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, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 0-15465
Banyan Strategic Realty Trust
(Exact name of Registrant as specified in its charter)
Massachusetts 36-3375345
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (312) 553-9800
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X . NO .
Shares of beneficial interest outstanding as of May 11, 1995: 10,471,102.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Consolidated Consolidated
ASSETS 1995 1994
Cash and Cash Equivalents $ 13,673,727 $ 14,769,170
Interest Receivable on
Investments 123,134 82,180
Interest Receivable on Mortgage
Loans 55,015 55,106
Accounts Receivable 102,887 107,672
Due from Affiliates --- 730,229
Investment Securities 2,507,355 1,017,236
------------ ------------
16,462,118 16,761,593
------------ ------------
Mortgage Loans Receivable (Net
of unamortized discount of
$1,722,096 and $1,808,716,
respectively) 5,204,104 5,136,229
Investment in Real Estate, at
cost:
Land 6,182,494 6,182,494
Building 33,152,589 33,152,589
Building Improvements 1,946,246 1,863,219
------------ ------------
41,281,329 41,198,302
Less: Accumulated Depreciation (1,281,008) (1,036,890)
------------ ------------
40,000,321 40,161,412
------------ ------------
Investment in Real Estate
Ventures 10,685,348 10,697,791
Deferred Financing Costs (Net of
Accumulated Amortization of
$69,350 and $21,411,
respectively) 803,181 793,649
Other Assets 712,424 533,677
------------ ------------
Total Assets $ 73,867,496 $ 74,084,351
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities
Accounts Payable and Accrued
Expenses $ 636,282 $ 802,335
Accrued Real Estate Taxes 644,068 666,567
Mortgage Loans Payable 7,859,492 7,900,695
Bond Payable 5,500,000 5,500,000
Accrued Interest Payable --- 26,005
Unearned Revenue 31,321 39,198
Security Deposit Liability 215,202 203,659
Other Liability 686,169 290,331
------------ ------------
Total Liabilities 15,572,534 15,428,790
------------ ------------
Minority Interest in
Consolidated Partnerships 216,965 214,849
Shareholders' Equity
Shares of Beneficial Interest,
No Par Value, Unlimited
Authorization; 11,993,751
Shares Issued 106,662,313 106,662,313
Accumulated Deficit (41,218,367) (40,855,652)
Treasury Shares at Cost,
1,522,649 Shares (7,365,949) (7,365,949)
------------ ------------
Total Shareholders' Equity 58,077,997 58,440,712
------------ ------------
Total Liabilities and Share-
holders' Equity $ 73,867,496 $ 74,084,351
============ ============
Book Value Per Share of Bene-
ficial Interest (10,471,102
Shares Outstanding) $ 5.55 $ 5.58
============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION)
MARCH 31, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Supplemental Information
Investment Investment
Activities Activities
ASSETS 1995 1994
Cash and Cash Equivalents $ 10,836,030 $ 13,077,182
Interest Receivable on
Investments 60,342 58,422
Interest Receivable on Mortgage
Loans 55,015 55,106
Accounts Receivable 102,887 107,672
Due from Affiliates --- ---
Investment Securities 2,507,355 1,017,236
------------ ------------
13,561,629 14,315,618
------------ ------------
Mortgage Loans Receivable (Net
of unamortized discount of
$1,722,096 and $1,808,716,
respectively) 5,204,104 5,136,229
Investment in Real Estate, at
cost:
Land 6,182,494 6,182,494
Building 33,152,589 33,152,589
Building Improvements 1,946,246 1,863,219
------------ ------------
41,281,329 41,198,302
Less: Accumulated Depreciation (1,281,008) (1,036,890)
------------ ------------
40,000,321 40,161,412
------------ ------------
Investment in Real Estate
Ventures --- ---
Deferred Financing Costs (Net of
Accumulated Amortization of
$69,350 and $21,411,
respectively) 803,181 793,649
Other Assets 608,320 408,353
------------ ------------
Total Assets $ 60,177,555 $ 60,815,261
============ ============
LIABILITIES
Liabilities
Accounts Payable and Accrued
Expenses $ 397,840 $ 621,966
Accrued Real Estate Taxes 644,068 666,567
Mortgage Loans Payable 7,859,492 7,900,695
Bond Payable 5,500,000 5,500,000
Accrued Interest Payable --- 26,005
Unearned Revenue 31,321 39,198
Security Deposit Liability 215,202 203,659
Other Liability --- ---
------------ ------------
Total Liabilities 14,647,923 14,958,090
------------ ------------
Minority Interest in
Consolidated Partnerships 216,965 214,849
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED BALANCE SHEETS (SUPPLEMENTAL INFORMATION)
MARCH 31, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
Supplemental Information
Foreclosed Foreclosed
Activities Activities
ASSETS 1995 1994
Cash and Cash Equivalents $ 2,837,697 $ 1,691,988
Interest Receivable on
Investments 62,792 23,758
Interest Receivable on Mortgage
Loans --- ---
Accounts Receivable --- ---
Due from Affiliates --- 730,229
Investment Securities --- ---
------------ ------------
2,900,489 2,445,975
------------ ------------
Mortgage Loans Receivable --- ---
Investment in Real Estate, at
cost:
Land --- ---
Building --- ---
Building Improvements --- ---
------------ ------------
--- ---
Less: Accumulated Depreciation --- ---
------------ ------------
