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 March 31, 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 of (I.R.S. Employer Identification No.)
incorporation or organization)
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 May 12, 1999: 13,432,587.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BANYAN STRATEGIC REALTY TRUST
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, 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 ....................................................... 11,201 9,654
--------- ---------
222,355 220,808
Less: Accumulated Depreciation .............................................. (12,827) (11,399)
--------- ---------
209,528 209,409
--------- ---------
Cash and Cash Equivalents ..................................................... 2,332 3,731
Restricted Cash - Capital Improvements ........................................ 1,712 1,407
Restricted Cash - Other ....................................................... 1,807 1,250
Interest and Accounts Receivable .............................................. 1,544 1,544
Deferred Financing Costs (Net of Accumulated Amortization of $1,311 and $1,246,
respectively) ............................................................... 1,880 1,893
Other Assets .................................................................. 3,536 3,356
--------- ---------
Total Assets .................................................................. $ 222,339 $ 222,590
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage Loans Payable ........................................................ $ 122,740 $ 123,108
Bonds Payable ................................................................. 21,091 21,140
Unsecured Loan Payable ........................................................ 7,400 7,400
Accounts Payable and Accrued Expenses ......................................... 2,032 2,625
Accrued Real Estate Taxes Payable ............................................. 1,544 967
Accrued Interest Payable ...................................................... 674 636
Unearned Revenue .............................................................. 1,034 758
Security Deposits ............................................................. 1,360 1,373
--------- ---------
Total Liabilities ............................................................. 157,875 158,007
--------- ---------
Minority Interest in Consolidated Partnerships ................................ 2,192 2,149
Shareholders' Equity
Shares of Beneficial Interest, No Par Value, Unlimited Authorization;
14,954,187 and 14,912,495 Shares Issued, respectively ....................... 120,080 119,872
Accumulated Deficit ........................................................... (50,442) (50,072)
Treasury Shares at Cost, 1,522,649 Shares ..................................... (7,366) (7,366)
--------- ---------
Total Shareholders' Equity .................................................... 62,272 62,434
--------- ---------
Total Liabilities and Shareholders' Equity .................................... $ 222,339 $ 222,590
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Operations
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
REVENUE
Rental Income ............................................. $ 9,196 $ 7,554
Operating Cost Reimbursement .............................. 998 756
Miscellaneous Tenant Income ............................... 188 191
Income on Investments and Other Income .................... 46 63
-------- --------
Total Revenue ............................................... 10,428 8,564
-------- --------
EXPENSES
Property Operating ........................................ 1,326 1,359
Repairs and Maintenance ................................... 1,146 913
Real Estate Taxes ......................................... 775 553
Interest .................................................. 2,890 1,860
Ground Lease .............................................. 235 239
Depreciation and Amortization ............................. 1,584 1,061
General and Administrative ................................ 1,055 1,034
Amortization of Deferred Financing Costs .................. 65 72
-------- --------
Total Expenses .............................................. 9,076 7,091
-------- --------
Income Before Minority Interest ............................. 1,352 1,473
Minority Interest in Consolidated Partnerships .............. (114) (116)
-------- --------
Net Income .................................................. $ 1,238 $ 1,357
======== ========
Earnings Per Share of Beneficial Interest - Basic and Diluted $ 0.09 $ 0 .10
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statement of Shareholders' Equity
For the Three Months Ended March 31, 1999
(Unaudited)
(Dollars in thousands)
<TABLE>
<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 41,692 208 -- -- 208
Net Income ........... -- -- 1,238 -- 1,238
Distributions Paid ... -- -- (1,608) -- (1,608)
---------- ---------- ---------- ---------- ----------
Shareholders' Equity,
March 31, 1999 ..... 14,954,187 $ 120,080 $ (50,442) $ (7,366) $ 62,272
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(Dollars in thousands)
1999 1998
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ............................................. $ 1,238 $ 1,357
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization ....................... 1,649 1,133
Minority Interest in Consolidated Partnerships ...... 114 116
Net Change In:
Restricted Cash - Other ............................ (557) (322)
Interest and Accounts Receivable ................... -- 69
