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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 18, 2000
(Date of earliest event reported)
Inland Retail Real Estate Trust, Inc.
(Exact name of registrant as specified in the charter)
Maryland |
000-30413 |
36-4246655 |
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(IRS Employer 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)
Item 2. Acquisition or Disposition of Assets
Gateway Market Center, St. Petersburg, Florida
On July 18, 2000, we purchased an existing shopping center known as Gateway Market Center located on approximately 21 acres and containing 231,447 gross leasable square feet. The center is located at the southeast corner of 9th Street North and 77th Avenue in St. Petersburg, Florida.
We purchased Gateway Market Center from an unaffiliated third party. Our total acquisition cost, including expenses, was approximately $21,130,000. Our total acquisition cost includes $2,800,000 allocated to the purchase of the Home Place of America building. We executed an interest free note to the seller in the amount of $2,800,000 to be paid once Home Place of America begins paying rent, which is expected to occur in August 2000. If the tenant has not begun rent payments by December 2000, we have the right not to close on this portion of the property. The total acquisition cost may increase by additional costs which have not yet been finally determined. We expect any additional costs to be insignificant. Our acquisition cost is approximately $91.29 per square foot of leasable space, which consists of the following:
* |
Purchase Price |
$20,850,000 |
* |
Acquisition costs to third parties |
154,166 |
* |
Financing costs |
125,780 |
|
Total |
$21,129,946 |
|
|
|
We purchased this property with the proceeds of a new mortgage, in favor of Allstate Insurance, which secures two promissory notes in the aggregate principal amount of $15,637,000. One promissory note is in the principal amount of $10,425,000, requires monthly payments of interest only at a fixed rate of 7.94% and is due August 2005. Payment of all or part of this note before maturity is not permitted in the first year and requires a prepayment premium of 2% in the second year, 1.5% in the third year, 1% in the fourth year and 0.5% in the fifth year. The other note is in the principal amount of $5,212,000, requires monthly payments of interest only at a floating rate per annum of 190 basis points over a 30-day LIBOR rate (which equates to a current interest rate of 8.53%), and is due August 2001. We paid loan fees of approximately $125,800 in connection with these loans. At the time of the purchase, the lender funded $9,025,000 and $4,512,000 respectively of these two notes. The balances of $1,400,000 and $700,000, respectively, will be funded at the time of the purchase of the Home Place of America building.
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. 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 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.
The center was razed in late 1998, and with the exception of one space (Beall's), which was completely rehabbed, all of the buildings are new. Gateway Market Center was completed in 1999/2000. It is comprised of a single-story, multi-tenant, retail building, two smaller multi-tenant buildings and one larger two tenant building. As of July 18, 2000, this property was 100% leased. The Target retail building and three single-tenant retail buildings are not part of our acquisition.
Five tenants, Beall's (a discount department clothing store), Publix (a grocery store), Home Place of America (a housewares store), Office Depot (an office supply store) and TJ Maxx (a discount 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 Leased |
% of Total |
Foot Per |
Lease |
Term |
Lessee |
(Sq. Ft.) |
GLA |
Annum ($) |
Beginning |
To |
Beall's |
60,000 |
26 |
4.04 |
04/99 |
01/21 |
Option 1 |
|
|
9.75 |
02/21 |
01/26 |
Option 2 |
|
|
9.75 |
02/26 |
01/31 |
|
|
|
|
|
|
Publix |
37,888 |
16 |
8.50 |
08/99 |
10/19 |
Option 1 |
|
|
8.50 |
11/19 |
10/24 |
Option 2 |
|
|
8.50 |
11/24 |
10/29 |
Option 3 |
|
|
8.50 |
11/29 |
10/34 |
Option 4 |
|
|
8.50 |
11/34 |
10/39 |
Option 5 |
|
|
8.50 |
11/39 |
10/44 |
|
|
|
|
|
|
Home Place of America |
35,000 |
15 |
9.50 |
04/00 |
12/05 |
|
|
|
10.00 |
01/05 |
12/10 |
Option 1 |
|
|
10.50 |
01/10 |
12/15 |
Option 2 |
|
|
11.00 |
01/15 |
12/20 |
Option 3 |
|
|
11.50 |
01/20 |
12/25 |
Option 4 |
|
|
12.00 |
01/25 |
12/30 |
|
|
|
|
|
|
Office Depot |
30,121 |
13 |
10.25 |
12/99 |
11/09 |
|
|
|
11.00 |
12/09 |
11/14 |
Option 1 |
|
|
11.75 |
12/14 |
11/19 |
Option 2 |
|
|
12.50 |
12/19 |
11/24 |
Option 3 |
|
|
13.25 |
12/24 |
11/29 |
|
|
|
|
|
|
TJ Maxx |
30,000 |
13 |
8.00 |
10/98 |
10/03 |
|
|
|
8.50 |
11/03 |
10/08 |
Option 1 |
|
|
8.50 |
11/08 |
10/13 |
Option 2 |
|
|
8.50 |
11/13 |
10/18 |
Option 3 |
|
|
8.50 |
11/18 |
10/23 |
For federal income tax purposes, the depreciable basis in this property will be approximately $15,000,000. 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 20 years, respectively. Real estate taxes for 1999 (the most recent tax year for which information is generally available) were $168,116. As Gateway Market Center was under development in 1999, the property is subject to reassessment for real estate taxes for subsequent years.
