Inland Retail Real Estate Trust, Inc.
Sticker Supplement
This Sticker Supplement No. 10 dated February 22, 2000 to our Prospectus
dated February 11, 1999 summarizes Supplement No. 10 which updates information
in the "Real Property Investments," "Plan of Distribution," "How to Subscribe,"
and "Distribution Reinvestment and Share Repurchase Programs" sections of our
Prospectus and includes the new form of Subscription Agreement to elect the
deferred commission option as Appendix A. Supplement No. 10 expands upon,
supplements, modifies or supersedes certain information contained in the
Prospectus and its Supplement No. 9 dated February 2, 2000, 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
Conway Plaza, Orlando, Florida
On February 9, 2000, we purchased Conway Plaza, an existing shopping center
containing 119,423 gross leasable square feet. This shopping center is located
at the southeast corner of Curry Ford and Conway Roads in Orange County,
Orlando, Florida. We purchased this property in an all cash transaction for
$8,540,363. This price represents approximately $72 per square foot of
leasable space. As of February 9, 2000, our new property was approximately 97%
leased. The tenants leasing more than 10% of the total square footage include
Publix and Beall's Outlet Store.
Plan of Distribution
As of February 11, 2000, we had sold 6,148,060 shares resulting in gross
proceeds of $61,468,604. 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 February 11, 2000, we have incurred $5,827,517 of
commissions and fees payable to Inland Securities Corporation, which will
result in our receipt of $55,641,087 of net proceeds from the sale of those
6,148,060 shares. An additional 66,851 shares have been sold pursuant to our
Distribution Reinvestment Program as of February 11, 2000, for which we have
received additional net proceeds of $635,084. 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 $1,538,776 are included in the purchase prices we
have paid for all our properties purchased through February 11, 2000, which
includes $40,363 of acquisition expenses paid in connection with the purchase
of Conway Plaza. After the purchase of Conway Plaza, we had invested
approximately $41,040,000 in properties that we purchased for an aggregate
purchase price of approximately $135,876,000, and after expenditures for
organization and offering expenses and acquisition expenses and establishing
appropriate reserves, as of February 11, 2000, we had net offering proceeds of
approximately $11,270,000 available for investment in additional properties.
SUPPLEMENT NO. 10
DATED FEBRUARY 22, 2000
TO THE PROSPECTUS DATED FEBRUARY 11, 1999
OF INLAND RETAIL REAL ESTATE TRUST, INC.
We are providing this Supplement No. 10 to you in order to supplement our
Prospectus. This Supplement No. 10 updates information in the "Real Property
Investments," "Plan of Distribution," "How to Subscribe," and "Distribution
Reinvestment and Share Repurchase Programs" sections of our Prospectus and
includes the new form of Subscription Agreement to elect the deferred commission
option as Appendix A. This Supplement No. 10 expands upon, supplements,
modifies or supersedes certain information contained in the Prospectus and its
Supplement No. 9 dated February 2, 2000, 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
Conway Plaza, Orlando, Florida
On February 9, 2000, we purchased an existing shopping center known as Conway
Plaza located on approximately 17 acres and containing 119,423 gross leasable
square feet. Conway Plaza Shopping Center is a food-anchored community shopping
center located at the southeast corner of Curry Ford and Conway Roads in Orange
County, Orlando, Florida.
We purchased Conway Plaza from an unaffiliated third party by paying the entire
purchase price we paid for the property in cash. The property will be financed
in the future. Our wholly owned Florida limited liability company, Inland
Southeast Conway, L.L.C., owns the entire fee simple interest in Conway Plaza.
Our total acquisition cost, including expenses, was approximately $8,540,363.
This amount 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 $72 per square foot of leasable space, which
consists of the following:
* Purchase Price......................................... $ 8,500,000
* Acquisition costs to third parties..................... 40,363
TOTAL......................... $ 8,540,363
=============
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 anticipate expending not more than approximately $250,000 for roof repairs
and parking lot and landscaping improvements over the next one to two years. It
is unlikely that the majority of such expenditures will be passed through to the
tenants.
An environmental assessment conducted in 1994 identified the presence of
tetrachloroethylene (PCE) and trichloroethylene (TCE) in the groundwater at the
property. The PCE and TCE were reportedly present as the result of releases
primarily from a dry cleaner located adjacent to our property, and secondarily,
from a dry cleaner that for approximately 30 years, and until August 1998, was a
tenant at our property.
-1-
Based upon a sampling of groundwater in January 2000, there is an environmental
risk at the site but we have been advised that it appears to be relatively low
because the on-site contamination measured in water samples taken in 1994 has
diminished significantly. Additionally, based upon the results of the sampling
in January 2000 of surface water, we have been advised that there is no apparent
environmental risk off our site as nothing of environmental concern was detected
in the water samples taken from the lake adjacent to and downgradient of our
property. Therefore, we do not at this time anticipate any third-party having a
legal basis for making a claim or filing a lawsuit against us for existing
conditions.
The federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") imposes strict liability for all cleanup costs on the current owner
of property where there has been a release or threatened release of hazardous
substances. PCE and TCE are such hazardous substances. While the federal
government under CERCLA may always perform a response action at the facility or
require the owner to do so, in light of the fact that the State of Florida is
dealing with the property as explained below and given the facts known to date,
absent changed circumstances, we have been advised that such possibility is
small. In addition, there has been no indication that the federal government is
interested in the site.
The State of Florida has established a state-funded dry cleaning solvent cleanup
program to clean up properties that are contaminated as a result of the
operations of a dry cleaning facility. This program is administered by the
Florida Department of Environmental Protection. The program limits the
liability of the owner, operator and real property owner of facilities for
cleanup of solvent contamination if certain stated conditions are met.
The former tenant submitted an application for eligibility in the Florida
program in December 1996. The site was accepted in the program in April 1997
with a deductible of $1,000. Assessment and cleanup under the program is
implemented according to a priority ranking system established by the Florida
Department of Environmental Protection. In view of the site's priority ranking
as of January 2000, the site will most likely not be addressed for cleanup under
the program until at least the year 2001. The adjacent off-site dry cleaner has
also been accepted in the program and its cleanup will be scheduled concurrently
with our property. Even though our property may have been contaminated by the
upgradient and adjacent dry cleaner, there presently is probably no possibility
of our recovering anything from that entity.
Regardless of a site's eligibility for this program, real property owners are
authorized to conduct rehabilitation activities at any time. The law provides
limited liability protection under certain conditions. However, the owner may
not seek cost recovery from the Florida fund.
We do not plan on conducting our own rehabilitation activities. Instead, we
intend to have the property assessed and, if necessary, cleaned up through the
Florida program whenever the program is ready to start cleanup on the property.
In addition, we have purchased an environmental impairment insurance policy for
known and unknown environmental contamination at the site providing coverage of
up to $5 million for each loss and for the total of all losses, for a term of 10
years. The insurance covers on-site cleanup where the cleanup costs result from
a governmental mandate of corrective action from pollution conditions at, on or
within the site to which the insurance applies. Further, the third party
pollution liability coverage will cover sums that we become legally obligated to
pay as damages arising out of claims for bodily injury or property damage that
result from pollution conditions at, on or emanating from our site.
-2-
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.
Conway Plaza, which was constructed between 1966 and 1981 and substantially
renovated in 1999 (with Publix being newly rebuilt in 1999), is a single-story,
multi-tenant, retail center. As of February 9, 2000, this property was
approximately 97% leased. In addition to the main building, there are three
outbuildings. The smallest outbuilding consists of three tenant spaces, each of
1,200 square feet. Weighco of Florida and the Nail Salon are tenants in this
outbuilding, and one of the tenant spaces is vacant. Separated from the
smallest outbuilding by a few feet is the largest outbuilding, consisting of two
tenant spaces of 5,100 square feet each and another of 6,015 square feet. The
6,015 square foot space was completely renovated in 1999 and is occupied by
Coldwell Banker. Centered Health Care, P.A. and Greenberg Dental are tenants in
each of the 5,100 square foot spaces in this larger building. The third
outbuilding is a stand alone metal structure of 3,050 square feet leased by
Fabriclean.
Two tenants, Publix (a supermarket) and Beall's Outlet Store (a discount
department 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 Foot Per
Leased % of Total Annum Lease Term
Lessee (Sq. Ft.) GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Publix 37,888 31.73 7.75 10/99 10/19
Options (1) (3) 7.75 11/19 10/49
Beall's Outlet
Store 12,000 10.05 5.00 05/97 04/01
Options (2) (3) 5.25 to 05/01 04/25
7.00
(1) There are six successive five-year renewal options at the same base rent
per square foot per annum.
(2) There are eight successive three-year renewal options. The base rent per
square foot increases by $.25 per square foot for each option.
(3) Publix and Beall's Outlet Store are obligated to pay, as additional rent, a
percentage of gross sales in excess of a prescribed amount, subject, in the case
of Beall's Outlet Store, to a specified maximum amount. However, neither Publix
or Beall's Outlet Store are currently paying percentage rent since their gross
sales have not reached the prescribed amounts.
For federal income tax purposes, our depreciable basis in this property will be
approximately $6,394,000. 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 $74,661.
