-----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, E+6Q8DURRxDm/KLc/fF7GE63/Z2yh1o3H3wiwm57tHuNFs4UpBjUsqra4gnFcCsb 0aV41mfyhxskXL2RMOb+kA== 0000892626-02-000178.txt : 20020506 0000892626-02-000178.hdr.sgml : 20020506 ACCESSION NUMBER: 0000892626-02-000178 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020506 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: 02634982 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: VMS STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19910325 FORMER COMPANY: FORMER CONFORMED NAME: BANYAN STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19920703 10-Q 1 ban_302.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 March 31, 2002. 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 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ]. NO [ ]. Shares of beneficial interest outstanding as of May 6, 2002: 15,496,806 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BANYAN STRATEGIC REALTY TRUST Consolidated Statements of Net Assets in Liquidation (Liquidation Basis) March 31, 2002 and December 31, 2001 (Unaudited) (Dollars in thousands) March 31, December 31, 2002 2001 ---------- ----------- ASSETS - ------ Investment in Real Estate Held for Sale: Land. . . . . . . . . . . . . . . . . . $ 3,137 3,137 Building. . . . . . . . . . . . . . . . 29,349 28,066 Building Improvements . . . . . . . . . 3,047 2,984 ---------- ---------- 35,533 34,187 Less: Accumulated Depreciation. . . . . (5,764) (5,764) ---------- ---------- 29,769 28,423 ---------- ---------- Cash and Cash Equivalents . . . . . . . . 5,798 7,493 Restricted Cash - Capital Improvements. . 244 212 Restricted Cash - Other . . . . . . . . . 1,732 2,095 Interest and Accounts Receivable. . . . . 152 212 Employees' Notes. . . . . . . . . . . . . 412 412 Notes Receivable. . . . . . . . . . . . . 2,264 2,264 Other Assets. . . . . . . . . . . . . . . 194 282 ---------- ---------- Total Assets. . . . . . . . . . . . . . . $ 40,565 41,393 ========== ========== LIABILITIES - ----------- Mortgage Loans Payable. . . . . . . . . . $ 21,482 21,555 Bonds Payable . . . . . . . . . . . . . . 3,400 3,900 Accrued Severance and Termination Costs . 2,037 2,018 Accounts Payable and Accrued Expenses . . 1,005 1,218 Accrued Real Estate Taxes . . . . . . . . 142 23 Accrued Interest Payable. . . . . . . . . 146 148 Unearned Revenue. . . . . . . . . . . . . 121 85 Security Deposits . . . . . . . . . . . . 95 87 ---------- ---------- Total Liabilities . . . . . . . . . . . . 28,428 29,034 ---------- ---------- Net Assets in Liquidation . . . . . . . . $ 12,137 12,359 ========== ========== 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 March 31, 2002 (Unaudited) (Dollars in thousands) Net Assets in Liquidation at December 31, 2001. . . . . $ 12,359 Interest Income on Cash and Cash Equivalents. . . . . . 118 Operating Loss. . . . . . . . . . . . . . . . . . . . . (310) Recovery of Losses on Loans, Notes and Interest Receivable . . . . . . . . . . . . . . . . . 46 Minority Interest in Consolidated Partnership . . . . . (76) -------- Net Assets in Liquidation at March 31, 2002 . . . . . . $ 12,137 ======== 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) March 31, 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 Interest Income on Employees' Notes . . . . . . . . . . 18 Interest Income on Cash and Cash Equivalents. . . . . . 49 Operating Income. . . . . . . . . . . . . . . . . . . . 2,509 Recovery of Losses on Loans, Notes and Interest Receivable . . . . . . . . . . . . . . . . . 870 Depreciation. . . . . . . . . . . . . . . . . . . . . . (1,616) Minority Interest in Consolidated Partnerships. . . . . (153) Issuance of Shares. . . . . . . . . . . . . . . . . . . 54 Distributions Paid to Shareholders. . . . . . . . . . . (580) -------- Net Assets in Liquidation at March 31, 2001 . . . . . . $ 65,365 ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Notes to Consolidated Financial Statements March 31, 2002 (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, 2001 which are included in the Trust's 2001 Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in such audited statements have been omitted from this report. Certain reclassifications have been made to the previously reported 2001 consolidated financial statements in order to provide comparability with the 2002 consolidated financial statements. These reclassifications have not changed the 2001 results. 