Other Assets ....................................... (311) (184)
Accounts Payable and Accrued Expenses .............. (593) 43
Accrued Interest Payable ........................... 38 259
Accrued Real Estate Taxes Payable .................. 577 453
Unearned Revenue ................................... 276 42
Security Deposits .................................. (13) 335
-------- --------
Net Cash Provided By Operating Activities .............. 2,418 3,301
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Real Estate Assets .................... -- (8,957)
Additions to Investment in Real Estate ............... (1,547) (684)
Earnest Money Deposits ............................... (25) (360)
Restricted Cash - Capital Improvements ............... (305) (31)
-------- --------
Cash Used In Investing Activities ...................... (1,877) (10,032)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Bonds and Loans Payable ................ -- 7,750
Distributions To Minority Partners ................... (71) (55)
Deferred Financing Costs ............................. (52) --
Principal Payments on Mortgage Loans and Bonds Payable (417) (235)
Distributions Paid to Shareholders ................... (1,608) (1,324)
Shares Issued, Net of Issuance Costs ................. 208 172
-------- --------
Net Cash Provided By (Used In) Financing Activities (1,940) 6,308
-------- --------
Net Decrease In Cash and Cash Equivalents .............. (1,399) (423)
Cash and Cash Equivalents at Beginning of Period ....... 3,731 4,429
-------- --------
Cash and Cash Equivalents at End of Period ............. $ 2,332 $ 4,006
======== ========
Supplemental Information:
Interest Paid During the Period ...................... $ 2,852 $ 1,601
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
BANYAN STRATEGIC REALTY TRUST
Notes to Consolidated Financial Statements
March 31, 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 March 31, 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 three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Numerator:
Net Income ........................................ $ 1,238 $ 1,357
=========== ===========
Denominator for basic earnings per weighted-average shares 13,407,319 13,251,417
Effect of dilutive securities:
Employee stock options ......................... 5,556 23,608
Convertible debt ............................... -- 454,728
----------- -----------
Dilutive potential common shares ............... 5,556 478,336
Denominator for diluted earnings per share-adjusted
weighted-average shares and assumed conversions . 13,412,875 13,729,753
=========== ===========
Basic and Diluted Earnings Per Share:
Net Income ........................................ $ 0.09 $ 0.10
=========== ===========
</TABLE>
5
<PAGE>
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 March 31, 1999,
the flex/industrial segment consisted of thirteen complexes with long-term
leases to approximately 210 tenants; the office segment consisted of fourteen
office sites with long-term leases to approximately 280 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.
Information by business segments is set forth below:
1999 1998
-------- --------
Revenue
Flex/Industrial ............................. $ 2,736 $ 1,961
Office ...................................... 5,344 4,339
Residential ................................. 1,055 1,052
Retail ...................................... 1,271 1,180
Corporate/Other ............................. 22 32
-------- --------
$ 10,428 $ 8,564
======== ========
1999 1998
-------- --------
Income (loss) before extraordinary item
Flex/Industrial ............................. $ 528 $ 817
Office ...................................... 1,321 1,259
Residential ................................. 202 196
Retail ...................................... 250 145
Corporate/Other ............................. (1,063) (1,060)
-------- --------
$ 1,238 $ 1,357
======== ========
As of As of
March 31, December 31,
1999 1998
-------- --------
Total Assets
Flex/Industrial ........................... $ 74,581 $ 74,513
Office .................................... 105,991 105,049
Residential ............................... 20,917 21,038
Retail .................................... 18,303 18,359
Corporate/Other ........................... 2,547 3,631
-------- --------
$222,339 $222,590
======== ========
1999 1998
-------- --------
Depreciation and amortization
Flex/Industrial ........................... $ 544 $ 307
Office .................................... 766 488
Residential ............................... 141 129
Retail .................................... 133 132
Corporate/Other ........................... 0 5
-------- --------
$ 1,584 $ 1,061
======== ========
6
<PAGE>
1999 1998
-------- --------
Interest expense
Flex/Industrial .............................. $ 885 $ 338
Office ....................................... 1,374 861
Residential .................................. 298 301
Retail ....................................... 333 336
Corporate/Other .............................. 0 24
-------- --------
$ 2,890 $ 1,860
======== ========
1999 1998
-------- --------
Additions to Investment in Real Estate
Flex/Industrial .............................. $ 406 $ 87
Office ....................................... 1,058 9,421
Residential .................................. 78 84
Retail ....................................... 5 49
-------- --------
$ 1,547 $ 9,641
======== ========
4. Subsequent Events
Distributions
On April 5, 1999, the Trust declared a cash distribution for the quarter
ended March 31, 1999 of $0.12 per share payable May 21, 1999 to shareholders of
record on April 21, 1999.
