BANYAN STRATEGIC REALTY TRUST, 10-K405, 2000-03-29

BANYAN STRATEGIC REALTY TRUST
10-K405, 2000-03-29
REAL ESTATE INVESTMENT TRUSTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission File Number 0-15465

Banyan Strategic Realty Trust
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)

Massachusetts 36-3375345
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

150 South Wacker Drive, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)

Registrant's telephone number including area code (312) 553-9800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

None None

Securities registered pursuant to Section 12(g) of the Act:

Shares of Beneficial Interest
(Title of Class)

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 [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]

Shares of beneficial interest outstanding as of February 16, 2000:
14,127,169. The aggregate market value of the Registrant's shares of
beneficial interest held by non-affiliates on such date was $59,960,901.

DOCUMENTS INCORPORATED BY REFERENCE
Exhibit index located on page 77 of sequentially numbered pages.

<PAGE>

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . 1

ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . 4

ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . 11

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS. . . . . . . . . . . . . . . . . 11

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S SHARES AND
RELATED SHAREHOLDER MATTERS. . . . . . . . . . . . . 12

ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . 14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . 19

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK. . . . . . . . . . . . . . . . . . 29

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . 30

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . 62

PART III

ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE
REGISTRANT . . . . . . . . . . . . . . . . . . . . . 62

ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . 64

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . 72

ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS . . . . . . . . . . . . . . . . 75

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . 75

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 76

<PAGE>

PART I

ITEM 1. BUSINESS

Certain statements in this Annual 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;

. potential inability to raise capital by either equity or debt;

. potential inability to repay or refinance indebtedness at
maturity;

. increases in interest rates;

. 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 "Management's Discussion and Analysis of
Financial Condition and Results of Operations -Risk Factors" for a more
complete discussion.

GENERAL

We are a self-administered infinite life real estate investment trust
("REIT"), organized as a Massachusetts business trust, which 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. BSRT UPREIT Corp., a wholly-
owned subsidiary, is the General Partner of the Operating Partnership. As
of December 31, 1999, we were the sole limited partner of BSRT UPREIT
Limited Partnership. As of December 31, 1999, we owned individually, or,
in some cases through joint ventures, twenty-seven properties comprised of:

. fourteen office properties totaling 1.5 million rentable square
feet;

. twelve flex/industrial properties totaling 1.7 million rentable
square feet;

. one retail property totaling 321,600 rentable square feet.

(See the property section below for a detailed information regarding all
properties in the portfolio.)

Our board of trustees has recently formed a committee comprised
entirely of our independent trustees to begin the process of evaluating
strategic alternatives. The results of this review may significantly
change our future business plan compared to the strategies that we have
pursued over the last several years. Further, pending this review we have
not acquired any new properties and have not taken any specific steps to
increase the amount of capital available for acquisitions.

<PAGE>

BUSINESS

We seek to carefully and aggressively manage our assets to maximize
the cash flow generated by, and the long term value of, our properties. To
achieve this we develop an annual operating plan for each property which
focuses on increasing property revenue through:

. increased occupancy and/or higher rents;

. negotiating leases containing base rental increases;

. emphasizing tenant satisfaction;

. controlling operating expenses; and

. expanding existing properties.

In the past, as part of our acquisition strategy, we have also sought
to acquire well-located, underperforming properties, primarily office and
flex/industrial properties that were leased at below market rates or had
low occupancy levels. In acquiring properties, we have also assessed:

. the ability to increase the cash flow generated by a property,
including the potential for increases in rental rates or occupancy levels;

. the composition and credit quality of the tenant base,
including the amount of space leased to any one tenant;

. the flexibility of a property's configuration in accommodating
small or large tenants or multiple users;

. the physical condition of the property; and

. the extent to which the property helps us achieve our portfolio
objectives.

We have competed for acquisitions primarily with local or private non-
institutional investors (generally less than $100 million in assets). We
carefully reviewed each acquisition opportunity through an extensive due
diligence process including an evaluation of the demographic trends in the
local market such as population and income growth as well as the demand
for, and supply of, the property type.

We have also regularly reviewed whether we can produce higher returns
for our shareholders by disposing of properties. Generally, we will
consider selling a property when one or more of the following conditions
apply:

. market prices are at or near replacement costs;

. occupancy and/or rents are high and there is limited potential
to increase cash flow and property value within a reasonable period; or

. ownership of the property is no longer consistent with our
growth strategies.

During the year ended December 31, 1999, we sold our residential
portfolio consisting of Woodrun Village Apartments, Country Creek
Apartments, Winchester Run Apartments, and Willowpark Apartments, as well
as Quantum Business Centre for a total gain of approximately $4 million.
We did not sell any properties during the year ended December 31, 1998.

<PAGE>

Our goal is a balanced and flexible capital structure. As of
December 31, 1999, we had borrowed a total of $132.7 million, $26.6 million
of which bears interest at variable rates. Based on the closing price of
our common shares on December 31, 1999, our borrowings represent
approximately 62.0% of our total market capitalization.

We compete with numerous other properties in attracting tenants to
lease our space. Some of the competing properties may be newer, better
located or owned by parties that are better capitalized. We believe that
our properties are located in high-growth areas and will continue to
attract tenants competitively. We further believe that the operating
strategy for our properties allows us to remain competitive with other
entities in our geographical markets.

OTHER INFORMATION

Our business and real estate property operations are not seasonal and
they compete on the basis of rental rates and property operations with
similar types of properties in the vicinities in which our properties are
located.

We have no real property investments located outside of the United
States. We do not segregate revenue or assets by geographic region, since,
in management's view, such a presentation would not be significant to an
understanding of our business or financial results taken as a whole.

We have fifteen employees, four of whom serve as executive officers.
The fifth executive officer is not our employee, but he provides services
to us as an independent contractor.

We review and monitor compliance with federal, state and local
provisions which have been enacted or adopted regulating the discharge of
material into the environment, or otherwise relating to the protection of
the environment. For the year ended December 31, 1999, we did not incur
any material capital expenditures for environmental control facilities nor
do we anticipate making any such expenditures for the year ending
December 31, 2000.

<PAGE>

<TABLE>

ITEM 2. PROPERTIES

As of December 31, 1999, we owned interests, directly or indirectly through our wholly owned subsidiaries, in
the properties set forth in the table below:

<CAPTION>
BANYAN STRATEGIC REALTY TRUST
PORTFOLIO SUMMARY
December 31, 1999

Scheduled Lease
Expirations
Occu- ----------------------------------
Date Square pancy After
Acquired Footage % 2000 2001 2002 2002 Description (a)
-------- ------- ----- ----- ---- ---- ----- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

FLEX/INDUSTRIAL
- ---------------
Milwaukee A 1% General and 84%
Industrial Limited Partner
Properties interest in a joint
Milwaukee, WI 4/30/93 235,800 89% 27% 11% 32% 19% venture (b) (c)

Elmhurst Metro A 1% General and 84%
Court Limited Partner
Elmhurst, IL 11/30/93 140,800 65% 15% 30% 12% 8% interest in a joint
venture (b) (c)

Willowbrook A 1% General and 84%
Industrial Court Limited Partner
Willowbrook, IL 6/16/95 84,300 91% 28% 20% 31% 12% interest in a joint
venture (b) (c)

Lexington Fee ownership of
Business Center land and improve-
Lexington, KY 12/05/95 308,800 71% 19% 9% 5% 38% ments

<PAGE>

6901 Riverport Leasehold interest
Drive pursuant to bond
Louisville, KY 11/19/96 322,100 100% 45% 0% 0% 55% financing and owner-
ship of improvements

Avalon Ridge Fee ownership of
Business Park land and improve-
Norcross, GA 4/24/98 57,400 100% 0% 0% 0% 100% ments

A 1% General and
Tower Lane 84% Limited Partner
Business Park interest in a joint
Bensenville, IL 4/27/98 95,900 88% 37% 15% 30% 6% venture (b) (f)

Fee ownership of
Metric Plaza land and improve-
Winter Park, FL 4/30/98 32,000 100% 0% 0% 69% 31% ments

Fee ownership of
Park Center land and improve-
Orlando, FL 4/30/98 47,400 80% 9% 25% 24% 22% ments

University Fee ownership of
Corporate Center land and improve-
Winter Park, FL 4/30/98 127,800 84% 22% 33% 21% 8% ments

Johns Creek
Office and
Industrial Park Fee ownership of
Duluth and land and improve-
Suwanne, GA 8/14/98 119,300 100% 0% 50% 50% 0% ments

--------- ---- ---- ---- ---- ----
Sub-total 1,658,700 87% 23% 16% 18% 30%
--------- ---- ---- ---- ---- ----

<PAGE>

Commerce
Center f/k/a
Florida Power Fee ownership of
& Light Building land and improve-
Sarasota, FL 3/22/94 81,100 100% 0% 11% 5% 84% ments

A 1% General and 84%
Woodcrest Office Limited Partner
Park interest in a joint
Tallahassee, FL 12/19/95 264,900 95% 24% 12% 13% 46% venture (b) (e)

Midwest Office A 1% General and 84%
Center Limited Partner
Oakbrook interest in a joint
Terrace, IL 4/18/96 77,000 91% 39% 13% 29% 10% venture (b) (c)

Phoenix Business Fee ownership of
Park land and improve-
Atlanta, GA 1/15/97 110,600 57% 2% 13% 18% 24% ments

A 1% General and
Butterfield 84% Limited Partner
Office Plaza interest in a joint
Oak Brook, IL 4/30/97 200,800 96% 27% 16% 37% 16% venture (b) (f)

Southlake Fee ownership of
Corporate Center land and improve-
Morrow, GA 7/30/97 56,200 87% 9% 32% 35% 11% ments

University Square Fee ownership of
Business Center land and improve-
Huntsville, AL 8/26/97 184,700 91% 28% 25% 26% 12% ments

Leasehold interest
pursuant to a ground
Technology Center lease and ownership of
Huntsville, AL 8/26/97 48,500 100% 35% 65% 0% 0% improvements

<PAGE>

Peachtree Pointe Fee ownership of
Office Park land and improve-
Norcross, GA 1/20/98 71,700 89% 29% 13% 16% 31% ments

Avalon Center Fee ownership of
Office Park land and improve-
Norcross, GA 3/20/98 53,300 100% 0% 0% 0% 100% ments

Sand Lake Fee ownership of
Tech Center land and improve-
Orlando, FL 4/30/98 84,100 77% 0% 0% 39% 38% ments

Technology Fee ownership of
Park land and improve-
Norcross, GA 8/14/98 145,700 96% 13% 28% 4% 51% ments
--------- ---- ---- ---- ---- ----
Sub-total 1,545,600 87% 19% 16% 18% 34%
--------- ---- ---- ---- ---- ----

RETAIL
- ------
Leasehold interest
pursuant to a ground
lease and ownership of
Northlake improvements (through
Tower Shopping a 1% General and 80.9%
Center Limited Partner
Atlanta, GA 7/28/95 321,600 98% 14% 2% 7% 75% interest) in a joint
--------- ---- ---- ---- ---- ---- venture (b) (d)
Portfolio
Total 3,525,900 88% 21% 15% 17% 35%
========= ==== ==== ==== ==== ====

<FN>
- --------------------

(a) Reference is made to Schedule III "Consolidated Real Estate and Accumulated Depreciation" filed with this
annual report for additional description of these real property investments.

(b) In all of our partnerships, we are the managing general partner and retain sole authority over all
significant decisions.

<PAGE>

(c) The stated percentages represent the economics of the venture; however, through our general and limited
partnership interest we hold a 90% voting interest in the venture. According to the partnership agreement, prior
to distributing cash flow from operations, our 84% and 1% partnership interests receive an annual 12% preferred
return on their respective net capital contributed to the partnership. Our joint venture partner then receives an
11% preferred return on the net capital which it has contributed. Then, 85% of the remaining cash will be
distributed to us and 15% will be distributed to the joint venture partner. Cash flow from either a sale or
refinancing of the partnership properties is distributed as follows: (i) our 84% and 1% partnership interests
receive an annual 12% preferred return on our net capital contributed to the partnership; (ii) the joint venture
partner receives an 11% preferred return on the net capital contributed to the partnership; (iii) we receive an
amount equal to our net capital contributions; (iv) our joint venture partner receives an amount equal to its net
capital contributions; (v) we receive an amount equal to 20.41% of our capital contribution; (vi) our joint
venture partner receives an amount equal to 52.63% of its capital contribution; (vii) then, 65% of the remaining
cash will be distributed to us and 35% will be distributed to our joint venture partner.

(d) The stated percentages represent our voting rights, not necessarily the economics of the venture. According
to the partnership agreement, prior to distributing cash flow from operations, our 80.9% and 1% partnership
interests receive an annual 12% preferred return on their respective net capital contributed to the partnership.
Then, our joint venture partner receives a 12% preferred return on the net capital which it has contributed.
Then, cash flow from operations is distributed pro-rata based on each partner's respective ownership interest.
Cash proceeds from either the sale or refinancing of the partnership property will be used: (i) to pay any of our
unpaid preferred returns; (ii) to return net capital contributed by all partners; (iii) to pay any of the venture
partner's unpaid preferred returns and (iv) to distribute the remaining cash based on ownership interests until we
have received an overall return of 15% on our invested capital. Then, we will receive 71.9% of the excess cash
and the balance will be paid to the joint venture partner.

(e) The stated percentages represent our voting rights, not necessarily the economics of the venture. According
to the partnership agreement, prior to distributing cash flow from operations, our 84% and 1% partnership interest
receive an annual 12% preferred return on their average unreturned Initial Capital Contribution to the
partnership. Then, our joint venture partner receives a 12% preferred return on its average unreturned Initial
Capital Contribution. Then, cash flow from operations is distributed pro-rata based on each partner's respective
ownership interest. Cash proceeds from either the sale or refinancing of the partnership properties will be used:

(i) to pay any of our unpaid preferred returns; (ii) to return our net capital contributed; (iii) to pay any
amounts necessary for us to receive a 15% cumulative return on our net total average unreturned capital
contributed; (iv) to pay the joint venture partner's unpaid preferred returns; (v) to return the joint venture
partner's net capital contributed; and (vi) the remaining cash will be distributed pro-rata based on each
partner's ownership interest.

<PAGE>

(f) The stated percentages represent the economics of the venture; however, through our general and limited
partnership interest we hold a 90% voting interest in the venture. According to the partnership agreement, cash
flow from operations is distributed as follows: (i) our 84% and 1% partnership interests receive an annual 12%
preferred return on their respective net capital contributed to the partnership; (ii) the joint venture partner
receives an 11% preferred return on the net capital contributed to the partnership; (iii) then, 85% of the
remaining cash will be distributed to us and 15% will be distributed to the joint venture partner. Cash flow from
either a sale or refinancing of the partnership properties is distributed as follows: (i) our 84% and 1%
partnership interests receive an annual 12% preferred return on our net capital contributed to the partnership;
(ii) the joint venture partner receives an 11% preferred return on the net capital contributed to the partnership;
(iii) we receive an amount equal to our net capital contributions; (iv) our joint venture partner receives an
amount equal to its net capital contributions; (v) we receive an amount equal to 20.41% of our capital
contribution; (vi) our joint venture partner receives an amount equal to 52.63% of its capital contribution; (vii)
then, 65% of the remaining cash will be distributed to us and 35% will be distributed to our joint venture
partner.

</TABLE>

<PAGE>

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 1,658,700 $ 5.55 $ 5.59

Office 1,545,600 9.18 10.27

Retail 321,600 11.81 12.00
---------- ------ ------
Total 3,525,900 $ 7.71 $ 8.23
========== ====== ======

- -------------

(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.

We also lease approximately 7,000 square feet under an operating lease
which expires on June 30, 2001 for our corporate headquarters.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

We are not aware of any material pending legal proceedings as of
March 24, 2000, nor were any material proceedings terminated during the
quarter ended December 31, 1999.

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

The Trust held its 1998 Annual Meeting of Shareholders on December 13,
1999. There were six proposals considered at the Meeting:

PROPOSAL #1 was to elect five trustees;

PROPOSAL #2 was to ratify the selection of Ernst & Young as our
independent accountants for 1999;

PROPOSAL #3 was to amend our Declaration of Trust to remove
references to "Advisor" or "Sponsor" or provisions governing our
relationship with an "Advisor" or "Sponsor";

PROPOSAL #4 was to amend our Declaration of Trust to remove
provisions governing our operating expenses;

PROPOSAL #5 was to amend our Declaration of Trust to delete the
reference to permitted actions prior to our first public sale of shares;
and

PROPOSAL #6 was to amend our Declaration of Trust to allow for the
delivery of proxies telephonically and through the use of electronic media
and for the delivery of notice through the use of electronic media.

PROPOSAL #1

FOR WITHHELD
---------- --------
SLATE OF TRUSTEES ELECTED

Walter E. Auch, Sr. 10,426,420 101,240
Daniel Levinson 10,440,603 87,057
Leonard G. Levine 10,433,343 94,317
Stephen M. Peck 10,437,288 90,372
L.G. Schafran 10,442,986 84,674

(All elected)

FOR AGAINST ABSTAIN
---------- ------- -------
PROPOSAL #2 10,426,041 23,303 78,316
(Carried)

FOR AGAINST ABSTAIN
---------- ------- -------
PROPOSAL #3 10,225,227 79,031 223,402
(Carried)

FOR AGAINST ABSTAIN
---------- ------- -------
PROPOSAL #4 9,979,639 271,345 276,676
(Carried)

<PAGE>

FOR AGAINST ABSTAIN
---------- ------- -------
PROPOSAL #5 10,159,141 125,267 243,252
(Carried)

FOR AGAINST ABSTAIN
---------- ------- -------
PROPOSAL #6 10,283,812 122,810 121,038
(Carried)

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S SHARES AND RELATED SHAREHOLDER MATTERS

Our shares are included for quotation on the NASDAQ National Market
(symbol - BSRTS). The table below shows the quarterly high and low bid
prices reported by NASDAQ and the amount of cash distributions we paid per
share for the years ended December 31, 1999 and 1998.

1999
----
Quarter Share Per Share Declaration
Ended Price Distributions Date
- ------- ----- ------------- -----------

3/31 High $5.81 $0.12 4/05/99
Low $4.31

6/30 High $6.00 $0.12 7/07/99
Low $4.37

9/30 High $6.06 $0.12 10/06/99
Low $4.75

12/31 High $6.00 $0.12 1/10/00
Low $4.37

1998
----
Quarter Share Per Share Declaration
Ended Price Distributions Date
- ------- ----- ------------- -----------

3/31 High $6.25 $0.12 3/16/98
Low $5.13

6/30 High $7.75 $0.12 7/6/98
Low $5.94

9/30 High $7.19 $0.12 10/6/98
Low $5.50

12/31 High $6.31 $0.12 1/6/99
Low $4.63

On January 10, 2000, we declared a cash distribution for the quarter
ended December 31, 1999 of $0.12 per share payable February 22, 2000 to
shareholders of record on January 21, 2000.

<PAGE>

During 1999 and 1998, we paid distributions equal to $0.48 and $0.46
per share, respectively. A total of $0.01 in 1998 represented a return of
capital. No portion of 1999 distributions represented a return of capital.

Our ability to make future distributions to our shareholders 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;

. our level of operating expenses; and

. the strategic course determined by our Board of Trustees as a
result of their strategic review.

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors" for a more complete discussion.

As of February 18, 2000, there were 3,368 record holders of shares of
beneficial interest.

<PAGE>

<TABLE>

ITEM 6. SELECTED FINANCIAL DATA (1)

<CAPTION>
For the years ended December 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues. . . . . . . . . . . . $ 41,716 $ 39,416 $ 28,785 $ 21,404 $ 12,902

Expenses:
Interest. . . . . . . . . . . . 11,558 9,778 6,447 4,011 1,536
Depreciation and amortization . 6,942 5,484 4,213 2,965 1,569
Property operating. . . . . . . 13,601 13,449 10,689 9,294 5,620
General and administrative. . . 4,496 4,614 4,315 3,126 2,036
Recovery of losses on loans,
notes and interest receivable -- -- (161) (17) (165)
-------- -------- -------- -------- --------
Total expenses. . . . . . 36,597 33,325 25,503 19,379 10,596
-------- -------- -------- -------- --------
Income before minority interest,
income (loss) from operations of
real estate venture, net gains
and extraordinary item (2). . . 5,119 6,091 3,282 2,025 2,306
Minority interest . . . . . . . . (538) (572) (590) (481) (178)
Income (loss) from operations of
real estate venture . . . . . . -- -- 37 (3,301) 63
Net gains and extraordinary item. 3,906 (141) 817 -- 409
-------- -------- -------- -------- --------
Net income (loss) . . . . . . . . $ 8,487 $ 5,378 $ 3,546 $ (1,757) $ 2,600
======== ======== ======== ======== ========
Earnings per share of beneficial
interest - Basic:
Income (loss) before net gains
and extraordinary item . . . . $ 0.34 $ 0.41 $ 0.24 $ (0.17) $ 0.21
======== ======== ======== ======== ========
Net income (loss) . . . . . . . $ 0.63 $ 0.40 $ 0.32 $ (0.17) $ 0.25
======== ======== ======== ======== ========
Earnings per share of beneficial
interest - Diluted:
Income (loss) before net gains
and extraordinary item . . . . $ 0.34 $ 0.40 $ 0.24 $ (0.17) $ 0.21
======== ======== ======== ======== ========
Net income (loss) . . . . . . . $ 0.63 $ 0.39 $ 0.32 $ (0.17) $ 0.25
======== ======== ======== ======== ========

<PAGE>

For the years ended December 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(amounts in thousands, except per share data)
Balance Sheet Data:

Investment in real estate, net. . $183,844 $209,409 $149,386 $102,490 $ 87,863
Total assets. . . . . . . . . . . 206,647 222,590 159,634 116,534 110,765
Loans and bonds payable . . . . . 132,681 151,648 92,118 59,081 49,022
Shareholders' equity. . . . . . . 65,295 62,434 62,315 50,934 56,875

Other Data:
Calculation of Funds
From Operations (3):
Net income (loss) . . . . . . . . 8,487 5,378 3,546 (1,757) 2,600
Plus: Depreciation and
amortization expense. . . . . . 6,629 5,176 3,500 2,484 1,385
Less: Minority interest share
of depreciation and amortiza-
tion expense. . . . . . . . . . (309) (315) (275) (241) (115)
Less: Recovery of losses on
loans, notes and interest
receivable. . . . . . . . . . . -- -- (161) (17) (165)
Valuation allowance included in
operations of real estate venture -- -- -- 3,180 --
Net gains . . . . . . . . . . . . (4,089) -- (881) -- (409)
Extraordinary item, net of
minority interest . . . . . . . 183 141 64 -- --
-------- -------- -------- -------- --------
Funds from operations . . . . . . $ 10,901 $ 10,380 $ 5,793 $ 3,649 $ 3,296
======== ======== ======== ======== ========
Calculations of Funds Available
for Distributions (4):
Funds from operations . . . . . . $ 10,901 $ 10,380 $ 5,793 $ 3,649 $ 3,296
Straight line rents . . . . . . . (248) (544) (386) (289) (97)
Lease commissions . . . . . . . . (1,182) (739) (630) (382) (122)
Capital reserve . . . . . . . . . (505) (493) (381) (350) (256)
-------- -------- -------- -------- --------
Funds available for distributions $ 8,966 $ 8,604 $ 4,396 $ 2,628 $ 2,821
======== ======== ======== ======== ========

Cash flows from:
Operating activities. . . . . . $ 10,844 $ 11,220 $ 8,644 $ 5,730 $ 2,847
Investing activities. . . . . . 7,581 (61,790) (27,575) (6,598) (31,691)
Financing activities. . . . . . (9,059) 49,872 19,555 (827) 19,574

<PAGE>

Number of property interests owned 27 32 22 15 13
Weighted average
number of shares. . . . . . . . 13,469 13,308 11,150 10,478 10,474
Cash distributions per share of
beneficial interest (5) . . . . $ 0.48 $ 0.46 $ 0.40 $ 0.40 $ 0.40
======== ======== ======== ======== ========
<FN>
- ------------

(1) You should read the above selected financial data in conjunction with the consolidated financial statements
and the related notes appearing elsewhere in this annual report.

(2) Net gains include gain on disposition of investment in real estate, loss on disposition of investment in
real estate venture and gain on disposition of partnership interest.

(3) 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 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 items, excluding gains (or losses) from sales of property plus
depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. 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 the Trust to those of other REIT's. The
calculation of FFO may vary from entity to entity since 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.
FFO is not intended 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.

(4) Funds Available for Distributions, or "FAD" for short, is calculated by adjusting FFO for straight-line rent
adjustments, lease commissions paid and a normalized reserve for capital improvements. The capital reserve is
$0.075 per sq. ft. for flex/industrial properties, $0.10 per sq. ft. for office properties and $0.15 per sq. ft.
for retail property and $200 per residential unit.

(5) Based on 13,469 weighted average shares outstanding for 1999; 13,308 weighted average shares outstanding for
1998; 11,150 weighted average shares outstanding for 1997; 10,478 weighted average shares outstanding for 1996;
and 10,474 weighted average shares outstanding for 1995.

</TABLE>

<PAGE>

<TABLE>
QUARTERLY RESULTS OF OPERATIONS

The following is a summary of the quarterly results of operations for the years ended December 31, 1999 and
1998.

<CAPTION>
1999
For the three months ended:
-----------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ------------ ------------ ------------
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Total Revenue $ 10,428 $ 10,483 $ 10,509 $ 10,296

Operating Expenses (9,076) (9,115) (9,180) (9,226)
-------- -------- -------- --------
Operating Income 1,352 1,368 1,329 1,070

Minority Interest in Consolidated
Partnerships (114) (141) (126) (157)
-------- -------- -------- --------
Income before Net Gains and Extra-
ordinary Item 1,238 1,227 1,203 913

Net Gains on Disposition of
Investments in Real Estate -- -- -- 4,089

Extraordinary Item, Net of
Minority Interest -- -- -- (183)
-------- -------- -------- --------
Net Income $ 1,238 $ 1,227 $ 1,203 $ 4,819
======== ======== ======== ========

Earnings Per Share of
Beneficial Interest - Basic:
Income before Net Gains and
Extraordinary Item $ 0.09 $ 0.09 $ 0.09 $ 0.07
======== ======== ======== ========

Net Income $ 0.09 $ 0.09 $ 0.09 $ 0.36
======== ======== ======== ========
Earnings Per Share of
Beneficial Interest - Diluted:
Income before Net Gains and
Extraordinary Item $ 0.09 $ 0.09 $ 0.09 $ 0.07
======== ======== ======== ========

Net Income $ 0.09 $ 0.09 $ 0.09 $ 0.36
======== ======== ======== ========

<PAGE>

1998
For the three months ended:
-----------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ------------ ------------ ------------
(Amounts in thousands, except per share data)
Total Revenue $ 8,564 $ 9,657 $ 10,552 $ 10,643

Operating Expenses (7,091) (8,057) (9,044) (9,133)
-------- -------- -------- --------
Operating Income 1,473 1,600 1,508 1,510

Minority Interest in Consolidated
Partnerships (116) (182) (151) (123)
-------- -------- -------- --------
Income before Extraordinary Item 1,357 1,418 1,357 1,387

Extraordinary Item, Net of
Minority Interest -- (141) -- --
-------- -------- -------- --------
Net Income $ 1,357 $ 1,277 $ 1,357 $ 1,387
======== ======== ======== ========

Earnings Per Share of
Beneficial Interest - Basic:
Income before Extraordinary Item $ 0.10 $ 0.11 $ 0.10 $ 0.10
========= ========= ========= =========

Net Income $ 0.10 $ 0.10 $ 0.10 $ 0.10
========= ========= ========= =========

Earnings Per Share of
Beneficial Interest - Diluted:
Income before Extraordinary Item $ 0.10 $ 0.10 $ 0.10 $ 0.10
========= ========= ========= =========

Net Income $ 0.10 $ 0.09 $ 0.10 $ 0.10
========= ========= ========= =========

</TABLE>

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

We acquired a large number of properties during 1998 and 1997. We did
not acquire any properties during 1999. Thus, period to period results are
not entirely comparable. At December 31, 1999, we owned individually or, in
some cases, through joint ventures:

. twelve flex industrial properties totalling 1,658,700 rentable
square feet;

. fourteen office properties totalling 1,545,600 rentable square
feet;

. one retail center which contains 321,600 rentable square feet.

During the year ended December 31, 1999, we sold four apartment
complexes containing 864 units and one flex industrial property totalling
182,300 rentable square feet.

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998

During the year ended December 31, 1999 and 1998 our net income
totalled approximately $8.5 million ($0.63 per basic common share) and
approximately $5.4 million ($0.40 per basic common share), respectively.
The approximately $3.1 million increase resulted primarily from net gains
on dispositions of investments in real estate of approximately $4.1
million, and revenue growth of approximately $2.3 million reduced by
expense growth of approximately $3.3 million. In particular, our total
revenues increased by approximately $2.3 million or 5.8% to approximately
$41.7 million from approximately $39.4 million, due primarily 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 year ended December 31, 1999 with the results of the same properties
owned during the year ended December 31, 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 four of our properties, the
Lexington Business Center, Phoenix Business Park, Elmhurst Metro Court, and
Airways Plaza Office Center. The average occupancy levels at these
properties were 65%, 67%, 65%, and 41% during the year ended December 31,
1999, respectively, compared to 85%, 96%, 76%, and 99% average occupancy
levels during the year ended December 31, 1998. The occupancy at these
four 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 depend on, among other things, the amount of 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 year ended
December 31, 1999.

<PAGE>

Our total expenses increased by approximately $3.3 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
$0.2 million to approximately $13.6 million from approximately $13.4
million in 1998. On a "same-store" basis, total operating expenses
decreased by approximately $0.4 million or 4.1% to approximately $9.4
million from approximately $9.8 million. Interest expense increased by
approximately $1.8 million to approximately $11.6 million from
approximately $9.8 million, primarily due to an increase in the amount we
borrowed in connection with the acquisitions that we completed in 1998.
General and Administrative expense decreased by approximately $0.1 million
to approximately $4.5 million from approximately $4.6 million.
Depreciation and Amortization expense increased by approximately $1.4
million to approximately $6.6 million from approximately $5.2 million which
accounts for the remaining net increase in total expenses.

COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997

During the years ended December 31, 1998 and 1997 our net income
totalled approximately $5.4 million ($0.40 per basic common share) and
approximately $3.5 million ($0.32 per basic common share), respectively.
The approximately $1.9 million increase resulted primarily from revenue
growth of approximately $10.6 million reduced by expense growth of
approximately $7.8 million. In particular, our total revenues increased by
approximately $10.6 million or 36.8% to approximately $39.4 million from
approximately $28.8 million, due primarily to an increase in the number of
properties that we own. We attribute approximately $9.9 million or 93.4%,
of this increase to properties acquired in 1998 and the net full-year
effect of properties we either acquired or sold during 1997. On a "same-
store" basis (comparing the results of operations of the properties owned
during the entire year ended December 31, 1998 with the results of the same
properties owned during the year ended December 31, 1997), total revenues
increased by approximately $0.7 million or 3.5% to approximately $20.7
million from approximately $20.0 million, due to increased rental rates at
these properties and recognition of lease termination fees at certain
properties. Our portfolio occupancy as of December 31, 1998 was lower than
it historically has been as a result of the termination of leases during
the last quarter. In addition, property acquisitions during 1997 and 1998
have significantly contributed to our growth in those years.

In 1998, our total operating expenses, which include property
operating, repair and maintenance, real estate taxes, and ground lease,
increased by approximately $2.7 million to approximately $13.4 million from
approximately $10.7 million in 1997, primarily due to an increase in the
number of properties that we own, which accounted for approximately $2.3
million or 85.2% of this increase. On a "same-store" basis, total
operating expenses increased by approximately $0.4 million or 6.3% to
approximately $6.7 million from approximately $6.3 million. Interest
expense increased by approximately $3.4 million from approximately $6.4
million to approximately $9.8 million, primarily due to an increase in the
amount we have borrowed in connection with the acquisitions we completed in
1998. Depreciation and amortization expense also increased approximately
$1.7 million. We attribute most of the increase to the fact that we owned
more properties during 1998 than we did during 1997. Total general and
administrative expenses increased by approximately $0.3 million due to
costs incurred in connection with due diligence for transactions that were
not completed in 1998 and due to an increase in administrative staff hired
to oversee our properties and the legal fees associated with acquiring
properties during 1998.

<PAGE>

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 funds
necessary for non-recurring capital improvements and funds required if we
decide to acquire and develop property, 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
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 December 31, 1999, our assets totalled approximately $206.6
million, a decrease of approximately $16.0 million from total assets at
December 31, 1998 of approximately $222.6 million. Our liabilities
totalled approximately $139.1 million at December 31, 1999 a decrease of
approximately $18.9 million from a total of approximately $158.0 million at
December 31, 1998. Our shareholders equity increased by approximately $2.9
million to approximately $65.3 million at December 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 $13.1 million at
December 31, 1999 and approximately $3.7 million at December 31, 1998. The
increase in total cash and cash equivalents from year-end 1998 to year-end
1999 results from receiving approximately $10.8 million from operations and
approximately $7.6 million from investing activities while using
approximately $9.1 million in financing activities.

Cash Flows From Operating Activities: Net cash provided by operating
activities decreased by approximately $0.4 million for the year ended
December 31, 1999 to approximately $10.8 million from approximately $11.2
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 affecting
operating activities. Net income adjusted for net gains, extraordinary
items, depreciation and amortization and minority interest increased by
approximately $0.5 million to approximately $12.1 million from
approximately $11.6 million for the years ended December 31, 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 items, excluding gains (or losses) from sales of property
plus depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. 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

<PAGE>

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 years ended December 31, 1999, 1998 and 1997, our properties
generated FFO of approximately $10.9 million, $10.4 million and $5.8
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 years ended December 31, 1999, 1998 and 1997 is calculated
as follows:
1999 1998 1997
--------- -------- --------
(Dollars in thousands)
Net Income $ 8,487 $ 5,378 $ 3,546

Plus:
Depreciation and
Amortization expense 6,629 5,176 3,485
Depreciation included
in Operations of
Real Estate Ventures -- -- 15
Less:
Minority Interest
Share of Depreci-
ation and Amor-
tization Expense (309) (315) (275)
Recovery of Losses
on Loans, Notes
and Interest
Receivable -- -- (161)

Net Gain on Disposition
of Investments in
Real Estate (4,089) -- (881)

Extraordinary Item, Net
of Minority Interest 183 141 64
-------- -------- --------
Funds From Operations $ 10,901 $ 10,380 $ 5,793
======== ======== ========
Cash Flows Provided By
(Used For):
Operating Activities $ 10,844 $ 11,220 $ 8,644
Investing Activities $ 7,581 $(61,790) $(27,575)
Financing Activities $ (9,059) $ 49,872 $ 19,555

Our ability to pay any distribution is influenced by the amount of
monies that we have available to distribute known as Funds Available for
Distribution or "FAD" for short. 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. We reserve approximately $0.075 per square foot for our
flex/industrial properties, $0.10 per square foot for our office
properties, $0.15 per square foot for our retail property and $200 per
residential unit.

Our ability to make future distributions to our shareholders is
dependent upon, among other things:

. the strategic course determined by our Board of Trustees as a
result of their strategic review;

<PAGE>

. sustaining or improving 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; and

. our level of operating expenses.

See Risk Factors for additional discussion.

FAD for the years ended December 31, 1999, 1998 and 1997 is calculated
as follows:

1999 1998 1997
------- ------- -------
(Dollars in thousands)
Funds From Operations . . . . . . $10,901 $10,380 $ 5,793
Straight-line Rents . . . . . . . (248) (544) (386)
Lease Commissions . . . . . . . . (1,182) (739) (630)
Capital Reserve . . . . . . . . . (505) (493) (381)
------- ------- -------
Funds Available for Distribution. $ 8,966 $ 8,604 $ 4,396
======= ======= =======

Cash Flows From Investing Activities: During the year ended
December 31, 1999, we generated approximately $7.6 million from investing
activities, primarily from proceeds from the sale of investments in real
estate and we used approximately $61.8 million in the same period in 1998.
During the year ended December 31, 1999, we sold four apartment complexes
and one flex/industrial property resulting in proceeds from sale of
approximately $13.7 million (gross proceeds from sale of approximately
$29.9 million less approximately $16.2 million representing debt assumed by
the purchaser). We also made capital improvements at our various
properties in the amount of approximately $6.0 million. In comparison,
during the same period in 1998, we used approximately $61.8 million
primarily to acquire properties. During the year ended December 31, 1998,
we purchased four office and six flex/industrial properties for
approximately $55.9 million and made capital improvements at our various
properties in the amount of approximately $5.3 million.

Cash Flows From Financing Activities: During the year ended
December 31, 1999, we used approximately $9.1 million in financing
activities compared to generating approximately $49.9 million for the same
period in 1998. During the year ended December 31, 1999, we used cash
primarily to make net payments on mortgage loans and bonds payable of
approximately $2.8 million and to pay distributions to shareholders of
approximately $6.5 million. During the year ended December 31, 1998, we
generated $49.9 million in financing activities. These cash flows resulted
primarily from approximately $55.9 million of net proceeds from bonds and
mortgage loans reduced by distributions paid to shareholders of
approximately $6.1 million.

FINANCINGS:

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 payable
monthly at a variable rate equal to LIBOR plus 2%. 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.

<PAGE>

On April 30, 1998, we entered into a $25 million line of credit
agreement (the "CCA Line") with Nomura Asset Capital Corporation
("Nomura"). Nomura subsequently assigned its interest to its subsidiary -
The Capital Company of America LLC ("CCA"). The CCA Line has an initial
term of twenty-four months. Draws on the line bear interest at a rate
equal to LIBOR plus 2.00%. The agreement with CCA requires that we satisfy
certain financial covenants, including maintaining a consolidated tangible
net worth of at least $52.5 million and a leverage ratio of debt to
consolidated net worth of 3:1 or less. As of December 31, 1999, we had
borrowed about $14.3 million on the CCA Line leaving approximately $10.7
million available for future borrowing. We have elected not to extend the
CCA Line and will repay the outstanding balance using proceeds from
replacement financing on the properties pledged as collateral that we are
in the process of arranging. At December 31, 1999, our debt to total
market capitalization ratio was 62% based upon the closing share price on
that date of $6.0.

During the third quarter of 1998, we borrowed $7.4 million under a
convertible term loan agreement entered into with a group of lenders in
October 1997. We used the proceeds to acquire the Johns Creek Office and
Industrial Park and Technology Park. The loan matures on September 30,
2002 and bears interest at 12% per year, payable quarterly. On January 20,
2000, we paid conversion fee of $37,000 (0.5% of the outstanding loan
balance) and we repaid approximately $1.2 million of the convertible term
loan. The remaining balance of approximately $6.2 million was converted
into 61,572 Series A convertible preferred shares at a conversion rate of
$100 per share and may be further converted into common shares at a
conversion rate of $5.15 per share.

IMPACT OF THE YEAR 2000

The year 2000 issue, or Y2K for short, arose as a result of computer
programs utilizing two digits rather than four digits to define the
applicable year. Any computer programs or hardware having date-sensitive
software or embedded chips might have recognized a date using "00" as the
year 1900 rather than the year 2000. This could have resulted in a system
failure or in miscalculations causing disruptions of real estate
operations, such as the functioning of property mechanical systems, and
other activities, or could have resulted in a temporary inability to
process transactions, generate invoices or reports, manage our portfolio,
comply with regulatory requirements or engage in similar normal business
activities.

In an effort to address these concerns, in the fourth quarter of 1998
we 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 met regularly during 1999 and monitored the progress of our Y2K
compliance initiatives.

We retained third party consultants and professionals to assist it in
evaluating certain technical issues and making strategic recommendations
for remedial action. Certain minor Y2K issues were discovered and remedied
prior to year end.

We established a plan for assessing and mitigating any potential
exposure to Y2K matters. The plan included 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 property managers,
significant suppliers, vendors, and tenants as to their Y2K compliance
initiatives.

<PAGE>

We assessed the operations at each of our properties in an effort to
diagnose the potential impact of Y2K on property operations, particularly
mechanical systems. Although there was not a specific Y2K issue at our
Butterfield Office Plaza property, we took action to retrofit the
building's mechanical system, an ancillary benefit of which was to remedy a
potential Y2K issue. We did not discover any other Y2K issues at our
properties.

We surveyed our property managers, significant suppliers and vendors
and our larger tenants during the course of 1999. We received no responses
which caused us undue concern.

We 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; and
- regarding communicating with our officers and Trustees.

On January 1, 2000, we directed engineers employed by our various
property managers to enter and examine the operating systems of each
building that we own. By noon on January 1, 2000, we had received at our
home office a faxed report from our engineers as to each of our buildings
indicating that all systems were operational and no Y2K issues had arisen.

Our Y2K Compliance Committee reported the January 1, 2000 results to
our Board of Trustees and was then disbanded. In total, we spent $52,000
on Y2K related matters.

<PAGE>

RISK FACTORS

REAL ESTATE RISKS

Acquiring and purchasing real estate involves certain risks. If we
decide to increase our portfolio, we may not be able to identify properties
that meet our standards or acquire properties at a price that allows us to
earn an attractive return since we would be competing for acquisitions with
other real estate investors, some of whom have significantly greater
resources at their disposal.

WE COMPETE FOR TENANTS. All of our office and flex industrial
properties are located in highly-developed areas that include other office
and flex industrial properties. Some of these properties are newer or
better located than our properties. Further, our competitors may have
greater resources than we do, which could allow them to reduce rents to a
level that is not profitable for us. We may also have to spend money
upgrading or renovating our properties to make them attractive to both
existing and potential tenants thus increasing our expenses and reducing
our cash resources. The number of properties or other companies that
compete in our market areas could have a material effect upon:

. our ability to lease space at our properties;
. the amount of rent that we can charge on new leases or
renewals; and
. the dollar amount of tenant improvements or leasing commissions
required to lease a property.

WE OWN PROPERTIES IN A LIMITED NUMBER OF MARKETS. Our properties are
located in the Midwestern and Southeastern United States, primarily
suburban Chicago, where we own properties that account for 19% of our gross
rental revenue, and suburban Atlanta, where we own properties that account
for 27% of our gross rental revenue. Our ability to maintain or increase
our revenues or to generate revenues that exceed our operating expenses is
affected by economic conditions in the Midwestern and Southeastern United
States. Like other real estate markets, these markets have experienced
economic downturns in the past and will likely experience downturns in the
future. Layoffs or downsizing, industry slowdowns, changing demographics,
increases in the supply of property or reduced demand for office or flex
industrial space may decrease our revenues or increase our operating
expenses or both.

LEASES ON APPROXIMATELY 21% OF OUR RENTABLE SQUARE FEET EXPIRE DURING
2000 AND 12% OF OUR RENTABLE SQUARE FOOTAGE WAS VACANT AS OF DECEMBER 31,
1999. As leases expire, we may not be able to renew or re-lease space at
rates comparable to or better than the rates contained in the expiring
leases. Leases on approximately 21% of our rentable square feet will
expire prior to December 31, 2000. If we fail to renew or re-lease space
at rates that are at least comparable to the rates on expiring leases, the
revenues generated by our properties will decline. Further, we may have to
spend significant sums of money to renew or re-lease space covered by
expiring leases, potentially reducing the amount of money that we have
available to distribute to you or to use for other purposes.

OUR TENANTS MAY NOT PAY THEIR RENT OR MAY DECLARE BANKRUPTCY. We
derive substantially all of our revenue from leasing space at our
properties. Consequently, our ability to make distributions to you may be
negatively affected if tenants leasing a significant percentage of our
rentable square feet fail to pay their rent or if we are unable to
profitably lease space. We may experience substantial delays and incur
significant expenses enforcing our rights against tenants who do not pay
their rent. A tenant may also seek the protection of the bankruptcy laws
and delay making rental payments to us or actually reject or terminate its
lease under those laws. Even if a tenant did not seek the protection of
the bankruptcy laws, the tenant may from time to time experience a downturn
in its business which may weaken its financial condition and its ability to
make rental payments to us when due.

<PAGE>

WE MAY NOT BE ABLE TO QUICKLY VARY OUR PORTFOLIO. Investments in real
estate are relatively illiquid. Except in certain circumstances, in order
to continue qualifying as a REIT, we are subject to rules and regulations
which limit our ability to sell properties within a short period of time.
Further, under the loan agreement with CCA, we may not sell any of the
properties that are mortgaged to secure payment prior to September of 2000.
We have mortgaged fifteen of our properties representing approximately 42%
of our rentable square footage to secure payment on the CCA loans. Thus, we
may be unable to sell certain properties even if market conditions or our
financial condition warrant such a sale.

WE ARE REQUIRED TO COMPLY WITH VARIOUS LAWS AND REGULATIONS. As an
owner of property, we are required to comply with a variety of federal,
state and local laws. Complying with these laws and regulations may
increase our operating expenses and reduce our profits. For example, we
are required to comply with laws and regulations that impose liability on a
property owner for the costs of removing or remediating certain hazardous
materials released on a property. We are subject to these laws even if we
are not aware of, or responsible for, releasing these materials. These
laws or regulations may also restrict the way that we can use a property or
the type of business which may be operated on the property. Further, if we
fail to comply with these laws or regulations by, for example, failing to
properly remediate a release of hazardous material, we may not be able to
sell the affected property or borrow money using the property as collateral
for a loan. We may also be required to pay money to individuals who are
injured due to the presence of hazardous materials on our property.
Although we are not aware of any hazardous materials at our properties,
these materials may exist and the cost of removing or remediating them may
be material and could adversely impact the value of the property affected.
We may also be required to pay the cost of removing or remediating
hazardous materials from a disposal or treatment facility to which we may
have shipped hazardous or toxic substances even if we never owned or
operated the disposal or treatment facility. Our properties must also
comply with the Americans with Disabilities Act. This act establishes
certain standards related to access to and use of properties by disabled
persons. We may be required, for example, to remove any barriers to
access. If we fail to comply, the U.S. government may fine us or we may be
required to pay damages to a disabled person. Complying with these
requirements may increase our expenses and changes in these requirements
may result in unexpected expenses.

OUR OBJECTIVES MAY CONFLICT WITH THOSE OF OUR JOINT VENTURE PARTNERS.
We own eight of our properties, or approximately 40% of our rentable square
footage, through controlling interests in joint ventures with various third
parties. We may purchase additional properties through joint ventures with
third parties. Investments in joint ventures which own properties may
involve risks that are not otherwise present when we wholly own the
property directly or through one of our subsidiaries. For example, our co-
venturer may file for bankruptcy protection or may have economic or
business interests or goals which are inconsistent with our goals or
interests. Further, although we own a controlling interest in each of
these ventures, we owe fiduciary duties to our partners that may cause us
to take actions we otherwise would not have taken.

WE MAY NOT HAVE ENOUGH INSURANCE. We have customary comprehensive
liability, fire, flood, earthquake, extended coverage and rental loss
policies that insure us against losses at our properties with policy
specifications and insurance limits that we believe are reasonable. There
are certain types of losses, for example environmental, that we may decide
not to insure against since the cost of insuring for the loss is not
economically practical. We use our discretion in determining the amount of
coverage, the limits on this coverage and the deductibles that apply to the
coverage in an attempt to balance the amount of insurance that we purchase
and the cost of that insurance. We may, however, suffer losses that exceed

<PAGE>

our insurance coverage. Further, inflation, changes in building codes and
ordinances or other factors such as environmental laws may make it too
expensive to repair or replace a property that has been damaged or
destroyed, even if covered by insurance.

PROPERTY TAXES MAY INCREASE. We are required to pay taxes based on
the assessed value of our properties as determined by various taxing
authorities such as state or local governments. These taxing authorities
may increase the tax rate imposed on a property or may reassess property
value, either of which could increase our operating expenses.

REAL ESTATE FINANCIAL RISKS

WE OFTEN NEED TO BORROW MONEY TO FINANCE OUR BUSINESS. Our ability to
internally fund our capital needs is limited since we must distribute at
least 95% of our net taxable income (excluding net capital gains) to our
shareholders to qualify as a REIT. Consequently, we often borrow money to
fund our operating or capital needs, and may borrow monies to satisfy the
95% distribution requirement. The documents which govern how we may
conduct our business do not limit the amount of money that we may borrow.
Borrowing money to fund operating or capital needs exposes us to various
risks. For example, our properties may not generate enough cash to pay the
principal and interest obligations on our loans or we may violate a loan
covenant that results in the lender accelerating the maturity date of a
loan. As of December 31, 1999, we owed a total of approximately $132.7
million, including approximately $125.3 million secured by mortgages on
certain of our properties. If we fail to make timely payments on our
loans, including those cases where a lender has accelerated the maturity
date due to a violation of a loan covenant, the lenders could foreclose on
the properties securing their loans and we could lose our entire investment
in those properties. Once a loan becomes due, we must either pay the
remaining balance or borrow additional money to pay off the maturing loan.
We may not, however, be able to obtain a new loan, or the terms of the new
loan, such as the interest rate or payment schedule, may not be as
favorable as the terms of the maturing loan. Thus, we may be forced to
sell a property at an unfavorable price to pay off the maturing loan or
agree to less favorable loan terms. A total of $23.9 and $5.3 million of
our indebtedness matures on or before December 31, 2000 and 2001,
respectively.

We occasionally enter into loans where the interest rate may
fluctuate. As of December 31, 1999, we owed approximately $26.6 million
that bore interest at variable rates. We may borrow additional amounts
that bear interest at variable rates. If interest rates increase, the
amount of interest that we are required to pay on these borrowings will
also increase. Any such increase would increase our operating expenses and
potentially negatively impact our ability to pay distributions to our
shareholders.

WE DEPEND ON A SMALL NUMBER OF KEY PERSONNEL. Our success depends, in
part, on the efforts of our principal executive officers, particularly
Messrs. Levine, Hansen, Schmidt and Teglia. Although we have entered into
employment contracts with each of these individuals, the loss of their
services could have an adverse effect upon our operations.

THIRD PARTIES MAY BE DISCOURAGED FROM MAKING ACQUISITION OR OTHER
PROPOSALS THAT MAY BE IN YOUR BEST INTERESTS. Under our Declaration, no
single person or group of persons (an entity is considered a person) may
own more than 9.9% of our outstanding common shares. The employment
contracts we have with each of our senior executives may require us, in
certain circumstances, to make payments to these individuals if a "change
of control" occurs. A "change of control" is defined in each of these
agreements to mean that the members of the board of trustees as of the date

<PAGE>

the agreement is signed fail to constitute a majority of the board members
provided that if the chief executive officer consents to a new board
member, that person is treated for purposes of this test as if he or she
was a member of the board at the time that the agreement was signed. These
provisions may prevent or discourage a third party from making a tender
offer or other business combination proposal such as a merger, even if such
a proposal would be in the best interest of our shareholders.

WE MIGHT FAIL TO QUALIFY AS A REIT. If we fail to qualify as a REIT,
we would not be allowed to deduct amounts distributed to our shareholders
in computing our taxable income and would incur substantially greater
expenses for taxes and would have less money available to distribute to
you. We would also be subject to federal income tax at regular corporate
rates as well as potentially the alternative minimum tax. Unless we
satisfied some exception, we could not elect to be taxed as a REIT for the
four taxable years following the year during which we were disqualified.
We may fail to qualify as a REIT if, among other things:

. less than 75% of the value of our total assets consists of real
estate assets, cash and government securities at the close of each fiscal
quarter;

. more than 5% of the value of our assets consists of securities
of any one issuer or we hold more than 10% of the outstanding voting
securities of any one issuer at the close of each fiscal quarter;

. less than 75% of our gross income is generated from rents from
real property, interest on obligations secured by mortgages, gain from the
sale of property, and certain other property-related revenue sources; or

. we fail to distribute at least 95% of our taxable income to our
shareholders.

If we fail to distribute enough money to satisfy the REIT
requirements, we may also have to pay a non-deductible excise tax. This tax
is equal to 4% of the amount in any year that our distributions are less
than the sum of 85% of our ordinary income in the current year plus 95% of
our net income from capital gains in the current year plus 100% of the
taxable income that we did not distribute in prior years.

SUBSEQUENT EVENT

Our Board of Trustees has recently formed a Special Committee
comprised entirely of its Independent Trustees to begin the process of
evaluating strategic alternatives. To assist in this process, on
February 18, 2000, the committee engaged Cohen Financial to, among other
things, evaluate our properties. Cohen Financial is a Chicago-based real
estate investment banking firm.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We do not engage in any hedge transaction or in the ownership of any
derivative financial instruments. To mitigate the impact of fluctuations
in interest rates, we generally maintained over 70% of our debt as fixed
rate in nature by borrowing on a long-term basis.

As of December 31, 1999, we had approximately $132.7 million of
outstanding long-term debt, of which $26.6 million bears interest at
variable rates. As of December 31, 1999, the weighted-average interest
rate on this variable rate debt was 7.31%. If interest rates on this
variable rate debt were to increase one percentage point (1%), interest
expense would increase by $266,000 on an annual basis.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BANYAN STRATEGIC REALTY TRUST
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Report of Independent Auditors 31

Consolidated Balance Sheets, December 31, 1999 and 1998 32

Consolidated Statements of Operations For the Years Ended
December 31, 1999, 1998 and 1997 34

Consolidated Statements of Shareholders' Equity For the
Years Ended December 31, 1999, 1998 and 1997 36

Consolidated Statements of Cash Flows For the Years Ended
December 31, 1999, 1998 and 1997 37

Notes to Consolidated Financial Statements 39

Schedule
--------
Consolidated Real Estate and
Accumulated Depreciation III

SCHEDULES NOT FILED:

All schedules other than those indicated in the above index are
omitted since the required information is not present or is not present in
amounts sufficient to require submission of the schedule or because the
information required is included in the consolidated financial statements
and notes thereto.

<PAGE>

REPORT OF INDEPENDENT AUDITORS

TO THE SHAREHOLDERS OF BANYAN STRATEGIC REALTY TRUST

We have audited the accompanying consolidated balance sheets of Banyan
Strategic Realty Trust as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the index
at Item 8. These financial statements and schedule are the responsibility
of the Trust's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Banyan Strategic Realty Trust at December 31, 1999 and 1998, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

Chicago, Illinois
February 2, 2000

<PAGE>

<TABLE>

BANYAN STRATEGIC REALTY TRUST

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<CAPTION>
December 31, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
- ------

Investment in Real Estate, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,445 $ 38,600
Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,608 172,554
Building Improvements . . . . . . . . . . . . . . . . . . . . . . . 14,211 9,654
-------- --------
199,264 220,808
Less: Accumulated Depreciation. . . . . . . . . . . . . . . . . . . (15,420) (11,399)
-------- --------
183,844 209,409
-------- --------

Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 13,097 3,731
Restricted Cash - Capital Improvements. . . . . . . . . . . . . . . . 1,497 1,407
Restricted Cash - Other . . . . . . . . . . . . . . . . . . . . . . . 1,171 1,250
Interest and Accounts Receivable. . . . . . . . . . . . . . . . . . . 1,186 1,544
Deferred Financing Costs (Net of Accumulated Amortization
of $1,512 and $1,246, respectively) . . . . . . . . . . . . . . . . 1,568 1,893
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,284 3,356
-------- --------
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $206,647 $222,590
======== ========

<PAGE>

BANYAN STRATEGIC REALTY TRUST

CONSOLIDATED BALANCE SHEETS - CONTINUED
(DOLLARS IN THOUSANDS)

December 31, December 31,
1999 1998
------------- ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities
Mortgage Loans Payable. . . . . . . . . . . . . . . . . . . . . . . . $120,781 $123,108
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 21,140
Unsecured Loan Payable. . . . . . . . . . . . . . . . . . . . . . . . 7,400 7,400
Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . 2,767 2,625
Accrued Real Estate Taxes Payable . . . . . . . . . . . . . . . . . . 908 967
Accrued Interest Payable. . . . . . . . . . . . . . . . . . . . . . . 615 636
Unearned Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . 922 758
Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 1,203 1,373
-------- --------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 139,096 158,007
-------- --------

Minority Interest in Consolidated Partnerships. . . . . . . . . . . . 2,256 2,149

Shareholders' Equity
Shares of Beneficial Interest, No Par Value,
Unlimited Authorization; 15,073,917 and 14,912,495 Shares
Issued, respectively. . . . . . . . . . . . . . . . . . . . . . . 120,707 119,872
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . . . . (48,046) (50,072)
Treasury Shares at Cost, 1,522,649 Shares . . . . . . . . . . . . . . (7,366) (7,366)
-------- --------
Total Shareholders' Equity. . . . . . . . . . . . . . . . . . . . . . 65,295 62,434
-------- --------
Total Liabilities and Shareholders' Equity. . . . . . . . . . . . . . $206,647 $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
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE
Rental Income . . . . . . . . . . . . . . . . . . . $ 36,705 $ 34,470 $ 25,370
Operating Cost Reimbursement. . . . . . . . . . . . 3,635 3,491 2,441
Miscellaneous Tenant Income . . . . . . . . . . . . 1,187 1,146 707
Income on Investments and Other Income. . . . . . . 189 309 267
-------- -------- --------
Total Revenue . . . . . . . . . . . . . . . . . . . . 41,716 39,416 28,785
-------- -------- --------
EXPENSES
Property Operating. . . . . . . . . . . . . . . . . 5,392 5,762 5,206
Repairs and Maintenance . . . . . . . . . . . . . . 4,318 4,041 2,595
Real Estate Taxes . . . . . . . . . . . . . . . . . 2,957 2,720 1,995
Interest. . . . . . . . . . . . . . . . . . . . . . 11,558 9,778 6,447
Ground Lease. . . . . . . . . . . . . . . . . . . . 934 926 893
Depreciation and Amortization . . . . . . . . . . . 6,629 5,212 3,490
General and Administrative. . . . . . . . . . . . . 4,496 4,614 4,315
Amortization of Deferred Financing Costs. . . . . . 313 272 723
Recovery of Losses on Loans, Notes and
Interest Receivable . . . . . . . . . . . . . . . -- -- (161)
-------- -------- --------
Total Expenses. . . . . . . . . . . . . . . . . . . . 36,597 33,325 25,503
-------- -------- --------
Income Before Minority Interest, Income
from Operations of Real Estate Ventures,
Net Gains and Extraordinary Item. . . . . . . . . . 5,119 6,091 3,282
Minority Interest in Consolidated Partnerships. . . . (538) (572) (590)
Income from Operations of Real Estate Ventures. . . . -- -- 37
-------- -------- --------
Income before Net Gains and
Extraordinary Item. . . . . . . . . . . . . . . . . 4,581 5,519 2,729
Net Gains on Disposition of Investments in Real Estate 4,089 -- 881
-------- -------- --------
Income Before Extraordinary Item . . . . . . . . . . 8,670 5,519 3,610

Extraordinary Item, Net of Minority Interest of $25
in 1998 . . . . . . . . . . . . . . . . . . . . . . (183) (141) (64)
-------- -------- --------
Net Income. . . . . . . . . . . . . . . . . . . . . . $ 8,487 $ 5,378 $ 3,546
======== ======== ========

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

FOR THE YEARS ENDED DECEMBER 31
-----------------------------------------------
1999 1998 1997
------------ ------------ ------------

Earnings Per Share of Beneficial Interest - Basic:
Income before Net Gains and Extraordinary Item. . . $ 0.34 $ 0.41 $ 0.24
======== ======== ========

Net Income. . . . . . . . . . . . . . . . . . . . . $ 0.63 $ 0.40 $ 0.32
======== ======== ========

Earnings Per Share of Beneficial Interest - Diluted:
Income before Net Gains and Extraordinary Item. . . $ 0.34 $ 0.40 $ 0.24
======== ======== ========

Net Income. . . . . . . . . . . . . . . . . . . . . $ 0.63 $ 0.39 $ 0.32
======== ======== ========

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

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(DOLLARS IN THOUSANDS)

Shares of
Beneficial Interest
------------------------- Accumulated Treasury
Shares Amount Deficit Shares Total
--------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Shareholders' Equity,
January 1, 1997. . . . . . . 12,001,620 $106,695 (48,394) (7,366) 50,935

Issuance of Shares,
net of issuance costs. . . . 2,264,595 9,999 -- -- 9,999
Award Shares Issued . . . . . 495,635 2,319 -- -- 2,319
Net Income. . . . . . . . . . -- -- 3,546 -- 3,546
Distributions Paid. . . . . . -- -- (4,484) -- (4,484)
---------- -------- -------- -------- --------

