SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A - Number 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 1998
BANYAN STRATEGIC REALTY TRUST
(Exact name of Registrant as specified in its charter)
Massachusetts 0-15465 36-3375345
(State of or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
This document consists of 20 pages.
Exhibit index is located on page 2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
a) Financial Statements.
(i) Technology Park/Johns Creek Park Properties
(See Attached).
b) Pro Forma Financial Information
c) EXHIBIT NUMBER DESCRIPTION
Exhibit (3)(c)
and (3)(d) Amended and Restated Declaration of
Trust dated as of August 8, 1986, as amended on March 8, 1991, May 4, 1993
and August 12, 1998, including Certificate of designations, preferences and
rights of Series A convertible preferred shares
Exhibit (10)(vii) First Amendment to Loan Agreement dated
September 11, 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 Park L.L.C., and BSRT University Corporate
Center L.L.C., as Borrower, and the Capital Company of America LLC, as
Lender.
Exhibit (10)(viii) First Amendment to Loan Agreement dated
September 11, 1998 between BSRT Lexington B Corp., and BSRT Lexington
Trust, as Borrower and the Capital Company of America LLC, as Lender.
Exhibit (10)(ix) First Amendment to Loan Agreement dated
September 11, 1998 between Banyan/Morgan Wisconsin L.L.C., as Borrower, and
Banyan/Morgan Elmhurst L.L.C., as Lender and the Capital Company of America
LLC, as Borrower.
Exhibit (23) Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:October 1, 1998 BANYAN STRATEGIC REALTY TRUST
(Registrant)
By: /s/ Joel L. Teglia
-----------------------
Vice President,
Chief Financial and
Accounting Officer
a) FINANCIAL STATEMENTS
(i) TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
---------------------------------------------
Combined Statements of Revenue and
Certain Expenses
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
For the year ended December 31, 1997 and
For the period from January 1, 1998
to August 14, 1998
Report of Independent Auditors
The Board of Directors
Banyan Strategic Realty Trust
We have audited the accompanying Combined Statements of Revenue and Certain
Expenses of the Technology Park/Johns Creek Park Properties (the
Properties) for the year ended December 31, 1997 and for the period from
January 1, 1998 to August 14, 1998. These Combined Statements of Revenue
and Certain Expenses are the responsibility of the Properties' management.
Our responsibility is to express an opinion on these Statements of Revenue
and Certain Expenses based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Combined Statements of
Revenue and Certain Expenses are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Combined Statements of Revenue and Certain Expenses. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the Combined Statements of Revenue and Certain Expenses.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Current Report on
Form 8-K/A of Banyan Strategic Realty Trust as described in Note 2 and is
not intended to be a complete presentation of the Properties' combined
revenue and expenses.
In our opinion, the Combined Statements of Revenue and Certain Expenses
referred to above present fairly, in all material respects, the combined
revenue and certain expenses described in Note 2 of the Properties for the
year ended December 31, 1997 and for the period from January 1, 1998 to
August 14, 1998 in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Chicago, Illinois
September 10, 1998
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Combined Statements of Revenue and Certain Expenses
(Amounts in thousands)
Period from
January 1,
Year ended 1998 to
December 31, August 14,
1997 1998
----------- -----------
REVENUE
Rental. . . . . . . . . . . . . . . . . $ 2,068 $ 1,348
Other . . . . . . . . . . . . . . . . . 259 164
------- -------
Total revenue . . . . . . . . . 2,327 1,512
------- -------
Expenses
Real estate taxes . . . . . . . . . . . 183 106
General operating . . . . . . . . . . . 227 142
Utilities . . . . . . . . . . . . . . . 134 92
Management fees . . . . . . . . . . . . 98 73
Insurance . . . . . . . . . . . . . . . 21 14
------- -------
Total expenses. . . . . . . . . 663 427
------- -------
Revenue in excess of certain expenses . . $ 1,664 $ 1,085
======= =======
See accompanying notes.