-3-
On February 9, 2000, a total of 115,823 square feet was leased to 20 tenants at
this property. The following tables set forth certain information with respect
to our leases with those tenants as of February 9, 2000:
Approximate Base Rent Per
GLA Current Square Foot
Leased Lease Renewal Annual Rent Per Annum
Lessee (Sq. Ft.) Ends Options ($) ($)
------ ---------- ----- ------- ----------- -----------
Publix 37,888 10/19 6/5 293,632 7.75
Paramount Health
Club 8,410 03/00 - 63,075 7.50
Henry's Vacuum 1,200 07/00 - 12,000 10.00
Weighco of Florida 1,200 07/00 - 12,660 10.55
Sunshine Laundry 1,800 12/01 1/5 22,284 12.38
Nail Salon 1,200 12/00 - 12,600 10.50
Fabriclean 3,050 01/01 - 24,980 8.19
Beall's Outlet
Store 12,000 04/01 8/3 60,000 5.00
A+ Liquors 1,300 04/01 - 13,156 10.12
Coldwell Banker 6,015 07/01 - 48,782 8.11
Players Sport Pub 5,700 08/01 - 49,590 8.70
Players Sport Pub (2)1,400 08/01 - 1,204 0.86
Great Clips 1,600 09/02 - 16,000 10.00
Greeting Card
Depot 1,800 03/03 - 15,600 8.67
Nature's Market 2,200 10/03 - 22,000 10.00
Advance America 1,600 12/04 - 17,600 11.00
Dollar Tree Store 5,400 01/05 2/5 43,200 8.00
Eckerd Drugs 10,260 01/05 4/5 42,270 4.12
Centered Health
Care, P.A. 5,100 12/06 - 51,000 10.00
Hua Xiu Chinese
Food Take Out
Restaurant 1,600 04/07 - 16,480 10.30
Greenberg Dental 5,100 12/09 - 34,986 6.86
Vacant 3,600
(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. Eckerd Drugs pays, as additional rent, a percentage of
gross sales in excess of a prescribed amount, but is not obligated to pay
any share of insurance costs. Beall's Outlet Store does not pay its
proportionate share of any expenses.
(2) This lease is for storage space.
-4-
(3) Approximately $107,525 is being held in escrow and is available for a
period of 23 months following the closing of our purchase of this property
(i.e., until January 2002) for disbursement to us for rent, common area
maintenance charges, real estate taxes and insurance relating to 3,600
square feet of vacant space. Of these escrowed funds, $77,050 are
available to be paid to us at the annual rate of $14.50 per square foot for
base rent and $2.25 per square foot for common area maintenance, real
estate taxes and insurance for 2,400 square feet of such vacant space, and
$30,475 of these escrowed funds are available to be paid to us at the
annual rate of $11.00 per square foot for base rent and $2.25 per square
foot for common area maintenance, real estate taxes and insurance for 1,200
square feet of such vacant space. Payments are to be made to us monthly
from that escrow if the spaces remain vacant during the 23-month period.
When all or part of such vacant space is rented, and the new tenant begins
paying full current rent and reimbursable expenses, the amount we will be
entitled to receive from the escrow will be reduced or eliminated. The
seller is also responsible for all leasing commissions, tenant improvements
and all other costs associated with placing tenants in the vacant space.
In addition, a $15,000 escrow has been established for the seller's
obligation to perform certain parking lot paving and building cleaning,
patching, caulking and painting.
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring By Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases (2)
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
2000 4 12,010 100,335 811,915 8.35 10.06 12.36
2001 6 31,265 220,667 673,596 7.06 26.18 27.18
2002 1 1,600 16,480 563,147 10.30 1.34 2.45
2003 2 4,000 43,950 538,703 10.99 3.35 7.80
2004 1 1,600 19,808 515,783 12.38 1.34 3.68
2005 2 15,660 85,471 421,502 5.46 13.11 16.57
2006 1 5,100 60,894 418,509 11.94 4.27 14.45
2007 1 1,600 19,664 346,240 12.29 1.34 4.70
2008 - - - 341,521 - - -
2009 1 5,100 49,776 343,408 9.76 4.27 14.57
(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>
-5-
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
Conway Plaza, as of December 26, 1999, of $8,800,000. Appraisals are estimates
of value and should not be relied on as a measure of true worth or realizable
value.
Plan of Distribution
The following new subsection is inserted preceding the subsection "Other
Discount" on page 184 of our Prospectus:
Deferred Commission Option
Subscribers for shares may agree with their participating Soliciting Dealer and
the Dealer Manager to have selling commissions due with respect to the purchase
of their shares paid over a six year period pursuant to a deferred commission
option arrangement. Stockholders electing the deferred commission option will
be required to pay a total of $9.40 per share purchased upon subscription,
rather than $10.00 per share, with respect to which $0.10 per share will be
payable as selling commissions due upon subscription. For each of the six years
following the subscription, on a date or dates to be determined by the Dealer
Manager, $0.10 per share will be deducted on an annual basis from cash
distributions otherwise payable to the stockholders holding such shares and will
be used by us to pay deferred commission obligations. The selling commissions
paid upon subscription and in each of the six following years will be paid by us
to the Dealer Manager, which selling commissions may be reallowed to the
Soliciting Dealer by the Dealer Manager. Our net proceeds from this offering
will not be affected by the election of the deferred commission option. Under
this arrangement, and based on a $10.00 per share deemed value for each share
issued, a stockholder electing the deferred commission option will pay a 1%
selling commission upon subscription, rather than a 7% selling commission, and
an amount equal to a 1% selling commission per year thereafter for the next six
years will be deducted from cash distributions otherwise payable to the
stockholder holding such shares and used by us to satisfy deferred commission
obligations. The foregoing selling commission amounts may be adjusted with
approval of the Dealer Manager by application of the volume discount provisions
previously described on pages 182-183 of our Prospectus.