Shareholders' Equity,
December 31, 1997. . . . . . 14,761,850 119,013 $(49,332) $ (7,366) $ 62,315

Issuance of Shares,
net of issuance costs. . . . 150,645 859 -- -- 859
Net Income. . . . . . . . . . -- -- 5,378 -- 5,378
Distributions Paid. . . . . . -- -- (6,118) -- (6,118)
---------- -------- -------- -------- --------
Shareholders' Equity,
December 31, 1998. . . . . . 14,912,495 119,872 $(50,072) $ (7,366) $ 62,434

Issuance of Shares,
net of issuance costs. . . . 161,422 835 -- -- 835
Net Income. . . . . . . . . . -- -- 8,487 -- 8,487
Distributions Paid. . . . . . -- -- (6,461) -- (6,461)
---------- -------- -------- -------- --------

Shareholders' Equity,
December 31, 1999. . . . . . 15,073,917 $120,707 $(48,046) $ (7,366) $ 65,295
========== ======== ======== ======== ========

<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
(DOLLARS IN THOUSANDS)

<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income. . . . . . . . . . . . . . . . . . . . . . $ 8,487 $ 5,378 $ 3,546
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Recovery of Losses on Loans, Notes and
Interest Receivable . . . . . . . . . . . . . . . -- -- (162)
Extraordinary Item, Net of Minority Interest. . . . 183 141 64
Net Gains on Disposition of Investments in
Real Estate . . . . . . . . . . . . . . . . . . . (4,089) -- (881)
Depreciation and Amortization . . . . . . . . . . . 6,942 5,484 4,214
Net (Income) Loss From Operation of
Real Estate Ventures. . . . . . . . . . . . . . . -- -- (37)
Minority Interest in Consolidated Partnerships. . . 538 572 590
Incentive Compensation. . . . . . . . . . . . . . . -- -- 1,213
Net Change In:
Restricted Cash - Other . . . . . . . . . . . . . 78 (419) 188
Interest and Accounts Receivable. . . . . . . . . 287 (682) (15)
Other Assets. . . . . . . . . . . . . . . . . . . (1,684) (1,676) (753)
Accounts Payable and Accrued Expenses . . . . . . 147 767 423
Accrued Interest Payable. . . . . . . . . . . . . (21) 340 73
Accrued Real Estate Taxes Payable . . . . . . . . (59) 171 4
Unearned Revenue. . . . . . . . . . . . . . . . . 207 482 44
Security Deposits . . . . . . . . . . . . . . . . (172) 662 133
-------- -------- --------
Net Cash Provided By Operating Activities . . . . . . 10,844 11,220 8,644
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Real Estate Assets . . . . . . . . . -- (55,874) (37,537)
Investment In Real Estate Ventures, Net . . . . . . -- -- 290

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997
-------- -------- --------
Proceeds From Sale of Investments in
Real Estate . . . . . . . . . . . . . . . . . . . $ 13,655 $ -- $ 12,484
Additions to Investment in Real Estate. . . . . . . (5,984) (5,347) (2,499)
Earnest Money Deposits. . . . . . . . . . . . . . . -- 75 225
Restricted Cash - Capital Improvements. . . . . . . (90) (644) (734)
Other . . . . . . . . . . . . . . . . . . . . . . . -- -- 196
-------- -------- --------
Net Cash Provided By (Used In) Investing Activities . 7,581 (61,790) (27,575)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Bonds and Loans Payable . . . . . . . 9,285 108,709 64,470
Investment From (Distributions To)
Minority Partners . . . . . . . . . . . . . . . . (431) 338 (1,681)
Deferred Financing Costs. . . . . . . . . . . . . . (117) (926) (1,200)
Principal Payments on Mortgage Loans and
Bonds Payable . . . . . . . . . . . . . . . . . . (12,116) (52,854) (47,549)
Distributions Paid to Shareholders. . . . . . . . . (6,461) (6,118) (4,484)
Prepayment Penalties on Early Extinguishment of Debt (54) (136) --
Shares Issued, Net of Issuance Costs. . . . . . . . 835 859 9,999
-------- -------- --------
Net Cash Provided By (Used In) Financing Activities . (9,059) 49,872 19,555
-------- -------- --------
Net Increase (Decrease) In Cash and Cash Equivalents. 9,366 (698) 624
Cash and Cash Equivalents at Beginning of Year. . . . 3,731 4,429 3,805
-------- -------- --------
Cash and Cash Equivalents at End of Year. . . . . . . $ 13,097 $ 3,731 $ 4,429
======== ======== ========
Supplemental Information:
Interest Paid During the Year . . . . . . . . . . . $ 11,579 $ 9,438 $ 6,374
======== ======== ========
Non-cash financing activities:
Debt assumed upon acquisition
of real estate. . . . . . . . . . . . . . . . . . $ -- $ 3,675 $ 21,616
======== ======== ========
Real estate conveyed in exchange for
release of mortgage indebtedness. . . . . . . . . $ 16,136 $ -- $ --
======== ======== ========

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

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Banyan Strategic Realty Trust (the "Trust") was organized in 1986 as a
business trust under the laws of the Commonwealth of Massachusetts. The
business of the Trust is the ownership and operation of real estate
properties. At December 31, 1999, the Trust owned twenty-seven properties
located principally in the Midwest and Southeast United States. See Note 8
for information with respect to the Trust's business segments.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the
accounts of the Trust, its wholly-owned subsidiaries and its controlled
Partnerships. In all of its partnerships, the Trust is the controlling
general partner and retains sole authority over all significant decisions.
All intercompany balances and transactions have been eliminated in
consolidation. Investment in a Real Estate Venture disposed of in 1997 was
accounted for on the equity method (see Note 6).

INVESTMENT IN REAL ESTATE

Costs incurred with respect to third parties for the acquisition,
development, construction and improvement of properties are capitalized.
Certain costs of yet-to-be acquired properties, including deposits and
professional fees, are capitalized as other assets. These costs are
subsequently capitalized as property acquisition costs or charged to
expense when it becomes apparent that acquisition of a particular property
is not probable. Repairs and maintenance are charged to expense when
incurred.

Depreciation of buildings is computed using the straight-line method
over the estimated useful lives of the assets, generally 40 years.
Depreciation of tenant improvements is computed using the straight-line
method over the shorter of the lease term or useful life. For the years
ended December 31, 1999, 1998 and 1997, depreciation expenses amounted to
$5,982, $4,793 and $3,282, respectively.

The Trust recognizes impairment losses for its properties when
indicators of impairment are present and a property's expected undiscounted
cash flows are not sufficient to recover the property's carrying amount.

The Trust classifies its real estate properties as held for sale when
its Board of Trustees has authorized the sale and an active program to find
a buyer has been initiated. The Trust classified none of its properties as
held for sale as of December 31, 1999 or 1998.

DEFERRED FINANCING COSTS

Deferred financing costs are amortized over the term of the related
loans.

REVENUE RECOGNITION

Minimum rentals are recognized on a straight-line basis over the term
of the related leases. Additional rents in the form of operating expense
reimbursements for common area maintenance expenses and real estate taxes
are recognized in the period in which the related expenses are incurred.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Trust believes the carrying amount of its financial instruments
approximates fair value at December 31, 1999 and 1998, because (i) the
fixed rates on mortgage loans payable are comparable to rates currently
offered in the market, (ii) the rates on the line of credit and bonds
payable are variable and the terms are comparable to those currently
offered in the market and (iii) the maturities of the Trust's cash
equivalents are relatively short.

INCOME TAXES

For the years ended December 31, 1999, 1998 and 1997, the Trust
elected or will elect to be treated as a real estate investment trust
("REIT") under Internal Revenue Code Sections 856-860. In order to
qualify, the Trust is required to distribute at least 95% of its "REIT"
taxable income to shareholders, meet asset and income tests and comply with
certain other requirements.

As of December 31, 1999, Investment in Real Estate has a gross and net
basis of $199,264 and $183,844, respectively, for income tax purposes.
Additionally, investment in a liquidating trust with a tax basis of $675
has not been accorded any value for financial reporting purposes.

As of December 31, 1999, the Trust has a net operating loss carry-
forward of $16,876 which will expire in 2006 ($8,634), 2008 ($789), and
2012 ($7,453).

CASH EQUIVALENTS

The Trust considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.

RESTRICTED CASH

Restricted cash represents amounts held by lenders to provide for
future real estate tax expenditures and tenant improvements, utility
deposits and security deposits. Certain of these amounts may be reduced
upon the fulfillment of certain conditions.

STOCK OPTIONS

The Trust has elected to follow Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees (APB 25), in accounting
for its stock options. Under APB 25, no compensation expense is recognized
because the exercise price of the Trust's employee stock options equals or
exceeds the market price of the underlying stock at the date of grant.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

3. EARNINGS PER SHARE

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table sets forth the computation of basic and diluted earnings per share:

<CAPTION>
1999 1998 1997
---------- ----------- ----------
<S> <C> <C> <C>
Numerator:
Income before Net Gains and
Extraordinary Item. . . . . . . . . . . . . . . . . . $ 4,581 $ 5,519 $ 2,729
Net Gains (a). . . . . . . . . . . . . . . . . . . . . 4,089 -- 881
Extraordinary Item, Net of Minority Interest . . . . . (183) (141) (64)
---------- ---------- ----------
Net Income. . . . . . . . . . . . . . . . . . . . . $ 8,487 $ 5,378 $ 3,546
========== ========== ==========
Denominator:
Denominator for basic earnings per
weighted-average shares. . . . . . . . . . . . . . . 13,468,514 13,307,658 11,149,982

Effect of dilutive securities:
Employee stock options . . . . . . . . . . . . . . . 6,558 28,603 4,942
Convertible debt . . . . . . . . . . . . . . . . . . -- 463,401 90,318
---------- ----------- -----------
Dilutive potential common shares . . . . . . . . . . . 6,558 492,004 95,260

Denominator for diluted earnings per share-adjusted
weighted-average shares and assumed conversions . 13,475,072 13,799,662 11,245,242
========== =========== ===========

Basic Earnings Per Share:
Income before Net Gains and
Extraordinary Item . . . . . . . . . . . . . . . . . $ 0.34 $ 0.41 $ 0.24
Net Gains (a) . . . . . . . . . . . . . . . . . . . . 0.30 -- 0.08
Extraordinary Item, Net of Minority Interest. . . . . (0.01) (0.01) --
---------- ----------- -----------
Net Income. . . . . . . . . . . . . . . . . . . . $ 0.63 $ 0.40 $ 0.32
========== =========== ===========
Diluted Earnings Per Share:
Income before Net Gains and
Extraordinary Item . . . . . . . . . . . . . . . . . $ 0.34 $ 0.40 $ 0.24
Net Gains (a) . . . . . . . . . . . . . . . . . . . . 0.30 -- 0.08
Extraordinary Item, Net of Minority Interest. . . . . (0.01) (0.01) --
---------- ----------- -----------
Net Income. . . . . . . . . . . . . . . . . . . . $ 0.63 $ 0.39 $ 0.32
========== =========== ===========

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<FN>

(a) Net gains include gain on disposition of investment in real estate, loss on disposition of investment in real
estate venture and gain on disposition of partnership interest.

For purposes of the computation of diluted earnings per share, options to purchase 133,000 common shares at $6.375
per share that were outstanding during 1999, 1998 and 1997 were not included in the 1999 and 1997 computation and for
certain periods of the 1998 computation because the options' exercise price was greater than the average market price of
the common shares and, therefore, the effect would be antidilutive.

The effect of conversion of $7,400 of convertible debt was not included in the calculations since the effect was
antidilutive.

For additional information relating to convertible debt and employee stock options, see notes 4 and 12.

</TABLE>

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

4. LONG-TERM DEBT

The Trust's long-term debt consists of the following at December 31,
1999 and 1998:

1999 1998
----------------------- -------------------------
Weighted Weighted
Average Average
Interest Interest
Balance Rate Balance Rate
--------- -------- ------------ --------
Mortgage
loans. . . . $120,781 7.48% $ 123,108 7.44%
Bonds . . . . 4,500 5.53% 21,140 6.77%
-------- -------- ---------- --------
Total
collateralized
debt . . . . $125,281 7.41% $ 144,248 7.34%
======== ======== ========== ========
Unsecured
loans. . . . $ 7,400 12.00% $ 7,400 12.00%
======== ======== ========== ========

Mortgage loans of $112,981 had fixed interest rates that ranged from
6.95% to 8.89% at December 31, 1999 and $7,800 had a variable rate (8.17%
at December 31, 1999). Bonds payable consist of variable rate tax exempt
revenue bonds which bear interest equal to 5.53% at December 31, 1999.
Substantially all of the mortgage loans and bonds contain prepayment
penalties. During 1999 and 1998, the Trust recognized extraordinary losses
of $183 and $141, respectively, related to prepayments on refinanced debt
and the writeoff of unamortized financing costs. Substantially all of the
Trust's real estate is pledged as collateral for the mortgage loans and
bonds.

On April 30, 1998, the Trust entered into a $25 million line of credit
agreement (the "Revolving Line"). Borrowings under the Revolving Line bear
interest at an annual rate of LIBOR plus 2.00% payable monthly. The
Revolving Line has an initial term of twenty-four months. As of December
31, 1999, the Trust had borrowed approximately $14.3 million on the
Revolving Line (included in Mortgage Loans), leaving approximately $10.7
million available for future borrowing. The Trust has elected not to
extend the line of credit and will repay the outstanding balance using
proceeds from replacement financing on the properties pledged as
collateral.

During 1998, the Trust borrowed $7.4 million pursuant to its $20
million 1997 Convertible Term Loan Agreement for an unsecured convertible
term loan (the "Unsecured Loan"). The Unsecured Loan bears interest at an
annual interest rate of 12% payable quarterly and matures on September 30,
2002. In addition, on October 14, of each year, the Trust is required to
pay an annual fee equal to 2% of the amount outstanding as of that date.
The amounts outstanding on the Unsecured Loan are convertible into Series A
convertible preferred shares at a conversion price of $100 per share or
into common shares at a conversion price of $5.15 per share. In addition,
the lenders had the option to purchase Series A convertible preferred
shares to the extent that any part of the $20 million loan commitment was
unused in an amount equal to the unfunded portion at a price equal to $100
per preferred share. These preferred shares would also be convertible into

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

common shares at a conversion price of $5.15 per share. No preferred
shares were issued prior to the termination of the purchase option on
November 13, 1998. On January 20, 2000, the Trust repaid $1,243 of the
Unsecured Loan and the remaining balance of $6,157 was converted into
61,572 Series A convertible preferred shares.

The principal balance of the Trust's long-term debt at December 31,
1999, is scheduled to be repaid as follows:

2000 . . . . . . . . . . . . $ 23,929
2001 . . . . . . . . . . . . 5,308
2002 . . . . . . . . . . . . 11,598
2003 . . . . . . . . . . . . 13,494
2004 . . . . . . . . . . . . 10,938
Thereafter . . . . . . . . . 67,414
--------
$132,681
========

5. SHARE PURCHASE AGREEMENT

During 1997, the Trust entered into a Share Purchase Agreement (the
"Agreement") with the same group of accredited investors providing the
Unsecured Loan (see Note 4). Under the Agreement, the Trust sold, in
October 1997, 2,192,501 shares of beneficial interest at $5.00 per share,
for an aggregate gross proceeds of approximately $11 million. The Trust
paid approximately $1.4 million of transaction costs in connection with the
share issuance.

6. INVESTMENT IN REAL ESTATE

ACQUISITION ACTIVITIES

The Trust did not acquire any properties during 1999. The following
properties were acquired in 1998; the results of their operations are
included in the consolidated statements of operations from their respective
dates of acquisition.

Purchase
Date of Price
Property's Name Acquisi- (in
and Location tion millions) Description
- --------------- --------- --------- ----------------

Peachtree Pointe 01/20/98 $4.6 Five one-story
Office Park office buildings
Norcross, GA

Avalon Center 03/20/98 4.4 Two one-story
Office Park office buildings
Norcross, GA

Avalon Ridge 04/24/98 3.9 Two one-story
Business Park flex/industrial
Norcross, GA

Tower Lane 04/27/98 5.2 Two one-story
Business Park (1) flex/industrial
Bensenville, IL buildings

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Purchase
Date of Price
Property's Name Acquisi- (in
and Location tion millions) Description
- --------------- --------- --------- ----------------

University 04/30/98 10.2 Seven one-story
Corporate Center flex/industrial
Winter Park, FL buildings

Metric Plaza 04/30/98 $2.6 Two one-story
Winter Park, FL flex/industrial
buildings

Park Center 04/30/98 3.7 Two one-story
Orlando, FL flex/industrial
buildings

Sand Lake 04/30/98 6.8 Five one-story
Tech Center office buildings
Orlando, FL
Johns Creek 08/14/98 5.8 Two flex/indus-
Office and trial buildings
Industrial Park
Duluth and
Suwanne, GA

Technology Park 08/14/98 12.4 Three office
Norcross, GA buildings
-----
Total $59.6
=====
- -----------------

(1) Upon the acquisition of Tower Lane, the Trust assumed a permanent
mortgage loan in the amount of approximately $3.7 million.

DISPOSITION ACTIVITIES

QUANTUM BUSINESS CENTRE

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 price of approximately
$6,100. The Trust received cash proceeds, net of debt repayment, of
approximately $3,700 and recognized a gain of approximately $700.

OKLAHOMA APARTMENT PORTFOLIO

On December 16, 1999, the Trust sold its Oklahoma Apartment Portfolio
- - four separate apartment complexes totaling 864 units - for a price of
approximately $24,100. The Trust received net proceeds of approximately
$7,500 and recognized a gain of approximately $3,400. The bonds used to
finance the properties were assumed by the purchaser.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

H STREET ASSEMBLAGE

Prior to 1998, the Trust had a 53% interest in a venture that owned
17,000 square feet of undeveloped land in downtown Washington, D.C. plus an
approximately 55,900 square foot office building (the "H Street
Assemblage"). During 1996, based on sales agreements for the H Street
Assemblage, the Trust recorded a valuation allowance of $3,180 which was
included in loss from operations of real estate ventures in the 1996
consolidated statement of operations. The H Street Assemblage was sold in
1997 and the Trust recognized a loss of approximately $61. The Trust has
no further interest in the H Street Assemblage.

OTHER

During 1997, the Trust sold its interests in Hallmark Village
Apartments and the Colonial Courts Apartments. The Trust received proceeds
of approximately $7.3 million and recognized a gain of approximately $942.

7. PRO FORMA INFORMATION (UNAUDITED)

The following unaudited pro forma summary presents information as if
the Trust's property acquisitions, property dispositions, and sales of
shares of beneficial interests through December 31, 1998 had occurred at
the beginning of each year. The pro forma information is provided for
information purposes only. It is based on historical information and does
not necessarily reflect the actual results that would have occurred nor is
it necessarily indicative of future results of operations of the Company.

Years Ended December 31,
---------------------------
1998 1997
-------- --------

Total revenue. . . . . . . . $ 42,260 $ 39,368
Net income . . . . . . . . . $ 5,187 $ 3,756
Basic earnings per share . . $ 0.39 $ 0.29
Diluted earnings per share . $ 0.38 $ 0.28

8. 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. For
the year ended December 31, 1999, the flex/industrial segment was comprised
of thirteen complexes with long-term leases to approximately 210 tenants;
the office segment was comprised of fourteen office sites with long-term
leases to approximately 280 tenants; the residential segment was comprised
of four apartment complexes with 864 units leased principally for six
months; and the retail segment was comprised of one retail center with
long-term leases to approximately 50 tenants. The Trust's long-term
tenants engage in a variety of business and no single tenant is significant
to the Trust's business.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Information by business segments is set forth below:

1999 1998 1997
-------- -------- --------
Revenue
Flex/Industrial . $ 11,416 $ 10,838 $ 7,830
Office. . . . . . 21,264 19,577 11,946
Residential . . . 4,168 4,170 4,138
Retail. . . . . . 4,771 4,646 4,604
Corporate/Other . 97 185 267
-------- -------- --------
$ 41,716 $ 39,416 $ 28,785
======== ======== ========

Income (loss) before
net gains and
extraordinary item
Flex/Industrial . $ 2,518 $ 3,787 $ 3,349
Office. . . . . . 5,177 5,124 3,298
Residential . . . 688 682 10
Retail. . . . . . 736 550 976
Corporate/Other . (4,538) (4,624) (4,904)
-------- -------- --------
$ 4,581 $ 5,519 $ 2,729
======== ======== ========

1999 1998
-------- --------
Total Assets
Flex/Industrial . $ 69,279 $ 74,513
Office. . . . . . 105,756 105,049
Residential . . . -- 21,038
Retail. . . . . . 18,125 18,359
Corporate/Other . 13,487 3,631
-------- --------
$206,647 $222,590
======== ========

1999 1998 1997
-------- -------- --------
Depreciation and
amortization
Flex/Industrial . $ 2,252 $ 1,714 $ 1,156
Office. . . . . . 3,287 2,404 1,259
Residential . . . 552 534 559
Retail. . . . . . 538 523 503
Corporate/Other . -- 37 13
-------- -------- --------
$ 6,629 $ 5,212 $ 3,490
======== ======== ========
Interest expense
Flex/Industrial . $ 3,557 $ 2,669 $ 1,373
Office. . . . . . 5,540 4,524 2,850
Residential . . . 1,136 1,199 1,235
Retail. . . . . . 1,325 1,338 939
Corporate/Other . -- 48 50
-------- -------- --------
$ 11,558 $ 9,778 $ 6,447
======== ======== ========

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1999 1998 1997
-------- -------- --------

Additions to Investment
in Real Estate
Flex/Industrial . $ 2,364 $ 32,942 $ 376
Office. . . . . . 3,257 31,533 39,089
Residential . . . 278 324 21,626
Retail. . . . . . 85 69 481
Corporate/Other . -- 28 80
-------- -------- --------
$ 5,984 $ 64,896 $ 61,652
======== ======== ========

9. TRANSACTIONS WITH AFFILIATES

During the years ended December 31, 1999, 1998 and 1997, the Trust
paid no salary to, but purchased legal services from an executive officer
of the Trust. Fees for legal services totalled $331, $391 and $338,
respectively. The executive pays no rent, as such, to the Trust for the
use of office space or equipment but grants the Trust a discount equal to
approximately 20% compared to rates charged to third parties for all time
billed to the Trust by the executive and his employees. The executive also
reimburses the Trust for the cost of two full time and certain part time
employees.

10. DISTRIBUTIONS PAID AND PAYABLE

To qualify as a REIT, the Trust must distribute at least 95% of its
"REIT Taxable Income" to shareholders. For 1999, net operating losses of
$2,076 utilized in meeting this requirement. A portion of the
distributions paid during the subsequent year may be allocable to taxable
income earned in the prior year.

The Trust has determined the shareholders' treatment for federal
income tax purposes to be as follows:

1999 1998 1997
------- ------- -------
Ordinary income. . . . $ 2,562 $ 5,978 $ 283
Long-term capital
gain . . . . . . . . 3,899 -- --
Return of capital. . . -- 140 4,201
------- ------- -------
$ 6,461 $ 6,118 $ 4,484
======= ======= =======

On January 10, 2000, the Trust declared a cash distribution for the
quarter ended December 31, 1999 of $0.12 per share payable February 22,
2000 to shareholders of record on January 21, 2000.

11. LEASES

MINIMUM RENTALS UNDER OPERATING LEASES

The Trust receives rental income from the rental of retail, office and
flex/industrial space under operating leases. The following is the minimum
future base rentals (excluding amounts representing executory costs such as

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

taxes, maintenance and insurance) on operating leases for the Trust's
industrial, office and retail projects held at December 31, 1999:

2000 . . . . . . $ 30,060
2001 . . . . . . 23,931
2002 . . . . . . 18,616
2003 . . . . . . 13,947
2004 . . . . . . 9,557
Thereafter . . . 14,061
--------
$110,172
========

No single tenant at the Trust's operating properties produced ten
percent or more of total income from property operating activities.

The Trust is subject to the usual business risks regarding the
collection of the above-mentioned rentals.

GROUND LEASE

The Trust owns a leasehold interest in a shopping center in Atlanta,
Georgia. The lease expires in 2067. The ground lease requires annual
lease payments of $600 through October 4, 2007 plus 7% of total annual
gross rental income commencing when gross rental income exceeds $2,000 from
the operations of the shopping center. The ground lease also requires that
the Trust pay property operating expenses, including real estate taxes.
The base rent is reset in 2007 based upon a market rent within a
contractually defined range.

12. OMNIBUS STOCK AND INCENTIVE PLAN

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

FIXED STOCK OPTIONS

The Board administers the Plan and has the authority to determine,
among other things, the individuals to be granted options, the exercise
price at which shares may be acquired, the number of shares subject to
options and the vesting requirements and the exercise period of each
option. The Board is granted discretion to determine the term of each
option granted under the Plan to employees, executives and Trustees, but in
no event will the term exceed ten years and one day from the date of the
grant.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

A summary of the Trust's fixed stock option activity, and related
information for the years ended December 31, 1998 and 1999 follows:

Weighted
Shares Average
Subject Exercise Price
to Options Per Share
---------- --------------

Outstanding at December 31, 1997. . . 375,000 $ 5.658
Options granted . . . . . . . . . . 122,000 5.443
Options exercised . . . . . . . . . (9,324) 4.080
Options canceled. . . . . . . . . . (2,000) 6.375
------- -------
Outstanding at December 31, 1998. . . 485,676 5.630

Options granted . . . . . . . . . . -- --
Options exercised . . . . . . . . . (2,000) 4.375
Options canceled. . . . . . . . . . (20,000) 5.710
------- -------
Outstanding at December 31, 1999. . . 463,676 5.632
======= =======

Exercisable at 12/31/98 . . . . . . 174,287 $ 5.680
Exercisable at 12/31/99 (a) . . . . 463,676 $ 5.632
- ----------

(a) Due to the election of three new trustees, on December 13, 1999,
the members of the board as of October 1, 1997 no longer constituted a
majority of the members of the board. By definition, this reconstitution
of the board was a "Change of Control" within the meaning of the Employee
Stock Option Agreements. As a result, all outstanding employee options
became immediately exercisable in accordance with the terms of the option
agreements.

At December 31, 1999, options to purchase 375,000 shares were
available for future grant.

The weighted average grant date fair value of options granted in 1998
and 1997 was $.54. The remaining weighted-average contractual life of
these options was 8.04 years. Exercise prices for options outstanding at
December 31, 1999 ranged from $4.08 to $6.75 per share.

TARGET STOCK PRICE PERFORMANCE OPTIONS

The exercise price of each target stock price performance option
granted is equal to the market price of the Trust's common shares on the
date of grant and vests as the Trust's common share price achieves certain
pre-established targets which were set on the date of grant. In
conjunction with the March 11, 1998 signing of an employment agreement
between the Trust and its President Leonard G. Levine, effective
retroactively to October 1, 1997, the Board granted Mr. Levine stock
options to purchase an aggregate of 150,000 shares of the Trust's common
shares of beneficial interest at an exercise price equal to $5.50 per
share. Options to purchase 150,000 shares vested and become exercisable on
December 13, 1999. The number of shares underlying the options and the
exercise price of each option are subject to adjustment from time to time
under certain circumstances.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

All of the options must be exercised by October 1, 2007, except that
if Mr. Levine dies or becomes permanently disabled during the term of the
agreement, then all options which have vested must be exercised within one
year of death or permanent disability. In addition, upon death or
permanent disability, all options not otherwise vested, but which would or
will vest within six months following the date of death or permanent
disability either by passage of time or satisfaction of the various
performance standards will be deemed vested and become exercisable within
the same one-year time period.

A summary of the Trust's target stock price performance option
activity, and related information for the years ended December 31, 1998 and
1999 follows:
Weighted
Shares Average
Subject Exercise Price
to Options Per Share
---------- --------------
Outstanding at December 31, 1997,
1998 and 1999 . . . . . . . . . . . 150,000 $5.500
======= ======

On December 13, 1999, as a result of the Change of Control, all target
stock price options became exercisable. Exercise prices for options
outstanding at December 31, 1999 were $5.50 per share. The remaining
weighted-average contractual life of these options was 7.8 years. The
weighted average grant date fair value of all options granted during 1997
is $0.96. Mr. Levine exercised his target stock price performance options
on January 12, 2000.

Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 "Accounting for Stock Based Compensation", and has
been determined as if the Trust had accounted for all options granted under
the plan using the fair value method of that statement. The fair value for
the fixed stock options was estimated at the date of grant using the Black-
Scholes option pricing model with the following weighted-average
assumptions for 1998 and 1997: risk free interest rates of 5.31% and
5.58%; expected dividend yields of 7.47% and 7.19%; volatility factors of
the expected market price of the Trust's common stock of 0.201 and 0.225;
and a weighted-average expected lives of the options of 5 years and 10
years, respectively. No options were granted during 1999. In addition,
the fair value for the target stock price performance options was estimated
at the date of grant using a modified Black-Scholes option pricing model
which, in addition to the required inputs above, takes into consideration
the target stock price (or barrier) which must be attained. The following
weighted-average assumptions were incorporated into the model for the
target stock price performance options granted in 1997: risk-free interest
rate of 5.92%; expected dividend yield of 7.27%; a volatility factor of the
expected market price of the Trust's common stock of 0.225; and expected
lives of the options of 10 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models, such as the Black-Scholes model, require the input of highly
subjective assumptions including the expected stock price volatility.
Because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's view, the existing models do not
necessarily provide a reliable single measure of the fair value of the
options granted under the Plan.

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The effects on 1999, 1998 and 1997 pro forma net income and pro forma
earnings per common share of amortizing to expense the estimated fair value
of stock options are not necessarily representative of the effects on net
income to be reported in future years due to such things as the vesting
period of the stock options, and potential for issuance of additional stock
options in future years. For purposes of pro forma disclosures, the
estimated fair value of the options is amortized to expense over the
options' vesting period.

