Inland Retail Real Estate Trust, Inc.
Sticker Supplement
This Sticker Supplement No. 3 dated July 8, 1999 to our Prospectus dated
February 11, 1999 summarizes Supplement No. 3 which updates information in the
"Real Property Investments" and "Plan of Distribution" sections of our
Prospectus. Supplement No. 3 expands upon, supplements, modifies or supersedes
certain information contained in the Prospectus and its Supplements No. 1 and 2
dated May 10 and June 10, 1999, respectively, and must be read in conjunction
with our Prospectus and those Supplements. Any word that is capitalized in
this Sticker Supplement but not defined has the same meaning as in our
Prospectus.
Real Property Investments
Town Center Commons, Kennesaw, Georgia
On July 1, 1999, we purchased 72,108 gross leasable square feet of an
existing 159,758 square foot shopping center known as Town Center Commons by
acquiring 100% of the ownership interests in the entity that owns that portion
of the shopping center from two companies within the Inland Organization. This
shopping center is located west of I-75 on Ernest Barrett Parkway in Kennesaw,
Georgia. We purchased this property for $9,656,381, which represents the total
costs incurred by the Inland companies in connection with their purchase of the
property. This price represents approximately $134.00 per square foot of
leasable space. A total of $1,919,737 was paid to the Inland companies, since
the outstanding balance of the mortgage loans and certain prorations were
credited against the purchase price.
We purchased this property subject to mortgages in favor of SouthTrust Bank,
N.A. in the aggregate principal amount of $7,600,000, which we reduced to
7,258,000 concurrently with the acquisition. As of June 29, 1999, our new
property was 96% leased. Tenants leasing more than 10% of the total square
footage currently include J.C. Penney Home Store with 42,728 square feet and
Baptist Book Store with 7,800 square feet. As of June 29, 1999, Town Center
Commons is managed by Trammell Crow Company.
Plan of Distribution
As of June 29, 1999, we had sold 1,380,412 shares resulting in gross proceeds
of $13,566,782. Inland Securities Corporation, an affiliate of our Advisor,
serves as dealer manager of this Offering and is entitled to receive selling
commissions and certain other fees, as discussed further in our Prospectus. As
of June 29, 1999, we have incurred $1,288,844 of commissions and fees payable
to Inland Securities Corporation, which will result in our receipt of
$12,277,938 of net proceeds from the sale of those 1,380,412 shares. An
additional 2,153 shares have been sold pursuant to our Distribution
Reinvestment Program as of June 29, 1999, for which we have received additional
net proceeds of $20,453. We also pay an affiliate of our Advisor fees to
manage and lease our properties. As of June 29, 1999, we have incurred and
paid property management fees of $16,792. Our Advisor may also receive an
annual asset management fee of not more than 1% of our average invested assets,
paid quarterly. As of the end of the quarter ending March 31, 1999, we had not
paid or incurred any asset management fees. We may pay expenses associated
with property acquisitions of up to .5% of the money that we raise in this
Offering but in no event will we pay acquisition expenses on any individual
property that exceeds 6% of its purchase price. Acquisition expenses totaling
$162,381 are included in the purchase price we paid for our portion of Town
Center Commons.
SUPPLEMENT NO. 3
DATED JULY 8, 1999
TO THE PROSPECTUS DATED FEBRUARY 11, 1999
OF INLAND RETAIL REAL ESTATE TRUST, INC.
We are providing this Supplement No. 3 to you in order to supplement our
Prospectus. This Supplement No. 3 updates information in the "Real Property
Investments" and "Plan of Distribution" sections of our Prospectus. This
Supplement No. 3 expands upon, supplements, modifies or supersedes certain
information contained in the Prospectus and its Supplements No. 1 and 2 dated
May 10 and June 10, 1999, respectively, and must be read in conjunction with
our Prospectus and those Supplements. Any word that is capitalized in this
Supplement but not defined has the same meaning as in our Prospectus.
