<PAGE> 1
Inland Real Estate Corporation
Sticker Supplement
Supplement No. 2 to the Company's Prospectus discloses information
regarding a recently completed acquisition of property and the resignation and
replacement of the Company's Secretary, Treasurer and Chief Financial Officer.
The Company commenced the Offering on July 24, 1996 and as of August 14, 1996
the Company had accepted subscriptions for 89,758.5 shares ($812,314.42 net of
Selling Commissions, the Marketing Contribution and the Due Diligence Expense
Allowance Fee) which are being offered on a best-efforts basis.
On August 15, 1996 the Company completed the acquisition of a 98,686
rentable square foot neighborhood retail facility known as Hawthorn Village
Commons located in Vernon Hills, Illinois, bringing to eleven the number of
neighborhood retail facilities acquired by the Company. The two largest
tenants, each of whom lease in excess of 10% of the rentable square feet, are
Dominick's (46,984 square feet) and Walgreens (11,974 square feet). The
facility was purchased from an unaffiliated third party for approximately $8.4
million. A portion of the purchase price was funded using the proceeds of a
loan in the principal amount of approximately $2.9 million from Inland Mortgage
Investment Corporation, an Affiliate of the Company.
An Affiliate of the Advisor serves as dealer manager of the Offering
and is entitled to receive selling commissions and certain other amounts. As
of August 14, 1996, the Affiliate of the Advisor was entitled to receive
commissions, the Marketing Contribution and the Due Diligence Expense Allowance
Fee totalling $85,270.58. An Affiliate of the Advisor is also entitled to
receive Property Management Fees for management and leasing services. The
Company incurred and paid Property Management Fees of $72,096 for the six
months ended June 30, 1996 and $46,791 for the year ended December 31, 1995.
The Advisor may also receive an annual Advisor Asset Management Fee of not more
than 1% of the Average Invested Assets, paid quarterly. As of June 30, 1996,
the Company had incurred $125,532 of fees, all of which remained unpaid on such
date. As of December 31, 1995, the Company had not incurred or paid any such
fees.
<PAGE> 2
SUPPLEMENT NO. 2
DATED AUGUST 19, 1996
TO THE PROSPECTUS DATED JULY 24, 1996
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 2 is provided for the purpose of supplementing the
Prospectus dated July 24, 1996 of Inland Real Estate Corporation (the
"Company") as supplemented on August 5, 1996 and must be read in conjunction
with the Prospectus and prior supplements. Unless otherwise defined,
capitalized terms used herein shall have the same meaning as in the Prospectus.
REAL PROPERTY INVESTMENTS
HAWTHORN VILLAGE COMMONS, VERNON HILLS, ILLINOIS
On August 15, 1996, the Company acquired a property commonly known as
the Hawthorn Village Commons ("Hawthorn Village") from LaSalle National Trust,
N.A., successor to LaSalle National Bank, as trustee under Trust Agreement
known as Trust 106520 and Endowment and Foundation Realty, Ltd. - JMB I, an
unaffiliated third party, for approximately $8.4 million. The Company funded
the purchase using: (i) the proceeds of a short-term loan maturing August 23,
1996 in the amount of approximately $2.9 million from Inland Mortgage
Investment Corporation ("IMIC"), an Affiliate of the Company (the "Short-Term
Loan"); and (ii) cash and cash equivalents. The Company did not pay any fees
in connection with the Short-Term Loan, which bears interest at a rate of eight
percent per annum. A majority of the Company's board, including a majority of
the Independent Directors, has approved the terms and conditions of the
Short-Term Loan. The Company expects to repay the Short-Term Loan using the
proceeds of a loan (the "Mortgage Loan") in the amount of $3,955,000 from
LaSalle National Bank, an unaffiliated lender. The Company has obtained a
commitment with, and has paid a 1% origination fee to, the lender of the
Mortgage Loan. The Mortgage Loan will have a term of five years and, prior to
the maturity date, will require payments of interest only, at an annual rate of
7.85%. If the Company is unable to close the Mortgage Loan or otherwise obtain
funds to repay the Short-Term Loan before August 23, 1996, then the interest
rate on the Short-Term Loan will increase from eight percent to thirteen
percent per annum.
