-----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, DVVrB6lLivgfJuadQTOrw418sBNjdruj2Z9sjNdU8UeejTlD5/oYXkFfcX0Dyxzd nEoPR6nP7zpULM2KAHmcTw== 0000892626-01-500167.txt : 20020410 0000892626-01-500167.hdr.sgml : 20020410 ACCESSION NUMBER: 0000892626-01-500167 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANYAN STRATEGIC REALTY TRUST CENTRAL INDEX KEY: 0000790817 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [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: 1785355 BUSINESS ADDRESS: STREET 1: 2625 BUTTERFIELD RD STREET 2: STE 101 NORTH CITY: OAK BROOK STATE: IL ZIP: 60523 BUSINESS PHONE: 6302187250 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 ban_901.txt 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, 2001. OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 0-15465 BANYAN STRATEGIC REALTY TRUST ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Massachusetts 36-3375345 - ----------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 2625 Butterfield Road, Suite 101 N Oak Brook, Illinois 60523 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (630) 218-7250 150 South Wacker Drive, Chicago, IL 60606 (312) 553-9800 --------------------------------------------------- Former name, former address and former fiscal year, if changed since last report 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 9, 2001: 15,496,806 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Net Assets in Liquidation (Liquidation Basis) September 30, 2001 (Unaudited) (Dollars in thousands) ASSETS - ------ Investment in Real Estate Held for Sale, at cost: Land. . . . . . . . . . . . . . . . . . . . . . . $ 1,387 Building. . . . . . . . . . . . . . . . . . . . . 5,950 Building Improvements . . . . . . . . . . . . . . 1,677 ---------- 9,014 Less: Accumulated Depreciation. . . . . . . . . . (1,406) ---------- 7,608 ---------- Investment in Real Estate, at cost: Land. . . . . . . . . . . . . . . . . . . . . . . 1,750 Building. . . . . . . . . . . . . . . . . . . . . 24,774 Building Improvements . . . . . . . . . . . . . . 1,189 ---------- 27,713 Less: Accumulated Depreciation . . . . . . . . . (4,051) ---------- 23,662 ---------- Cash and Cash Equivalents . . . . . . . . . . . . . 10,627 Restricted Cash - Capital Improvements. . . . . . . 181 Restricted Cash - Other . . . . . . . . . . . . . . 1,715 Interest and Accounts Receivable. . . . . . . . . . 203 Employees' Notes. . . . . . . . . . . . . . . . . . 514 Notes Receivable. . . . . . . . . . . . . . . . . . 2,264 Other Assets. . . . . . . . . . . . . . . . . . . . 168 ---------- Total Assets. . . . . . . . . . . . . . . . . . . . $ 46,942 ========== LIABILITIES - ----------- Mortgage Loans Payable. . . . . . . . . . . . . . . $ 21,627 Bonds Payable . . . . . . . . . . . . . . . . . . . 4,200 Accounts Payable and Accrued Expenses . . . . . . . 3,131 Accrued Real Estate Taxes . . . . . . . . . . . . . 187 Accrued Interest Payable. . . . . . . . . . . . . . 151 Unearned Revenue. . . . . . . . . . . . . . . . . . 123 Security Deposits . . . . . . . . . . . . . . . . . 90 Distributions Payable . . . . . . . . . . . . . . . 3,099 ---------- Total Liabilities . . . . . . . . . . . . . . . . . 32,608 ---------- Net Assets in Liquidation . . . . . . . . . . . . . $ 14,334 ========== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Changes in Net Assets in Liquidation (Liquidation Basis) For the Nine Months Ended September 30, 2001 (Unaudited) (Dollars in thousands) Shareholders' Equity at December 31, 2000 (Going concern basis) . . . . . . . . . . . . . . . . $ 67,350 Adjustments to Liquidation Basis: Liquidation and Termination Costs . . . . . . . . . . (810) Elimination of Intangible Assets. . . . . . . . . . . (5,470) Reclassification of Employees' Notes. . . . . . . . . 3,144 -------- Net Assets in Liquidation at December 31, 2000. . . . . 64,214 Net Gains on Disposition of Investment in Real Estate Held for Sale (Net of Minority Interest of $6,445) . . . . . . . . . . . . . . . . . 25,771 Interest Income on Employees' Notes . . . . . . . . . . 125 Interest Income on Cash and Cash Equivalents. . . . . . 624 Operating Income. . . . . . . . . . . . . . . . . . . . 3,141 Recovery of Losses on Loans, Notes and Interest Receivable . . . . . . . . . . . . . . . . . 870 Depreciation. . . . . . . . . . . . . . . . . . . . . . (2,905) Minority Interest in Consolidated Partnerships. . . . . (279) Issuance of Shares. . . . . . . . . . . . . . . . . . . 91 Distributions Paid and Payable to Shareholders. . . . . (77,318) -------- Net Assets in Liquidation at September 30, 2001 . . . . $ 14,334 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Changes in Net Assets in Liquidation (Liquidation Basis) For the Three Months Ended September 30, 2001 (Unaudited) (Dollars in thousands) Net Assets in Liquidation at June 30, 2001. . . . . . . $ 18,103 Interest Income on Cash and Cash Equivalents. . . . . . 157 Operating Loss. . . . . . . . . . . . . . . . . . . . . (328) Depreciation. . . . . . . . . . . . . . . . . . . . . . (308) Minority Interest in Consolidated Partnerships. . . . . (227) Issuance of Shares. . . . . . . . . . . . . . . . . . . 36 Distributions Payable to Shareholders . . . . . . . . . (3,099) -------- Net Assets in Liquidation at September 30, 2001 . . . . $ 14,334 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Balance Sheet December 31, 2000 (Unaudited) (Dollars in Thousands) ASSETS - ------ Investment in Real Estate Held for Sale, at cost: Land. . . . . . . . . . . . . . . . . . . . . . . . . $ 36,445 Building. . . . . . . . . . . . . . . . . . . . . . . 148,608 Building Improvements . . . . . . . . . . . . . . . . 20,633 -------- 205,686 Less: Accumulated Depreciation. . . . . . . . . . . . (21,511) -------- 184,175 -------- Cash and Cash Equivalents . . . . . . . . . . . . . . . 2,393 Restricted Cash - Capital Improvements. . . . . . . . . 1,200 Restricted Cash - Other . . . . . . . . . . . . . . . . 1,178 Interest and Accounts Receivable. . . . . . . . . . . . 1,344 Deferred Financing Costs (Net of Accumulated Amortization of $1,620) . . . . . . . . . . . . . . . 1,219 Deferred Leasing Commissions (Net of Accumulated Amortization of $2,165) . . . . . . . . . . . . . . . 2,612 Other Assets. . . . . . . . . . . . . . . . . . . . . . 1,936 -------- Total Assets. . . . . . . . . . . . . . . . . . . . . . $196,057 ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities Mortgage Loans Payable. . . . . . . . . . . . . . . . . $115,452 Bonds Payable . . . . . . . . . . . . . . . . . . . . . 4,200 Accounts Payable and Accrued Expenses . . . . . . . . . 3,147 Accrued Real Estate Taxes Payable . . . . . . . . . . . 898 Accrued Interest Payable. . . . . . . . . . . . . . . . 676 Unearned Revenue. . . . . . . . . . . . . . . . . . . . 578 Security Deposits . . . . . . . . . . . . . . . . . . . 1,439 -------- Total Liabilities . . . . . . . . . . . . . . . . . . . 126,390 -------- Minority Interest in Consolidated Partnerships. . . . . 2,317 Shareholders' Equity Series A Non-Voting Convertible Preferred Shares, No Par Value, 200,000 Shares Authorized, 61,572 Shares Issued and Outstanding. . . . . . . . . . . . . . . . 6,157 Shares of Beneficial Interest, No Par Value, Unlimited Authorization; 15,805,289 Shares Issued . . 124,559 Accumulated Deficit . . . . . . . . . . . . . . . . . . (52,856) Employees' Notes. . . . . . . . . . . . . . . . . . . . (3,144) Treasury Shares at Cost, 1,522,649 Shares . . . . . . . (7,366) -------- Total Shareholders' Equity. . . . . . . . . . . . . . . 67,350 -------- Total Liabilities and Shareholders' Equity. . . . . . . $196,057 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Operations For the Nine Months Ended September 30, 2000 (Unaudited) (Dollars in thousands, except per share data) REVENUE Rental Income . . . . . . . . . . . . . . . . . . . . $ 24,438 Operating Cost Reimbursement. . . . . . . . . . . . . 2,849 Miscellaneous Tenant Income . . . . . . . . . . . . . 263 Income on Investments and Other Income. . . . . . . . 545 -------- Total Revenue . . . . . . . . . . . . . . . . . . . . . 28,095 -------- EXPENSES Property Operating. . . . . . . . . . . . . . . . . . 3,400 Repairs and Maintenance . . . . . . . . . . . . . . . 2,762 Real Estate Taxes . . . . . . . . . . . . . . . . . . 2,087 Interest. . . . . . . . . . . . . . . . . . . . . . . 6,889 Ground Lease. . . . . . . . . . . . . . . . . . . . . 694 Depreciation and Amortization . . . . . . . . . . . . 5,092 General and Administrative. . . . . . . . . . . . . . 3,193 Amortization of Deferred Financing Costs. . . . . . . 226 Severance and Termination Costs . . . . . . . . . . . 1,557 -------- Total Expenses. . . . . . . . . . . . . . . . . . . . . 25,900 Income Before Minority Interest and Extraordinary Item. 2,195 Minority Interest in Consolidated Partnerships. . . . . (403) -------- Income Before Extraordinary Item . . . . . . . . . . . 1,792 Extraordinary Item. . . . . . . . . . . . . . . . . . . (42) -------- Net Income. . . . . . . . . . . . . . . . . . . . . . . 