--- ---
------------ ------------
Investment in Real Estate
Ventures 10,685,348 10,697,791
Deferred Financing Costs --- ---
Other Assets 104,104 125,324
------------ ------------
Total Assets $ 13,689,941 $ 13,269,090
============ ============
LIABILITIES
Liabilities
Accounts Payable and Accrued
Expenses $ 238,442 $ 180,369
Accrued Real Estate Taxes --- ---
Mortgage Loans Payable --- ---
Bond Payable --- ---
Accrued Interest Payable --- ---
Unearned Revenue --- ---
Security Deposit Liability --- ---
Other Liability 686,169 290,331
------------ ------------
Total Liabilities 924,611 470,700
------------ ------------
Minority Interest in Consolidated
Partnerships --- ---
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Consolidated Consolidated
INCOME 1995 1994
Income From Property Operating
Activities:
Industrial $ 586,397 $ 496,964
Residential 790,223 744,794
Commercial 686,128 74,673
----------- -----------
Total Income From Property
Operating Activities 2,062,748 1,316,431
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans 246,820 233,950
Income on Investments 199,907 122,553
----------- -----------
Total Income From Lending
and Investing Activities 446,727 356,503
----------- -----------
Total Income 2,509,475 1,672,934
----------- -----------
EXPENSES
Expenses from Property
Operating Activities:
Operating Property Expenses 98,446 74,357
Repairs and Maintenance 170,659 149,494
Real Estate Taxes 211,983 183,598
Interest Expense 221,227 79,451
Property Management Fees 92,369 56,466
Payroll Expense 107,601 120,795
Utilities Expense 166,208 101,152
Depreciation and
Amortization 251,359 146,865
----------- -----------
Total Expenses From Property
Operating Activities 1,319,852 912,178
----------- -----------
Other Expenses:
Shareholder Expenses 43,548 57,945
Trustees' Fees, Expenses
and Insurance 109,569 101,994
Other Professional Fees 58,523 74,640
General and Administrative 403,302 325,406
Amortization of Deferred Loan
Fees and Financing Costs 55,801 12,224
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) (134,986)
----------- -----------
Total Other Expenses 514,909 437,223
----------- -----------
Total Expenses 1,834,761 1,349,401
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 674,714 323,533
Minority Interest in
Consolidated Partnerships (16,942) (4,924)
Income (Loss) from Operations
of Real Estate Ventures 26,623 772
----------- -----------
Net Income (Loss) $ 684,395 $ 319,381
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,471,102 Weighted Average
Shares Outstanding) $ 0.07 $ 0.03
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Investment Investment
Activities Activities
1995 1994
INCOME
Income From Property Operating
Activities:
Industrial $ 586,397 $ 496,964
Residential 790,223 744,794
Commercial 686,128 74,673
----------- ----------
Total Income From Property
Operating Activities 2,062,748 1,316,431
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans 246,820 233,950
Income on Investments 117,714 81,068
----------- -----------
Total Income From Lending
and Investing Activities 364,534 315,018
----------- -----------
Total Income 2,427,282 1,631,449
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property Expenses 98,446 74,357
Repairs and Maintenance 170,659 149,494
Real Estate Taxes 211,983 183,598
Interest Expense 221,227 79,451
Property Management Fees 92,369 56,466
Payroll Expense 107,601 120,795
Utilities Expense 166,208 101,152
Depreciation and
Amortization 251,359 146,865
----------- -----------
Total Expenses From Property
Operating Activities 1,319,852 912,178
----------- -----------
Other Expenses:
Shareholder Expenses 7,585 8,920
Trustees' Fees, Expenses
and Insurance 6,000 6,625
Other Professional Fees 30,482 51,954
General and Administrative 273,165 225,332
Amortization of Deferred
Loan Fees and Financing
Costs 55,801 12,224
Recovery of Losses on Loans,
Notes and Interest
Receivable and Class Action
Settlement Costs and
Expenses --- ---
----------- -----------
Total Other Expenses 373,033 305,055
----------- -----------
Total Expenses 1,692,885 1,217,233
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures 734,397 414,216
Minority Interest in
Consolidated Partnerships (16,942) (4,924)
Income (Loss) from Operations
of Real Estate Ventures --- ---
----------- -----------
Net Income (Loss) $ 717,455 $ 409,292
=========== ===========
Earnings (Loss) Per Share of
Beneficial Interest
(10,471,102 Weighted Average
Shares Outstanding) $ 0.07 $ 0.04
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Supplemental Information
Foreclosed Foreclosed
Activities Activities
1995 1994
INCOME
Income From Property Operating
Activities:
Industrial $ --- $ ---
Residential --- ---
Commercial --- ---
----------- -----------
Total Income From Property
Operating Activities --- ---
----------- -----------
Income From Lending and
Investing Activities:
Interest and Amortized
Discount on Mortgage Loans --- ---
Income on Investments 82,193 41,485
----------- -----------
Total Income From Lending
and Investing Activities 82,193 41,485
----------- -----------
Total Income 82,193 41,485
----------- -----------
EXPENSES