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Notes to Combined Statements of Revenue and Certain Expenses
1. BUSINESS
The accompanying Combined Statements of Revenue and Certain Expenses relate
to the operations of the Technology Park/Johns Creek Park Properties (the
Properties), which consist of five office buildings located in northeast
metro-Atlanta, Georgia totaling 265,012 square feet. The Properties
include:
Address Park Square Feet
205 Scientific Drive, Norcross Technology Park 21,380
302 Research Drive, Norcross Technology Park 58,157
303 Research Drive, Norcross Technology Park 66,132
11455 Lakefield Drive, Duluth Johns Creek Park 59,343
3851 Lakefield Drive, Swanee Johns Creek Park 60,000
The properties were acquired by Banyan Strategic Realty Trust ("Banyan") on
August 14, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Current Report on
Form 8-K/A of Banyan. The Combined Statements of Revenue and Certain
Expenses are not representative of the actual operations of the Properties
for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization, interest and asset
management fees, which may not be comparable to the expenses expected to be
incurred by Banyan in future operations of the Properties, have been
excluded. The operations of the Properties have been presented on a
combined basis because all of the Properties have been under common
ownership.
Revenue and Expense Recognition
Rental income is recognized as revenue on a straight line basis over the
terms of the operating leases. Expenses are recognized in the period in
which they are incurred.
TECHNOLOGY PARK/JOHNS CREEK PARK PROPERTIES
Notes to Combined Statements of Revenue and Certain Expenses
(continued)
Use of Estimates
The preparation of the Combined Statements of Revenue and Certain Expenses
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
3. MANAGEMENT FEES
During the year ended December 31, 1997 and the period from January 1, 1998
to August 14, 1998, the Property paid a property management fee totaling
$98,671 and $73,181, respectively, to an unrelated third party. The fee
was paid monthly and was based on 2% -5% of gross receipts and an
allocation of the property supervisor's salary depending on the property.
4. LEASES AND SIGNIFICANT TENANTS
The Properties had six tenants which accounted for approximately 78% and
69% of the total rental income earned for the year ended December 31, 1997
and the period from January 1, 1998 to August 14, 1998, respectively.
b) PRO FORMA FINANCIAL INFORMATION
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented assuming that as of June 30, 1998, the Trust acquired Johns Creek
Park and Technology Park properties.
This unaudited Pro Forma condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would have
been at June 30, 1998, nor does it purport to represent the future
financial position of the Trust.
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
(Dollars in thousands)
Technology
Park /
Johns Creek Pro
Historical Park Forma
----------- ----------- -----------
ASSETS
Investment in Real Estate, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . $ 36,326 $ 2,420 $ 38,746
Building. . . . . . . . . . . . . . . . . . . . 156,612 15,761 172,373
Building Improvements . . . . . . . . . . . . . 6,475 -- 6,475
----------- ----------- -----------
199,413 18,181 217,594
Less: Accumulated Depreciation . . . . . . . (8,773) -- (8,773)
----------- ----------- -----------
190,640 18,181 208,821
----------- ----------- -----------
Cash and Cash Equivalents . . . . . . . . . . . . 4,275 110 4,385
Restricted Cash . . . . . . . . . . . . . . . . . 2,989 -- 2,989
Interest and Accounts Receivable. . . . . . . . . 959 -- 959
Deferred Financing Costs, net . . . . . . . . . . 1,880 54 1,934
Other Assets. . . . . . . . . . . . . . . . . . . 3,029 49 3,078
----------- ----------- -----------
Total Assets. . . . . . . . . . . . . . . . . $ 203,772 $ 18,394 $ 222,166
=========== =========== ===========
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
Technology
Park /
Johns Creek Pro
Historical Park Forma
----------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses . . . . . . $ 2,275 $ 30 $ 2,305
Accrued real estate taxes payable . . . . . . . . 1,786 115 1,901
Mortgage loans payable. . . . . . . . . . . . . . 110,923 18,100 129,023
Bonds payable . . . . . . . . . . . . . . . . . . 21,537 -- 21,537
Accrued interest payable. . . . . . . . . . . . . 603 -- 603
Unearned revenue. . . . . . . . . . . . . . . . . 901 115 1,016
Security deposits . . . . . . . . . . . . . . . . 1,286 34 1,320