The Trust's pro forma information is as follows:

Years Ended December 31,
------------------------------
1999 1998 1997
------ ------ ------
Pro forma net income. . . . . . . $8,260 $5,279 $3,474
Pro forma basic earnings per share $ 0.61 $ 0.40 $ 0.31
Pro forma diluted earnings
per share . . . . . . . . . . . $ 0.61 $ 0.38 $ 0.31

13. DISTRIBUTION REINVESTMENT AND SHARE PURCHASE PLAN

On April 23, 1997, the Trust filed a Registration Statement on Form S-
3 under the Securities Act of 1933 in order to register the shares issuable
under the Trust's Distribution Reinvestment and Share Purchase Plan (the
"DRIP Plan"). The DRIP Plan allows shareholders of the Trust to: (i)
automatically reinvest the cash distributions on all, or part, of shares
registered in their name; and (ii) make cash investments of not more than
$120 per calendar year. Shares purchased under the DRIP Plan will be
issued directly by the Trust at either: (i) 97% of the average closing
sales price of the shares as reported on the NASDAQ National Market on the
last five business days preceding the relevant investment date in the case
of reinvested cash distributions; or (ii) 100% of the aforementioned
average closing price in the case of cash investments. For the years ended
December 31, 1999, 1998 and 1997, the Trust issued 161,422, 141,321 and
72,094 shares of beneficial interest under the DRIP Plan and received total
proceeds of $835, $818 and $379, respectively.

14. AWARD SHARES AND WEIGHTED AVERAGE SHARES OUTSTANDING

Pursuant to the March 19, 1997 Amendment and the September 3, 1997
Second Amendment to the Second Amended and Restated Employment Agreement of
Leonard G. Levine, the Trust's president, and pursuant to the shareholder
approval which was obtained at the Trust's 1996 Annual Meeting held on
July 8, 1997, all incentive compensation earned by Mr. Levine for the
fiscal years ended December 31, 1996 and 1997 has been paid in shares of
the Trust's stock ("Award Shares").

On July 9, 1997, the Trust issued 95,635 Award Shares to Mr. Levine,
representing Mr. Levine's incentive compensation earned on the performance
of the Trust's assets acquired subsequent to January 1, 1993 ("Reinvestment
Activities") for the fiscal year ending December 31, 1996 (the "1996 Award
Shares"). On September 3, 1997, the Trust issued 400,000 Award Shares
representing the final payment and settlement of Mr. Levine's compensation

<PAGE>

BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

earned on Reinvestment Activities for the fiscal year ending December 31,
1997 and for cumulative incentive compensation for the period January 1,
1993 through August 31, 1997 (the "Final Award Shares"). The 95,635 Award
Shares were valued at $4.125 per share, or $394. The 400,000 Final Award
Shares were valued at $4.812 per share, or $1,925 of which $650 was
expensed in 1996, and the balance was ratably expensed during 1997. The
1996 Award Share price of $4.125 was based upon the average closing price
of the Trust's shares for the five business days ending December 31, 1996.
The Final Award Shares price of $4.812 was based on the average closing
price of the Trust's shares for the five business days ending August 31,
1997. The 1996 Award Shares and Final Award Shares are included in the
total shares outstanding of the Trust when calculating Net Income Per Share
of Beneficial Interest Based on Weighted Average Number of Shares
Outstanding.

15. LITIGATION

The Trust is involved in various litigation arising in the ordinary
course of business. It is management's opinion that the defense of these
matters and the potential liability are adequately protected by insurance
coverage. Although the final outcome of these matters cannot be
determined, based on the facts presently known, it is management's opinion
that the final resolution of these matters will not have an adverse effect
on the Trust's financial position or results of operations.

<PAGE>

<TABLE>
SCHEDULE III
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<CAPTION>
Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired Land ments Land ments Land ments Total tion
- ------------------ ----------- ----------- ------ --------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Milwaukee
Industrial
Properties
Milwaukee, WI
1973-1980
4/30/93 $ 533 $ 5,242 $ -- $ 1,106 $ 533 $ 6,348 $ 6,881 $ 1,300

Elmhurst
Metro Court
Elmhurst, IL
1982
11/30/93 1,615 3,605 -- 601 1,615 4,206 5,821 751

Colonial Penn
Building
Tampa, FL
1984
3/22/94 1,190 7,366 -- 103 1,190 7,469 8,659 1,064

Florida Power
& Light
Building
Sarasota, FL
1991
3/22/94 1,700 8,367 -- 146 1,700 8,513 10,213 1,297

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired/ Land ments Land ments Land ments Total tion
- ------------------ ----------- ----------- ------ --------- ---------- ----------- ----------- ----------

Willowbrook
Industrial Court
Willowbrook, IL
1979
6/16/95 $ 962 $ 2,961 $ -- $ 394 $ 962 $ 3,355 $ 4,317 $ 516

Northlake Tower
Shopping Center
Atlanta, GA
1983-1984
7/28/95 -- 17,144 -- 1,016 -- 18,160 18,160 2,103

Lexington
Business Center
Lexington, KY
1985
12/05/95 1,330 5,753 -- 1,731 1,330 7,484 8,814 916

Newtown Business
Center
Lexington, KY
1981-1982
12/5/95 355 3,234 -- 322 355 3,556 3,911 381

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired Land ments Land ments Land ments Total tion
- ------------------ ----------- ----------- ------ --------- ---------- ----------- ----------- ----------

Woodcrest
Office Park
Tallahassee, FL
1967-1989
12/19/95 $ 3,080 $ 7,968 $ -- $ 2,107 $ 3,080 $ 10,075 $ 13,155 $ 1,430

Midwest Office
Center
Oakbrook Terrace, IL
1979
4/18/96 2,396 2,591 -- 439 2,396 3,030 5,426 396

6901 Riverport
Drive
Louisville, KY
1985
11/19/96 1,750 8,242 -- 59 1,750 8,301 10,051 650

Phoenix
Business Park
Atlanta, GA
1979
1/15/97 1,717 3,777 -- 507 1,717 4,284 6,001 308

Butterfield
Office Plaza
Oak Brook, IL
1974
4/30/97 4,813 10,255 -- 1,474 4,813 11,729 16,542 919

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired Land ments Land ments Land ments Total tion
- ------------------ ----------- ----------- ------ --------- ---------- ----------- ----------- ----------
Southlake
Corporate Center
Morrow, GA
1989
7/30/97 $ 750 $ 3,746 $ -- $ 283 $ 750 $ 4,029 $ 4,779 $ 284

Technology Center
Huntsville, AL
1990
8/26/97 130 2,417 -- 40 130 2,457 2,587 150

University Square
Business Center
Huntsville, AL
1984-1987
8/26/97 1,387 5,950 -- 1,067 1,387 7,017 8,404 599

Airways Plaza
Office Center
Memphis, TN
1982
12/10/97 409 2,756 -- 162 409 2,918 3,327 161

Peachtree Pointe
Office Park
Norcross, GA
1982
1/20/98 712 3,858 -- 509 712 4,367 5,079 246

Avalon Center
Office Park
Norcross, GA
1997
3/20/98 585 3,803 -- 533 585 4,336 4,921 260

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired Land ments Land ments Land ments Total tion
- ------------------ ------ ----------- ------ --------- ---------- ----------- ----------- ----------

Avalon Ridge
Business Park
Norcross, GA
1997
4/24/98 $ 539 $ 3,327 $ -- $ 383 $ 539 $ 3,710 $ 4,249 $ 158

Tower Lane
Business Park
Bensenville, IL
1979-1980
4/27/98 1,255 3,933 -- 244 1,255 4,177 5,432 202

Sand Lake
Tech Center
Orlando, FL
1984-1986
4/30/98 1,984 4,804 -- 9 1,984 4,813 6,797 206

Park Center
Orlando, FL
1982
4/30/98 997 2,755 -- 136 997 2,891 3,888 137

Metric Plaza
Winter Park, FL
1985
4/30/98 629 1,940 -- 56 629 1,996 2,625 98

University
Corporate Center
Winter Park, FL
1981-1987
4/30/98 3,207 7,022 -- 19 3,207 7,041 10,248 308

<PAGE>

BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

Costs
Capitalized
Initial costs Subsequent Gross Amount at which Carried
to the Trust to Acquisition at December 31, 1999 (a)(b)(c)
---------------------- --------------- ---------------------------------
Building Building Building Accumu-
Property & Location/ & & & lated
Date of Construction/ Improve- Improve- Improve- Deprecia-
Date Acquired Land ments Land ments Land ments Total tion
- ------------------ ------ ----------- ------ --------- ---------- ----------- ----------- ----------

Johns Creek
Office and
Industrial Park
Duluth and
Suwanne, GA
1990-1992
8/14/98 $ 890 $ 4,874 $ -- $ -- $ 890 $ 4,874 $ 5,764 $ 167

Technology Park
Norcross, GA
1977-1984
8/14/98 1,530 10,905 -- 778 1,530 11,683 13,213 413
------- -------- ----- -------- -------- -------- -------- --------
$36,445 $148,595 $ -- $ 14,224 $ 36,445 $162,819 $199,264 $ 15,420
======= ======== ===== ======== ======== ======== ======== ========
<FN>

- --------------------

(a) The aggregate cost of the above real estate at December 31, 1999 for Federal income tax purposes is
$199,264. For further details regarding encumbrances on the Trust's properties see Note 4, Long-Term Debt.

(b) Reconciliation of real estate owned:

</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance at Beginning of Year. . . . . . . . $220,808 $156,020 $107,182
Acquisitions During Year (1). . . . . . . . -- 59,549 59,153
Sale of Property (2)(3) . . . . . . . . . . (27,528) -- (12,814)
Additions During Year . . . . . . . . . . . 5,984 5,239 2,499
-------- -------- --------
Balance at End of Year. . . . . . . . . . . $199,264 $220,808 $156,020
======== ======== ========
<FN>
(1) In addition to these capitalized costs, the Trust assumed $598 of net operating liabilities
at acquisition in 1997.
(2) In connection with the sale of Colonial Courts and Hallmark Apartments, the Trust transferred
$107 of net operating liabilities in 1997.
(3) In connection with the sale of Quantum Business Center and the Oklahoma apartment portfolio,
the Trust transferred $135 of net operating assets in 1999.

(c) Depreciation expense is computed using the straight line method. Rates used in the determination of
depreciation are based upon the estimated useful life of the asset, primarily 40 years.
</TABLE>

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Reconciliation of Accumulated Depreciation:

Beginning of Year . . . . . . . . . . . . . $ 11,399 $ 6,634 $ 4,692
Depreciation Expense. . . . . . . . . . . . 5,982 4,765 3,282
Sale of Property. . . . . . . . . . . . . . (1,961) -- (1,340)
-------- -------- --------
Balance at End of Year. . . . . . . . . . . $ 15,420 $ 11,399 $ 6,634
======== ======== ========

</TABLE>

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There have been no changes in, or disagreements with, the accountants
on any matter of accounting principles, practices or financial statement
disclosure.

PART III

ITEM 10. OUR TRUSTEES AND EXECUTIVE OFFICERS

The trustees and executive officers of the Trust are as follows:

Walter E. Auch, Sr. Trustee
Daniel Levinson Trustee
Stephen M. Peck Trustee
L.G. Schafran Trustee
Leonard G. Levine President and Trustee
Neil D. Hansen First Vice President
Robert G. Higgins Vice President and Secretary/
General Counsel
Joel L. Teglia Vice President/
Chief Financial Officer
Jay E. Schmidt Vice President/Investments

WALTER E. AUCH, SR. Mr. Auch, age 78, has served as an independent
trustee since 1986. Mr. Auch served as the chairman and chief executive
officer of the Chicago Board of Options Exchange from 1979 to 1986. Prior
to that time, Mr. Auch was executive vice president, director and a member
of the executive committee of PaineWebber. Mr. Auch is a director of Pimco
Advisors L.P., Smith Barney Concert Series Funds, Smith Barney Trak Fund,
The Brinson Partners Funds, the Nicholas Applegate Funds, Semele Group,
Inc., and Legend Properties, Inc. and a trustee of Hillsdale College and
the Arizona Heart Institute. Mr. Auch is also a director of Semele Group,
Inc. and Legend Properties, Inc.

DANIEL LEVINSON. Mr. Levinson, age 42, has served as an independent
trustee since 1999. Mr. Levinson is currently Chief Operating Officer at
Oracle Investment Management, Inc. Before working at Oracle, he was chief
financial officer for Morgens, Waterfall, Vintiadis & Co., Inc. from 1993
through 1999 and specialized in the management and workout of real estate
and other investments in its investment funds. Before working at Morgens,
Mr. Levinson was a vice president at Sentinel Real Estate Corporation, an
institutional real estate investment manager. Prior to joining Sentinel in
1988, Mr. Levinson was at KPMG Peat Marwick for over six years. Mr.
Levinson received a Bachelor of Science degree from Lehigh University. Mr.
Levinson is a certified public accountant and a member of the American
Institute of Certified Public Accountants.

STEPHEN M. PECK. Mr. Peck, age 65, has served as an independent
trustee since 1999. Mr. Peck maintains an investment office at Gilder,
Gagnon, Howe & Co. LLC. Mr. Peck is a director of Harnischfeger, Inc.,
Fresenius Medical Care and Offit Investment funds, and Chairman of the
Board of Grand Union Company. He is also a member of the Board of Trustees
of New York University, The Jewish Theological Seminary and the Mount Sinai
School of Medicine and is Chairman of the Board of Trustees of the Mount
Sinai-NYU Health.

<PAGE>

L.G. SCHAFRAN. Mr. Schafran, age 61, has served as an independent
trustee since 1999. Since 1984, Mr. Schafran has been a Managing General
Partner at L.G. Schafran & Associates, a private New York based real estate
investment and development firm. Mr. Schafran is a director of Tarragon
Realty Investors, Inc., COMSAT Corporation and PubliCARD, Inc. He is also
chairman of the board of directors and co-chief executive officer of Delta-
Omega Technologies, Inc. Mr. Schafran served as a director of Capsure
Holdings Inc. from 1986 to 1997, OXIGENE, Inc. from 1993 to 1996,
Glasstech, Inc. from 1995 to 1997, Dart Group Corporation from 1993 to 1997
and Kasper A.S.L., Ltd. from 1997 to 2000.

LEONARD G. LEVINE. Mr. Levine, age 53, has been our president since
1990 and a trustee since 1998. Mr. Levine also served as a trustee from
September 1986 until February 1990. Mr. Levine received a bachelors of
science/bachelors of arts degree in accounting from Roosevelt University
and a masters degree in taxation from DePaul University. Mr. Levine
previously served as president of Legend Properties, Inc. (f/k/a Banyan
Mortgage Investment Fund), Banyan Short Term Income Trust and Semele Group,
Inc. (f/k/a Banyan Strategic Land Fund II) (collectively, the "Banyan
Funds"). Mr. Levine is a certified public accountant and a licensed real
estate broker. Mr. Levine is the father of Adam Levine, one of our
employees.

NEIL D. HANSEN. Mr. Hansen, age 53, has been our first vice president
since 1991 and oversees our asset management group. Mr. Hansen received a
B.S. degree in finance from the University of Illinois and a master of
management degree from Northwestern University. Mr. Hansen previously
served as First Vice President of each of the Banyan Funds. Mr. Hansen is
a certified public accountant.

ROBERT G. HIGGINS. Mr. Higgins, age 48, has served as our vice
president and general counsel since 1992 and as secretary since 1995. Mr.
Higgins received a B.A. degree in government from the University of Notre
Dame and a J.D. degree from Loyola University of Chicago. Mr. Higgins
concentrates his practice in the areas of real estate development, finance,
acquisition, land use, sales, lending and general corporate business
practice. Mr. Higgins previously served as vice president, general counsel
and secretary of each of the Banyan Funds. Mr. Higgins is admitted to the
bar in the States of Illinois, Minnesota and Texas. Mr. Higgins also
practices law as a sole practitioner.

JOEL L. TEGLIA. Mr. Teglia, age 38, has served as our vice president
and chief financial officer since 1994. Prior to his appointment, Mr.
Teglia provided various services to us in his capacity as controller for
BSRT Management Corp. (f/k/a Banyan Management Corp.), a position that he
held from 1991 to 1994. He received a B.A. degree in accounting from the
University of Notre Dame. Mr. Teglia previously served as vice president
and chief financial officer of each of the Banyan Funds. Mr. Teglia is a
certified public accountant.

JAY E. SCHMIDT. Mr. Schmidt, age 48, has served as our vice president
of investments since 1995. From 1992 to 1995, he served as vice president
of investments for BSRT Management Corp. Mr. Schmidt received a B.A.
degree from Franklin and Marshall College and a J.D. degree from the
University of Wisconsin. He is a licensed real estate broker and an
attorney admitted to the bar in the State of Wisconsin.

<PAGE>

ITEM 11. COMPENSATION OF TRUSTEES AND EXECUTIVE OFFICERS

A. INDEPENDENT TRUSTEE COMPENSATION

Each independent trustee is paid an annual fee of $20,000, payable
quarterly, plus $1,000 for each board meeting, including meetings of board
committees, attended in person and $500 an hour for each Board meeting,
including committee meetings held by telephonic conference call. Each
independent trustee is also reimbursed for out-of-pocket expenses incurred
in attending board meetings. We also award each person serving as an
independent trustee an option to purchase 2,000 of our common shares ten
days after each annual meeting. The "strike price" of these options is the
closing price of our shares on the day of the grant. All options granted
to the independent trustees vest and become exercisable in the following
installments: (1) fifty percent (50%) on the first anniversary of the
grant; and (2) fifty percent (50%) on the second anniversary of the grant.

B. EXECUTIVE COMPENSATION

This table shows compensation paid to our chief executive officer and
our next three most highly compensated executive officers during the last
three years. No other individual satisfied the criteria for inclusion in
this chart.

<PAGE>

<TABLE>

<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------- ----------------------------------
AWARDS PAYOUTS
----------------------- -------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR (2)($) ($) ($) ($) SARS(#) ($) ($)
- -------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonard G. Levine
President and
Chief Executive
Officer (1) . . . . . 1999 $212,317 $101,471
1998 $206,100 $146,382
1997 $195,540 $2,319,292

Jay E. Schmidt
Vice President-
Investments . . . . . 1999 $183,053 $ 40,000
1998 $170,307 $ 41,908
1997 $165,281 $ 35,000

Neil D. Hansen
First Vice President. 1999 $220,732 $ 50,000
1998 $205,860 $ 48,990
1997 $192,546 $ 20,000

Joel L. Teglia
Vice President
and Chief Financial
Officer . . . . . . . 1999 $143,208 $ 30,000
1998 $126,825 $ 30,755
1997 $ 95,160 $10,000

- ----------

<PAGE>

<FN>

(1) As of the fiscal year ended December 31, 1999, Mr. Levine owned 512,504 shares of beneficial interest which
he is restricted from transferring except in compliance with the registration requirements of federal and state
securities law. The value of these shares as of December 31, 1999, without any discount for the transfer
restrictions was $3,075,024.

(2) Includes the lesser of 3% of base compensation or $4,800 which was contributed by us to each employee's
401(k) plan. For 1999, due to timing of our bi-weekly pay periods, salary paid includes 1999 salary plus 1/26 of
1998 salary.

</TABLE>

<PAGE>

EMPLOYMENT AGREEMENTS.

MR. LEVINE. We entered into the existing employment agreement with
Mr. Levine, our president and chief executive officer on March 11, 1998,
although the agreement became effective retroactively as of October 1,
1997. This contract has a term expiring on December 31, 2001. The
election of Messrs. Levinson, Peck and Schafran constituted a "Change of
Control" under Mr. Levine's employment agreement. The effect of this event
is described below. Without giving effect to the "Change of Control" under
the agreement, we pay Mr. Levine a base salary equal to $200,000 per year
through December 31, 1999 increasing to $210,000 per year during the last
two years of the agreement. In addition, Mr. Levine may earn incentive
compensation during each year of the agreement equal to 62.5% of the base
salary for that year, subject to our achieving certain predetermined levels
of "funds from operations" increased by .03 for each one percentage point
that our actual per share "funds from operations" exceed the target and
decreased (but not below zero) by .04 for each one percentage point our
actual per share "funds from operations" is below the target amount. For
the year ended December 31, 1999, this target was $0.85 per share. For the
year ended December 31, 2000, this target is $0.90 per share. Our actual
"funds from operations" for this period was $0.81 per share. Thus, Mr.
Levine earned incentive compensation equal to $101,471 for the year ended
December 31, 1999. We have also granted Mr. Levine non-qualified stock
options to purchase an aggregate of 350,000 shares of our common shares of
beneficial interest at an exercise price equal to $5.50 per share.

Options to purchase 100,000 of these shares vested and became
exercisable when we signed the agreement with Mr. Levine. Options to
purchase an additional 250,000 shares vested and became exercisable on
December 13, 1999 as a result of the "Change of Control" described above.

The agreement also requires us to provide Mr. Levine with both life
and disability insurance benefits during the term of the agreement, as well
as all non-wage benefits we provide to our other salaried employees. We
have the right to terminate Mr. Levine's employment under the existing
agreement within thirty (30) calendar days after we file our annual report
on Form 10-K with the Securities and Exchange Commission for the preceding
year if we do not achieve certain earnings before interest, taxes,
depreciation and amortization, (or EBITDA for short), targets for that
year. For the year ended December 31, 1999, this earnings target was $1.39
per basic common share. Our actual EBITDA for this period was $1.75 per
share. We may also terminate Mr. Levine for "Just Cause." For purposes of
the agreement, "Just Cause" exists if Mr. Levine is convicted of, or has a
civil judgment rendered against him for theft or embezzlement of our
property, is convicted of a felony resulting in injury to our business
property or reputation, or if a civil judgment is rendered that Mr. Levine
breached his duty of loyalty to us or if an arbitrator determines that Mr.
Levine has refused to perform, or willfully failed to perform, his material
duties under the agreement or committed intentional acts that caused
material damage to our business or properties or performed his material
duties in a manner that constituted gross negligence.

As noted above, Mr. Levine had the right to terminate the agreement
upon ninety (90) days' notice to us for any reason (the "Notice
Termination"), or upon a "Change of Control" or "Constructive Termination."

For these purposes, a "Change of Control" occurs if the members of our
board as of October 1, 1997 fail to constitute a majority of the members of
the board, except for individuals consented to by Mr. Levine, or if our
shareholders adopt a plan of liquidation or take other action having the
effect of a plan of liquidation without the recommendation and approval of
our board.

Since the election of Messrs. Levinson, Peck and Schafran constituted
a "Change of Control," under the existing agreement; Mr. Levine could have
elected to terminate the existing employment agreement. Had he done so, we
would have become obligated to pay Mr. Levine approximately $900,000,
representing the amount of incentive compensation due under the agreement.
Mr. Levine agreed, however, not to terminate the agreement and defer
payment of these amounts. In return we agreed to enter into a new revised
agreement with Mr. Levine that becomes effective only if: (1) we adopt a
plan of liquidation; (2)we sell substantially all of our assets in a single
or a series of related transactions; (3) we merge with another entity and
as a result we are not surviving entity and our shareholders do not own
more than 50% of the shares of the new entity; or (4) a majority of the
board changes prior to any of the other above events occurring.

In the new agreement, the definition of a "Change of Control" has
been modified (1) so that the existing board comprised of Messrs. Auch,
Levinson, Peck and Schafran are considered the existing board members for
purposes of determining whether a change has occurred; (2) to remove the
adoption of a plan of liquidation or the taking of other action having the
effect of a plan of liquidation from the definition; and (3) to provide
that the board position occupied by Mr. Levinson will not be deemed to have
changed if the position is occupied by an employee of Morgens, Waterfall,
Vintiadis & Co., Inc. or one of its affiliates. Under the existing
agreement, a "Constructive Termination" occurs if Mr. Levine's authority is
materially reduced or if there is a material adverse change in his working
conditions or we require him to relocate from the Chicago metropolitan
area. Further, if Mr. Levine terminates the existing agreement upon a
"Change of Control" or is deemed to suffer a "Constructive Termination," we
will be obligated to pay Mr. Levine all amounts previously deferred that
could have been paid under the agreement, including all incentive
compensation. Additionally, all of the options that we granted to Mr.
Levine when we signed the existing agreement became vested and immediately
exercisable. If Mr. Levine is not employed by us on January 1, 2002
pursuant to a written employment agreement, and has not then died or become
permanently disabled, we are obligated to pay Mr. Levine $210,000, unless
we had previously terminated the agreement either due to our failing to
achieve certain performance standards or for "Just Cause" or if the
agreement is terminated by Mr. Levine by a "Notice Termination."

The following summarizes the terms of the new agreement:

TERM OF AGREEMENT: The existing employment agreement remains in
effect until December 31, 2001. If, however: (1) we adopt a plan of
liquidation; (2) we sell substantially all of our assets in a single or
series of related transactions; (3) we merge with another entity and, as a
result, we are not the surviving entity and our shareholders do not own
more than 50% of the shares of the new entity; or (4) a majority of the
board changes prior to any of the other above events occurring, the
existing employment agreement will terminate and the new agreement will
become effective for a period equal to thirty (30) months commencing on the
effective date, subject to renewal options.

LIQUIDATION SALARY: If the new agreement becomes effective, we have
agreed to pay Mr. Levine a base salary equal to $17,500 per month during
the liquidation term. This monthly salary equates to the base salary which
Mr. Levine earns on an annual basis of $210,000 per year. If we have
adopted a plan of liquidation which takes longer than thirty (30) months to
complete, and we renew Mr. Levine's agreement, we have agreed to pay him a
salary equal to $250,000 per year for services during that extended time
frame.

<PAGE>

LIQUIDATION COMPENSATION: If the new agreement becomes effective, we
have also agreed to pay Mr. Levine all of the base salary which he would
have been paid during the remaining term of the existing agreement as
though he had terminated that agreement as a result of a change of control,
plus the difference between $387,500 and all incentive compensation which
Mr. Levine earns and is paid or is payable to Mr. Levine between the date
that the "Change of Control" occurs and the effective date of the new
agreement. Mr. Levine currently earns a base salary equal to $210,000 per
annum through December 31, 2001. The payment of incentive compensation
effectively represents the amount that Mr. Levine would have been paid had
he terminated the existing agreement upon election of Messrs. Levinson,
Peck and Schafran. Mr. Levine agreed to waive his right to terminate the
existing employment agreement and defer the payment so long as we agreed to
pay him those amounts if an event later occurs that triggers the
effectiveness of the new agreement. In addition, under Mr. Levine's
existing agreement, he is entitled to a severance payment equal to $210,000
if he is not employed by us on January 1, 2002. Mr. Levine has also agreed
to waive his right to payment of this amount until the effective date of
the new agreement.

LIQUIDATION INCENTIVE COMPENSATION: If the new agreement becomes
effective and we adopt a plan of liquidation, Mr. Levine will be able to
earn incentive compensation based on the amount of proceeds actually
distributed in liquidation to our shareholders. In particular, we will pay
Mr. Levine a percentage of a base amount based on the aggregate
distributions to our shareholders. The base amount for these purposes is
$420,000. The percentages range from 50% to 200%. Mr. Levine will earn
100% of the base amount if the present value of the total per share
distribution to shareholders in a liquidation falls in the range of $6.25-
$6.49 per share. He will be able to earn up to 200% of the base amount if
these distributions reach at least $7.25 per share. In contrast, Mr.
Levine will not earn any incentive compensation unless the aggregate
distributions equal at least $5.75 per share. For these purposes,
distributions will include amounts that we may use to repurchase our shares
in the open market or by means of a tender offer.

OPTIONS: Under Mr. Levine's existing agreement, he was granted
options to purchase a total of 350,000 shares, some of which were vested at
the time he signed that agreement and some of which vest over time if our
share price reaches certain targets. As part of the revised employment
arrangements, we agreed to vest all of these options upon signing the new
agreement. We also agreed to lend Mr. Levine, on a non-recourse basis, an
amount sufficient to exercise these options. The loan bears interest at an
annual rate equal to 6.5% and matures on January 11, 2005. Any options Mr.
Levine does not exercise within thirty (30) days following execution of the
new employment agreement will be canceled. Mr. Levine has effectively
exercised all 350,000 options.

PAYMENTS DUE ON CHANGE OF CONTROL OR CONSTRUCTIVE TERMINATION: If
Mr. Levine terminates the new agreement after it becomes effective due to a
change of control or because any of the events (other than adoption of a
plan of liquidation) triggering effectiveness of the new agreement occurs,
then we are required to immediately pay all of the amounts he would have
earned during the liquidation term in salary ($17,500 per month) for a
total not to exceed thirty (30) months discounted to present value plus an
amount equal to 180% of the base amount of incentive compensation that Mr.
Levine can earn during the pendency of a plan of liquidation ($756,000)
less any of the liquidation incentive compensation previously paid to
Mr. Levine as well as to continue paying premiums on the life and
disability insurance policies which we have agreed to pay under Mr.
Levine's existing agreement.

<PAGE>

MESSRS. HANSEN, SCHMIDT AND TEGLIA. We have also entered into
employment agreements with each of Messrs. Hansen, Schmidt and Teglia.
These agreements were signed on March 4, 1999 but became effective as of
December 31, 1998. Pursuant to these agreements, we pay Mr. Hansen an
annual base salary of $213,040; we pay Mr. Schmidt an annual base salary of
$176,680; and we pay Mr. Teglia an annual base salary of $138,240. We may
award each executive a bonus, or other compensation, but are under no
obligation to do so. Each executive is eligible for all non-wage benefits
we offer to our salaried employees and will be reimbursed for reasonable
business expenses. Additionally, pursuant to each agreement, we are
required to indemnify and hold harmless each executive from liabilities
each may incur as a result of performing duties under his employment
agreement

Each employment agreement expires on December 31, 2000 but is
automatically renewed for successive one-year periods unless either party
delivers at least ninety (90) days' written notice to the contrary. We have
the option of terminating each agreement if we undergo a "Change in
Control." We may also terminate each executive for "Just Cause." For
purposes of these agreements, these terms have the same meaning ascribed to
these terms under Mr. Levine's existing employment agreement. Thus, the
election of Messrs. Levinson, Peck and Schafran constituted a "Change of
Control" under each of these employment agreements. The Trustees, however,
did not exercise the termination rights. Each of Messrs. Hansen, Schmidt
and Teglia may terminate his respective employment agreement at any time by
giving us at least ninety (90) days' written notice.