Expenses From Property
Operating Activities:
Operating Property Expenses --- ---
Repairs and Maintenance --- ---
Real Estate Taxes --- ---
Interest Expense --- ---
Property Management Fees --- ---
Payroll Expenses --- ---
Utilities Expense --- ---
Depreciation and Amortization --- ---
----------- -----------
Total Expenses From Property
Operating Activities --- ---
----------- -----------
Other Expenses:
Shareholder Expenses 35,963 49,025
Trustees' Fees, Expenses
and Insurance 103,569 95,369
Other Professional Fees 28,041 22,686
General and Administrative 130,137 100,074
Amortization of Deferred Loan
Fees and Financing Costs --- ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) (134,986)
----------- -----------
Total Other Expenses 141,876 132,168
----------- -----------
Total Expenses 141,876 132,168
----------- -----------
Income (Loss) Before Minority
Interest and Income (Loss)
from Operations of Real
Estate Ventures (59,683) (90,683)
Minority Interest in
Consolidated Partnerships --- ---
Income (Loss) from Operations
of Real Estate Ventures 26,623 772
----------- -----------
Net Income (Loss) $ (33,060) $ (89,911)
=========== ============
Earnings (Loss) Per Share of
Beneficial Interest
(10,471,102 Weighted Average
Shares Outstanding) $ 0.00 $ (0.01)
============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
Shares of
Beneficial Interest Accumulated Treasury
Shares Amount Deficit Shares Total
Shareholders'
Equity,
December 31,
1994 11,993,751 $106,662,313 $(40,855,652) $(7,365,949) $58,440,712
Net Income --- --- 684,395 --- 684,395
Dividends
Paid --- --- (1,047,110) --- (1,047,110)
----------- ------------ ------------ ----------- -----------
Shareholders'
Equity, March
31, 1995 11,993,751 $106,662,313 $(41,218,367) $(7,365,949) $58,077,997
=========== ============ ============ =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Consolidated Consolidated
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ 684,395 $ 319,381
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In) Operating
Activities:
Amortization of Premium on
Investment Securities 3,241 64,530
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) (134,986)
Depreciation and Amortization 307,160 159,089
Amortization of Discount on
Mortgage Loans Receivable (86,620) (72,734)
Net Income From Operation of
Real Estate Ventures (26,623) (772)
Minority Interest Participation
in Consolidated Partnerships 16,942 4,924
Net Change In:
Interest Receivable on Mortgage
Loans and Investments (40,863) 96,619
Accounts Receivable 4,785 89,278
Due from Affiliates --- ---
Other Assets (185,988) (9,436)
Accounts Payable and Accrued
Expenses (166,053) (176,597)
Accrued Interest Payable (26,005) (139)
Accrued Real Estate Tax Payable (22,499) 208,554
Unearned Revenue (7,877) 25,803
Security Deposit Liability 11,543 9,945
----------- -----------
Net Cash Provided By (Used In)
Operating Activities 309,704 583,459
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets --- (18,681,928)
Additions to Investment in
Real Estate (83,027) (147,361)
Payment of Liabilities Assumed
at Acquisition of Real Estate
Assets --- (160,072)
Proceeds From Sale of
Investment Securities --- 12,999,892
Other Liability 395,838 ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses 155,834 134,986
Purchase of Investment
Securities (1,493,360) ---
Principal Collections on
Mortgage Loans Receivable 10,883 5,705
Due from Affiliates 730,229 (186,469)
Distribution From (Investment
In) Real Estate Ventures 39,066 (40,232)
Minority Interest Share of
Real Estate Investments (14,826) (16,416)
----------- -----------
Net Cash (Used In) Provided By
Investing Activities (259,363) (6,091,895)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Deferred Financing Costs (57,471) ---
Reductions to Deferred
Financing Costs --- 5,864
Principal Payments on Mortgage
Loans Payable (41,203) (20,783)
Dividends Paid to Shareholders (1,047,110) (1,047,110)
----------- -----------
Net Cash Used in Financing
Activities (1,145,784) (1,062,029)
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents (1,095,443) (6,570,465)
Cash and Cash Equivalents at
Beginning of Period 14,769,170 13,621,820
----------- -----------
Cash and Cash Equivalents at End
of Period $13,673,727 $ 7,051,355
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Investment Investment
Activities Activities
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ 717,455 $ 409,292
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In) Operating
Activities:
Amortization of Premium on
Investment Securities 3,241 64,530
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses --- ---
Depreciation and Amortization 307,160 159,089
Amortization of Discount on
Mortgage Loans Receivable (86,620) (72,734)
Net Income From Operation of
Real Estate Ventures --- ---
Minority Interest Participation
in Consolidated Partnerships 16,942 4,924
Net Change In:
Interest Receivable on Mortgage
Loans and Investments (1,829) 86,034
Accounts Receivable 4,785 89,278
Due From Affiliates --- ---
Other Assets (207,208) (12,368)
Accounts Payable and Accrued
Expenses (224,126) (150,468)
Accrued Interest Payable (26,005) (139)
