UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 1, 1999
(Date of earliest event reported)
Inland Retail Real Estate Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland 333-64391 36-4246655
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2901 Butterfield Road
Oak Brook, Illinois 60523
(Address of principal executive offices)
(630) 218-8000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
-1-
Item 2. Acquisition or Disposition of Assets
On July 1, 1999, we purchased approximately 8 acres improved with 72,108 gross
leasable square feet of an existing 159,758 square foot shopping center known
as Town Center Commons by acquiring the interests of Inland Southeast
Investment Corporation and Inland Southeast Acquisition Corp. (collectively,
the "Town Center Affiliates"), both of which are affiliates of our Advisor, in
Inland Southeast Town Center Limited Partnership (the "Town Center Property
Partnership"). The Town Center Property Partnership owns the entire fee simple
interest in only the 72,108 gross leasable square feet of Town Center Commons
we purchased and has no ownership interest in the other 87,650 square foot
portion of the shopping center. The portion of Town Center Commons in which we
have no ownership interest consists of an 80,000 square foot Galyan's
department store and a 7,650 square foot The Shane Company jewelry store in two
separate buildings. The portion of Town Center Commons that we own will be
referred to in this Report as "Our Portion of Town Center Commons" or "this
Property" and the entire shopping center will be referred to as "Town Center
Commons".
Town Center Commons is located west of I-75 on Ernest Barrett Parkway in
Kennesaw, Georgia, and is approximately 25 miles northwest of downtown Atlanta.
The Town Center Property Partnership purchased Our Portion of Town Center
Commons on April 13, 1999 from an unaffiliated third party. The $9,656,381 we
paid for this Property represents the total costs incurred by the Inland
affiliated companies in connection with their purchase of this Property as of
the date of our purchase of their interests. Such costs consists of the
following:
* Purchase Price.......................... $9,494,000
* Acquisition costs to third parties...... 76,923
* Financing costs to an Inland affiliate.. 47,458
* Financing costs to third parties........ 38,000
-----------
Total.......... $9,656,381
===========
Our acquisition cost is approximately $134 per square foot of leasable space.
We paid a total of $1,919,737 to the Town Center Affiliates, since the
outstanding balance of the mortgage loans and certain prorations were credited
against the purchase price. Of such amount, $1,914,757 was paid to Inland
Mortgage Investment Corporation, an Inland Affiliated Company, as payment in
full of a promissory note evidencing a loan made to the Town Center Affiliates
in connection with the purchase in April 1999 of this Property. The promissory
note provided for payments of interest only at the rate of 10.9% per annum.
There may be additional expenses incurred relative to the acquisition of this
Property, which we will pay.
In evaluating this Property as a potential acquisition, we considered a variety
of factors including location, demographics, tenant mix, price per foot,
occupancy and the fact that overall rental rates at the shopping center are
comparable to market rates. We believe that the shopping center is located
within a vibrant economic area. The Company did not consider any other factors
materially relevant to the decision to acquire this Property.
-2-
We do not anticipate making any significant repairs and improvements to this
Property over the next few years. However, if we were to make any repairs or
improvements, the tenants would be obligated to pay a substantial portion of
any monies spent pursuant to the provisions of their respective leases.
We believe that this Property is well located, has acceptable roadway access,
attracts high-quality tenants, is well maintained and has been professionally
managed. This Property will be subject to competition from similar shopping
centers within its market area, and its economic performance could be affected
by changes in local economic conditions.
We purchased this Property subject to two mortgages and a collateral assignment
of rents and leases in favor of SouthTrust Bank, N.A., which secure promissory
notes in the aggregate principal amount of $7,600,000, which we reduced to
7,258,000 concurrently with the acquisition. One promissory note is in the
principal amount of $4,750,000, requires monthly payments of interest only at
the fixed rate of 7% per annum and is due April 13, 2006. Payment of all or
part of this note before maturity requires a prepayment premium initially equal
to 2% of the amount being prepaid, but declining to 1 1/2% during the sixth,
and 1% in the seventh, loan years. The other note requires monthly payments of
interest only at a floating rate per annum of 1.75% over a LIBOR related index,
is due April 13, 2000, and may be paid at any time prior to maturity without
penalty.