1,750 Less Income Allocated to Preferred Shares . . . . . . . (431) -------- Net Income Available to Common Shares . . . . . . . . . $ 1,319 ======== Basic and Diluted Earnings Available to Common Shares per weighted-average Common Share: Income Before Extraordinary Item. . . . . . . . . . . $ 0.09 ======== Net Income. . . . . . . . . . . . . . . . . . . . . . $ 0.09 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Operations For the Three Months Ended September 30, 2000 (Unaudited) (Dollars in thousands, except per share data) REVENUE Rental Income . . . . . . . . . . . . . . . . . . . . $ 8,159 Operating Cost Reimbursement. . . . . . . . . . . . . 900 Miscellaneous Tenant Income . . . . . . . . . . . . . 99 Income on Investments and Other Income. . . . . . . . 127 -------- Total Revenue . . . . . . . . . . . . . . . . . . . . . 9,285 -------- EXPENSES Property Operating. . . . . . . . . . . . . . . . . . 1,211 Repairs and Maintenance . . . . . . . . . . . . . . . 928 Real Estate Taxes . . . . . . . . . . . . . . . . . . 664 Interest. . . . . . . . . . . . . . . . . . . . . . . 2,274 Ground Lease. . . . . . . . . . . . . . . . . . . . . 232 Depreciation and Amortization . . . . . . . . . . . . 1,760 General and Administrative. . . . . . . . . . . . . . 1,049 Amortization of Deferred Financing Costs. . . . . . . 67 Severance and termination Costs . . . . . . . . . . . 1,557 -------- Total Expenses. . . . . . . . . . . . . . . . . . . . . 9,742 Loss Before Minority Interest . . . . . . . . . . . . . (457) Minority Interest in Consolidated Partnerships. . . . . (130) -------- Net Loss. . . . . . . . . . . . . . . . . . . . . . . . (587) Less Income Allocated to Preferred Shares . . . . . . . (155) -------- Net Loss Available to Common Shares . . . . . . . . . . $ (742) ======== Basic and Diluted Earnings Available to Common Shares per weighted-average Common Share: Net Loss. . . . . . . . . . . . . . . . . . . . . . . $ (0.05) ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Cash Flows For the Nine Months Ended September 30, 2000 (Unaudited) (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income. . . . . . . . . . . . . . . . . . . . . . . . $ 1,750 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Extraordinary Item. . . . . . . . . . . . . . . . . . . 42 Depreciation and Amortization . . . . . . . . . . . . . 5,318 Minority Interest in Consolidated Partnerships. . . . . 403 Net Change In: Restricted Cash - Other . . . . . . . . . . . . . . . (586) Interest and Accounts Receivable. . . . . . . . . . . (191) Other Assets. . . . . . . . . . . . . . . . . . . . . (853) Accounts Payable and Accrued Expenses . . . . . . . . 747 Accrued Interest Payable. . . . . . . . . . . . . . . 41 Accrued Real Estate Taxes Payable . . . . . . . . . . 818 Unearned Revenue. . . . . . . . . . . . . . . . . . . 1 Security Deposits . . . . . . . . . . . . . . . . . . 167 -------- Net Cash Provided By Operating Activities . . . . . . . . 7,657 -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Investment in Real Estate. . . . . . . . (4,421) Restricted Cash - Capital Improvements. . . . . . . . 396 -------- Net Cash Used In Investing Activities . . . . . . . . . . (4,025) -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Loans Payable . . . . . . . . . . . . . . 8,500 Distributions to Minority Partners. . . . . . . . . . . (288) Deferred Financing Costs. . . . . . . . . . . . . . . . (159) Payment of Preferred Shares Issuance Costs. . . . . . . (30) Repayment of Employees' Notes . . . . . . . . . . . . . 79 Principal Payments on Mortgage Loans, Bonds Payable and Unsecured Loan Payable. . . . . . . . . . . . . . (16,683) Distributions Paid to Shareholders. . . . . . . . . . . (5,099) Payment of Preferred Distributions. . . . . . . . . . . (431) Prepayment Penalties on Early Extinguishment of Debt. . (6) Shares Issued, Net of Issuance Costs. . . . . . . . . . 597 -------- Net Cash Used In Financing Activities . . . . . . . . . . (13,520) -------- Net Decrease In Cash and Cash Equivalents . . . . . . . . (9,888) Cash and Cash Equivalents at Beginning of Period. . . . . 13,097 -------- Cash and Cash Equivalents at End of Period. . . . . . . . $ 3,209 ======== Supplemental Information: Interest Paid During the Period . . . . . . . . . . $ 6,848 ======== Non-Cash Financing Activities: Preferred Share Debt Conversion . . . . . . . . . . . . $ 6,157 ======== Employees' Notes. . . . . . . . . . . . . . . . . . . . $ 3,238 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Notes to Consolidated Financial Statements September 30, 2001 (Unaudited) (Dollars in thousands, except per share data) 1. FINANCIAL STATEMENT PRESENTATION Readers of this quarterly report should refer to Banyan Strategic Realty Trust's (the "Trust") audited consolidated financial statements for the year ended December 31, 2000 which are included in the Trust's 2000 Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in such audited statements have been omitted from this report. In anticipation of the sale of the Trust's real estate assets (see Note 2), the Trustees, on January 5, 2001, adopted a Plan of Termination and Liquidation under which the Trust will be dissolved, the obligations of the Trust will be paid, appropriate reserves will be taken and the net proceeds will be distributed to the shareholders. Effective as of January 5, 2001, the Trust adopted the liquidation basis of accounting. Certain reclassifications have been made to the previously reported 2000 consolidated financial statements in order to provide comparability with the 2001 consolidated financial statements. These reclassifications have not changed the 2000 results. 2. LIQUIDATION OF THE TRUST On May 17, 2001, the Trust sold 24 of its 27 properties (representing approximately 85% of the portfolio) to affiliates of Denholtz Management Corporation ("Denholtz") for a total sales price of $185,250, of which $3,000 was in the form of promissory notes and the remainder was in cash, pursuant to a Purchase and Sale Agreement dated January 8, 2001 as amended on March 30, 2001, April 9, 2001 and May 11, 2001. The notes bear interest at 12 percent per annum, require monthly payment of interest only and mature on June 30, 2002. As of September 30, 2001, Denholtz repaid $736. In addition, Denholtz paid the cost of all prepayment penalties and assumption fees related to the Trust's mortgage debt secured by the properties that were sold. The Trust realized a gain on disposition of investment in real estate (net of minority interest of $6,445) of $25,771. The following table shows cash flows for the nine months ended September 30, 2001. Gross sales proceeds $ 185,250 Repayment of mortgage loans payable (93,061) Closing prorations and closing costs (4,850) Purchase money notes (3,000) ---------- Net proceeds from sale 84,339 Release of restricted cash upon repayment of debt 2,345 Escrow for post closing adjustments (1,500) Distributions to minority interests (8,695) Initial liquidating distributions to shareholders at $4.75 per share (73,609) Receipt of principal and interest on employees' notes 2,755 Receipt of principal on notes receivables 736 ---------- Net cash available from sale of properties and related transactions 6,371 Increase in operating cash (net of distribution to minority interest of $56) 1,863 ---------- Net change in cash and cash equivalents 8,234 Cash and cash equivalents as of January 1, 2001 2,393 ---------- Cash and cash equivalents as of September 30, 2001 $ 10,627 ========== Of the three remaining properties, University Square in Huntsville, Alabama, remains subject to the Purchase and Sale Agreement with Denholtz and is classified as investment in real estate held for sale in the Consolidated Statement of Net Assets in Liquidation. The closing for this property is scheduled for December 19, 2001. On May 17, 2001, Denholtz deposited the sum of $1,000 in escrow to secure its performance under the deferred closings. If the sale does not close, through no fault of the Trust, $1,000 in earnest money will be forfeited and the property will be reclassified to Investment in Real Estate. The Trust is permitted to sell to third parties the other two properties, its Riverport property in Louisville, Kentucky and its Northlake Festival Shopping Center in Atlanta, Georgia. In the alternative, the Trust may elect to "put" these properties to Denholtz at agreed upon prices any time prior to January of 2002. On October 12, 2001, the Trust entered into an Amendment to Substituted, Amended and Restated Reimbursement Agreement with the issuer of the Letter of Credit (the "LOC Bank") collateralizing the bonds payable related to the Riverport property. This amendment primarily extended for a period of one year, the term of the letter of credit which otherwise would have expired on December 1, 2001. On that same date, the Trust deposited $300 with the LOC Bank to be utilized to make the mandatory bond redemption payment scheduled for December 1, 2001. The Trust additionally agreed, that if the $1,000 earnest money deposit in connection with the Denholtz contract is, for any reason, forfeited, it will pay the LOC Bank $500 to be utilized to further redeem additional outstanding bonds payable over and above any otherwise scheduled redemption payments. Furthermore, the Trust agreed to pay an extension fee in the amount of $25 payable in two equal installments - the first on the date of the agreement, and the second on June 1, 2002 if the Letter of Credit is still outstanding. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" which is effective for fiscal years beginning after December 15, 2001. Application of the provisions of this Statement are not expected to affect the earnings or financial position of the Trust. 3. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the nine months ended September 30, 2000: Numerator: Income Available to Common Shares Before Extraordinary Item. . . . . . . . . . . . . . . . . $ 1,361 Extraordinary Item. . . . . . . . . . . . . . . . . . (42) ---------- Net Income Available to Common Shares . . . . . . $ 1,319 ========== Denominator: Denominator for basic earnings per weighted-average shares. . . . . . . . . . . . . . . . . . . . . . . 14,157,824 Effect of dilutive securities - Employee stock options . . . . . . . . . . . . . . . . . . . . . . 7,370 ---------- Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions . 14,165,194 ========== Basic and Diluted Earnings Available to Common Shares Per weighted-average Common Share: Income Before Extraordinary Item. . . . . . . . . . . $ 0.09 Extraordinary Item. . . . . . . . . . . . . . . . . . -- ---------- Net Income. . . . . . . . . . . . . . . . . . . . $ 0.09 ========== The following table sets forth the computation of basic and diluted earnings per share for the three months ended September 30, 2000: Numerator: Net Loss Available to Common Shares . . . . . . . . . $ (742) ========== Denominator: Denominator for basic earnings per weighted-average shares. . . . . . . . . . . . . . . . . . . . . . . 14,217,926 Effect of dilutive securities - Employee stock options . . . . . . . . . . . . . . . . . . . . . . 6,026 ---------- Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions . 14,223,952 ========== Basic and Diluted Earnings Available to Common Shares Per weighted-average Common Share: Net Loss. . . . . . . . . . . . . . . . . . . . . . $ (0.05) ========== 4. BUSINESS SEGMENTS As of September 30, 2000, the Trust owned and operated real estate properties located principally in the Midwest and Southeast United States. At that time, the Trust had three operating segments corresponding to the three property types comprising its real estate assets: flex/industrial, office and retail. As of September 30, 2000, the flex/industrial segment was comprised of twelve complexes with long-term leases to approximately 170 tenants; the office segment was comprised of fourteen office sites with long-term leases to approximately 260 tenants; and the retail segment was comprised of one retail center with long-term leases to approximately 50 tenants. As of September 30, 2000, the Trust's long-term tenants were in a variety of businesses and no individual tenant was significant to the Trust's business when considered as a whole. Information by business segments is set forth below: Three Months Nine Months Ended Ended September 30, September 30, 2000 2000 ------------- ------------- REVENUE Flex/Industrial . . . . . . . . . . . . . $ 2,769 $ 8,461 Office. . . . . . . . . . . . . . . . . . 5,224 15,683 Retail. . . . . . . . . . . . . . . . . . 1,191 3,462 Corporate/Other . . . . . . . . . . . . . 101 489 -------- -------- $ 9,285 $ 28,095 ======== ======== Income (Loss) Before Extraordinary Item Flex/Industrial . . . . . . . . . . . . . $ 759 $ 2,318 Office. . . . . . . . . . . . . . . . . . 1,040 3,384 Retail. . . . . . . . . . . . . . . . . . 149 419 Corporate/Other . . . . . . . . . . . . . (2,535) (4,329) -------- -------- $ (587) $ 1,792 ======== ======== As of September 30, 2000 ------------- Total Assets Flex/Industrial . . . . . . . . . . . . . $ 68,803 Office. . . . . . . . . . . . . . . . . . 107,844 Retail. . . . . . . . . . . . . . . . . . 17,536 Corporate/Other . . . . . . . . . . . . . 2,856 -------- $197,039 ======== Three Months Nine Months Ended Ended September 30, September 30, 2000 2000 ------------- ------------- Depreciation and Amortization Flex/Industrial . . . . . . . . . . . . . $ 585 1,753 Office. . . . . . . . . . . . . . . . . . 1,031 2,910 Retail. . . . . . . . . . . . . . . . . . 144 429 -------- -------- $ 1,760 5,092 ======== ======== Interest Expense Flex/Industrial . . . . . . . . . . . . . $ 738 2,212 Office. . . . . . . . . . . . . . . . . . 1,209 3,692 Retail. . . . . . . . . . . . . . . . . . 327 985 -------- -------- $ 2,274 6,889 ======== ======== Additions to Investment in Real Estate Flex/Industrial . . . . . . . . . . . . . $ 500 1,154 Office. . . . . . . . . . . . . . . . . . 1,342 3,210 Retail . . . . . . . . . . . . . . . . . 26 57 -------- -------- $ 1,868 4,421 ======== ======== 5. CONVERSION OF SERIES A CONVERTIBLE PREFERRED SHARES During 1998, the Trust borrowed $7.4 million pursuant to its $20 million 1997 Convertible Term Loan Agreement for an unsecured convertible term loan (the "Unsecured Loan"). On January 20, 2000, the Trust repaid $1,243 of the Unsecured Loan and the remaining balance of $6,157 was converted into 61,572 Series A convertible preferred shares. The Series A convertible preferred shares paid quarterly preferred dividends at a rate of 10% per annum and were convertible into common shares at a conversion price of $5.15 per share. On April 17, 2001, 61,572 Series A convertible preferred shares were converted into 1,195,574 common shares. 6. DISTRIBUTIONS On September 13, 2001, the Trust declared a liquidating cash distribution in the amount of $0.20 per share payable October 24, 2001 to shareholders of record on September 24, 2001. The distribution, payable in the amount of approximately $3.1 million, is included in the Trust's total liabilities in the accompanying September 30, 2001 Consolidated Statement of Net Assets in Liquidation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Certain statements in this quarterly report that are not historical in fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, estimates and projections. These statements are not a guaranty of future performance. Without limiting the foregoing, words such as "believes," "intends," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements which are subject to a number of risks and uncertainties, including, among other things: . general real estate investment risks; . resolution of existing litigation; . inability to collect interest and principal on notes receivable; . economic impact of the tragic events of September 11, 2001 and their aftermath on the economy in general and on real estate operations and values in particular; . failure of Denholtz to purchase our remaining properties at the contractual prices; . potential inadequacy of our cash reserves; . increases in interest rates; . adverse consequences of failure to qualify as a REIT; . possible environmental liabilities; and . failure or inability to comply with or effectuate the Plan of Termination and Liquidation. Actual results could differ materially from those projected in these forward-looking statements. See "Managements's Discussion and Analysis of Financial Condition and Results of Operations -Risk Factors" in the annual report on Form 10-K for the year ended December 31, 2000 for a more complete discussion. We are a self-administered infinite life real estate investment trust ("REIT"), organized as a Massachusetts business trust. On January 5, 2001, we adopted a Plan of Termination and Liquidation (the "Plan")under which our Trust will be dissolved, the obligations of the Trust will be paid, appropriate reserves will be taken and the net proceeds will be distributed to our shareholders. On May 17, 2001, we sold 24 of our 27 properties (representing 85% of our portfolio) to affiliates of Denholtz Management Corporation ("Denholtz") for a total sales price of $185.25 million, of which $3 million was in the form of unsecured promissory notes and the remainder was in cash, pursuant to a Purchase and Sale Agreement dated January 8, 2001 as amended on March 30, 2001, April 9, 2001 and May 11, 2001. The notes bear interest at 12 percent per annum, require monthly payment of interest only and mature on June 30, 2002. As of September 30, 2001, Denholtz has repaid approximately $0.7 million. In addition, Denholtz paid the cost of all prepayment penalties and assumption fees related to the Trust's mortgage debt. The Trust realized net gains on disposition of investment in real estate (net of minority interest of approximately $6.4 million) of approximately $25.8 million. The following table shows cash flows for the nine months ended September 30, 2001. (in thousands) Gross sales proceeds $ 185,250 Repayment of mortgage loans payable (93,061) Closing prorations and closing costs (4,850) Purchase money notes (3,000) ---------- Net proceeds from sale 84,339 Release of restricted cash upon repayment of debt 2,345 Escrow for post closing adjustments (1,500) Distributions to minority