-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AGgieGrbQ+qrwTje+zlMoH7kXHaFuaLHFzYAp+hhoi8Ec1GM6tj3LMjWzsnnA0US spn2IvgQT0SpbZLNNs40zw== 0000790817-95-000006.txt : 19951124 0000790817-95-000006.hdr.sgml : 19951124 ACCESSION NUMBER: 0000790817-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANYAN STRATEGIC REALTY TRUST CENTRAL INDEX KEY: 0000790817 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 363375345 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15465 FILM NUMBER: 95593276 BUSINESS ADDRESS: STREET 1: 150 S WACKER DR STE 2900 STREET 2: SUITE 2900 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3125539800 FORMER COMPANY: FORMER CONFORMED NAME: BANYAN STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VMS STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19910325 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 0-15465 Banyan Strategic Realty Trust (Exact name of Registrant as specified in its charter) Massachusetts 36-3375345 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 South Wacker Drive, Chicago, IL 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (312) 553-9800 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X . NO . Shares of beneficial interest outstanding as of November 14, 1995: 10,477,138 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BANYAN STRATEGIC REALTY TRUST CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (UNAUDITED) Consolidated Consolidated ASSETS 1995 1994 Cash and Cash Equivalents $ 8,468,782 $ 14,769,170 Interest Receivable on Investments 92,673 82,180 Interest Receivable on Mortgage Loans 55,904 55,106 Accounts Receivable 334,302 107,672 Due from Affiliates --- 730,229 Investment Securities --- 1,017,236 ------------ ------------ 8,951,661 16,761,593 ------------ ------------ Mortgage Loans Receivable (Net of unamortized discount of $1,535,826 and $1,808,716, respectively) 5,352,924 5,136,229 Investment in Real Estate, at cost: Land 8,044,994 6,182,494 Building 57,350,354 33,152,589 Building Improvements 2,394,433 1,863,219 ------------ ------------ 67,789,781 41,198,302 Less: Accumulated Depreciation (1,888,365) (1,036,890) ------------ ------------ 65,901,416 40,161,412 ------------ ------------ Investment in Real Estate Ventures 9,473,533 10,697,791 Deferred Financing Costs (Net of Accumulated Amortization of $169,883 and $21,411, respectively) 843,448 793,649 Other Assets 1,111,643 533,677 ------------ ------------ Total Assets $ 91,634,625 $ 74,084,351 ============ ============ Consolidated Consolidated 1995 1994 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts Payable and Accrued Expenses $ 950,397 $ 802,335 Accrued Real Estate Taxes 953,642 666,567 Mortgage Loans Payable 23,482,174 7,900,695 Bond Payable 5,500,000 5,500,000 Accrued Interest Payable --- 26,005 Unearned Revenue 39,954 39,198 Security Deposit Liability 364,507 203,659 Other Liability 686,169 290,331 ------------ ------------ Total Liabilities 31,976,843 15,428,790 ------------ ------------ Minority Interest in Consolidated Partnerships 1,820,879 214,849 Shareholders' Equity Shares of Beneficial Interest, No Par Value, Unlimited Authorization; 11,999,787 and 11,993,751 Shares Issued, respectively 106,687,212 106,662,313 Accumulated Deficit (41,484,360) (40,855,652) Treasury Shares at Cost, 1,522,649 Shares (7,365,949) (7,365,949) ------------ ------------ Total Shareholders' Equity 57,836,903 58,440,712 ------------ ------------ Total Liabilities and Share- holders' Equity $ 91,634,625 $ 74,084,351 ============ ============ Book Value Per Share of Bene- ficial Interest (10,477,138 and 10,471,102 Shares Outstanding, respectively) $ 5.52 $ 5.58 ============ ============ The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION) SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (UNAUDITED) Supplemental Information Investment Investment Activities Activities ASSETS 1995 1994 Cash and Cash $ 6,368,283 $ 13,077,182 Equivalents Interest Receivable on Investments 45,861 58,422 Interest Receivable on Mortgage 55,904 55,106 Loans Accounts Receivable 334,302 107,672 Due from Affiliates --- --- Investment Securities --- 1,017,236 ------------ ------------ 6,804,350 14,315,618 ------------ ------------ Mortgage Loans Receivable (Net of unamortized discount of 5,352,924 5,136,229 $1,535,826 and $1,808,716, respectively) Investment in Real Estate, at cost: Land 8,044,994 6,182,494 Building 57,350,354 33,152,589 Building Improvements 2,394,433 1,863,219 ------------ ------------ 67,789,781 41,198,302 Less: Accumulated (1,888,365) (1,036,890) Depreciation ------------ ------------ 65,901,416 40,161,412 ------------ ------------ Investment in Real Estate --- --- Ventures Deferred Financing Costs (Net of Accumulated Amortization of 843,448 793,649 $169,883 and $21,411, respectively) Other Assets 839,003 408,353 ------------ ------------ Total Assets $ 79,741,141 $ 60,815,261 ============ ============ Supplemental Information Investment Investment Activities Activities 1995 1994 LIABILITIES Liabilities Accounts Payable and Accrued $ 773,583 $ 621,966 Expenses Accrued Real Estate 953,642 666,567 Taxes Mortgage Loans Payable 23,482,174 7,900,695 Bond Payable 5,500,000 5,500,000 Accrued Interest --- 26,005 Payable Unearned Revenue 39,954 39,198 Security Deposit 364,507 203,659 Liability Other Liability --- --- ------------ ------------ Total Liabilities 31,113,860 14,958,090 ------------ ------------ Minority Interest in Consolidated 1,820,879 214,849 Partnerships The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION) SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (UNAUDITED) Supplemental Information Foreclosed Foreclosed Activities Activities ASSETS 1995 1994 Cash and Cash Equivalents $ 2,100,499 $ 1,691,988 Interest Receivable on Investments 46,812 23,758 Interest Receivable on Mortgage --- --- Loans Accounts Receivable --- --- Due from Affiliates --- 730,229 Investment Securities --- --- ------------ ------------ 2,147,311 2,445,975 ------------ ------------ Mortgage Loans Receivable --- --- Investment in Real Estate, at cost: Land --- --- Building --- --- Building Improvements --- --- ------------ ------------ --- --- Less: Accumulated --- --- Depreciation ------------ ------------ --- --- ------------ ------------ Investment in Real Estate Ventures 9,473,533 10,697,791 Deferred Financing Costs --- --- Other Assets 272,640 125,324 ------------ ------------ Total Assets $ 11,893,484 $ 13,269,090 ============ ============ Supplemental Information Foreclosed Foreclosed Activities Activities 1995 1994 LIABILITIES Liabilities Accounts Payable and Accrued Expenses $ 176,814 $ 180,369 Accrued Real Estate Taxes --- --- Mortgage Loans Payable --- --- Bond Payable --- --- Accrued Interest Payable --- --- Unearned Revenue --- --- Security Deposit Liability --- --- Other Liability 686,169 290,331 ------------ ------------ Total Liabilities 862,983 470,700 ------------ ------------ Minority Interest in Consolidated Partnerships --- --- The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Consolidated Consolidated INCOME 1995 1994 Income From Property Operating Activities: Industrial $ 1,921,973 $ 1,561,948 Residential 2,472,308 2,346,027 Commercial 2,161,285 1,495,252 Retail 756,356 --- ----------- ----------- Total Income From Property Operating Activities 7,311,922 5,403,227 ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage Loans 761,181 713,547 Income on Investments 548,092 275,794 ----------- ----------- Total Income From Lending and Investing Activities 1,309,273 989,341 ----------- ----------- Total Income 8,621,195 6,392,568 ----------- ----------- EXPENSES Expenses from Property Operating Activities: Operating Property Expenses 378,861 240,613 Repairs and Maintenance 866,604 609,042 Real Estate Taxes 745,134 625,119 Interest and Ground Lease 996,856 237,081 Expense Property Management Fees 276,552 200,608 Payroll Expense 327,284 378,334 Utilities Expense 498,552 412,741 Depreciation and Amortization 874,146 627,174 ----------- ----------- Total Expenses From Property Operating Activities 4,963,989 3,330,712 ----------- ----------- Other Expenses: Shareholder Expenses 148,364 153,341 Trustees' Fees, Expenses and Insurance 316,010 314,563 Other Professional Fees 156,917 153,313 General and Administrative 1,074,777 909,645 Amortization of Deferred Loan Fees and Financing Costs 172,057 36,955 Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement (155,834) (134,986) Costs and Expenses ----------- ----------- Total Other Expenses 1,712,291 1,432,831 ----------- ----------- Consolidated Consolidated 1995 1994 Total Expenses 6,676,280 4,763,543 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real Estate Ventures 1,944,915 1,629,025 Minority Interest in Consolidated Partnerships (80,359) (28,014) Income (Loss) from Operations of 649,274 (46,064) Real Estate Ventures ----------- ----------- Net Income (Loss) $ 2,513,830 $ 1,554,947 =========== =========== Earnings (Loss) Per Share of Beneficial Interest (10,473,048 and 10,471,102 Weighted $ 0.24 $ 0.15 Average =========== =========== Shares Outstanding, respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES (SUPPLEMENTAL INFORMATION) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Supplemental Information Investment Investment Activities Activities 1995 1994 INCOME Income From Property Operating Activities: Industrial $1,921,973 $1,561,948 Residential 2,472,308 2,346,027 Commercial 2,161,285 1,495,252 Retail 756,356 --- ----------- ---------- Total Income From Property Operating Activities 7,311,922 5,403,227 ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage Loans 761,181 713,547 Income on Investments 439,242 165,154 ----------- ----------- Total Income From Lending and Investing Activities 1,200,423 878,701 ----------- ----------- Total Income 8,512,345 6,281,928 ----------- ----------- EXPENSES Expenses From Property Operating Activities: Operating Property Expenses 378,861 240,613 Repairs and Maintenance 866,604 609,042 Real Estate Taxes 745,134 625,119 Interest and Ground Lease Expense 996,856 237,081 Property Management Fees 276,552 200,608 Payroll Expense 327,284 378,334 Utilities Expense 498,552 412,741 Depreciation and Amortization 874,146 627,174 ----------- ----------- Total Expenses From Property Operating Activities 4,963,989 3,330,712 ----------- ----------- Supplemental Information Investment Investment Activities Activities 1995 1994 Other Expenses: Shareholder Expenses 46,999 22,239 Trustees' Fees, Expenses and Insurance 19,665 17,875 Other Professional Fees 102,193 100,502 General and Administrative 785,403 656,575 Amortization of Deferred Loan Fees and Financing Costs 172,057 36,955 Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses --- --- ----------- ----------- Total Other Expenses 1,126,317 834,146 ----------- ----------- Total Expenses 6,090,306 4,164,858 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real Estate Ventures 2,422,039 2,117,070 Minority Interest in Consolidated Partnerships (80,359) (28,014) Income (Loss) from Operations of Real Estate Ventures --- --- ----------- ----------- Net Income (Loss) $ 2,341,680 $ 2,089,056 =========== =========== Earnings (Loss) Per Share of Beneficial Interest (10,473,048 and 10,471,102 Weighted Average $ 0.22 $ 0.20 Shares Outstanding, =========== =========== respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES (SUPPLEMENTAL INFORMATION) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Supplemental Information Foreclosed Foreclosed Activities Activities 1995 1994 INCOME Income From Property Operating Activities: Industrial $ --- $ --- Residential --- --- Commercial --- --- Retail --- --- ----------- ----------- Total Income From Property Operating Activities --- --- ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage Loans --- --- Income on Investments 108,850 110,640 ----------- ----------- Total Income From Lending and Investing Activities 108,850 110,640 ----------- ----------- Total Income 108,850 110,640 ----------- ----------- EXPENSES Expenses From Property Operating Activities: Operating Property Expenses --- --- Repairs and Maintenance --- --- Real Estate Taxes --- --- Interest and Ground Lease Expense --- --- Property Management Fees --- --- Payroll Expenses --- --- Utilities Expense --- --- Depreciation and --- --- Amortization ----------- ----------- Total Expenses From Property Operating Activities --- --- ----------- ----------- Supplemental Information Foreclosed Foreclosed Activities Activities 1995 1994 Other Expenses: Shareholder Expenses 101,365 131,102 Trustees' Fees, Expenses and Insurance 296,345 296,688 Other Professional Fees 54,724 52,811 General and Administrative 289,374 253,070 Amortization of Deferred Loan --- --- Fees and Financing Costs Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement (155,834) (134,986) Costs and Expenses ----------- ----------- Total Other Expenses 585,974 598,685 ----------- ----------- Total Expenses 585,974 598,685 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real Estate Ventures (477,124) (488,045) Minority Interest in Consolidated Partnerships --- --- Income (Loss) from Operations of Real Estate Ventures 649,274 (46,064) ----------- ----------- Net Income (Loss) $ 172,150 $ (534,109) =========== ============ Earnings (Loss) Per Share of Beneficial Interest (10,473,048 and 10,471,102 Weighted $ 0.02 $ (0.05) Average ============ ============ Shares Outstanding, respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) ConsolidatedConsolidated INCOME 1995 1994 Income From Property Operating Activities: Industrial $ 726,917 $ 540,047 Residential 833,174 790,641 Commercial 745,217 718,902 Retail 756,356 --- ----------- ----------- Total Income From Property Operating Activities 3,061,664 2,049,590 ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage 260,104 242,313 Loans Income on Investments 131,855 88,473 ----------- ----------- Total Income From Lending and Investing Activities 391,959 330,786 ----------- ----------- Total Income 3,453,623 2,380,376 ----------- ----------- EXPENSES Expenses from Property Operating Activities: Operating Property Expenses 151,134 91,670 Repairs and Maintenance 377,126 248,342 Real Estate Taxes 288,707 241,111 Interest and Ground Lease 559,718 78,600 Expense Property Management Fees 101,715 71,732 Payroll Expense 127,004 146,358 Utilities Expense 178,875 166,370 Depreciation and Amortization 366,662 243,944 ----------- ----------- Total Expenses From Property 2,150,941 1,288,127 Operating Activities ----------- ----------- Other Expenses: Shareholder Expenses 32,460 29,314 Trustees' Fees, Expenses and Insurance 98,065 109,695 Other Professional Fees 55,445 44,196 General and Administrative 301,127 297,072 Amortization of Deferred Loan 59,261 12,407 Fees and Financing Costs Recovery of Losses on Loans, Notes and Interest Receivable --- --- and Class Action ----------- ----------- Settlement Costs and Expenses Total Other Expenses 546,358 492,684 ----------- ----------- ConsolidatedConsolidated 1995 1994 Total Expenses 2,697,299 1,780,811 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real Estate Ventures 756,324 599,565 Minority Interest in Consolidated Partnerships (55,896) (9,368) Income (Loss) from Operations of 256,674 (20,913) Real Estate Ventures ----------- ----------- Net Income (Loss) $ 957,102 $ 569,284 =========== =========== Earnings (Loss) Per Share of Beneficial Interest (10,476,876 and 10,471,102 Weighted $ 0.09 $ 0.05 Average =========== =========== Shares Outstanding, respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES (SUPPLEMENTAL INFORMATION) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Supplemental Information Investment Investment Activities Activities 1995 1994 INCOME Income From Property Operating Activities: Industrial $ 726,917 $ 540,047 Residential 833,174 790,641 Commercial 745,217 718,902 Retail 756,356 --- ----------- ---------- Total Income From Property Operating Activities 3,061,664 2,049,590 ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage Loans 260,104 242,313 Income on Investments 121,992 43,870 ----------- ----------- Total Income From Lending and Investing Activities 382,096 286,183 ----------- ----------- Total Income 3,443,760 2,335,773 ----------- ----------- EXPENSES Expenses From Property Operating Activities: Operating Property Expenses 151,134 91,670 Repairs and Maintenance 377,126 248,342 Real Estate Taxes 288,707 241,111 Interest and Ground Lease Expense 559,718 78,600 Property Management Fees 101,715 71,732 Payroll Expense 127,004 146,358 Utilities Expense 178,875 166,370 Depreciation and Amortization 366,662 243,944 ----------- ----------- Total Expenses From Property Operating Activities 2,150,941 1,288,127 ----------- ----------- Supplemental Information Investment Investment Activities Activities 1995 1994 Other Expenses: Shareholder Expenses 21,728 4,114 Trustees' Fees, Expenses and Insurance 6,665 5,563 Other Professional Fees 39,957 27,571 General and Administrative 244,422 209,302 Amortization of Deferred Loan Fees and Financing Costs 59,261 12,407 Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses --- --- ----------- ----------- Total Other Expenses 372,033 258,957 ----------- ----------- Total Expenses 2,522,974 1,547,084 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real Estate Ventures 920,786 788,689 Minority Interest in Consolidated Partnerships (55,896) (9,368) Income (Loss) from Operations of Real Estate Ventures --- --- ----------- ----------- Net Income (Loss) $ 864,890 $ 779,321 =========== =========== Earnings (Loss) Per Share of Beneficial Interest (10,476,876 and 10,471,102 Weighted Average $ 0.08 $ 0.07 Shares Outstanding, =========== =========== respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES (SUPPLEMENTAL INFORMATION) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Supplemental Information Foreclosed Foreclosed Activities Activities 1995 1994 INCOME Income From Property Operating Activities: Industrial $ --- $ --- Residential --- --- Commercial --- --- Retail --- --- ----------- ----------- Total Income From Property Operating Activities --- --- ----------- ----------- Income From Lending and Investing Activities: Interest and Amortized Discount on Mortgage --- --- Loans Income on Investments 9,863 44,603 ----------- ----------- Total Income From Lending and Investing Activities 9,863 44,603 ----------- ----------- Total Income 9,863 44,603 ----------- ----------- EXPENSES Expenses From Property Operating Activities: Operating Property --- --- Expenses Repairs and Maintenance --- --- Real Estate Taxes --- --- Interest and Ground Lease Expense --- --- Property Management Fees --- --- Payroll Expenses --- --- Utilities Expense --- --- Depreciation and --- --- Amortization ----------- ----------- Total Expenses From Property --- --- Operating Activities ----------- ----------- Supplemental Information Foreclosed Foreclosed Activities Activities 1995 1994 Other Expenses: Shareholder Expenses 10,732 25,200 Trustees' Fees, Expenses and Insurance 91,400 104,132 Other Professional Fees 15,488 16,625 General and Administrative 56,705 87,770 Amortization of Deferred Loan --- --- Fees and Financing Costs Recovery of Losses on Loans, Notes and Interest Receivable --- --- and Class Action ----------- ----------- Settlement Costs and Expenses Total Other Expenses 174,325 233,727 ----------- ----------- Total Expenses 174,325 233,727 ----------- ----------- Income (Loss) Before Minority Interest and Income (Loss) from Operations of Real (164,462) (189,124) Estate Ventures Minority Interest in Consolidated Partnerships --- --- Income (Loss) from Operations 256,674 (20,913) of Real Estate Ventures ----------- ----------- Net Income (Loss) $ 92,212 $ (210,037) =========== ============ Earnings (Loss) Per Share of Beneficial Interest (10,476,876 and 10,471,102 Weighted Average $ 0.01 $ (0.02) Shares Outstanding, ============ ============ respectively) The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
Shares of Beneficial Interest Accumulated Treasury Shares Amount Deficit Shares Total Shareholders' Equity, December 31, 1994 11,993,751 $106,662,313 $(40,855,652) $(7,365,949) $58,440,712 Award Shares Issued 6,036 24,899 --- --- 24,899 Net Income --- --- 2,513,830 --- 2,513,830 Dividends Paid --- --- (3,142,538) --- (3,142,538) ----------- ------------ ------------ ----------- ----------- Shareholders' Equity, September 30, 11,999,787 $106,687,212 $(41,484,360) $(7,365,949) $57,836,903 1995 =========== ============ ============ =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Consolidated Consolidated 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ 2,513,830 $ 1,554,947 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used In) Operating Activities: Amortization of Premium on Investment Securities 10,596 66,474 Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses (155,834) --- Depreciation and Amortization 1,046,203 664,129 Amortization of Discount on Mortgage Loans Receivable (272,890) (225,663) Net (Income) Loss From Operation of Real Estate Ventures (649,274) 46,064 Minority Interest Participation in Consolidated Partnerships 80,359 28,014 Net Change In: Interest Receivable on Mortgage Loans and Investments (11,291) 26,789 Accounts Receivable (226,630) 147,004 Due from Affiliates --- --- Other Assets (85,148) (193,646) Accounts Payable and Accrued Expenses (160,919) (137,011) Accrued Interest Payable (26,005) (424) Accrued Real Estate Tax Payable 180,464 581,308 Unearned Revenue 556 11,145 Security Deposit Liability 9,743 20,086 ----------- ----------- Net Cash Provided By (Used In) Operating Activities 2,253,760 2,589,216 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Real Estate Assets (26,060,265) (18,710,648) Proceeds From Sale of Investment in Real Estate Venture 1,931,467 --- Investment In Real Estate Ventures, Net (57,935) (64,380) Additions to Investment in Real Estate (531,214) (517,657) Payment of Liabilities Assumed at Acquisition of Real Estate Assets 51,408 (413,525) Other Liability 395,838 --- Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses 155,834 --- Purchase of Investment Securities (1,493,360) --- Proceeds From Sale and Maturities of Investment Securities 2,500,000 14,363,649 Principal Collections on Mortgage Loans Receivable 32,610 26,127 Investment in Mortgage Loans Receivable --- (4,771) Due from Affiliates 730,229 (418,111) Transfer of Equity From Sale of Investment in Real Estate Venture --- --- ----------- ----------- Net Cash (Used In) Provided By Investing Activities (22,345,388) (5,739,316) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Mortgage Loans Payable 15,706,807 