Stockholders electing the deferred commission option who are subject to federal
income taxation will incur tax liability for cash distributions payable to them
with respect to their shares even though such cash distributions will be
withheld from such stockholders and will instead be paid to third parties to
satisfy deferred commission obligations.
A new form of Subscription Agreement has been adopted for use where the
subscriber elects the deferred commission option, which includes a box to check
for election of the deferred commission option and a means for the broker-dealer
to acknowledge that it agrees to the deferred commission option. The form of
the new Subscription Agreement is included as Appendix A to this supplement.
Investors who wish to elect the deferred commission option must make the
election upon their Subscription Agreement/Signature Page of this new form of
Subscription Agreement. In addition, the broker-dealer must also complete and
sign the Subscription Agreement/Signature Page to acknowledge its agreement to
the deferred commission option. The form of Subscription Agreement included as
Appendix C to our Prospectus dated February 11, 1999 will continue to be used
for subscribers not electing the deferred commission option.
-6-
Election of the deferred commission option shall authorize us to withhold cash
distributions otherwise payable to such stockholder for the purpose of paying
selling commissions due under the deferred commission option; provided, however,
that in no event may we withhold in excess of $0.60 per share in the aggregate
under the deferred commission option.
In the event that the shares become listed for trading on a national stock
exchange or included for quotation on a national market system, or such listing
or inclusion is reasonably anticipated to occur at any time prior to the
satisfaction of the remaining deferred commission obligations, we shall
accelerate the remaining selling commissions due under the deferred commission
option. In such event, we shall provide notice of such acceleration to
stockholders who have elected the deferred commission option. The amount of the
remaining selling commissions due shall be deducted and paid by us out of cash
distributions otherwise payable to such stockholders during the time period
prior to any such listing of the shares for trading on a national market system
or inclusion for quotation on a national market system; provided that, in no
event may we withhold in excess of $0.60 per share in the aggregate during the
six-year period following the subscription. To the extent that the cash
distributions during such time period are insufficient to satisfy the remaining
deferred selling commissions due, the obligation of us and our stockholders to
make any further payments of deferred selling commissions under the deferred
commission option shall terminate and the Dealer Manager (and participating
Soliciting Dealers if the deferred selling commissions are reallowed to them by
the Dealer Manager) will not be entitled to receive any further portion of the
unpaid deferred selling commissions following any such listing for trading or
inclusion for quotation of our shares.
In addition, if a subscriber elects the deferred commission option and
subsequently elects to participate in our Share Repurchase Program or requests
that we transfer his or her shares for any other reason prior to the time that
the remaining deferred selling commissions have been deducted from cash
distributions otherwise payable to that stockholder during the mentioned six
year period, then we shall accelerate the remaining selling commissions due
under the deferred commission option. In such event, we shall provide notice of
such acceleration to the stockholder, and (i) in the case of an election to sell
the shares under our Share Repurchase Program, the stockholder will be required
to pay to us the unpaid portion of the remaining deferred commission obligation
prior to or concurrently with our purchase of the stockholder's shares pursuant
to our Share Repurchase Program or we may deduct such unpaid portion of the
remaining deferred commission obligation from the amount otherwise due to the
stockholder for our purchase of the stockholder's shares under our Share
Repurchase Program; or (ii) in the case of a stockholder request that we
transfer the shares for any other reason, the stockholder will not be entitled
to effect any such transfer until the stockholder first either (a) pays to us
the unpaid portion of the remaining deferred commission obligation or (b)
provides a written instrument in form and substance satisfactory to us, and
appropriately signed by the transferee, to the effect that the proposed
transferee agrees to have the unpaid portion of the remaining deferred
commission obligation deducted from cash distributions otherwise payable to the
transferee during the remaining portion of the specified six year period.
All certificates representing any shares that elect the deferred commission
option will bear a legend referring to the fact that such shares are subject to
the terms of the deferred commission option including the withholding of cash
distributions otherwise payable to the stockholders for the purpose of paying
the deferred selling commission obligation.