7
<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:
o general real estate investment risks;
o lack of operating history associated with recent acquisitions;
o potential inability to raise capital by either equity or debt;
o potential inability to repay or refinance indebtedness at maturity;
o increases in interest rates;
o competition for property acquisitions;
o adverse consequences of failure to qualify as a REIT; and
o 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 March 31, 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 March 31, 1999, we owned individually, or, in some cases through
joint ventures, thirty-two properties consisting of:
o thirteen flex/industrial properties totaling 1,841,000 rentable square
feet;
o fourteen office properties totaling 1,545,600 rentable square feet;
o four apartment complexes containing 864 units;
o one retail center which contains 321,600 rentable square feet.
8
<PAGE>
Comparison of Three Months Ended March 31, 1999 to Three Months Ended March 31,
1998
During the three months ended March 31, 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 expense growth of approximately
$2.0 million reduced by revenue growth of approximately $1.8 million. In
particular, our total revenues increased by approximately $1.8 million or 20.9%
to approximately $10.4 million from approximately $8.6 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
three months ended March 31, 1999 with the results of the same properties owned
during the entire three months ended March 31, 1998), total revenues decreased
by approximately $0.2 million. This decrease was caused by a decrease in the
occupancy at two of our properties, the Lexington Business Center and Elmhurst
Metro Court. These properties were 54% and 58% occupied at March 31, 1999,
respectively, compared to 93% and 90% occupancy levels at March 31, 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. Our ability to achieve "same-store" growth in revenue in the
future will be dependent on the time it takes to re-lease this and future vacant
space and the rental rates at which we obtain new tenants. Furthermore, property
acquisitions completed during 1998 significantly contributed to our revenue
growth in the three months ended March 31, 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 operating expenses, which include property operating, repairs and
maintenance, real estate taxes, and ground lease increased by approximately $0.4
million to approximately $3.5 million from approximately $3.1 million in 1998.
On a "same-store" basis, total operating expenses decreased by approximately
$0.1 million or 3.3% to approximately $2.9 million from approximately $3.0
million. Interest expense increased by approximately $1.0 million from
approximately $1.9 million to approximately $2.9 million, primarily due to an
increase in the amount we have borrowed in connection with the acquisitions that
we completed in 1998. Depreciation and amortization expense also increased
approximately $0.5 million. We attribute most of this increase to the increase
in the number of properties that we own.
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. 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.
At March 31, 1999, our assets totaled approximately $222.3 million, a
decrease of approximately $0.3 million from total assets at December 31, 1998 of
approximately $222.6 million. Our liabilities totaled approximately $157.9
million at March 31, 1999, a decrease of approximately $0.1 million from a total
of approximately $158.0 million at December 31, 1998. Our shareholders equity
decreased by approximately $0.1 million to approximately $62.3 million at March
31, 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 $2.3 million at March 31,
1999 and approximately $3.7 million at December 31, 1998. The decrease in total
cash and cash equivalents resulted from using approximately $1.9 million in
investing activities and approximately $1.9 million in financing activities,
while receiving approximately $2.4 million from operating activities.
Cash Flows From Operating Activities: Net cash provided by operating
activities decreased by approximately $0.9 million for the three months ended
March 31, 1999 to approximately $2.4 million from approximately $3.3 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 depreciation and amortization and minority interest increased by
approximately $0.4 million to approximately $3.0 million from approximately $2.6
million for the three months ended March 31, 1999 and 1998, respectively. See
Results of Operations above for further discussion of the operations of our real
estate assets.
9
<PAGE>
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 three months ended March 31, 1999 and 1998, our properties
generated FFO of approximately $2.8 million and $2.4 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.
FFO for the three months ended March 31, 1999 and 1998 is calculated as
follows:
1999 1998
-------- --------
(Dollars in thousands)
Net Income ........................................... $ 1,238 $ 1,357
Plus:
Depreciation and Amortization Expense ............. 1,584 1,056
Less:
Minority Interest
Share of Depreciation and Amortization Expense ... (56) (63)
-------- --------
Funds From Operations ................................ $ 2,766 $ 2,350
======== ========
Cash Flows Provided By (Used For):
Operating Activities ............................... $ 2,418 $ 3,301
Investing Activities ............................... $ (1,877) $(10,032)
Financing Activities ............................... $ (1,940) $ 6,308
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:
o 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;
o the operating performance of future acquisitions; and
o 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.
