interest rates on this variable rate debt increased by one
percentage point (1%), interest expense would increase by $177,000 on an
annual basis.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see Exhibit Index included elsewhere herein).
(b) None.
<PAGE>
SIGNATURES
PURSUANT to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on our behalf
and in the capacities and on the dates indicated.
BANYAN STRATEGIC REALTY TRUST
By: /s/ Leonard G. Levine Date: November 12, 1999
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: November 12, 1999
Joel L. Teglia, Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT
INDEX
- -------
3.1 Second Amended and Restated Declaration of Trust dated as of
August 8, 1986, as amended on March 8, 1991, May 1, 1993 and August 12,
1998, including Certificate of designations, preferences and rights of
Series A convertible preferred shares. (1)
3.2 By-Laws dated March 13, 1996. (2)
3.3 BSRT UPREIT Limited Partnership Limited Partnership Agreement (3)
4.1 Convertible Term Loan Agreement dated as of October 10, 1997 among
Banyan Strategic Realty Trust, as Borrower, and the Entities listed
therein, as Lenders. (4)
4.2 First Amendment to Convertible Term Loan Agreement dated as of
March 30, 1998 made by and among Banyan Strategic Realty Trust and the
Entities listed therein, as Lenders. (5)
4.3 Second Amendment to Convertible Term Loan Agreement dated as of
June 26, 1998 made by and among Banyan Strategic Realty Trust and the
Entities listed therein, as Lenders. (6)
4.4 Third Amendment to Convertible Term Loan Agreement dated as of
September 13, 1999 made by and among Banyan Strategic Realty Trust and the
Entities listed therein, as Lenders.(*)
4.5 Extension Letter to Convertible Term Loan Agreement dated as of
October 14, 1999.(*)
4.6 Extension Letter to Convertible Term Loan Agreement dated as of
November 9, 1999.(*)
4.7 Revolving Credit Agreement dated April 30, 1998 among Banyan
Strategic Realty Trust, as Borrower and the Capital Company of America, as
Lender. (7)
4.8 Loan Agreement dated May 22, 1998 among BSRT Fountain Square L.L.C.,
BSRT Phoenix Business Park L.L.C., BSRT Newtown Trust, BSRT Southlake
L.L.C., BSRT Technology Center L.L.C., BSRT Airways Plaza L.L.C., BSRT
Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT Sand Lake Tech
Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza L.L.C., and BSRT
University Corporate Center L.L.C., as Borrower, and the Capital Company of
America, as Lender. (6)
4.9 First Amendment to Loan Agreement dated September 11, 1998 among BSRT
Fountain Square L.L.C., BSRT Phoenix Business Park L.L.C., BSRT Newton
Trust, BSRT Southlake L.L.C., BSRT Technology Center L.L.C., BSRT Airways
Plaza L.L.C., BSRT Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT
Sand Lake Tech Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza
L.L.C., and BSRT University Corporate Center L.L.C., as Borrower, and the
Capital Company of America LLC, as Lender. (1)
4.10 Loan Agreement dated May 22, 1998 between BSRT Lexington B Corp. and
BSRT Lexington Trust, as Borrower and the Capital Company of America, as
Lender. (6)
4.11 First Amendment to Loan Agreement dated September 11, 1998 between
BSRT Lexington B Corp., and BSRT Lexington Trust, as Borrower and the
Capital Company of America LLC, as Lender. (1)
4.12 Loan Agreement dated June 22, 1998 between Banyan/Morgan Wisconsin
L.L.C., and Banyan/Morgan Elmhurst L.L.C., as Borrower and the Capital
Company of America, as Lender. (6)
<PAGE>
EXHIBIT
INDEX
- -------
4.13 First Amendment to Loan Agreement dated September 11, 1998 between
Banyan/Morgan Wisconsin L.L.C., and Banyan/Morgan Elmhurst L.L.C., as
Borrower and the Capital Company of America LLC, as Lender. (1)
10.1 Employment Agreement of Leonard G. Levine as of October 1, 1997. (8)
10.2 Employment Agreement of Joel L. Teglia dated December 31, 1998. (3)