Minority Interest Share of Real Estate Investments 1,525,671 (56,561) Deferred Financing Costs (198,271) --- Reductions to Deferred Financing Costs --- 5,864 Principal Payments on Mortgage Loans Payable (125,328) (63,614) Dividends Paid to Shareholders (3,142,538) (3,141,331) Issuance of Common Stock 24,899 --- ----------- ----------- Net Cash Provided By (Used In) Financing Activities 13,791,240 (3,255,642) ----------- ----------- Net (Decrease) Increase In Cash and Cash Equivalents (6,300,388) (6,405,742) Cash and Cash Equivalents at Beginning of Period 14,769,170 13,621,820 ----------- ----------- Cash and Cash Equivalents at End of Period $ 8,468,782 $ 7,216,078 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (SUPPLEMENTAL INFORMATION) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Investment Activities Investment Activities 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ 2,341,680 $ 2,089,056 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used In) Operating Activities: Amortization of Premium on Investment Securities 10,596 66,474 Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement --- --- Costs and Expenses Depreciation and Amortization 1,046,203 664,129 Amortization of Discount on Mortgage Loans Receivable (272,890) (225,663) Net (Income) Loss From Operation of Real Estate Ventures --- --- Minority Interest Participation 80,359 28,014 in Consolidated Partnerships Net Change In: Interest Receivable on Mortgage 11,763 47,447 Loans and Investments Accounts Receivable (226,630) 147,004 Due From Affiliates --- --- Other Assets 62,168 (182,511) Accounts Payable and Accrued Expenses (157,364) (90,177) Accrued Interest Payable (26,005) (424) Accrued Real Estate Tax 180,464 581,308 Payable Unearned Revenue 556 11,145 Security Deposit Liability 9,743 20,086 ----------- ----------- - Net Cash Provided By (Used In) Operating Activities 3,060,643 3,155,888 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Real Estate Assets (26,060,265 (18,710,648) ) Proceeds from Sale of Invest- ment in Real Estate Venture --- --- Investment In Real Estate Ventures, Net --- --- Additions to Investment in Real Estate (531,214) (517,657) Payment of Liabilities Assumed at Acquisition of Real Estate Assets 51,408 (413,525) Other Liability --- --- Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement --- Costs and Expenses --- Purchase of Investment Securities (1,493,360) --- Proceeds From Sale and Maturities of Investment Securities 2,500,000 14,363,649 Principal Collections on Mortgage Loans Receivable 32,610 26,127 Investment in Mortgage Loans Receivable --- (4,771) Due from Affiliates --- --- Transfer of Equity From Sale of Investment in Real Estate Venture 1,940,039 --- ----------- ----------- Net Cash (Used In) Provided By Investing Activities (23,560,782 (5,256,825) ) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Mortgage Loans Payable 15,706,807 --- Minority Interest Share of Real Estate Investments 1,525,671 (56,561) Deferred Financing Costs (198,271) --- Reductions to Deferred Financing Costs --- 5,864 Principal Payments on Mortgage Loans Payable (125,328) (63,614) Dividends Paid to Shareholders (2,387,057) (3,142,538) Issuance of Common Stock 24,899 --- ----------- ----------- Net Cash Provided By (Used In) Financing Activities 13,791,240 (2,501,368) ----------- ----------- Net (Decrease) Increase In Cash and Cash Equivalents (6,708,899) (4,602,305) Cash and Cash Equivalents at Beginning of Period 13,077,182 10,332,184 ----------- ----------- Cash and Cash Equivalents at End of Period $ 6,368,283 $ 5,729,879 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (SUPPLEMENTAL INFORMATION) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) Foreclosed Foreclosed Activities Activities 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ 172,150 $ (534,109) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used In) Operating Activities: Amortization of Premium on Investment Securities --- --- Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses (155,834) --- Depreciation and Amortization --- --- Amortization of Discount on Mortgage Loans Receivable --- --- Net (Income) Loss From Operation of Real Estate Ventures (649,274) 46,064 Minority Interest Participation in Consolidated Partnerships --- --- Net Change In: Interest Receivable on Mortgage Loans and Investments (23,054) (20,658) Accounts Receivable --- --- Due from Affiliates --- --- Other Assets (147,316) (11,135) Accounts Payable and Accrued Expenses (3,555) (46,834) Accrued Interest Payable --- --- Accrued Real Estate Tax Payable --- --- Unearned Revenue --- --- Security Deposit Liability --- --- ----------- ----------- Net Cash Provided By (Used In) Operating Activities (806,883) (566,672) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Real Estate Assets --- --- Proceeds From Sale of Investment in Real Estate Venture 1,931,467 --- Investment In Real Estate Ventures, Net (57,935) (64,380) Additions to Investment in Real Estate --- --- Payment of Liabilities Assumed at Acquisition of Real Estate Assets --- --- Other Liability 395,838 --- Recovery of Losses on Loans, Notes and Interest Receivable and Class Action Settlement Costs and Expenses 155,834 --- Purchase of Investment Securities --- --- Proceeds From Sale and Maturities of Investment Securities --- --- Principal Collections on Mortgage Loans Receivable --- --- Investment in Mortgage Loans Receivable --- --- Due from Affiliates 730,229 (418,111) Transfer of Equity From Sale of Investment in Real Estate Venture (1,940,039) --- ----------- ----------- Net Cash (Used In) Provided By Investing Activities 1,215,394 (482,491) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgage Loans Payable --- --- Minority Interest Share of Real Estate Investments --- --- Deferred Financing Costs --- --- Reductions to Deferred Financing Costs --- --- Principal Payments on Mortgage Loans Payable --- --- Dividends Paid to Shareholders --- (754,274) Issuance of Common Stock --- --- ----------- ----------- Net Cash Provided By (Used In) Financing Activities --- (754,274) ----------- ----------- Net (Decrease) Increase In Cash and Cash Equivalents 408,511 (1,803,437) Cash and Cash Equivalents at Beginning of Period 1,691,988 3,289,636 ----------- ----------- Cash and Cash Equivalents at End of Period $2,100,499 $ 1,486,199 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) Readers of this quarterly report should refer to Banyan Strategic Realty Trust's (the "Trust") audited consolidated financial statements for the year ended December 31, 1994 which are included in the Trust's 1994 Annual Report and Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in such audited statements have been omitted from this report. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Trust, its wholly-owned subsidiaries and its controlled partnerships. All intercompany balances and transactions have been eliminated in consolidation. Investment in Real Estate Ventures are accounted for on the equity method. FINANCIAL STATEMENT PRESENTATION Effective January 1, 1993, the Trust elected to provide supplemental financial information in a format that segregates financial condition, results of operations and cash flows between the Trust's new investments in real estate assets (the "Investment Activities") and the real estate assets acquired in prior years through foreclosure (the "Foreclosed Activities"). Certain reclassifications have been made to the previously reported 1994 financial statements in order to provide comparability with the 1995 consolidated financial statements. These reclassifications have not changed the 1994 operating results. In the opinion of management, all adjustments necessary for a fair presentation have been made to the accompanying consolidated financial statements as of September 30, 1995 and for the three and nine months ended September 30, 1995 and 1994. These adjustments made to the financial statements, as presented, are all of a normal recurring nature to the Trust. 2. INVESTMENT IN REAL ESTATE WILLOWBROOK INDUSTRIAL COURT PROPERTY On June 16, 1995, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"), a joint venture between a subsidiary of the Trust, which is the general partner, and Morgan Realty Partners ("Morgan"), acquired the Willowbrook Industrial Court property (the "Willowbrook Property") which consists of a three-building office/warehouse complex with a total of approximately 84,000 square feet of leasable space located in the metropolitan Chicago area for a purchase price, including liabilities assumed at acquisition, of approximately $3,922,000. The Trust and Morgan contributed additional capital of approximately $1,030,000 and $370,000 to BMMLP for their 85% and 15% ownership interest in BMMLP, respectively, which includes $200,000 in reserves held by BMMLP for property improvements and lease-up. The acquisition was made subject to a nonrecourse first mortgage loan collateralized by the property in the amount of $2,650,000 which bears interest at a fixed rate of 8.5%, matures on July 1, 2002, and requires monthly payments based upon a twenty-two and a half year amortization schedule. The loan requires a balloon payment for the remaining unpaid principal balance at maturity. Upon acquisition, the Willowbrook Property was 93% leased. The terms of the BMMLP Partnership Agreement as originally established at the time of the acquisitions of the Milwaukee Industrial and the Elmhurst Metro Court properties, were amended effective July 1, 1995 as a result of the Willowbrook Property acquisition by BMMLP. Pursuant to the amended BMMLP Partnership Agreement, any excess cash flow from operations, after each of the Trust and Morgan receives its 12% and 11% preferred return, respectively, on contributed equity, will be allocated 85% to the Trust and 15% to Morgan. The amendment was adopted as a result of the increase in additional equity contributed by Morgan of approximately $370,000. The results of operations for the Willowbrook Property are included in the Trust's investment activities for financial reporting purposes. The BMMLP ownership percentage changes which occurred upon acquisition of the Willowbrook Property, as mentioned above, will become effective July 1, 1995 for financial reporting purposes. NORTHLAKE TOWER SHOPPING CENTER On July 28, 1995, BSRT/M&J Northlake Limited Partnership ("BMJNLP"), a joint venture between a subsidiary of the Trust and M&J Wilkow Retail Ltd. ("Wilkow"), acquired a shopping center known as the Northlake Tower Shopping Center ("Northlake Property") located in northeast suburban Atlanta, Georgia for a purchase price, including liabilities assumed at acquisition, of approximately $17,079,000. The Northlake Property consists of six structures containing approximately 322,000 rentable square feet built in 1984. The Trust contributed $6,000,000 to BMJNLP for an approximate 80% interest, while Wilkow contributed approximately $1,500,000 for the remaining 20% interest, which includes approximately $550,000 in reserves held by BMJNLP for property improvements, lease-up and other closing prorations. The Northlake Property was acquired pursuant to a ground lease with a remaining term of sixty-two years. The ground lease requires annual lease payments of $600,000 through October 4, 2007 plus 7% of total annual gross rental