2. LIQUIDATION OF THE TRUST On January 5, 2001, the Trustees 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. The Trust adopted the liquidation basis of accounting effective January 1, 2001. On May 17, 2001, the Trust sold 24 of its 27 properties for a total sales price of $185,250. On March 14, 2002, the Trust acquired the interests of its partner, M&J Wilkow, Ltd., in the Northlake Tower Shopping Center property for a gross purchase price of $1,300. M&J Wilkow had an 18.1% interest in the property's cash flow and a 28.1% interest in its capital proceeds. On April 1, 2002, the Trust sold its University Square Business Center for a total sales price of $8,450. The purchaser is USBC, LLC, an Alabama limited liability company, whose principals include Alan C. Jenkins and Joel L. Teglia. Mr. Jenkins is a principal in InterSouth Properties, Inc., the Trust's contract manager of the property, and Mr. Teglia is the Executive Vice President and Chief Financial Officer of the Trust. Mr. Teglia recused himself from all of the Trust's deliberations concerning the sale of University Square. The net sales proceeds, after repayment of the first mortgage on the property, adjustment for unfinished tenant improvements, sales commissions, prorations and closing costs, were $3,312. In addition, USBC, LLC paid the prepayment penalty of $732 associated with the payoff of the first mortgage. On May 1, 2002, the Trust sold its 6901 Riverport Drive in Louisville, Kentucky for a total sales price of $5,652 to Riverport LLC and Riverport Group, LLC. The net sales proceeds, after repayment of the bond indebtedness, sales commission, prorations and closing costs were $2,116. On May 1, 2002, the Trust signed a contract to sell its Northlake Tower Shopping Center for a gross purchase price of $20,500. The purchase contract contains a 45-day inspection period during which the purchaser may terminate the contract without penalty. Additionally, the contract is subject to the ability of the purchaser to obtain the approval of the holder of the first mortgage to assume the existing first mortgage financing. If the purchaser is unable to obtain approval to assume the existing loan and it does not elect to avail itself of alternative financing, the contract can be terminated by the purchaser without penalty. If the sale is consummated, the Trust expects to realize net sales proceeds of approximately $3,400 during the third quarter of 2002. 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. DISTRIBUTIONS On May 1, 2002, the Trust declared a liquidating distribution of $0.30 per share payable on May 31, 2002, to shareholders of record as of May 16, 2002. 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; . potential delisting of our shares by Nasdaq; . condition of the United States economy in general and its impact on real estate operations and values in particular; . failure to sell our remaining property on terms beneficial to the Trust, if at all; . 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, 2001 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 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. On March 14, 2002, we acquired the interests of our partner, M&J Wilkow, Ltd., in the Northlake Tower Shopping Center property for a gross purchase price of $1.3 million. On April 1, 2002, we sold our University Square Business Center for a total sales price of $8.45 million. The purchaser is USBC, LLC, an Alabama limited liability company, whose principals include Alan C. Jenkins and Joel L. Teglia. Mr. Jenkins is a principal in InterSouth Properties, Inc., the contract manager of the University Square property, and Mr. Teglia is our Executive Vice President and Chief Financial Officer. Mr. Teglia recused himself from all of our deliberations regarding the sale of University Square. The net sales proceeds, after repayment of the first mortgage on the property, adjustment for unfinished tenant improvements, sales commission, prorations and closing costs, were approximately $3.3 million. In addition, USBC, LLC paid the prepayment penalty of approximately $0.7 million associated with the payoff of the first mortgage. On May 1, 2002, we sold our 6901 Riverport Drive in Louisville, Kentucky for a total sales price of approximately $5.7 million to Riverport LLC and Riverport Group, LLC. The principals of these entities include Daniel Smith. Mr. Smith, or entities owned or controlled by him, was a joint venture partner with us on our Woodcrest property and also managed our Commerce Center and Fountain Square properties. The net sales proceeds, after repayment of the bond indebtedness, sales commission, prorations and closing costs were approximately $2.1 million. On May 1, 2002, we signed a contract to sell our Northlake Tower Shopping Center for a gross purchase price of $20.5 million. The purchase contract contains a 45-day inspection period during which the purchaser may terminate the contract without penalty. Additionally, the contract is subject to the ability of the purchaser to obtain the approval of the first mortgagee to assume the existing first mortgage financing. If the purchaser is unable to obtain approval to assume the existing loan and it does not elect to avail itself of alternative financing, the contract can be terminated by the purchaser without penalty. If the sale is consummated, we expect to realize net sales proceeds of approximately $3.4 million during the third quarter of 2002. RESULTS OF OPERATIONS On January 5, 2001, we adopted a Plan of Termination and Liquidation under which the Trust will be dissolved. As a result of the adoption of the Plan, we began reporting on the liquidation basis of accounting effective for the quarter ending March 31, 2001. Therefore, operations for the three months ending March 31, 2002 and 2001 are reported on the Consolidated Statement of Changes in Net Assets in Liquidation. 