As of July 18, 2000, a total 231,447 square feet was leased to 15 tenants at this property. The following tables set forth certain information with respect to those leases.
|
ApproximateGLA Leased |
|
Renewal |
Current Annual |
Base Rent Per Square Foot |
Lessee (1) |
(Sq. Ft.) |
Lease Ends |
Options |
Rent ($) |
Per Annum ($) |
|
|
|
|
|
|
Sun Trust |
3,000 |
09/01 |
- |
54,000 |
18.00 |
H & R Block |
1,266 |
04/04 |
- |
26,586 |
21.00 |
Mattress Firm |
3,200 |
11/04 |
1/5 yr. |
59,648 |
18.64 |
Radio Shack |
3,000 |
01/05 |
2/5 yr. |
48,750 |
16.25 |
Castle Dental |
2,000 |
01/05 |
2/5 yr. |
39,000 |
19.50 |
Super Styles Hair |
1,266 |
02/05 |
- |
20,269 |
16.01 |
China One (2) |
1,266 |
09/05 |
- |
21,522 |
17.00 |
TJ Maxx |
30,000 |
10/08 |
3/5 yr. |
240,000 |
8.00 |
Hollywood Video |
5,000 |
11/09 |
3/5 yr. |
84,550 |
16.91 |
Party City |
11,940 |
01/10 |
2/5 yr. |
155,220 |
13.00 |
Shoe Carnival |
6,500 |
01/10 |
4/5 yr. |
78,000 |
12.00 |
Home Place of America (2) |
35,000 |
12/10 |
4/5 yr. |
332,500 |
9.50 |
Office Depot |
30,121 |
11/14 |
3/5 yr. |
308,740 |
10.25 |
Publix |
37,888 |
10/19 |
5/5 yr. |
322,048 |
8.50 |
Beall's |
60,000 |
01/21 |
2/5 yr. |
242,174 |
4.04 |
|
|
|
|
|
|
Year Ending December 31, |
Number of Leases Expiring |
Approx. GLA of Expiring Leases (Sq. Ft.) |
Annual Base Rent of Expiring Leases ($) |
Total Annual Base Rent (1) ($) |
Average Base Rent Per Square Foot Under Expiring Leases ($) |
Percent of Total Building GLA Represented By Expiring Leases (%) |
Percent of Annual Base Rent Represented By Expiring Leases (2) (%) |
|
|
|
|
|
|
|
|
2000 |
- |
- |
- |
2,033,010 |
- |
- |
- |
2001 |
1 |
3,000 |
54,000 |
2,033,010 |
18.00 |
1.30 |
2.66 |
2002 |
- |
- |
- |
1,982,242 |
- |
- |
- |
2003 |
- |
- |
- |
1,983,505 |
- |
- |
- |
2004 |
2 |
4,466 |
89,466 |
1,998,505 |
20.03 |
1.93 |
4.48 |
2005 |
4 |
7,532 |
132,073 |
1,933,806 |
17.53 |
3.25 |
6.83 |
2006 |
- |
- |
- |
1,827,683 |
- |
- |
- |
2007 |
- |
- |
- |
1,827,683 |
- |
- |
- |
2008 |
1 |
30,000 |
255,000 |
1,827,683 |
8.50 |
12.96 |
13.95 |
2009 |
1 |
5,000 |
93,000 |
1,572,683 |
18.60 |
2.16 |
5.91 |
We received an appraisal which states that it was prepared in conformity with the Standards of Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation by an independent appraiser who is a member of the Appraisal Institute. The appraisal reported an "As Is" market value for Gateway Market Center as of June 26, 2000, of $21,200,000. Appraisals are estimates of value and should not be relied on as a measure of true worth or realizable value.
Item 5. Other Events
The distribution level was increased to $0.77 per share per annum, effective
August 1, 2000, beginning with the distribution to be paid on September&
nbsp;7, 2000.
On July 10, 2000, our Board determined that it would be in the best
interests of stockholders to invest approximately $3.5 million in
publicly traded cumulative preferred stocks of other REITs with a market
value of up to $5 million. As permitted by the Board's authorization, we
intend to leverage such investments by purchasing the cumulative preferred
stocks on margin of no greater than 30%.
Item 7. Financial Statements and Exhibits
Index to Financial Statements
Pro Forma Consolidated Balance Sheet (unaudited) at March 31, 2000 |
F- 1 |
|
Notes to Pro Forma Consolidated Balance Sheet (unaudited) at March 31, 2000 |
F- 3 |
|
Pro Forma Consolidated Statement of Operations (unaudited) for the three months ended March 31, 2000 |
F- 5 |
|
Notes to Pro Forma Consolidated Statement of Operations (unaudited) for the three months ended March 31, 2000 |
F- 7 |
|
Pro Forma Consolidated Statement of Operations (unaudited) for the year ended December 31, 1999 |
F- 9 |
|
Notes to Pro Forma Consolidated Statement of Operations (unaudited) for the year ended December 31, 1999 |
F-11 |
|
Pleasant Hill Square: |
|
|
|
|
|
Independent Auditors' Report |
F-17 |
|
Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 |
F-18 |
|
Notes to the Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 |
F-19 |
|
Historical Summary of Gross Income and Direct Operating Expenses (unaudited) for the three months ended March 31, 2000 |
F-21 |
|
Notes to the Historical Summary of Gross Income and Direct Operating Expenses (unaudited) for the three months ended March 31, 2000 |
F-22 |
|
|
|
|
Gateway Market Center |
|
|
|
|
|
Independent Auditors' Report |
F-23 |
|
Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 |
F-24 |
|
Notes to the Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 |
F-25 |
|
Historical Summary of Gross Income and Direct Operating Expenses (unaudited) for the three months ended March 31, 2000 |
F-27 |
|
Notes to the Historical Summary of Gross Income and Direct Operating Expenses (unaudited) for the three months ended March 31, 2000 |
F-28 |
|
|
|
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
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Balance Sheet
March 31, 2000
(unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet is presented as if the acquisition of the properties indicated in Note B had occurred on March 31, 2000.