10
<PAGE>
FAD for the three months ended March 31, 1999 and 1998 is calculated as
follows:
1999 1998
------- -------
(Dollars in thousands)
Funds From Operations .......................... $ 2,766 $ 2,350
Sraight-line Rents ............................. (25) (75)
Lease Commissions .............................. (307) (137)
Capital Reserve ................................ (128) (114)
------- -------
Funds Available for Distribution ............... $ 2,306 $ 2,024
======= =======
Cash Flows From Investing Activities: During the three months ended March
31, 1999, we used approximately $1.9 million in investing activities compared to
approximately $10.0 million in the same period in 1998. Cash flow was primarily
used during the three months ended March 31, 1999 to make capital improvements
at our various properties in the amount of approximately $1.5 million. In
comparison, during the same period in 1998, we acquired two office properties
for a total of approximately $9.0 million and made capital improvements in the
amount of approximately $0.7 million.
Cash Flows From Financing Activities: During the three months ended March
31, 1999, financing activities used approximately $1.9 million compared to
receiving approximately $6.3 million in the same period in 1998. During the
three months ended March 31, 1999, we used cash primarily to pay distributions
to shareholders of approximately $1.6 million and make principal payments on
mortgage loans and bonds payable of approximately $0.4 million. The cash flows
provided by financing activities for the three months ended March 31, 1998
resulted primarily from approximately $7.5 million of net proceeds from bonds
and mortgage loans reduced by distributions paid to shareholders of
approximately $1.3 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 will, as circumstances dictate, retain 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 March 31, 1999, we have expended
$41,000 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 $50,000 on Y2K compliance at
our corporate headquarters. Based solely upon preliminary 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.
11
<PAGE>
We are also assessing 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 anticipate completing this assessment in the second or
third quarter of 1999. At this time, we are gathering information to evaluate
what, if any, remedial action will be necessary and the potential costs
associated with the action.
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, five have systems that, in
their view, are Y2K compliant; three expect to become compliant by the second
quarter of 1999; one expects to be compliant by the third quarter of 1999; and
one is in the process of assessing its Y2K readiness.
We intend to further verify and test each significant property manager's
compliance by the third quarter of 1999. 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 spite of the above steps to verify Y2K compliance, if 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.
12
<PAGE>
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 December 31, 1998, its Y2K
renovation and testing of its systems was substantially complete. The remaining
Y2K related system changes as well as external testing and contingency planning
is expected to be completed by June 30, 1999. 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.
We are also in the process of contacting our other service providers and
vendors to ascertain their ability to continue to provide goods and services to
us. We are developing a mechanism to continue the review and assessment of
service providers and vendors on a regular basis until circumstances no longer
warrant monitoring. Other than described above, the future success of our
operations is not closely tied to any one 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 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.
As of March 31, 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 March 31, 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.
We are currently formulating 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.
We expect to formulate our contingency plan by June 1999.
We are focusing 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 building mechanical, life safety or security
systems. Furthermore, the worst case scenario would include 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 liquidity. 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
unlikely event.
