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: June 4, 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)
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Item 2. Acquisition or Disposition of Assets
On June 4, 1999, we purchased a shopping center, Merchants Square, by acquiring
the interests of Inland Southeast Merchants Square Investment Corporation and
Inland Southeast Acquisitions Corp. (collectively, the "Merchants Square
Affiliated Partners"), both of which are affiliates of our Advisor, in the
Inland Southeast Merchants Square Limited Partnership. Merchants Square is
located at the intersection of U.S. 301 North and Pretty Pond Road in
Zephyrhills, Florida. We purchased Merchants Square for approximately
$5,742,000, which was the total cost incurred by the Merchants Square
Affiliated Partners in acquiring the property. This equates to approximately
$77 per square foot of leasable space. We believe the purchase price was fair
and reasonable based on, among other things, an appraisal from an independent
appraiser that we received and presented to our board of directors.
Merchants Square, built in 1993, is a one-story, multi-user retail facility.
Merchants Square contains 74,849 leasable square feet. As of June 4, 1999,
Merchants Square was 100% leased. In evaluating Merchants Square as a
potential acquisition, we considered a variety of factors including location,
demographics, tenant mix, price per square foot, occupancy and the fact that
overall rental rates are comparable to market rates. We believe that Merchants
Square is located within a vibrant economic area.
We do not anticipate making any significant repairs and improvements to
Merchants Square over the next few years. However, if we were to make any
repairs or improvements, the tenants would be obligated to pay a substantial
portion of any monies spent pursuant to the provisions of their respective
leases.
Two tenants, Kash 'N Karry, a supermarket, and Fashion Bug, a clothing store,
each lease more than 10% of the total gross leasable area of the property. The
leases with these tenants require the tenants to pay base annual rent on a
monthly basis as follows:
Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Kash 'N Karry 47,955 64 6.70 Currently 05/27/13
Options (1) 6.70 05/28/13 05/27/43
Fashion Bug 9,040 12 8.00 Currently 01/31/04
Options (2) 8.50 to
9.50 02/01/04 01/31/19
(1) There are six successive five-year renewal options at the same base rent
per square foot per annum.
(2) There are three successive five-year renewal options. The base rent per
square foot increases $.50 per square foot for each option.
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For federal income tax purposes, our depreciable basis in Merchants Square will
be approximately $4,750,000. When we calculate depreciation expense for tax
purposes, we will use the straight-line method. We depreciate buildings and
improvements based upon estimated useful lives of 40 and 15 years,
respectively.
On June 4, 1999, a total of 74,849 square feet was leased to 13 tenants at
Merchants Square. The following tables set forth certain information with
respect to our leases with these 13 tenants as of June 4, 1999:
Approximate
GLA Current Rent per
Leased Lease Renewal Annual Rent Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
Kash N' Karry 47,955 05/13 6/5 yr. 321,299 6.70
Fashion Bug 9,040 01/04 3/5 yr. 72,320 8.00
Dollar Tree 3,320 06/00 4/4 yr. 33,001 9.94
Payless Shoe Source 2,800 03/03 2/5 yr. 26,600 9.50
Beef O'Bradys 2,030 06/02 - 21,912 10.79
L.G. Edwards
Insurance 2,000 05/03 - 23,500 11.75
Sally Beauty Supply 1,600 04/03 - 17,600 11.00
Cuts, Curls & Color 1,200 05/02 - 15,108 12.59
Dr. Baldridge 1,120 07/03 2/5 yr. 14,112 12.60
Postal Zone 1,197 01/01 2/3 yr. 11,970 10.00
Concire Centers 1,009 04/01 - 11,604 11.50
Nabers Jewelers 1,000 04/00 - 12,600 12.60
Bingham Realty 578 04/01 - 5,780 10.00
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<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - - - 587,406 - - -
2000 2 4,320 45,601 562,608 10.56 5.77 7.76
2001 3 2,784 29,354 519,345 10.54 3.72 5.22
2002 2 3,230 37,122 492,733 11.49 4.32 7.15
2003 4 7,520 81,812 424,159 10.88 10.05 16.60
2004 1 9,040 72,320 327,326 8.00 12.08 17.05
2005 - - - 321,299 - - -
2006 - - - 321,299 - - -
2007 - - - 321,299 - - -
2008 - - - 321,299 - - -
(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 a letter 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 Merchants
Square, as of December 10, 1998, of $5,800,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
Item 5. Other Events
Directors and Executive Officers
Due to unexpected requirements on her time, Kelly Tucek has resigned as our
Treasurer and Chief Financial Officer. Barry L. Lazarus, our President, Chief
Operating Officer and an Affiliated Director, has been elected by our board of
directors to the additional offices of Treasurer and Chief Financial Officer.
Distributions
We have decided to increase the distribution level from $.70 per share per
annum to $.73 per share per annum, effective July 1, 1999, beginning with the
distribution to be paid August 7, 1999.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
To be subsequently filed.
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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: June 16, 1999
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