Accrued Real Estate Tax Payable (22,499) 208,554
Unearned Revenue (7,877) 25,803
Security Deposit Liability 11,543 9,945
------------ -----------
Net Cash Provided By (Used In)
Operating Activities 484,962 821,740
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets --- (18,681,928)
Additions to Investment in
Real Estate (83,027) (147,361)
Payment of Liabilities Assumed
at Acquisition of Real Estate
Assets --- (160,072)
Proceeds From Sale of
Investment Securities --- 12,999,892
Other Liability --- ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses --- ---
Purchase of Investment
Securities (1,493,360) ---
Principal Collections on
Mortgage Loans Receivable 10,883 5,705
Due from Affiliates --- ---
Distribution From (Investment
In) Real Estate Ventures --- ---
Minority Interest Share of
Real Estate Investments (14,826) (16,416)
----------- -----------
Net Cash (Used In) Provided By
Investing Activities (1,580,330) (6,000,180)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Deferred Financing Costs (57,471) ---
Reductions to Deferred
Financing Costs --- 5,864
Principal Payments on Mortgage
Loans Payable (41,203) (20,783)
Dividends Paid to Shareholders (1,047,110) (1,047,110)
----------- -----------
Net Cash Used in Financing
Activities (1,145,784) (1,062,029)
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents (2,241,152) (6,240,469)
Cash and Cash Equivalents at
Beginning of Period 13,077,182 10,332,184
----------- -----------
Cash and Cash Equivalents at End
of Period $10,836,030 $ 4,091,715
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(SUPPLEMENTAL INFORMATION)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
Foreclosed Foreclosed
Activities Activities
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET INCOME (LOSS) $ (33,060) $ (89,911)
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used In) Operating
Activities:
Amortization of Premium on
Investment Securities --- ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses (155,834) (134,986)
Depreciation and Amortization --- ---
Amortization of Discount on
Mortgage Loans Receivable --- ---
Net Income From Operation
of Real Estate Ventures (26,623) (772)
Minority Interest Participation
in Consolidated Partnerships --- ---
Net Change In:
Interest Receivable on Mortgage
Loans and Investments (39,034) 10,585
Accounts Receivable --- ---
Due from Affiliates --- ---
Other Assets 21,220 2,932
Accounts Payable and Accrued
Expenses 58,073 (26,129)
Accrued Interest Payable --- ---
Accrued Real Estate Tax Payable --- ---
Unearned Revenue --- ---
Security Deposit Liability --- ---
----------- -----------
Net Cash Provided By (Used In)
Operating Activities (175,258) (238,281)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Real Estate
Assets --- ---
Additions to Investment in
Real Estate --- ---
Payment of Liabilities Assumed
at Acquisition of Real Estate
Assets --- ---
Proceeds From Sale of
Investment Securities --- ---
Other Liability 395,838 ---
Recovery of Losses on Loans,
Notes and Interest Receivable
and Class Action Settlement
Costs and Expenses 155,834 134,986
Purchase of Investment
Securities --- ---
Principal Collections on
Mortgage Loans Receivable --- ---
Due from Affiliates 730,229 (186,469)
(Distribution From) Investment
In Real Estate Ventures 39,066 (40,232)
Minority Interest Share of
Real Estate Investments --- ---
----------- -----------
Net Cash (Used In) Provided By
Investing Activities 1,320,967 (91,715)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Deferred Financing Costs --- ---
Reductions to Deferred
Financing Costs --- ---
Principal Payments on Mortgage
Loans Payable --- ---
Dividends Paid to Shareholders --- ---
----------- -----------
Net Cash Used in Financing
Activities --- ---
----------- -----------
Net (Decrease) Increase In Cash
and Cash Equivalents 1,145,709 (329,996)
Cash and Cash Equivalents at
Beginning of Period 1,691,988 3,289,636
----------- -----------
Cash and Cash Equivalents at End
of Period $ 2,837,697 $ 2,959,640
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
Readers of this quarterly report should refer to Banyan Strategic Realty
Trust's (the "Trust's") audited consolidated financial statements for the year
ended December 31, 1994 which are included in the Trust's 1994 Annual Report,
as certain footnote disclosures which would substantially duplicate those
contained in such audited statements have been omitted from this report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Trust, its wholly-owned subsidiaries and its controlled partnerships.
All intercompany balances and transactions have been eliminated in
consolidation. Investment in Real Estate Ventures are accounted for on the
equity method.
FINANCIAL STATEMENT PRESENTATION
Effective January 1, 1993, the Trust elected to provide supplemental
financial information in a format that segregates financial condition, results
of operations and cash flows between the Trust's new investments in real
estate assets (the "Investment Activities") and the management of the real
estate assets acquired in prior years through foreclosure (the "Foreclosed
Activities").