----------- ----------- -----------
Total liabilities . . . . . . . . . . . . . . 139,311 18,394 157,705
----------- ----------- -----------
Minority interest in consolidated partnerships. . 2,051 -- 2,051
SHAREHOLDERS' EQUITY
Shares of beneficial interest . . . . . . . . . . 119,390 -- 119,390
Accumulated deficit . . . . . . . . . . . . . . . (49,614) -- (49,614)
Treasury shares at cost . . . . . . . . . . . . . (7,366) -- (7,366)
----------- ----------- -----------
Total shareholders' equity. . . . . . . . . . 62,410 -- 62,410
----------- ----------- -----------
Total liabilities and shareholders' equity. . $ 203,772 $ 18,394 $ 222,166
=========== =========== ===========
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
The unaudited Pro Forma Condensed Consolidated Statements of
Operations for the six months ended June 30, 1998 is presented as if each
of the 1998 acquisition properties ("1998 Acquisition Properties") had been
acquired as of January 1, 1998.
The unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 is presented as if the following had
occurred as of January 1, 1997; (a) the acquisition of the 1998 Acquisition
Properties; (b) the acquisition and disposition of various properties
during 1997; (c) the October, 1997 issuance of 2,192,501 shares of
beneficial interest the proceeds of which were used to repay borrowings
under a line of credit of $9 million.
These unaudited Pro Forma Condensed Consolidated Statements of
Operations have been prepared by management of the Trust and do not purport
to be indicative of the results which would actually have been obtained had
the transactions described above had been completed on the dates indicated
or which may be obtained in the future.
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
(Dollars in thousands, except per share data)
1998 Acquisitions (A)
----------------------------------------------------------
Tech-
nology
Park/ Pro
Peach- Orlando Johns Forma
Histor- tree Avalon Avalon Tower Port- Creek Adjust- Pro
ical Pointe Center Ridge Lane folio Park ments Forma
-------- -------- -------- -------- -------- -------- -------- -------- --------
Revenue:
Rental income. . $ 16,003 $ 44 $ 57 $ 20 $ 201 $ 889 $ 1,084 $ -- $ 18,298
Operating cost
reimbursement . 1,570 -- 3 -- -- 111 132 -- 1,816
Miscellaneous
tenant income . 533 -- -- -- 7 1 -- -- 541
Income on
investments . . 115 -- -- -- -- -- -- -- 115
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenue . . 18,221 44 60 20 208 1,001 1,216 -- 20,770
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses:
Property
operating . . . 6,296 7 15 10 61 276 343 -- (B) 7,008
Interest . . . . 4,230 -- -- -- -- -- -- 1,668(C) 5,898
Depreciation and
amortization. . 2,305 -- -- -- -- -- -- 397(D) 2,702
General and admin-
istrative . . . 2,176 -- -- -- -- -- -- -- 2,176
Amortization of
deferred loan
fees and
financing
costs . . . . . 141 -- -- -- -- -- -- 20(D) 161
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Expenses. . 15,148 7 15 10 61 276 343 2,085 17,945
-------- -------- -------- -------- -------- -------- -------- -------- --------
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1998 Acquisitions (A)
----------------------------------------------------------
Tech-
nology
Park/ Pro
Peach- Orlando Johns Forma
Histor- tree Avalon Avalon Tower Port- Creek Adjust- Pro
ical Pointe Center Ridge Lane folio Park ments Forma
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income before
minority
interest . . . . $ 3,073 $ 37 $ 45 $ 10 $ 147 $ 725 $ 873 $ (2,085) $ 2,825
Minority in-
terest in
consolidated
partnerships . . (298) -- -- -- -- -- -- (39) (337)
Extraordinary
item, net of
minority
interest . . . . (141) -- -- -- -- -- -- 141(E) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income. . . . $ 2,634 $ 37 $ 45 $ 10 $ 147 $ 725 $ 873 $ (1,983) $ 2,488
======== ======== ======== ======== ======== ======== ======== ======== ========
Weighted number
of shares out-
standing -
Basic. . . . . .13,267,394 13,267,394
Per share -
Basic. . . . . .$ 0.20 $ 0.19
========== ==========
Weighted number
of shares out-
standing -
Diluted. . . . .13,909,705 13,909,705
Per share -
Diluted. . . . .$ 0.19 $ 0.18
========== ==========
- ---------------
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
<FN>
(A) These adjustments relate to certain properties acquired subsequent to December 31, 1997 and include each
property's operations for the period of time from January 1, 1998 through its respective date of acquisition or
June 30, 1998 if acquired subsequent to that date.
