UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 1-8820
Banyan Short Term Income Trust
(Exact name of Registrant as specified in its charter)
Massachusetts 36-6801275
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. YES X . NO .
Shares of beneficial interest outstanding as of May 9, 1996: 6,667,410.
Transitional Small Business Disclosure Format. YES . NO X .
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
BANYAN SHORT TERM INCOME TRUST
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
1996 1995
ASSETS
Cash and Cash
Equivalents $ 2,454,714 $ 1,635,312
Investment Securities 942,133 ---
Interest Receivable 99,814 1,942
Net Investment in Real
Estate Ventures 498,311 1,636,749
Other Assets 255,528 282,879
------------ ------------
Total Assets 4,250,500 3,556,882
------------ ------------
LIABILITIES
Accounts Payable and
Accrued Expenses 628,091 829,822
------------ ------------
NET ASSETS IN
LIQUIDATION $ 3,622,409 $ 2,727,060
============ ============
Book Value Per Share
of Beneficial
Interest (6,667,410
Shares Issued and
Outstanding) $ 0.54 $ 0.41
============ ============
The accompanying notes are an integral part of the consolidated
financial statements.
BANYAN SHORT TERM INCOME TRUST
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Net Assets in Liquidation at
December 31, 1995 $ 2,727,060
Interest Income on Cash and
Cash Equivalents and
Investment Securities 20,453
Operating Expenses (201,139)
Net Income From Real Estate
Ventures 1,076,035
------------
Net Assets in Liquidation
at March 31, 1996 $ 3,622,409
============
The accompanying notes are an integral part of the consolidated
financial statements.
BANYAN SHORT TERM INCOME TRUST
CONSOLIDATED STATEMENT OF INCOME AND EXPENSES
(GOING CONCERN BASIS)
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
INCOME
Interest Income on Cash
and Cash Equivalents $ 50,476
Interest Income on Investment
Securities 81,393
Other Income 24,757
-----------
Total Income 156,626
-----------
EXPENSES (RECOVERIES)
Shareholder Expenses 25,760
Directors' Fees, Expenses
and Insurance 54,172
Other Professional Fees 39,000
General and Administrative 140,768
Recovery of Losses On Loans
Notes and Interest
Receivable (336,374)
-----------
Total (Recoveries) Expenses (76,674)
-----------
Operating Income 233,300
Net Income From Real Estate
Ventures 79,946
Net Loss From Foreclosed Real
Estate Held for Sale (24,495)
-----------
Net Income $ 288,751
===========
Net Income Per Share
of Beneficial Interest (Based
on Shares Outstanding of
6,667,410) $ 0.04
===========
The accompanying notes are an integral part of
the consolidated financial statements.
BANYAN SHORT TERM INCOME TRUST
CONSOLIDATED STATEMENT OF CASH FLOW
(GOING CONCERN BASIS)
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 288,751
Adjustments to Reconcile Net
Income to Net Cash Provided
By Operating Activities:
Amortization of Premium on
Investment Securities 11,640
Equity in Net Income from
Real Estate Ventures (79,946)
Equity in Net Loss from
Operations of Foreclosed
Real Estate Held for Sale 24,495
Net Change In:
Interest Receivable on Cash
and Cash Equivalents and
Investment Securities (102,682)
Other Assets (2,731)
Accounts Payable and Accrued
Expenses 131,311
-----------
Net Cash Provided By Operating
Activities 270,838
-----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from Sale of
Investment Securities 2,051,620
Purchase of Investment
Securities (3,695,616)
Collections of Notes Receivable 3,500,000
Distributions from Real Estate
Ventures, Net 318,912
Investment in Foreclosed
Real Estate Held for Sale (24,495)
-----------
Net Cash Provided By
Investing Activities 2,150,421
-----------
Net Increase in Cash
and Cash Equivalents 2,421,259
Cash and Cash Equivalents at
Beginning of Period 2,687,908
------------
Cash and Cash Equivalents at
End of Period $ 5,109,167
============
The accompanying notes are an integral part of the consolidated
financial statements.
BANYAN SHORT TERM INCOME TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
Readers of this quarterly report should refer to Banyan Short Term Income
Trust's (the "Trust's") audited consolidated financial statements for the year
ended December 31, 1995, which are included in the Trust's 1995 Annual Report on
Form 10-KSB, as certain footnote disclosures which would substantially duplicate
those contained in such audited financial statements have been omitted from this
report.
1. LIQUIDATION AND BASIS OF PRESENTATION
Banyan Short Term Income Trust (the "Trust") was organized as a business
Trust under the laws of the Commonwealth of Massachusetts, pursuant to a
Declaration of Trust filed July 13, 1984. On October 26, 1995 the Trust's Board
of Trustees unanimously approved a Plan of Termination and Liquidation (the
"Plan") for the Trust which included plans for the disposition of its remaining
assets and the distribution of any net cash proceeds to the shareholders.