The purchase price for Hawthorn Village was approximately $85 per
square foot, which the Company concluded was fair and reasonable and within the
range of values indicated in an appraisal received by the Company. Hawthorn
Village was built in 1978 and remodeled in 1993 and consists of two
single-story buildings comprising a multi-tenant neighborhood retail facility
aggregating 98,686 rentable square feet.
In evaluating Hawthorn Village as a potential acquisition, the Company
considered a variety of factors including location, demographics, tenant mix,
price per square foot, existing rental rates compared to market rates, traffic
patterns and the occupancy of the center. The Company believes that the center
is located within a vibrant economic area. According to a study conducted by
Urban Decision Systems, Inc. and dated November 21, 1995, the population within
a five mile radius of Hawthorn Village is 109,597, with an average household
income in excess of $98,472 per year, higher than the national average.
Walgreens, which occupies in excess of 10% of the rentable square feet at
Hawthorn Village, has the right to cancel its lease with one year's notice on
(i) December 31, 1997 (requiring the payment of a $60,000 fee) and (ii)
December 31,
1
<PAGE> 3
2000 (requiring no fee). The Company's management believes that if Walgreens
cancelled its lease, the space could be released at a rate equal to or greater
than the current rental rate. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company anticipates making approximately $196,000 in repairs and
improvements to Hawthorn Village over the next eighteen months, including
painting, parking lot repair, landscaping, and roof repairs. A substantial
portion of this cost will be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at Hawthorn Village expressed as a percentage of total gross
leasable area for each of the last five calendar years and the average
effective annual base rent per square foot for each of the last five calendar
years.
<TABLE>
<CAPTION>
Year Ending Occupancy Effective Annual Rental
December 31, Rate Per Square Foot
------------ ---- ---------------
<S> <C> <C>
1991 96% $ 7.73
1992 98% 7.97
1993 98% 8.49
1994 100% 8.96
1995 100% 9.10
</TABLE>
As of August 1, 1996, Hawthorn Village was 95% leased. Tenants
leasing more than 10% of the total square footage are Dominick's, a grocery
store, which leases 46,984 square feet, and Walgreens, a drug store, which
leases 11,974 square feet.
The lease with Dominick's requires Dominick's to pay base rent equal
to $4.73 per square feet per annum, payable monthly until February 2003. The
lease also grants Dominick's one option to renew the lease for a five year
term. If the option is exercised, Dominick's will be required to pay a base
rent equal to $4.73 per square foot per annum payable monthly from March 20,
2003 through March 19, 2008. The lease also requires Dominick's to pay
percentage rent annually equal to 1% of sales in excess of: (i) the annual
fixed minimum rent (currently $222,234); minus (ii) 50% of real estate taxes
and common area maintenance expenses allocated to the leased property. In
1995, net percentage rent was $43,744.
The lease with Walgreens requires Walgreens to pay base rent of $7.02
per square foot per annum payable monthly until May 31, 1999 and $6.02 per
square foot per annum payable monthly from June 1, 1999 to December 31, 2005.
The lease also requires Walgreens to pay percentage rent annually equal to the
sum of: (i) 3% of gross sales, excluding liquor, up to $2.4 million; plus (ii)
2% of gross sales, excluding liquor, exceeding $2.4 million; plus (iii) 1.5% on
gross sales of liquor, adjusted by annual minimum rent. In 1995, net
percentage rent was $29,314. As described above, Walgreens has the right to
cancel the lease on December 31, 1997 and December 31, 2000.
2
<PAGE> 4
For federal income tax purposes, the Company's depreciable basis in
Hawthorn Village will be approximately $5,830,500. Depreciation expense, for
tax purposes, will be computed using the straight-line method. Buildings and
improvements are based upon estimated useful lives of 40 years.