-7-
The marketing contribution of 2% and the due diligence expense allowance of 0.5%
will be payable on the gross offering proceeds for the shares electing the
deferred commission option, based on a $10 per share deemed value for each share
issued pursuant to that election.
The following new subsection is inserted at the end of this section on page 185
of our Prospectus:
Update
As of February 11, 2000, we had sold 6,148,060 shares resulting in gross
proceeds of $61,468,604. 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 February 11, 2000, we have incurred $5,827,517 of commissions
and fees payable to Inland Securities Corporation, which will result in our
receipt of $55,641,087 of net proceeds from the sale of those 6,148,060 shares.
An additional 66,851 shares have been sold pursuant to our Distribution
Reinvestment Program as of February 11, 2000, for which we have received
additional net proceeds of $635,084. 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
$1,538,776 are included in the purchase prices we have paid for all our
properties purchased through February 11, 2000, which includes $40,363 of
acquisition expenses paid in connection with the purchase of Conway Plaza.
After the purchase of Conway Plaza, we had invested approximately $41,040,000 in
properties that we purchased for an aggregate purchase price of approximately
$135,876,000, and after expenditures for organization and offering expenses and
acquisition expenses and establishing appropriate reserves, as of February 11,
2000, we had net offering proceeds of approximately $11,270,000 available for
investment in additional properties.
How to Subscribe
This section is revised by the insertion of the following immediately after the
first paragraph of this section:
In addition, if a subscriber elects the deferred commission option, the
subscriber must make the election by completing and signing the Subscription
Agreement/Signature Page of the form of Subscription Agreement to be used for
this purpose and the Soliciting Dealer must also complete and sign the
Subscription Agreement/Signature Page to acknowledge its agreement to the
deferred commission option, as more fully explained under "Plan of Distribution-
Deferred Commission Option."
-8-
Distribution Reinvestment and Share Repurchase Programs
Share Repurchase Program
The subsection, as previously revised, is further revised by the insertion of
the following at the end of the subsection:
See "Plan of Distribution - Deferred Commission Option" for an explanation of
what will be required of the stockholder if the stockholder has elected the
deferred commission option and subsequently elects to participate in our Share
Repurchase Program while there is an unpaid portion of the remaining deferred
commission obligation.
-9-
APPENDIX A
INLAND RETAIL REAL ESTATE TRUST, INC.
SUBSCRIPTION AGREEMENT
[LOGO]
SPECIMEN
PLEASE COMPLETE THIS FORM OF SUBSCRIPTION AGREEMENT ONLY IF YOU WISH TO ELECT
THE DEFERRED COMMISSION OPTION.
PLEASE MAIL THE PINK COPY, THE WHITE COPY, AND YOUR CHECK MADE PAYABLE TO
"LNB/ESCROW AGENT FOR IRRET" TO: Inland Securities Corporation, 2901 Butterfield
Road, Oak Brook, Illinois 60523, Attn: Investor Services. Please use ballpoint
pen or type the information.
- - ------------------------------------------------------------------------------
INLAND RETAIL REAL ESTATE TRUST, INC., INSTRUCTIONS TO PURCHASERS
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTRUCTIONS Any Person desiring to subscribe for Shares should
carefully read and review the Prospectus, as
supplemented to date, and if he/she desires to subscribe
for Shares, complete the Subscription Agreement/
Signature Page which follows these instructions. Follow
the appropriate instruction listed below for the items
indicated.
Please print in ink or type the information.
- - -------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT Item 1(a)--Enter the number of Shares to be purchased
A and the dollars and cents amount of the purchase.
Minimum purchase 300 Shares ($3,000). Qualified Plans
100 Shares ($1,000). (Iowa requires 300 Shares
($3,000) for IRA accounts; Minnesota requires 200
Shares ($2,000) for IRA and qualified accounts).
Check the box to indicate whether this is an initial
or an additional investment. The "Additional
Investment" box must be checked in order for this
subscription to be combined with another subscription
for purposes of a volume discount.
Item 1(b)--Deferred Commission Option: Please check
the box if you have agreed with your Soliciting Dealer
to elect the Deferred Commission Option, as described
in the prospectus, as supplemented to date. By electing
the Deferred Commission Option, you are required to pay
only $9.40 per share purchased upon subscription. For
the next six years following the year of subscription,
you will have a sales commission of $0.10 per share
deducted from and paid out of cash distributions otherwise
distributable to you. Election of the Deferred Commission
Option shall authorize the Company to withhold such amounts
from cash distributions otherwise payable to you and to pay
them as described in the "Plan of Distribution-Deferred
Commission Option" section of the prospectus, as
supplemented to date.
<CAPTION>
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<S> <C>
B Item 2--Check if you desire to participate in
Distribution Reinvestment Program.