10.3 Employment Agreement of Neil Hansen dated December 31, 1998. (3)
10.4 Employment Agreement of Jay Schmidt dated December 31, 1998. (3)
10.5 1997 Omnibus Stock and Incentive Plan dated July 9, 1997. (9)
10.6 Share Purchase Agreement by and among Banyan Strategic Realty Trust
and the Purchasers listed on the signature page attached thereto dated as
of October 10, 1997. (4)
10.7 Registration Rights Agreement dated as of October 10, 1997 between
Banyan Strategic Realty Trust and the Purchasers listed on the Signature
Pages attached thereto. (4)
10.8 Registration Rights Agreement dated as of October 1, 1997 between
Banyan Strategic Realty Trust and Leonard G. Levine. (3)
10.9 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Walter E. Auch, Sr. (10)
10.10 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Norman M. Gold. (10)
10.11 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Marvin A. Sotoloff. (10)
10.12 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Leonard G. Levine. (10)
10.13 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Joel L. Teglia. (10)
10.14 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Neil D. Hansen. (10)
10.15 Indemnification Agreement dated as of January 1, 1999 between Banyan
Strategic Realty Trust and Jay E. Schmidt. (10)
10.16 Indemnification Agreement dated as of June 9,1999 between Banyan
Strategic Realty Trust and Robert G. Higgins. (10)
10.17 Indemnification Agreement dated as of June 9, 1999 between Banyan
Strategic Realty Trust and Christopher J. Swieca. (10)
21 Subsidiaries of Banyan Strategic Realty Trust (3)
27 Financial Data Schedule (*)
99.7 Press Release dated October 6, 1999 (11)
99.8 Press Release dated October 20, 1999 (11)
99.9 Press Release dated November 8, 1999 (*)
99.10 Press Release dated November 10, 1999 (*)
<PAGE>
- --------------------
(*) Filed herewith.
(1) Incorporated by reference from the Trust's Form 8-K/A-1 dated
August 14, 1998.
(2) Incorporated by reference from the Trust's Registration
Statement on Form S-11 (file number 33-4169).
(3) Incorporated by reference from the Trust's Form 10-K for the
year ended December 31, 1998.
(4) Incorporated by reference from the Trust's Form 8-K dated
October 14, 1997.
(5) Incorporated by reference from the Trust's Form 10-K/A for the
year ended December 31, 1997.
(6) Incorporated by reference from the Trust's Form 8-K dated
May 22, 1998.
(7) Incorporated by reference from the Trust's Form 10-Q dated
March 31, 1998.
(8) Incorporated by reference from the Trust's Form 10-K dated
December 31, 1997.
(9) Incorporated by reference from the Trust's Form 10-Q for the
quarter ended June 30, 1997.
(10) Incorporated by reference from the Trust's Form 10-Q for the
quarter ended June 30, 1999.
(11) Incorporated by reference from the Trust's Form 8-K dated
October 25, 1999.
EXHIBIT 4.4
- -----------
THIRD AMENDMENT TO
CONVERTIBLE TERM LOAN AGREEMENT
THIS THIRD AMENDMENT TO CONVERTIBLE TERM LOAN AGREEMENT
(this"Third Amendment"), dated as of September 13, 1999, is made by and
among BANYAN STRATEGIC REALTY TRUST, a Massachusetts business trust
("Company"), and THE ENTITIES LISTED ON THE SIGNATURE PAGES HEREOF
(collectively, "Lenders"),with reference to the following Recitals:
R E C I T A L S:
A. Company and Lenders are parties to that certain Convertible
Term Loan Agreement dated as of October 10, 1997, as amended by that
certain First Amendment to Convertible Term Loan Agreement dated as of
March 30, 1998 and as further amended by that certain Second Amendment to
Convertible Term Loan Agreement dated as of June 26, 1999 (as amended, the
"LOAN AGREEMENT"). Initially capitalized terms used in this Third
Amendment and not otherwise defined herein shall have the meaning given
such terms in the Loan Agreement, unless the context clearly indicates
otherwise.