Real estate taxes to be paid in 1996 for the tax year ended 1995 (the
most recent tax year for which information is available) were $194,441. The
real estate taxes payable were calculated by multiplying Hawthorn Village's
assessed value times a tax rate of 8.035%.
At August 1, 1996, a total of 94,091 square feet were leased to 20
tenants at Hawthorn Village. The following tables set forth certain
information with respect to the amount of and expiration of leases at this
Neighborhood Retail Center.
<TABLE>
<CAPTION>
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Options Annual Rent Square Foot
------ ------ ---- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Dominick's 46,984 02/2003 1/5 yr. $ 222,234 $ 4.73
Formally Yours 1,609 08/1998 None 28,962 18.00
One Hour Photo 668 06/1998 1/5 yr. 12,645 18.93
Baskin Robbins 895 04/1997 1/2 yr. 20,585 23.00
Great Frame Up 1,455 07/1999 None 21,825 15.00
Hair Depot 1,950 12/1998 None 31,200 16.00
Mailboxes Etc. 1,486 10/1998 1/3 yr. 26,748 18.00
Annie's Bookstop 1,033 11/1996 1/2 yr. 12,913 12.50
Village Dental Clinic 1,463 12/1998 None 21,945 15.00
Tasty Thai 1,802 01/1999 1/5 yr. 25,228 14.00
Pearle Vision Center 2,957 12/1998 1/5 yr. 65,054 22.00
Petal Peddlers 1,486 06/1998 None 20,804 14.00
Majestic Dry Cleaning 1,757 12/1998 1/5 yr. 25,459 14.49
El Famous Burrito 1,685 11/1998 None 30,364 18.02
Zanie's Comedy 6,046 10/1997 2/5 yr. 66,506 11.00
Walgreens 11,974 12/2005 None 83,938 7.02
Big Apple Bagels 2,000 09/2005 2/5 yr. 33,980 16.99
Caldwell Banker 3,631 05/1998 1/3 yr. 54,465 15.00
Bo-Bo's Gyros 1,410 04/2000 1/5 yr. 21,150 15.00
Daily Herald 1,800 03/1997 None 26,100 14.50
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
Average Base Percent of Percent of
Rent Per Total Building Annual Base
Approx. GLA Annual Base Square Foot GLA Rent
Number of of Expiring Rent of Under Represented Represented
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring by Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
------------ -------- -------------- ------ ------------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 2 2,436 $ 27,682 $864,475 $11.36 2.47% 3.20%
1997 3 8,741 113,191 838,325 12.95 8.86 13.50
1998 10 18,692 316,741 726,085 16.95 18.94 43.62
1999 2 3,257 48,392 409,714 14.86 3.30 11.81
2000 1 1,410 21,150 362,697 15.00 1.43 5.83
2001 - - - 345,672 - - -
2002 - - - 345,672 - - -
2003 1 46,984 222,234 345,672 4.73 47.61 64.29
2004 - - - 123,438 - - -
2005 2 13,974 123,438 123,438 8.83 14.16 100.00
</TABLE>
(1) No assumptions were made regarding the releasing of expired leases.
It is the opinion of the Company's management that the space will be
released at market rates.
The Company received an appraisal prepared by an independent appraiser
who is a member in good standing of the American Institute of Real Estate
Appraisers which reported a fair market value for the Hawthorn Village
property, of the lease fee interest upon reaching stabilized occupancy as of
July 15, 1996, of $8,560,000. Appraisals are estimates of value and should
not, however, be relied on as a measure of true worth or realizable value.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Effective August 16, 1996, Cynthia M. Hassett resigned as Secretary,
Treasurer and Chief Financial Officer of the Company. The Company's board of
directors appointed Kelly Tucek to fill each of the vacancies created by Ms.