13
<PAGE>
Other Information
As of March 31, 1999, we owned interests, directly or indirectly through
our wholly owned subsidiaries, in the properties set forth in the table below:
BANYAN STRATEGIC REALTY TRUST
Portfolio Summary
March 31, 1999
<TABLE>
<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 82% 14% 20% 11% 37%
Elmhurst Metro Court
Elmhurst, IL ......................... 11/30/93 140,800 58% 18% 6% 30% 4%
Willowbrook Industrial Court
Willowbrook, IL ...................... 6/16/95 84,300 97% 39% 21% 11% 26%
Quantum Business Centre
Louisville, KY ....................... 9/26/95 182,300 74% 15% 21% 18% 20%
Lexington Business Center
Lexington, KY ........................ 12/05/95 308,800 54% 2% 17% 9% 26%
Newtown Business Center
Lexington, KY ........................ 12/05/95 87,100 67% 5% 4% 37% 21%
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 73% 0% 0% 0% 73%
Tower Lane Business Park
Bensenville, IL ...................... 4/27/98 95,900 90% 28% 31% 15% 16%
Metric Plaza
Winter Park, FL ...................... 4/30/98 32,000 100% 0% 0% 0% 100%
Park Center
Orlando, FL .......................... 4/30/98 47,400 65% 6% 9% 25% 25%
University Corporate Center
Winter Park, FL ...................... 4/30/98 127,800 100% 12% 53% 11% 24%
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 80% 9% 23% 15% 33%
--------- --------- --------- --------- --------- ---------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Scheduled Lease Expirations
Occu- ------------------------------------------------
Date Square pancy After
Acquired Footage % 1999 2000 2001 2001
-------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Office
Colonial Penn Building
Tampa, FL ....................... 3/22/94 79,200 100% 0% 100% 0% 0%
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 89% 11% 26% 13% 39%
Midwest Office Center
Oakbrook Terrace, IL ............ 4/18/96 77,000 95% 18% 32% 14% 31%
Phoenix Business Park
Atlanta, GA ..................... 1/15/97 110,600 71% 9% 26% 13% 23%
Butterfield Office Plaza
Oak Brook, IL ................... 4/30/97 200,800 96% 13% 26% 16% 41%
Southlake Corporate Center
Morrow, GA ...................... 7/30/97 56,200 100% 0% 13% 42% 45%
University Square Business Center
Huntsville, AL .................. 8/26/97 184,700 88% 26% 15% 25% 22%
Technology Center
Huntsville, AL .................. 8/26/97 48,500 100% 0% 100% 0% 0%
Airways Plaza Office Center
Memphis, TN ..................... 12/10/97 87,800 91% 87% 0% 4% 0%
Peachtree Pointe Office Park
Norcross, GA .................... 1/20/98 71,700 89% 24% 16% 15% 34%
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 74% 0% 0% 0% 74%
Technology Park
Norcross, GA .................... 8/14/98 145,700 100% 17% 9% 26% 48%
--------- --------- --------- --------- --------- ---------
Sub-total ................... 1,545,600 91% 16% 23% 14% 38%
--------- --------- --------- --------- --------- ---------
Retail
Northlake Tower Shopping Center
Atlanta, GA ..................... 7/28/95 321,600 98% 2% 18% 2% 76%
--------- --------- --------- --------- --------- ---------
Total ....................... 3,708,200 86% 11% 22% 13% 40%
--------- --------- --------- --------- --------- ---------
</TABLE>
<PAGE>
Occu-
Date Residential pancy
Acquired Units %
-------- ----------- -----
Residential
Country Creek Apartments
Oklahoma City, OK ....................... 5/22/97 320 97%
Willowpark Apartments
Lawton, OK .............................. 5/22/97 160 99%
Winchester Run Apartments
Oklahoma City, OK ....................... 5/22/97 192 96%
Woodrun Village Apartments
Yukon, OK ............................... 5/22/97 192 97%
--- ---
Total ............................... 864 97%
=== ===
PORTFOLIO TOTAL (a) ..................... 88%
===
(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.
BANYAN STRATEGIC REALTY TRUST
Comparison of Average Rents
Average
Average Market
"In Place" Net Rents
Property Type Square Footage Net Rents (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
========= ====== ======
<TABLE>
<CAPTION>
Average Monthly Monthly
"In Place" Rents Market Rents
------------------------- ------------------------
Units Per Unit Sq. Ft. Per Unit Sq. Ft.
----- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Residential............ 864 $403 $0.67 $446 $0.63
==== ==== ===== ==== =====
</TABLE>
(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.
15
<PAGE>
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 March 31, 1999, we had approximately $151.2 million of outstanding
long-term debt, of which $17.7 million bears interest at variable rates. The
rates are adjusted on a weekly basis on $4.8 million of this debt and on a
monthly basis on the remaining $12.9 million. As of March 31, 1999, the
weighted-average interest rate on this variable rate debt was 6.29%. 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.
16
<PAGE>
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: May 13, 1999
-----------------------------------
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: May 13, 1999
-----------------------------------
Joel L. Teglia, Vice President and
Chief Financial Officer
17
<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 Revolving Credit Agreement dated April 30, 1998 among Banyan Strategic
Realty Trust, as Borrower and the Capital Company of America, as
Lender. (7)
4.5 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)
4.6 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)
4.7 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)
4.8 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)
4.9 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)
4.10 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)
18
<PAGE>
Exhibit
Index
-----
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)
21 Subsidiaries of Banyan Strategic Realty Trust (3)
27 Financial Data Schedule *
99.3 Press Release dated April 5, 1999*
99.4 Press Release dated May 12, 1999*
- ----------
* 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.