If we terminate an employment agreement for "Just Cause" or if any of
Messrs. Hansen, Schmidt or Teglia exercises his right to terminate the
agreement, we will have no further obligations under the terminated
agreement. If, however, we terminate an agreement other than for "Just
Cause" or the expiration of the term, we are required to pay the terminated
executive the salary he was due to earn during the remainder of his term
plus the salary he would have earned for the twelve months following the
expiration of the term. Additionally, we are required to provide the
terminated executive coverage, at our expense, under our group health and
life insurance policies for the same period. Further, if we terminate an
employment agreement due to a "Change in Control," we are required to pay
the terminated executive an amount equal to the executive's incentive bonus
(if any) for our most recently completed fiscal year. If we do not renew
an employment agreement, we are required to pay the executive severance in
an amount equal to one-half of the executive's salary.

STOCK OPTION GRANTS

We did not grant any options to purchase shares of beneficial interest
during 1999 to our chief executive officer or to any other executive
officer.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUE
---------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- ---- -----------------------------------------------------
Leonard G. Levine . -- -- 350,000/0 $175,000/$0
Jay E. Schmidt. . . -- -- 39,335/0 $16,403/$0
Neil D. Hansen. . . -- -- 39,335/0 $16,403/$0
Joel L. Teglia. . . -- -- 32,335/0 $15,153/$0

<PAGE>

The election of Messrs. Levinson, Peck and Schafran constituted a
"Change of Control" under the option agreements that we have entered into
with each employee or advisor who had previously been granted options.
Under these existing option agreements, if the person is terminated
following a "Change of Control," all outstanding options become immediately
exercisable. In addition, the Board of Trustees offered all of our current
employees and advisors who hold options, the opportunity to exercise all of
the vested but unexercised options with the proceeds of a loan from us.
The loan is on substantially the same terms as the loan that we made to
Mr. Levine. Each loan is non-recourse and bears interest at an annual rate
of 6.5%. Like Mr. Levine, each person was required to pledge all shares
purchased with the proceeds of the loan to secure the payment of principal
and interest on the loan. The loan program was available until January 12,
2000. On that date, employees, including Mr. Levine, borrowed
approximately $3.2 million to purchase 575,337 shares. All loans will
mature in five years; provided that any person who terminates his or her
employment or whom we terminate will be required to repay the loan and all
accrued interest within one month of terminating employment, or the shares
held as security for the loan will be forfeited.

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of February 18, 2000,
except as otherwise noted, regarding the number and percentage of our
outstanding common shares beneficially owned by: (1) any person known to us
to be the beneficial owner of more than five percent of our outstanding
common shares; (2) each trustee; (3) each executive officer; and (4) all
trustees and executive officers as a group. Information with respect to
Morgens Waterfall Income Partners, L.P., Kensington Investment Group, Inc.,
Magten Asset Management Corp. and FMR Corp. listed in the table below,
including the notes, is based solely on copies of statements filed under
Section 13(d) or 13(g) of the Exchange Act, and we have not independently
confirmed this information. Share amounts and percentages shown for each
person or entity are adjusted to give effect to common shares that are not
outstanding but that may be acquired by a person or entity upon exercise of
all options exercisable or conversion of series A preferred shares by such
entity or person within sixty days of the date of the date hereof.
However, those common shares are not deemed to be outstanding for the
purpose of computing the percentage of outstanding common shares
beneficially owned by any other person.

Amount and
Nature of
Name and Address of Beneficially Percent
Beneficial Owner Owned of Class
- -------------------- --------------- ----------
Morgens Waterfall Income 3,391,074 22.1%
Partners, L.P.(1)
Restart Partners, L.P.
Restart Partners II, L.P.
Restart Partners III, L.P.
Restart Partners IV, L.P.
Restart Partners V, L.P.
Endowment Restart, L.L.C.
10 East 50th Street
New York, NY 10022

Kensington Investment Group, Inc. (2)1,289,406 9.5%
Mellon Bank, N.A. as Trustee for
the General Motors Employees
Domestic Group Pension Trust
350 East 21st Street
New York, New York 10010

Magten Asset Management Corp. (3) 756,700 5.6%
Four Orinda Way
Suite 220D
Orinda, CA 94563

FMR Corp.(4) 982,350 7.2%
Fidelity Management &
Research Company
Fidelity Low-Priced Stock Fund
Fidelity Management Trust Company
Edward C. Johnson 3d
Abigail P. Johnson
82 Devonshire St.,
Boston, MA 02109

Daniel Levinson -- *

Leonard G. Levine,
President (5) 862,504 6.1%

Neil D. Hansen, 59,962 *
First Vice President (5) (6)

Stephen M. Peck -- *

L.G. Schafran -- *

Jay E. Schmidt, 45,485 *
Vice President (5) (6)

Joel L. Teglia, 36,675 *
Chief Financial Officer (5) (6)

Walter E. Auch, Sr. (6) 3,000 *

All Trustees and 1,007,626 7.1%
Named Executive Officers
of the Trust, as a group
(eight persons)

- --------------------

* less than 1%

(1) Includes the conversion of 61,572 shares of convertible
preferred stock, which can be converted into 1,195,573 of our common
shares at a price of $5.15 per share. Certain affiliates of Morgens
Waterfall Income Partners, L.P. have filed reports with the SEC pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") indicating combined ownership of five percent (5%) or more
of the outstanding common shares. As of December 31, 1999, (i) Morgens
Waterfall Income Partners, L.P. owns 83,315 common shares; (ii) Restart
Partners, L.P. owns 418,768 common shares; (iii) Restart Partners II, L.P.
owns 692,830 common shares; (iv) Restart Partners III, L.P. owns 482,350
common shares; (v) Restart Partners IV, L.P. owns 304,758 common shares;
(vi) Restart Partners V, L.P. owns 100,855 common shares; (vii) Endowment
Restart, L.L.C. owns 109,625 common shares. Although John C. Waterfall and
Edwin H. Morgens do not directly own any common shares, each of them may be
deemed an indirect beneficial owner of 2,192,501 common shares by virtue of
their effective control over the operation of each of the affiliated
entities listed above. Furthermore, Morgens Waterfall Capital, L.L.C. may
be deemed an owner of 83,315 common shares by virtue of its position as
general partner of Morgens Waterfall Income Partners, L.P.

(2) According to filings made with the SEC, Kensington Investment
Group, Inc. ("Kensington") is an investment advisor registered under the
Investment Advisors Act of 1940. Kensington has filed reports with the SEC
pursuant to Section 13(d) of the Exchange Act, indicating ownership of five
percent (5%) or more of the outstanding common shares. As of December 31,
1999, Kensington has sole dispositive power over 1,289,406 common shares,
and sole voting power over 1,289,406 common shares.

(3) According to filings made with the SEC, Magten Asset Management
Corp. ("Magten") is an investment advisor registered under the Investment
Advisors Act of 1940. Magten has filed reports with the SEC pursuant to
Section 13(d) of the Exchange Act, indicating ownership of five percent
(5%) or more of the outstanding common shares. As of December 31, 1999,
Magten has shared dispositive power over 756,700 common shares, and shared
voting power over 315,200 common shares.

<PAGE>

(4) FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson (who
together with other members of the Johnson family may be deemed to form a
controlling group with respect to FMR Corp.) have filed reports with the
SEC pursuant to Section 13(d) of the Exchange Act, indicating combined
ownership of five percent (5%) or more of the outstanding common shares.
As of the date of their latest filing, Fidelity Management & Research
Company, an investment advisor registered under the Investment Advisors Act
of 1940, and Fidelity Low-Priced Stock Fund, an investment company which
Fidelity Management & Research Company serves as investment advisor, owned
982,350 common shares or 7.8% of the outstanding common shares. Edward C.
Johnson 3d and FMR Corp. each has sole dispositive power over these 982,350
common shares, but neither has sole voting power over these common shares.
As of the date of their latest filing, Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp., owned 71,000 common shares or .53% of
the outstanding common shares as a result of serving as investment manager
of institutional accounts. Edward C. Johnson 3d and FMR Corp. each has
voting and dispositive power over these 71,000 common shares.

(5) Includes shares to purchased on January 12, 2000 pursuant to
the aforementioned employee stock loan program as follows: Mr. Levine,
350,000 shares; Mr. Schmidt, 36,000 shares; Mr Hansen, 36,000 shares and
Mr. Teglia, 29,000 shares.

(6) Includes options to purchase 3,335 shares for each of Messrs.
Hansen, Schmidt and Teglia and 3,000 shares for Mr. Auch.

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the fiscal year ended December 31, 1999, we paid no salary to,
but purchased legal services from, Robert G. Higgins, our vice president,
secretary and general counsel. We paid Mr. Higgins, in the aggregate,
$330,645 for these services. We also provide Mr. Higgins with office space
and equipment. Mr. Higgins does not pay any rent for the use of office
space and equipment. Instead, Mr. Higgins bills us at a discounted rate.
Mr. Higgins also reimburses us for the cost of two full-time and certain
part-time employees. For the fiscal year ended December 31, 1999, Mr.
Higgins reimbursed us for a total of $172,074. During the fiscal year
ended December 31, 1999, we paid Adam Levine, the son of our president,
chief executive officer and trustee, Leonard G. Levine, $85,173 for
services rendered to us as an employee. We also provided Adam Levine with
benefits customarily provided to our other employees.

On January 12, 2000, our employees exercised their vested options to
purchase 575,337 of our common shares with the proceeds of the loan from
us. See "Compensation of Trustees and Executive Officers" above for
details of the loan program. The table below shows the original amounts
outstanding and the loan balances on March 1, 2000 due from our executive
officers and Adam Levine.

Balance
Original at
Name Amount 3/1/00
- ---- ---------- ----------

Leonard G. Levine . . . . $1,925,000 $1,897,598
Jay E. Schmidt. . . . . . $ 213,500 $ 210,799
Neil D. Hansen. . . . . . $ 213,500 $ 210,799
Joel L. Teglia. . . . . . $ 170,875 $ 168,691
Robert G. Higgins . . . . $ 173,735 $ 171,412
Adam Levine . . . . . . . $ 95,493 $ 94,177

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) Financial Statements of the Company are set forth
in this report in Item 8.

(2) Financial Statement Schedule is set forth in this
report in Item 8.

(b) Report on Form 8-K dated December 16, 1999 was filed on
January 3, 2000 to provide information required by Item 2 of Form 8-K and a
pro forma information required by Item 7 of Form 8-K in connection with the
Trust's disposition of the property in the Oklahoma apartment portfolio.

(d) None.

<PAGE>

SIGNATURES

PURSUANT to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

BANYAN STRATEGIC REALTY TRUST

By: /s/ Leonard G. Levine Date: March 29, 2000
Leonard G. Levine, President

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.

By: /s/ Leonard G. Levine Date: March 29, 2000
Leonard G. Levine, President
and Trustee

By: /s/ Joel L. Teglia Date: March 29, 2000
Joel L. Teglia, Vice President and
Chief Financial Officer

By: /s/ Walter E. Auch, Sr. Date: March 29, 2000
Walter E. Auch, Sr., Trustee

By: /s/ Daniel Levinson Date: March 29, 2000
Daniel Levinson, Trustee

By: /s/ Stephen M. Peck Date: March 29, 2000
Stephen M. Peck, Trustee

By: /s/ L.G. Schafran Date: March 29, 2000
L.G. Schafran, Trustee

<PAGE>

EXHIBIT INDEX
-------------

3.1 Third Amended and Restated Declaration of Trust
dated as of August 8, 1986, as amended on March 8, 1991, May 1, 1993,
August 12, 1998 and December 13, 1999, including Certificate of
designations, preferences and rights of Series A convertible preferred
shares. (*)

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 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 LLC, as
Lender. (1)

4.7 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
-------------

4.08 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 dated
December 14, 1999 (*)

10.2 Employment Agreement of Leonard G. Levine as of
October 1, 1997. (8)

10.3 Employment Agreement of Joel L. Teglia dated
December 31, 1998. (3)

10.4 Employment Agreement of Neil Hansen dated
December 31, 1998. (3)

10.5 Employment Agreement of Jay Schmidt dated
December 31, 1998. (3)

10.6 1997 Omnibus Stock and Incentive Plan dated July 9,
1997. (9)

10.7 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)

10.8 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)

10.9 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 *

23 Consent of Ernst & Young LLP *

27 Financial Data Schedule *

99.12 Press Release dated January 10, 2000 *

99.13 Press Release dated January 27, 2000 *

99.14 Press Release dated February 23, 2000 *

- --------------------

* 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.

<PAGE>

(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.

EXHIBIT 3.1
- -----------

THIRD AMENDED AND RESTATED

DECLARATION OF TRUST

BANYAN STRATEGIC REALTY TRUST

THIS AMENDED AND RESTATED DECLARATION OF TRUST, dated as of March 14,
1986, as amended and restated as of August 8, 1986, and amended on March 8,
1991 and May 4, 1993, amended and restated on August 12, 1998 and amended
and restated on December 13, 1999 is hereby accepted by the Trustees of
BANYAN STRATEGIC REALTY TRUST (the "Trust"), who hereby declare that all
property, real, personal or mixed, tangible or intangible or of any other
description now held or hereafter acquired by or transferred to them in
their capacities as Trustee hereunder, together with the income and profits
therefrom and the proceeds thereof, shall be held by them in trust and
shall be received, managed and disposed of for the benefit of the
Shareholders hereunder and in the manner and subject to the terms and
conditions herein provided.

ARTICLE I

THE TRUST, DEFINITIONS

1.1 NAME. The trust created by this Declaration of Trust, herein
referred to as the "Trust," shall be known by the name "BANYAN STRATEGIC
REALTY TRUST" (the "Trust"). So far as may be practicable, legal and
convenient, the affairs of the Trust shall be conducted and transacted
under that name, which name shall not refer to the Trustees individually or
personally or to the Shareholders of the Trust, or to any officers,
employees or agents of the Trust or the Trustees.

Under circumstances in which the Trustees determine that the use of
the name "BANYAN STRATEGIC REALTY TRUST" is not practicable, legal and
convenient, they may as appropriate use and adopt another name under which
the Trust may hold property or operate in any jurisdiction. Legal title to
all the properties subject from time to time to this Declaration of Trust
shall be transferred to, vested in and held by the Trustees as joint
tenants with right of survivorship as Trustees of this Trust, and not
individually, except that the Trustees shall have the power to cause legal
title to any property of this Trust to be held by and/or in the name of one
or more of the Trustees, or any other person as nominee, on such terms, in
such manner, and with such powers as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected.

1.2 PLACE OF BUSINESS. The Trust shall maintain an office in
Boston, Massachusetts, and shall designate a resident agent for service of
process, which office and agent initially shall be c/o CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. This office and the
name and address of the Trust's resident agent for service of process may
change from time to time in the determination of the Trustees, with any
changes reported from time to time to the Secretary of the Commonwealth of
Massachusetts. The Trust may have such other offices or places of business
within or without the Commonwealth of Massachusetts as the Trustees may
from time to time determine.

<PAGE>

1.3 NATURE OF TRUST. The Trust is a trust or voluntary association
of the type referred to in Section 1 of Chapter 182 of the General Laws of
the Commonwealth of Massachusetts and commonly known as a business trust.
It is intended that the Trust elect to carry on business as a real estate
investment trust as described in Sections 856-860 of the Code as soon as
and as long as it is deemed by the Trustees to be in the best interest of
the Shareholders to make such election; provided, however, that, by
affirmative vote of the holders of two-thirds of the outstanding shares,
the Shareholders may determine that the Trust shall no longer carry on the
business as a real estate investment trust and shall cease to qualify as
such under the Code. The Trust is not intended to be, shall not be deemed
to be, and shall not be treated as, a general partnership, limited
partnership, joint venture, corporation, or joint stock company or
association (but nothing herein shall preclude the Trust from being taxable
as an association under Section 856-860 of the Code) nor shall the Trustees
or Shareholders or any of them for any purpose be deemed to be or be
treated in any way whatsoever to be, liable or responsible hereunder as
partners or joint venturers or as agents of one another. The relationship
of the Shareholders to the Trustees shall be solely that of beneficiaries
of the Trust and their rights shall be limited to those conferred upon them
by this Declaration.

1.4 PURPOSE OF THE TRUST. The purpose of the Trust is to lend
funds secured by real property, by interests in entities which own real
property or by a similar security interest, and in general to carry on any
other acts in connection with or arising out of the foregoing and to have
and exercise all powers that are available to voluntary associations formed
under the laws of the Commonwealth of Massachusetts and to do any or all of
the things herein set forth to the same extent as natural persons might or
could do.

1.5 DEFINITIONS. The terms defined in this Section 1.5 whenever
used in this Declaration shall, unless the context otherwise requires, have
the respective meanings hereinafter specified in this Section 1.5. In this
Declaration, words in the singular number include the plural and in the
plural number include the singular.

"Advisor." [Reserved].

"Affiliate." An Affiliate of, or a person Affiliated with, a
specified person, is (i) any person directly or indirectly controlling,
controlled by or under common control with another person, (ii) any person
owning or controlling 10% or more or the outstanding voting securities or
beneficial interests of such other person, (iii) any officer, director,
trustee or general partner of such person and (iv) if such other person is
an officer, director, trustee or partner of another entity, then the entity
for which that person acts in any such capacity.

"Annual Meeting of Shareholders." The meeting referred to in the
first sentence of Section 7.7.

"Annual Report." The report referred to in Section 7.9.

"As-Built Appraised Value of the Property" shall mean the land
portion of the Appraised Value of the mortgaged property, taking into
account the planned development of the property as determined by an MAI
appraisal.

"Average Invested Assets." For any period, the average Total Assets
of the Trust, invested, directory or indirectly, in Mortgage Loans before
reserves for bad debts or other similar non-cash reserves, computed by
taking the average of such values at the end of each month during such
period.

"By-Laws." The By-Laws referred to in Section 4.4, if adopted.

<PAGE>

"Chairman" shall mean one of the Trustees designated by a majority of
the Trustees to be Chairman of the Board of Trustees. The Chairman shall
not have any powers not also delegated to the other Trustees, except as
expressly provided herein or in the By-Laws.

"Code." The Internal Revenue Code of 1986, as amended, or
corresponding provisions of any successor legislation.

"Commission." The Securities and Exchange Commission.

"Declaration." This Declaration of Trust and all amendments or
modifications hereof.

"Independent Trustee" shall mean a person other than an officer or
employee of the Trust or its subsidiaries or any other individual having a
relationship which, in the opinion of the Board of Trustees, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a Trustee.

"Mortgage Loans." Notes, debentures, bonds and other evidences of
indebtedness or obligations which are secured or collateralized by
interests in real property.

"Net Assets." The Total Assets (other than intangibles) of the Trust
at cost before deducting depreciation or other non-cash reserves, less
total liabilities, calculated at least quarterly according to generally
accepted accounting principles on a basis consistently applied.

"Net Income." The net income of the Trust for any period shall mean
total revenues applicable to such period as determined for federal income
tax purposes, less the expenses applicable to such period, other than
additions to reserves for bad debts or other similar non-cash reserves; for
purposes of calculating Operating Expenses, Net Income shall not include
the gain from the sale of the Trust's assets.

"Operating Expenses." All operating, general and administrative
expenses of the Trust as determine under generally accepted accounting
principles, including rent, utilities, capital equipment, salaries, fringe
benefits, travel expenses and other administrative items, but excluding the
expenses of raising capital, interest payments, taxes, non-cash
expenditures (e.g., depreciation, amortization, bad debt reserves), the
Subordinated Incentive Fee, and the costs related directly to a specific
Mortgage Loan investment by the Trust, such as expenses for originating,
acquiring, servicing or disposing of a Mortgage Loan.

"Preferred Shares" shall mean preferred shares of beneficial interest
of the Trust, designated by the Board of Trustees and issued pursuant to
the Declaration.

"REIT" and "real estate investment trust." A real estate investment
trust as defined in Sections 856-860 of the Code.

"Shareholders." The registered holders of Shares.

"Shares." Shares of beneficial interest of the Trust, evidencing a
pro rata ownership interest in the Trust Estate and being of a class having
the right to elect the Trustees of the Trust, issued pursuant to the
Declaration.

"Sponsor." [Reserved].

"Total Assets." The book value of all assets of the Trust,
determined in accordance with generally accepted accounting principles.

"Trust." The Trust created by this Declaration.

<PAGE>

"Trustees." As of any particular time, means the individuals holding
office under this Declaration at such time, whether they be the Trustees
named herein or additional or successor Trustees.

"Trust Estate." The assets of the Trust, the legal title to which is
held by the Trustees as Trustees of the Trust and the equitable title to
which is evidenced by the Shares and held by the Shareholders.

"Unimproved Real Property." Property which has each of the following
three characteristics: (i) it was not acquired for the purpose of producing
rental or other operating income, (ii) there is no development or
construction in process on such land, and (iii) there is no development or
construction planned in good faith to commence on such land within one
year.

ARTICLE II

INVESTMENT POLICY

2.1 GENERAL STATEMENT OF POLICY. It is the general policy of the
Trust that the Trustees invest the Trust Estate principally in investments
which will conserve and protect the Trust's invested capital, produce
income and cash which may be used to make cash distributions to Share-
holders, and offer the potential for participation in the appreciation
realized upon the sale, refinancing or other disposition of the properties
which secure such investments. The Trustees shall at least annually
review the investment policies of the Trust to determine that the policies
being followed by the Trust are in the best interests of the Shareholders,
and each such determination and the basis therefor shall be set forth in
the minutes of meetings of the Trustees.

2.2 ADDITIONAL INVESTMENTS. To the extent that the Trust has
assets not otherwise invested in accordance with Section 2.1, the Trustees
may invest such assets in:

2.2.1 mortgage-backed obligations of or guaranteed or insured -
by the United States Government or any agencies or political
subdivisions thereof;

2.2.2 other obligations of or guaranteed or insured by the
United States Government or by any state, territory or possession of the
United States of America or any agencies or political subdivisions thereof;

2.2.3 shares of other REITs; or

2.2.4 other investments which qualify as "real estate assets,
cash and cash items (including receivables), and Government securities"
under Section 856(c)(5)(A) of the Code;

provided, however, that the assets of the Trust shall at all times be
invested in a manner which permits the Trust to qualify as a REIT under the
Code, so long as the Trust elects to qualify as a REIT.

<PAGE>

ARTICLE III

TRUSTEES

3.1 NUMBER, TERM OF OFFICE, QUALIFICATION OF TRUSTEES. The Board
of the Trust shall be comprised of no fewer than three nor more than nine
Trustees, unless one or more Trustees are required to be added to the Board
under the designations of any Preferred Shares, in which case the
authorized number of Trustees shall be increased in order to comply with
such designations. At least a majority of the Trustees shall at all times
be Independent Trustees. The range in the authorized number of Trustees
may be changed by vote of Shareholders holding or having the right to vote
a majority of the Shares, provided that the exact number of Trustees within
such range shall be specified by the Trustees from time to time. There
shall be no cumulative voting in the election of Trustees. Trustees may be
reelected without limit as to the number of times. A Trustee shall be an
individual at least 21 years of age who is not under legal disability.
Unless otherwise required by law or by action of the Trustees, no Trustee
shall be required to give bond, surety or security in any jurisdiction for
the performance of any duties or obligations hereunder. The Trustees in
their capacity as Trustees shall not be required to devote their entire
time or any specified portion of their time to the business and affairs of
the Trust.

3.2 ELECTION OF TRUSTEES. The initial Trustees shall be elected at
the annual meeting of the Shareholders, except as provided in Sections 3.4
or 3.5, and each Trustee elected shall hold office until the next annual
meeting of the Shareholders of the Trust and until his or her successor is
duly elected and qualified, or until his or her death or retirement or
until he or she resigns or is removed in the manner hereinafter provided.
Such election shall be by written ballot.

3.3 COMPENSATION AND OTHER REMUNERATION. Each Independent Trustee
shall be entitled to receive $20,000 per year for his or her services as an
Independent Trustee plus $1,000 for each meeting of the Board attended in
person and $500 per hour for each meeting of the Board attended via
telephonic conference call. The compensation payable to the Trustees for
their services hereunder may be increased or decreased upon the affirmative
vote of the holders of a majority of Shares at an Annual Meeting of Share-
holders or a special meeting of Shareholders called for that purpose. The
Trustees shall be reimbursed for their reasonable expenses incurred in
connection with their services as Trustees, including, without limitation,
travel to and attendance at meetings of the Board of Trustees and Annual
Meetings of Shareholders.

3.4 RESIGNATION, REMOVAL AND DEATH OF TRUSTEES. A Trustee may
resign at any time by giving written notice to the remaining Trustees.
Such resignation shall take effect on the date such notice is given or at
any later time specified in the notice. A Trustee may be removed at any
time with or without cause by vote or written consent of Shareholders
holding or having the right to vote a majority of the outstanding Shares,
and can be removed at a special meeting pursuant to Section 7.7 herein,
unless the designations of any Preferred Shares require otherwise, in which
case the terms of the designations shall prevail. A Trustee may also be
removed with cause by a majority of the remaining Trustees, unless the
designations of any Preferred Shares require otherwise, in which case the
terms of the designations shall prevail. For purposes of the immediately
preceding sentence "cause" shall include, without limitation, any physical
and/or mental inability, due to a condition or illness which is expected to
be of permanent or indefinite duration, to perform the duties of a Trustee.

Upon the resignation or removal of any Trustee, or his otherwise ceasing to
be a Trustee, he shall execute and deliver such documents, if any, as the
remaining Trustees shall reasonably require for the conveyance of any Trust

<PAGE>

property held in his name, shall account to the remaining Trustees as they
require for all property which he holds as Trustee and shall thereupon be
discharged as Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall perform the acts, if any, set forth in the
preceding sentence and the discharge mentioned therein shall run to such
legal representative and to the incapacitated Trustee, or the estate of the
deceased Trustee, as the case may be.

3.5 VACANCIES. If any or all of the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate the Trust or affect its
continuity. Until vacancies are filled, the remaining Trustee or Trustees
may exercise the power of the Trustees hereunder. Vacancies among the
Trustees (including vacancies created by increases in the number of
Trustees) shall be filled by a majority of the remaining Trustees, unless
the designations of any Preferred Shares require otherwise, in which case
the terms of the designations shall prevail. If at any time there shall be
no Trustees in office, successor Trustees shall be elected by the
Shareholders as provided in Section 7.7, unless the designations of any
Preferred Shares require otherwise, in which case the terms of the
designations shall prevail.

3.6 SUCCESSOR AND ADDITIONAL TRUSTEES. The right, title and
interest of the Trustees in and to the Trust property, shall also vest in
successor and additional Trustees upon their qualification, and they shall
thereupon have all the rights and obligations of Trustees hereunder. Such
right, title and interest shall vest in the Trustees whether or not
conveyancing documents have been executed and delivered pursuant to
Section 3.4 or otherwise. Appropriate written evidence of the election and
qualification of successor and additional Trustees shall be filed with the
records of the Trust and in such other offices or places as the Trustees
may deem necessary, appropriate or desirable. Upon, the resignation,
removal or death of a Trustee, he (and in the event of his death, his
estate) shall automatically cease to have any right, title or interest in
or to any of the Trust property, and the right, title and interest in such
Trustee in and to the Trust Estate shall vest automatically in the
remaining Trustees without any further act.

3.7 ACTIONS BY TRUSTEES. The Trustees may act with or without a
meeting. A quorum for all meetings of the Trustees shall be a majority of
the Trustees. Unless specifically provided otherwise in this Declaration,
any action of the Trustees may be taken at a meeting by vote of a majority
of the Trustees present at such meeting if a quorum is present, or without
a meeting by written consent of all of the Trustees. The acquisition of
any investment shall require the approval of the majority of the Trustees.
Any agreement, deed, mortgage, lease or other instrument or writing
executed by any one or more of the Trustees or by any one or more
authorized persons shall be valid and binding upon the Trustees and upon
the Trust when authorized by action of the Trustees or as approved in the
By-Laws, if the same are adopted. Trustees may conduct meetings by
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such
meeting.

An annual meeting of the Trustees shall be held at substantially the
same time as the Annual Meeting of Shareholders. Regular meetings shall be
held at least four times per year at such times as shall be fixed by the
Trustees. No notice shall be required of an annual or a regular meeting of
Trustees.

<PAGE>

Special meetings of the Trustees shall be called by the Chairman upon
the request of any two Trustees and may be called by the Chairman on his
own motion, on not less than two days' notice to each Trustee if the
meeting is to be held in person, and/or not less than eight hours' notice
if the meeting is to be held by conference telephone or similar equipment.
Such notice, which shall state the purpose of the meeting, shall be by
oral, telegraphic, telephonic or written communication stating the time and
place therefor. Notice of any special meeting need not be given to any
Trustee entitled thereto who submits a written and signed waiver of notice,
either before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to
him.

Regular or special meetings of the Trustees may be held within or
without the Commonwealth of Massachusetts, at such places as shall be
designated by the Trustees. The Trustees may adopt such rules and
regulations for their conduct and the management of the affairs of the
Trust as they may deem proper and as are not inconsistent with this De-
claration.

3.8 INDEPENDENT TRUSTEES. In order that a majority of the Trustees
shall at all times be Independent Trustees, if, at any time, by reason of
one or more vacancies, there shall not be such a majority, then within 90
days after such vacancy occurs, the continuing Independent Trustee or
Trustees then in office shall appoint, pursuant to Section 3.5, a
sufficient number of other persons who are Independent Trustees, so that
there shall be such a majority.

3.9 COMMITTEES. The Trustees may appoint from among their number
an executive committee and such other standing committees, including
without limitation, audit and nominating committees, or special committees
as the Trustees determine. Each standing committee shall consist of three
or more members, a majority of whom shall be Independent Trustees. Each
committee shall have such powers, duties and obligations as may be required
by any governmental agency or other regulatory body or as the Trustees may
deem necessary and appropriate.

3.10 RESIGNATION OF INDEPENDENT TRUSTEES. In the event that a
person elected as an Independent Trustee ceases to be an Independent
Trustee, and if, as a result, a majority of Trustees are no longer
Independent Trustees, such person shall immediately resign as a Trustee and
such vacancy shall be filled in a manner consistent with Sections 3.5, 3.6
and 3.8 hereof.