Hassett's resignation. Ms. Tucek joined Inland in 1989 and is also an
Assistant Vice President of IREIC. Ms. Tucek is responsible for the Investment
Accounting Department, which includes overseeing the accounting for the Company
and all public limited partnership accounting functions along with quarterly
and annual SEC filings. Prior to joining Inland, Ms. Tucek was on the audit
staff of Coopers and Lybrand since 1984. She received her B.A. Degree in
Accounting and Computer Science from North Central College.
4
<PAGE> 6
PLAN OF DISTRIBUTION
The Company commenced the Offering on July 24, 1996 and as of August 14,
1996 the Company had accepted subscriptions for 89,758.5 shares ($812,314.42
net of Selling Commissions, the Marketing Contribution and the Due Diligence
Expense Allowance Fee) which are being offered on a best-efforts basis.
An Affiliate of the Advisor serves as dealer manager of the Offering and
is entitled to receive selling commissions and certain other amounts. As of
August 14, 1996, the Affiliate of the Advisor was entitled to receive
commissions, the Marketing Contribution and the Due Diligence Expense Allowance
Fee totalling $85,270.58. An Affiliate of the Advisor is also entitled to
receive Property Management Fees for management and leasing services. The
Company incurred and paid Property Management Fees of $72,096 for the six
months ended June 30, 1996 and $46,791 for the year ended December 31, 1995.
The Advisor may also receive an annual Advisor Asset Management Fee of not more
than 1% of the Average Invested Assets, paid quarterly. As of June 30, 1996,
the Company had incurred $125,532 of fees, all of which remained unpaid on such
date. As of December 31, 1995, the Company had not incurred or paid any such
fees.
5
<PAGE> 7
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Pro Forma Balance Sheet (unaudited) at December 31, 1995 . . . . . . . . . . . . . . . . . . . F-1
Notes to Pro Forma Balance Sheet (unaudited) at December 31, 1995 . . . . . . . . . . . . . . . F-3
Pro Forma Statement of Operations (unaudited) of the Company
for the year ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Pro Forma Statement of Operations (unaudited)
for the year ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Pro Forma Balance Sheet (unaudited) at June 30, 1996 . . . . . . . . . . . . . . . . . . . . . F-17
Notes to Pro Forma Balance Sheet (unaudited) at June 30, 1996 . . . . . . . . . . . . . . . . . F-19
Pro Forma Statement of Operations (unaudited) of the Company
for the six months ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21
Notes to Pro Forma Statement of Operations (unaudited)
for the six months ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-23
</TABLE>
251422
6
<PAGE> 8
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1995
(unaudited)
The following unaudited Pro Forma Balance Sheet of the Company is presented to
effect the acquisitions of Mundelein Plaza, the Regency Point Shopping Center,
Prospect Heights Plaza, Montgomery-Sears Shopping Center, the Zany Brainy
store, Salem Square and Hawthorn Village Commons as though these transactions
occurred December 31, 1995. This unaudited Pro Forma Balance Sheet should be
read in conjunction with the December 31, 1995 Financial Statements and the
notes thereto as filed on Form 10-K.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at December 31, 1995, nor does it
purport to represent the future financial position of the Company. Unless
otherwise defined, capitalized terms used herein shall have the same meaning as
in the Prospectus.