This unaudited Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been at March 31, 2000, nor does it purport to represent our future financial position. Unless otherwise defined, capitalized terms used herein shall have the same meaning as in the Prospectus.
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Balance Sheet
March 31, 2000
(unaudited)
|
|
Pro Forma |
|
|
|
Adjustments (B) |
|
|
(A) |
Property |
Pro Forma |
|
Historical |
Acquisitions |
as adjusted |
Assets |
|
|
|
|
|
|
|
Net investment properties |
$133,534,632 |
55,345,666 |
188,880,298 |
Cash |
15,096,311 |
(2,577,599) |
12,518,712 |
Restricted cash |
1,054,581 |
452,292 |
1,506,873 |
Accounts and rents receivable |
1,728,015 |
- |
1,728,015 |
Real Estate Tax and Insurance escrows (E) |
286,870 |
- |
286,870 |
Furniture and Equipment |
9,166 |
- |
9,166 |
Loan fees, net |
156,732 |
- |
156,732 |
Leasing fees, net |
27,285 |
- |
27,285 |
Other assets |
380,135 |
265,180 |
645,315 |
|
|
|
|
Total assets |
$152,273,727 |
53,485,539 |
205,759,266 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Accounts payable |
306,702 |
- |
306,702 |
Accrued offering costs |
1,920,281 |
- |
1,920,281 |
Accrued interest payable |
490,443 |
- |
490,443 |
Real estate taxes payable |
381,539 |
122,423 |
503,962 |
Distribution payable |
418,582 |
- |
418,582 |
Security deposits |
284,941 |
17,331 |
302,272 |
Mortgages payable (D) |
89,782,139 |
32,757,000 |
122,539,139 |
Unearned income |
160,471 |
- |
160,471 |
Other liabilities |
1,238,419 |
3,272,292 |
4,510,711 |
Due to Affiliates |
1,249,772 |
- |
1,249,772 |
|
|
|
|
Total liabilities |
96,233,289 |
36,169,046 |
132,402,335 |
|
|
|
|
Minority interest in partnership (C) |
2,000 |
- |
2,000 |
|
|
|
|
Common Stock |
68,186 |
20,135 |
88,321 |
Additional paid-in capital (net of Offering costs) |
57,881,963 |
17,296,358 |
75,178,321 |
Accumulated distributions in excess of net income |
(1,911,711) |
- |
(1,911,711) |
|
|
|
|
Total stockholders' equity (F) |
56,038,438 |
17,316,493 |
73,354,931 |
|
|
|
|
Total liabilities and stockholders' equity |
$152,273,727 |
53,485,539 |
205,759,266 |
See accompanying notes to pro forma consolidated balance sheet.
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Balance Sheet
March 31, 2000
(unaudited)
(continued
|
Pleasant |
Gateway |
Total |
|
Hill |
Market |
Pro Forma |
|
Square |
Center |
Adjustments |
|
|
|
|
Assets |
|
|
|
|
|
|
|
Net investment in properties |
$34,341,500 |
21,004,166 |
55,345,666 |
Cash |
- |
(2,577,599) |
(2,577,599) |
Restricted cash |
425,292 |
- |
452,292 |
Other assets |
139,400 |
125,780 |
265,180 |
|
|
|
|
Total assets |
$34,933,192 |
18,552,347 |
53,485,539 |
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Accrued real estate taxes |
30,766 |
91,657 |
122,423 |
Security deposits |
13,641 |
3,690 |
17,331 |
Mortgages payable |
17,120,000 |
15,637,000 |
32,757,000 |
Other liabilities |
452,292 |
2,820,000 |
3,272,292 |
|
|
|
|
Total liabilities |
17,616,699 |
18,552,347 |
36,169,046 |
|
|
|
|
Common Stock |
20,135 |
- |
20,135 |
Additional paid in capital (net of Offering costs) |
17,296,358 |
- |
17,296,358 |
|
|
|
|
Total stockholders equity |
17,316,493 |
- |
17,316,493 |
|
|
|
|
Total liabilities and stockholders' equity |
$34,933,192 |
18,552,347 |
53,485,539 |
|
|
|
|
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Balance Sheet
March 31, 2000
(unaudited)(continued)
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2000
(unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented to effect the acquisition of the properties indicated in Note B of the Notes to the Pro Forma Consolidated Statement of Operations as though they occurred on January 1, 1999.
This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been for the three months ended March 31, 2000, nor does it purport to represent our future financial position. Unless otherwise defined, capitalized terms used herein shall have the same meaning as in the Prospectus.