income commencing when gross rental income exceeds $2,000,000 from the operations of the Northlake Property. The ground lease also requires that BMJNLP pay for expenses incurred on the Northlake site, including real estate taxes. The Northlake Property was financed by BMJNLP utilizing a non-recourse leasehold mortgage loan from the seller in the amount of $10,350,000. The mortgage loan requires monthly payments of interest only at a fixed rate of 8.5% per annum. The leasehold mortgage loan matures on July 1, 2005 and may be repaid at any time during its term without any prepayment penalty. Pursuant to the terms of the BMJNLP Partnership Agreement, cash flow from operations will be distributed first to the Trust until it has received a 12% cumulative return on its capital contribution and then to Wilkow until it has received a 12% cumulative return on its capital contribution. Any excess cash flow will be allocated pro-rata to the Trust and Wilkow based on their respective capital contributions. Proceeds from the sale or refinancing of the Northlake Property, after the payment of any debt or expense associated with the sale or refinancing, will be distributed first to the Trust to the extent that the 12% annual preferred return has not been received. Next, distributions will be made to the Trust and Wilkow on a pro-rata basis in an amount equal to their respective equity contributions. Thereafter, distributions will be made to Wilkow to the extent that its 12% annual preferred return has not been received. In the event there are any remaining proceeds to be distributed and the average annual return to the Trust during the period that BMJNLP owned the Northlake Property is equal to or greater than 15%, Wilkow will receive 30% of any remaining proceeds. The results of operations for the Northlake Property are included in the Trust's Investment Activities for financial reporting purposes. BLUEGRASS CORPORATE CENTER On September 26, 1995, a subsidiary of the Trust acquired a 100% ownership interest in a seven building office/industrial complex known as the Bluegrass Corporate Center (the "Bluegrass Property") located in Jefferson County, Kentucky (suburban Louisville), for a purchase price, including liabilities assumed at acquisition, of approximately $5,059,000. The seven buildings contain approximately 182,000 net rentable square feet. The Bluegrass Property was built during 1976-77 and 1979-80 and was 91% leased with 43 tenants upon acquisition. The acquisition was made subject to a nonrecourse first mortgage loan collateralized by the property in the amount of approximately $2,707,000, bears interest at a fixed rate of 8%, matures on April 25, 2001, and requires monthly payments based upon a twenty year amortization schedule with a balloon payment of approximately $2,320,000 upon maturity. The results of operations for the Bluegrass Property are included in the Trust's Investment Activities for financial reporting purposes. 3. INVESTMENT IN JOINT VENTURES H STREET ASSEMBLAGE The summary income statement information for the H Street Assemblage unconsolidated venture for the nine months ended September 30, 1995 and 1994 is as follows: 1995 1994 Total Revenues $ 409,991 $ 301,943 ========== =========== Net Income (Loss) $ 372,281 $ (355,601) ========== =========== PLAZA AT WESTMINSTER The Trust owned a 30.7% participation interest in the Westminster property. On June 22, 1995, the Westminster property was sold to an unaffiliated third party for $7,525,000 which resulted in a net gain of approximately $1,333,000 after prorations for closing costs of approximately $1,235,000. The Trust's share of the cash proceeds was approximately $1,931,000 which resulted in the Trust's share of the net gain of approximately $409,000. The Trust's share of income generated from operations of Westminster for the nine months ended September 30, 1995 was $42,675 (prior to sale) as compared to $142,405 for the same period in 1994. 4. TRANSACTIONS WITH AFFILIATES Administrative costs, primarily salaries and general and administrative expenses, are reimbursed by the Trust to Banyan Management Corp. ("BMC"). These costs are allocated to the Trust and other entities to which BMC provides administrative services based upon the actual number of hours spent by BMC personnel on matters related to that particular entity. The Trust's allocable share of costs for the nine months ended September 30, 1995 and 1994 aggregated $832,074 and $809,987, respectively. As one of its administrative services, BMC serves as the paying agent for general and administrative costs of the Trust. As part of providing this payment service, BMC maintains a bank account on behalf of the Trust. As of September 30, 1995, the Trust had a net receivable due from BMC of $43,654. The Trust's allocated charges related to Investment Activities and Foreclosed Activities for the nine months ended September 30, 1995 were $615,879 and $216,195, respectively. The Trust's allocated charges related to Investment Activities and Foreclosed Activities for the nine months ended September 30, 1994 were $601,087 and $208,900, respectively. 5. RECOVERY OF LOSSES ON LOANS, NOTES AND INTEREST RECEIVABLE AND CLASS ACTION SETTLEMENT COSTS AND EXPENSES On February 9, 1995, the Trust received a cash distribution of $551,672 related to its interest in a liquidating trust established for the benefit of the unsecured creditors of VMS Realty Partners and its affiliates ("VMS"). For the nine months ended September 30, 1995, the Trust recorded $155,834 of this distribution as a recovery of losses on mortgage loans, notes and interest receivable on its consolidated statement of income and expenses. The $155,834 net recovery recorded in 1995 represents the $551,672 distribution received net of an estimated $395,838 due to the Class Action Settlement Fund representing the Trust's share of amounts due per the terms of the previously settled VMS securities litigation. As of September 30, 1995, the Trust has recorded $686,169 as an Other Liability as the total estimated amount due to the Class Action Settlement Fund per the terms of the settlement. On January 25, 1994, the Trust received net proceeds of $134,986 as a recovery of payments previously made into an escrow established as part of the 1992 Class Action Settlement of the VMS securities litigation. The escrow was established to provide trustees of the Trust with monies to fund the cost of any litigation in which they might be named as defendants following settlement of the class action. Subsequently, the trustees have released the proceeds from the escrow and the Trust has purchased an insurance policy to cover the officers and trustees. 6. DIVIDEND AND DISTRIBUTIONS PAID On October 5, 1995, the Trust declared a cash dividend for the quarter ended September 30, 1995 of $0.10 per share payable November 17, 1995 to shareholders of record on October 20, 1995. On July 5, 1995, the Trust issued 6,036 shares of its beneficial interest ("Award Shares") to Leonard G. Levine, its President, pursuant to Mr. Levine's amended employment agreement, representing 20% of Mr. Levine's 1994 incentive compensation earned on the performance of the Investment Activities. The 6,036 Award Shares are valued at $4.125 per share or $24,899. All incentive amounts are due Mr. Levine on or before March 15, of the year following the period for which the incentive is earned. The Award Shares are held for Mr. Levine by the Trust subject to certain vesting requirements as stipulated under his amended employment agreement. With respect to the Award Shares, Mr. Levine is entitled to receive any cash distributions of the Trust with respect to his share of beneficial interest between the date earned (March 15) and the date that any Award Shares are sold or forfeited by Mr. Levine. Therefore, the distributions paid by the Trust on May 20, 1995 and August 18, 1995 represented $0.10 per share based on 10,477,138 shares for a total cash distribution by the Fund aggregating $2,095,428. The Award Shares are included in the total shares outstanding of the Trust effective July 5, 1995 when calculating Net Income Per Share of Beneficial Interest Based on Weighted Average Number of Shares Outstanding. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Banyan Strategic Realty Trust (the "Trust") was originally established to make mortgage loans principally to entities affiliated with VMS Realty Partners which planned to acquire and develop strategically located properties not then at their highest and best use. The Trust has ceased funding such mortgage loans. The current business plan of the Trust is to invest its cash and cash equivalents into additional real estate assets and to manage these real estate assets in a manner which will increase the Trust's cash flow over time. From May 1993 through September 30, 1995, the Trust obtained a line of credit, completed mortgage financing on the Elmhurst, Milwaukee, Willowbrook, Northlake and Bluegrass properties (see Results of Operations below for details regarding the acquisitions and financing of Willowbrook, Northlake and Bluegrass properties) and secured enhancement of a bond financing on the Colonial Courts property. The cash proceeds generated pursuant to these transactions provide the Trust with additional capital for the continued acquisition of income producing properties, the potential acquisition of mortgage loans and for general corporate needs. On June 22, 1995, the Trust sold its interest in the Plaza at Westminster property (see Results of Operations for details). The Trust will reinvest the net sales proceeds of approximately $1,931,000 into new real estate investments. The Trust further intends to liquidate its interest in the H Street Assemblage which was acquired through foreclosure and to reinvest the proceeds from its liquidation into additional real estate investments as well. Effective January 1, 1993, the Trust began providing supplemental financial information in a format that presents the financial condition, results of operations and cash flows from the investment of the Trust's cash into new real estate opportunities (the "Investment Activities") and the management of the real estate assets acquired through foreclosure or otherwise (the "Foreclosed Activities"). Returns on Investment Activities include the interest earned on investment securities and cash and cash equivalents and the new real estate assets acquired from May 1993 through September 30, 1995 offset by the incremental costs associated with the investment activities. Returns on Foreclosed Activities include the results of managing the foreclosed real estate assets plus the costs associated with maintaining the Trust. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents consist of cash and short-term investments. The Trust's cash and cash equivalents balance at September 30, 1995 and December 31, 1994 was $8,468,782 and $14,769,170, respectively. In addition, at December 31, 1994 the Trust held $1,017,236 in investment securities which were immediately convertible to cash. The decrease in total cash, cash equivalents and investment securities of approximately $7,318,000 is primarily due to the use of $10,353,458 to acquire the Willowbrook, Northlake and Bluegrass properties, payment of distributions to shareholders of $3,142,538, additions to investment in real estate of $531,214 relating to investment activities, principal payments on mortgage loans payable of $125,328, deferred financing costs paid in 1995 of $198,271 and the payment of the Trust's operating expenses, excluding depreciation and amortization, totalling approximately $5,786,000. Partially offsetting these cash outflows was the Trust's receipt of cash proceeds from the sale of the Trust's interest in the Plaza at Westminster property on June 22, 1995 of approximately $1,931,000, a $551,672 cash distribution in respect of the Trust's interest in the liquidating trust (see below), a $730,229 repayment from Banyan Strategic Land Fund II ("BSLFII") for advances made on behalf of BSLFII for H Street Assemblage expenditures (see below), net income from operations of real estate ventures of $649,274, the receipt of interest income from lending and investing activities of approximately $1,309,000 and cash receipts from property operations totalling approximately $7,312,000. See Results of Operations for further details regarding the sale of the Plaza at Westminster property and the acquisitions of the Willowbrook, Northlake and Bluegrass properties. The Trust has entered into a partnership agreement with BSLFII regarding the ownership and operation of the H Street Assemblage (the "H Street Venture"). Under the terms of this Agreement, the Trust has the right, but is not obligated, to advance expenditures on behalf of BSLFII. During 1994 and 1993, the Trust advanced to the H Street Venture all funds expended on the H Street Assemblage, including BSLFII's portion. As provided in the H Street partnership agreement, all advances made by the Trust for BSLFII's share of the H Street Venture's expenses bore interest at a rate of prime plus 2% per annum until repaid. As of December 31, 1994, the Trust's total receivable from BSLFII was approximately $730,000. On March 24, 1995, BSLFII repaid the December 31, 1994 outstanding balance of approximately $730,000 to the Trust. As of September 30, 1995, the H Street advances, and all interest thereon, made by the Trust have been repaid in full by BSLFII. On February 9, 1995, the Trust received a cash distribution of $551,672 related to its interest in a liquidating trust established for the benefit of the unsecured creditors of VMS Realty Partners and its affiliates ("VMS"). For the nine months ended September 30, 1995, the Trust recorded $155,834 of this distribution as a recovery of losses on mortgage loans, notes and interest receivable on its consolidated statement of income and expenses. The $155,834 net recovery recorded in 1995 represents the $551,672 distribution received net of an estimated $395,838 due to the Class Action Settlement Fund representing the Trust's share of amounts due per the terms of the previously settled VMS securities litigation. As of September 30, 1995, the Trust has recorded $686,169 as an Other Liability as the total estimated amount due to the Class Action Settlement Fund per the terms of the settlement. The Trust's future liquidity needs are expected to be funded from operating cash flow from Investment Activities, the sale or refinancing of the remaining asset acquired through foreclosure, interest earned on the Trust's short-term investments and to a lesser extent the potential receipt of distributions from the liquidating trust. Cash will be expended to maintain, operate and dispose of the remaining "Foreclosed Activity" property. The Trust's cash and cash equivalents, as well as cash flow from "Investment Activity" properties, are expected to be sufficient to meet its reasonably anticipated needs for liquidity and capital resources in the near future and provide cash proceeds for distributions to shareholders. During 1995, the Trust anticipates that it will likely continue making additional investments in operating properties which could have an effect on future liquidity of the Trust. Additional investments in operating properties will be made from existing cash reserves, financing collateralized by existing operating properties, cash available through the Trust's line of credit as well as financing proceeds provided for upon future operating property acquisitions. In addition, the Trust anticipates continuing the $0.10 per share quarterly distribution for the remainder of 1995. As of September 30, 1995 and December 31, 1994, the Trust's mortgage loan portfolio consisted of five mortgage loans receivable with aggregate carrying values totaling $5,352,924 and $5,136,229, respectively, net of $1,535,826 and $1,808,716 of unamortized discounts, respectively. During the nine months ended September 30, 1995, the Trust received principal and interest payments totalling $32,610 and $487,493, respectively. During the nine months ended September 30, 1994, the Trust received principal and interest payments totalling $26,127 and $489,758, respectively. Management reviews the properties owned by the Trust on a quarterly basis and, when it has been determined that a permanent impairment in the value of a given property has occurred, the property's carrying value is then written down to its fair value. On a quarterly basis, management also reviews each mortgage loan in the Trust's portfolio and provides allowances as deemed necessary. The estimate of the aggregate allowances is based upon a number of factors, including analysis of the value of the collateral and, in certain cases, evaluation of the disposition strategy which includes ongoing negotiations regarding the disposition of this collateral as well as consideration of the general business conditions affecting the Trust's portfolio. Management has determined not to take any write downs for the quarter ended September 30, 1995. The Trust's ability to make distributions to its shareholders is dependent upon, among other things: (i) the operating performance of the existing and future real estate investments; (ii) the ability to redeploy cash proceeds derived from the sale of the remaining Foreclosed Activities asset into new investments; (iii) increases in the underlying sales value realized upon the sale of the Trust's properties; (iv) the potential receipt of cash distributions from the liquidating trust; (v) the Trust's ability to control its operating expenses; and (vi) the general improvement of conditions in the real estate markets where the Trust's properties are located. RESULTS OF OPERATIONS Total income for the nine months ended September 30, 1995 increased to $8,621,195 from $6,392,568 for the nine months ended September 30, 1994. The increase for the nine months ended September 30, 1995 as compared to the same period in 1994 is due primarily to increases in property operating revenue of approximately $1,909,000 (see below) and interest income on investments of approximately $272,000. Interest income on investments at September 30, 1995 increased when compared to the prior year's period due to the increase in cash available for investment derived from the proceeds received or financing of the Elmhurst and Colonial Courts properties which were held as cash reserves until the 1995 acquisitions by the Trust of the Willowbrook, Northlake and Bluegrass properties. A further increase in cash available for investment resulted from the Trust's share of net proceeds received from the Westminster sale in June 1995. (See below for further details of the 1995 acquisitions and sale of the Westminster property). Industrial property operating revenue increased by approximately $360,000 which is primarily the result of an increase in rental income at the Trust's Elmhurst Metro Court ("Elmhurst") property and the 1995 acquisitions of the Willowbrook Industrial Court ("Willowbrook") and Bluegrass Corporate Center ("Bluegrass") properties. Rental income at Elmhurst increased by approximately $151,000 due primarily to reductions in rental abatements of approximately $35,000 with the remainder attributable to annual rent adjustments in 1995 made pursuant to tenant lease agreements. The occupancy level as of September 30, 1995 and 1994 for the Elmhurst property was 91% and 96%, respectively. The acquisition of the Willowbrook property on June 16, 1995 resulted in an increase in total income of approximately $175,000. The occupancy level for the Willowbrook property was 83% at September 30, 1995. In addition, the acquisition of the Bluegrass property on September 26, 1995 resulted in an increase in total income of approximately $12,000. The rental income and occupancy level for the Milwaukee Industrial properties remained unchanged with occupancy at 95% for September 30, 1995, when compared to the same period in 1994. Residential property operating revenue increased by approximately $126,000 resulting primarily from an increase in income at the Hallmark Village Apartments ("Hallmark") property. Income at Hallmark increased by approximately $110,000 due primarily to the Trust's aggressive collection efforts in 1995 which reduced delinquent rental payments and an increase in occupancy to 96% at September 30, 1995 as compared to 88% for the same period in 1994. The rental income for Colonial Courts remained stable with the occupancy level at September 30, 1995 and 1994 at 91% and 90%, respectively. Commercial property operating revenue increased by approximately $666,000 which is primarily attributable to including a full nine months of operating results of the Colonial Penn and Florida Power and Light office buildings which were acquired in late March of 1994. Occupancy levels at the Colonial Penn and Florida Power and Light office buildings remained unchanged at September 30, 1995 of 100% and 90%, respectively, when compared to the same period in 1994. Retail property operating revenue represents income generated pursuant to the acquisition of the Northlake Tower Shopping Center ("Northlake") on July 28, 1995. The occupancy level for the Northlake property was 98% at September 30, 1995. Total expenses for the nine months ended September 30, 1995 increased to $6,676,280 from $4,763,543 for the nine months ended September 30, 1994. This increase is due to an increase in expenses from property operating activities of approximately $1,633,000 and an increase in total other expenses of approximately $279,000. The increase in total expenses from property operating activities for 1995 is primarily attributable to the acquisitions of the Trust's properties during 1994 as discussed above and the acquisitions in 1995 of the Willowbrook, Northlake and Bluegrass properties (as discussed below) which accounted for approximately $960,000 of this change. In addition, total expenses from property operating activities increased in 1995 due to interest expense of approximately $433,000 relating primarily to the Trust's financing of the Elmhurst and Colonial Courts properties in December 1994. Excluding the Trust's acquisitions during 1994 and 1995, total expenses from property operating activities increased further as a result of an increase of approximately $68,000 in operating property expenses and an increase of approximately $127,000 in repairs and maintenance expense. Property operating expenses and repair and maintenance costs increased due to an increase in general and administrative costs and higher unit turnover costs at the Hallmark and Colonial Courts properties. Total other