Inland Retail Real Estate Trust, Inc.
Sticker Supplement
This Sticker Supplement No. 8 dated January 10, 2000 to our Prospectus dated
February 11, 1999 summarizes Supplement No. 8 which updates information in the
"Real Property Investments" and "Plan of Distribution" sections of our
Prospectus. Supplement No. 8 expands upon, supplements, modifies or supersedes
certain information contained in the Prospectus and its Supplement No. 7 dated
November 2, 1999, and must be read in conjunction with our Prospectus and that
Supplement. Any word that is capitalized in this Sticker Supplement but not
defined has the same meaning as in our Prospectus.
Real Property Investments
Casselberry Commons, Casselberry, Florida
On December 30, 1999, we purchased Casselberry Commons, an existing shopping
center containing 227,664 gross leasable square feet. We accomplished the
acquisition by acquiring a 100% ownership interest in Inland Southeast
Casselberry, L.L.C., which was owned by a company within the Inland
Organization. This shopping center is located at the northwest corner of State
Road 436 (Semoran Boulevard) and Howell Branch Road in Seminole County, City of
Casselberry, a suburb of northeast Orlando, Florida. We purchased this
property for $17,766,370, which represents the total cost incurred by the
Inland company in connection with its purchase and financing of the property.
This price represents approximately $78 per square foot of leasable space. We
purchased this property subject to a mortgage in favor of AmSouth Bank, which
secures debt in the principal amount of $13,924,800. As of December 30, 1999,
our new property was approximately 97.3% leased. The tenants leasing more than
10% of the total square footage currently include Publix and Ross Stores, Inc.
Plan of Distribution
As of December 31, 1999, we had sold 5,329,432 shares resulting in gross
proceeds of $53,294,324. 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 December 31, 1999, we have incurred $5,062,961 of
commissions and fees payable to Inland Securities Corporation, which will
result in our receipt of $48,231,363 of net proceeds from the sale of those
5,329,432 shares. An additional 43,207 shares have been sold pursuant to our
Distribution Reinvestment Program as of December 31, 1999, for which we have
received additional net proceeds of $410,465. We also pay an affiliate of our
Advisor, which is owned principally by individuals who are affiliates of
Inland, fees to manage and lease our properties. As of December 31, 1999, we
have incurred and paid property management fees of $225,665, of which $201,835
were retained by the mentioned affiliate of our Advisor. Our Advisor may also
receive an annual asset management fee of not more than 1% of our average
invested assets, to be paid quarterly. As of the end of the quarter ending
December 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 $360,370 are included in the purchase price we
paid for Casselberry Commons. Acquisition expenses totaling $1,498,413 are
included in the purchase prices we have paid for all our properties purchased
through December 31, 1999. As of December 31, 1999, we had invested
approximately $32,696,000 in properties that we purchased for an aggregate
purchase price of approximately $127,236,000, and after expenditures for
organization and offering expenses and acquisition expenses and establishing
appropriate reserves, we had net offering proceeds of approximately $14,564,000
available for investment in additional properties.
SUPPLEMENT NO. 8
DATED JANUARY 10, 2000
TO THE PROSPECTUS DATED FEBRUARY 11, 1999
OF INLAND RETAIL REAL ESTATE TRUST, INC.
We are providing this Supplement No. 8 to you in order to supplement our
Prospectus. This Supplement No. 8 updates information in the "Real Property
Investments" and "Plan of Distribution" sections of our Prospectus. This
Supplement No. 8 expands upon, supplements, modifies or supersedes certain
information contained in the Prospectus and its Supplement No. 7 dated November
2, 1999, and must be read in conjunction with our Prospectus and that
Supplement. Any word that is capitalized in this Supplement but not defined
has the same meaning as in our Prospectus.
Real Property Investments
Casselberry Commons, Casselberry, Florida
On December 30, 1999, we purchased a shopping center known as Casselberry
Commons, containing 227,664 gross leasable square feet, by acquiring from
Inland Southeast Investment Corporation ("ISIC"), which is an affiliate of our
Advisor, a 100% ownership interest in Inland Southeast Casselberry, L.L.C.
Inland Southeast Casselberry, L.L.C. owns the entire fee simple interest in
Casselberry Commons. The shopping center site consists of approximately 21.87
acres.