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BANYAN
STRATEGIC REALTY TRUST'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,332
<SECURITIES> 0
<RECEIVABLES> 1,544
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,876
<PP&E> 222,355
<DEPRECIATION> (12,827)
<TOTAL-ASSETS> 222,339
<CURRENT-LIABILITIES> 5,284
<BONDS> 151,231
<COMMON> 62,272
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 222,339
<SALES> 0
<TOTAL-REVENUES> 10,428
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,186
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,890
<INCOME-PRETAX> 1,238
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,238
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
Exhibit 99.3
AT THE TRUST: AT THE FINANCIAL RELATIONS BOARD:
Karen Dickelman Tony Ebersole Laura Kuhlmann Georgeanne Palffy
Investor Relations General Info. Media Inquiries Analyst Inquiries
312 683-3671 312 640-6728 312 640-6727 312 640-6768
www.banyanreit.com
FOR IMMEDIATE RELEASE
MONDAY, APRIL 5, 1999
BANYAN STRATEGIC REALTY TRUST DECLARES FIRST QUARTER 1999
CASH DISTRIBUTION
CHICAGO, April 5, 1999 Banyan Strategic Realty Trust (Nasdaq:BSRTS) today
declared a quarterly cash distribution of 12 cents per share for the first
quarter ended March 31, 1999. The distribution is payable May 21, 1999 to
shareholders of record as of April 21, 1999.
Banyan Strategic Realty Trust is an equity real estate investment trust (REIT)
with a portfolio that includes primarily flex/industrial and suburban office
buildings, as well as retail and residential properties. The Trust's current
portfolio includes 32 properties totaling 3.7 million net rentable square feet
and 864 apartment units. The Trust currently has 13,431,538 shares of beneficial
interest outstanding.
See Banyan's website at http://banyanreit.com for additional company
information.
Further information regarding Banyan can also be found free of charge via fax by
dialing 1/800-PRO-INFO and enter BSRTS.
Exhibit 99.4
AT THE TRUST: AT THE FINANCIAL RELATIONS BOARD:
Karen Dickelman Tony Ebersole Laura Kuhlmann Georganne Palffy
Director - Investor Relations General Info. Media Inquiries Analyst Inquiries
312 683-3671 312 640-6728 312 640-6727 312 640-6768
FOR IMMEDIATE RELEASE
WEDNESDAY, MAY 12, 1999
BANYAN STRATEGIC REALTY TRUST REPORTS $0.205 FFO PER SHARE FOR FIRST QUARTER
Banyan Strategic Realty Trust First Quarter Highlights*
o First Quarter FFO of $2.8 million, or $0.205 per share, up 20 percent from
a year ago
o Revenues of $10.4 million, an increase of 21 percent from last year
o EBITDA of $5.9 million, up 32 percent from previous year
o Average occupancy of portfolio of 88 percent at March 31, 1999
o Quarterly cash distribution of $0.12 per share declared.
* Per share data presented on diluted basis.
CHICAGO, May 12, 1999 -- Banyan Strategic Realty Trust (Nasdaq: BSRTS) a real
estate investment trust, today announced first quarter 1998 funds from
operations (FFO) of $2.8 million, or $0.205 per share, an 18 percent increase in
total FFO from last year's first quarter. The company's average occupancy rate
at the Trust's 32 properties was 88 percent at March 31, 1999.
Consolidated Financial Results
Banyan reported first quarter 1999 net income of $1.2 million, or $0.09 per
share, on revenues of $10.4 million, and FFO of $2.8 million, or $0.205 per
share. This compared to first quarter 1998 net income of $1.4 million, or $0.10
per share, on revenues of $8.6 million, and FFO of $2.4 million, or $0.17 per
share.
"We are pleased with our revenue, cash flow and FFO growth in the first quarter
over the first quarter of last year," said Leonard G. Levine, President of
Banyan. "This was due primarily to the significant expansion of our portfolio
from a year ago. We have targeted FFO growth for the full year 1999 at more than
10 percent above last year, exclusive of any new acquisitions, through our
ability to maintain favorable leasing activity and rollovers in the strong
office and flex/industrial markets we serve."