expenses increased due primarily to an increase in general and administrative expenses and an increase in amortization of deferred loan fees and financing costs. The change in general and administrative expenses is attributable to additional expenses related to the 1995 acquisitions (as discussed below). Amortization of deferred loan fees and financing costs increased as a result of the financing of the Elmhurst and Colonial Courts properties and costs associated with obtaining the Trust's line of credit which occurred during the fourth quarter of 1994. The factors discussed above resulted in consolidated net income of $2,513,830 ($0.24 per share) for the nine months ended September 30, 1995 as compared to a consolidated net income of $1,554,947 ($0.15 per share) for the nine months ended September 30, 1994. Total income for the three months ended September 30, 1995 increased to $3,453,623 from $2,380,376 for the three months ended September 30, 1994. The increase for the three months ended September 30, 1995 as compared to the same period in 1994 is due primarily to increases in property operating revenue of approximately $1,012,000 (see below) and interest income on investments of approximately $43,000. Interest income on investments at September 30, 1995 increased when compared to the prior year's period due to the increase in cash available for investment derived from the proceeds received on financing of the Elmhurst and Colonial Courts properties which occurred prior to the 1995 acquisitions by the Trust of the Willowbrook, Northlake and Bluegrass properties. A further increase in cash available for investment resulted from the receipt of the Trust's share of net proceeds received from the Westminster sale in June 1995. (See below for further details of the 1995 acquisitions and sale of the Westminster property.) Industrial property operating revenue increased by approximately $187,000 resulting from increases in rental income at the Trust's Elmhurst property and acquisition of the Willowbrook property in June 1995 and the Bluegrass property in September 1995. Rental income at Elmhurst increased by approximately $23,000 due to annual rent adjustments. The acquisition of the Willowbrook and Bluegrass properties contributed to the increase in total income in the amounts of approximately $145,000 and $12,000, respectively. Residential property operating revenue increased by approximately $43,000 resulting primarily from an increase in rental income at the Hallmark property. Rental income at the Hallmark property increased due to an increase in occupancy as described above. Commercial property operating revenue increased by approximately $26,000 which is attributable to an increase in rental income at the Colonial Penn and Florida Power and Light Office buildings. The increase in rental income at both properties was due to annual rent adjustments. Retail property operating revenue represents income generated pursuant to the acquisition of the Northlake property on July 28, 1995 as mentioned above. Total expenses for the three months ended September 30, 1995 increased to $2,697,299 from $1,780,811 for the three months ended September 30, 1994. This increase is due to increases in expenses from property operating activities of approximately $863,000 and an increase in total other expenses of approximately $54,000. The increase in property operating expenses for the quarter ended September 30, 1995 is primarily attributable to the acquisitions in the second and third quarters of 1995 of the Willowbrook, Northlake and Bluegrass properties (as discussed below) which accounted for approximately $651,000 of this increase. Excluding the Trust's acquisitions during 1995, total expenses from property operating activities for the quarter ended September 30, 1995 increased approximately $237,000 of which $160,000 is attributable to increases in interest expense and approximately $77,000 is attributable to increases in repairs and maintenance expense. Interest expense increased primarily to the Trust's financing of the Elmhurst and Colonial Courts properties in December 1994. Repairs and maintenance costs increased due primarily to higher unit turnover costs at the Colonial Courts and Hallmark properties. Total other expenses increased due primarily to an increase in amortization of deferred loan fees and financing costs which resulted from the Elmhurst and Colonial Courts financing and costs associated with obtaining the Trust's line of credit which occurred during the fourth quarter of 1994. For the nine months ended September 30, 1995, the Trust recorded net income from operations of real estate ventures of $649,274 as compared to a net loss of $(46,064) for the same period in 1994. For the three months ended September 30, 1995, the Trust recorded net income of $256,674 as compared to a net loss of $(20,913) for the same period in 1994. The operations of real estate ventures for the nine months ended September 30, 1995 resulted in income from operations on the Plaza at Westminster and H Street Assemblage properties of $451,966 and $197,308, respectively. The increase in the net income from the operations of real estate ventures for the nine months ended September 30, 1995 as compared to the same period in 1994 is primarily due to the June 22, 1995 sale of the Plaza at Westminster property which resulted in a net gain to the Trust of approximately $409,000. The Trust's share of the net income for the nine months ended September 30, 1995 as compared to the same period in 1994 from the H Street property increased by approximately $386,000. This increase in net income for the H Street property is partially due to a reduction in legal costs compared to 1994 relating to the successful real estate tax appeal which reduced the property's assessed taxable value. During 1995, the Venture recorded approximately $534,000 in real estate tax refunds and interest, thereon, relating to taxes paid in 1992 and 1993, resulting in a decrease in real estate tax expense of approximately $160,000 for the nine months ended September 30, 1995 when compared to the same period in 1994. In addition, legal and entitlement costs for 1995 decreased when compared to 1994 since the costs incurred during 1994 included nonrecurring payments for professional services associated with obtaining the historic preservation rights in 1994. The Trust has completed and obtained the zoning, entitlement and historic preservation rights for the development of an approximately 300,000 square foot commercial building on the H Street Assemblage. The H Street Venture has not made any significant capital expenditures on this asset and is allowing occupancy to decline by selectively retenanting the Victor building at the H Street Assemblage with short term leases so that the building will be more marketable to a potential buyer which would need to vacate the Victor building before its redevelopment. The H Street Venture is currently marketing the H Street Assemblage for sale. The current market for the sale of undeveloped land where the H Street Assemblage is located is very limited. Further contributing to the decline in demand for commercial development sites in the Washington, D.C. market was the recent government decision to downsize various departments and agencies and place a freeze on leasing of any additional office space. Therefore, the H Street Venture currently anticipates its marketing efforts could proceed slower than originally anticipated. Operations of real estate ventures resulted in income from operations on the Plaza at Westminster property of $142,405 which was offset by a loss from operations of $188,469 on the H Street property for the nine months ended September 30, 1994. The factors discussed above resulted in consolidated net income of $957,102 ($0.09 per share) for the quarter ended September 30, 1995 as compared to a consolidated net income of $569,284 ($0.05 per share) for the quarter ended September 30, 1994. The Trust owned a 30.7% participation interest in the Plaza at Westminster ("Westminster") property. On June 22, 1995, the Westminster property was sold to an unaffiliated third party for $7,525,000 which resulted in a net gain of approximately $1,333,000 after prorations for closing costs of approximately $1,235,000. The Trust's share of the cash proceeds was approximately $1,931,000 which resulted in the Trust's share of the net gain of approximately $409,000. On June 16, 1995, Banyan/Morgan Milwaukee Limited Partnership ("BMMLP"), a joint venture between a subsidiary of the Trust, which is the general partner, and Morgan Realty Partners ("Morgan"), acquired the Willowbrook Industrial Court property (the "Willowbrook Property") which consists of a three-building office/warehouse complex with a total of approximately 84,000 square feet of leasable space located in the metropolitan Chicago area for a purchase price, including liabilities assumed at acquisition, of approximately $3,922,000. The Trust and Morgan contributed additional capital of approximately $1,030,000 and $370,000 to BMMLP for their 85% and 15% ownership interest in BMMLP, respectively, which includes $200,000 in reserves held by BMMLP for property improvements and lease-up. The acquisition was made subject to a nonrecourse first mortgage loan collateralized by the property in the amount of $2,650,000 which bears interest at a fixed rate of 8.5%, matures on July 1, 2002, and requires monthly payments based upon a twenty-two and a half year amortization schedule. The loan requires a balloon payment for the remaining unpaid principal balance at maturity. Upon acquisition, the Willowbrook Property was 93% leased. The terms of the BMMLP Partnership Agreement as originally established at the time of the acquisitions of the Milwaukee Industrial and the Elmhurst Metro Court properties, were amended effective July 1, 1995 as a result of the Willowbrook Property acquisition by BMMLP. Pursuant to the amended BMMLP Partnership Agreement, any excess cash flow from operations, after each of the Trust and Morgan receives its 12% and 11% preferred return, respectively, on contributed equity, will be allocated 85% to the Trust and 15% to Morgan. The amendment was adopted as a result of the increase in additional equity contributed by Morgan of approximately $370,000. The BMMLP ownership percentage changes which occurred upon acquisition of the Willowbrook Property, as mentioned above, will become effective July 1, 1995 for financial reporting purposes. On July 28, 1995, BSRT/M&J Northlake Limited Partnership ("BMJNLP"), a joint venture between a subsidiary of the Trust and M&J Wilkow Retail Ltd. ("Wilkow"), acquired a shopping center known as the Northlake Tower Shopping Center ("Northlake Property") located in northeast suburban Atlanta, Georgia for a purchase price, including liabilities assumed at acquisition, of approximately $17,079,000. The Northlake Property consists of six structures containing approximately 322,000 rentable square feet built in 1984. The Trust contributed $6,000,000 to BMJNLP for an approximate 80% interest, while Wilkow contributed approximately $1,500,000 for the remaining 20% interest which includes approximately $550,000 in reserves held by BMJNLP for property improvements, lease-up and other closing prorations. The Northlake Property was