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. For the three months ending March 31, 2002, our Net Assets in Liquidation decreased by approximately $0.3 million from approximately $12.4 million to approximately $12.1 million. This decrease is primarily the result of operating loss of approximately $0.3 million and minority interest of approximately $0.1 million decreased by approximately $0.1 million of interest income on cash and cash equivalents. Prior to reporting the operating activity for quarter ending March 31, 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 at 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 three months ending March 31, 2001, our Net Assets in Liquidation increased by approximately $1.2 million from approximately $64.2 million at December 31, 2000 to approximately $65.4 million at March 31, 2001. This increase is primarily the result of operating income in the amount of approximately $2.5 million and recovery of losses on loans, notes and interest receivable of approximately $0.9 million reduced by depreciation expense of approximately $1.6 million, distributions to shareholders in the amount of approximately $0.6 million and minority interest of approximately $0.1 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. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2002, our total assets were approximately $40.6 million, a decrease of approximately $0.8 million from total assets at December 31, 2001 of approximately $41.4 million. Our liabilities totaled approximately $28.4 million at March 31, 2002, a decrease of approximately $0.6 million from approximately $29.0 million at December 31, 2001. At March 31, 2002, our net assets in liquidation were approximately $12.1 million, a decrease of approximately $0.3 million from approximately $12.4 million at December 31, 2001. Cash and cash equivalents consist of cash and short-term investments. Our cash and cash equivalents balance decreased by approximately $1.7 million to approximately $5.8 million at March 31, 2002 from approximately $7.5 million at December 31, 2001. The decrease in total cash and cash equivalents was due primarily to our purchase of the interests of our venture partner in the Northlake Tower Shopping Center property and operating loss for the quarter. Having made our two liquidating distributions, we have established unrestricted cash reserves of $5.8 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 determining the adequacy of these reserves, we have considered the impact that the sale of University Square Business Center and 6901 Riverport Drive will have on our future net operations. Together, the operations for these two properties generated approximately $0.5 million of cash flow on an annual basis. On May 1, 2002, our Board of Trustees declared our third liquidating distribution in the amount of $0.30 per share. After making this distribution, we will have distributed $5.25 per share pursuant to the Plan. If we complete the sale of the Northlake Tower Shopping Center as discussed above, we will receive net proceeds of approximately $3.4 million or $0.215 per share. Also, unsecured notes receivable in the amount of $2.3 million or $0.15 per share become due and payable on June 30, 2002. The total amount of our remaining liquidating distributions will be dependent on our success in realizing the projected net proceeds related to the two pending transactions, as well as the costs to terminate and liquidate the Trust and the ultimate resolution of the pending litigation against Mr. Leonard G. Levine (See--Other-Litigation below). We intend to continue our policy of making liquidating distributions when, and as often as, circumstances permit. PROPERTIES: As of March 31, 2002, 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 was sold on April 1, 2002, and the Riverport property was sold on May 1, 2002. Also, as described above, we have executed a contract to sell our Northlake property for a sale price of $20.5 million. BANYAN STRATEGIC REALTY TRUST PORTFOLIO SUMMARY March 31, 2002 (Dollars in thousands) Occu- Debt Square pancy Property Balance Footage % Description - -------- ------- ------- ----- ----------- FLEX/INDUSTRIAL - --------------- 6901 Riverport Leasehold interest Drive (a)(b) subject to bond financing Louisville, KY $ 3,400 322,100 55% and ownership of (Sold May 1, improvements 2002) OFFICE - ------ University Square Business Center (c) Fee ownership of land Huntsville, AL 4,644 184,700 90% and improvements (Sold April 1, 2002) RETAIL - ------ Northlake Tower Shopping Leasehold interest pursuant Center (d) to ground lease and Atlanta, GA 16,838 321,600 98% ownership of improvements ------- ------- --- Total $24,882 828,400 79% ======= ======= --- (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. (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 $0.5 million. (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 by our tenant, AMC Theatres, that it has made a determination to cease operations at the shopping center and was seeking to terminate its lease in August of 2001. The AMC Theatres did not cease operations and we have received no further communication from the tenant with respect to cessation of operations or the timing of any termination of its lease. 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, primarily with long term leases. OTHER - LITIGATION On August 14, 2000, we exercised our rights under the Trust's employment agreement with Mr. Leonard G. 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 filed an action in the Circuit Court of Cook County, Illinois asking the court to terminate 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 have 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 The 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. Mr. Levine has answered all counts. On May 7, 2001, we amended our 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. During the pendency of the litigation, we continue to pay a base salary to Mr. Levine. We are seeking recovery of these payments, among other recoveries, in the litigation. A case management conference in the Employment Litigation was held on October 18, 2001. Judge Richard A. 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. Judge Siebel's October 18, 2001 scheduling order was modified as a result of a motion brought by Mr. Levine on January 31, 2002. The revised schedule calls for: (i) the conclusion of all written fact discovery by March 31, 2002; (ii) the conclusion of all non-expert depositions by June 30, 2002; and (iii) a further status hearing on May 17, 2002. On December 17, 2001, we filed a motion for partial summary judgment in the Employment Litigation. This motion sought a ruling by the court that the Trust had "just cause" to terminate Mr. Levine's employment contract at the time we placed Mr. Levine on suspension on August 14, 2000. The motion was heard and denied on April 4, 2002. On the same date, the court extended the deadline for the completion of written fact discovery from March 31, 2002 to May 31, 2002. On March 18, 2002, Mr. Levine filed a motion for judgment on the pleadings which sought a judgment in favor of Mr. Levine on Counts I, IV and VI of our Third Amended Complaint. On May 1, 2002, Judge Siebel granted the motion (without prejudice) in regard to Count I and denied the motion in regard to Counts IV and VI. We will be seeking leave of the Court to file a Fourth Amended Complaint in the near future. 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 March 31, 2002, we had approximately $24.9 million of outstanding long-term debt, of which $3.4 million bears interest at variable rates that are adjusted on a monthly basis. As of March 31, 2002, the weighted-average interest rate on this variable rate debt was 3.07%. If interest rates on this variable rate debt increased by one percentage point (1%), interest expense would increase by $34,000 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) Reports on Form 8-K: . dated February 13, 2002, filed February 15, 2002 including Item 7; . dated February 21, 2002, filed February 22, 2002 including Item 7; . dated March 4, 2002, filed March 5, 2002 including Item 7; . dated March 15, 2002, filed March 18, 2002 including Item 7; and . dated March 25, 2002, filed March 26, 2002 including Item 7. 