interests (8,695) Initial liquidating distributions to shareholders at $4.75 per share (73,609) Receipt of principal and interest on employees' notes 2,755 Receipt of principal on notes receivables 736 ---------- Net cash available from sale of properties and related transactions 6,371 Increase in operating cash (net of distribution to minority interest of $56) 1,863 ---------- Net change in cash and cash equivalents 8,234 Cash and cash equivalents as of January 1, 2001 2,393 ---------- Cash and cash equivalents as of September 30, 2001 $ 10,627 ========== Of the three remaining properties, University Square in Huntsville, Alabama, remains subject to the Purchase and Sale Agreement with Denholtz. The closing for this property is scheduled for December 19, 2001. We are permitted to sell to third parties the other two properties, our Riverport property in Louisville, Kentucky and our Northlake Tower Shopping Center in Atlanta, Georgia. In the alternative, we may elect to "put" these properties to Denholtz at agreed upon prices any time prior to January of 2002 (see "Properties" section below for additional information). Following the first closing, the sum of $1 million remains in escrow to secure Denholtz's performance under the deferred closings. If all three properties are purchased by Denholtz pursuant to the Amended Purchase and Sale Agreement, we would realize estimated net proceeds of approximately $11.6 million, consisting of $38.7 million in gross sales proceeds reduced by approximately $25.8 million of debt and an estimated $1.3 million of minority interest. If Denholtz defaults, it will forfeit to us $1 million in earnest money now held in escrow. All of Denholtz's obligations to purchase and our obligations to sell our remaining properties will then be extinguished. We, in turn, will be required to market and sell the properties to other parties. However, since the adoption of our Plan of Termination and Liquidation, the condition of the United States economy in general and the real estate markets in which our properties are located, in particular, has weakened. Accordingly, if Denholtz defaults, there can be no assurance, in light of these unforeseen market developments, that we will be able to complete our Plan of Termination and Liquidation within the time period previously projected or that we will achieve sales prices for our properties sufficient to allow us to make the distributions in the amount previously anticipated. RESULTS OF OPERATIONS As a result of the adoption of the Plan, we began reporting on the liquidation basis of accounting effective for the quarter ended March 31, 2001. Therefore, operations for the nine and three months ended September 30, 2001 are reported on the Consolidated Statement of Changes in Net Assets in Liquidation while the operations for the nine and three months ended September 30, 2000 are reported on a going concern basis on the Consolidated Statement of Operations. The Statement of Changes in Net Assets in Liquidation differs from the Statement of Operations in that we no longer amortize deferred financing fees and leasing commissions and we no longer record straight line rental income. We do, however, deduct leasing commissions in the computation of Operating Income. As a result of these differences, the results for the nine and three months ended September 30, 2001 are not comparable to the results for the nine and three months ended September 30, 2000. Prior to reporting the operating activity for the nine months ended September 30, 2001, we adjusted our Shareholders' Equity as of December 31, 2000 as reported on a going concern basis to the liquidation basis of accounting. As a result, we recorded an adjustment of approximately $5.4 million related to the write off of certain intangible assets, specifically leasing commissions, deferred financing fees and straight line rents receivable, that were included in our total assets as of December 31, 2000. In addition, we recorded a charge of approximately $0.8 million for costs related to the liquidation and termination of the Trust and reclassed approximately $3.1 million of employees' notes from shareholders' equity to assets. For the nine months ended September 30, 2001, our Net Assets in Liquidation decreased by approximately $49.9 million from approximately $64.2 million at December 31, 2000 to approximately $14.3 million at September 30, 2001. This decrease was primarily due to total distributions paid and payable to shareholders of approximately $77.3 million including our initial liquidating distribution to shareholders of $4.75 per share or approximately $73.6 million and our second liquidating distribution of $0.20 per share or approximately $3.1 million that was accrued as of September 30, 2001 and paid on October 24, 2001. Offsetting this decrease were gains on disposition of investment in real estate (net of minority interest of approximately $6.4 million) of $25.8 million, operating income in the amount of approximately $3.1 million, recovery of losses on loans, notes and interest receivable of approximately $0.9 million and interest income on cash and cash equivalents of approximately $0.6 million, reduced by depreciation expense of approximately $2.9 million. The recovery of losses on loans, notes and interest receivable of approximately $0.9 million represents cash received in respect of our interest in a liquidating trust established for the benefit of the unsecured creditors of VMS Realty Partners and its affiliates. Our interest in this liquidating trust had previously been accorded no value in our financial statements. For the nine months ended September 30, 2000, we reported Net Income Available to Common Shares of approximately $1.3 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described above, this amount is not comparable to the changes in net assets in liquidation as reported for the nine months ended September 30, 2001. For the three months ended September 30, 2001, our Net Assets in Liquidation decreased by approximately $3.8 million to approximately $14.3 million at September 30, 2001 from approximately $18.1 million at June 30, 2001. This decrease was primarily due to the accrual of our second liquidating distribution of $0.20 per share or approximately $3.1 million that was payable as of September 30, 2001 and paid on October 24, 2001, operating loss in the amount of approximately $0.3 million, depreciation expense of approximately $0.3 million and minority interest of $0.2 million, reduced by approximately $0.2 million of interest income on cash and cash equivalents. For the three months ended September 30, 2000, we reported Net Loss Available to Common Shares of approximately $0.7 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described above, this amount is not comparable to the changes in net assets in liquidation as reported for the three months ended September 30, 2001. LIQUIDITY AND CAPITAL RESOURCES At September 30, 2001, our total assets (liquidation basis) were approximately $46.9 million, a decrease of approximately $149.2 million from total assets at December 31, 2000 (going concern basis) of approximately $196.1 million. Our liabilities totaled approximately $32.6 million at September 30, 2001, a decrease of approximately $93.8 million from approximately $126.4 million at December 31, 2000. At September 30, 2001 our net assets in liquidation (liquidation basis) were approximately $14.3 million compared to shareholders equity (going concern basis) of approximately $67.4 million at December 31, 2000, a decrease of approximately $53.1 million. The significant decreases in total assets and total liabilities are primarily due to the sale of 24 of our 27 properties on May 17, 2001, distributions paid and payable to shareholders in the amount of approximately $77.3 million, distributions to minority interest of approximately $8.7 million and to the write off of leasing commissions, deferred financing fees and straight line rents receivable upon adoption of the liquidation basis of accounting effective as of the first quarter of 2001. See "Results of Operations", above, for the discussion regarding the decrease of net assets in liquidation and the differences between the liquidation basis of accounting and the going concern basis of accounting. Cash and cash equivalents consist of cash and short-term investments. Our cash and cash equivalents balance increased by approximately $8.2 million to approximately $10.6 million at September 30, 2001 from approximately $2.4 million at December 31, 2000. The increase in total cash and cash equivalents was due primarily to our receipt of net proceeds from the sale of 24 of our 27 properties less distributions to shareholders. During the nine months ended September 30, 2000, our operating activities provided net cash of approximately $7.6 million. We used approximately $4.0 million in investing activities to make capital improvements at our various properties net of proceeds from restricted cash. During the nine months ended September 30, 2000, our financing activities used approximately $13.5 million of cash primarily to make