Our Portion of Town Center Commons, which was built in 1998, consists of two
one-story, multi-tenant retail buildings. As of June 29, 1999, this Property
was 96% leased. Tenants leasing more than 10% of the total square footage
currently include J.C. Penney Home Store, a home furnishings store, and Baptist
Book Store, a religious retail store. The leases with these tenants require
the tenants to pay base annual rent on a monthly basis as follows:
Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
J.C. Penney Home
Store 42,728 59.26 10.50 to 11/98 10/08
11.50
Option 1 12.75 11/08 10/13
Option 2 14.00 11/13 10/18
Option 3 15.25 11/18 10/23
Baptist Book
Store 7,800 10.82 16.00 to 01/99 09/08
17.25
Option 1 18.57 10/08 09/13
Option 2 20.03 10/13 09/18
As of June 29, 1999, Town Center Commons is managed by Trammell Crow Company.
-3-
For federal income tax purposes, our depreciable basis in this Property
will be approximately $6,362,589. When we calculate depreciation expense for
tax purposes, we will use the straight-line method. We depreciate buildings
and improvements based upon estimated useful lives of 40 and 15 years,
respectively. Real estate taxes for the year ended 1998 (the most recent tax
year for which information is generally available) were $44,436.
On June 29, 1999, a total of 69,108 square feet was leased to 10 tenants
at this Property. The following tables set forth certain information with
respect to our leases at this Community Center with these tenants as of
June 29, 1999:
Approximate
GLA Current Rent per
Leased Lease Renewal Annual Rent (1) Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
J.C. Penney Home
Store 42,728 10/08 3/5 yr. 448,644 10.50
Baptist Book Store 7,800 09/08 2/5 yr. 124,800 16.00
Original Mattress
Factory 4,600 12/03 1/3 yr. 87,400 19.00
Bikes USA, Inc. 4,800 03/04 2/5 yr. 91,200 19.00
Nu Age Nutrition 1,040 03/04 - 19,760 19.00
Town Center Nails 1,040 03/03 - 19,760 19.00
Powertel 1,300 02/04 - 24,700 19.00
Master Portrait 1,300 03/04 1/5 yr. 24,700 19.00
Accustaff 1,500 02/04 - 28,500 19.00
Gondolier Pizza 3,000 04/04 2/5 yr. 57,000 19.00
Vacant 3,000
(1) Each tenant also pays its proportionate share of real estate taxes,
insurance and common area maintenance costs. In addition, Baptist Book
Store, Original Mattress Factory, Bikes USA, Inc., Nu Age Nutrition, Town
Center Nails, Powertel and Gondolier Pizza pay, as additional rent, a
percentage of gross sales in excess of a prescribed amount.
-4-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - - - 926,464 - - -
2000 - - - 930,164 - - -
2001 - - - 933,864 - - -
2002 - - - 940,754 - - -
2003 2 5,640 114,580 932,044 20.32 8.16 12.18
2004 6 12,940 256,800 690,222 19.85 18.72 27.55
2005 - - - 625,922 - - -
2006 - - - 625,922 - - -
2007 - - - 625,922 - - -
2008 2 50,528 625,922 510,389 12.39 73.11 100.00
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion of
our management that the space will be re-leased at market rates at the time of re-leasing.
</TABLE>
We received an appraisal prepared in conformity with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Institute and the Appraisal
Foundation by an independent appraiser who is a member of the Appraisal
Institute. The appraisal reported a fair market value for Our Portion of Town
Center Commons, as of June 3, 1999, of $9,750,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
To be subsequently filed.
-5-
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.
Inland Retail Real Estate Trust, Inc.
(Registrant)
By:/s/ Barry L. Lazarus
Barry L. Lazarus
President, Chief Operating Officer,
Treasurer and Chief Financial Officer
Date: July 12, 1999
-6-