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2000
(unaudited)
|
Historical |
|
|
|
|
|
|
|
Company |
Pro Forma |
|
|
(A) |
Adjustment |
Pro Forma |
|
|
|
|
|
|
|
|
Rental income |
$3,475,191 |
1,122,597 |
4,597,788 |
Percentage rental income |
- |
- |
- |
Additional rental income |
1,335,078 |
204,362 |
1,539,440 |
Interest income |
200,950 |
- |
200,950 |
Other income |
3,599 |
- |
3,599 |
|
|
|
|
Total income |
5,014,818 |
1,326,959 |
6,341,777 |
|
|
|
|
|
|
|
|
Professional services |
80,725 |
- |
80,725 |
General and administrative expenses |
107,659 |
- |
107,659 |
Advisor asset management fee (C) |
- |
79,400 |
79,400 |
Property operating expenses |
1,462,511 |
265,071 |
1,727,582 |
Management fee (G) |
199,455 |
60,712 |
260,167 |
Interest expense (H) |
1,766,153 |
597,649 |
2,363,802 |
Acquisition costs expensed |
3,877 |
- |
3,877 |
Depreciation (D) |
906,081 |
416,650 |
1,322,731 |
Amortization |
20,024 |
- |
20,024 |
|
|
|
|
Total expenses |
4,546,485 |
1,419,482 |
5,965,967 |
|
|
|
|
Net income (loss) applicable to common shareholders (F) |
468,333 |
(92,523) |
375,810 |
|
|
|
|
|
|
|
|
Weighted average number of shares of common stock outstanding (E) |
6,174,848 |
|
6,194,983 |
|
|
|
|
Basic and diluted net income (loss) per weighted average shares of common stock outstanding (E) |
.08 |
|
.06 |
See accompanying notes to pro forma consolidated statement of operations.
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2000
(unaudited)
|
|
Pleasant |
Gateway |
|
|
Conway |
Hill |
Market |
Total |
|
Plaza |
Square |
Center |
Pro Forma |
|
|
|
|
|
Rental income |
51,435 |
641,547 |
429,615 |
1,122,597 |
Percentage rental income |
- |
- |
- |
- |
Additional rental income |
6,690 |
102,542 |
95,130 |
204,362 |
|
|
|
|
|
Total income |
58,125 |
744,089 |
524,745 |
1,326,959 |
|
|
|
|
|
Advisor asset management fee |
10,600 |
42,800 |
26,000 |
79,400 |
Property operating expenses |
19,674 |
117,865 |
127,532 |
265,071 |
Management fee |
3,615 |
33,484 |
23,613 |
60,712 |
Interest expense |
- |
322,284 |
275,365 |
597,649 |
Depreciation |
21,500 |
270,150 |
125,000 |
416,650 |
|
|
|
|
|
Total expenses |
55,389 |
786,583 |
577,510 |
1,419,482 |
|
|
|
|
|
Net income (loss) |
2,736 |
(42,494) |
(52,765) |
(92,523) |
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2000
(unaudited)
Pleasant Hill Square
The Company purchased this property with the proceeds of a new first mortgage in the amount of approximately $17,120,000. The note bears will have an annual interest rate of 140 basis points over LIBOR (currently 7.53%).
Gateway Market Center
We purchased this property with the proceeds of a new mortgage, which secures two promissory notes in the aggregate principal amount of $15,637,000. One promissory note is in the principal amount of $10,425,000, requires monthly payments of interest only at a fixed rate of 7.94% and is due August 2005. The other note is in the principal amount of $5,212,000, requires monthly payments of interest only at a floating rate per annum of 190 basis points over a 30-day LIBOR rate (which equates to a current interest rate of 8.53%), and is due August 2001. At the time of the purchase, the lender funded $9,025,000 and $4,512,000 respectively of these two notes. The balances of $1,400,000 and $700,000, respectively, will be funded at the time of the purchase of the Home Place of America building.
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
The following unaudited Pro Forma Consolidated Statement of Operations is presented to effect the acquisition of the properties indicated in Note B of the Notes to the Pro Forma Consolidated Statement of Operations as though they occurred on January 1, 1999.
This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been for the year ended December 31, 1999, nor does it purport to represent our future financial position. Unless otherwise defined, capitalized terms used herein shall have the same meaning as in the Prospectus.
Inland Retail Real Estate Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
|
Historical |
|
|
|
|
(B) |
|
|
Company |
Pro Forma |
|
|
(A) |
Adjustment |
Pro Forma |
|
|
|
|
Rental income |
$ 4,339,614 |
11,202,362 |
15,541,976 |
Percentage rental income |
- |
85,529 |
85,529 |
Additional rental income |
1,452,868 |
2,538,385 |
3,991,253 |
Interest income |
237,261 |
- |
237,261 |
Other income |
350 |
- |
350 |
|
|
|
|
Total income |
6,030,093 |
13,826,276 |
19,856,369 |
|
|
|
|
Professional services |
76,844 |
- |
76,844 |
General and administrative expenses |
208,625 |
- |
208,625 |
Advisor asset management fee (C) |
- |
953,400 |
953,400 |
Property operating expenses |
1,646,393 |
2,992,344 |
4,638,737 |
Management fee (G) |
225,665 |
625,612 |
851,277 |
Interest expense (H) |
2,367,882 |
6,993,092 |
9,360,974 |
Acquisition costs expensed |
83,587 |
- |
83,587 |
Depreciation (D) |
1,229,323 |
4,068,699 |
5,298,022 |
Amortization |
23,778 |
- |
23,778 |
|
|
|
|
Total expenses |
5,862,097 |
15,633,147 |
21,495,244 |
|
|
|
|
Net income (loss) applicable to common shareholders (F) |
167,996 |
(1,806,871) |
(1,638,875) |
|
|
|
|
Weighted average number of shares of common stock outstanding (E) |
2,522,628 |
|
7,421,300 |
|
|
|
|
Basic and diluted net income (loss) per weighted average shares of common stock outstanding (E) |
.07 |
|
(.22) |
|
|
|
|
See accompanying notes to pro forma consolidated statement of operations.