Effective with the adoption of the Plan, the accounting basis used by the
Trust in preparing its financial statements changed from the going concern to
the liquidation basis of accounting. The amount ultimately available for
distribution to shareholders will depend on the amounts realized from the
liquidation of assets, including the timing of the liquidation process and the
resolution of the Trust's liabilities.
The accompanying consolidated financial statements include the accounts of
the Trust, its wholly-owned subsidiaries, the Trust's 50% interest in the
Oakridge Joint Venture and 75% interest in the Dearborn Park Townhome
Partnership both of which are accounted for on the equity method. All
intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying consolidated financial statements as of March
31, 1996 and for the quarter ended March 31, 1996 and 1995. These adjustments
made to the financial statements as presented are all of a normal recurring
nature to the Fund unless otherwise indicated.
2. INCOME TAXES
For the year ended December 31, 1995 the Trust elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code Sections
856-860. In order to so qualify, the Trust was required to distribute at least
95% of its taxable income to shareholders and meet asset and income tests as
well as certain other requirements. On March 20, 1996, the Trust notified the
Internal Revenue Service of its intent to revoke its election to be treated as a
REIT under section 856(c)(1) of the Internal Revenue Code of 1986, as amended,
due to the Trust's decision to liquidate.
3. INVESTMENT SECURITIES
The Trust considers all highly liquid investments purchased with a
maturity greater than three months to be Investment Securities. Investment
Securities at March 31, 1996 include a U.S. Treasury Note with a face amount of
$940,000 bearing an interest rate of 6.00% and maturing on June 30, 1996. The
cost and approximate market value of this investment at March 31, 1996 is
$942,133. There were no investment securities at December 31, 1995.
4. INVESTMENT IN REAL ESTATE VENTURES
Equity in Income (Loss):
For the quarter ended
March 31, 1996 1995
Dearborn Park Townhome
Partnership $ 96,207 $ 123,575
VST/VMIF Oakridge Partnership
979,828 (43,629)
---------- ---------
Total $1,076,035 $ 79,946
========== =========
During the quarter ended March 31, 1996, the Trust received $375,000 as
its share of a distribution from the Dearborn Park Townhome Partnership. Also
during the quarter ended March 31, 1996, the Trust made cash contributions of
$19,944 to the Oakridge Partnership. The Oakridge cash contributions were
offset by the receipt of $1,859,417 in net cash proceeds received primarily from
the sale of 205 acres of the Oakridge property.
5. TRANSACTIONS WITH AFFILIATES
Administrative costs, primarily salaries and general and administrative
expenses are reimbursed by the Trust to Banyan Management Corp. ("BMC"). These
costs are allocated to the Trust and other entities to which BMC provides
administrative services based upon the actual number of hours spent by BMC
personnel on matters related to the particular entity in relation to total BMC
personnel hours. The Trust's allocated share of costs for the quarter ended
March 31, 1996 and 1995 aggregated $70,316 and $88,325, respectively. As one of
its administrative services, BMC serves as the paying agent for general and
administrative costs of the Trust. As part of providing this payment service,
BMC maintains a bank account on behalf of the Trust. As of March 31, 1996, the
Trust had a net receivable due from BMC of $197,354. The net receivable is
included in other assets in the Trust's Consolidated Statement of Net Assets in
Liquidation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN
OF OPERATION
GENERAL
Banyan Short Term Income Trust (the "Trust") was formed to make short-term
loans to affiliates of VMS Realty Partners. These borrowers subsequently
defaulted on their obligations adversely affecting the Trust. As a result of
these defaults, the Trust suspended the making of new loans, except for advances
of additional funds under circumstances which it deemed necessary to preserve
the value of existing collateral, including instances where the Trust foreclosed
upon or taken title, indirectly, to the collateral. In early 1990, the Trust
implemented a Principal Recovery Plan designed to preserve its assets and manage
its properties acquired through foreclosure or otherwise until they could be
disposed of in an orderly manner. On August 17, 1995, the Trust's Board of
Trustees authorized management to prepare a Plan of Termination and Liquidation
(the "Plan") for the Trust which was to include plans for disposing of its
remaining assets and the distribution of any net cash proceeds to the
shareholders. On October 26, 1995 the Trustees unanimously approved the Plan.