Certain reclassifications have been made to the previously reported 1994
financial statements in order to provide comparability with the 1995
consolidated financial statements. These reclassifications have not changed
the 1994 operating results. In the opinion of management, all adjustments
necessary for a fair presentation have been made to the accompanying
consolidated financial statements as of March 31, 1995 and for the three
months ended March 31, 1995 and 1994. These adjustments made to the financial
statements, as presented, are all of a normal recurring nature to the Trust,
unless otherwise indicated.
2. INVESTMENT IN SECURITIES
The Trust's investment securities portfolio at March 31, 1995 was as
follows:
Amortized
1995 Cost and
Estimated
Fair Value at
Name of Issuer and Title Principal March 31,
of Each Issue 1995
Amount
Federal Farm Credit $ 1,020,000 $ 1,019,940
Bank Bond, 4.43%,
12/01/94-04/03/95 (a)
U.S. Treasury Note, 685,000 684,789
5.88%, 01/03/95-
05/15/95
Federal Home Loan 795,000 802,626
Mortgage Corp., 11.15%,
02/01/95-06/12/95 (b)
----------- -----------
$ 2,500,000 $ 2,507,355
=========== ===========
(a) The certificate is guaranteed as to the timely payment of principal and
interest by the Federal Farm Credit Bank.
(b) The certificate is guaranteed as to the timely payment of principal and
interest by the Federal Home Loan Mortgage Corporation.
3. INVESTMENT IN JOINT VENTURES
The summary income statement information for the H Street Assemblage and
Plaza at Westminster unconsolidated ventures for the three months ended March
31, 1995 and 1994 is as follows:
1995 1994
Total Revenues $ 399,454 $ 361,644
========== ===========
Net Income $ 127,286 $ 65,663
========== ===========
4. DUE FROM AFFILIATES
The Trust has entered into a partnership agreement with Banyan Strategic
Land Fund II ("BSLFII"), an affiliate, regarding the ownership and operation of
the H Street Assemblage (the "Venture"). Under the terms of this Agreement the
Trust has the right, but is not obligated, to advance expenditures on behalf of
BSLFII. During 1994 and 1993, the Trust advanced to the Venture all funds
expended on the H Street Assemblage, including BSLFII's portion. As provided in
the Venture's partnership agreement, all advances made by the Trust for BSLFII's
share of the Venture's expenses bore interest at a rate of prime plus 2% per
annum until repaid. As of December 31, 1994, the Trust's total receivable from
BSLFII was approximately $730,000. On March 24, 1995, BSLFII repaid the
December 31, 1994 outstanding balance of approximately $730,000 to the Trust.
As of March 31, 1995, the H Street advances, and all interest thereon, made by
the Trust have been repaid in full by BSLFII.
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 Fund and other entities to which BMC provides
administrative services based upon the actual number of hours spent by BMC
personnel on matters related to that Fund. The Trust's costs for the three
months ended March 31, 1995 and 1994 aggregated $312,323 and $285,160,
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, 1995, the Trust had a net payable due to BMC of $31,382. The net
payable is included in accounts payable and accrued expenses in the Trust's
Consolidated Balance Sheet.
The Trust's allocated charges related to Reinvestment Activities and
Foreclosed Activities for the three months ended March 31, 1995 were $224,389
and $87,934, respectively. The Trust's allocated charges related to Reinvestment
Activities and Foreclosed Activities for the three months ended March 31, 1994
were $205,322 and $79,838, respectively.
6. RECOVERY OF LOSSES ON LOANS, NOTES AND INTEREST RECEIVABLE AND CLASS
ACTION SETTLEMENT COSTS AND EXPENSES
On February 9, 1995, the Trust received a cash distribution of $551,672
related to its interest in a liquidating trust established for the benefit of
the unsecured creditors of VMS Realty Partners and its affiliates ("VMS"). For
the quarter ended March 31, 1995, the Trust recorded a $155,834 recovery of
losses on mortgage loans, notes and interest receivable on its consolidated
statement of income and expenses related to the distribution received from the
liquidating trust. The $155,834 net recovery recorded in 1995 represents the
$551,672 distribution received net of an estimated $395,838 due to the Class
Action Settlement Fund representing the Trust's share of amounts due per the
terms of the previously settled VMS securities litigation. As of March 31,
1995, the Trust has recorded $686,169 as an Other Liability as the total
estimated amount due to the Class Action Settlement Fund per the terms of the
settlement.
On January 25, 1994, the Trust received net proceeds of $134,986 relating
to a recovery of payments previously made into an escrow established as part of
the 1992 Class Action Settlement of the VMS securities litigation. The escrow
was established to provide trustees of the Trust with monies to fund the cost of
any litigation in which they may be named as defendants following settlement of
the class action. Subsequently, the trustees have released the proceeds from
the escrow and the Trust has purchased an insurance policy to cover the
trustees.