acquired pursuant to a ground lease with a remaining term of sixty-two years. The ground lease requires annual lease payments of $600,000 through October 4, 2007 plus 7% of total annual gross rental income commencing when gross rental income exceeds $2,000,000 from the operations of the Northlake Property. The ground lease also requires that BMJNLP pay for expenses incurred on the Northlake site, including real estate taxes. The Northlake Property was financed by BMJNLP utilizing a non-recourse leasehold mortgage loan from the seller in the amount of $10,350,000. The mortgage loan requires monthly payments of interest only at a fixed rate of 8.5% per annum. The leasehold mortgage loan matures on July 1, 2005 and may be repaid at any time during its term without any prepayment penalty. Upon acquisition, the property was 97% leased with sixteen national and regional credit tenants leasing 84% of the leased space. Pursuant to the terms of the BMJNLP Partnership Agreement, cash flow from operations will be distributed first to the Trust until it has received a 12% cumulative return on its capital contribution and then to Wilkow until it has received a 12% cumulative return on its capital contribution. Any excess cash flow will be allocated pro-rata to the Trust and Wilkow based on their respective capital contributions. Proceeds from the sale or refinancing of the Northlake Property, after the payment of any debt or expense associated with the sale or refinancing, will be distributed first to the Trust to the extent that the 12% annual preferred return has not been received. Next, distributions will be made to the Trust and Wilkow on a pro-rata basis in an amount equal to their respective equity contributions. Thereafter, distributions will be made to Wilkow to the extent that its 12% annual preferred return has not been received. In the event there are any remaining proceeds to be distributed and the average annual return to the Trust during the period that BMJNLP owned the Northlake Property is equal to or greater than 15%, Wilkow will receive 30% of any remaining proceeds. On September 26, 1995, a subsidiary of the Trust acquired a 100% ownership interest in a seven building office/industrial complex known as the Bluegrass Corporate Center (the "Bluegrass Property") located in Jefferson County, Kentucky (suburban Louisville), for a purchase price, including liabilities assumed at acquisition, of approximately $5,059,000. The seven buildings contain approximately 182,000 net rentable square feet. The Bluegrass Property was built during 1976-77 and 1979-80 and was 91% leased with 43 tenants upon acquisition. The acquisition was made subject to a nonrecourse first mortgage loan collateralized by the property in the amount of approximately $2,707,000, bears interest at a fixed rate of 8%, matures on April 25, 2001, and requires monthly payments based upon a twenty year amortization schedule with a balloon payment of approximately $2,320,000 upon maturity. An objective of the Trust is to provide cash distributions to the shareholders from cash generated from the Trust's consolidated operations as discussed above. Cash generated from operations is not equivalent to the Trust's net operating income as determined under generally accepted accounting principles. Due to certain unique operating characteristics of real estate companies, the real estate investment trust ("REIT") industry has adopted a standard for reflecting operating property performance and comparing operating performance within the industry. Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trust as net income computed in accordance with generally accepted accounting principles, excluding extraordinary, unusual and nonrecurring items, excluding gains (or losses) from debt restructuring and sales of property plus depreciation and amortization from real property and after adjustments for unconsolidated partnerships and joint ventures in which the REIT holds an interest. FFO is not intended to be a measure of the cash generated by a REIT nor its dividend paying capacity. However, a REIT's dividend can be analyzed in comparison to FFO in a similar manner as a company that is not a REIT would compare its dividend to net operating income. The Trust provides supplemental information on the results from the Investment Activities as well as on the consolidated results. For the nine months ended September 30, 1995 and 1994, the Trust's Investment Activities, including interest received on the Karfad Loan Portfolio, generated FFO of $3,146,578 ($0.30 per share) and $2,683,515 ($0.26 per share), respectively. For the nine months ended September 30, 1995 and 1994, the Trust's consolidated activities generated FFO of $2,513,343 ($0.24 per share) and $2,066,727 ($0.20 per share), respectively. For the quarter ended September 30, 1995 and 1994, the Trust's Investment Activities, including interest received on the Karfad Loan Portfolio, generated FFO of $1,193,439 ($0.11 per share) and $1,011,861 ($0.10 per share), respectively. For the quarter ended September 30, 1995 and 1994 the Trust's consolidated activities generated FFO of $1,019,527 ($0.10 per share) and $819,260 ($0.08 per share), respectively. Excluding the effect of the 1994 and 1995 property acquisitions, FFO related to Investment Activities decreased by approximately $316,000 for the nine months ended September 30, 1995 as compared to the same period in 1994. This decrease in FFO is primarily due to the increase in interest expense and amortization of deferred loan fees and financing costs for the nine months ended September 30, 1995 of approximately $500,000 as a result of the December 1994 financing of the Elmhurst and Colonial Courts properties and obtaining the Trust's line of credit. The decrease in FFO related to reinvestment activities was partially offset by increased operating performance of the Trust's properties. Excluding the effect of interest expense, amortization of deferred loan fees and financing costs and the 1994 and 1995 acquisitions, FFO relating to reinvestment activities increased by approximately $184,000 for the nine months ended September 30, 1995 as compared to the same period in 1994. FFO for the nine months ended September 30, 1995 is calculated as follows: Investment Consolidated Net Income $2,341,680 $2,513,830 Plus: Depreciation expense 851,475 851,475 Depreciation inclu- ded in Operations of Real Estate Ventures --- 42,763 Lease Commission Amortization 22,671 22,671 Less: Minority Interest Share of Depre- ciation Expense (66,610) (66,610) Minority Interest Share of Lease Commission Amortization (2,638) (2,638) Recovery of Losses on Mortgage Loans, Notes and Interest Receivable --- (155,834) Gain on Disposition of Investment in Real Estate Venture --- (409,290) Real Estate Tax Rebates from Operations of Real Estate Venture --- (283,024) ---------- ---------- Funds From Operations $3,146,578 $2,513,343 ========== ========== The Trust paid dividends equal to $0.10 per share on August 18, 1995 and August 15, 1994 for the second quarter of 1995 and 1994, respectively. On October 5, 1995, the Trust declared a cash dividend for the third quarter of 1995 of $0.10 per share payable November 17, 1995 to shareholders of record on October 20, 1995. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits- Financial Statements and Pro Forma Financial Information (i) Northlake Tower Shopping Center (TO BE FILED BY AMENDMENT (ii) Bluegrass Corporate Center (b) No current reports on Form 8-K were filed during the quarter ended September 30, 1995. 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: November 14, 1995 Leonard G. Levine, President By: /s/ Joel L. Teglia Date: November 14, 1995 Joel L. Teglia, Vice President Finance and Administration, Chief Financial and Accounting Officer EX-27 2
5 "This schedule contains summary financial information extracted from Banyan Strategic Realty Trust's Form 10Q for the nine months ended September 30, 1995 and is qualified in its entirety by reference to such Form 10Q." 9-MOS DEC-31-1995 SEP-30-1995 8,468,782 0 482,879 0 0 8,951,661 67,789,781 1,888,365 91,634,625 2,630,162 5,500,000 57,836,903 0 0 0 91,634,625 0 8,621,195 0 0 5,835,258 (155,834) 996,856 2,513,830 0 2,513,830 0 0 0 2,513,830 0.24 0.24
EX-99 3 EXHIBIT (ii) INDEPENDENT AUDITOR'S REPORT The Partners Bluegrass Corporate Centers III and IV Partners Louisville, Kentucky We have audited the accompanying balance sheets of Bluegrass Corporate Centers III and IV Partners as of December 31, 1994 and 1993, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 financial position of Bluegrass Corporate Centers III and IV Partners as of December 31, 1994 and 1993, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ CARPENTER & MOUNTJOY, PSC Louisville, Kentucky February 1, 1995 BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS BALANCE SHEETS December 31, ASSETS 1994 1993 Property And Improvements- Notes A and B Land $ 441,515 $ 441,515 Buildings and improvements 5,015,745 5,002,302 ----------- ----------- 5,457,260 5,443,817 Less accumulated 3,602,951 3,277,908 depreciation ----------- ----------- 1,854,309 2,165,909 Other Assets Cash and equivalents-Note F 238,030 298,368 Accounts receivable --- 9,320 Other current assets 21,806 5,566 Deferred assets, net of accumulated amortization- Note A 111,223 19,916 ----------- ----------- 371,059 333,170 ----------- ----------- $ 2,225,368 $ 2,499,079 =========== =========== LIABILITIES AND PARTNERS' DEFICIT Debt-Note B $ 2,789,129 $ 2,805,488 Other Liabilities Accounts payable- Note D 6,937 1,984 Accrued interest 17,663 24,280 Unearned rent 12,046 12,183 Security deposits 33,714 32,408 ----------- ----------- 70,360 70,855 Partners' Deficit (634,121) (377,264) ----------- ----------- $ 2,225,368 $ 2,499,079 =========== =========== See notes to financial statements. BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS STATEMENTS OF OPERATIONS Year ended December 31, 1994 1993 Revenues $ 767,402 $ 725,552 Operating Expenses Depreciation expense 325,042 337,760 Interest expense 241,197 295,145 Repairs and maintenance 64,349 66,373 Property taxes 41,592 35,688 Management fee 34,166 32,167 Amortization 22,755 36,451 Utilities 16,504 16,450 Leasing fees 14,776 23,758 Insurance 9,210 8,921 Professional fees 4,194 5,193 Miscellaneous expenses 2,399 1,928 ----------- ----------- 776,184 859,834 ----------- ----------- Loss from operations (8,782) (134,282) Other Income 2 Interest income 746 1,993 Other 1,179 4,124 ----------- ----------- Total other income 1,925 6,117 ----------- ----------- Net loss $ (6,857) $ (128,165) =========== =========== See notes to financial statements. BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS STATEMENTS OF PARTNERS' DEFICIT
Years ended December 31, 1994 and 1993 Sturgeon- LHI Thornton Development Bluegrass Inc. Partners Total Partners' Deficit at December 31, 1992 $ (108,616) $ (140,483) $ (249,099) 1993 Net loss (121,102) (7,063) (128,165) ---------- ---------- ---------- Partners' Deficit at December 31, 1993 (229,718) (147,546) (377,264) 1994 Net loss (24,062) 17,205 (6,857) 1994 Distributions (200,000) (50,000) (250,000) ---------- ---------- ---------- Partners' Deficit at December 31, 1994 $ (453,780) $ (180,341) $ (634,121) ========== ========== ========== See notes to financial statements.
BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS STATEMENTS OF OPERATIONS Year ended December 31, 1994 1993 Cash Flows From Operating Activities Net loss $ (6,857) $ (128,165) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 347,797 374,211 3 Changes in assets and liabilities: Deferred assets (108,784) --- Other assets (12,197) 25,409 Other liabilities (495) (39,293) ---------- ---------- Total adjustments 226,321 360,327 Net cash provided by operating activities 219,464 232,162 Cash Flows From Investing Activities Purchase of fixed assets (13,443) (19,215) Cash Flows From Financing Activities Principal payments on long- (2,805,488) (72,500) term debt Proceeds from long-term debt refinancing 2,789,129 --- Distributions to partners (250,000) --- ---------- ---------- Net Cash used in financing activities (266,359) (72,500) Net increase (decrease) in cash and equivalents (60,338) 140,447 Cash and equivalents at beginning of year 298,368 157,921 ---------- ---------- Cash and equivalents at end of year $ 238,030 $ 298,368 ========== ========== BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS NOTES TO FINANCIAL STATEMENTS December 31, 1994 and 1993 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Partnership Activities: The Partnership derives its revenues from the leasing of commercial office building space in Louisville, Kentucky. Accounts Receivable: Accounts receivable consist of rents due from tenants. The partnership considers all of these to be collectible and as such, no allowance has been recorded on the books. Building and Improvements: Property is recorded at cost with depreciation provided over its estimated useful lives using the straight-line method. Deferred Assets: Deferred leasing commissions and capitalized leasing costs are being amortized over the life of the related lease using the straight-line 4 method. Loan costs are being amortized over the life of the note. At December 31, 1994 and 1993, deferred assets consisted of the following: 1994 1993 Capitalized leasing costs $ 1,341 $ 1,341 Deferred leasing commissions 18,133 17,124 Deferred loan costs 150,056 41,273 --------- --------- 169,530 59,738 Less accumulated amortization (58,307) (39,822) --------- --------- $ 111,223 $ 19,916 ========= ========= Statement of Cash Flows: For purposes of the statement of cash flows, the Partnership considers all short-term highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash paid for interest was $241,197 and $295,145 for 1994 and 1993, respectively. Continued BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS NOTES TO FINANCIAL STATEMENTS-CONTINUED December 31, 1994 and 1993 NOTE B--LONG-TERM DEBT Long-term debt consists of the following: December 31 1994 1993 9.75% mortgage note payable due in monthly installments of $11,528, including interest. Note refinanced on April 25, 1994. $ --- $ 1,022,639 10.75% mortgage note payable due in monthly installments of $19,687, including interest. Note refinanced on April 25, 1994. --- 1,782,849 7.6% mortgage note payable due in monthly installments of $26,582, including interest. Final lump sum payment due April 25, 2001. 2,789,129 --- ----------- ----------- $ 2,789,129 $ 2,805,488 =========== =========== Maturities on long-term debt are as follows: 1995 $ 110,526 1996 119,224 5 1997 128,608 1998 138,730 1999 149,648 2000 and thereafter 2,142,393 ----------- $ 2,789,129 =========== NOTE C--INCOME TAXES Income taxes on net earnings are payable by the partners pursuant to the provision of Subchapter K of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. Continued BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS NOTES TO FINANCIAL STATEMENTS-CONTINUED December 31, 1994 and 1993 NOTE D--TRANSACTIONS WITH RELATED PARTIES The Partnership has entered into a building management contract with Sturgeon and Associates to manage the project. The owner of Sturgeon and Associates is also a partner of Sturgeon-Thornton Bluegrass Partners, which is a 20% partner in the Partnership. The management fee, which amounted to $34,166 and $32,167 for 1994 and 1993, respectively, is 4.5% of the monthly gross rents collected. The Partnership also pays leasing commissions to Sturgeon and Associates at 3.5% on new tenant leases and 1.5% on renewal. These commissions amounted to $14,776 for 1994 and $23,758 for 1993. Another related party is a tenant of the Partnership and paid rent of $2,667 in 1994 and $8,000 in 1993. The lease expired April 30, 1994 and was not renewed. Included in accounts payable at December 31, 1994 is a payable to Sturgeon and Associates of $3,600. NOTE E--FUTURE MINIMUM RENTALS At December 31, 1994, the Partnership had the following future minimum rentals under noncancellable operating leases, not including renewal options or any re-leasing: Year ended December 31, 1995 $ 614,028 1996 372,652 1997 212,174 1998 107,536 1999 28,800 2000 and thereafter 12,000 ----------- $ 1,347,190 =========== 6 Continued BLUEGRASS CORPORATE CENTERS III AND IV PARTNERS NOTES TO FINANCIAL STATEMENTS-CONTINUED December 31, 1994 and 1993 NOTE F--CONCENTRATIONS OF CREDIT RISK Cash is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At December 31, 1994, the Company had bank balances exceeding individual FDIC insurance limits as follows:
Amount Financial in Excess Statement Reconciling Bank of FDIC Balance Items Balance Insurance Cash deposit in excess of FDIC insurance limit $ 238,030 $ 5,841 $ 243,921 $ 143,921 =========== ========== ========== ==========
BLUEGRASS CORPORATE CENTER Estimated Pro Forma Statement of Net Operating Income (Unaudited) The Estimated Pro Forma Statement of Net Operating Income represents the amount of estimated income which would be realized by the Registrant during twelve months of ownership of the Property, based upon the assumptions set forth in the accompanying notes (See Note 1). Revenue: Rental Income $815,000 Other Income 7,000 -------- Total Revenues $822,000 -------- Property Operating 71,000 Utilities 17,000 Real Estate Taxes 44,000 Depreciation (See Note 2) 104,000 Insurance 10,000 Management Fee (See Note 3) 33,000 Repairs and Maintenance 119,000 Interest (See Note 4) 213,000 7 Administration and Other 7,000 -------- Total Expenses 618,000 -------- Pro Forma Revenue in Excess of Expenses $204,000 ======== Pro Forma Funds from Operations (See Note 5) $308,000 ======== The accompanying notes are an integral part of the estimated pro forma statement. Bluegrass Corporate Center Notes to Estimated Pro Forma Statement 1) This statement does not propose to forecast actual operating results for any period in the future and thus, the following assumptions may not be valid for future years and actual results may differ. These statements should be read in conjunction with the Statement of Revenue and Certain Expenses for the year ended December 31, 1994 which were modified by Management for known changes in revenues and expenses associated with the Registrant's ownership of the Property in order to estimate the pro forma statement. 2) Depreciation expense which represents a non-cash expenditure has been included for informational purposes only. Depreciation is calculated on a depreciable basis of approximately $4,160,000 using the straight line method based on a useful life of 40 years. 3) The Property will be managed by an unaffiliated third party for initial management fee of 4.0% of gross revenues. 4) The Bluegrass Corporate Center serves as collateral for a nonrecourse first mortgage loan in the amount of approximately $2,707,000 which bears interest at a fixed rate of 8%, matures on April 25, 2001, and requires monthly payments of principal and interest based upon a twenty year amortization schedule. The loan requires a balloon payment for the remaining unpaid principal balance upon its maturity. 5) Funds From Operations (or "FFO") has been provided in the Pro Forma Statement as supplemental information to the property's projected operating results. FFO is used by the real estate investment trust industry as a measure of a property's performance and is defined as net operating income from a property's operations, plus certain non-cash items including depreciation and amortization and excluding an extraordinary capital items. 8 -----END PRIVACY-ENHANCED MESSAGE-----