Casselberry Commons is located at the northwest corner of State Road 436
(Semoran Boulevard) and Howell Branch Road in Seminole County, City of
Casselberry, a suburb of northeast Orlando, Florida.
ISIC, through its wholly owned limited liability company, Inland Southeast
Casselberry, L.L.C., purchased Casselberry Commons on April 29, 1999 from an
unaffiliated third party. The $17,766,370 we paid for this property represents
all of the acquisition costs and financing costs incurred by ISIC in connection
with its acquisition and financing of the property as of the date of our
purchase of its ownership interest in Inland Southeast Casselberry, L.L.C. The
purchase price we paid for the property is approximately $78 per square foot of
leasable space, and consists of the following:
* Purchase Price paid by ISIC............................ $ 17,406,000
* Acquisition costs paid by ISIC to third parties........ 147,491
* Financing costs paid by ISIC to an Inland affiliate.... 54,046
* Financing costs paid by ISIC to third parties.......... 158,833
TOTAL......................... $ 17,766,370
=============
We paid a total of $3,790,242 for the benefit of ISIC, since the outstanding
balance of the first mortgage loan and certain prorations were credited against
the purchase price. That amount, together with $145,639 provided by ISIC (for
a total of $3,935,881), was paid part to Inland Mortgage Investment Corporation
and part to Inland Real Estate Investment Corporation, both Inland affiliated
companies, as payment in full of two promissory notes evidencing loans made to
ISIC in connection with its purchase of the property. The promissory notes
provided for the payment of interest only at the rates of 10.9% per annum and
8% per annum, respectively.
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.
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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 a mortgage, security agreement and an
assignment of leases, rents and contract rights in favor of AmSouth Bank, which
secure two promissory notes in the aggregate principal amount of $13,924,800.
One promissory note is in the principal amount of $8,703,000, requires monthly
payments of interest only at a fixed rate of 7.64% and is due April 29, 2006.
Payment of all or part of this note before maturity requires a prepayment
premium determined according to an equivalent yield formula, the effect of
which is to provide the lender with the same yield until maturity on the loan
as if the loan had not been paid off. The other note is in the principal
amount of $5,221,800, requires monthly payments of interest only at a floating
rate per annum of 2.5% over a 30-day LIBOR rate (which equated to an interest
rate of 8.3% as of the date of acquisition of this property), is due April 29,
2000, and may be paid at any time prior to maturity without penalty.
Casselberry Commons, which was originally constructed in 1973 and completely
renovated in 1998, consists of four separate buildings. In addition to the
main building, there are three outlot buildings, which are leased to Burger
King, LensCrafters and Patsino's Restaurant. Not included in the property we
purchased are two undeveloped outparcels and developed outparcels occupied by
an Arby's Restaurant, Washington Mutual Bank and Specialty Imaging Services.
As of December 30, 1999, this property was approximately 97.3% leased. Tenants
leasing more than 10% of the total square footage currently include Publix, (a
supermarket) and Ross Stores, Inc., (a discount department clothing store).
The leases with these tenants require the tenants to pay base annual rent on a
monthly basis as follows:
Base Rent
Approximate Per Square
GLA Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Ross Stores, Inc. 42,862 18.83 3.75 05/83 05/90
4.69 05/90 04/00
4.70 04/00 05/00
3.75 (1) 05/00 02/03
Options (2) 4.69 02/03 01/18
Publix 35,930 15.78 5.00 02/73 01/12
Options (3) 5.00 01/12 01/32
(1) As of May, 2000 the base rent per square foot changes from $4.70 to $3.75
for the remainder of the current term ending in January 2003.
(2) There are three successive five-year renewal options at the same base rent
per square foot per annum.
(3) 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 $11,015,000. 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 1999 (the most recent tax year for which information is
generally available) were $210,588.