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
REGISTRATION INFORMATION Item 3--Enter the exact name in which the Shares are
C to be held. For co-owners enter the names of all
owners. For investments by qualified plans, include
the exact name of the plan. For investments by
qualified plans, enter the name of the custodian or
trustee on the first line and FBO the name of the
investor on the second line. IF THIS IS AN ADDITIONAL
PURCHASE BY A QUALIFIED PLAN, PLEASE USE THE SAME
EXACT PLAN NAME AS PREVIOUSLY USED.
Item 4--Enter the mailing address, state of residence
and telephone number of the owner. For qualified
investments please enter the mailing address of the
custodian or trustee.
Item 5--Enter the birth date(s) or date of
incorporation.
</TABLE>
A-1
<TABLE>
<S> <C>
Item 6--Check the appropriate box. If the owner is a
non-resident alien, he must apply to the United
States Internal Revenue Service for an identification
number via Form SS-4 for an individual or SS-5 for a
corporation, and supply the number to the Company as
soon as it is available.
Item 7--Check this box if the owner is an employee of
Inland or an individual who has been continuously
affiliated with Inland as an independent contractor.
Item 8--Enter the Social Security number or Taxpayer
I.D. number. The owner is certifying that this number
is correct. For qualified investments, please enter
both the investor's social security number (for
identification purposes) and the custodian or
trustee's Taxpayer I.D. number (for tax purposes).
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
D Item 9--Enter the residence address if different than
the mailing address. For qualified investments,
please enter the residence address of the investor.
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
E Item 10--Check the appropriate box to indicate the
type of entity which is subscribing. If this is an
additional purchase, this should be completed exactly
the same as the previous investment. If the
subscriber is a pension or profit sharing plan,
indicate whether it is taxable or exempt from
taxation under Section 501A of the Internal Revenue
Code.
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
SIGNATURE Item 11--The Subscription Agreement/Signature Page
F MUST BE EXECUTED by the owner(s), and if applicable,
the trustee or custodian.
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
ALTERNATE ADDRESS FOR Item 12--If owners desire direct deposit of
DISTRIBUTIONS (OPTIONAL) his/her/their cash distributions to an account or
G address other than as set forth in the Subscription
Agreement/Signature Page, please complete. PLEASE
MAKE SURE THAT THE ACCOUNT HAS BEEN OPENED AND THE
ACCOUNT NUMBER IS PROVIDED, AS WELL AS INFORMING
RECIPIENT THAT DISTRIBUTION WILL BE FORTHCOMING AND
IS AN ASSET TRANSFER.
<CAPTION>
- - -------------------------------------------------------------------------------------------
</TABLE>
A-2
<TABLE>
<S> <C>
BROKER/DEALER REGISTERED Item 13--Enter the name of the Broker/Dealer and the
REPRESENTATIVE name of the Registered Representative, along with the
H street address, city, state, zip code, telephone
number, fax and email of the Registered
Representative. By executing the Subscription
Agreement/Signature Page, the Registered Representa-
tive substantiates compliance with the conduct rules
of the NASD, by certifying that the Registered
Representative has reasonable grounds to believe,
based on information obtained from the investor
concerning his, her or its investment objectives,
other investments, financial situation and needs and
any other information known by such Registered
Representative, that investment in the Company is
suitable for such investor in light of his, her or
its financial position, net worth and other
suitability characteristics and that the Registered
Representative has informed the investor of all
pertinent facts relating to the liability, liquidity
and marketability of an investment in the Company
during its term. The Registered Representative
(authorized signature) should sign where provided.
Check the box to indicate whether the broker-dealer
agrees to the Deferred Commission Option if the
subscriber has elected the Deferred Commission Option;
and the broker-dealer must sign, where provided, to
acknowledge that agreement.
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
SUBMISSION OF SUBSCRIPTION The properly completed and executed Pink and White
copies of the Subscription Agreement/Signature Page
together with a CHECK MADE PAYABLE TO "LNB/ESCROW
AGENT FOR IRRET" should be returned to the owner's
Registered Representative or the offices of Inland
Securities Corporation, 2901 Butterfield Road, Oak
Brook, Illinois 60523.
</TABLE>
NOTE: If a Person other than the Person in whose name the Shares will be held
is reporting the income received from the Company, you must notify the Company
in writing of that Person's name, address and Social Security number.
ALL INVESTORS AND THEIR REGISTERED REPRESENTATIVES MUST SIGN THE SUBSCRIPTION
AGREEMENT/SIGNATURE PAGE PRIOR TO TENDERING ANY FUNDS FOR INVESTMENT IN SHARES.
CALIFORNIA INVESTORS:
All Certificates representing Shares which are sold in the State of California
will bear the following legend conditions: IT IS UNLAWFUL TO CONSUMMATE A SALE
OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFORE, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER'S RULES.
Any subscriber seeking to purchase Shares pursuant to a discount offered by the
Company must submit such request in writing and set forth the basis for the
request. Any such request will be subject to verification by the Company.