F-1
<PAGE> 9
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
December 31,
December 31, 1995
1995 Pro Forma Pro Forma
Historical(A) Adjustments(B) Balance Sheet
------------- -------------- -------------
<S> <C> <C> <C>
Assets
- ------
Net investment in
properties.................. $ 17,342,538 34,021,080 51,363,618
Cash and cash equivalents..... 738,931 - 738,931
Restricted cash............... 150,000 - 150,000
Accounts and rents
receivable.................. 333,823 632,984 966,807
Other assets.................. 185,585 39,550 225,135
------------ ---------- ----------
Total assets.................. $ 18,750,877 34,693,614 53,444,491
============= =========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 288,037 7,500 295,537
Accrued real estate taxes..... 374,180 667,178 1,041,358
Distributions payable (C)..... 129,532 - 129,532
Security deposits............. 54,483 52,221 106,704
Mortgage payable.............. 750,727 8,428,200 9,178,927
Notes payable to Affiliate.... 360,000 - 360,000
Other liabilities............. 178,852 - 178,852
------------ ---------- ----------
Total liabilities............. 2,135,811 9,155,099 11,290,910
------------ ---------- ----------
Common Stock.................. 19,996 29,697 49,693
Additional paid in capital
(net of Offering costs)..... 16,835,183 25,508,818 42,344,001
Accumulated distributions in
excess of net income........ (240,113) - (240,113)
------------ ---------- ----------
Total Stockholders' equity.... 16,615,066 25,538,515 42,153,581
------------ ---------- ----------
Total liabilities and
Stockholders' equity........ $ 18,750,877 34,693,614 53,444,491
============ ========== ==========
</TABLE>
See accompanying notes to pro forma balance sheet.
F-2
<PAGE> 10
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
December 31, 1995
(unaudited)
(A) The December 31, 1995 Historical column represents the historical balance
sheet as presented in the December 31, 1995 10-K as filed with the SEC.
(B) The following pro forma adjustment relates to the acquisition or probable
acquisition of the subject properties as though they were acquired on
December 31, 1995. The terms are described in the notes that follow.
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------------------------------------------------- Hawthorn
Mundelein Regency Prospect Montgomery- Zany Salem Village
Plaza Point Heights Sears Brainy Square Commons
----------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
- -------
Net investment in
properties.................. $ 5,658,230 5,700,000 2,165,000 3,419,000 2,455,000 6,173,850 8,450,000
Accounts and rent
receivable.................. 84,375 16,867 38,771 27,842 - 270,729 194,400
Other assets.................. - - - - - - 39,550
----------- --------- --------- --------- --------- --------- ---------
Total assets.................. $ 5,742,605 5,716,867 2,203,771 3,446,842 2,455,000 6,444,579 8,683,950
=========== ========= ========= ========= ========== ========= ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 7,500 - - - - - -
Accrued real estate taxes..... 89,010 16,867 63,517 32,655 - 270,729 194,400
Security deposits............. 15,000 28,621 8,600 - - - -
Mortgage payable.............. - 4,473,200 - - - - 3,955,000
----------- --------- --------- --------- --------- --------- ---------
Total liabilities............. 111,510 4,518,688 72,117 32,655 - 270,729 4,149,400
----------- --------- --------- --------- --------- --------- ---------
Common Stock(D)............... 6,548 1,393 2,479 3,970 2,855 7,179 5,273
Additional paid in capital
(net of Offering costs)(D).. 5,624,547 1,196,786 2,129,175 3,410,217 2,452,145 6,166,671 4,529,277
----------- --------- --------- --------- --------- --------- ---------
Total Stockholders' equity.... 5,631,095 1,198,179 2,131,654 3,414,187 2,455,000 6,173,850 4,534,550
----------- --------- --------- --------- --------- --------- ---------
Total liabilities and
Stockholders' equity........ $ 5,742,605 5,716,867 2,203,771 3,446,842 2,455,000 6,444,579 8,683,950
=========== ========= ========= ========= ========== ========= ==========
Total
Pro Forma
Adjustment
----------
Assets
- ------
Net investment in
properties.................. 34,021,080
Accounts and rent
receivable.................. 632,984
Other assets.................. 39,550
----------
Total assets.................. 34,693,614
==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... 7,500
Accrued real estate taxes..... 667,178
Security deposits............. 52,221
Mortgage payable.............. 8,428,200
---------
Total liabilities............. 9,155,099
---------
Common Stock(D)............... 29,697
Additional paid in capital
(net of Offering costs)(D).. 25,508,818
----------
Total Stockholders' equity.... 25,538,515
----------
Total liabilities and
Stockholders' equity........ 34,693,614
==========
</TABLE>
F-3
<PAGE> 11
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1995
(unaudited)
Acquisition of Mundelein Plaza, Mundelein, Illinois
On March 29, 1996, the Company acquired the Mundelein Plaza property
located in Mundelein, Illinois ("Mundelein Plaza") from an unaffiliated
third party for a purchase price of $5,658,230, including closing costs of
$8,230, on an all cash basis, funded from offering proceeds.