B. Section 2.3 of the Loan Agreement provides that a loan fee in
the amount of two percent of the balance of the Loans outstanding is due on
October 14 of each year beginning with 1998.
C. For the 1999 calendar year only, the parties desire to extend
to November 15, 1999 from October 14, 1999, the date upon which the loan
fee described in Section 2.3 shall be due.
NOW, THEREFORE, with reference to the foregoing Recitals, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Lenders hereby agree as follows:
1. Loan Fees. Notwithstanding the provisions of Section 2.3 of
the Loan Agreement, a loan fee of two percent of the balance of the Loans
then outstanding shall not be due on October 14, 1999, but instead shall be
calculated as of November 15, 1999 and shall be due on November 15, 1999 in
respect to the balance of the Loans outstanding on November 15, 1999.
2. Except as expressly modified by this Third Amendment, Company
and Lenders acknowledge and agree that the Loan Agreement and the other
Loan Documents are unmodified and remain in full force and effect.
Company hereby ratifies and affirms its obligations under the Loan
Agreement (as modified by this Third Amendment) and the other Loan
Documents.
3. This Third Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY: BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
By: /s/ ROBERT G. HIGGINS
----------------------------------------
Printed Name: Robert G. Higgins
Title: Vice President
AGENT: MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.,
a New York corporation
By: /s/ DANIEL M. LEVINSON
----------------------------------------
Printed Name: Daniel M. Levinson
Title: Authorized Agent
LENDERS: RESTART PARTNERS, L.P.,
a Delaware limited partnership
By: PRIME GROUP L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: Daniel M. Levinson
(whose signature appears below),
Authorized Agent
RESTART PARTNERS II, L.P.,
a Delaware limited partnership
By: PRIME GROUP II, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: Daniel M. Levinson
(whose signature appears below),
Authorized Agent
(SIGNATURES CONTINUED ON NEXT PAGE)
<PAGE>
RESTART PARTNERS III, L.P.,
a Delaware limited partnership
By: PRIME GROUP III, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: Daniel M. Levinson
(whose signature appears below),
Authorized Agent
ENDOWMENT RESTART LLC,
a Delaware limited liability company
By: ENDOWMENT PRIME LLC,
a Delaware limited liability company,
its Managing Member
By: Daniel M. Levinson
(whose signature appears below),
Authorized Agent
MORGENS WATERFALL INCOME PARTNERS, L.P.,
a New York limited partnership
By: MW CAPITAL, LLC,
a Delaware limited liability company,
its General Partner
By: Daniel M. Levinson
(whose signature appears below),
Authorized Agent
/s/ DANIEL M. LEVINSON
- -------------------------------------------------------
Daniel M. Levinson
for the entities and in the capacities described above
EXHIBIT 4.5
- -----------
Morgens, Waterfall, Vintiadis & Company, Inc.
10 East 50th Street
New York, NY 10022
Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, IL 60606
Gentlemen:
Reference is hereby made to that certain Convertible Term Loan
Agreement dated October 10, 1997, as three times amended (the "Loan
Agreement"), by and among Banyan Strategic Realty Trust and various
entities listed therein for all of whom Morgens, Waterfall, Vintiadis &
Company, Inc. acts as authorized agent. Initially capitalized terms in
this letter shall have the same meaning given such terms in the Loan
Agreement.
Pursuant to the Third Amendment to the Loan Agreement dated as of
September 13, 1999, the due date for a loan fee originally due on
October 14, 1999 was extended to November 15, 1999. Morgens, Waterfall,
Vintiadis & Company, Inc. desires to again extend such due date.