ARTICLE IV

TRUSTEES' POWERS

4.1 POWER AND AUTHORITY OF TRUSTEES. The Trustees, subject only to
the specific limitations contained in this Declaration, shall have, without
further or other authorization, and free from any power of control on the
part of the Shareholders, full, absolute and exclusive power, control and
authority over the Trust Estate and over the business and affairs of the
Trust to the same extent as if the Trustees were the sole owners thereof in
their own right, and to do all such acts and things as in their sole
judgment and discretion are necessary or incidental to, or desirable for,
the carrying out of any of the purposes of the Trust or conducting the
business of the Trust. Any determination made in good faith by the
Trustees of the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive and each such determination and the
basis therefor shall be set forth in the minutes of meetings of the
Trustees. In construing the provisions of this Declaration, the
presumption shall be in favor of the grant of powers and authority to the
Trustees. The enumeration of any specific power or authority herein shall
not be construed as limiting the general powers or authority or any other
specified power or authority conferred herein by statute or rule of law
upon the Trustees.

<PAGE>

4.2 SPECIFIC POWERS AND AUTHORITIES. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authorities conferred by this Declaration or which the Trustees may have by
virtue of any present or future statute or rule of law, the Trustees,
without any action or consent by the Shareholders shall have and may
exercise, at any time, and from time to time, the following powers and
authorities which may or may not be exercised by them in their sole
judgment and discretion, and in such manner, and upon such terms and
conditions as they may, from time to time, deem proper:

4.2.1 to retain, invest and reinvest the capital or other
funds of the Trust and, for such consideration as they deem proper, to
purchase or otherwise acquire for cash or other property or through the
issuance of Shares or other securities of the Trust and hold for investment
real or personal property of any kind, tangible or intangible, in entirety
or in participation and to possess and exercise all the rights, powers and
privileges appertaining to the ownership of the Trust Estate with respect
thereto;

4.2.2 to sell, rent, lease, hire, exchange, release,
partition, assign, mortgage, pledge, hypothecate, grant security
interests in, encumber, negotiate, convey, transfer or otherwise dispose
of or grant interests in all or any portion of the Trust Estate by deeds,
financing statements, security agreements and other instruments, trust

deeds, assignments, bills of sale, transfers, leases or mortgages, for any
of such purposes;

4.2.3 to enter into leases, contracts, obligations, and other
agreements for a term extending beyond the term of office of the Trustees
and beyond the possible termination of the Trust or for a lesser term;

4.2.4 to borrow money and give negotiable or non-negotiable
instruments therefor; to guarantee, indemnify or act as surety with respect
to payment or performance of obligations of third parties; to enter into
other obligations on behalf of the Trust; and to assign, convey, transfer,
mortgage, subordinate, pledge, grant security interests in, encumber or
hypothecate the Trust Estate to secure any of the foregoing;

4.2.5 to lend money, whether secured or unsecured, to any
person, including any person affiliated with the Trust;

4.2.6 to create reserve funds for any purpose;

4.2.7 to incur and pay out of the Trust Estate any charges or
expenses, and disburse any funds of the Trust, which charges, expenses or
disbursements are, in the opinion of the Trustees, necessary or incidental
to or desirable for the carrying out of any of the purposes of the Trust or
conducting the business of the Trust, including, without limitation, taxes
and other governmental levies, charges and assessments, of whatever kind or
nature, imposed upon or against the Trustees in connection with the Trust
or the Trust Estate or upon or against the Trust Estate or any part
thereof, and for any of the purposes herein;

4.2.8 to deposit funds of the Trust in or with banks, trust
companies, savings and loan associations, money market organizations and
other depositories or issuers of depository-type accounts, whether or not
such deposits will draw interest or be insured, the same to be subject to
withdrawal or redemption on such terms and in such manner and by such
person or persons (including any one or more Trustees, officers, agents or
representatives) as the Trustees may determine;

<PAGE>

4.2.9 to possess and exercise all the rights, powers and
privileges appertaining to the ownership of any or all mortgages or
securities issued or created by, or interests in, any person, forming part
of the Trust Estate, to the same extent that an individual might and,
without limiting the generality of the foregoing, to vote or give consent,
request or notice, or waive any notice, either in person or by proxy or
power of attorney, with or without power of substitution, to one or more
persons, which proxies and powers of attorney may be for meetings or action
generally or for any particular meeting or action, and may include the
exercise of discretionary powers;

4.2.10 to enter into joint ventures, general or limited
partnerships and any other lawful combinations or associations;

4.2.11 to elect or appoint officers of the Trust (none of whom
needs be a Trustee), who may be removed or discharged at the discretion of
the Trustees, such officers to have such powers and duties, and to serve
such terms, as may be prescribed by the Trustees or by the By-Laws of the
Trust, if adopted, or as may pertain to such offices;

4.2.12 [reserved];

4.2.13 subject to the provisions of Sections 8.5 and 8.6, to
engage or employ any persons as agents, representatives, employees or
independent contractors (including without limitation, real estate
advisors, investment advisors, transfer agents, registrars, underwriters,
accountants, attorneys at law, real estate agents, managers, appraisers,
brokers, architects, engineers, construction managers, general contractors
or otherwise) in one or more capacities, in connection with the management
of the Trust's affairs or otherwise, and to pay compensation from the Trust
for services in as many capacities as such person may be so engaged or
employed and notwithstanding that any such person is, or is an Affiliated
person of, a Trustee or officer of the Trust, and, except as prohibited by
law, to delegate any of the powers and duties of the Trustees to any one or
more Trustees, agents, representatives, officers, employees, independent
contractors or other persons;

4.2.14 to determine whether moneys, securities or other assets
received by the Trust shall be charged or credited to income or capital or
allocated between income and capital, including the power to amortize or
fail to amortize any part or all of any premium or discount, to treat all
or any part of the profit resulting from the maturity or sale of any asset,
whether purchased at a premium or at a discount, as income or capital, or
apportion the same between income and capital, to apportion the sales price
of any asset between income and capital, and to determine in what manner
any expenses or disbursements are to be borne as between income and
capital, whether or not in the absence of the power and authority conferred
by this subsection such moneys, securities or other assets would be
regarded as income or as capital or such expense or disbursement would be
charged to income or to capital; to treat any dividend or other
distribution on any investment as income or capital or to apportion the
same between income and capital; to provide or fail to provide reserves for
depreciation, amortization, doubtful collection, or obsolescence in respect
of all or any part of the Trust Estate subject to depreciation,
amortization, collection, or obsolescence in such amounts and by such
methods as they shall determine; and to determine the method or form in
which the accounts and records of the Trust shall be kept and to changed
from time to time such method or form;

<PAGE>

4.2.15 to determine from time to time the value of all or any
part of the Trust Estate and of any services, securities, property or other
consideration to be furnished to or acquired by the Trust, and from time to
time to revalue all or any part of the Trust Estate in accordance with such
valuations or other information;

4.2.16 to collect, sue for and receive all sums of money
coming due to the Trust, and to engage in, intervene in, prosecute, join,
defend, compound, compromise, abandon or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims, con-
troversies, demands or other litigation relating to the Trust, the Trust
Estate or the Trust's affairs, to enter into agreement therefor, whether or
not any suit is commenced or claim accrued or asserted and, in advance of
any controversy, to enter into agreements regarding arbitration,
adjudication or settlement thereof;

4.2.17 to renew, modify, release, compromise, extend, -
consolidate or cancel, in whole or in part, any obligation to or of
the Trust;

4.2.18 subject to Section 8.4 below, to purchase and pay for
out of the Trust Estate insurance contracts and policies insuring the Trust
Estate against any and all risks and insuring the Trust, the Trustees, the
Shareholders, the officers of the Trust or any or all of them, against any
and all claims and liabilities of every nature asserted by any person
arising by reason of any action alleged to have been taken or omitted by
the Trust or by the Trustees, Shareholders or officers;

4.2.19 to cause legal title to any of the Trust Estate to be
held by or in the name of the Trust or one or more of the Trustees or any
other person as the Trustees may determine, on such terms and in such
manner and with such powers (not inconsistent with Section 1.1), and with
or without disclosure that the Trust or Trustees are interested therein;

4.2.20 to adopt an accounting method for the Trust, and from
time to time to change such accounting method, and to engage a firm of
independent certified public accountants to audit the financial records of
the Trust;

4.2.21 to adopt and use a seal (but the use of a seal shall
not be required for the execution of instruments or obligations of the
Trust);

4.2.22 with respect to any securities issued by the Trust, to
provide that the same may be signed by the manual signature of one or more
Trustees or officers, or persons who have theretofore been Trustees or
officers or by the facsimile signature of any such person (with or without
countersignature by a transfer agent, registrar, authenticating agent or
other similar person), and to provide that ownership of such securities may
be conclusively evidenced by the books and records of the Trust or in any
appropriate evidence of the Trust without the necessity of any certificate,
all as determined by the Trustees from time to time to be consistent with
normal commercial practices;

4.2.23 to declare and pay cash distributions to Shareholders
as provided in Section 7.5, subject to any restrictions set forth in the
designations of any Preferred Shares;

4.2.24 to adopt a distribution reinvestment or similar such
plan for the Trust, and to provide for the cost of the administration
thereof to be borne by the Trust, subject to any restrictions set forth in
the designations of any Preferred Shares;

<PAGE>

4.2.25 to file any and all documents and take any and all such
other action as the Trustees in their sole judgment may deem necessary in
order that the Trust may lawfully conduct its business in any jurisdiction;

4.2.26 to participate in any reorganization, readjustment,
consolidation, merger, dissolution, sale or purchase of assets, lease or
similar proceedings of any corporation, partnership or other organization
in which the Trust shall have an interest and in connection therewith to
delegate discretionary powers to any reorganization, protective or similar
committee and to pay assessments and other expenses in connection
therewith, subject to any restrictions set forth in the designations of any
Preferred Shares;

4.2.27 to determine whether or not, at any time or from time
to time, to attempt to cause the Trust to qualify or to cease to qualify as
a real estate investment trust for federal income tax purposes, and to take
all action deemed by the Trustees appropriate in connection with main-
taining or ceasing to maintain such qualification;

4.2.28 to do all other such acts and things as are incident to
the foregoing, and to exercise all powers which are necessary or useful to
carry on the business of the Trust, to promote any of the purposes for
which the Trust is formed, and to carry out the provisions of this
Declaration; and

4.2.29 in the event that either (a) the assets of the Trust
would constitute "plan assets" for purposes of ERISA or (b) the
transactions contemplate hereunder would constitute "prohibited
transactions" under ERISA or the Code and an exemption for such
transactions is not obtainable, or not sought by the Trustees, from the
United States Department of Labor, to (1) restructure the Trust's
activities to the extent necessary to comply with any exemption in any
final plan asset regulation adopted by the Department of Labor or to comply
with any requirement the Department of Labor might impose as a condition to
granting a prohibited transaction exemption, and/or (2) terminate the
offering of Shares or compel a dissolution and termination of the Trust.
The Trustees are empowered to amend such provisions to the minimum extent
they believe is necessary in accordance with the advice of accountants
and/or counsel to comply with any applicable federal or state legislation,
rules, regulations, administrative pronouncements or interpretations and/or
judicial interpretations thereof after the date of this Declaration. Such
amendment(s) made by the Trustees in reliance upon the advice of competent
accountants or counsel described above shall be deemed to be made pursuant
to the fiduciary obligation of the Trustees to the Trust and Shareholders,
and no such amendment shall give rise to any claim or cause of action by
any Shareholder.

4.3 INVESTMENT OPPORTUNITIES. All Trustees must present investment
opportunities which comply with the Trust's investment policies to the
Trust prior to engaging in such investments themselves.

4.4 BY-LAWS. The Trustees may, but are not required to, make,
adopt, amend or repeal By-Laws containing provisions relating to the
business of the Trust, the conduct of its affairs, its rights or powers and
the rights or powers of its Shareholders, Trustees or officers not incon-
sistent with law or with this Declaration. Such By-Laws may provide for
the appointment of assistant officers or agents of the Trust, subject,
however, to the right of the Trustees to remove or discharge such officers
or agents.

<PAGE>

ARTICLE V

EMPLOYEES AND AGENTS

5.1 EMPLOYMENT OF EMPLOYEES AND AGENTS. The Trustees are
responsible for the general policies of the Trust and for such general
supervision of the business of the Trust conducted by all officers, agents,
employees, advisors, managers or independent contractors of the Trust as
may be necessary to insure that such business conforms to the provisions of
this Declaration. However, the Trustees shall have the power and may, but
are not obligated to, appoint, employ or contract with any person as the
Trustees may deem necessary, or proper for the transaction of the business
of the Trust, and for such purpose may grant or delegate such authority to
any such person as the Trustees may in their sole discretion deem necessary
or desirable without regard to whether such authority is normally granted
or delegated by trustees; provided, however, that any such delegation shall
not preclude the qualification of the Trust as a REIT under the Code. No
advisory contract with an Affiliate shall be entered into or renewed
without the approval of a majority of the Trustees.

It shall be the duty of the Trustees to monitor the administrative
procedures, investment operations, and performance of the Trust, and to
determine from time to time but at least annually that the total fees and
expenses of the Trust are reasonable in light of the investment experience
of the Trust, its Net Assets, its Net Income, and the fees and expenses of
other comparable advisors in real estate, with each such determination
reflected in the minutes of the Trustees' meetings.

The Trustees, subject to the approval of a majority of the
Independent Trustees, shall have the power to determine the terms and
compensation of any person whom they may employ or with whom they may
contract.

5.2 [Reserved].

5.3 [Reserved].

5.4 [Reserved].

5.5 [Reserved].

ARTICLE VI

PROHIBITED ACTIVITIES

6.1 PROHIBITED INVESTMENTS AND ACTIVITIES. The Trust shall not
engage in any of the following investment practices or activities:

6.1.1 invest in any foreign currency, bullion or commodities
or commodities future, contracts or effect short sales of commodities or
securities;

6.1.2 invest in contracts for the sale of real estate unless
such contracts are recordable in the chain of title;

6.1.3 issue (a) "redeemable securities," "face amount
certificates of the installment type" or "periodic payment plan
certificates," all as defined in the Investment Company Act of 1940, (b)
[reserved], (c) nonvoting or assessable securities (other than debt
securities), and (d) convertible or nonconvertible debt securities to the
public unless the historical cash flow of the Trust or the substantiated
future cash flow of the Trust, excluding extraordinary items, is sufficient
to cover the interest of the debt securities;

<PAGE>

6.1.4 Grant options, warrants or rights to purchase Shares at
exercise prices less than the fair market value of such Shares on the date
of grant and for consideration (which may include services) that in the
judgment of the Trustees has a market value less than the value of such
option, warrant or right on the date of grant; any such options, warrants
or rights to purchase Shares issued to the Trustees or their Affiliates
shall be on the same terms as those sold to the public and shall not exceed
an amount equal to 10% of the number of outstanding Shares on the date of
the grant;

6.1.5 engage in underwriting or the agency distribution of
securities issued by others;

6.1.6 invest more than 10% of Total Assets of the Trust in
Unimproved Real Property or indebtedness secured by a deed of trust or
Mortgage Loans on Unimproved Real Property;

6.1.7 engage in trading, as compared with investment,
activities or in any other activity which would have the effect of causing
the Trust to fail to qualify as a REIT under the Code;

6.1.8 [Reserved].

6.1.9 acquire securities in any company holding investments or
engaging in activities prohibited by this Section 6.1;

6.1.10 the Trust may not make junior Mortgage Loans except
where the principal amount of such junior Mortgage Loans (excluding
interest and working capital and interest reserves) plus the outstanding
amount of senior debt does not exceed 85% of the As-Built Appraised Value
of the Property, unless a majority of the Independent Trustees determine
that an increased amount is justified by additional credit or collateral;
the Trust may not make a junior Mortgage Loan which is subordinate to a
mortgage held by the Trustees or Affiliates of the Trust;

6.1.11 purchase property from Affiliates, unless (i) a
majority of the Trustees not otherwise interested in such transaction
approve the transaction as being fair and reasonable to the Trust and at a
price to the Trust no greater than the cost of the asset to such Trustee or
Affiliate, or, (ii) if the price to the Trust is in excess of such costs,
that substantial justification for such excess exists and such excess is
not unreasonable; in no event shall the cost of such asset to the Trust
exceed its current appraised value as determined by a qualified independent
real estate appraiser selected by the Trustees not otherwise interested in
such transaction; or (b) sell property to Affiliates;

6.1.12 borrow funds from any Affiliate unless the interest and
other financing charges or fees received by the Affiliate does not exceed
the amount which would be charged by unrelated lending institutions on
comparable loans for the same purpose;

6.1.13 purchase insurance either through or from any
Affiliate, unless: (i) before a master insurance policy covering all the
Trust's assets is placed through such brokerage services, there will have
been received quotations from two independent insurance brokers relating to
the proposed coverage, which quotations shall be upon coverage and terms
comparable to those proposed to be provided by the Affiliate, and such
Affiliate shall not provide such insurance brokerage services unless it can
obtain such insurance at a cost which is no greater than the lowest of the
two unaffiliated insurance agency quotations for such master insurance
policy; and (ii) if at any time the Affiliates cease to derive at least 75%
of their business from insurance commissions with respect to insurance
written for individuals, partnerships, corporations, trusts or other
entities which are not Affiliates of the Trust, the Affiliates shall not
write any further insurance on behalf of the Trust or on properties then
owned by it;

<PAGE>

6.1.14 invest in equity securities of any nongovernmental
issuer, including other REITs or limited partnerships, for a holding period
in excess of 18 months; or

6.1.15 issue its Shares on a deferred payments basis or other
similar arrangement.

6.2 OBLIGOR'S DEFAULT. Notwithstanding any provision in any
Article of this Declaration, when an obligor to the Trust is in default
under the terms of any obligation to the Trust, the Trustees shall have the
power to pursue any remedies permitted by law which in their sole judgment
are in the interest of the Trust and the Trustees shall have the power to
enter into any necessary investment, commitment or obligation of the Trust
resulting from the pursuit of such remedies that are necessary or desirable
to dispose of property acquired in the pursuit of such remedies.

6.3 PERCENTAGE DETERMINATIONS. Whenever standards contained in
this Article VI are expressed in terms of a percentage, whether of value,
total assets, cost or otherwise, such percentage shall be determined at
the time of the approval of a Mortgage Loan by the Trust for a transaction
covered by such standard hereunder.

ARTICLE VII

SHARES AND SHAREHOLDERS

7.1 TRUST ESTATE. The beneficial interest in the Trust shall be
divided into shares of beneficial interest. The Trust shall have authority
to issue an unlimited number of common shares of beneficial interest, no
par value per share (the "Shares"), and two million preferred shares of
beneficial interest, no par value per share (the "Preferred Shares"). The
Preferred Shares may be issued on such rights, preferences and designations
as determined by the Trustees, including without limitation such rights,
preferences and designations which grant the holders of Preferred Shares
rights in the Trust Estate superior to those rights of the holders of
Shares. The Shares and Preferred Shares may be issued for such
consideration as the Trustees shall determine, including, upon the
conversion of convertible debt, or by way of share distribution or share
split in the discretion of the Trustees. Subject to Section 7.12 hereof,
outstanding Shares or Preferred Shares shall be transferrable and
assignable in like manner as are shares of common stock or preferred stock
of a Massachusetts business corporation. Shares or Preferred Shares
reacquired by the Trust shall no longer be deemed outstanding and shall
have no voting or other rights unless and until reissued. Shares or
Preferred Shares reacquired by the Trust may be cancelled by action of the
Trustees. All Shares or Preferred Shares shall be fully paid and non-
assessable by or on behalf of the Trust upon receipt of full consideration
for which they have been issued or without additional consideration if
issued by way of distribution, split, or upon the conversion of convertible
debt. Neither the Shares nor the Preferred Shares shall entitle the holder
to preference, preemptive, conversion or exchange rights of any kind,
except as the Trustees may specifically determine with respect to any
Shares or Preferred Shares at the time of issuance of such shares, as set
forth in the applicable designations (in the case of Preferred Shares), and
except as specifically required by law.

7.2 LEGAL OWNERSHIP OF TRUST ESTATE. The legal ownership of the
Trust Estate and the right to conduct the business of the Trust are vested
exclusively in the Trustees, and the Shareholders shall have no interest
therein other than the beneficial interest in the Trust conferred by their
Shares issued hereunder and they shall have no right to compel any
partition, division, dividend or distribution of the Trust or any of the
Trust Estate, nor can they be called upon to share or assume any losses of
the Trust or suffer an assessment of any kind by virtue of their ownership
of Shares.

<PAGE>

7.3 SHARES DEEMED PERSONAL PROPERTY. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and
rights specifically set forth in this Declaration. The death, insolvency
or incapacity of a Shareholder shall not dissolve or terminate the Trust or
affect its continuity nor give his legal representative any rights
whatsoever, whether against or in respect of other Shareholders, the
Trustees or the Trust Estate or otherwise except the sole right to demand
and, subject to the provisions of this Declaration, the By-Laws, if
adopted, and any requirements of law, to receive a new certificate for
Shares registered in the name of such legal representative, in exchange for
the certificate held by such Shareholder.

7.4 SHARE RECORD; ISSUANCE AND TRANSFERABILITY OF SHARES. Records
shall be kept by or on behalf of and under the direction of the Trustees,
which shall contain the names and addresses of the Shareholders, the number
of Shares held by them respectively, and the number of certificates, if
any, representing the Shares, and in which there shall be recorded all
transfers of Shares. The persons in whose names Shares are so recorded
shall be deemed the absolute owners of such Shares for all purposes of this
Trust; but nothing herein shall be deemed to preclude the Trustees or
officers, or their agents or representatives from inquiring as to the
actual ownership of Shares. Until a transfer is duly registered on the
records of the Trust, the Trustees shall not be affected by any notice of
such transfer, either actual or constructive. The payment thereof to the
person in whose name any Shares are registered on the records of the Trust
or to the duly authorized agent of such person (or if such Shares are so
registered in the names of more than one person, to any one of such persons
or to the duly authorized agent of such person) shall be sufficient
discharge for all distributions payable or deliverable in respect of such
Shares.

In case of the loss, mutilation or destruction of any certificate for
Shares, the Trustees may issue or cause to be issued a replacement
certificate on such terms and subject to such rules and regulations as the
Trustees may from time to time prescribe. Nothing in this Declaration
shall impose upon the Trustees or a transfer agent a duty, or limit their
rights, to inquire into adverse claims.

Any issuance, redemption or transfer of Shares which would operate to
disqualify the Trust as a real estate investment trust for federal income
tax purposes, is null and void, and such transaction will be cancelled when
so determined in good faith by the Trustees.

7.5 DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall declare and
pay to Shareholders quarterly distributions in cash, out of current or
accumulated income, capital, capital gains, principal, surplus, proceeds
from the increase or refinancing of Trust obligations, from the repayment
of loans made by the Trust, from the sale of portions of the Trust Estate,
or from any other source as the Trustees in their discretion shall
determine within 45 days after the last day of each fiscal quarter during
which the "real estate investment trust taxable income" (as defined in Code
Section 856(b)(2)) of the Trust was greater than zero; but, in any event,
the Trustees, shall, from time to time, declare and pay to the Shareholders
such distributions as may be necessary to continue to qualify the Trust as
a real estate investment trust, so long as such qualification, in the
opinion of the Trustees, is in the best interest of the Shareholders.
Shareholders shall have no right to any distribution unless and until
declared by the Trustees. The date for determining the Shareholders who
are entitled to participate in such distributions shall be such date as the
Trustees shall designate. The Trustees shall furnish the Shareholders at
the time of each such distribution with a statement in writing advising as
to the source of the funds so distributed or, if the source thereof has not
then been determined, a written statement disclosing the source shall be
sent to each Shareholder who received the distribution not later than 75
days after the close of the fiscal year in which the distribution was made.

<PAGE>

7.6 TRANSFER AGENT, DISTRIBUTION, DISBURSING AGENT AND REGISTRAR.
The Trustees shall have power to employ one or more transfer agents,
distribution disbursing agents, distribution reinvestment plan agents and
registrars and to authorize them on behalf of the Trust to keep records, to
hold and disburse any distributions and to have and perform powers and
duties customarily had and performed by transfer agents, distribution
disbursing agents, distribution reinvestment plan agents and registrar as
may be conferred upon them by the Trustees.

7.7 SHAREHOLDERS' MEETINGS AND CONSENTS. The Trustees shall cause
to be called and held an Annual Meeting of Shareholders at such time and
such place as they may determine, at which Trustees shall be elected and
any other proper business may be conducted. The Annual Meeting of
Shareholders shall be held within six months after the end of each fiscal
year, after not fewer than 10 days nor more than 60 days written notice of
such meeting has been sent to Shareholders by the Trustees and not less
than 30 days after delivery to the Shareholders of the Annual Report for
the fiscal year then ended. Special meetings of Shareholders may be called
by a majority of the Trustees, and shall be called by the Board of Trustees
upon the written request of Shareholders holding or having the right to
vote not less than 10% of the outstanding Shares of the Trust. Within 45
days after receipt of a written request either in person or by registered
mail stating the purpose of the meeting requested by Shareholders, the
Trust shall provide all Shareholders written notice (either in person or by
mail) of a meeting and the purpose of such meeting to be held on a date not
fewer than 20 days nor more than 60 days before the date of such meeting,
at a time and place convenient to Shareholders. The call and notice of any
special meeting shall state the purpose of the meeting and no other
business shall be considered at such meeting. If there shall be no
Trustees, a special meeting of the Shareholders shall be held promptly for
the election of successor Trustees. Notwithstanding anything contained in
this Section 7.7 to the contrary, the Trustees may grant to the holders of
Preferred Shares the right to call a special meeting, as set forth in the
designations of the applicable Preferred Shares.

A majority of the outstanding Shares entitled to vote at any meeting
represented in person or by proxy shall constitute a quorum at such
meeting. Whenever Shareholders are required or permitted to take any
action, such action may be taken, except as otherwise provided by this
Declaration or required by law, by a majority of the votes cast at a
meeting of Shareholders at which a quorum is present by holders of Shares
entitled to vote thereon, or without a meeting by written consent setting
forth the action so taken signed by the holders of a majority of the
outstanding Shares entitled to vote thereon or such larger proportion
thereof as would be required for a vote of Shareholders at a meeting. Any
written consent may be revoked by a writing received by the Trust prior to,
but not after, the time that written consents of the number of Shares
required to authorize the proposed action have been filed with the Trust.
Notwithstanding this or any other provision of this Declaration, no vote or
consent of Shareholders shall be required to approve the sale, exchange or
other disposition, pledging, hypothecating, granting security interests in,
mortgaging, encumbering or leasing by the Trustees of less taken half of
the assets of the Trust or upon the liquidation and dissolution of the
Trust in the ordinary course.

7.8 PROXIES. Whenever the vote or consent of Shareholders is
required or permitted under this Declaration, such vote or consent may be
given either directly by the Shareholder or by a proxy. The Trustees may
solicit such proxies from the Shareholders or any of them in any matter
requiring or permitting the Shareholders' vote or consent. A Shareholder
may authorize another person or persons to act for him or her as proxy by
transmitting or authorizing the transmission of a telegram, cablegram or
other means of electronic transmission to the person who will be the holder
of the proxy or to a proxy solicitation, proxy support service organization

<PAGE>

or like agent duly authorized by the person or persons who will be the
holder of the proxy to receive the transmission, provided that any
telegram, cablegram, or electronic transmission must either set forth or be
submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
Shareholder. For these purposes, "electronic transmission" shall mean any
process of communicating that is suitable for retaining, retrieving and
reproducing information by the recipient in a manner that does not directly
involve the physical transfer of paper, including telephonic delivery
pursuant to procedures adopted by the Board of Trustees.

7.9 REPORTS TO SHAREHOLDERS. The Trustees shall cause to be
prepared and mailed to the Shareholders not later than 120 days after the
close of each fiscal year of the Trust, and in any event not less than 15
days prior to the Trust's annual meeting of Shareholders, a report of the
business and operation of the Trust during such fiscal year, which report
shall constitute the accounting of the Trustees for such fiscal year. The
report shall be in such form and have such content as the Trustees deem
proper, but shall in any event include: (a) a balance sheet, an income
statement and a statement of changes in financial position, each prepared
in accordance with generally accepted accounting principles, shall be
audited by an independent certified public accountant thereon, and shall be
accompanied by the report of such accountant thereon; and (b) a description
of the material terms and circumstances of any transactions between the
Trust and any Trustee, officer or Affiliate, including, without limitation,
purchases from loans to or from or joint ventures with the Trust, and a
statement that a majority of the Trustees and a majority of the
disinterested Trustees determined that such transactions were fair and
reasonable to the Trust and on terms not less favorable than those
available from unaffiliated third parties.

7.10 FIXING RECORD DATE. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof or for the purpose of any other action, the Trustees
shall fix a date not more than 60 days prior to the date of any meeting of
Shareholders or distribution payment or other action as a record date for
the determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to take any other action. Any Shareholder who was a
Shareholder at the time so fixed shall be entitled to vote at such meeting
or adjournment thereof or to take such other action, even though he has
since that date disposed of his Shares, and no Shareholder becoming such
after that date shall be so entitled to vote at such meeting or any
adjournment thereof or to take such other action. The provisions of this
Section 7.10 shall not limit the rights of holders of Preferred Shares to
vote at any special meeting, as set forth in the designations of the
applicable Preferred Shares.

7.11 NOTICE TO SHAREHOLDERS. Any notice of meeting or other notice,
communication or report to any Shareholder shall be deemed duly delivered
to such Shareholder when such notice, communication or report is deposited,
with postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust, is
delivered in person to such Shareholder or by electronic transmission to a
Shareholder that has previously, in writing, consented to the electronic
transmission of notice and the Trust obtains evidence that the Shareholder
actually received the information by electronic mail return receipt. For
these purposes, "electronic transmission" shall have the meaning described
in Article VII, Section 7.8.

<PAGE>

7.12 SHAREHOLDERS' DISCLOSURE; TRUSTEES' RIGHT TO REFUSE TO TRANSFER
SHARES; LIMITATION ON HOLDINGS; REDEMPTION OF SHARES.

7.12.1 The Shareholders shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of the Shares as the Trustees deem necessary to comply with
Sections 856-860 of the Code or to comply with the requirements of any
taxing authority or governmental agency.