7. SUBSEQUENT EVENT
DIVIDEND
On April 6, 1995, the Trust declared a cash dividend for the quarter ended
March 31, 1995 of $0.10 per share payable May 20, 1995 to shareholders of record
on April 20, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Banyan Strategic Realty Trust (the "Trust") was originally established to
make mortgage loans principally to entities affiliated with VMS Realty Partners
which planned to acquire and develop strategically located properties not then
at their highest and best use. The Trust has ceased funding such mortgage
loans. The current business plan of the Trust is to invest its cash and cash
equivalents into additional real estate assets and to manage these real estate
assets in a manner which will increase the Trust's cash flow over time. During
1994 and 1993, the Trust obtained a line of credit, completed mortgage financing
on the Elmhurst and Milwaukee properties and secured enhancement of a bond
financing on the Columbus property. The cash proceeds generated pursuant to
these transactions provide the Trust with additional capital for the continued
acquisition of income producing properties, the potential acquisition of
mortgage loans and for general corporate needs. The Trust further intends to
liquidate its real estate assets acquired through foreclosure which include the
H Street Assemblage and the Plaza at Westminster and to reinvest the proceeds
from these liquidations into additional real estate investments.
Effective January 1, 1993, the Trust elected to provide supplemental
financial information in a format that presents the financial condition, results
of operations and cash flows from the investment of the Trust's cash and
investment securities into new real estate opportunities (the "Investment
Activities") and the management of the real estate assets acquired through
foreclosure (the "Foreclosed Activities"). Returns on Investment Activities
include the interest earned on investment securities and cash and cash
equivalents and the new real estate assets acquired during 1993 and 1994 offset
by the incremental costs associated with the investment efforts. Returns on
Foreclosed Activities include the results of managing the foreclosed real estate
assets plus the costs associated with maintaining the Trust.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments. The
Trust's cash and cash equivalents balance at March 31, 1995 and December 31,
1994 was $13,673,727 and $14,769,170, respectively. In addition, the Trust, at
March 31, 1995 and December 31, 1994 held $2,507,355 and $1,017,236,
respectively, in investment securities which are immediately convertible to
cash. The increase in total cash, cash equivalents and investment securities of
approximately $395,000 is primarily due to the Trust's receipt of a $551,672
cash distribution received relating to the Trust's interest in the liquidating
trust (see below), a $730,229 repayment from Banyan Strategic Land Fund II
("BSLFII") for advances made on behalf of BSLFII for H Street Assemblage
expenditures (see below), the Trust's receipt of interest income from lending
and investing activities of approximately $447,000 as well as cash receipts from
property operations totalling approximately $2,063,000. Partially offsetting
these cash receipts was the Trust's payment of distribution to shareholders of
$1,047,110, additions to investment in real estate of $83,027, principal
payments on mortgage loans payable of $41,203, deferred financing costs of
$57,471 and the payment of the Trust's operating expenses totalling
approximately $1,991,000.
The Trust has entered into a partnership agreement with Banyan Strategic
Land Fund II ("BSLFII"), an affiliate, regarding the ownership and operation of
the H Street Assemblage (the "Venture"). Under the terms of this Agreement the
Trust has the right, but is not obligated, to advance expenditures on behalf of
BSLFII. During 1994 and 1993, the Trust advanced to the Venture all funds
expended on the H Street Assemblage, including BSLFII's portion. As provided in
the Venture's partnership agreement, all advances made by the Trust for BSLFII's
share of the Venture's expenses bore interest at a rate of prime plus 2% per
annum until repaid. As of December 31, 1994, the Trust's total receivable from
BSLFII was approximately $730,000. On March 24, 1995, BSLFII repaid the
December 31, 1994 outstanding balance of approximately $730,000 to the Trust.
As of March 31, 1995, the H Street advances, and all interest thereon, made by
the Trust have been repaid in full by BSLFII.
On February 9, 1995, the Trust received a cash distribution of $551,672
related to its interest in a liquidating trust established for the benefit of
the unsecured creditors of VMS Realty Parters and its affiliates ("VMS"). For
the quarter ended March 31, 1995, the Trust recorded a $155,834 recovery of
losses on mortgage loans, notes and interest receivable on its consolidated
statement of income and expenses related to the distribution received from the
liquidating trust. The $155,834 net recovery recorded in 1995 represents the
$551,672 distribution received net of an estimated $395,838 due to the Class
Action Settlement Fund representing the Trust's share of amounts due per the
terms of the previously settled VMS securities litigation. As of March 31,
1995, the Trust has recorded $686,169 as an Other Liability as the total
estimated amount due to the Class Action Settlement Fund per the terms of the
settlement.
The Trust's future liquidity is expected to be generated by the operating
cash flow from Investment Activities, the sale or refinancing of the assets
acquired through foreclosure, interest earned on the Trust's investment
securities and short-term investments and to a lesser extent the potential
receipt of distributions from the liquidating trust. Cash may be expended to
maintain, operate and dispose of the "Foreclosed Activity" properties. The
Trust's investment securities and cash and cash equivalents, as well as cash
flow from "Investment Activity" properties, are expected to be sufficient to
meet its reasonably anticipated needs for liquidity and capital resources in the
near future. During 1995, the Trust anticipates making additional investments
in operating properties which could have an effect on future liquidity of the
Trust. In addition, the Trust anticipates continuing the $0.10 per share
quarterly distribution for the remainder of 1995.