Accordingly, please be advised that the loan fee described in Section
2.3, which is currently due on November 15, 1999, is not due until December
15, 1999, and shall be calculated in respect to the balance of the loans
outstanding on that date.
We acknowledge adequate consideration for this extension. No other
terms of the Loan Agreement are affected hereby. Please acknowledge your
agreement with the foregoing by executing below.
Very truly yours,
Morgens, Waterfall, Vintiadis & Company, Inc.
By: /s/ DANIEL M. LEVINSON
------------------------------
Title: Managing Director
------------------------------
Acknowledged:
Banyan Strategic Realty Trust
By: /s/ ROBERT G. HIGGINS
------------------------------
Title: Vice President
------------------------------
Date: October 14, 1999
------------------------------
EXHIBIT 4.6
- -----------
10 EAST 50th STREET
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC. NEW YORK, NEW YORK 10022
Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, IL 60606
Gentlemen:
Reference is hereby made to that certain Convertible Term Loan
Agreement dated October 10, 1997, as three times amended (the "Loan
Agreement"), by among Banyan Strategic Realty Trust and various entities
listed therein for all of whom Morgens, Waterfall, Vintiadis, & Company,
Inc. acts as authorized agent. Initially capitalized terms in this letter
shall have the same meaning given such terms in the Loan Agreement.
Pursuant to Third Amendment to the Loan Agreement dated as of
September 13, 1999, the due date for a loan fee originally due on
October 14, 1999, was extended to December 15, 1999. Morgens, Waterfall,
Vintiadis & Company, Inc. desires to again extend such due date.
Accordingly, please be advised that the loan fee described in
Section 2.3, which is currently due on December 15, 1999, is not due until
January 31, 2000, and shall be calculated in respect to the balance of the
loans outstanding on that date.
We acknowledge adequate consideration for this extension. No other
terms of the Loan Agreement are affected hereby. Please acknowledge your
agreement with foregoing by executing below.
Very truly yours,
Morgens, Waterfall, Vintiadis & Company, Inc.
By: /s/ DANIEL M. LEVINSON
------------------------------
Title: Managing Director
------------------------
Acknowledged:
Banyan Strategic Realty Trust
By: /s/ ROBERT G. HIGGINS
------------------------------
Title: Vice President
------------------------------
Date: November 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BANYAN STRATEGIC REALTY TRUST'S FORM 10-Q FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10-Q.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,587
<SECURITIES> 0
<RECEIVABLES> 1,155
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,742
<PP&E> 224,388
<DEPRECIATION> (15,847)
<TOTAL-ASSETS> 222,119
<CURRENT-LIABILITIES> 6,264
<BONDS> 150,395
<COMMON> 61,888
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 222,119
<SALES> 0
<TOTAL-REVENUES> 31,420
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,652
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,719
<INCOME-PRETAX> 3,668
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,668
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,668
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.27
</TABLE>
EXHIBIT 99.9
- ------------
AT THE TRUST AT THE FINANCIAL RELATIONS BOARD
Karen Dickelman Tony Ebersole Georganne Palffy
Investor Relations General Information Analyst Inquiries
312 683-3671 312 640-6728 312 640-6768
www.banyanreit.com
email: [email protected]
FOR IMMEDIATE RELEASE
MONDAY, NOVEMBER 8, 1999
BANYAN STRATEGIC REALTY TRUST ANNOUNCES SALE OF THE
QUANTUM BUSINESS CENTRE IN JEFFERSON COUNTY, KENTUCKY
CHICAGO, NOVEMBER 8, 1999 -- BANYAN STRATEGIC REALTY TRUST (NASDAQ: BSRTS)
announced the completion of the previously announced sale of the Quantum
Business Centre, a multi-tenant office/warehouse property located in
Jefferson County (suburban Louisville), Kentucky on November 4, 1999 for
$6.1 million resulting in net proceeds of $3 million.
The Trust will report a gain of approximately $750,000 in the fourth
quarter as a result of the sale.