A review of the Trust's business plan which led to the consideration and
ultimately the adoption of the Plan was triggered by the Trust's 1995
disposition of its largest remaining assets; its note receivable collateralized
by the Boca Raton Golf and Tennis Club and the sale of its interest in the Boca
Raton Marina Parcel. Pursuant to the Plan, the Trustees intend to complete the
sale of the remaining townhome unit in the Federal Square Project, complete the
sale of the remaining five-acre land parcel of the Oakridge site, dispose of the
Trust's liquidating trust interest and proceed to wind-up and terminate the
Trust's affairs prior to December 31, 1996. The Plan does not contemplate the
distribution to the shareholders of the Trust of securities or other property in
kind and, therefore, the Trustees did not seek shareholder approval of the
Plan. On December 22, 1995 the Trust made an initial liquidating
distribution to all shareholders of record on December 11, 1995 in
the amount of $3.95 per share. Assuming completion of the sale of the
Trust's remaining real estate assets by the end of the third quarter of
1996, the Trust anticipates a final distribution to shareholders of $0.40
to $0.60 per share. The final distribution is anticipated to occur sometime
in the fourth quarter of 1996. The estimated timing and amount of the
Trust's termination and final distribution are based upon various
assumptions associated with the disposition of its remaining assets, as
discussed above. The final termination and distribution could vary from
the Trust's estimates in the event the assets are disposed of earlier or
later than anticipated and cash proceeds received upon disposition are more or
less than expected due to changes in the market conditions as originally
estimated.
Subsequent to the initial liquidating distribution, the Trust was no
longer able to meet certain financial requirements for continued listing of the
Trust's shares of beneficial interest on the American Stock Exchange (the
"AMEX") and, as a result, the AMEX ceased trading of the Trust's shares on
February 2, 1996. Final delisting of the Trust's shares occurred on April 10,
1996. Following the final distribution, the Trust will close its transfer books
and other records at the close of business on a date determined by the Trustees
and thereafter certificates representing shares shall not be assignable or
transferable. At such time, the existence of the Trust will effectively be
terminated.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments. The
Trust's cash and cash equivalents balance at March 31, 1996 and December 31,
1995 was $2,454,714 and $1,635,312, respectively. In addition, as of March 31,
1996, the Trust also held $942,133 in investment securities. The increase in
cash and cash equivalents and investment securities between March 31, 1996 and
December 31, 1995 of $1,761,535 is due primarily to the Trust's receipt of its
50% share of cash proceeds from the VST/VMIF Oakridge Partnership (the "Oakridge
Venture") sale of 205 acres of the Oakridge property of $1,856,289 and the
receipt of cash distributions from the Dearborn Park Townhome Partnership
("Federal Square") project of $375,000 as discussed below. Partially offsetting
the increase in cash and cash equivalents and investment securities was the
payment of the operating costs of the Trust of approximately $470,000.
On February 5, and March 1, 1996, the Oakridge Venture sold a total of 180
acres to an unaffiliated party for approximately $4,600,000. In addition, on
March 1, 1996, the Oakridge Venture sold an additional 25-acre parcel of the
Oakridge property to an unaffiliated party for approximately $2,200,000. The
disparity in the price per acre between the two contracts of approximately
$88,000 per acre to $26,000 per acre is due to each parcel's unit density per
approved zoning and entitlement rights. The February and March, 1996 sales
resulted in the Oakridge Venture's repayment of a first mortgage loan
collateralized by the Oakridge property in the amount of $1,916,617. After
repayment of the mortgage loan, interest and other closing costs the Oakridge
Venture received net proceeds from the sales of $4,180,505 (including $467,928
of deposits received during 1995) of which $2,090,253 was distributed to the
Trust representing its 50% interest in the Venture. The Trust recognized its
share of the gain from the February and March property sales of approximately
$1,051,000. The Oakridge Venture is currently engaged in negotiations to sell
the remaining five-acre retail parcel at the Oakridge property.
For the quarter ended March 31, 1996, the Dearborn Park Townhome
Partnership sold three townhomes resulting in net income from the sales of
approximately $127,000. The Trust has recognized $96,207 as its 75% share of
the net income from these sales. As of May 3, 1996 development has been
completed and the Dearborn Park Townhome Partnership has sold 116 units of the
117 units available.
The Trust's current balance of cash and cash equivalents and investment
securities along with the cash proceeds to be derived from the sale of the
Trust's remaining interests is expected to be sufficient to meet its reasonably
anticipated needs for its Plan as discussed above.
RESULTS OF OPERATIONS
As a result of the adoption of the Plan on October 26, 1995, effective
October 27, 1995, the Trust began reporting on the liquidation basis of
accounting. Therefore, operations for the quarter ended March 31, 1996 are
stated on the liquidation basis as reported on the Consolidated Statement of
Changes in Net Assets in Liquidation while the March 31, 1995 results are
reported on a going concern basis as reported on the Consolidated Statements of
Income and Expenses. See Note 1, "Liquidation and Basis of Presentation" of the
Notes to Consolidated Financial Statements for further information.