(B) The pro forma adjustment to reflect management fees and insurance expense assuming the Trust's operating
cost structure is immaterial.
(C) The pro forma adjustment reflects the increase in interest expense relating to acquired properties. These
properties, except Tower Lane, were acquired using variable interest rate debt. Avalon Ridge was under
construction and did not start operations until March of 1998. Interest for Avalon Ridge was capitalized during
its construction period. If the variable interest rate was higher by 0.125% for all variable rate debt, the pro
forma interest expense would be $5,924.
(D) The pro forma adjustment reflects depreciation for the acquisition properties (calculated using the
straight-line method with a 40 year useful life), and amortization of additional loan costs relating to debt for
acquisition properties.
(E) To eliminate extraordinary item on debt refinancing.
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(Dollars in thousands, except per share data)
1997 1997
Acquisitions Dispositions
Historical (A) (B)
---------- ------------ ------------
Revenue:
Rental income . . . . . $ 25,370 $ 4,795 $(1,242)
Operating cost reimburse-
ment. . . . . . . . . 2,441 112 --
Miscellaneous tenant
income. . . . . . . . 707 161 (170)
Income on investments . 267 -- --
------- ------- -------
Total revenue . . . . . . 28,785 5,068 (1,412)
------- ------- -------
Expenses:
Property operating. . . 10,689 2,104 (1,162)
Interest expense. . . . 6,447 404 (297)
Depreciation and
amortization. . . . . 3,490 -- (222)
General and administra-
tive. . . . . . . . . 4,315 -- --
Amortization of deferred
loan fees and financing
costs . . . . . . . . 723 -- (54)
Recovery of losses on
loans, notes and
interest receivable . (161) -- --
------- ------- -------
Total expenses. . . . . . 25,503 2,508 (1,735)
------- ------- -------
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1997 1997
Acquisitions Dispositions
Historical (A) (B)
---------- ------------ ------------
Income before minority
interest and income
from operations of
real estate venture . . $ 3,282 $ 2,560 $ 323
Minority interest in
consolidated partner-
ships . . . . . . . . . (590) -- 20
Income (loss) from
operations of real
estate venture. . . . . 37 -- (37)
Gain on disposition and
extraordinary item. . . 817 -- (881)
------- ------- -------
Net income. . . . . . . . $ 3,546 $ 2,560 $ (575)
======= ======= =======
Weighted number of shares
outstanding - Basic. . . 11,149,982
Per share - Basic . . . . $0.32
==========
Weighted number of shares
outstanding - Diluted. . 11,245,242
Per share - Diluted . . . $0.32
==========
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1998 Acquisitions (C)
----------------------------------------------------------------
Johns Creek
Peach- Orlando and
tree Avalon Avalon Tower Port- Technology Pro Forma
Pointe Center Ridge Lane folio Park Adjustments Pro Forma
-------- -------- -------- -------- -------- ----------- ---------- ---------
Revenue:
Rental income . . . . $ 868 $ 107 $ -- $ 792 $ 2,399 $ 2,068 $ -- $ 35,157
Operating cost reimburse-
ment. . . . . . . . 43 7 -- -- 339 259 -- 3,158
Miscellaneous tenant
income. . . . . . . 8 -- -- 3 34 -- -- 786
Income on investments -- -- -- -- -- -- -- 267
------- ------- ------- ------- ------- -------- ------ -------
Total revenue . . . . . 919 114 -- 795 2,772 2,327 -- 39,368
------- ------- ------- ------- ------- -------- ------ -------
Expenses:
Property operating. . 485 27 1 255 832 663 -- (D) 13,894
