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: October 26, 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
Countryside Shopping Center, Naples, Florida
On October 26, 1999, we purchased a shopping center known as Countryside
Shopping Center, containing 73,965 gross leasable square feet, by acquiring the
interests of Inland Southeast Investment Corporation and Inland Southeast
Acquisitions Corp. (collectively the "Countryside Affiliated Partners"), both
of which are affiliates of our Advisor, in Inland Southeast Countryside Limited
Partnership. The Inland Southeast Countryside Limited Partnership owns the
entire fee simple interest in Countryside Shopping Center.
Countryside Shopping Center is located at the southwest corner of Santa Barbara
Boulevard and Radio Road in Naples, Florida. Naples is approximately 185 miles
south of Tampa and approximately 105 miles west of Miami.
The Inland Southeast Countryside Limited Partnership purchased Countryside
Shopping Center on March 31, 1998 from an unaffiliated third party. The
$8,595,602 we paid for this property represents all of the acquisition costs
and a prorated portion of the financing costs incurred by the Countryside
Affiliated Partners in connection with their acquisition and financing of the
property as of the date of our purchase of their interests. Our acquisition
cost is approximately $116 per square foot of leasable space, which consists of
the following:
* Purchase Price.......................... $ 8,400,000
* Acquisition costs to third parties...... 96,253
* Financing costs to an Inland affiliate.. 45,356
* Financing costs to third parties........ 53,993
Total.......... $ 8,595,602
=============
We paid a total of $1,860,818 to the Countryside Affiliated Partners since the
outstanding balance of the mortgage loan and certain prorations were credited
against the purchase price. That amount, together with $282,814 provided by
the Countryside Affiliated Partners (for a total of $2,143,632), 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 Countryside
Affiliated Partners in connection with their purchase in March 1998 of this
property. The promissory note provided for payment of interest only at the
rate of 10.9% per annum.
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.
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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 a mortgage and a collateral assignment of
rents and leases in favor of SouthTrust Bank, National Association, which
secure a promissory note having a principal balance of $6,720,000 as of the
date of our acquisition of the property. The promissory note requires monthly
payments of interest only at a floating rate of 1.75% over a LIBOR related
index and is due on March 31, 2001. We may prepay the note either in whole or
in part at any time without payment of any premium or penalty, except as
follows. At any one time after we have paid amounts necessary to reduce the
principal balance to 60% or less of the appraised value of the property, we may
elect to change the interest rate to either a floating rate of 1.6% over a
LIBOR related index, or to a fixed rate which would be equal to 1.6% in excess
of the average weekly yield of U.S. Treasury Securities having a term ending on
March 31, 2001. If we elect to have the fixed rate apply to the note, then any
amount prepaid must include a prepayment premium equal to 1% of the amount
prepaid.
Countryside Shopping Center, which was built in 1997, consists of a one-story,
multi-tenant, retail facility, consisting of two separate buildings. As of
October 26, 1999, this property was 98% leased. Tenants leasing more than 10%
of the total square footage currently include Winn-Dixie Stores, Inc., a
supermarket, and Promedco of Southwest Florida, Inc., a medical and health care
center. The leases with these tenants require the tenants to pay base annual
rent on a monthly basis as follows:
Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Winn-Dixie Stores,
Inc. 51,261 69.30 8.00 05/1997 04/2017
Options (1) 8.00 05/2017 04/2042
Promedco of Southwest
Florida, Inc. 10,725 14.50 18.00 08/1997 07/2002
19.00 08/2002 07/2004
20.00 08/2004 07/2007
Options (2) 20.51 08/2007
to 25.00 07/2017
(1) There are five successive five-year renewal options at the same base rent
per square foot per annum.
(2) There are two successive five-year renewal options. The base rent per
square foot increases by $.50 per square foot each year of the option term.
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For federal income tax purposes, our depreciable basis in this property will be
approximately $7,478,000. 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 $67,117. Real estate taxes for 1999 are expected to
be approximately $72,000.
On October 26, 1999, a total of 72,765 square feet was leased to seven tenants
at this property. The following tables set forth certain information with
respect to our leases with those tenants:
Approximate
GLA Current Rent per
Leased Lease Renewal Annual Rent Square Foot
Lessee (1) (Sq. Ft.) Ends Options ($) ($)
(1)
------ ---------- ----- ------- ----------- -----------
Winn-Dixie Stores,
Inc. 51,261 04/17 5/5 yr. 410,088 8.00
Promedco of Southwest
Florida, Inc. 10,725 07/07 2/5 yr. 193,050 18.00
Blockbuster
Videos, Inc. 6,000 04/02 3/5 yr. 102,000 17.00
Ettore Mancini 1,200 03/02 1/3 yr. 21,600 18.00
Mailboxes, Etc. 1,200 08/02 1/5 yr. 22,920 19.10
Mama Panetti's Inc. 1,200 12/02 1/5 yr. 22,248 18.54
John Rogers Jr.
Dry Cleaners 1,179 07/02 1/5 yr. 22,920 19.44
Vacant 1,200
Other (2)
(1) Each tenant also pays its proportionate share of real estate taxes,
insurance and common area maintenance costs. In addition, Winn-Dixie
Stores, Inc. pays, as additional rent, a percentage of gross sales in
excess of a prescribed amount.
(2) Touchless Laser Car Wash occupies an outlot and is connected into the
shopping center's water system. We bill it quarterly for its water usage,
but it does not pay rent or anything else to us since we do not own the
outlot. Coin Star Communications, Inc. provides payphones in the shopping
center. Coin Star Communications, Inc. pays a monthly percentage rent of
30% of its sales.
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<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases (1)
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - - - 790,007 - - -
2000 - - - 797,514 - - -
2001 - - - 800,285 - - -
2002 5 10,779 197,855 708,294 18.36 14.57 24.72
2003 - - - 613,863 - - -
2004 - - - 624,588 - - -
2005 - - - 624,588 - - -
2006 - - - 624,588 - - -
2007 1 10,725 214,500 535,213 20.00 14.50 34.34
2008 - - - 410,088 - - -
(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 which states that is was prepared in conformity with
the requirements of the Uniform Standards of Professional Appraisal Practice
(USPAP) of the Appraisal Foundation and the Standards of Professional Appraisal
Practice of the Appraisal Institute, by an independent appraiser who is a member
of the Appraisal Institute. The appraisal reported a fair market value for
Countryside Shopping Center, as of August 27, 1999, of $8,650,000. Appraisals
are estimates of value and should not be relied on as a measure of true worth or
realizable value.
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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: November 4, 1999
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