MORE...
<PAGE>
Exhibit 99.4
BANYAN STRATEGIC REALTY TRUST
ADD 1
Portfolio Performance - First Quarter Revenue up 21 Percent
Total revenue increased 21 percent to $10.4 million for the first quarter,
compared with $8.6 million during the same period the previous year. The
increase was due to the addition of eight properties acquired since the end of
the first quarter last year and through higher rents achieved at some of the
Trust's properties as a result of lease rollovers. The Company's portfolio of 32
properties was 88 percent occupied at March 31, 1999.
Balance Sheet
At March 31, 1999, total assets at net book value were approximately $222
million. EBITDA (earnings before interest, tax, depreciation and amortization)
was $5.9 million, up 32 percent from the previous year's first quarter. EBITDA
coverage ratio through March 31, 1999 was 2.04. The Trust had $151.2 million of
total debt outstanding as of March 31, 1999.
Quarterly Cash Distribution and Funds Available for Distribution (FAD)
On April 5, Banyan declared a quarterly cash distribution of $0.12 per share for
the first quarter ended March 31, 1999. The distribution is payable May 21, 1999
to shareholders of record as of April 21, 1999.
Funds Available for Distribution (FAD) totaled $2.3 million for the three months
ended March 31, 1999, or $0.17 per share. FAD for the same period a year ago
totaled $2.0 million, or $0.15 per share. FAD is calculated by adjusting FFO for
straight-line 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.
Outlook
Mr. Levine added, "With our existing portfolio, we have targeted total 1999 FFO
of between $0.82 and $0.83 per share. We will maintain our focus on internal
growth through favorable leasing transactions and rental increases, since the
markets in which we operate exhibit strong real estate fundamentals. At the same
time, we continue to seek value-added acquisitions and disposition opportunities
in our market niche in order to provide for future growth."
MORE...
<PAGE>
Exhibit 99.4
BANYAN STRATEGIC REALTY TRUST
ADD 2
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 32 properties totaling 3.7 million rentable square feet and 864
apartment units. As of this date, the Trust has 13,432,587 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 March 31, 1999 filed with the
Securities and Exchange Commission on May 13, 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."
MORE...
<PAGE>
Exhibit 99.4
BANYAN STRATEGIC REALTY TRUST
ADD 3
Financial Tables to Follow
SELECTED FINANCIAL DATA
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
3/31/99 3/31/98 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Total revenue $ 10,428 $ 8,564 $ 39,416
Operating expenses (9,076) (7,091) (33,325)
-------- -------- --------
Operating income 1,352 1,473 6,091
Minority interest in consolidated partnerships (114) (116) (572)
Extraordinary item, net of minority interest -- -- (141)
-------- -------- --------
Net income $ 1,238 $ 1,357 $ 5,378
======== ======== ========
Earnings per share of Beneficial Interest -- Basic:
Income before Extraordinary Item $ 0.09 $ 0.10 $ 0.41
Net Income $ 0.09 $ 0.10 $ 0.40
======== ======== ========
Earnings per share of Beneficial Interest -- Diluted:
Income before Extraordinary Item $ 0.09 $ 0.10 $ 0.40
Net Income $ 0.09 $ 0.10 $ 0.39
======== ======== ========
Funds from Operations
Net income $ 1,238 $ 1,357 $ 5,378
Plus:
Depreciation and amortization expense 1,584 1,056 5,176
Less:
Minority interest share of depreciation
and amortization expense (56) (63) (315)
Extraordinary item, net of minority interest -- -- 141
-------- -------- --------
Funds from operations $ 2,766 $ 2,350 $ 10,380
======== ======== ========
</TABLE>
MORE...
<PAGE>
Exhibit 99.4
BANYAN STRATEGIC REALTY TRUST
ADD 4
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31, December 31,
1999 1998
--------- ---------
Investment in Real Estate, at cost: $ 222,355 $ 220,808
Less: Accumulated Depreciation (12,827) (11,399)
--------- ---------
209,528 209,409
--------- ---------
Cash and Cash Equivalents 2,332 3,731
Restricted Cash 3,519 2,657
Other Assets 6,960 6,793
--------- ---------
Total Assets $ 222,339 $ 222,590
========= =========
Loans and Bonds Payable $ 151,231 $ 151,648
Other Liabilities 6,644 6,359
Minority Interest 2,192 2,149
Shareholders' Equity 62,272 62,434
--------- ---------
Total Liabilities and Shareholders' Equity $ 222,339 $ 222,590
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MORE...