Acquisition of Regency Point Shopping Center, Lockport, Illinois
On April 5, 1996, the Company completed the acquisition of the Regency
Point Shopping Center located in Lockport, Illinois ("Regency Point"), from
an unaffiliated third party for a purchase price of $5,700,000. As part of
the acquisition, the Company will assume the existing first mortgage loan
of $4,473,200 along with a related interest rate swap agreement, with the
balance funded with Offering proceeds.
The first mortgage loan has a floating interest rate of 180 basis points
over the 30-day LIBOR rate, which rate is adjusted monthly. The interest
rate swap agreement, in conjunction with the first mortgage, provides for
Bank One, Chicago, to receive from or pay to the Company the difference
between 6.11% and the 30-day LIBOR rate, so that the first mortgage loan
has an effective rate of 7.91% per annum. The first mortgage loan matures
in August 2000. The related interest rate swap agreement was terminated on
April 18, 1996 resulting in $48,419 proceeds to the Company. No pro forma
adjustment has been made as a result of this termination.
Acquisition of Prospect Heights Plaza, Prospect Heights, Illinois
On June 17, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $2,165,000 on an all cash basis,
funded from Offering Proceeds.
Acquisition of Montgomery-Sears, Montgomery, Illinois
On June 17, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $3,419,000 on an all cash basis,
funded from Offering Proceeds.
Acquisition of Zany Brainy, Wheaton, Illinois
On July 1, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $2,455,000 on an all cash basis,
funded from Offering Proceeds.
F-4
<PAGE> 12
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1995
(unaudited)
Acquisition of Salem Square, Countryside, Illinois
On August 2, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $6,173,850, on an all cash basis,
funded from Offering Proceeds.
Acquisition of Hawthorn Village Commons, Vernon Hills, Illinois
On August 15, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $8,450,000.
The Company funded the purchase using: (i) the proceeds of a short-term
loan maturing August 23, 1996 in the amount of $2.9 million from Inland
Mortgage Investment Corporation ("IMIC"), an Affiliate of the Company (the
"Short-Term Loan"), and (ii) cash and cash equivalents. The Company did
not pay any fees in connection with the Short-Term Loan, which bears
interest at a rate of eight percent per annum. A majority of the Company's
board, including a majority of the Independent Directors has approved the
terms and conditions of the Short-Term Loan. The Company expects to repay
the Short-Term Loan using the proceeds of a loan (the "Mortgage Loan") in
the amount of $3,955,000 from an unaffiliated lender. The Company has
signed a commitment letter with, and has paid a 1% origination fee to, the
lender of the Mortgage Loan. The Mortgage Loan will have a term of five
years and, prior to the maturity date, will require payments of interest
only, at an annual rate of 7.85%. If the Company is unable to close the
Mortgage Loan or otherwise obtain funds to repay the Short-Term Loan before
August 23, 1996, then the interest rate on the Short-Term Loan will
increase from eight percent to thirteen percent per annum.
(C) No pro forma assumptions have been made for the additional payment of
distributions resulting from the additional proceeds raised.
(D) Additional Offering Proceeds of $29,697,000, net of additional Offering
costs of $4,158,485, are reflected as received as of December 31, 1995,
prior to the purchase of the properties. Offering costs consist
principally of registration costs, printing and selling costs, including
commissions.