principal payments on mortgage loans and on an unsecured loan payable of approximately $16.7 million and to pay distributions to shareholders of approximately $5.5 million offset by approximately $8.5 million of proceeds from loans payable. Having made our initial liquidating distribution and second liquidating distribution, we have established unrestricted cash reserves of $7.5 million and restricted cash held in escrow for post closing adjustments of $1.5 million. We project that these reserves will be sufficient to cover the net costs of operating the Trust through its anticipated final liquidation, liquidation costs and contingent liabilities related to pending litigation. In addition to these reserves, as of September 30, 2001 our cash balances include approximately $3.1 million of cash to be utilized to pay our second liquidating distribution of $0.20 per share on October 24, 2001. If Denholtz defaults, it will forfeit to us $1 million in earnest money now held in escrow. All of Denholtz's obligations to purchase and our obligations to sell our remaining properties will then be extinguished. We, in turn, will be required to market and sell the properties to other parties. However, since the adoption of our Plan of Termination and Liquidation, the condition of the United States economy in general and the real estate markets in which our properties are located, in particular, has weakened. Accordingly, if Denholtz defaults, there can be no assurance, in light of these unforeseen market developments, that we will be able to complete our Plan of Termination and Liquidation within the time period previously projected or that we will achieve sales prices for our properties sufficient to allow us to make the distributions in the amount previously anticipated. We will endeavor to distribute amounts in excess of reserves to our shareholders as additional assets are sold or as contingent liabilities are reduced or eliminated. PROPERTIES: As of September 30, 2001, we owned interests, directly or indirectly through our wholly owned subsidiaries, in the three properties set forth in the table below. As described above, the University Square Business Center remains subject to the Purchase and Sale Agreement with Denholtz with the closing for this property scheduled for December 19, 2001. We are permitted to sell the Riverport property and the Northlake Tower Shopping Center to third parties or we may elect to "put" these properties to Denholtz at agreed upon prices any time prior to January of 2002. If all three properties are purchased by Denholtz pursuant to the Amended Purchase and Sale Agreement, we would realize estimated net proceeds of approximately $11.6 million, consisting of $38.7 million in gross sales proceeds reduced by approximately $25.8 of debt and an estimated $1.3 million of minority interest. The amount of our net recovery from the sale of these assets will vary if we are unable to complete a sale pursuant to the Amended Purchase and Sale Agreement with Denholtz. BANYAN STRATEGIC REALTY TRUST PORTFOLIO SUMMARY September 30, 2001 (Dollars in thousands) Occu- Debt Square pancy Property Balance Footage % Description - -------- ------- ------- ----- ----------- FLEX/INDUSTRIAL - --------------- 6901 Riverport Drive (a)(b) Louisville, KY $ 4,200 322,100 55% Leasehold interest subject to bond financing and ownership of improvements OFFICE - ------ University Square Business Center (c) Huntsville, AL 4,686 184,700 87% Fee ownership of land and improvements Occu- Debt Square pancy Property Balance Footage % Description - -------- ------- ------- ----- ----------- RETAIL - ------ Northlake Tower Shopping Center (d)(e) Atlanta, GA 16,941 321,600 98% Leasehold interest pursuant ------- ------- to ground lease and ownership of improvements (through a 1% General and a 80.9% Limited Partner interest) in a joint venture Total $25,827 828,400 ======= ======= (a) Riverport is 55% leased to The Apparel Group, Ltd. under a lease, which expires in July of 2004. The remaining 146,352 square feet of space are vacant and are presently being marketed for lease. We are also actively marketing the Riverport property for sale through our financial advisor Cohen Financial. We have listed this property for sale at $8.5 million. (b) The Riverport property is financed by an industrial revenue (low floater) bond, which fully amortizes at a rate of $300,000 per year over its term and which expires in December of 2014. At that time, the ground lessee can acquire the fee interest at a cost of approximately $500,000. (c) The University Square Business Center is leased to approximately 50 tenants with lease terms averaging between three and five years. (d) We have been advised that our tenant, AMC Theatres, has made a determination to cease operations at the shopping center and is seeking to terminate its lease with approximately 30 months remaining in the term. The AMC Theatres space comprises approximately 8.4% of the total leaseable space. The loss of the revenue from the AMC lease may have a material adverse impact on the net proceeds we could recover from the sale of this property if a suitable replacement tenant is not located. The remainder of the shopping center space is leased to approximately 50 tenants, with primarily long term leases. (e) In the Northlake partnership, we are the managing general partner and retain sole authority over all significant decisions. The stated percentages represent our voting rights, not necessarily the economics of the venture. According to the partnership agreement, prior to distributing cash flow from operations, our 80.9% and 1% partnership interests receive an annual 12% preferred return on their respective net capital contributed to the partnership. Then, our joint venture partner receives a 12% preferred return on the net capital which it has contributed. Then, cash flow from operations is distributed pro-rata based on each partner's respective ownership interest. Cash proceeds from either the sale or refinancing of the partnership property will be used: (i) to pay any of our unpaid preferred returns; (ii) to return net capital contributed by all partners; (iii) to pay any of the venture partner's unpaid preferred returns, and (iv) to distribute the remaining cash based on ownership interests until we have received an overall return of 15% on our invested capital. From the remaining proceeds, if any, we will receive 71.9% of the excess cash and the balance will be paid to the joint venture partner. FINANCINGS: During the third quarter of 1998, we borrowed $7.4 million under a convertible term loan agreement entered into with a group of lenders in October 1997. On January 20, 2000, we paid a conversion fee of $37,000 (0.5% of the outstanding loan balance) and we repaid approximately $1.2 million of the convertible term loan. The remaining balance of approximately $6.2 million was converted into 61,572 Series A convertible preferred shares at a conversion rate of $100 per share and on April 17, 2001 these preferred shares were further converted into 1,195,574 common shares at a conversion rate of $5.15 per common share. OTHER - LITIGATION During the third quarter of 2001, we continued to be involved in contested litigation with suspended president Leonard G. Levine. A description of the pending action follows: On August 14, 2000, we exercised our rights under the Trust's employment agreement with Mr. Levine by suspending him and placing him on leave from his position as president. Simultaneously, we initiated an arbitration proceeding as required under the employment agreement. On October 5, 2000, Mr. Levine brought an action in the Circuit Court of Cook County, Illinois to halt the arbitration proceedings by reason of improper forum. On October 18, 2000, we filed a lawsuit against Mr. Levine in the Circuit Court of Cook County, Illinois. Our complaint alleged violations of Mr. Levine's duty of loyalty owed to the Trust. On December 6, 2000, we and Mr. Levine, through our respective attorneys, agreed to dismiss the arbitration action and Mr. Levine's lawsuit challenging the arbitration, and further agreed to resolve all issues under Mr. Levine's employment contract within the lawsuit we had filed against Mr. Levine in the Circuit Court of Cook County (the "Employment Litigation"). On January 19, 2001, Mr. Levine filed an answer, affirmative defenses and counterclaim in the Employment Litigation. The pleading generally denies that Mr. Levine breached his fiduciary duties, raises various defenses and seeks a judgment in favor of Mr. Levine and against us on the counterclaim, for money damages and also seeks a reinstatement to active employment status. Discovery in this case has commenced and is continuing. On May 2, 2001, Mr. Levine presented a motion for partial judgment on the pleadings, which was denied at a hearing on July 19, 2001. We filed a Third Amended Complaint on September 6, 2001, seeking, among other things, $300,000 in compensatory damages and $3 million in punitive damages against Mr. Levine in connection with various alleged breaches of fiduciary duty. The factual bases