A-3
INLAND RETAIL REAL ESTATE TRUST, INC.
SUBSCRIPTION AGREEMENT [INLAND LOGO]
INLAND RETAIL REAL ESTATE TRUST, INC.
SUBSCRIPTION AGREEMENT/SIGNATURE PAGE
Please read this Subscription Agreement/Signature Page and the Terms and
Conditions before signing.
Subscriber must read the Subscription Instructions.
- -------------------------------------------------------------------------------
MAKE CHECK PAYABLE TO LNB/ESCROW AGENT FOR IRRET
<TABLE>
<S> <C>
(1)a. Investment
This subscription is in the amount of $__________ for the purchase of _______ Shares of Inland Retail Real Estate Trust,
Inc. at $10 per Share. Minimum initial investment: 300 Shares (100 Shares for IRA, Keogh and qualified plan accounts-Iowa
A requires 300 Shares for IRA accounts; Minnesota requires 200 Shares for IRA and qualified plan accounts).
This is an: [ ] INITIAL INVESTMENT [ ] ADDITIONAL INVESTMENT
b. Check the following box to elect the Deferred Commission Option [ ]
(This election must agreed to by the Broker/Dealer listed below)
====================================================================================================================================
(2) Distribution Reinvestment program: [ ] YES Subscriber elects to participate in the Distribution Reinvestment Program
B described in the Prospectus. Distributions will be made by check unless box is marked.
====================================================================================================================================
(3) REGISTERED OWNER - -
--------------------------------------------- ---------------------------------------
[ ] Mr [ ] Mrs [ ] Ms (AREA CODE) HOME TELEPHONE
---------------------------------------------
CO-OWNER
---------------------------------------------
[ ] Mr [ ] Mrs [ ] Ms
---------------------------------------------
(4) MAILING ADDRESS - -
--------------------------------------------- -------------------------------------
CITY, STATE & ZIP CODE (AREA CODE) BUSINESS TELEPHONE
---------------------------------------------
STATE OF RESIDENCE ------
(5) BIRTH DATE
-------------------- -----------------
C MONTH DAY YEAR MONTH DAY YEAR
(6) PLEASE INDICATE CITIZENSHIP STATUS [ ] U.S. CITIZEN
[ ] RESIDENT ALIEN [ ] NON-RESIDENT ALIEN
(7) [ ] EMPLOYEE OR AFFILIATE
(8) SOCIAL SECURITY # CORPORATE OR CUSTODIAL
------------------------------- TAX IDENTIFICATION NUMBER
CO-OWNER
SOCIAL SECURITY # ------------------------------- -------------------------
====================================================================================================================================
(9) RESIDENCE ADDRESS IF DIFFERENT FROM ABOVE OR FOR INVESTOR OR QUALIFIED PLAN
D
---------------------------------------------------------------------------------------------
STREET CITY STATE ZIP CODE
====================================================================================================================================
(10) Check one
A [ ] Individual Ownership H [ ] IRA L [ ] Pension or Profit Sharing Plan
[ ] Taxable [ ] Exempt under 501A
B [ ] Joint Tenants with Right M [ ] Trust/Date Trust Established _______
of Survivorship I [ ] QUALIFIED PLAN (KEOGH) Name of Trustee or other Administrator
E C [ ] Community Property J [ ] Simplified Employee Pension/Trust (S.E.P) ______________________________________
D [ ] Tenants in Common K [ ] Uniform Gifts to Minors Act [ ] Taxable [ ] Grantor A or B
E [ ] Tenants by the Entirety State of ________________ a Custodian N [ ] Estate
F [ ] Corporate Ownership for _________________________________ O [ ] Other (Specify) ______________________
G [ ] Partnership Ownership [ ] Taxable [ ] Non-Taxable
====================================================================================================================================
(11) The undersigned certifies, under penalties of perjury (i) that the taxpayer identification number shown on the
Subscription Agreement/Signature Page is true, correct and complete, and (ii) that he is not subject to backup withholding either
because he has not been notified that he is subject to backup withholding as a result of a failure to report all interest or
distributions, or the Internal Revenue Service has notified him that he is no longer subject to backup withholding.
The undersigned further acknowledges and/or represents (or in the case of fiduciary accounts, the person authorized to sign on such
Investor's behalf) the following:
(a) acknowledges receipt, not less than five (5) business days prior to the signing of this Subscription Agreement, of the
Prospectus of the Company relating to the Shares, wherein the terms and conditions of the offering of the Shares are described,
including among other things, the restrictions on ownership and tranfer of Shares, which require, under certain circumstances,
that a holder of Shares shall give written notice and provide certain information to the Company.