Interest expense. . . -- -- -- -- -- -- 5,108 (E) 11,662
Depreciation and
amortization. . . . -- -- -- -- -- -- 1,541 (F) 4,809
General and administra-
tive. . . . . . . . -- -- -- -- -- -- -- 4,315
Amortization of deferred
loan fees and financing
costs . . . . . . . -- -- -- -- -- -- 125 (F) 794
Recovery of losses on
loans, notes and
interest receivable -- -- -- -- -- -- -- (161)
------- ------- ------- ------- ------- ------ ------- -------
Total expenses. . . . . 485 27 1 255 832 663 6,774 35,313
------- ------- ------- ------- ------- ------ ------- -------
BANYAN STRATEGIC REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - CONTINUED
1998 Acquisitions (C)
----------------------------------------------------------------
Johns Creek
Peach- Orlando and
tree Avalon Avalon Tower Port- Technology Pro Forma
Pointe Center Ridge Lane folio Park Adjustments Pro Forma
-------- -------- -------- -------- -------- ----------- ---------- ---------
Income before minority
interest and income
from operations of
real estate venture . $ 434 $ 87 $ (1) $ 540 $ 1,940 $ 1,664 $(6,774) $ 4,055
Minority interest in
consolidated partner-
ships . . . . . . . . -- -- -- -- -- -- (135) (705)
Income (loss) from
operations of real
estate venture. . . . -- -- -- -- -- -- -- --
Gain on disposition and
extraordinary item. . -- -- -- -- -- -- 64 (G) --
------- ------- ------- ------- ------- ------- ------- --------
Net income. . . . . . . $ 434 $ 87 $ (1) $ 540 $ 1,940 $ 1,664 $(6,845) $ 3,350
======= ======= ======= ======= ======= ======= ======= ========
Weighted number of shares
outstanding - Basic. . 13,125,324
Per share - Basic . . . $ 0.26
==========
Weighted number of shares
outstanding - Diluted. 13,584,994
Per share - Diluted . . $ 0.25
==========
- ----------------
<FN>
(A) These adjustments relate to certain properties acquired subsequent to December 31, 1996 and include each
property's operations for the period of time from January 1, 1997 through its respective date of acquisition.
(B) The Dispositions column eliminates the historical revenues and expenses of certain properties that were sold
prior to December 31, 1997.
(C) The 1998 Acquisitions columns reflect the 1997 historical revenues and operating expenses of properties
acquired after December 31, 1997.
(D) The pro forma adjustment to reflect management fees and insurance expense assuming the Trusts operating cost
structure is immaterial.
(E) The pro forma adjustment reflects the increase in interest expense relating to acquired properties, net of
the decrease in interest expense resulting from the repayment of debt utilizing proceeds received from the sale of
properties and the issuance of shares. Avalon Ridge was under construction for the whole year of 1997, and the Avalon
Center was under construction until August of 1997. Interest for Avalon Center and Avalon Ridge was capitalized during
the periods the properties were under construction. The Trust used variable interest rate debt to purchase various of
its properties. If the variable rate was higher by 0.125% for all variable rate debt, the pro forma interest expense
would be $11,724.
(F) The pro forma adjustment reflects the depreciation expense for 1997 and 1998 acquisition properties
(calculated using the straight-line method with a 40 year useful life), and amortization of additional loan costs
relating to debt for acquisition properties and costs relating to the unsecured corporate financing completed on October
14, 1997.
(G) To eliminate extraordinary item on debt refinancing.