underlying the Third Amended Complaint include allegations that (i) Mr Levine caused the Trust to pay on his account or reimburse him for expenses that were not reasonable, ordinary and necessary business expenses; (ii) during negotiations between the Trust and Oak Realty Group, Inc. (an entity solely owned by Mr. Levine) Mr. Levine attempted to pressure the Trust into accepting Oak's offer to acquire the Trust by revealing to one of the trustees that Oak had entered into certain confidentiality and exclusivity agreements which had the effect of excluding potential purchasers and/or capital providers from purchasing or providing financing to a potential purchaser of the Trust, except through Oak; (iii) Mr. Levine's failure to disclose to our Board of Trustees a prior pattern and practice of obtaining unauthorized expense reimbursements allows the Board to rescind Mr. Levine's 1999 Employment Contract and legally estops Mr. Levine from obtaining any benefits under that contract and (iv) Mr. Levine's prosecution of a shareholder derivative action from January to April of 2001, which action was resolved by summary judgment in favor of the Trust, amounts to a separate breach of fiduciary duty by Mr. Levine. On November 1, 2001, Mr. Levine moved to dismiss three of the counts of our Third Amended Complaint, which motion has not yet been decided by the court. On November 3, 2001, Mr. Levine filed an Answer and Affirmative Defenses to three of the counts on our Third and Amended Complaint. On May 7, 2001, the Trust amended its answer to Mr. Levine's counterclaim in the Employment Litigation to add several affirmative defenses based upon Mr. Levine's breaches of his fiduciary duty of loyalty. The maximum potential liability in connection with Mr. Levine's contract (inclusive of incentives but exclusive of base salary) is estimated to be approximately $1.8 million. A case management conference in the Employment Litigation was held on October 18, 2001. Judge Siebel of the Circuit Court of Cook County ordered: (i) all written fact discovery must be concluded by January 31, 2002; (ii) all non-expert depositions must be concluded by April 30, 2002; and (iii) a further status hearing for the purpose of setting a date for the close of discovery will be held on May 17, 2002. SUBSEQUENT EVENT: On October 12, 2001, through our wholly-owned subsidiary BSRT Riverport Trust, we entered into an Amendment to Substituted, Amended and Restated Reimbursement Agreement with National City Bank of Kentucky (the "LOC Bank"), the issuer of the Letter of Credit collateralizing the bonds payable related to our property located at 6901 Riverport Drive in Louisville, Kentucky. This amendment primarily extended for a period of one year, the term of the letter of credit which otherwise would have expired on December 1, 2001. On that same date, we deposited $0.3 million with the LOC Bank to be utilized to make the mandatory bond redemption payment scheduled for December 1, 2001. We additionally agreed, that if the $1 million earnest money deposit in connection with the Denholtz contract is, for any reason, forfeited to us, we will pay the LOC Bank $0.5 million to be utilized to further redeem additional outstanding bonds payable over and above any otherwise scheduled redemption payments. Furthermore, we agreed to pay an extension fee in the amount of $25,000 payable in two equal installments the first on the date of the agreement, and the second on June 1, 2002 if the Letter of Credit is still outstanding. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We do not engage in any hedging transactions nor in the ownership of any derivative financial instruments. To mitigate the impact of fluctuations in interest rates, we generally have maintained over 70% of our debt as fixed rate in nature by borrowing on a long-term basis. As of September 30, 2001, we had approximately $25.9 million of outstanding long-term debt, of which $4.2 million bears interest at variable rates that are adjusted on a monthly basis. As of September 30, 2001, the weighted-average interest rate on this variable rate debt was 2.37%. If interest rates on this variable rate debt increased by one percentage point (1%), interest expense would increase by $42,000 on an annual basis. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (see Exhibit Index included elsewhere herein). (b) None. SIGNATURES PURSUANT to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated. BANYAN STRATEGIC REALTY TRUST By: /s/ L.G. Schafran Date: November 14, 2001 ------------------------------ L.G. Schafran, Interim President By: /s/ Joel L. Teglia Date: November 14, 2001 ------------------------------ Joel L. Teglia, Executive Vice President and Chief Financial Officer EXHIBIT INDEX - ------- 2.1 Plan of Termination and Liquidation (1) 3.1 Third Amended and Restated Declaration of Trust dated as of August 8, 1986, as amended on March 8, 1991, May 1, 1993, August 12, 1998 and December 13, 1999, including Certificate of designations, preferences and rights of Series A convertible preferred shares. (2) 3.2 First Amendment of Third Amended and Restated Declaration of Trust effective December 13, 1999. (3) 3.3 By-Laws dated March 13, 1996. (4) 3.4 BSRT UPREIT Limited Partnership Limited Partnership Agreement (5) 4.1 Convertible Term Loan Agreement dated as of October 10, 1997 among Banyan Strategic Realty Trust, as Borrower, and the Entities listed therein, as Lenders. (6) 4.2 First Amendment to Convertible Term Loan Agreement dated as of March 30, 1998 made by and among Banyan Strategic Realty Trust and the Entities listed therein, as Lenders. (7) 4.3 Second Amendment to Convertible Term Loan Agreement dated as of June 26, 1998 made by and among Banyan Strategic Realty Trust and the Entities listed therein, as Lenders. (8) 4.4 Revolving Credit Agreement dated April 30, 1998 among Banyan Strategic Realty Trust, as Borrower and the Capital Company of America, as Lender. (9) 4.5 Loan Agreement dated May 22, 1998 among BSRT Fountain Square L.L.C., BSRT Phoenix Business Park L.L.C., BSRT Newtown Trust, BSRT Southlake L.L.C., BSRT Technology Center L.L.C., BSRT Airways Plaza L.L.C., BSRT Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT Sand Lake Tech Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza L.L.C., and BSRT University Corporate Center L.L.C., as Borrower, and the Capital Company of America, as Lender. (8) 4.6 First Amendment to Loan Agreement dated September 11, 1998 among BSRT Fountain Square L.L.C., BSRT Phoenix Business Park L.L.C., BSRT Newton Trust, BSRT Southlake L.L.C., BSRT Technology Center L.L.C., BSRT Airways Plaza L.L.C., BSRT Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT Sand Lake Tech Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza L.L.C., and BSRT University Corporate Center L.L.C., as Borrower, and the Capital Company of America LLC, as Lender. (10) 4.7 Loan Agreement dated June 22, 1998 between Banyan/Morgan Wisconsin L.L.C., and Banyan/Morgan Elmhurst L.L.C., as Borrower and the Capital Company of America, as Lender. (8) 4.8 First Amendment to Loan Agreement dated September 11, 1998 between Banyan/Morgan Wisconsin L.L.C., and Banyan/Morgan Elmhurst L.L.C., as Borrower and the Capital Company of America LLC, as Lender. (10) 10.1 Employment Agreement of L.G. Schafran dated October 26, 2000. (14) 10.2 Employment Agreement of Leonard G. Levine as of December 14, 1999. (2) EXHIBIT INDEX - ------- 10.3 Employment Agreement of Leonard G. Levine as of October 1, 1997. (11) 10.4 Employment Agreement of Joel L. Teglia dated November 1, 2000. (14) 10.5 Employment Agreement of Joel L. Teglia dated December 31, 1998. (5) 10.6 Employment Agreement of Robert G. Higgins dated September 1, 2000. (14) 10.7 Separation Agreement of Neil Hansen dated October 1, 2000. (14) 10.8 Employment Agreement of Neil Hansen dated December 31, 1998. (5) 10.9 Separation Agreement of Jay Schmidt dated October 1, 2000. (14) 10.10 Employment Agreement of Jay Schmidt dated December 31, 1998. (5) 10.11 1997 Omnibus Stock and Incentive Plan dated July 9, 1997. (12) 10.12 Share Purchase Agreement by and among Banyan Strategic Realty Trust and the Purchasers listed on the signature page attached thereto dated as of October 10, 1997. (6) 10.13 Registration Rights Agreement dated as of October 10, 1997 between Banyan Strategic Realty Trust and the Purchasers listed on the Signature Pages attached thereto. (6) 10.14 Registration Rights Agreement dated as of October 1, 1997 between Banyan Strategic Realty Trust and Leonard G. Levine. (5) 10.15 Consulting Agreement dated as of February 18, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (13) 10.16 Modification to Consulting Agreement dated as of May 31, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (13) 10.17 Purchase and Sale Agreement dated January 8, 2001. (1) 10.18 First Amendment to Purchase and Sale Agreement dated March 28, 2001 (16) 10.19 Second Amendment to Purchase and Sale Agreement dated April 9, 2001 (17) 10.20 Third Amendment to Purchase and Sale Agreement dated May 11, 2001 (18) 21. Subsidiaries of Banyan Strategic Realty Trust (15) 99.15 Press Release Dated August 14, 2001 (*). 