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
|
Lake |
Merchants |
Town |
Lake |
Boynton |
|
Walden |
Square |
Center |
Olympia |
Commons |
|
|
|
|
|
|
Rental income |
$ 571,000 |
245,000 |
359,529 |
567,413 |
1,387,674 |
Percentage rental income |
- |
- |
- |
- |
- |
Additional rental income |
183,000 |
122,555 |
91,961 |
149,668 |
364,195 |
|
|
|
|
|
|
Total income |
754,000 |
367,555 |
451,490 |
717,081 |
1,751,869 |
|
|
|
|
|
|
Advisor asset management fee |
72,900 |
28,700 |
48,300 |
49,100 |
152,200 |
Property operating expenses |
186,165 |
90,189 |
84,921 |
161,885 |
517,421 |
Management fee |
33,930 |
16,540 |
20,317 |
32,269 |
82,266 |
Interest expense |
286,988 |
133,720 |
266,000 |
326,312 |
922,360 |
Depreciation |
149,186 |
80,173 |
121,687 |
182,114 |
459,802 |
|
|
|
|
|
|
Total expenses |
729,169 |
349,322 |
541,225 |
751,680 |
2,134,049 |
|
|
|
|
|
|
Net income (loss) |
24,831 |
18,233 |
(89,735) |
(34,599) |
(382,180) |
|
|
|
|
|
|
|
|
|
Countryside |
|
|
|
Bridgewater |
Bartow |
Shopping |
Casselberry |
Conway |
|
Marketplace |
Marketplace |
Center |
Commons |
Plaza |
|
|
|
|
|
|
Rental income |
279,320 |
1,747,468 |
648,397 |
1,790,825 |
483,054 |
Percentage rental income |
- |
63,717 |
- |
- |
- |
Additional rental income |
74,564 |
82,535 |
127,579 |
571,837 |
98,614 |
|
|
|
|
|
|
Total income |
353,884 |
1,893,720 |
775,976 |
2,362,662 |
581,668 |
|
|
|
|
|
|
Advisor asset management fee |
30,000 |
122,000 |
43,000 |
89,500 |
42,500 |
Property operating expenses |
86,821 |
41,168 |
198,943 |
650,051 |
172,708 |
Management fee |
15,925 |
85,217 |
34,919 |
106,319 |
26,175 |
Interest expense |
222,748 |
946,772 |
399,280 |
1,098,318 |
- |
Depreciation |
122,089 |
488,010 |
227,448 |
405,687 |
258,083 |
|
|
|
|
|
|
Total expenses |
477,583 |
1,683,167 |
903,590 |
2,349,875 |
499,466 |
|
|
|
|
|
|
Net income (loss) |
(123,699) |
210,553 |
(127,614) |
12,787 |
82,202 |
|
|
|
|
|
|
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
|
Pleasant |
Gateway |
|
|
Hill |
Market |
Total |
|
Square |
Center |
Pro Forma |
|
|
|
|
Rental income |
2,345,409 |
777,273 |
11,202,362 |
Percentage rental income |
- |
21,812 |
85,529 |
Additional rental income |
430,874 |
241,003 |
2,538,385 |
|
|
|
|
Total income |
2,776,283 |
1,040,088 |
13,826,276 |
|
|
|
|
Advisor asset management fee |
171,200 |
104,000 |
953,400 |
Property operating expenses |
495,461 |
306,611 |
2,992,344 |
Management fee |
124,932 |
46,803 |
625,612 |
Interest expense |
1,289,136 |
1,101,458 |
6,993,092 |
Depreciation |
1,074,420 |
500,000 |
4,068,699 |
|
|
|
|
Total expenses |
3,155,149 |
2,058,872 |
15,633,147 |
|
|
|
|
Net income (loss) |
(378,866) |
(1,018,784) |
(1,806,871) |
|
|
|
|
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
Acquisition of Conway Plaza, Orlando, Florida
Reconciliation of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 prepared in accordance with Rule 3.14 of Regulation S-X (*) to the Pro Forma Adjustments:
Conway Plaza
|
*As |
Pro Forma |
|
|
Reported |
Adjustments |
Total |
Rental income |
$ 483,054 |
- |
483,054 |
Additional rental income |
98,614 |
- |
98,614 |
|
|
|
|
Total income |
581,668 |
- |
581,668 |
|
|
|
|
Advisor asset management fee |
- |
42,500 |
42,500 |
Property operating expenses |
172,708 |
- |
172,708 |
Management fees |
25,929 |
246 |
26,175 |
Depreciation |
- |
258,083 |
258,083 |
|
|
|
|
Total expenses |
198,637 |
300,829 |
499,466 |
|
|
|
|
Net income (loss) |
$ 383,031 |
(300,829) |
82,202 |
|
|
|
|
Acquisition of Pleasant Hill Square, Duluth, Georgia
Reconciliation of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 prepared in accordance with Rule 3.14 of Regulation S-X (*) to the Pro Forma Adjustments:
Pleasant Hill Square
|
*As |
Pro Forma |
|
|
Reported |
Adjustments |
Total |
Rental income |
$ 2,345,409 |
- |
2,345,409 |
Additional rental income |
430,874 |
- |
430,874 |
|
|
|
|
Total income |
2,776,283 |
- |
2,776,283 |
|
|
|
|
Advisor asset management fee |
- |
171,200 |
171,200 |
Property operating expenses |
495,461 |
- |
495,461 |
Management fees |
72,079 |
52,853 |
124,932 |
Interest expense |
- |
1,289,136 |
1,289,136 |
Depreciation |
- |
1,074,420 |
1,074,420 |
|
|
|
|
Total expenses |
567,540 |
2,587,609 |
3,155,149 |
|
|
|