On December 30, 1999, a total of 221,421 square feet was leased to 36 tenants at
this property. The following tables set forth certain information with respect
to our leases with those tenants:
Approximate
GLA Current Rent Per
Leased Lease Renewal Annual Rent Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
Publix 35,930 01/12 4/5 179,650 5.00
Leedy's Books 1,350 12/99 - 16,875 12.50
Butler Shoe Repair 600 05/00 1/3 6,654 11.09
Joe Miller
Jewelers Inc. 600 06/00 1/2 7,200 12.00
Total Travel 600 07/00 - 6,858 11.43
Critters Corner 2,000 07/00 1/5 26,500 13.25
Anthony's Pizza 1,350 10/00 1/3 18,981 14.06
Shoeworld 4,000 01/01 3/5 37,000 9.25
Nail Tip Salon 625 03/01 1/3 7,863 12.58
Fashion Bug 7,200 05/01 3/5 68,400 9.50
The Closet Door 1,400 06/01 - 13,104 9.36
Radio Shack 2,400 10/01 2/5 20,160 8.40
Sally Beauty
Supply 2,000 11/02 1/5 25,000 12.50
Music Shack Inc. 3,200 12/02 1/5 31,392 9.81
Bagel King
Bakery Inc. 4,320 12/02 2/5 33,696 7.80
Ross Stores, Inc. 42,862 01/03 3/5 201,023 4.69
Dollar Tree
Stores, Inc. 4,080 04/03 2/5 44,880 11.00
Beall's Outlet
Stores, Inc. 12,000 04/03 3/5 60,000 5.00
E-Solutions LLC 1,350 04/03 1/5 19,656 14.56
Dockside Imports 20,579 10/03 2/5 98,779 4.80
Home Care America 7,000 10/03 2/5 105,000 15.00
Clicks #16 Ltd. 6,051 10/03 1/5 67,892 11.22
Big Mail Boxes 1,800 11/03 1/5 25,200 14.00
Trader Publishing
Company 5,000 11/03 1/5 43,250 8.65
Alan David Designs 1,800 01/04 1/5 27,000 15.00
LensCrafters 4,200 02/04 1/5 48,006 11.43
Patsino's Restaurant 2,000 02/04 - 35,680 17.84
Centre For
Alternative 4,292 04/04 1/5 55,796 13.00
Mutare Inc. 1,780 08/04 2/5 27,145 15.25
Commercial Credit
Management 2,000 11/04 1/5 16,000 8.00
Burger King 4,350 09/04 1/5 38,150 8.77
K.K. Man 1,740 12/04 2/5 6,003 3.45
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Approximate
GLA Current Rent Per
Leased Lease Renewal Annual Rent Square Foot
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
Blockbuster
Video, Inc. 5,790 05/05 2/5 95,535 16.50
General Nutrition
Corp. 1,350 12/05 1/5 18,900 14.00
Service Merchandise
Company, Inc. 13,822 02/09 3/5 116,243 8.41
Hancock Fabrics 10,000 09/09 3/5 67,200 6.72
Peterson Outdoor
Advertising (BILLBOARD) 05/09 - 4,300 N/A
Vacant 6,243
(1) In general, each tenant pays its proportionate share of real estate taxes,
insurance and common area maintenance costs, although the leases with some
tenants provide that the tenant's liability for such expenses is limited in
some way, usually so that their liability for such expenses does not exceed
a specified amount. Burger King, LensCrafters and Patsino's Restaurant are
located on separately assessed parcels for real estate tax purposes and pay
their own tax bills. In addition, Radio Shack, General Nutrition
Corporation, Hancock Fabrics, Publix, Fashion Bug, Beall's Outlet Stores,
Inc., Shoeworld, Ross Stores, Inc., Dockside Imports, Burger King,
Patsino's Restaurant and LensCrafters pay, as additional rent, a percentage
of gross sales in excess of a prescribed amount.
(2) Not included in the list of tenants in the foregoing chart is Kimsworth,
Inc. ("Kimsworth"), to which we lease 103,161 square feet, because
Kimsworth does not occupy any of that space. We sublease the same space
back from Kimsworth for $92,845 per year more than what Kimsworth pays to
us as rent for its lease. We in turn sublet that space to occupants who
are included among the tenants listed above and who actually occupy the
space, including Ross Stores, Inc., Service Merchandise Company, Inc.,
Dockside Imports, and Home Care America. The rent we receive from those
tenants is included in the rent in the above table.
(3) Service Merchandise Company, Inc. ("Service Merchandise") has filed for
protection under chapter 11 of the federal bankruptcy laws in order to
reorganize its business. It has the right under the bankruptcy laws to
terminate its lease with us, but as of December 31, 1999, it had neither
accepted nor rejected that lease. We benefit from the establishment of an
escrow which will pay us the amount of rent due from Service Merchandise if
Service Merchandise fails to pay the rent itself and for the amount of
tenant improvements and leasing commissions we incur if Service Merchandise
rejects its lease and the space is leased to a new tenant. This protection
for rent payments lasts until the expiration of 180 days after the
effective date of a bankruptcy court confirmed plan of reorganization for
Service Merchandise which had not been modified or revoked during the 180
days to provide for rejection of the lease, or the exhaustion of the
$270,358 (the amount of rent due under its lease for two years) that was
escrowed for this purpose. The escrow also is holding an additional
$207,300 ($15 per square foot) for the mentioned tenant improvements and
leasing commissions, which will be available until April 29, 2002.