(b) represents that I (we) either; (i) have a net worth (excluding home, home furnishings and automobiles) of at least $45,000
and estimate that (without regard to investment in the Company) I (we) have gross income due in the current year of at least
$45,000; or (ii) have a net worth (excluding home, home furnishings and automobiles) of at least $150,000 or such higher
suitability as may be required by certain states and set forth on the reverse side hereof; in the case of sales to fiduciary
accounts, the suitability standards must be met by the beneficiary, the fiduciary account or by the donor or grantor who directly
or indirectly supplies the funds for the purchase of the Shares.
(c) represents that the investors are purchasing the Shares for his or her own account and if I am (we are) purchasing Shares
on behalf of a trust or other entity of which I am (we are) trustee(s) or authorized agent(s) I (we) have due authority to execute
the Subscription Agreement/Signature Page and do hereby legally bind the trust or other entity of which I am (we are) trustee(s) or
authorized agent(s).
(d) acknowledges that the Shares are not liquid; (not required for Minnesota residents)
(e) if an Affiliate of the Company represents that the Shares are being purchased for investment purposes only and not with a
view toward immediate resale.
Agreement Dated X
- ---------------------------------------------------------------- --------------------------------------------------------------
Signature -- Registered Owner
(Print Name of Custodian of Trustee) X
-------------------------------------------------------------
Signature -- Co-Owner
- ---------------------------------------------------------------- A sale of the Shares may not be completed by the Soliciting
Authorized Signature (Custodian or Trustee) Dealers until at least five business days after receipt
of the Prospectus.
- ------------------------------------------------------------------------------------------------------------------------------------
(12) (Optional) Directly Deposit Cash Distributions to: --------------------------------------------------------------
Account Number -- MUST BE FILLED IN
Name of Bank, X
Brokerage Firm --------------------------------------------------------------
or Individual ------------------------------------- Signature -- Registered Owner
G Mailing Address -------------------------------------
City, State & X
Zip Code ------------------------------------- --------------------------------------------------------------
Signature -- Co-Owner
(13) Broker/Dealer data -- completed by selling Registered Representative (Please use Rep's address -- not home office)
Name of Registered - -
Representative -------------------------------------------
[]Mr. []Mrs. []Ms. ------------------------------------- Registered Representative's Telephone
- -- Mailing
Address Have you changed Broker/Dealers? [] Yes [] No
- --
City, State & Registered Representative's e-mail:
Zip Code -------------------------------------
- -- Broker/Dealer --------------------------------------------------------------
Name ------------------------------------- Registered Representative's fax:
- --
Home Office --------------------------------------------------------------
Mailing Address -------------------------------------
City, State & X
Zip Code ------------------------------------- --------------------------------------------------------------
Signature -- Registered Representative
Check the following box if the Broker/Dealer agrees to the Deferred Commission Option elected: [ ]
______________________________________
Signature Broker/Dealer
</TABLE>
- -------------------------------------------------------------------------------
A-4
INLAND RETAIL REAL ESTATE TRUST, INC.
SPECIMEN
(REVERSE SIDE OF)
SUBSCRIPTION AGREEMENT/SIGNATURE PAGE
Certain states have imposed special financial suitability standards for
investors who purchase Shares.
If the investor is a resident of Maine, the investor must have either: (i) a
minimum net worth (excluding home, home furnishings and automobiles) of
$200,000; or (ii) a minimum annual gross income of $50,000 and a minimum net
worth (exclusive of home, home furnishings and automobiles) of $50,000.
If the investor is a resident of Massachusetts, Missouri or Tennessee, the
investor must have either: (i) a minimum net worth (excluding home, home
furnishings and automobiles) of $225,000; or (ii) a minimum annual gross income
of $60,000 and a minimum net worth (exclusive of home, home furnishings and
automobiles) of $60,000.
In addition, if the investor is a resident of Ohio or Pennsylvania, the
investment may not exceed 10% of the investor's liquid net worth.
The Company intends to assert the foregoing representations as a defense in
any subsequent litigation where such assertion would be relevant. The Company
shall have the right to accept or reject this Subscription in whole or in part,
so long as such partial acceptance or rejection does not result in an investment
of less than the minimum amount specified in the Prospectus. As used above, the
singular includes the plural in all respects if Shares are being acquired by
more than one Person. As used in this Agreement, "Inland" refers to The Inland
Group, Inc. and its Affiliates. This Agreement and all rights hereunder shall be
governed by, and interpreted in accordance with, the laws of the State of
Illinois.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE INVESTOR IS NOT WAIVING ANY
RIGHTS UNDER THE FEDERAL SECURITIES LAWS.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTOR CHECK DATE
OFFICE USE ONLY _______ -----------
INVESTOR CHECK # _______ Owner Account / / / / / /
CHECK AMOUNT # _______ Number
-----------
Broker/Dealer Co-Owner / / / / / /
/ / / / / / / / / / / /
Number / Account Number
---------- -
</TABLE>
- --------------------------------------------------------------------------------
A-5