99.16 Press Release Dated September 13, 2001 (*). 99.17 Press Release Dated November 14, 2001 (*). - -------------------- (*) Filed herewith. (1) Incorporated by reference from the Trust's Form 8-K dated January 8, 2001. (2) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 1999. (3) Incorporated by reference from the Trust's Form 10-Q dated March 31, 2000. (4) Incorporated by reference from the Trust's Registration Statement on Form S-11 (file number 33-4169). (5) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 1998. (6) Incorporated by reference from the Trust's Form 8-K dated October 14, 1997. (7) Incorporated by reference from the Trust's Form 10-K/A for the year ended December 31, 1997. (8) Incorporated by reference from the Trust's Form 8-K dated May 22, 1998. (9) Incorporated by reference from the Trust's Form 10-Q dated March 31, 1998. (10) Incorporated by reference from the Trust's Form 8-K/A-1 dated August 14, 1998. (11) Incorporated by reference from the Trust's Form 10-K dated December 31, 1997. (12) Incorporated by reference from the Trust's Form 10-Q for the quarter ended June 30, 1997. (13) Incorporated by reference from the Trust's Form 10-Q for the quarter ended June 30, 2000. (14) Incorporated by reference from the Trust's Form 10-Q for the quarter ended September 30, 2000. (15) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 2000. (16) Incorporated by reference from the Trust's Form 8-K dated March 28, 2001. (17) Incorporated by reference from the Trust's Form 8-K dated April 9, 2001. (18) Incorporated by reference from the Trust's Form 10-Q for the quarter ended March 31, 2001. EX-99.15 3 ex_9915.txt EXHIBIT 99.15 - ------------- AT THE TRUST Robert G. Higgins Investor Relations Vice President, General Counsel L.G. Schafran - Chairman and Interim CEO/President 630-218-7255 630-218-7250 bhiggins@banyanreit.com ir@banyanreit.com FOR IMMEDIATE RELEASE TUESDAY, AUGUST 14, 2001 BANYAN STRATEGIC REALTY TRUST REPORTS $47.3 MILLION DECREASE IN NET ASSETS IN LIQUIDATION AFTER INITIAL LIQUIDATING DISTRIBUTION OF $73.6 MILLION OR $4.75 PER SHARE CHICAGO - AUGUST 14, 2001. BANYAN STRATEGIC REALTY TRUST (Nasdaq: BSRTS) announced today that for the quarter ending June 30, 2001, its Net Assets in Liquidation decreased by approximately $47.3 million from approximately $65.4 million at March 31, 2001 to approximately $18.1 million at June 30, 2001. The decrease was primarily the result of the Trust's initial liquidating distribution of $4.75 per share on June 28, 2001, amounting to $73.6 million. Offsetting this decrease were approximately $25.8 million of gains on the Trust's disposition of 24 of its 27 properties on May 17, 2001 (net of minority interests of $6.5 million), operating income in the amount of approximately $1.0 million and interest on cash and cash equivalents of approximately $0.4 million, reduced by depreciation expense of approximately $1.0 million. For the three months ending June 30, 2000, the Trust reported Net Income Available to Common Shares of approximately $1.0 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described below, this amount is not comparable to the net changes in assets in liquidation as reported for the three months ending June 30, 2001. For the six months ending June 30, 2001, the Trust's Net Assets in Liquidation decreased by approximately $46.1 million from approximately $64.2 million at December 31, 2000 to approximately $18.1 million at June 30, 2001. The decrease was primarily the result of distributions to shareholders of $74.2 million including the Trust's initial liquidating distribution of $4.75 per share on June 28, 2001, amounting to $73.6 million. Offsetting this decrease were gains on the disposition Trust's sale of 24 of its 27 properties on May 17, 2001 (net of minority interests of $6.5 million) of approximately $25.8 million, operating income in the amount of approximately $3.5 million, recovery of losses on loans, notes and interest receivable of approximately $0.9 million and $0.5 million of interest on cash and cash equivalents, reduced by depreciation expense of approximately $2.6 million. The recovery of losses on loans, notes and interest receivable of approximately $0.9 million represents cash received in respect of the Trust's interest in a liquidating trust established for the benefit of the unsecured creditors VMS Realty Partners and its affiliates. The interest in this liquidating trust had previously been accorded no carrying value in the Trust's financial statements. BANYAN STRATEGIC REALTY TRUST ADD 1 For the six months ending June 30, 2000, the Trust reported Net Income Available to Common Shares of approximately $2.1 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described below, this amount is not comparable to the net changes in assets in liquidation as reported for the six months ending June 30, 2001. Banyan added that after making its initial liquidating distribution of $4.75 per share, it has established reserves that it expects will cover contingent liabilities related to pending litigation, liquidation costs and the net costs of operating the Trust through its final liquidation which is anticipated to occur during the third or fourth quarter of 2002. The Trust anticipates that it will make additional liquidating distributions from excess of reserves as additional assets are sold or contingent liabilities are reduced or eliminated. The Trust currently estimates that it will make additional distribution(s) of approximately $1.25 per share and that the total amount of liquidating distributions that will be made pursuant to its Plan of Termination and Liquidation (including the initial liquidating distribution of $4.75 per share) remains at approximately $6.00 per share. LIQUIDATION BASIS OF ACCOUNTING - ------------------------------- As a result of the adoption of a Plan of Termination and Liquidation on January 5, 2001, the Trust began reporting on the liquidation basis of accounting effective for the quarter ending March 31, 2001. Therefore, operations for the six and three months ending June 30, 2001 are reported on the Consolidated Statement of Changes in Net Assets in Liquidation while the June 30, 2000 results are reported on a going concern basis on the Consolidated Statement of Operations. The financial statement presentations differ materially in that under the liquidation basis of accounting, the Trust no longer amortizes deferred financing fees and leasing commissions and no longer records straight line rental income. Leasing commissions, however, are deducted in the computation of Operating Income and are no longer capitalized and amortized. Banyan Strategic Realty Trust is an equity Real Estate Investment Trust (REIT). Its current portfolio consists of interests in three properties totaling 828,400 rentable square feet. As of this date, Banyan has 15,496,806 shares of beneficial interest outstanding. Except for the historical information contained herein, certain matters discussed in this release are forward-looking statements, the achievement of which involve risks and uncertainties that are detailed from time to time in our reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission on March 9, 2001. The "Management's Discussion and Analysis of Financial Condition and Results of Operations" section was included in our Form 10-Q for the quarter ended June 30, 2001 which was filed with the Securities and Exchange Commission on August 14, 2001. Without limitation the foregoing, words such as "anticipates", "expects", "intends", "plans", and similar expressions are intended to identify forward-looking statements. See Banyan's Website at http://www.banyanreit.com. EX-99.16 4 ex_9916.txt EXHIBIT 99.16 - ------------- AT THE TRUST Robert G. Higgins Investor Relations Vice President, General Counsel L.G. Schafran - Chairman and 630-218-7255 Interim CEO/President bhiggins@banyanreit.com 630-218-7250 ir@banyanreit.com FOR IMMEDIATE RELEASE THURSDAY, SEPTEMBER 13, 2001 BANYAN STRATEGIC REALTY TRUST ANNOUNCES ADDITIONAL $.20 PER SHARE LIQUIDATING DISTRIBUTION OAK BROOK, ILLINOIS - SEPTEMBER 13, 2001 - BANYAN STRATEGIC REALTY TRUST (Nasdaq: BSRTS) announced today that its Board of Trustees has authorized a second liquidating distribution of $.20 per share. The distribution will be paid on October 24, 2001 to shareholders of record as of September 24, 2001. The Trust, which sold all but three of its properties to affiliates of Denholtz Management Corporation on May 17, 2001 in a $185.25 million transaction, previously distributed $4.75 per share on June 28, 2001. These distributions are made pursuant to the Trust's Plan of Termination and Liquidation that was adopted on January 5, 2001. Taking into account the distribution announced today, the Trust has distributed $4.95 per share pursuant to the Plan of Termination and Liquidation. L.G. Schafran, Interim President of the Trust, commented: "In keeping with our previously announced intentions, we are now distributing $.20 per share to our shareholders. After completing the accounting process from the