As of March 31, 1995 and December 31, 1994, the Trust's mortgage loan
portfolio consisted of five mortgage loans receivable with aggregate carrying
values totaling $5,204,104 and $5,136,229, respectively, net of $1,722,096 and
$1,808,716 of unamortized discounts, respectively. During the quarter ended
March 31, 1995, the Trust received principal and interest totalling $10,883 and
$160,291, respectively. During the quarter ended March 31, 1994, the Trust
received principal and interest totalling $5,705 and $161,241, respectively.
Management reviews the investment properties held by the Trust on a
quarterly basis and, when it has been determined that a permanent impairment in
the value of a given property has occurred, the property's carrying value is
then written down to its fair value. On a quarterly basis, management also
reviews each mortgage loan in the Trust's portfolio and provides allowances as
deemed necessary. The estimate of the aggregate allowances is based upon a
number of factors, including analysis of the value of the collateral and, in
certain cases, evaluation of the disposition strategy which includes ongoing
negotiations regarding the disposition of this collateral as well as
consideration of the general business conditions affecting the Trust's
portfolio.
The Trust's ability to make distributions to its shareholders is dependent
upon, among other things: (i) the operating performance of the existing and new
real estate investments; (ii) the ability to redeploy cash proceeds in new
investments derived from the sale of assets of Foreclosed Activities; (iii)
increases in the eventual sales price of the Trust's properties; (iv) the
potential receipt of cash distributions from the liquidating trust; (v) the
Trust's ability to control its operating expenses; and (vi) the general
improvement of conditions in the real estate markets where the Trust's
properties are located.
RESULTS OF OPERATIONS
Total income for the three months ended March 31, 1995 increased to
$2,509,475 from $1,672,934 for the three months ended March 31, 1994. The
increase for the three months ended March 31, 1995 as compared to the same
period in 1994 is due primarily to increases in property operating revenue of
approximately $746,000 (see below) and interest income on investments of
approximately $90,000. Interest income on investments at March 31, 1995
increased when compared to the prior year's period due to the increase in cash
available for investment and an increase in the rate of return on investments.
Industrial property operating revenue increased by approximately $89,000,
which is primarily the result of an increase in rental income at the Trust's
Elmhurst Metro Court property ("Elmhurst"). Rental income at Elmhurst increased
due to an increase in occupancy to 94% at March 31, 1995 as compared to 75% for
the same period in 1994. This increase in occupancy is the result of the
execution of approximately 26,000 square feet of new leases pursuant to its
business plan to remarket the available space at Elmhurst. The occupancy level
for the Milwaukee Industral properties was 98% at March 31, 1995, as compared to
100% for the same period in 1994.
Residential property operating revenue increased by approximately $46,000
resulting primarily from an increase in rental income at the Hallmark Village
Apartments property ("Hallmark"). An increase in rental income at the Hallmark
property was achieved as a result of the Trust's aggressive collection efforts
in 1995 which reduced delinquent rental payments. The occupancy level as of
March 31, 1995 for the Hallmark property is 85%. The Colonial Courts of
Westland Apartments ("Colonial Courts") occupancy level at March 31, 1995 and
1994 was 89% and 93%, respectively.
Commercial property operating revenue increased by approximately $611,000
which is attributable to the acquisition of the Colonial Penn and Florida Power
and Light office buildings in late March of 1994. Occupancy levels at the
Colonial Penn and Florida Power and Light office buildings remained unchanged at
March 31, 1995 of 100% and 90%, respectively, when compared to the same period
in 1994.
Total expenses for the three months ended March 31, 1995 increased to
$1,834,761 from $1,349,401 for the three months ended March 31, 1994. This
increase is due to increases in expenses from property operating activities of
approximately $408,000 and an increase in total other expenses of approximately
$78,000. The increase in property operating expenses for 1995 is primarily
attributable to the acquisition of the Trust's properties during 1994 as
discussed above which contributed to approximately $274,000 of this increase.
In addition, property operating expenses increased in 1995 due to an increase in
the interest expense of approximately $142,000 relating to the Trust's financing
of the Elmhurst and Colonial Courts properties in December 1994. Total other
expenses increased due primarily to an increase in general and administrative
expenses and an increase in recovery of losses on loans notes and interest
receivable and class action settlement costs and expenses at March 31, 1995 when
compared to the same period in 1994. The increase in general and administrative
expenses is attributable to an increase in hours allocated to the Trust by
Banyan Management Corp. personnel related to the Trust's reinvestment activities
and supervision of its newly-acquired assets. During the quarter ended March
31, 1995, the Trust recorded a $155,834 recovery of losses on loans, notes and
interest receivable, as mentioned in Liquidity Capital Resources. During the
quarter ended March 31, 1994, the Trust recorded a $134,986 recovery of class
action settlement costs and expenses relating to the release of an escrow
established as part of the 1992 class action settlement of the VMS securities
litigation. This increase was partially offset by decreases in shareholder
expenses and other professional fees. The decrease in shareholder expenses is
due to the timing of the payment for annual report and proxy costs of the
Trust. The decrease in other professional fees was due to nonrecurring 1994
professional fees associated with the acquisition of the new real estate costs
incurred for the Trust's assets.