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: May 6, 2002 ------------------------------ L.G. Schafran, Interim President By: /s/ Joel L. Teglia Date: May 6, 2002 ------------------------------ 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 First Amendment to Employment Agreement of L.G. Schafran dated February 13, 2002. (15) EXHIBIT INDEX - ------- 10.3 Employment Agreement of Leonard G. Levine as of December 14, 1999. (2) 10.4 Employment Agreement of Leonard G. Levine as of October 1, 1997. (11) 10.5 Employment Agreement of Joel L. Teglia dated November 1, 2000. (14) 10.6 Employment Agreement of Joel L. Teglia dated December 31, 1998. (5) 10.7 Employment Agreement of Robert G. Higgins dated September 1, 2000. (14) 10.8 Separation Agreement of Neil Hansen dated October 1, 2000. (14) 10.9 Separation Agreement of Jay Schmidt dated October 1, 2000. (14) 10.10 1997 Omnibus Stock and Incentive Plan dated July 9, 1997. (12) 10.11 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) 10.12 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) 10.13 Registration Rights Agreement dated as of October 1, 1997 between Banyan Strategic Realty Trust and Leonard G. Levine. (5) 10.14 Consulting Agreement dated as of February 18, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (13) 10.15 Modification to Consulting Agreement dated as of May 31, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (13) 10.16 Purchase and Sale Agreement dated January 8, 2001. (1) 10.17 First Amendment to Purchase and Sale Agreement dated March 28, 2001 (16) 10.18 Second Amendment to Purchase and Sale Agreement dated April 9, 2001 (17) 10.19 Third Amendment to Purchase and Sale Agreement dated May 11, 2001 (18) 21. Subsidiaries of Banyan Strategic Realty Trust (19) 99.7 Press release dated May 1, 2002. (*) 99.8 Press release dated May 2, 2002. (*) - -------------------- * 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 8-K dated February 13, 2002. (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. (19) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 2001. EX-99.7 3 ban_997.txt EXHIBIT 99.7 - ------------ AT THE TRUST Robert G. Higgins Investor Relations First 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 WEDNESDAY, MAY 1, 2002 BANYAN STRATEGIC REALTY TRUST CLOSES SALE OF RIVERPORT PROPERTY; ANNOUNCES $0.30 PER SHARE INTERIM LIQUIDATING DISTRIBUTION OAK BROOK, ILLINOIS - MAY 1, 2002 - Banyan Strategic Realty Trust (Nasdaq: BSRTS) today announced that it has completed the sale of its Louisville, Kentucky property, known as 6901 Riverport Drive, for a gross purchase price of $5.65 million. The purchaser is Riverport LLC and Riverport Group LLC, each of which is a Florida limited liability company, whose principals include Daniel Smith of Charlotte, North Carolina. Mr. Smith previously managed properties owned by the Trust in Florida and jointly owned with the Trust the Woodcrest property in Tallahassee, Florida. The Riverport property is a 322,000 square foot bulk warehouse facility located in the Riverport Industrial area of suburban Louisville. It is currently 55% leased by The Apparel Group, Ltd., whose lease expires in July of 2004. The remaining 146,000 square feet are unoccupied. The gross purchase price of $5.65 million represents an effective reduction of $400,000 from the original contract price of $6.05 million. The reduction resulted from a $100,000 credit for deferred maintenance items discovered by the purchaser during its inspection period, and the conversion (at no additional cost to the Trust) of a $300,000 fee due to the purchaser at closing, pursuant to the original contract, into a purchase price reduction. Upon closing, Banyan discharged its outstanding municipal bond indebtedness ($3.40 million). Banyan also paid $140,000 in real estate commissions, closing costs, prorations and transaction expenses. Banyan realized approximately $2.11 million in net proceeds from the sale, or approximately $0.135 per share. Banyan also announced that consistent with its Plan of Termination and Liquidation adopted on January 5, 2001, and by reason of the receipt of proceeds from the sale of University Square Business Center on April 1, 2002 and the sale of the Riverport property today, the Trust will make an interim liquidating distribution of $0.30 per share on May 31, 2002 to shareholders of record as of May 16, 2002. Giving effect to the distribution announced today, the Trust will have made total distributions of $5.25 per share since adopting the Plan of Termination and Liquidation. Banyan is marketing for sale its interest in its one remaining property, The Northlake Tower Festival Mall in Atlanta, Georgia. The company recently acquired the interest of its joint venture partner in this property and now owns and controls the property outright. MORE BANYAN STRATEGIC REALTY TRUST ADD 1 L.G. Schafran, Interim President and CEO of Banyan, commenting upon the Riverport transaction said, "We are pleased to announce the completion of the Riverport sale, which furthers our Plan of Termination and Liquidation adopted in January of 2001. We are similarly pleased to announce the $0.30 liquidating distribution associated with this transaction and the sale of University Square in April. By combining the proceeds from these two transactions, we reduced the administrative expenses associated with making this distribution." NASDAQ DELISTING Banyan previously announced that on February 14, 2002, it was notified by Nasdaq that because the minimum bid price for Banyan's shares of