Real Property Investments
Town Center Commons, Kennesaw, Georgia
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 Supplement 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 of the Town Center Affiliates
as of the date of our purchase of their interests. Such costs consists of the
following paid by the Town Center Affiliates:
* 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.
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 $4,750,000, requires monthly payments of interest only at
the fixed rate of 7% per annum and is due April 13, 2006. Payment of all or
part of this note before maturity requires a prepayment premium initially equal
to 2% of the amount being prepaid, but declining to 1 1/2% during the sixth,
and 1% in the seventh, loan years. This other note requires monthly payments
of interest only at a floating rate per annum of 1.75% over a LIBOR related
index, is due April 13, 2000, and may be paid at any time prior to maturity
without penalty.
Our Portion of Town Center Commons, which was built in 1998, consists of two
one-story, multi-tenant retail buildings. As of June 29, 1999, this Property
was 96% leased. Tenants leasing more than 10% of the total square footage
currently include J.C. Penney Home Store, a home furnishings store, and Baptist
Book Store, a religious retail store. The leases with these tenants require
the tenants to pay base annual rent on a monthly basis as follows:
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Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) 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.
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 $44,436.
On June 29, 1999, a total of 69,108 square feet was leased to 10 tenants at
this Property. The following tables set forth certain information with respect
to our leases at this Community Center with these tenants as of June 29, 1999:
Approximate
GLA Current Rent per
Leased Lease Renewal Annual Rent Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
J.C. Penney Home
Store 42,728 10/08 3/5 yr. 448,644 10.50
Baptist Book Store 7,800 09/08 2/5 yr. 124,800 16.00
Original Mattress
Factory 4,600 12/03 1/3 yr. 87,400 19.00
Bikes USA, Inc. 4,800 03/04 2/5 yr. 91,200 19.00
Nu Age Nutrition 1,040 03/04 - 19,760 19.00
Town Center Nails 1,040 03/03 - 19,760 19.00
Powertel 1,300 02/04 - 24,700 19.00
Master Portrait 1,300 03/04 1/5 yr. 24,700 19.00
Accustaff 1,500 02/04 - 28,500 19.00
Gondolier Pizza 3,000 04/04 2/5 yr. 57,000 19.00
Vacant 3,000
(1) Each tenant also pays its proportionate share of real estate taxes,
insurance and common area maintenance costs. In addition, Baptist Book
Store, Original Mattress Factory, Bikes USA, Inc., Nu Age Nutrition, Town
Center Nails, Powertel and Gondolier Pizza pay, as additional rent, a
percentage of gross sales in excess of a prescribed amount.
-3-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<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.
Plan of Distribution
As of June 29, 1999, we had sold 1,380,412 shares resulting in gross proceeds
of $13,566,782. Inland Securities Corporation, an affiliate of our Advisor,
serves as dealer manager of this Offering and is entitled to receive selling
commissions and certain other fees, as discussed further in our Prospectus. As
of June 29, 1999, we have incurred $1,288,844 of commissions and fees payable
to Inland Securities Corporation, which will result in our receipt of
$12,277,938 of net proceeds from the sale of those 1,380,412 shares. An
additional 2,153 shares have been sold pursuant to our Distribution
Reinvestment Program, for which we will receive additional net proceeds of
$20,453. We also pay an affiliate of our Advisor fees to manage and lease our
properties. As of June 29, 1999, we have incurred and paid property management
fees of $16,792. Our Advisor may also receive an annual asset management fee
of not more than 1% of our average invested assets, paid quarterly. As of the
end of the quarter ending March 31, 1999, we had not paid or incurred any asset
management fees. We may pay expenses associated with property acquisitions of
up to .5% of the money that we raise in this Offering but in no event will we
pay acquisition expenses on any individual property that exceeds 6% of its
purchase price. Acquisition expenses totaling $162,381 are included in the
purchase price we paid for our Portion of Town Center Commons.
-4-
