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: September 30, 1999
(Date of earliest event reported)
Inland Retail Real Estate Trust, Inc.
(Exact name of registrant as specified in the 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
Bartow Marketplace, Cartersville, Georgia
On September 30, 1999, we purchased an existing shopping center known as Bartow
Marketplace located on approximately 46.66 acres and containing 375,067 gross
leasable square feet. Bartow Marketplace is located on Georgia Highway 20,
near the intersection of US Highway 41 and Georgia Highway 411 in Cartersville,
Georgia. Cartersville is located approximately 35 miles northwest of downtown
Atlanta.
We purchased Bartow Marketplace from an unaffiliated third party. Our total
acquisition cost, including expenses, was $24,496,029. This amount may
increase by additional costs which have not yet been finally determined. We
expect any additional costs to be immaterial. Our acquisition cost is
approximately $65 per square foot of leasable space, which consists of the
following:
* Purchase Price.......................... $ 24,326,600
* Acquisition costs to third parties...... 84,429
* Financing costs to an Inland affiliate.. 35,000
* Financing costs to third parties........ 50,000
Total.......... $ 24,496,029
=============
In evaluating this property 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 at the shopping center are
comparable to market rates. We believe that the shopping center is located
within a vibrant economic area. We did not consider any other factors
materially relevant to the decision to acquire this property.
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.
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We purchased this property with the proceeds of a new first mortgage loan in
the amount of $18,375,000 from SouthTrust Bank, National Association, secured
by deeds to secure debt and security agreement and a collateral assignment of
rents and leases. The loan is evidenced by two promissory notes. One
promissory note is in the principal amount of $13,475,000, requires monthly
payments of interest only at a floating rate per annum of 1.50% over a LIBOR
related index, is due on September 30, 2004 and may be prepaid at any time
prior to maturity without penalty. However, the note provides that we may
elect to pay interest at a fixed rate equal to the greater of 7.75% or 2.00% in
excess of the rate being paid on U.S. Treasury Securities with a maturity date
closest to September 30, 2004 at the time of exercise of the option. If this
election is made, then the note may be prepaid in whole or in part at any time
prior to maturity with a penalty equal to 1.00% of the amount prepaid. The
other note is in the principal amount of $4,900,000, requires monthly payments
of interest only at a floating rate per annum of 1.50% over a LIBOR related
index, is due on September 30, 2000 and may be prepaid at any time prior to
maturity without penalty. We or any of our affiliates are required to maintain
deposit accounts with SouthTrust Bank, National Association beginning January
1, 2000; and by June 30, 2000, we must maintain an average collected demand
deposit balance or average overnight repurchase agreement balances of not less
than $2,000,000. In the event this condition is not met, the applicable
interest rate on both notes shall be increased by .0025% from the time this
occurs throughout the remaining term of the loan.
Bartow Marketplace, which was built in 1995, consists of a single-story, multi-
tenant retail center. As of September 30, 1999, this property was 100% leased.
Tenants leasing more than 10% of the total square footage currently include
Wal-Mart, a discount department store, and Lowe's Home Centers, a home
furnishing store. The leases with these tenants require the tenants to pay
base annual rent on a monthly basis as follows:
Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Wal-Mart 204,170 54.44 5.41 10/1995 10/2015
Options (1) 5.41 11/2015 10/2035
Lowe's Home
Centers 130,497 34.79 6.03 10/1995 10/2015
Option 1 6.63 11/2015 10/2020
Option 2 7.30 11/2020 10/2025
Option 3 8.03 11/2025 10/2030
Option 4 8.83 11/2030 10/2035
Option 5 9.71 11/2035 10/2040
Option 6 10.68 11/2040 10/2045
(1) There are four successive five-year renewal options at the same base rent
per square foot per annum.