7.12.2 Whenever it is deemed by them to be reasonably
necessary to protect the tax status of the Trust as a REIT, the Trustees
may require a statement or affidavit from each proposed transferee of
Shares setting forth the number of Shares already owned by him and any
related person specified in the form prescribed by the Trustees and, in
connection therewith, if the proposed transfer may jeopardize the
qualification of the Trust as a REIT, the Trustees shall have the right,
but not a duty, to refuse to transfer the Shares to the proposed
transferee. All contracts for the sale or other transfer of Shares shall
be subject to this provision.

7.12.3 Notwithstanding any other provision of this Declaration
of Trust to the contrary and subject to the provisions of subsection
7.12.5, no person shall at any time directly or indirectly acquire
ownership in the aggregate of more than 9.9% of the outstanding Shares of
the Trust (the "Limit"). Shares owned by a person or group of persons in
excess of the Limit at any time shall be deemed "Excess Shares." For the
purposes of this Section 7.12, "person" shall have the meaning set forth in
Section 7701(a)(1) of the Code, and shall also mean any partnership,
limited partnership, syndicate or other group deemed to be a "person"
pursuant to Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended; and a person shall be deemed to own (a) Shares actually owned by
such person, (b) Shares constructively owned by such person after applying
the rules of Section 544 of the Code, and (c) Shares of which such person
is beneficial owner as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934. All Shares which any person has the right
to acquire upon exercise of outstanding rights, options and warrants, and
upon conversion of any securities convertible into Shares, if any, shall be
considered outstanding for purposes of the Limit if such inclusion will
cause such person to own more than the Limit.

7.12.4 The Trustees, by notice to the holder thereof, may
redeem any or all Shares that are Excess Shares (including Shares that
remain or become Excess Shares because of the decrease in outstanding
shares resulting from such redemption); and from and after the date of
giving of such notice of redemption ("Redemption Date") the Shares called
for redemption shall cease to be outstanding and the holder thereof shall
cease to be entitled to dividends, voting rights and other benefits with
respect to such Shares excepting only the right to payment by the Trust of
the redemption price determined and payable as set forth in the following
two sentences. Subject to the limitation on payment set forth in the
following sentence, the redemption price of each Excess Share called for
redemption shall be the average daily per Share closing sales price if the
Shares of the Trust are listed on a national securities exchange, and if
the Shares are not so listed shall be the mean between the average per
Share closing bid and asked prices, in each case during the 30 calendar day
period ending on the business day prior to the Redemption Date, or if there
have been no sales on a national securities exchange and no published bid
quotations and no published asked quotations with respect to Shares of the
Trust during such 30 calendar day period, the redemption price shall be the
price determined by the Trustees in good faith. Unless the Trustees
determine that it is in the interest of the Trust to make earlier payment
of all of the amount determined as the redemption price per Share in
accordance with the preceding sentence, the redemption price

<PAGE>

shall be payable only upon the liquidation of the Trust and shall not
exceed an amount which is the sum of the per Share distributions designated
as liquidation distributions and return of capital distributions declared
with respect to unredeemed Shares of the Trust of record subsequent to the
Redemption Date, and no interest shall accrue with respect to the period
subsequent to the Redemption Date to the date of such payments; provided,
however, that in the event that within 30 days after the Redemption Date
the person from whom the Excess Shares have been redeemed sells (and
notifies the Trust of such sale) a number of the remaining Shares owned by
him at least equal to the number of such Excess Shares (and such sale is to
a person in whose hands the Shares sold would not be Excess Shares), then
the Trust shall rescind the redemption of the Excess Shares if following
such rescission such person would not be the holder of Excess Shares,
except that if the Trust receives an opinion of its counsel that such
rescission would jeopardize the tax status of the Trust as a REIT then the
Trust shall in lieu of rescission make immediate payment of the redemption
price.

7.12.5 The Limit set forth in Section 7.12.3 shall not apply
to acquisitions of Shares pursuant to a cash tender offer made for all
outstanding Shares of the Trust (including securities convertible into
Shares) in conformity with applicable federal and state securities laws
where a majority of the outstanding Shares (not including Shares or
securities convertible into Shares held by the tender offerer and/or any
"affiliates" or "associates" thereof within the meaning of the Act) are
duly tendered and accepted pursuant to the cash tender offer; nor shall the
Limit apply to the acquisition of Shares by an underwriter in a public
offering of Shares, or in any transaction involving the issuance of Shares
by the Trust, in which a majority of the Trustees determine that the
underwriter or other person or party initially acquiring such Shares will
make a timely distribution of such Shares to or among other holders such
that, following such distribution, none of such Shares will be Excess
Shares.

7.12.6 The Trustees in their discretion may exempt from the
Limit ownership of certain designated Shares while owned by a person who
has provided the Trustees with evidence and assurance acceptable to the
Trustees that the qualification of the Trust as a REIT would not be
jeopardized thereby.

7.12.7 Notwithstanding any other provisions of this
Declaration of Trust to the contrary, any purported acquisition of Shares
of the Trust which would result in the disqualification of the Trust as a
REIT shall be null and void, ab initio.

7.12.8 Nothing contained in this Section 7.12 or in any other
provision of this Declaration of Trust shall limit the authority of the
Trustees to take such other action as they deem necessary or advisable to
protect the Trust and the interests of the Shareholders by preservation of
the Trust's qualification as a REIT under Section 856-860 of the Code.

7.12.9 If any provision of this Section 7.12 or any
application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the validity of
the remaining provisions shall not be affected and other applications of
such provision shall be affected only to the extend necessary to comply
with the determination of such court. To the extent this Section 7.12 may
be inconsistent with any other provision of this Declaration of Trust, this
Section 7.12 shall be controlling.

<PAGE>

7.13 INSPECTION BY SHAREHOLDERS. The Trust will maintain a list of
the names and addresses of all Shareholders as part of its books and
records. Inspection of the Trust's books and records (including a list of
Shareholders) by a state securities administrator shall be permitted upon
request upon reasonable notice and during normal business hours.
Inspection of the books and records of the Trust by the Shareholders shall
be permitted to the same extent as permitted under the laws of the
Commonwealth of Massachusetts applicable to business corporations.

ARTICLE VIII

LIABILITY OF TRUSTEES, SHAREHOLDERS
AND OFFICERS, AND OTHER MATTERS

8.1 LIMITATION OF LIABILITY OF TRUSTEES AND OFFICERS. The Trustees
of the Trust shall be deemed to be in a fiduciary relationship to the
Shareholders. No Trustee, officer, employee or other agent of the Trust
shall be liable to the Trust or to any Trustee or Shareholder for any act
or omission of any other Trustee, Shareholder, officer, agent or employee
of the Trust or be held to any personal liability whatsoever in tort,
contract or otherwise, in connection with the affairs of this Trust if it
is determined that such person acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of
the Trust, unless such liability was the result of gross negligence or
misconduct by the person.

8.2 LIMITATION OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OFFICERS.

The Trustees and officers in incurring any debts, liabilities or
obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and shall be deemed to be, acting as
Trustees or officers of the Trust and not in their own individual
capacities. Except to the extent provided in Section 8.1, no Trustee,
officer or Shareholder shall be liable for any debt, claim, demand,
judgment, decree, liability or obligation of any kind of, against or with
respect to the Trust arising out of any action taken or omitted for or on
behalf of the Trust and the Trust shall be solely liable therefor and
resort shall be had solely to the Trust Estate for the payment or
performance thereof. Each Shareholder shall be entitled to pro rata
indemnity from the Trust Estate if, contrary to the provisions hereof, such
Shareholder shall be held to any such personal liability.

8.3 EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS. As far as
practicable, the Trustees shall cause any written instrument creating an
obligation of the Trust to include a reference to this Declaration and to
provide that neither the Shareholders nor the Trustees nor the officers of
the Trust shall be liable thereunder and that the other parties to such
instrument shall look solely to the Trust Estate for the payment of any
claim of such obligation. The omission of this provision from any such
instrument shall not render the Shareholders or any Trustee or officer of
the Trust liable nor shall the Trustees or any officer of the Trust be
liable to anyone for such omission.

8.4 INDEMNIFICATION. Any person made a party to any action, suit
or proceeding or against whom a claim or liability is asserted by reason of
the fact that he, his testator or intestate was or is a Trustee, officer,
employee or other agent acting on behalf of the Trust shall be indemnified
and held harmless by the Trust against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claim sustained by them in
connection with the Trust, provided that (a) such person has determined, in
good faith, that the course of conduct which caused the loss or liability
was in the best interests of the Trust, (b) such liability or loss was not
the result of gross negligence or misconduct by such person, and (c) such
indemnification or agreement to hold harmless is recoverable only out of
the assets of the Trust and not from the personal assets of any
Shareholder. Indemnification will not be allowed for any liability imposed

<PAGE>

by judgment, and costs associated therewith, including attorneys' fees,
arising from or out of a violation of state or federal securities laws
associated with the offer and sale of the Shares. Indemnification will not
be allowed for losses, liabilities, settlements and related expenses of
lawsuits alleging securities law violations unless (1) a court approves the
settlement and finds that indemnification of the settlement and related
costs should be made, or (2) there has been a dismissal with prejudice or a
successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee. Any person
seeking indemnification shall apprise the court of the position of the
Securities and Exchange Commission and the Massachusetts Securities
Division with respect to indemnification for securities law violations,
before seeking court approval for indemnification. The Trust may advance
funds to any person for legal expenses and other costs incurred as a result
of a legal action initiated against the person if (i) the legal action
relates to the performance of duties or services by the person on behalf
of the Trust; and (ii) such person agrees in writing to repay the advanced
funds to the Trust if it is ultimately determined that he or she is not
entitled to indemnification by the Trust as authorized herein. The rights
accruing to any person under these provisions shall not exclude any other
right to which he or she may be lawfully entitled, nor shall anything
contained herein restrict the right of any person to contribution as may
be available under applicable law. The Trust shall have power to purchase
and maintain liability insurance on behalf of any person entitled to
indemnity hereunder, including the Trustees, but the Trust shall not incur
the cost of that portion of liability insurance which insures any party
against any liability for which he or she could not be indemnified under
this Declaration.

8.5 RIGHT OF TRUSTEES AND OFFICERS TO OWN SHARES OR OTHER PROPERTY
AND TO ENGAGE IN OTHER BUSINESS. Any Trustee or officer may acquire, own,
hold and dispose of Shares in the Trust, for his individual account, and
may exercise all rights of a Shareholder to the same extent and in the same
manner as if he were not a Trustee or officer. Any Trustee or officer may
have personal business interests and may engage in personal business
activities, which interests and activities may include the acquisition,
syndication, holding, management, development, operation or investment in,
for his own account or for the account of others, interests in real
property or persons engaged in the real estate business. Subject to the
provisions of Article V and Section 3.10, any Trustee or officer may be
interested as trustee, officer, director, stockholder, partner, member or
employee, or otherwise have a direct or indirect interest in any person who
may be engaged to render advice or services to the Trust, and may receive
compensation from such person as well as compensation as Trustee, officer
or otherwise hereunder and no such activities shall be deemed to conflict
with his duties and powers as Trustee or officer.

8.6 TRANSACTIONS WITH AFFILIATES. The Trust shall not engage in
transactions with any Trustee, officer or any Affiliated person of such
Trustee or officer, except to the extent that each such transaction has,
after disclosure of such affiliation, been approved or ratified by the
affirmative vote of a majority of the Independent Trustees who are not
interested parties in the transactions after a determination by them that:

8.6.1 the transaction is fair and reasonable to the Trust and
its Shareholders;

8.6.2 the terms of such transaction are at least as favorable
as the terms of any comparable transactions made on an arm's length basis;

<PAGE>

8.6.3 payments to any Trustee or officer for services rendered
in a capacity other than that as Trustee, or officer may only be made upon
determination that:

a. the compensation is not in excess of their compensation
paid for any comparable services; and

b. the compensation is not greater than the charges for
comparable services available from others who are competent and not
affiliated with any of the parties involved.

8.7 PERSONS DEALING WITH TRUSTEES OR OFFICERS. Any act of the
Trustees or officers purporting to be done in their capacity as such shall,
as to any persons dealing with such Trustees or officers, be conclusively
deemed to be within the purposes of this Trust and within the powers of the
Trustees and officers. No person dealing with the Trustees or any of them,
or with the authorized officers, agents or representatives of the Trust
shall be bound to see to the application of any funds or property passing
into their hands or control. The receipt of the Trustees or any of them,
or of authorized officers, agents or representatives of the Trust, for
moneys or other consideration, shall be binding upon the Trust.

ARTICLE IX

DURATION, TERMINATION, AMENDMENT
AND REORGANIZATION OF TRUST

9.1 DURATION AND TERMINATION OF TRUST. The duration of the Trust
shall be perpetual unless a majority of the Trustees shall determine that
the Trust should be terminated and liquidated. Any determination by the
Trustees of the date upon which termination shall occur shall be reflected
in a vote of or written instrument signed by a majority of all of the
Trustees then in office, including a majority of the Independent Trustees;
provided that the Trust shall be subject to termination at any time by the
vote or consent of Shareholders holding or having the right to vote a
majority of the outstanding Shares entitled to vote thereon.

9.1.1 Upon the termination of the Trust;

a. the Trust shall carry on no business except for the
purpose of winding up its affairs;

b. the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up, including
the power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or otherwise dispose of
all or any part of the remaining Trust Estate to one or more persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay
its liabilities, and do all other acts appropriate to liquidate its
business (and provided that the Trustees may, if permitted by applicable
law, and if they deem it to be in the best interest of the Shareholders,
appoint a liquidating trustee or agent or other entity to perform one or
more of the foregoing functions); and

<PAGE>

c. after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, and
after payment in full of the liquidation preferences to holders of any
Preferred Shares as required under the applicable designations of Preferred
Shares, the Trustees or any liquidating trust, agent or other entity
appointed by them, shall distribute the remaining Trust Estate among the
Shareholders, pro rata, according to the number of Shares held by each.

If any plan for the termination of the Trust approved by Shareholders
holding or having the right to vote two-thirds of the outstanding Shares
and agreeable to a majority of the Trustees provides for actions of the
Trustees other than as aforesaid, the Trustees shall have full authority to
take all action as in their opinion is necessary or appropriate to
implement such plan.

9.1.2 After termination of the Trust and distribution to the
Shareholders as provided herein or in any such plan so approved by the
Shareholders, the Trustees shall execute and include among the records of
the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder and the rights and interests of
all Shareholders hereunder shall thereupon cease.

9.2 MERGER, ETC. Upon the vote or written consent of a majority of
the Trustees, and with the approval of Shareholders holding or having the
right to vote two-thirds of the Shares then outstanding, at a meeting the
notice for which included a statement of the proposed action, the Trustees
may (a) merge the Trust into, or sell, convey and transfer the Trust Estate
to, any corporation, association, trust or other organization, which may or
may not be a subsidiary of the Trust, in exchange for shares or securities
thereof, or beneficial interests therein, or other consideration, and the
assumption by such transferee of the liabilities of the Trust and (b)
thereupon terminate the Trust and, subject to this Section 9 and in
compliance with the designations of any Preferred Shares, distribute such
shares, securities, beneficial interests or other consideration ratably
among the Shareholders in redemption of their Shares; provided, however,
that: (i) the Shareholders would, thereafter, be the sole equity owners of
such entity; and (ii) such entity and the Shareholders would thereafter be
subject to federal income tax in much the same manner as they were so long
as the Trust qualified as a REIT.

9.3 AMENDMENT PROCEDURE. This Declaration may be amended by the
vote or written consent of a majority of the Trustees and of Shareholders
holding or having the right to vote a majority of the outstanding Shares;
provided, however, that no amendment which would reduce the priority of
payment or amount payable to holders of Shares of the Trust upon
liquidation of the Trust or that would diminish or eliminate any voting
rights pertaining to holders of Shares shall be made unless approved by the
vote or consent of Shareholders holding or having the right to vote two-
thirds of the outstanding Shares; provided further, however, that a
majority of the Trustees without the vote or consent of Shareholders may at
any time amend the Declaration to the extent deemed by the Trustees in good
faith to be necessary (i) to clarify any ambiguities or correct any
inconsistencies; (ii) to meet the requirements for qualification as a real
estate investment trust under Sections 856-860 of the Code or any
interpretation thereof by a court or other governmental agency of competent
jurisdiction, but the Trustees shall not be liable for failing so to do;
(iii) (a) to restructure the Trust's activities to the extent necessary to
comply with any exemption in the final plan asset regulation adopted by the

<PAGE>

Department of Labor, including establishing a fixed percentage of Shares
permitted to be held by Qualified Plans or other Tax-Exempt Entities,
discontinuing sales to such investors after a given date as necessary to
obtain a prohibited transaction exemption from the Department of Labor
and/or (b) to terminate the offering or to compel a dissolution and
termination of the Trust. Actions by the Trustees pursuant to the third
paragraph of Section 1.1 hereof or pursuant to Subsection 10.3.1 hereof
that result in amending this Declaration may also be effected without vote
or consent of any Shareholder.

ARTICLE X

MISCELLANEOUS

10.1 APPLICABLE LAW. This Declaration of Trust is made in The
Commonwealth of Massachusetts; the situs, domicile and residency of the
Trust for all purposes is Massachusetts; and the Trust is created under and
is to be governed by and construed and administered according to the laws
of such Commonwealth, including the Massachusetts Business Corporation Law
as the same may be amended from time to time, to which reference is made
with the intention that matters not specifically covered herein or as to
which an ambiguity may exist shall be resolved as if the Trust were a
Massachusetts business corporation, but the reference to such Business
Corporation Law is not intended to and shall not give the Trust, the
Trustees, the Shareholders or any other person any right, power, authority
or responsibility available only to or in connection with an entity
organized in corporate form.

10.2 FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of The Commonwealth of Massachusetts and with the Boston City
Clerk, as well as any other governmental office where such filing may from
time to time be required, but the failure to make any such filing shall
not impair the effectiveness of this instrument or any such amendment.
Anyone dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such amendments have been made, as to
the identities of the Trustees and officers, and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it
were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument, and
all expressions like "herein," "hereof," and "hereunder" shall be deemed to
refer to this instrument as a whole as the same may be amended or affected
by any such amendments. The masculine gender shall include the feminine
gender and the neuter. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.

10.3 PROVISIONS OF THE TRUST IN CONFLICT WITH LAW OR REGULATIONS.

10.3.1 The provisions of this Declaration are severable and if
a majority of the Trustees shall determine, with the advice of counsel,
that any one or more of such provision (the "Conflicting Provisions") would
have the effect of preventing the Trust from qualifying as a real estate
investment trust under Sections 856-860 of the Code (and if the Trustees
have determined the Trust should elect to be taxed as a REIT under the
Code) or are in conflict with other applicable federal or state laws or
regulations, the Conflicting Provisions shall be deemed never to have
constituted a part of the Declaration; provided, however, that such
determination by the Trustees shall not affect or impair any of the
remaining provisions of this Declaration or render invalid or improper any
action taken or omitted (including but not limited to the election of

<PAGE>

Trustees) prior to such determination. A certification signed by a
majority of the Trustees setting forth any such determination and reciting
that it was duly adopted by the Trustees, or a copy of this Declaration,
with the Conflicting Provisions removed pursuant to such a determination,
signed by a majority of the Trustees, shall be conclusive evidence (except
as to Shareholders, as to whom it shall only be prima facie evidence) of
such determination when included in the records of the Trust. The Trustees
shall not be liable for failure to make any determination under this
Section 10.3.1. Nothing in this Section 10.3.1 shall in any way limit or
affect the right of the Trustees to amend this Declaration as provided in
Section 9.3.

10.3.2 If any provision of this Declaration shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render invalid
or unenforceable any other provision of this Declaration, and this
Declaration shall be carried out as if any such invalid or unenforceable
provisions were not contained herein.

10.4 BINDING EFFECT; SUCCESSOR IN INTEREST. Each person who becomes
a Shareholder shall, as a result thereof, be deemed to have agreed to and
to be bound by the provisions of this Declaration of Trust. This
Declaration shall be binding upon and inure to the benefit of the Trustees
and the Shareholders and each of their respective successors, assigns,
heirs, distributees and legal representatives.

<PAGE>

ADDRESSES OF TRUSTEES
---------------------

Walter E. Auch, Sr.
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606

Norman M. Gold
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606

Marvin A. Sotoloff
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606

Leonard G. Levine
c/o Banyan Strategic Realty Trust
150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606

387959

<PAGE>

CERTIFICATE

The undersigned, being the duly elected, qualified and acting
President of Banyan Strategic Realty Trust, a Massachusetts business trust
("BSRT"), and as President having authority to certify as true and correct
resolutions of the board of trustees of BSRT (the "Trustees"), does hereby
certify that the Trustees have adopted and approved the amendments to the
Amended and Restated Declaration of Trust of BSRT reflected in the Third
Amended and Restated Declaration of Trust of BSRT, and that these
amendments were approved by BSRT's shareholders at the Annual Meeting of
Shareholders held December 13, 1999, as subsequently adjourned.

IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
December, 1999.

------------------------------
Leonard G. Levine
President

EXHIBIT 10.1
- ------------

EMPLOYMENT AGREEMENT

This Agreement (the "Agreement") is made and entered into as of
December 14, 1999 by and between Leonard G. Levine (the "Executive") and
Banyan Strategic Realty Trust (the "Trust").

WHEREAS, the Executive is employed as the Trust's President and Chief
Executive Officer pursuant to an employment agreement entered into as of
October 1, 1997 (the "Existing Employment Agreement");

WHEREAS, the election of Daniel Levinson, Stephen Peck, L.G. Schafran
and Leonard G. Levine on December 13, 1999 to the Board of Trustees of the
Trust (the "Board") will constitute a Change of Control under the Existing
Employment Agreement (the "Board Change") entitling the Executive to
terminate the Existing Employment Agreement and receive certain payments
thereunder;

WHEREAS, the Trust is desirous of retaining the Executive to continue
to serve as the Trust's President and Chief Executive Officer;

WHEREAS, the Executive is willing to continue to serve as the Trust's
President and Chief Executive Officer and to waive his rights to terminate
the Existing Employment Agreement as a result of the Board Change, provided
the Trust enters into this Agreement with the Executive on the terms and
conditions set forth herein;

NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Trust and
the Executive do hereby agree as follows:

1. EMPLOYMENT DUTIES. The Trust agrees to employ the Executive as
the President and Chief Executive Officer of the Trust to perform such
duties as may reasonably be assigned from time to time consistent with this
position by the Board.

2. PERFORMANCE. The Executive accepts the appointment described in
Section 1 of this Agreement and agrees to faithfully and diligently perform
the services described therein.

3. EFFECTIVENESS; TERM. This Agreement (other than Section 6
hereof) shall become effective upon a Triggering Event (as defined below)
(the date of such Triggering Event being the "Effective Date") and will
remain in effect until the end of the thirtieth month following such
Triggering Event (such 30 month period being the "Initial Term") and
thereafter shall automatically renew for six-month periods (each such six-
month period being a "Renewal Term", and the Initial Term together with any
Renewal Terms being the "Term") unless either party notifies the other in
writing no later than ninety (90) days prior to the end of the applicable
Initial Term or Renewal Term, as the case may be, of its desire to
terminate the Agreement as of the end of the term then in effect; provided,
however, that for this Agreement to become effective the Triggering Event
must occur prior to January 1, 2002 and the Executive must have remained in
the employ of the Trust through the date of the Triggering Event.
Notwithstanding any other provision of this Agreement, Section 6 hereof
shall become effective on the date hereof. On the Effective Date, the
Existing Employment Agreement shall terminate and be of no further force
and effect. For purposes of this Agreement, the term "Triggering Event"
shall mean the first to occur of (w) the date a Plan of Liquidation of the
Trust becomes effective, (x) the date the Trust sells all or substantially

<PAGE>

all of its assets in a single transaction or series of related
transactions, (y) the date the Trust merges into any corporation,
association, trust or other organization where the Trust is not the
surviving entity and the successor of the Trust is not 50% or more
beneficially owned by the Trust's beneficial owner's prior to the merger
(either of (x) or (y) being a "Sale"); or (z) a Change of Control but only
if none of the events described in (w), (x) or (y) above have occurred.

4. SALARY. For the services to be rendered by the Executive
hereunder, the Trust shall pay the Executive a base salary (the "Base
Salary") at an annual rate of $210,000 per year during the Initial Term and
$250,000 per year during any Renewal Term.

5. INCENTIVE COMPENSATION. (a) As soon as practicable following the
Effective Date, the Trust shall pay to the Executive an amount equal to the
sum of (x) the remaining base salary (at a rate of $210,000 per annum) the
Executive would have been entitled to receive over the remaining period of
the Existing Employment Agreement had it not been terminated on the
Effective Date, (y) the excess of (i) $387,500 over (ii) all Additional
Compensation (as defined in the Existing Employment Agreement) which was
earned and paid or payable to the Executive between the date hereof and the
Effective Date, and (z) $210,000; provided, however, that the amounts
calculated under (x) and (y) above shall be discounted to present value
from when they would otherwise have been paid pursuant to the Existing
Employment Agreement utilizing a discount rate equal to the yield payable
on three-month Treasury bills on the Effective Date as published in the
Wall Street Journal plus 100 basis points. If the Effective Date is not a
business day, then such discount rate shall be determined by reference to
the Treasury bill yield on the last business day before the Effective Date.

(b) In addition, in the event that the Triggering Event is the date a
Plan of Liquidation became effective, the Executive will be able to earn
incentive compensation hereinafter referred to as "Liquidation
Compensation." The Executive will earn Liquidation Compensation each time
the Trust pays a distribution to its holders during the Term based on the
following formula: Liquidation Compensation equals the product of the
Liquidation Base Amount and the Applicable Liquidation Incentive Factor
less any Liquidation Compensation previously paid to the Executive during
the Term.

For purposes of calculating amounts payable under this Section 5(b):

(A) "Application Liquidation Incentive Factor" shall mean the
percentage set forth in the second column of the following table:

Present Value of Liquidation
Aggregate Per Share Distributions Incentive Factor
- --------------------------------- ----------------

Less than $5.75 0%
$5.75 - $5.99 50%
$6.00 - $6.24 75%
$6.25 - $6.49 100%
$6.50 - $6.74 125%
$6.75 - $6.99 150%
$7.00 - $7.24 175%
$7.25 and over 200%

(B) "Liquidation Base Amount" shall mean four hundred twenty
thousand dollars ($420,000).

<PAGE>

(C) "Per Share Distribution Paid to Holders" shall be equal
to (i) the cash paid or the non-cash value of the distributions, as
determined by the Board exercising reasonable business judgment, paid or
payable to the Trust's holders of beneficial interest during the Term,
including repurchase by means of an issuer tender offer or open market
repurchase plan conducted in accordance with Rule 10b-18 promulgated under
the Securities Exchange Act of 1934, as amended, or a tender offer, divided
by (ii) the number of shares of beneficial interest outstanding on the
record date of the distribution or, in the case of a tender offer or open
market repurchases, the number of shares of beneficial interest outstanding
on the business day before the tender offer or open market repurchase
program begins.

(D) "Present Value of Aggregate Per Share Distributions"
shall mean the sum of the Per Share Distribution Paid to Holders discounted
from the date of payment to the date that the Plan of Liquidation became
effective using a discount rate equal to 12% per annum.

To illustrate, if at the end of the first year of the Plan of
Liquidation the Trust pays a distribution equal to $6.50 per share to its
holders of beneficial interest, then the Trust will pay the Executive
Liquidation Compensation of $210,000, which is equal to the product of the
Liquidation Base Amount ($420,000) and the Applicable Liquidation Incentive
Factor, which in this case is 50% ($6.50 discounted at 12% for one year,
$5.80). If at the end of the second year the Trust pays a distribution
equal to $1.00 per share to its holders of beneficial interest, then the
Trust will pay the Executive, Liquidation Compensation of $315,000, which
is equal to the product of Liquidation Base Amount ($420,000) and the
Applicable Liquidation Incentive Factor, which in this case is 125%
(Present Value of Aggregate Per Share Distributions equal $6.60) less the
$210,000 paid in the previous year.

Payment of any Liquidation Compensation earned under this Section 5
shall be made in cash no later than ten (10) business days after a
distribution is paid to the holder of shares of beneficial interest of the
Trust.

6. WAIVER OF CHANGE OF CONTROL/BOARD CHANGE; AMENDMENTS TO EXISTING
EMPLOYMENT AGREEMENT; OPTIONS. (a) Notwithstanding the fact that this
Agreement shall not become effective until the Effective Date, the
Executive hereby waives, effective on the date hereof, any and all rights
and/or payments or benefits he may have or be entitled to pursuant to the
Existing Employment Agreement as a result of the Board Change or any Change
of Control (as defined in (b) below) occurring immediately prior to or
contemporaneously with a Triggering Event.

(b) The Existing Employment Agreement shall be amended, as of the
date hereof, so that "Change of Control", which was defined in Section 9(c)
of the Existing Employment Agreement, shall be defined as the date on which
the members of the Board on the date of this amendment fail to constitute
at least a majority of the Board; provided, however, that (i) any
individual becoming a member of the Board with the Executive's consent
shall be deemed to have been a Board member on the date of this amendment
and (ii) the Board position occupied by Daniel Levinson shall not be deemed
to have changed if such position is occupied by an employee of Morgens,
Waterfall, Vintiadis & Co., Inc. or an employee of one of its affiliates.
For purposes of this Agreement, "Change of Control" shall have the meaning
provided in this Section 6(b).

<PAGE>

(c) All Options (as defined in the Existing Employment Agreement)
held by the Executive (or his permitted transferee) shall become fully
vested and exercisable on the date hereof and shall remain so for 30 days.
Following the 30 day period, any unexercised Options shall terminate and be
of no force and effect. In addition, the Trust agrees to lend to the
Executive (or his permitted transferee), a sufficient amount to permit him
to exercise his Options. The loan will be secured by the shares the
Executive (or his permitted transferee) receives upon exercise of his
Options and shall be evidenced by a note and pledge and security agreement
substantially in the form of Appendix 6A and 6B, respectively, to this
Agreement.