Banyan Strategic Realty Trust is an equity Real Estate Investment Trust
(REIT) that owns and acquires primarily office and flex/industrial
properties. The properties are located in certain major metropolitan areas
and smaller markets of the Midwest and southeastern United States. The
Trust's current portfolio includes 31 properties totaling 3.5 million
rentable square feet and 864 apartment units.
See Banyan's website at http//www.banyanreit.com
For further information regarding
Banyan free of charge via fax,
dial 1-800-PRO-INFO and enter "BSRTS".
-30-
EXHIBIT 99.10
- -------------
AT THE TRUST: AT THE FINANCIAL RELATIONS BOARD:
Karen Dickelman Tony Ebersole Georganne Palffy
Director - Investor Relations General Info. Analyst Inquiries
312 683-3671 312 640-6728 312 640-6768
www.banyanreit.com
email: [email protected]
FOR IMMEDIATE RELEASE
WEDNESDAY, NOVEMBER 10, 1999
BANYAN STRATEGIC REALTY TRUST REPORTS $0.21 FFO PER SHARE
FOR THIRD QUARTER
Banyan Strategic Realty Trust Third Quarter Highlights *
. Third Quarter FFO of $2.8 million, or $0.21 per share
. Revenues of $10.5 million
. EBITDA of $6.0 million
. Average occupancy of portfolio 89 percent at September 30, 1999
. Quarterly cash distribution of $0.12 per share declared
. Total debt and equity market capitalization of $220 million at
September 30, 1999
* Per share data presented on diluted basis
CHICAGO, NOVEMBER 10, 1999 -- BANYAN STRATEGIC REALTY TRUST (NASDAQ:
BSRTS), a real estate investment trust, today announced third quarter 1999
funds from operations (FFO) of $2.8 million, or $0.21 per share. The
portfolio-wide occupancy rate for the Trust's properties as of
September 30, 1999 was 89 percent.
CONSOLIDATED FINANCIAL RESULTS
- ------------------------------
For the third quarter 1999 Banyan reported net income of $1.2 million, or
$0.09 per share, on revenues of $10.5 million, and FFO of $2.8 million, or
$0.21 per share. This compared to net income of $1.4 million, or $0.10 per
share, on revenues of $10.6 million, and FFO of $2.7 million, or $0.19 per
share during the third quarter the previous year. EBITDA (earnings before
interest, tax, depreciation and amortization) in the recent quarter was
$6.0 million, an increase of seven percent over the third quarter a year
ago.
For the first nine months of 1999, the company reported net income of $3.7
million, or $0.27 per share, on revenues of $31.4 million and FFO of $8.4
million, or $0.62 per share. In the first nine months of last year the
company reported net income of $4.0 million, or $0.29 per share, on
revenues of $28.8 million and FFO of $7.6 million, or $0.55 per share.
EBITDA in the first nine months period was $17.9 million, an increase of 16
percent from the $15.4 million during the same period last year.
MORE ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 1
"We are pleased with our ability to grow FFO and EBITDA for both the three-
month and nine-month periods over the comparable periods a year ago," said
Leonard G. Levine, President and CEO of Banyan. "Meanwhile, we have
maintained our cost discipline, with general and administrative costs as a
percent of total revenue declining to 10.3 percent during the first nine
months of this year from 12.0 percent a year ago."
PORTFOLIO PERFORMANCE -- NINE MONTHS REVENUE UP 9 PERCENT
- ---------------------------------------------------------
Total revenue for the first nine-month period increased nine percent to
$31.4 million from $28.8 million during the same period in the previous
year. As of September 30, 1999, the company's portfolio of 32 properties
was 89 percent occupied.