|
Net income (loss) |
$ 2,208,743 |
(2,587,609) |
(378,866) |
|
|
|
|
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
Acquisition of Gateway Market Center, St. Petersburg, Florida
Reconciliation of Gross Income and Direct Operating Expenses for the year ended December 31, 1999 prepared in accordance with Rule 3.14 of Regulation S-X (*) to the Pro Forma Adjustments:
Gateway Market Center
|
*As |
Pro Forma |
|
|
Reported |
Adjustments |
Total |
Rental income |
$ 777,273 |
- |
777,273 |
Percentage rental income |
21,812 |
- |
21,812 |
Additional rental income |
241,003 |
- |
241,003 |
|
|
|
|
Total income |
1,040,088 |
- |
1,040,088 |
|
|
|
|
Advisor asset management fee |
- |
104,000 |
104,000 |
Property operating expenses |
306,611 |
- |
306,611 |
Management fees |
51,157 |
(4,354) |
46,803 |
Interest expense |
- |
1,101,458 |
1,101,458 |
Depreciation |
- |
500,000 |
500,000 |
|
|
|
|
Total expenses |
357,768 |
1,701,104 |
2,058,872 |
|
|
|
|
Net income (loss) |
$ 682,320 |
(1,701,104) |
(1,018,784) |
|
|
|
|
Several tenants, including two anchor tenants, executed leases during 1999 for new or additional space. In addition, one additional anchor tenant executed a new lease with anticipated occupancy to occur in 2000. As a result, subsequent years base rent and recovery income may differ from the amounts reflected above.
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
Lake Walden
Inland Retail Real Estate Trust, Inc. assumed the outstanding mortgage debt related to Lake Walden Square of approximately $10,100,000 in connection with the acquisition. The assumed debt, which originated October 30, 1997, has an annual interest rate of 7.63% and requires monthly principal and interest payments.
In addition, as part of the acquisition, the Company assumed a second mortgage debt of approximately $800,000 due to affiliate with an interest rate of 10.9%.
Merchants Square
Inland Retail Real Estate Trust, Inc. assumed the outstanding mortgage debt related to Merchants Square Shopping Center of approximately $4,300,000 in connection with the acquisition. The assumed debt, which originated October 9, 1998, has an annual interest rate of 7.25% and requires monthly principal and interest payments.
Town Center
Inland Retail Real Estate Trust, Inc. assumed the outstanding mortgage debts related to Town Center totaling approximately $7,600,000 in connection with the acquisition. The assumed debts, which originated April 13, 1999, have annual interest rates ranging from 7% to 175 basis points over LIBOR (currently 7.15%).
Boynton Commons
As part of the acquisition, the Company assumed the outstanding mortgage debts related to Boynton Commons Shopping Center of approximately $22,900,000. The assumed debts, which were modified March 19, 1999, have annual interest rates of 175 basis points over LIBOR (currently 8.23%) and 7.21%, respectively.
Inland Retail Real Estate Trust, Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1999
(unaudited)
Lake Olympia
Inland Retail Real Estate Trust, Inc. assumed the outstanding mortgage debt related to Lake Olympia totaling approximately $5,933,000 in connection with the acquisition. The assumed debt, which originated June 24, 1998, has an annual interest rate of 8.25% and requires monthly principal and interest payments.
Bridgewater Marketplace
As part of the acquisition, the Company assumed an outstanding mortgage debt of approximately $4,450,000. The debt was modified on September 7, 1999, no prepayment penalties were incurred. The principal balance was increased to approximately $4,780,000 and has an annual interest rate of 175 basis points over LIBOR (currently 7.15%).
Bartow Marketplace
The Company purchased this property with the proceeds of a new first mortgage loan in the amount of $18,375,000. The loan is evidenced by two promissory notes. The notes bear an annual interest rate of 150 basis points over LIBOR (currently 6.90%).
Countryside Shopping Center
Inland Retail Real Estate Trust, Inc. assumed the outstanding mortgage debt related to Countryside Shopping Center of approximately $6,720,000 in connection with the acquisition. The assumed debt, which originated March 31, 1998, has an annual interest rate of 175 basis points over LIBOR (currently 7.15%).