sale to Denholtz, and having made appropriate distributions to our joint venture partners, we conclude that our cash reserves are sufficient to support this distribution. We continue to expect to distribute a total of approximately $6.00 per share before the end of 2002. We will continue to make periodic distributions that are warranted as assets are liquidated and liabilities are discharged". Banyan Strategic Realty Trust is an equity Real Estate Investment Trust (REIT) which, on January 5, 2001, adopted a Plan of Termination and Liquidation. On May 17, 2001, the Trust sold approximately 85% of its portfolio in a single transaction and now owns interests in three (3) real estate properties located in Atlanta, Georgia; Huntsville, Alabama; and Louisville, Kentucky. As of this date the Trust has 15,496,806 shares of beneficial interest outstanding. Except for the historical information contained herein, certain matters discussed in this release are forward-looking statements, the achievement of which involve risks and uncertainties such as the sale of the Trust's remaining properties, the amount of the remaining liquidating distributions and other risks and uncertainties that are detailed from time to time in the Trust's reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 2000 and in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section which was included in the Trust's Form 10-Q for the quarter ended June 30, 2001, which was filed with the Securities and Exchange Commission on August 13, 2001. Without limitation, the foregoing words such as "anticipates", "expects", "intends", "plans", and similar expressions are intended to identify forward-looking statements. See Banyan's Website at http://www.banyanreit.com. EX-99.17 5 ex_9917.txt EXHIBIT 99.17 - ------------- AT THE TRUST Robert G. Higgins Investor Relations Vice President, General Counsel L.G. Schafran - Chairman and Interim CEO/President 630-218-7255 630-218-7250 bhiggins@banyanreit.com ir@banyanreit.com FOR IMMEDIATE RELEASE WEDNESDAY, NOVEMBER 14, 2001 BANYAN STRATEGIC REALTY TRUST REPORTS $3.8 MILLION DECREASE IN NET ASSETS IN LIQUIDATION AFTER SECOND LIQUIDATING DISTRIBUTION OF $3.1 MILLION OR $0.20 PER SHARE CHICAGO - NOVEMBER 14, 2001. Banyan Strategic Realty Trust (Nasdaq: BSRTS) announced today that due primarily to a $0.20 per share liquidating distribution, for the quarter ended September 30, 2001 its Net Assets in Liquidation decreased by approximately $3.8 million from approximately $18.1 million at June 30, 2001 to approximately $14.3 million at September 30, 2001. The distribution of $0.20 per share, amounting to $3.1 million, was payable to shareholders of record on September 24, 2001 and was paid on October 24, 2001. This was the Trust's second liquidating distribution, raising the total per share distribution to $4.95 per share thus far. Also contributing to the decrease in Net Assets in Liquidation was an operating loss of $0.3 million, depreciation expense of $0.3 million and minority interest of $0.2 million offset by $0.2 million of interest income on cash and cash equivalents. For the three months ended September 30, 2000, the Trust reported Net Loss Available to Common Shares of approximately $0.7 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described below, this amount is not comparable to the net changes in assets in liquidation as reported for the three months ending September 30, 2001. For the nine months ended September 30, 2001, the Trust's Net Assets in Liquidation decreased by approximately $49.9 million from approximately $64.2 million at December 31, 2000 to approximately $14.3 million at September 30, 2001. The decrease was primarily the result of distributions paid and payable to shareholders of $77.3 million including the Trust's initial liquidating distribution of $4.75 per share on June 28, 2001, amounting to $73.6 million and the Trust's second liquidating distribution of $0.20 per share, amounting to $3.1 million. Offsetting this decrease were gains on the Trust's sale of 24 of its 27 properties on May 17, 2001 (net of minority interests of $6.4 million) of approximately $25.8 million, operating income in the amount of approximately $3.1 million, recovery of losses on loans, notes and interest receivable of approximately $0.9 million and $0.6 million of interest on cash and cash equivalents, reduced by depreciation expense of approximately $2.9 million. The recovery of losses on loans, notes and interest receivable of approximately $0.9 million represents cash received in respect of the Trust's interest in a liquidating trust established for the benefit of the unsecured creditors VMS Realty Partners and its affiliates. The interest in this liquidating trust had previously been accorded no carrying value in the Trust's financial statements. -more- BANYAN STRATEGIC REALTY TRUST ADD 1 For the nine months ended September 30, 2000, the Trust reported Net Income Available to Common Shares of approximately $1.3 million. Because of the differences between the liquidation basis of accounting and the going concern basis of accounting described below, this amount is not comparable to the net changes in assets in liquidation as reported for the nine months ended September 30, 2001. STATUS OF REAL ESTATE ASSET SALES - --------------------------------- As of September 30, 2001, Banyan owned three properties; Northlake Tower Festival Shopping Center in Atlanta, Georgia; University Square Business Center in Huntsville, Alabama and 6901 Riverport Drive in Louisville, Kentucky. In accordance with the Amended Purchase and Sale Agreement with affiliates of Denholtz Management Corporation ("Denholtz"), under which Banyan previously sold 24 of its 27 properties to Denholtz, University Square is under contract of sale to Denholtz with a required closing date of December 19, 2001 and 6901 Riverport Drive and the Northlake Tower Festival Shopping Center can be "put" to Denholtz upon 90 days notice. As of today's date, the Trust has not elected to "put" either 6901 Riverport Drive or the Northlake Tower Festival Shopping Center to Denholtz. If Denholtz defaults any of its obligations with respect to its purchase of these three properties, it will forfeit to Banyan, $1 million in earnest money now held in escrow, and all of Denholtz's obligations to purchase and Banyan's obligations to sell the remaining properties will then be extinguished. The Trust, in turn, will then be required to market and sell the properties to other parties. Since Banyan's adoption of its Plan of Termination and Liquidation, the condition of the United States economy in general and in the real estate markets in which its properties are located, in particular, has weakened. Accordingly, if Denholtz defaults, there can be no assurance, in light of these unforeseen market developments, that Banyan will be able to complete its Plan of Termination and Liquidation within the time period previously projected or that it will achieve sales prices for its properties sufficient to allow it to make the distributions in the amount previously anticipated. LIQUIDATION BASIS OF ACCOUNTING - ------------------------------- As a result of the adoption of a Plan of Termination and Liquidation on January 5, 2001, the Trust began reporting on the liquidation basis of accounting effective for the quarter ending March 31, 2001. Therefore, operations for the nine and three months ended September 30, 2001 are reported on the Consolidated Statement of Changes in Net Assets in Liquidation while the September 30, 2000 results are reported on a going concern basis on the Consolidated Statement of Operations. The financial statement presentations differ materially in that under the liquidation basis of accounting, the Trust no longer amortizes deferred financing fees and leasing commissions and no longer records straight line rental income. Leasing commissions, however, are deducted in the computation of Operating Income and are no longer capitalized and amortized. Banyan Strategic Realty Trust is an equity Real Estate Investment Trust (REIT). Its current portfolio consists of interests in three properties totaling 828,400 rentable square feet. As of this date, Banyan has 15,496,806 shares of beneficial interest outstanding. BANYAN STRATEGIC REALTY TRUST ADD 2 Except for the historical information contained herein, certain matters discussed in this release are forward-looking statements, the achievement of which involve risks and uncertainties that are detailed from time to time in our reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission on March 9, 2001. The "Management's Discussion and Analysis of Financial Condition and Results of Operations" section was included in our Form 10-Q for the quarter ended September 30, 2001 which was filed with the Securities and Exchange Commission on November 14, 2001. Without limitation the foregoing, words such as "anticipates", "expects", "intends", "plans", and similar expressions are intended to identify forward-looking statements. See Banyan's Website at http://www.banyanreit.com. -30- -----END PRIVACY-ENHANCED MESSAGE-----