SALE OF KENTUCKY PROPERTY AND PENDING SALE OF OKLAHOMA PROPERTIES ANNOUNCED
- ---------------------------------------------------------------------------
During the third quarter, the company announced it had entered into
agreements to sell Quantum Business Centre in Jefferson County, Kentucky,
and the Oklahoma Apartment Portfolio in Oklahoma City and Lawton, Oklahoma,
with net cash proceeds from the combined sales expected to be approximately
$10.6 million.
The Quantum Business Centre, a multi-tenant office/warehouse property
located in suburban Louisville, was sold to a private investor for
approximately $6.1 million on November 4, 1999. The transaction yielded an
internal rate of return on the Trust's investment of approximately 15
percent, with net cash proceeds of approximately $3.6 million.
The Oklahoma Apartment Portfolio includes four separate apartment complexes
totaling 864 units and is under contract for sale to an institutional
investor, with net cash proceeds to the Trust expected to be approximately
$7 million. The sale of the Oklahoma Apartment Portfolio is contingent
upon the bondholder's approval of the purchaser's assumption of bonds used
to finance the property. This transaction is expected to close by year
end.
Any taxable gains generated by the sale of the Quantum Business Centre and
the Oklahoma Apartment Portfolio transactions are expected to be offset by
the Trust's net operating loss carry forwards.
The Board of Trustees expects to evaluate various alternatives for the use
of the $10.6 million in proceeds from these sales once both transactions
are closed.
BALANCE SHEET, MARKET VALUE AND LIQUIDITY
- -----------------------------------------
At the end of the third quarter 1999, total debt and equity market
capitalization was $220 million. EBITDA coverage ratio for the nine-month
period ended September 30, 1999 was 2.05 to 1. The Trust had $150.4
million of total debt outstanding as of September 30, 1999.
MORE ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 2
QUARTERLY CASH DISTRIBUTION AND FUNDS AVAILABLE FOR DISTRIBUTION (FAD)
- ----------------------------------------------------------------------
On October 6, Banyan declared a quarterly cash distribution of $0.12 per
share for the third quarter ended September 30, 1999. The distribution is
payable November 22, 1999 to shareholders of record as of October 22, 1999.
Funds Available for Distribution (FAD) totaled $2.2 million for the three
months ended September 30, 1999, or $0.16 per share, and $6.8 million, or
$0.51 per share for the nine months ended September 30, 1999.
Banyan Strategic Realty Trust is an equity Real Estate Investment Trust
(REIT) that owns and acquires primarily office and flex/industrial
properties. The properties are located in certain major metropolitan areas
of Atlanta, Georgia and Chicago, Illinois and smaller markets such as
Huntsville, Alabama; Louisville, Kentucky; Memphis, Tennessee; and Orlando,
Florida located in the Midwestern and Southeastern United States. The
Trust's current portfolio consists of 31 properties totaling 3.5 million
rentable square feet and 864 apartment units. As of this date, the Trust
has 13,510,742 shares of beneficial interest outstanding.
Except for the historical information contained herein, certain matters
discussed in this release are forward-looking statements, the achievement
of which involve risks and uncertainties that are detailed from time to
time in our reports filed with the Securities and Exchange Commission,
including the report on Form 10-K for the year ended December 31, 1998.
The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section will be included in our Form 10-Q for the
quarter ended September 30, 1999 filed with the Securities and Exchange
Commission on November 12, 1999. Without limitation, the foregoing words
such as "anticipates", "expects", "intends", "plans", and similar
expressions are intended to identify forward-looking statements.
See Banyan's Website at http://www.banyanreit.com.
For further information regarding Banyan free of charge via fax,
dial 1-800-PRO-INFO and enter "BSRTS".