7. LIFE INSURANCE/DISABILITY BENEFITS. Except as provided herein,
during the term of this Agreement, the Trust shall continue to pay all
premiums when due on life insurance policy numbers 8,783,869 and 8,636,508
and issued by New England Mutual Life Insurance Company, the beneficiaries
of which shall be designated by the Executive. A copy of the policy
schedule and schedule of renewal premiums for each policy is attached
hereto as Annex A. If at any time during the term of this Agreement the
Executive is permanently unable to perform his duties hereunder by reason
of illness, accident or other disability (as confirmed by competent medical
evidence), then the Trust shall continue to pay Executive one hundred
percent (100%) of his Base Salary then in effect for six months following
the date of such disability (the "Disability Payment") to the extent such
period is not otherwise covered by insurance; (but with no obligation to
pay any Liquidation Compensation contemplated by this Agreement, except for
Liquidation Compensation previously earned but not paid, if any). Except
as otherwise provided in this Agreement, until the end of the Term, the
Trust shall continue to pay all premiums when due on policy number
8,059,767 issued on May 13, 1993 by Massachusetts Mutual Life Insurance
Company (f/k/a Connecticut Mutual Life Insurance Company) naming the
Executive as the insured. A copy of the policy specifications is attached
hereto as Annex B.

8. OTHER BENEFITS. The Executive shall be eligible for all non-wage
benefits the Trust provides generally to its other salaried employees. In
addition, the Trust shall reimburse the Executive for reasonable, ordinary
and necessary business expenses incurred by the Executive in connection
with performing his duties under this Agreement; provided, however, that
the Executive shall provide the Trust with an accounting conforming to
Internal Revenue Service or other requirements substantiating the nature of
all reimbursable expenses. All such reimbursements shall be payable to the
Executive within a reasonable time after receipt of the appropriate
documentation.

9. TERMINATION. The Trust may terminate the Executive's employment
at any time for any reason or no reason.

(a) Termination for Just Cause. The Trust may terminate this
Agreement for "Just Cause." For purposes of this Agreement, "Just Cause"
shall mean the occurrence of any one or more of the following events: (i)
the conviction or rendering of a civil judgment against the Executive for
theft or embezzlement of Trust property; (ii) the rendering of a civil
judgment against the Executive for breach of a duty of loyalty owed to the
Trust; (iii) conviction of the Executive of a felony resulting in injury to
the business, property or reputation of the Trust or any affiliate of the
Trust; or (iv) a decision rendered by an arbitrator, in an arbitration to
be initiated by the Trust that the Executive shall have refused to or
willfully failed to perform his material duties under this Agreement, shall
have committed intentional acts that caused material damage to the business
or property of the Trust, or performed his material duties under this
Agreement in a manner that constituted gross negligence which caused or is
causing material damage to the business or property of the Trust. The sole
purpose of such arbitration shall be

<PAGE>

to determine whether the Trust has "Just Cause" to terminate the
Agreement of the Executive under (iv) hereof. The Trust shall not
terminate the Agreement or the Executive for "Just Cause" before the
Executive has been convicted or before a civil judgment has been rendered
against the Executive or before the Trust has obtained an arbitrator's
final decision regarding "Just Cause" as the case may be. If the Trust
terminates this Agreement or the Executive for "Just Cause" before
obtaining an arbitrator's final decision or before a civil judgment has
been rendered, the Trust shall be deemed to immediately and irrevocably
waive and release any and all grounds that it has or may have at the time
to terminate this Agreement or the Executive for "Just Cause." The
arbitration shall be final and binding and held in the City of Chicago
before a single arbitrator and in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect,
except as specifically otherwise provided in this Section 9. The
arbitrator shall be selected from a group of professionals associated with
JAM/Endispute and each party shall have the right to serve document
requests and up to twenty-five interrogatories and to take up to three
depositions each of which shall last no more than four hours. Except as
set forth below, the filing of the arbitration or initiation of a civil
proceeding shall not excuse any party from performing its obligations under
this Agreement; and during the pendency of the arbitration, all parties
shall continue to perform their respective obligations in good faith,
subject to any rights to terminate this Agreement that may be available to
any party other than for "Just Cause" except that the Trust may suspend or
place the Executive on leave, with pay, upon the commencement of any
criminal or civil proceeding (including arbitration) alleging any of the
events set forth in (i)-(iv) above.

(b) Termination by Executive. The Executive may terminate this
Agreement: (i) at any time by written notice given to the Trust at least
ninety (90) days in advance of the termination date set forth in the notice
("Executive Termination"); (ii) within 90 days following the Effective Date
if the Triggering Event was a Sale; (iii) within 30 days following a Change
of Control (as defined in Section 6(b)) if the Triggering Event was not a
Sale, or (iv) except for suspension as described in Section 9(a) above and
any reduction in authority or working conditions resulting solely form the
adoption or implementation of a plan of liquidation, if the Executive's
authority is materially reduced, if there has been a material adverse
change in the Executive's working conditions or if the Trust requires the
Executive to relocate from the Chicago metropolitan area and the Executive
refuses (any of (ii), (iii) or (iv) being a "Constructive Termination").

(c) Payment in case of Termination. (i) Except for the
Disability Payment and for payments which accrued or were payable prior to
the date of termination, upon a termination for "Just Cause", as a result
of the Executive's death of disability, or because of an Executive
Termination, the Trust shall have no further obligations hereunder,
including any obligation to pay the insurance premiums on the policies
referenced in Section 7 (although, in the event of death or disability, the
Executive may be entitled to benefits pursuant to the terms of a welfare
benefit plan (e.g., life insurance, disability, etc.) sponsored by the
Trust).

<PAGE>

(ii) If the Trust terminates this Agreement or the Executive
for any reason other than for "Just Cause", death or disability (including
before an arbitrator has issued his or her final decision regarding "Just
Cause" pursuant to Section 9(a)(iv) or before a court has entered a civil
judgment, but excluding any termination as a result of the Executive's
death or disability) or if the Executive terminates this Agreement for a
Constructive Termination, the Trust shall, as its sole obligation: (A)
within 10 business days following his resignation form the Board, pay the
Executive all Base Salary which would have been paid to the Executive,
discounted to present value as described below, over the remainder of the
Term; (B)continue paying the premiums on the insurance policies referenced
in Section 7 hereof for the remainder of the Term; and (C) within 10
business days following his resignation from the Board, pay the Executive
the excess of (x) 180% of the Liquidation Base Amount, over (y) any
payments previously made pursuant to Section 5(b); provided, further that
the amount of the Base Salary due the Executive under (A) above shall be
discounted to present value as of the date of termination utilizing a
discount rate equal to the yield on three-month Treasury bills on the date
of termination as published in the Wall Street Journal plus 100 basis
points. If the date of termination is not a business day, then such
discount rate shall be determined by referenced to the Treasury bill yield
on the last business day before the termination date.

(iii) In the event of any termination of the Executive's
employment (other than as a result of death), the Executive shall, within
60 days following his receipt of written notice (the "60 Day Period") from
the Company requesting his resignation, resign any position he holds on the
Board. Notwithstanding any other provision of this Agreement, the
Executive shall not be entitled to any payments or benefits pursuant to
this Section 9 until after he has resigned any position he holds on the
Board. In the event that the Executive has not resigned such position
prior to the end of the 60 Day Period, then, notwithstanding any other
provision of this Agreement, the Executive shall not be entitled to receive
any payments or benefits pursuant to the provisions of this Section 9 or
any indemnification pursuant to Section 11 hereof and, in the event any
such payments or benefits have already been made or provided, then the
Executive agrees to return to the Trust any such payments and reimburse the
Trust for any such benefits.

10. OTHER ACTIVITIES OF EXECUTIVE. The Executive shall be required
to devote such working time and attention to the Trust's business as is
necessary to carry out his responsibilities hereunder. The Executive shall
not engage in any activity which may be adverse to the Trust's business,
appropriate or usurp business opportunities or engage or invest in
businesses or assets which compete directly or indirectly with the Trust.
Nothing contained herein shall prohibit the Executive from investing in
publicly-traded entities which are engaged in lines of businesses similar
to the Trust or from engaging in the real estate activities of Oak Realty
as such activities are conducted on the date of this Agreement. The
Executive shall not become an officer or ten percent (10%) shareholder of
any entity with the exception of Oak Realty. These obligations and
limitations shall be in addition to those provided by law.

11. INDEMNIFICATION. The Trust shall indemnify and hold harmless
the Executive from liabilities which the Executive may incur resulting from
or arising out of any act undertaken in connection with the Executive's
duties under the Agreement in the same manner and to the same extent as the
Trust is permitted to indemnify any trustee or other officer of the Trust
under the Trust's Amended and Restated Declaration of Trust, as may be
amended.

<PAGE>

12. GENERAL PROVISION.

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

If to the Trust:

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

with copies to:

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

If to the Executive:

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

with a copy to:

Alan B. Patzik, Esq.
Patzik Frank & Samotny Ltd.
150 South Wacker Drive
Suite 900
Chicago, Illinois 60606

The notice shall be deemed to be received on the earlier of (i) the
date of its actual receipt by the party entitled thereto and (ii) the third
business day following the date of mailing.

(b) Amendment and Waiver. No amendment or modification to
this Agreement shall be valid or binding on the Trust unless made in
writing and signed by an officer of the Trust duly authorized by the Board
or upon the Executive unless made in writing and signed by the Executive.
The waiver by the Trust or the Executive of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach.

(c) Entire Agreement. This Agreement shall, on the Effective
Date, constitute the entire agreement between the parties with respect to
the Executive's duties, compensation and severance as an employee of the
Trust, there are representations, warranties, agreements or commitments
between the parties hereto with respect to the Executive's employment
except as set forth herein.

(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois.

<PAGE>

(e) Severability. If any provision of this agreement shall,
for any reason, be held unenforceable, the provision shall be severed from
this Agreement unless, as a result of severance, the Agreement fails to
reflect the basis intent of the parties on the date hereof. If the
Agreement reflects the basic intent of the parties on the date hereof, then
the invalidity of any specific provision shall not affect the
enforceability of any other provision herein, and the remaining provisions
shall remain in full force and effect.

(f) Assignment. Except as provided herein, the Executive may
not, under any circumstances delegate any of his rights and obligations
hereunder without the prior written consent of the Trust. This Agreement
and all of the Trust's rights and obligations hereunder may be assigned or
transferred by it, in whole or in part, to be binding upon and inure to the
benefit of any subsidiary or successor of the Trust.

(g) Cost of Enforcement. In any suit or proceeding seeking to
enforce the terms, covenants or conditions of this Agreement, the
prevailing parties shall, in addition to all of the remedies and relief
that may be available under this Agreement or applicable law, recover his
or its reasonable attorneys' fees and costs as shall be determined and
awarded by the court or the arbitrator.

(h) Withholding. The Trust shall be entitled to withhold from
payment any amount of withholding required by law.

(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.

<PAGE>

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

BANYAN STRATEGIC REALTY TRUST

By: _________________________________
Name: Robert G. Higgins
Title: Vice President

EXECUTIVE

___________________________
Leonard G. Levine

EXHIBIT 21
- ----------

SUBSIDIARIES OF BANYAN STRATEGIC REALTY TRUST

NAME OF SUBSIDIARY STATE OF ORGANIZATION
------------------- ----------------------
Banyan/Morgan Milwaukee Limited Partnership Illinois
Banyan/Morgan Willowbrook L.P. Illinois
BSLT Milwaukee Corp. Illinois
BSRT Lexington Trust Massachusetts
BSRT Lexington B Corp. Illinois
BSRT/M&J Northlake Limited Partnership Illinois
BSRT Merger Corp. Illinois
BSRT Newtown Trust Massachusetts
BSRT Northlake Festival Corp. Illinois
BSRT Kentucky Management Corp. Illinois
BSRT Riverport Trust Massachusetts
BSRT/STM Business Center Trust Massachusetts
BSRT Willburr Corp. Illinois
BSRT Woodcrest Office Corp. Illinois
BSRT Woodcrest Office Park Limited Partnership Illinois
Banyan/Morgan MOC Limited Partnership Illinois
BSRT Brook Corp. Illinois
BSRT UPREIT Corp. Illinois
BSRT UPREIT Limited Partnership Illinois
BSRT Butterfield Office Plaza L.L.C. Illinois
BSRT Southlake L.L.C. Illinois
BSRT University Square L.L.C. Illinois
BSRT Technology Center L.L.C. Illinois
BSRT Airways Plaza L.L.C. Illinois
BSRT Management Corp. Illinois
BSRT Peachtree Pointe L.L.C. Illinois
BSRT 316 Business Center L.L.C. Illinois
BSRT Avalon Center L.L.C. Illinois
BSRT Sand Lake Tech Center L.L.C. Illinois
BSRT Park Center L.L.C. Illinois
BSRT Metric Plaza L.L.C. Illinois
BSRT Avalon Ridge L.L.C. Illinois
BSRT University Corporate Center L.L.C. Illinois
BSRT Fountain Square L.L.C. Illinois
BSRT Phoenix Business Park L.L.C. Illinois
BSRT Portfolio Corp. Illinois
Tower Lane Limited Partnership Illinois
Butterfield O'Hare L.P. Illinois
BSRT Milwaukee Elmhurst L.L.C. Illinois
BSRT Johns Creek L.L.C. Illinois
BSRT Portfolio C Corp. Illinois
Banyan/Morgan Wisconsin L.L.C. Illinois
Banyan/Morgan Elmhurst L.L.C. Illinois
BSRT Technology Park (GA.) L.L.C. Illinois
BSRT Portfolio B Corp. Illinois
BSRT Oklahoma Woodrun L.L.C. Illinois
BSRT Oklahoma Winchester Run L.L.C. Illinois
BSRT Oklahoma Country Creek L.L.C. Illinois
BSRT Oklahoma Willowpark L.L.C. Illinois
BSRT Commerce Center L.L.C. Illinois

EXHIBIT 23
- ----------

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
Form S-8 No. 333-49437 and Form S-3 No. 333-00047 of Banyan Strategic
Realty Trust of our report dated February 2, 2000, with respect to the
consolidated financial statements and schedule of Banyan Strategic Realty
Trust included in the Annual Report (Form 10-K) for the year ended
December 31, 1999.

Ernst & Young LLP

Chicago, Illinois
March 27, 2000

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BANYAN
STRATEGIC REALTY TRUST'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K. Dollars are
in thousands except per share data.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999

<CASH> 13,097
<SECURITIES> 0
<RECEIVABLES> 1,186
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,283
<PP&E> 199,264
<DEPRECIATION> (15,420)
<TOTAL-ASSETS> 206,647
<CURRENT-LIABILITIES> 5,212
<BONDS> 132,681
<COMMON> 65,295
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 206,647
<SALES> 0
<TOTAL-REVENUES> 41,716
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 25,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,558
<INCOME-PRETAX> 4,581
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,670
<DISCONTINUED> 0
<EXTRAORDINARY> (183)
<CHANGES> 0
<NET-INCOME> 8,487
<EPS-BASIC> 0.63
<EPS-DILUTED> 0.63

</TABLE>

EXHIBIT 99.12
- -------------

AT THE TRUST AT THE FINANCIAL RELATIONS BOARD
Karen Dickelman Tony Ebersole Georganne Palffy
Investor Relations General Information Analyst Inquiries
312 683-3671 312 640-6727 312 640-6768
[email protected]

FOR IMMEDIATE RELEASE
MONDAY, JANUARY 10, 2000

BANYAN STRATEGIC REALTY TRUST DECLARES FOURTH QUARTER
1999 CASH DISTRIBUTION

CHICAGO, JANUARY 10, 2000 - Banyan Strategic Realty Trust (Nasdaq:BSRTS)
today declared a quarterly cash distribution of $0.12 per share for the
fourth quarter ended December 31, 1999. The distribution is payable
February 22, 2000 to shareholders of record as of January 21, 2000.

Banyan Strategic Realty Trust is an equity real estate investment trust
(REIT) with a portfolio that includes primarily flex/industrial and
suburban office buildings. 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 27 properties
totaling 3.5 million rentable square feet.

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 99.13
- -------------

AT THE TRUST AT THE FINANCIAL RELATIONS BOARD
Karen Dickelman Tony Ebersole Georganne Palffy
Investor Relations General Information Analyst Information
312 683-3671 312 640-6728 312 640-6768

FOR IMMEDIATE RELEASE
JANUARY 27, 2000

BANYAN STRATEGIC REALTY TRUST ANNOUNCES TERMINATION OF
CONTRACT TO SELL OFFICE PROPERTY IN SARASOTA, FLORIDA

CHICAGO, JANUARY 27, 2000 - Banyan Strategic Realty Trust (BSRTS:Nasdaq)
today announced that the contract to sell the Sarasota Commerce Center, a
Class A office building located in Sarasota, Florida, has been terminated
by the prospective buyer.

The transaction was subject to financing contingencies that the buyer, a
private German investor, was unable to meet. Upon termination of the
contract, the Trust retained earnest money in the amount of $100,000.

Leonard G. Levine, President and CEO, commented, "We are disappointed that
the sale of the Sarasota Commerce Center will not be completed. However,
we believe that recent interest rate increases and the reduction of the
euro's valuation against the dollar have caused many foreign buyers to
postpone acquisitions."

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 27 properties totaling 3.5 million
rentable square feet.

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 99.14
- -------------

AT THE TRUST: AT THE FINANCIAL RELATIONS BOARD:
Karen Dickelman Tony Ebersole Georganne Palffy
Director - Investor General Info. Analyst Inquiries
Relations
312 683-3671 312 640-6728 312 640-6768
www.banyanreit.com
email: [email protected]

FOR IMMEDIATE RELEASE
WEDNESDAY, FEBRUARY 23, 2000

BANYAN STRATEGIC REALTY TRUST REPORTS $0.19 FFO PER SHARE FOR
FOURTH QUARTER; COHEN FINANCIAL RETAINED TO EVALUATE TRUST'S
PROPERTIES

BANYAN STRATEGIC REALTY TRUST FOURTH QUARTER/FISCAL 1999 HIGHLIGHTS *

. Fourth Quarter FFO of $2.5 million, or $0.19 per share; full year
1999 FFO of $0.81 per share

. Annual cash distribution of $0.48 per share, with quarterly cash
distribution of $0.12 per share declared January 10, 2000

. Fourth Quarter Revenues of $10.3 million

. Fourth quarter EBITDA of $5.7 million/full year EBITDA of $23.6
million

. Disposition of assets during the year nets company $10.8 million in
cash proceeds

. Average occupancy rate of portfolio 88 percent at December 31, 1999

. Total debt and equity market capitalization of $214 million at
December 31, 1999

* Per share data presented on diluted basis

CHICAGO, FEBRUARY 23, 2000 - BANYAN STRATEGIC REALTY TRUST (Nasdaq: BSRTS),
a real estate investment trust, today announced 1999 funds from operations
of $10.9 million, or $0.81 per share. Fourth quarter FFO was $2.5 million,
or $0.19 per share. The portfolio-wide occupancy rate for the Trust's
properties as of December 31, 1999 was 88 percent.

CONSOLIDATED FINANCIAL RESULTS
- ------------------------------

For the fourth quarter 1999 Banyan reported net income of $4.8 million, or
$0.36 per share, on revenues of $10.3 million, and FFO of $2.5 million, or
$0.19 per share. Fourth Quarter 1999 income before net gains and
extraordinary items was $913,000, or $0.07 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 $2.8 million, or $0.21 per share during the fourth quarter the
previous year. EBITDA (earnings before interest, tax, depreciation and
amortization) in the recent quarter was $5.7 million.

MORE ...

<PAGE>

BANYAN STRATEGIC REALTY TRUST
ADD 1

For the twelve months ended December 31, 1999, the company reported net
income of $8.5 million, or $0.63 per share, on revenues of $41.7 million
and FFO of $10.9 million, or $0.81 per share. Income before net gains and
extraordinary items for the twelve months ended December 31, 1999 was $4.6
million, or $0.34 per share. During the same period the previous year, the
company reported income before extraordinary item of $5.5 million, or
$0.40 per share, on revenues of $39.4 million and FFO of $10.4 million, or
$0.75 per share. EBITDA in the recent 12-month period was $23.6 million,
an increase of 10 percent from the $21.3 million during the previous year.

"We are pleased we were able to continue our FFO growth, as well as grow
EBITDA year over year", said Leonard G. Levine, President and CEO of
Banyan. "Overall, our general and administrative costs as a percent of
total revenue declined a full percentage point to 10.8 percent during the
year from the previous year. Meanwhile, the office and flex-industrial
markets we serve continue to exhibit strong real estate fundamentals, with
rents in our portfolio below average market rents in each market, which
bodes well for both occupancy and same store growth going forward."

PORTFOLIO PERFORMANCE - REVENUE UP 6 PERCENT
- --------------------------------------------

Total revenue for twelve-month period increased 6 percent to $41.7 million
from $39.4 million during the previous year. As of December 31, 1999, the
company's portfolio of 27 properties was 88 percent occupied.

SALE OF KENTUCKY AND OKLAHOMA PROPERTIES CONCLUDED
- --------------------------------------------------

The company realized a gain of $4.1 million during the fourth quarter from
the sale of two properties, the Quantum Business Centre, a multi-tenant
office/warehouse property located in Jefferson County (suburban
Louisville), Kentucky, and its Oklahoma Apartment Portfolio, four separate
apartment complexes totaling 864 units. The company realized total net
cash proceeds of approximately $10.8 million from these transactions.

"The dispositions of our Oklahoma Apartment Portfolio and Quantum Business
Centre are consistent with our strategy of selling certain non-core assets,
as well as maximizing returns to shareholders from properties that have
reached their maximum potential," said Mr. Levine.

BALANCE SHEET, MARKET VALUE AND LIQUIDITY
- -----------------------------------------

At the end of the fourth quarter 1999, total debt and equity market
capitalization was approximately $214 million. EBITDA coverage ratio for
the twelve-month period ended December 31, 1999 was 2.0 to 1. The Trust
had $132.7 million of total debt outstanding as of December 31, 1999.

On January 20, 2000, $6.2 million of the Trust's $7.4 million unsecured
convertible loan payable was converted into 61,572 Series A convertible
preferred shares at a conversion price of $100 per share. These shares may
be further converted into common shares at a conversion price of $5.15 per
share. The balance of the loan along with accrued interest and a $37,000
conversion/repayment fee was repaid as of that date using the Trust's cash
reserves.

MORE ...

<PAGE>

BANYAN STRATEGIC REALTY TRUST
ADD 2

QUARTERLY CASH DISTRIBUTION AND FUNDS AVAILABLE FOR DISTRIBUTION (FAD)
- ----------------------------------------------------------------------

On January 10, 2000, the Trust declared a quarterly cash distribution of
$0.12 per share for the fourth quarter ended December 31, 1999. The
distribution was paid February 22, 2000 to shareholders of record as of
January 21, 2000.

Funds Available for Distribution (FAD) totaled $2.1 million for the three
months ended December 31, 1999, or $0.16 per share, and $9.0 million, or
$0.67 per share for the twelve months ended December 31, 1999. This
compared to FAD of $2.3 million or $0.17 per share, and $8.6 million or
$0.62 per share, for the same periods in the previous year.

COHEN FINANCIAL ENGAGED
- -----------------------

The Trust's Board has recently formed a special committee comprised
entirely of its Independent Trustees to begin the process of evaluating
strategic alternatives. To assist in this process, the committee has
engaged Cohen Financial to, among other things, evaluate the Trust's
properties. Cohen Financial is a Chicago-based real estate investment
banking firm.

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 the Midwest and Southeastern United States, including 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 27 properties totaling 3.5 million rentable square
feet. As of this date, the Trust has 14,126,605 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-K for the
year ended December 31, 1999 filed with the Securities and Exchange
Commission by March 31, 2000. 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>

BANYAN STRATEGIC REALTY TRUST
ADD 3

FINANCIAL TABLE TO FOLLOW

<PAGE>

BANYAN STRATEGIC REALTY TRUST
ADD 3

CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(Dollars in thousands)

December 31, December 31,
1999 1998
------------ ------------

Investment in Real Estate, at cost. . . . $ 199,264 $ 220,808
Less: Accumulated Depreciation . . . . (15,420) (11,399)
---------- ----------
183,844 209,409
---------- ----------

Cash and Cash Equivalents . . . . . . . . 13,097 3,731
Restricted Cash . . . . . . . . . . . . . 2,668 2,657
Other Assets. . . . . . . . . . . . . . . 7,038 6,793
---------- ----------
Total Assets. . . . . . . . . . . . . . . $ 206,647 $ 222,590
========== ==========

Loans and Bonds Payable . . . . . . . . . $ 132,681 $ 151,648
Other Liabilities . . . . . . . . . . . . 6,415 6,359
Minority Interest . . . . . . . . . . . . 2,256 2,149
Shareholders' Equity. . . . . . . . . . . 65,295 62,434
---------- ----------
Total Liabilities and
Shareholders' Equity. . . . . . . . . . $ 206,647 $ 222,590
========== ==========

MORE ...

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
ADD 4
BANYAN STRATEGIC REALTY TRUST
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
<CAPTION>

Three Months Ended Year Ended
12/31/99 12/31/98 12/31/99 12/31/98
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total revenue . . . . . . . . . . . . . . . . . . . . . $ 10,296 $ 10,643 $ 41,716 $ 39,416
Operating expenses. . . . . . . . . . . . . . . . . . . (9,226) (9,133) (36,597) (33,325)
---------- ---------- ---------- ----------
Operating income. . . . . . . . . . . . . . . . . . . . 1,070 1,510 5,119 6,091

Minority interest in consolidated partnerships. . . . . (157) (123) (538) (572)

Net gains on disposition of investments in real estate. 4,089 -- 4,089 --
Extraordinary item, net of minority interest. . . . . . (183) -- (183) (141)
---------- ---------- ---------- ----------
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 4,819 $ 1,387 $ 8,487 $ 5,378
========== ========== ========== ==========

Earnings per share of Beneficial Interest - Basic:
Income before Net Gains and Extraordinary Item. . . . $ 0.07 $ 0.10 $ 0.34 $ 0.41
Net Income. . . . . . . . . . . . . . . . . . . . . . $ 0.36 $ 0.10 $ 0.63 $ 0.40
========== ========== ========== ==========

Earnings per share of Beneficial Interest - Diluted:
Income before Net Gains and Extraordinary Item. . . . $ 0.07 $ 0.10 $ 0.34 $ 0.40
Net Income. . . . . . . . . . . . . . . . . . . . . . $ 0.36 $ 0.10 $ 0.63 $ 0.39
========== ========== ========== ==========

FUNDS FROM OPERATIONS

Net Income. . . . . . . . . . . . . . . . . . . . . . . $ 4,819 $ 1,387 $ 8,487 $ 5,378

PLUS:
Depreciation and amortization expense. . . . . . . . . 1,713 1,493 6,629 5,176

LESS:
Minority interest share of depreciation and
amortization expense. . . . . . . . . . . . . . . . . (83) (90) (309) (315)
Net gain on disposition of investments in real estate. (4,089) -- (4,089) --
Extraordinary item, net of minority interest . . . . . 183 -- 183 141
---------- ---------- ---------- ----------
Funds from operations . . . . . . . . . . . . . . . . . $ 2,543 $ 2,790 $ 10,901 $ 10,380
========== ========== ========== ==========

MORE ...
</TABLE>

<PAGE>

<TABLE>
BANYAN STRATEGIC REALTY TRUST
ADD 5 BANYAN STRATEGIC REALTY TRUST
PORTFOLIO SUMMARY
12/31/99
<CAPTION>
Scheduled Lease Expirations
Occu- -----------------------------
Square pancy After
Location Footage % 2000 2001 2002 2002
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<S> <C> <C> <C> <C> <C> <C> <C>
FLEX/INDUSTRIAL
Milwaukee Industrial Portfolio Milwaukee, Wisconsin 235,800 89% 27% 11% 32% 19%
Elmhurst Metro Court Elmhurst, Illinois 140,800 65% 15% 30% 12% 8%
Willowbrook Industrial Court Willowbrook, Illinois 84,300 91% 28% 20% 31% 12%
6901 Riverport Drive Louisville, Kentucky 322,100 100% 45% 0% 0% 55%
Lexington Business Center Lexington, Kentucky 308,800 71% 19% 9% 5% 38%
Newtown Business Center Lexington, Kentucky 87,100 97% 4% 37% 16% 40%
Avalon Ridge Business Park Norcross, Georgia 57,400 100% 0% 0% 0% 100%
Metric Plaza Winter Park, Florida 32,000 100% 0% 0% 69% 31%
Park Center Orlando, Florida 47,400 80% 9% 25% 24% 22%
University Corporate Center Winter Park, Florida 127,800 84% 22% 33% 21% 8%
Tower Lane Business Park Bensenville, Illinois 95,900 88% 37% 15% 30% 6%
Johns Creek Office and Duluth and Suwanee,
Industrial Park Georgia 119,300 100% 0% 50% 50% 0%
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Sub-Total 1,658,700 87% 23% 16% 18% 30%
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OFFICE
Colonial Penn Building Tampa, Florida 79,200 100% 28% 0% 0% 72%
Commerce Center Sarasota, Florida 81,100 100% 0% 11% 5% 84%
Woodcrest Office Park Tallahassee, Florida 264,900 95% 24% 12% 13% 46%
Midwest Office Center Oakbrook Terrace, Illinois77,000 91% 39% 13% 29% 10%
Phoenix Business Park Atlanta, Georgia 110,600 57% 2% 13% 18% 24%
Butterfield Office Plaza Oak Brook, Illinois 200,800 96% 27% 16% 37% 16%
Southlake Corporate Center Morrow, Georgia 56,200 87% 9% 32% 35% 11%
University Square Business CenterHuntsville, Alabama 184,700 91% 28% 25% 26% 12%
Technology Center Huntsville, Alabama 48,500 100% 35% 65% 0% 0%
Airways Plaza Office Center Memphis, Tennessee 87,800 26% 16% 4% 3% 3%
Peachtree Pointe Office Park Norcross, Georgia 71,700 89% 29% 13% 16% 31%
Avalon Center Office Park Norcross, Georgia 53,300 100% 0% 0% 0% 100%
Sand Lake Tech Center Orlando, Florida 84,100 77% 0% 0% 39% 38%
Technology Park Norcross, Georgia 145,700 96% 13% 28% 4% 51%
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Sub-Total 1,545,600 87% 19% 16% 18% 34%
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RETAIL
Northlake Tower Shopping Center Atlanta, Georgia 321,600 98% 14% 2% 7% 75%
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Total 3,525,900 88% 21% 15% 17% 35%
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