F-5
<PAGE> 13
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the year ended December 31, 1995
(unaudited)
The following unaudited Pro Forma Statement of Operations of the Company is
presented to effect the acquisitions of the Walgreens/Decatur property, Eagle
Crest Shopping Center, Montgomery-Goodyear property, Nantucket Square Shopping
Center, Mundelein Plaza, Regency Point Shopping Center, Prospect Heights Plaza,
Montgomery-Sears Shopping Center, Salem Square and Hawthorn Village Commons as
of January 1, 1995. Hartford/Naperville Plaza, Antioch Plaza and the Zany
Brainy store were constructed in 1995 and acquired shortly after construction
was completed and as such, the unaudited Pro Forma Statement of Operations of
the Company is presented to effect these acquisitions as of August 17, 1995,
September 1, 1995 and November 22, 1995, respectively, the date occupancy
commenced at these properties. This unaudited Pro Forma Statement of
Operations should be read in conjunction with the December 31, 1995 Financial
Statements and the notes thereto as filed on Form 10-K.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the year ended
December 31, 1995, nor does it purport to represent the future results of
operations of the Company. Unless otherwise defined, capitalized terms used
herein shall have the same meaning as in the Prospectus.
F-6
<PAGE> 14
Inland Real Estate Corporation
Pro Forma Statement of Operations
for the year ended December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------
1995 1995 1996
Historical Acquisitions Acquisitions 1995
(A) (B) (C) Pro Forma
---------- ------- --------- ---------
<S> <C> <C> <C> <C>
Rental
income.......... $ 869,485 585,614 3,388,449 4,843,548
Additional
rental income... 228,024 162,536 1,067,674 1,458,234
Interest
income (D)...... 82,913 - - 82,913
---------- ------- --------- ---------
Total income.... 1,180,422 748,150 4,456,123 6,384,695
---------- ------- --------- ---------
Professional
services and
general and
administrative.. 23,132 - - 23,132
Property operating
expenses........ 326,721 275,218 1,343,910 1,945,849
Interest expense.. 164,161 429,997 662,368 1,256,526
Depreciation (E).. 169,894 111,767 769,722 1,051,383
---------- ------- --------- ---------
Total expenses.... 683,908 816,982 2,776,000 4,276,890
---------- ------- --------- ---------
Net income(loss) $ 496,514 (68,832) 1,680,123 2,107,805
========== ======= ========= =========
Weighted average
common stock shares
outstanding (F). 943,156 3,912,856
========== =========
Net income per weighted
average common stock
outstanding (F). $ .53 .54
========== =========
</TABLE>
See accompanying notes to pro forma statement of operations.
F-7
<PAGE> 15
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the year ended December 31, 1995
(unaudited)
(A) The December 31, 1995 Historical column represents the historical statement
of operations of the Company for the year ended December 31, 1995, as filed
with the SEC on Form 10-K.
(B) Total pro forma adjustments for the year ended December 31, 1995 are as
though the acquisitions were acquired the earlier of January 1, 1995 or
date that operations commenced.
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------------------------------------
Hartford Total
Montgomery- Naperville Nantucket Antioch 1995
Walgreens Eagle Crest Goodyear Plaza Square Plaza Pro Forma
---------- ----------- ----------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental
income.......... $ 10,651 95,232 101,359 15,077 340,545 22,750 585,614
Additional
Rental income... - 2,218 19,203 662 140,453 - 162,536
---------- ------- ------- ------- ------- ------ -------
Total income.... 10,651 97,450 120,562 15,739 480,998 22,750 748,150
---------- ------- ------- ------- ------- ------ -------
Property operating
expenses........ 533 17,376 47,758 3,436 205,903 212 275,218
Interest expense.. 4,840 77,170 46,325 13,625 267,137 20,900 429,997
Depreciation (E).. 3,141 16,324 20,682 8,867 57,357 5,396 111,767
---------- ------- ------- ------- ------- ------ -------
Total expenses.... 8,514 110,870 114,765 25,928 530,397 26,508 816,982
---------- ------- ------- ------- ------- ------ -------
Net income(loss) $ 2,137 (13,420) 5,797 (10,189) (49,399) (3,758) (68,832)
========== ======= ======= ======= ======= ====== =======
</TABLE>
F-8
<PAGE> 16
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Acquisition of Walgreens/Decatur, Decatur, Illinois
In conjunction with the acquisition, the Company assumed a portion of the
first mortgage loan with a balance of $775,000. This mortgage has an
interest rate of 7.655%, amortizes over a 25-year period and matures May
31, 2004. The Company is responsible for monthly payments of principal
and interest of $5,689. The pro forma adjustment for interest expense for
the period prior to acquisition was estimated using the described loan
terms.