For the quarter ended March 31, 1995, the Trust recognized net income from
the operations of real estate ventures of $26,623, as compared to net income of
$772 for the same period in 1994. The operations of real estate ventures for
the three months ended March 31, 1995 resulted in income from operations on the
Plaza at Westminster property of $56,222 which was offset by a loss from
operations of $29,599 on the H Street property. The increase in net income from
operations of real estate ventures is primarily due to a decrease in the net
loss on the H Street property for 1995 as compared to 1994. The decrease in net
loss resulted from a reduction of legal costs paid in 1994 relating to the
successful real estate tax appeal which reduced the property's assessed taxable
value in 1994. During 1994, the Trust completed and obtained the zoning,
entitlement and historic preservation rights for the H Street Assemblage. The
Trust has not made any significant capital expenditures on this asset and is
allowing occupancy to decline by selectively retenanting the Victor building at
the H Street property with short term leases so that the building will be more
marketable to a potential buyer which would need to vacate the Victor Building
before its redevelopment. The Venture is currently marketing the H Street
Assemblage for sale. For the three months ended March 31, 1994, operations of
real estate ventures resulted in income from operations on the Plaza at
Westminster property of $46,847 which was offset by a loss from operations of
$46,075 on the H Street Assemblage.
The factors discussed above resulted in consolidated net income of
$684,395 ($0.07 per share) for the quarter ended March 31, 1995 as compared to a
consolidated net income of $319,381 ($0.03 per share) for the quarter ended
March 31, 1994.
An objective of the Trust is to provide cash distributions to the share-
holders from cash generated from the Trust's operations as discussed above.
Cash generated from operations is generally not equivalent to the Trust's net
operating income as determined under generally accepted accounting principles.
Due to certain unique operating characteristics of real estate companies, the
Real Estate Investment Trust ("REIT") industry has adopted a standard for
comparing operating performance within the industry. Funds from operations
("FFO") is defined as net operating income excluding extraordinary items plus
depreciation and amortization from real property and after adjustments for
consolidated entities in which the REIT holds an interest. FFO is not intended
to be a measure of the cash generated by a REIT nor its dividend paying
capacity. However, a REIT's dividend can be analyzed in comparison to FFO in a
similar manner as a company that is not a REIT would compare its dividend to net
operating income.
The Trust provides supplemental information on the results from the
reinvestment activities as well as on the consolidated results. For the
quarters ended March 31, 1995 and 1994, the Trust's reinvestment activities,
including interest received on the Karfad Loan Portfolio, generated FFO of
$953,368 ($0.09 per share) and $542,010 ($0.05 per share), respectively. For
the quarters ended March 31, 1995 and 1994, the Trust's consolidated activities
generated FFO of $781,910 ($0.07 per share) and $334,096 ($0.03 per share),
respectively. Excluding the effect of the 1994 property acquisitions,
consolidated net income and FFO for the quarter ended March 31, 1995 each
increased by $30,000 when compared to the prior year's period as a result of the
increased performance of the Trust's existing operating properties.
FFO for the three months ended March 31, 1995 is calculated as follows:
Investment Consolidated
Net Income $ 717,455 $ 684,395
Plus:
Depreciation expense 244,118 244,118
Depreciation inclu-
ded in Operations
of Real Estate
Ventures --- 17,436
Lease Commission
Amortization 7,241 7,241
Less:
Minority Interest
Share of Depre-
ciation Expense (14,722) (14,722)
Minority Interest
Share of Lease
Commission
Amortization (724) (724)
Recovery of Losses on
Mortgage Loans,
Notes and Interest
Receivable --- (155,834)
--------- ---------
Funds From Operations $ 953,368 $ 781,910
========= =========
The Trust paid dividends equal to $0.10 per share on February 24, 1995 and
February 25, 1994 for the fourth quarters of 1994 and 1993, respectively. On
April 6, 1995, the Trust declared a cash dividend for the first quarter of 1995
of $0.10 per share payable May 20, 1995 to shareholders of record on April 20,
1995.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are included with this Report.
(b) On January 17, 1995 a current report on Form 8-K was filed wherein
Item 5, Other Information, disclosed the terms of a $15,000,000
Revolving Line of Credit and other various mortgage financing
collateralized by the Trust's properties.
SIGNATURES
PURSUANT to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
BANYAN STRATEGIC REALTY TRUST
By: /s/ Leonard G. Levine Date: May 11, 1995
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: May 11, 1995
Joel L. Teglia, Vice President
Finance and Administration, Chief
Financial and Accounting Officer