<PAGE>
Exhibit 99.4
BANYAN STRATEGIC REALTY TRUST
ADD 5
PORTFOLIO SUMMARY
March 31, 1999
<TABLE>
<CAPTION>
Scheduled Lease Expirations
------------------------------
4/1-12/31 After
Location Square Footage Occupancy % 1999 2000 2001 2001
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FLEX/INDUSTRIAL
Milwaukee Industrial Properties Milwaukee, Wisconsin 235,800 82% 14% 20% 11% 37%
Elmhurst Metro Court Elmhurst, Illinois 140,800 58% 18% 6% 30% 4%
Willowbrook Industrial Court Willowbrook, Illinois 84,300 97% 39% 21% 11% 26%
Quantum Business Centre Louisville, Kentucky 182,300 74% 15% 21% 18% 20%
Lexington Business Center Lexington, Kentucky 308,800 54% 2% 17% 9% 26%
Newtown Business Center Lexington, Kentucky 87,100 67% 5% 4% 37% 21%
6901 Riverport Drive Louisville, Kentucky 322,100 100% 0% 45% 0% 55%
Avalon Ridge Business Park Norcross, Georgia 57,400 73% 0% 0% 0% 73%
Tower Lane Business Park Bensenville, IIlinois 95,900 90% 28% 31% 15% 16%
Metric Plaza Winter Park, Florida 32,000 100% 0% 0% 0% 100%
Park Center Orlando, Florida 47,400 65% 6% 9% 25% 25%
University Corporate Center Winter Park, Florida 127,800 100% 12% 53% 11% 24%
Johns Creek Office and Industrial Park Duluth and Suwanee, Georgia 119,300 100% 0% 0% 50% 50%
------------- --------- ------------------------------
Sub-Total 1,841,000 80% 9% 23% 15% 33%
------------- --------- ------------------------------
OFFICE
Colonial Penn Building Tampa, Florida 79,200 100% 0% 100% 0% 0%
Commerce Center Sarasota, Florida 81,100 100% 0% 0% 11% 89%
Woodcrest Office Park Tallahassee, Florida 264,900 89% 11% 26% 13% 39%
Midwest Office Center Oakbrook Terrace, Illinois 77,000 95% 18% 32% 14% 31%
Phoenix Business Park Atlanta, Georgia 110,600 71% 9% 26% 13% 23%
Butterfield Office Plaza Oak Brook, Illinois 200,800 96% 13% 26% 16% 41%
Southlake Corporate Center Morrow, Georgia 56,200 100% 0% 13% 42% 45%
University Square Business Center Huntsville, Alabama 184,700 88% 26% 15% 25% 22%
Technology Center Huntsville, Alabama 48,500 100% 0% 100% 0% 0%
Airways Plaza Office Center Memphis, Tennessee 87,800 91% 87% 0% 4% 0%
Peachtree Pointe Office Park Norcross, Georgia 71,700 89% 24% 16% 15% 34%
Avalon Center Office Park Norcross, Georgia 53,300 100% 0% 0% 0% 100%
Sand Lake Tech Center Orlando, Florida 84,100 74% 0% 0% 0% 74%
Technology Park Norcross, Georgia 145,700 100% 17% 9% 26% 48%
------------- --------- ------------------------------
Sub-Total 1,545,600 91% 16% 23% 14% 38%
------------- --------- ------------------------------
RETAIL
Northlake Tower Shopping Center Atlanta, Georgia 321,600 98% 2% 18% 2% 76%
------------- --------- ------------------------------
Total 3,708,200 86% 11% 22% 13% 40%
============= ========= ==============================
<CAPTION>
RESIDENTIAL
Residential Units Occupancy %
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Country Creek Apartments Oklahoma City, Oklahoma 320 97%
Willowpark Apartments Lawton, Oklahoma 160 99%
Winchester Run Apartments Oklahoma City, Oklahoma 192 96%
Woodrun Village Apartments Yukon, Oklahoma 192 97%
============= =========
Total 864 97%
============= =========
PORTFOLIO TOTAL 88%
=========
</TABLE>