Casselberry Commons
As part of the acquisition, the Company assumed two outstanding debts secured by one mortgage related to Casselberry Commons of approximately $13,924,000 from an affiliate of our Advisor. The assumed debts, which originated April 29, 1999, have annual interest rates of 7.64% and 250 basis points over LIBOR (currently 8.3%), respectively.
Pleasant Hill Square
The Company purchased this property with the proceeds of a new first mortgage in the amount of approximately $17,120,000. The note bears an annual interest rate of 140 basis points over LIBOR (currently 7.53%).
Gateway Market Center
We purchased this property with the proceeds of a new mortgage, which secures two promissory notes in the aggregate principal amount of $15,637,000. One promissory note is in the principal amount of $10,425,000, requires monthly payments of interest only at a fixed rate of 7.94% and is due August 2005. The other note is in the principal amount of $5,212,000, requires monthly payments of interest only at a floating rate per annum of 190 basis points over a 30-day LIBOR rate (which equates to a current interest rate of 8.53%), and is due August 2001. At the time of the purchase, the lender funded $9,025,000 and $4,512,000 respectively of these two notes. The balances of $1,400,000 and $700,000, respectively, will be funded at the time of the purchase of the Home Place of America building.
Independent Auditors' Report
The Board of Directors
Inland Retail Real Estate Trust, Inc.:
We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) of Pleasant Hill Shopping Center for the year ended December 31, 1999. This Historical Summary is the responsibility of the management of Inland Retail Real Estate Trust, Inc. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in the Post Effective Amendment No. 4 to Form S-11 of Inland Retail Real Estate Trust, Inc., as described in note 2. The presentation is not intended to be a complete presentation of Pleasant Hill's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in note 2 of Pleasant Hill Shopping Center for the year ended December 31, 1999, in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
April 15, 2000
Pleasant Hill Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1999
Gross income: |
|
Base rental income |
$2,345,409 |
Operating expense and real estate tax recoveries |
430,874 |
|
|
Total Gross Income |
2,776,283 |
|
|
Direct operating expenses: |
|
Operating expenses |
217,693 |
Management fees |
72,079 |
Real estate taxes |
266,331 |
Insurance |
11,437 |
|
|
Total direct operating expenses |
567,540 |
|
|
Excess of gross income over direct operating expenses |
$2,208,743 |
|
|
See accompanying notes to historical summary of gross income and direct operating expenses.
Pleasant Hill Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
For the Year ended December 31, 1999
Pleasant Hill Shopping Center (Pleasant Hill) is located in Duluth, Georgia. It consists of approximately 221,400 square feet of gross leasable area and was 97% leased and occupied at December 31, 1999. Pleasant Hill has 20 tenant spaces and seven anchor tenants occupying 80% of the total leasable area. Inland Retail Real Estate Trust, Inc. has signed a sale and purchase agreement for the purchase of Pleasant Hill from an unaffiliated third party with an anticipated closing date of May 2000.
The Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for inclusion in the Post Effective Amendment No. 4 to Form S-11 of Inland Retail Real Estate Trust, Inc. and is not intended to be a complete presentation of Pleasant Hill's revenues and expenses. The Historical Summary has been prepared on the accrual basis of accounting and requires management of Pleasant Hill to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.
Pleasant Hill leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. Certain of the leases include provisions under which Pleasant Hill is reimbursed for common area costs, real estate taxes, trash removal, water & sewer and insurance costs. Certain of the leases contain renewal options for various periods at various rental rates.
Base rentals are reported as income over the lease term as they become receivable under the lease provisions. However, when rentals vary from a straight-line basis due to short-term rent abatements or escalating rents during the lease term, the income is recognized based on effective rental rates. Related adjustments increased base rental income by $65,758 for the year ended December 31, 1999.
Pleasant Hill Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
For the Year ended December 31, 1999
Minimum rents to be received from tenants under operating leases in effect or executed at December 31, 1999, are as follows:
Year |
Amount |
|
|
2000 |
$ 2,566,188 |
2001 |
2,529,609 |
2002 |
2,484,992 |
2003 |
2,373,780 |
2004 |
2,384,905 |
Thereafter |
10,748,781 |
|
|
|
$23,088,255 |
|
|
Direct operating expenses include only those costs expected to be comparable to the proposed future operations of Pleasant Hill. Costs such as mortgage interest, depreciation, amortization and professional fees are excluded from the Historical Summary.
Pleasant Hill is managed pursuant to the terms of a management agreement for an annual fee of 4% to 6% of gross revenues (as defined). Subsequent to the sale of Pleasant Hill (note 1), the current management agreement will cease. Any new management agreement may cause future management fees to differ from the amounts reflected in the Historical Summary.
Pleasant Hill Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Three months ended March 31, 2000
(unaudited)
Gross income: |
|
Base and percentage rental income |
$ 641,547 |
Operating expense and real estate tax recoveries |
102,542 |
|
|
Total Gross Income |
744,089 |
|
|
Direct operating expenses: |
|
Operating expenses |
41,603 |
Management fees |
31,545 |
Real estate taxes |
69,912 |
Insurance |
6,350 |
Total direct operating expenses |
149,410 |
|
|
Excess of gross income over direct operating expenses |
$ 594,679 |
|
|
See accompanying notes to historical summary of gross income and direct operating expenses.