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For federal income tax purposes, our depreciable basis in this property will be
approximately $18,372,000. 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. Real estate taxes for 1998 (the most recent tax year for which
information is generally available) were $22,410. Wal-Mart and Lowe's are
located on separately assessed parcels for real estate tax purposes and pay
their own tax bills. Real estate taxes for 1999 are expected to be
approximately $22,410.
On September 30, 1999, a total of 375,067 square feet was leased to 17 tenants
at this property. The following tables set forth certain information with
respect to our leases with those tenants:
Approximate
GLA Current Rent per
Leased Lease Renewal Annual Rent Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
Wal-Mart 204,170 10/15 4/5 yr. 1,104,560 5.41
Lowe's Home Centers 130,497 10/15 6/5 yr. 786,897 6.03
Fashion Bug (2) 12,000 01/06 6/5 yr. 90,000 7.50
The Sport Shoe 4,800 03/01 - 61,200 12.75
Gold & Diamond
Exchange (2) 1,200 08/06 2/5 yr. 16,872 14.06
Dollar Tree 3,000 03/00 - 36,750 12.25
Payless Shoesource 3,000 05/06 2/5 yr. 36,750 12.25
Fast Rental 2,800 11/00 2/5 yr. 33,600 12.00
Hickory Hams 2,800 03/01 2/5 yr. 35,700 12.75
Sally Beauty
Supply 1,800 02/01 1/5 yr. 19,800 11.00
Gorin's Cafe &
Grill 1,800 05/01 2/5 yr. 22,950 12.75
V. Nail Salon 1,200 12/00 - 16,068 13.39
Mailboxes, Etc. 1,200 12/00 1/5 yr. 15,600 13.00
Team Personnel
Services 1,200 01/01 - 15,756 13.13
Hair Cuttery 1,200 03/01 - 17,304 14.42
Tele-Dynamics 1,200 11/01 - 16,044 13.37
New Ming Moon 1,200 08/04 1/5 yr. 16,800 14.00
(1) Each tenant also pays its proportionate share of real estate taxes, (except
for Wal-Mart and Lowe's Home Centers, as noted above), insurance and common
area maintenance costs. In addition, Lowe's Home Centers, Fashion Bug, The
Sport Shoe, Gold & Diamond Exchange, Dollar Tree, Payless Shoesource,
Hickory Hams, Sally Beauty Supply, Gorin's Cafe & Grill and Hair Cuttery
pay, as additional rent, a percentage of gross sales in excess of a
prescribed amount.
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(2) Gold & Diamond Exchange is expanding into 2,400 square feet of space
currently occupied by Fashion Bug (which will downsize by a like amount of
square footage). Fashion Bug will continue to pay its current rental of
$7,500 per month until November 2, 1999 at which time its rent shall reduce
automatically to $6,000 per month (reflecting the downsizing from 12,000
square feet to 9,600 square feet). Gold & Diamond Exchange shall continue
paying its current rental in the amount of $1,406 per month through the
45th day after Landlord's delivery of the expansion space (i.e., 2,400
additional square feet taken from Fashion Bug) at which time its rental
shall automatically increase to $4,218 per month.
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - - - 2,349,211 - - -
2000 4 8,200 102,663 2,334,979 12.52 2.19 4.37
2001 7 14,800 194,368 2,139,697 13.13 3.95 8.32
2002 - - - 2,080,499 - - -
2003 - - - 2,081,051 - - -
2004 1 1,200 18,912 2,074,747 15.76 .32 .91
2005 - - - 2,062,139 - - -
2006 3 16,200 170,682 1,950,133 10.54 4.32 8.28
2007 - - - 1,891,457 - - -
2008 - - - 1,891,457 - - -
(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 Bartow Marketplace,
as of August 31, 1999, of $24,500,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
-5-
Item 5. Other Events
Distributions
We have decided to increase distributions from a rate of $.73 per share per
annum to a rate of $.75 per share per annum, effective November 1, 1999,
beginning with the distribution to be paid December 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: October 13, 1999
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