Financial Tables to Follow
MORE ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 3
SELECTED FINANCIAL DATA
(Dollars in Thousands, except per share data)
Three Months Ended Year Ended
9/30/99 9/30/98 12/31/98
---------- ---------- ----------
Total revenue. . . . . . $ 10,509 $ 10,552 $ 39,416
Operating expenses . . . (9,180) (9,044) (33,325)
-------- -------- --------
Operating income . . . . 1,329 1,508 6,091
Minority interest
in consolidated
partnerships . . . . . (126) (151) (572)
Extraordinary item,
net of minority
interest . . . . . . . -- -- (141)
-------- -------- --------
Net income . . . . . . . $ 1,203 $ 1,357 $ 5,378
======== ======== ========
Earnings per share of
Beneficial Interest --
Basic:
Income before Extra-
ordinary Item . . . $ 0.09 $ 0.10 $ 0.41
Net Income. . . . . $ 0.09 $ 0.10 $ 0.40
======== ======== ========
Earnings per share of
Beneficial Interest --
Diluted:
Income before Extra-
ordinary Item. . . . $ 0.09 $ 0.10 $ 0.40
Net Income. . . . . $ 0.09 $ 0.10 $ 0.39
======== ======== ========
FUNDS FROM OPERATIONS
Net income . . . . . . . $ 1,203 $ 1,357 $ 5,378
PLUS:
Depreciation and
amortization expense. . 1,682 1,393 5,176
LESS:
Minority interest
share of depreciation
and amortization
expense . . . . . . . . (78) (82) (315)
Extraordinary item,
net of minority
interest. . . . . . . . -- -- 141
-------- -------- --------
Funds from operations. . $ 2,807 $ 2,668 $ 10,380
======== ======== ========
MORE ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 4
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, December 31,
1999 1998
------------- ------------
Investment in Real Estate, at cost:. $ 224,388 $ 220,808
Less: Accumulated Depreciation. (15,847) (11,399)
---------- ----------
208,541 209,409
---------- ----------
Cash and Cash Equivalents. . . . . . 2,587 3,731
Restricted Cash. . . . . . . . . . . 4,035 2,657
Other Assets . . . . . . . . . . . . 6,956 6,793
---------- ----------
Total Assets . . . . . . . . . . . . $ 222,119 $ 222,590
========== ==========
Loans and Bonds Payable. . . . . . . $ 150,395 $ 151,648
Other Liabilities. . . . . . . . . . 7,656 6,359
Minority Interest. . . . . . . . . . 2,180 2,149
Shareholders' Equity . . . . . . . . 61,888 62,434
---------- ----------
Total Liabilities and
Shareholders' Equity . . . . . . . $ 222,119 $ 222,590
========== ==========
MORE ...
<PAGE>
<TABLE>
BANYAN STRATEGIC REALTY TRUST
ADD 5
BANYAN STRATEGIC REALTY TRUST
Portfolio Summary
September 30, 1999
<CAPTION>
Scheduled Lease Expirations
-------------------------------
Occu- 10/31-
Property/ Square pancy 12/31 After
Location Footage % 1999 2000 2001 2001
- ---------------- ------- -------- ------ ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
FLEX/INDUSTRIAL
- ---------------
Milwaukee Industrial Properties
Milwaukee, WI. . . . . . . . . 235,800 89% 11% 20% 11% 47%
Elmhurst Metro Court
Elmhurst, IL . . . . . . . . . 140,800 72% 14% 12% 30% 16%
Willowbrook Industrial Court
Willowbrook, IL. . . . . . . . 84,300 91% 3% 26% 17% 45%
Quantum Business Centre
Louisville, KY . . . . . . . . 182,300 91% 4% 26% 18% 43%
Lexington Business Center
Lexington, KY. . . . . . . . . 308,800 70% 1% 16% 10% 43%
Newtown Business Center