beneficial interest closed below $1.00 per share for the preceding thirty consecutive trading days, Banyan's shares faced delisting. Nasdaq has advised that the bid price must close at $1.00 or more per share for ten or more consecutive trading days, between the notification date and May 15, 2002, for delisting to be avoided. If this criterion is not met, the shares would be delisted, subject to Banyan's right of appeal. Since February 14, 2002, the closing price of Banyan's shares has averaged $0.70 per share and it is not anticipated that the share price will exceed $1.00 before May 15, 2002. Banyan is currently looking into alternatives in order to provide a continued market for the exchange of its shares. Banyan Strategic Realty Trust is an equity Real Estate Investment Trust (REIT) that, 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. Other properties were sold on April 1, 2002 and May 1, 2002. Banyan now owns a leasehold interest in one (1) real estate property located in Atlanta, Georgia, representing approximately 9% of its original portfolio. 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 property, the amount of the remaining liquidating distributions, the outcome of pending litigation 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, 2001, which was filed with the Securities and Exchange Commission on March 21, 2002. 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- EX-99.8 4 ban_998.txt EXHIBIT 99.8 - ------------- AT THE TRUST Robert G. Higgins Investor Relations First 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, MAY 2, 2002 BANYAN STRATEGIC REALTY TRUST SIGNS CONTRACT TO SELL LAST REMAINING PROPERTY, NORTHLAKE TOWER FESTIVAL MALL, FOR $20.5 MILLION OAK BROOK, ILLINOIS - MAY 2, 2002 - BANYAN STRATEGIC REALTY TRUST (Nasdaq: BSRTS) today announced that it has signed a contract to sell its Tucker (Atlanta), Georgia property, known as Northlake Tower Festival Mall, for a gross purchase price of $20.5 million. The purchaser, West Coast Realty Investors, Inc., a Delaware corporation, has deposited $200,000 in earnest money and is required to deposit an additional $200,000 at the end of the inspection period (see below). Northlake Tower Festival Mall is a 322,000 square foot power center on 38 acres located in suburban Atlanta. It is currently ninety-eight percent (98%) leased to 49 tenants including Toys R-Us; Office Max; PetSmart; Haverty's; AMC Theaters and Bally Total Fitness. The purchase contract contains a forty-five (45) day inspection period and is further contingent upon the purchaser obtaining the approval of General Electric Capital Corp. ("GECC") to assume the existing first mortgage debt that encumbers the property, which has an approximate principal balance of $16.8 million. The purchaser is required to pay any and all assumption fees charged by GECC. The purchaser may terminate the contract for any reason during the inspection period without penalty. The closing of the transaction is currently scheduled to occur on or before July 17, 2002, unless an extension is required to complete the debt assumption process. In the event GECC fails to approve the assumption, and the purchaser has not elected to avail itself of alternative financing, the contract will be terminated without penalty to the purchaser. If the transaction closes at the contract price, the Trust expects to realize net proceeds of approximately $3.35 million, or approximately $0.215 per share, after crediting the Purchaser the amount of the existing Northlake debt (approximately $16.8 million) and paying related closing costs and prorations (expected to be approximately $0.35 million). The Trust reiterated that it intends to continue its policy of making liquidating distributions to its shareholders when, and as often as, conditions warrant, including as soon as is practical after a closing. The Trust also noted that pursuit of the pending litigation between the Trust and its suspended president Leonard G. Levine is now the primary focus of the Trust's liquidation activity going forward. MORE BANYAN STRATEGIC REALTY TRUST ADD 1 Banyan Strategic Realty Trust is an equity Real Estate Investment Trust (REIT) that, 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. Other properties were sold on April 1, 2002 and May 1, 2002. Banyan now owns a leasehold interest in one (1) real estate property located in Atlanta, Georgia (the subject matter of this press release), representing approximately 9% of its original portfolio. 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 property, the amount of the remaining liquidating distributions, the outcome of pending litigation 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, 2001 which was filed with the Securities and Exchange Commission on March 21, 2002. 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-----