Pleasant Hill Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating expenses
Three months ended March 31, 2000
(unaudited)
The Historical Summary of Gross Income and Direct Operating Expenses for the period ended March 31, 2000 has been prepared from operating statements provided by the owners of the property during that period and requires management of Pleasant Hill Shopping Center to make estimates and assumptions that affect the amounts of the revenues and expenses during that period. Actual results may differ from those estimates.
In the opinion of management, all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim period presented have been reflected. Certain information in footnote disclosures included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.
Independent Auditors' Report
The Board of Directors
Inland Retail Real Estate Trust, Inc.
We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (Historical Summary) of Gateway Market Center for the year ended December 31, 1999. This Historical summary is the responsibility of the management of Inland Retail Real Estate Trust, Inc. Our responsibility is to express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in the Current Report on Form 8-K of Inland Retail Real Estate Trust, Inc., as described in note 2. The presentation is not intended to be a complete presentation of Gateway Market Center's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in note 2 of Gateway Market Center for the year ended December 31, 1999, in conformity with generally accepted accounting principles.
Chicago, Illinois
June 26, 2000
Gateway Market Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1999
Gross income: |
|
Base rental income |
$ 777,273 |
Operating expense and real estate tax recoveries |
241,003 |
Other income |
21,812 |
|
|
Total gross income |
1,040,088 |
|
|
Direct operating expenses: |
|
Operating expenses |
138,495 |
Management fees |
51,157 |
Real estate taxes |
168,116 |
|
|
Total direct operating expenses |
357,768 |
|
|
Excess of gross income over direct operating expenses |
$ 682,320 |
See accompanying notes to historical summary of gross income and direct operating expense.
Gateway Market Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1999
Gateway Market Center (Gateway) is located in St. Petersburg, Florida. It consists of approximately 231,500 square feet of gross leasable area and was 99% leased and 82% leased and occupied at December 31, 1999. Gateway has four anchor tenants, which occupy 68% of the gross leasable area. Inland Retail Real Estate Trust, Inc. has signed a sale and purchase agreement for the purchase of Gateway from an unaffiliated third party with an anticipated closing in July 2000.
The Historical Summary of Gross Income and Direct Operating Expense (Historical Summary) has been prepared for the purpose of complying with Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for inclusion in the Current Report on Form 8-K of Inland Retail Real Estate Trust, Inc. and is not intended to be complete presentation of Gateway's revenues and expenses. The Historical Summary has been prepared on the accrual basis of accounting and requires management of Gateway to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.
Gateway leases retail space under various lease agreements with its tenants. All leases are accounted for as operating leases. Certain of the leases include provisions under which Gateway is reimbursed for common area costs, real estate taxes, trash removal, water & sewer and insurance costs. Certain of the leases contain renewal options for various periods at various rental rates. Certain of the leases contain additional rental income based on a stated percentage of gross sales over the tenant's break point. Such amounts totaled approximately $22,000 for the year ended December 31, 1999.
Base rentals are reported as income over the lease term as they become receivable under the lease provisions. However, when rentals vary from a straight-line basis due to short-term rent abatements or escalating rents during the lease term, the income is recognized based on effective rental rates. Related adjustments increased base rental income by approximately $14,300 for the year ended December 31, 1999.
Several tenants, including two anchor tenants, executed leases during 1999 for new or additional space. In addition, one additional anchor tenant executed a new lease with anticipated occupancy to occur in 2000. As a result, subsequent years base rent and recovery income may differ from the amounts reflected in the Historical Summary.
Gateway Market Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1999
Minimum rents to be received from tenants under operating leases in effect at December 31, 1999 are as follows:
Year |
Amount |
|
|
2000 |
$ 1,824,667 |
2001 |
1,998,020 |
2002 |
1,958,682 |
2003 |
1,962,449 |
2004 |
1,933,352 |
Thereafter |
18,014,650 |
|
|
|
$27,691,820 |
Direct operating expenses include only those costs expected to be comparable to the proposed future operations of Gateway. Costs such as mortgage interest, depreciation, amortization, and professional fees are excluded from the Historical Summary.
Gateway was management pursuant to the terms of a management agreement for an annual fee of 5% of gross revenues (as defined). Subsequent to the sale of Gateway (note 1), the current management agreement will cease. Any new management agreement may cause future management fees to differ from the amounts reflected in the Historical Summary.
Gateway Market Center
Historical Summary of Gross Income and Direct Operating Expenses
Three months ended March 31, 2000
(unaudited)
Gross income: |
|
Base and percentage rental income |
$ 429,615 |
Operating expense and real estate tax recoveries |
95,130 |
|
|
Total Gross Income |
524,745 |
|
|
Direct operating expenses: |
|
Operating expenses |
68,829 |
Management fees |
22,476 |
Real estate taxes |
58,708 |
Total direct operating expenses |
150,008 |
|
|
Excess of gross income over direct operating expenses |
$ 374,737 |
|
|
See accompanying notes to historical summary of gross income and direct operating expenses.
Gateway Market Center
Notes to Historical Summary of Gross Income and Direct Operating expenses
Three months ended March 31, 2000
(unaudited)
The Historical Summary of Gross Income and Direct Operating Expenses for the period ended March 31, 2000 has been prepared from operating statements provided by the owners of the property during that period and requires management of Gateway Market Center to make estimates and assumptions that affect the amounts of the revenues and expenses during that period. Actual results may differ from those estimates.
In the opinion of management, all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim period presented have been reflected. Certain information in footnote disclosures included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.
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