Lexington, KY. . . . . . . . . 87,100 80% 5% 5% 37% 33%
6901 Riverport Drive
Louisville, KY . . . . . . . . 322,100 100% 0% 45% 0% 55%
Avalon Ridge Business Park
Norcross, GA . . . . . . . . . 57,400 100% 0% 0% 0% 100%
Tower Lane Business Park
Bensenville, IL. . . . . . . . 95,900 88% 7% 33% 15% 33%
Metric Plaza
Winter Park, FL. . . . . . . . 32,000 100% 0% 0% 0% 100%
Park Center
Orlando, FL. . . . . . . . . . 47,400 80% 0% 9% 25% 46%
More ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 6
Scheduled Lease Expirations
Occu- -------------------------------
Square pancy After
Footage % 1999 2000 2001 2001
------- -------- ---- ---- ---- -----
University Corporate Center
Winter Park, FL. . . . . . . . 127,800 84% 5% 20% 33% 26%
Johns Creek Office and
Industrial Park
Duluth and Suwanee, GA . . . . 119,300 100% 0% 0% 50% 50%
---------- ----- ----- ----- ----- -----
Sub-total. . . . . . . . . . 1,841,000 87% 4% 21% 17% 45%
---------- ----- ----- ----- ----- -----
OFFICE
- ------
Colonial Penn Building
Tampa, FL. . . . . . . . . . . 79,200 100% 0% 28% 0% 72%
Commerce Center f/k/a
Florida Power & Light Building
Sarasota, FL . . . . . . . . . 81,100 100% 0% 0% 11% 89%
Woodcrest Office Park
Tallahassee, FL. . . . . . . . 264,900 90% 9% 28% 12% 41%
Midwest Office Center
Oakbrook Terrace, IL . . . . . 77,000 94% 12% 30% 13% 39%
Phoenix Business Park
Atlanta, GA. . . . . . . . . . 110,600 57% 0% 2% 13% 42%
Butterfield Office Plaza
Oak Brook, IL. . . . . . . . . 200,800 96% 5% 27% 16% 48%
Southlake Corporate Center
Morrow, GA . . . . . . . . . . 56,200 87% 0% 9% 32% 46%
University Square Business Center
Huntsville, AL . . . . . . . . 184,700 89% 11% 19% 25% 34%
Technology Center
Huntsville, AL . . . . . . . . 48,500 100% 0% 35% 65% 0%
Airways Plaza Office Center
Memphis, TN. . . . . . . . . . 87,800 26% 0% 16% 4% 6%
More ...
<PAGE>
BANYAN STRATEGIC REALTY TRUST
ADD 7
Scheduled Lease Expirations
Occu- -------------------------------
Square pancy After
Footage % 1999 2000 2001 2001
------- -------- ---- ---- ---- -----
Peachtree Pointe Office Park
Norcross, GA . . . . . . . . . 71,700 90% 13% 16% 15% 46%
Avalon Center Office Park
Norcross, GA . . . . . . . . . 53,300 100% 0% 0% 0% 100%
Sand Lake Tech Center
Orlando, FL. . . . . . . . . . 84,100 77% 0% 0% 0% 77%
Technology Park
Norcross, GA . . . . . . . . . 145,700 100% 17% 9% 26% 48%
---------- ----- ----- ----- ----- -----
Sub-total. . . . . . . . . 1,545,600 87% 6% 18% 16% 47%
---------- ----- ----- ----- ----- -----
RETAIL
- ------
Northlake Tower Shopping Center
Atlanta, GA. . . . . . . . . . 321,600 97% 2% 17% 2% 76%
---------- ----- ----- ----- ----- -----
Total. . . . . . . . . . . . . 3,708,200 88% 5% 19% 15% 49%
---------- ----- ----- ----- ----- -----
RESIDENTIAL OCCU-
RESIDENTIAL UNITS PANCY
- ----------- ----------- -----
Country Creek Apartments
Oklahoma City, OK. . . . . . . 320 96%
Willowpark Apartments
Lawton, OK . . . . . . . . . . 160 91%
Winchester Run Apartments
Oklahoma City, OK. . . . . . . 192 97%
Woodrun Village Apartments
Yukon, OK. . . . . . . . . . . 192 98%
-------- -----
Total. . . . . . . . . . . 864 96%
======== =====
PORTFOLIO TOTAL. . . . . . . . 89%
=====
</TABLE>