Total income for the quarters ended March 31, 1996 and 1995 was $20,453
and $156,626, respectively. The decrease in total income is primarily due to
the decrease in interest income as a result of a decrease in cash and cash
equivalents available for investment. This decrease in cash and cash
equivalents is primarily due to the Trust's payment of the initial liquidating
distribution made on December 22, 1995 in the amount of $26,336,270 or $3.95 per
share. Also contributing to this decrease was a one time receipt during 1995 of
$24,757 of interest income related to the Boca Golf and Tennis Club note.
For the quarters ended March 31, 1996 and 1995, total expenses
(recoveries) were $201,139 and $(76,674), respectively. The $277,813 increase
in total expenses for the quarter ended March 31, 1996 when compared to the
quarter ended March 31, 1995 is primarily related to the fact that 1995 results
were impacted by a $336,374 recovery of losses on mortgage loans, notes, and
interest receivable representing a cash distribution received from its interest
in a liquidating trust. There were no cash distributions pursuant to the
Trust's liquidating trust interest during the quarter ended March 31, 1996.
Partially offsetting this increase was a decrease in operating expenses of
$58,561. This decrease is primarily due to a decrease in Banyan Management
Corp. ("BMC") expenses which are allocated to the Trust based on the actual
number of hours spent by BMC personnel on Trust-related matters. During early
1995, BMC personnel spent a significant amount of time related to the Boca
assets which were disposed of in 1995 while spending significantly less time, in
1996, following the adoption of the Plan.
Net Income from Real Estate Ventures was $1,076,035 and $79,946 for the
quarters ended March 31, 1996 and 1995, respectively. For the quarter ended
March 31, 1996, net income from real estate ventures consisted of the Trust's
share of net income from its interest in the Dearborn Park Townhome Partnership
in the amount of $96,207 plus the Trust's share of net income from the Oakridge
Venture in the amount of $979,828. The Trust's share of the 1996 net income of
the Dearborn Park Townhome Partnership represents the Trust's 75% share of the
Dearborn Park Townhome Partnership's approximate $127,000 of net income from the
sale of three townhomes. Development of the Dearborn Park Townhome
Partnership's Federal Square project, consisting of a total of 117 townhomes, is
nearly complete with 116 units sold as of May 3, 1996. The $979,828 of net
income from the Oakridge Venture for the quarter ended March 31, 1996 consists
of a $1,050,936, gain on the sale of 205 acres, which represents the Trust's 50%
share as discussed above and the Trust's share of a $71,108 loss on operations.
The $71,108 net loss on operations of the Oakridge Venture for the quarter ended
March 31, 1996, is primarily due to sales and marketing costs related to the
sales of 205 acres of the Oakridge property during 1996. For the quarter ended
March 31, 1995, net income from real estate ventures consisted of the Trust's
share of net income from its interest in the Dearborn Park Townhome Partnership
of $123,575 and the Trust's share of net loss from its interest in the Oakridge
Partnership of $43,629. The Trust's share of the 1995 income of the Dearborn
Park Townhome Partnership represents the Trust's 75% share of the partnership's
approximate $160,000 of net income from the sale of eight townhomes. The
$43,529 net loss on operations of the Oakridge Venture for the quarter ended
March 31, 1995 is primarily related to zoning and marketing costs incurred in
the process of selling the Oakridge property during 1995.
Net loss from foreclosed real estate held for sale for the quarter ended
March 31, 1995 consisted of a $24,495 net loss from operations representing
holding costs associated with its Boca Marina Parcel.
The combination of these changes resulted in net income for the quarters
ended March 31, 1996 and 1995 of $895,349 ($0.13 per share) and $288,751 ($0.04
per share), respectively.
OTHER INFORMATION
The Trust elected to be treated as a real estate investment trust ("REIT")
under Sections 856-860 of the Internal Revenue Code for the year ended December
31, 1995. On March 20, 1996, the Trust notified the Internal Revenue Service of
its intent to revoke the tax election to be treated as a REIT under section
856(c)(1) of the Internal Revenue Code of 1986, as amended, due to the decision
to liquidate and terminate the Trust.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is incorporated by reference from the Trust's Form
8-K dated November 1, 1995.
Exhibit Description
(2) Plan of Liquidation/Termination
(b) The following reports on Form 8-K was filed during the quarter ended March
31, 1996 for which this report is filed:
A current report on Form 8-K was filed on January 30, 1996, wherein Item
5., Other Information, disclosed the American Stock Exchange's decision to
cease trading of the Registrant's shares on February 2, 1996.
SIGNATURES
PURSUANT to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
BANYAN SHORT TERM INCOME TRUST
By: /s/ Leonard G. Levine Date: May 9, 1996
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: May 9, 1996
Joel L. Teglia, Vice President
and Chief Financial Officer