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(4) Approximately $133,000 is being held in escrow and is available until April
30, 2001 for disbursement to us for rent, real estate taxes, insurance,
common area maintenance charges, leasing commissions and tenant improvement
costs relating to 3,000 square feet of the vacant space. Approximately
$76,000 of these escrowed funds are available to be paid to us at the
annual rate of $19 per square foot times the number of square feet of such
3,000 square feet that remains vacant in the month for which payment is
made. As of the date of our acquisition of the property, we are entitled
to receive $4,750 per month from the escrow. When all or any part of such
vacant 3,000 square feet is rented and the new tenant begins paying rent,
the amount we will be entitled to receive from the escrow will be reduced
or eliminated. In addition, approximately $45,000 of the escrowed funds
are available for payment of leasing commissions and tenant improvement
costs for such vacant 3,000 square feet, to be disbursed as and when such
costs are incurred. The remainder of the escrowed funds are available to
us for reimbursement of tenant improvement costs we paid to our seller as
part of the purchase price of the property.
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring By Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases (2)
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
2000 5 5,150 66,193 1,711,648 12.85 2.26 4.11
2001 5 15,625 147,384 1,581,140 9.43 6.86 8.61
2002 3 9,520 100,078 1,540,687 10.51 4.18 6.33
2003 9 100,722 643,364 1,171,540 6.39 44.24 41.76
2004 8 22,162 307,545 661,029 13.42 9.73 26.25
2005 2 7,140 118,680 460,985 16.62 3.14 17.95
2006 - - - 403,869 - - -
2007 - - - 408,154 - - -
2008 - - - 412,577 - - -
2009 2 23,822 228,680 183,897 9.60 10.46 55.43
(1) For purposes of this column, we made no assumptions regarding the re-leasing of
expiring leases. Therefore, no amount is included in this column for any lease which
will expire during the specified 10-year period, commencing with its actual expiration
date and continuing throughout the remaining years shown in this table.
(2) In view of the assumption made with regard to Total Annual Base Rent as explained in
footnote (1), the percentages shown may not be reflective of the expected actual
percentages.
(3) The foregoing assumptions should not be deemed indicative of or a prediction of future
actual results. It is the opinion of our management that the space for expiring
leases will be re-leased at market rates existing at the time of the expiration of
those leases.
</TABLE>
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We received an appraisal which states that it was prepared in conformity with
the Code of Professional Ethics and 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 a fair market value for
Casselberry Commons, as of December 28, 1999, of $18,000,000. 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 December 31, 1999, we had sold 5,329,432 shares resulting in gross
proceeds of $53,294,324. 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 December 31, 1999, we have incurred $5,062,961 of commissions
and fees payable to Inland Securities Corporation, which will result in our
receipt of $48,231,363 of net proceeds from the sale of those 5,329,432 shares.
An additional 43,207 shares have been sold pursuant to our Distribution
Reinvestment Program as of December 31, 1999, for which we have received
additional net proceeds of $410,465. We also pay an affiliate of our Advisor,
which is owned principally by individuals who are affiliates of Inland, fees to
manage and lease our properties. As of December 31, 1999, we have incurred and
paid property management fees of $225,665, of which $201,835 were retained by
the mentioned affiliate of our Advisor. Our Advisor may also receive an annual
asset management fee of not more than 1% of our average invested assets, to be
paid quarterly. As of the end of the quarter ending December 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
$360,370 are included in the purchase price we paid for Casselberry Commons.
Acquisition expenses totaling $1,498,413 are included in the purchase prices we
have paid for all our properties purchased through December 31, 1999. As of
December 31, 1999, we had invested approximately $32,696,000 in properties that
we purchased for an aggregate purchase price of approximately $127,236,000, and
after expenditures for organization and offering expenses and acquisition
expenses and establishing appropriate reserves, we had net offering proceeds of
approximately $14,564,000 available for investment in additional properties.
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