Acquisition of Eagle Crest Shopping Center, Naperville, Illinois
As part of the acquisition, the Company assumed a portion of the first
mortgage loan with a balance of $3,534,000, as well as entering into a
loan agreement with Inland Property Sales, Inc. ("IPS"), an Affiliate of
the Advisor, for the balance of the purchase price for $1,212,427. The
first mortgage bears interest at 9.5% per annum and the loan to IPS bears
interest at 10.5%. The pro forma adjustment for interest expense for the
period prior to acquisition was estimated using the described loan terms.
Acquisition of Montgomery-Goodyear, Montgomery, Illinois
As part of the acquisition, the Company entered into a loan agreement with
Inland Mortgage Investment Corporation ("IMIC"), an affiliate of the
Advisor, for $600,000 which bears interest of 10.9% per annum. The pro
forma adjustment for interest expense for the period prior to acquisition
was estimated using the described loan terms.
Acquisition of Hartford/Naperville Plaza, Naperville, Illinois
In conjunction with the acquisition, the Company entered into a loan
agreement with IMIC for $600,000 which bears interest of 10.9% per annum.
The pro forma adjustment for interest expense was estimated using the
described loan terms.
Acquisition of Nantucket Square Shopping Center, Schaumburg, Illinois
As part of the acquisition, the Company entered into a loan agreement with
IMIC for $3,550,000 which bears interest of 10.5% per annum. The pro
forma adjustment for interest expense for the period prior to acquisition
was estimated using the described loan terms.
F-9
<PAGE> 17
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Acquisition of Antioch Plaza, Antioch, Illinois
This pro forma adjustment reflects the purchase of the Antioch Plaza
property as if the Company had purchased the property as of September 1,
1995, the date the first tenant occupied this newly constructed property.
The pro forma adjustment for operations for the period September 1, 1995
to December 28, 1995 (date of acquisition) was estimated using applicable
lease information. Blockbuster Video was the only tenant occupying the
property during that period. No pro forma adjustment was made for real
estate tax expense and the related recovery income since the property was
vacant land for most of 1995 and the amount would be difficult to estimate
and have an immaterial effect.
As part of the acquisition, the Company entered into a loan agreement with
Inland Real Estate Investment Corporation, an affiliate of the Advisor,
for $660,000 which bears interest of 9.5% per annum. The pro forma
adjustment for interest expense was estimated using the described loan
terms.
F-10
<PAGE> 18
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
(C) Total pro forma adjustments for 1996 Acquisitions as though they were
acquired the earlier of January 1, 1995 or date that operations
commenced.
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------------------------------------------------------------
Hawthorn Total
Mundelein Regency Prospect Montgomery- Zany Salem Village 1995
Plaza Point Heights Sears Brainy Square Commons Pro Forma
---------- ------- -------- ----------- ------ --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental
income.......... $ 639,124 541,085 164,152 327,610 28,643 717,522 970,313 3,388,449
Additional
Rental income... 66,669 63,294 116,175 76,182 5,030 387,179 353,145 1,067,674
---------- ------- ------- ------- ------ --------- --------- ---------
Total income.... 705,793 604,379 280,327 403,792 33,673 1,104,701 1,323,458 4,456,123
---------- ------- ------- ------- ------ --------- --------- ---------
Property operating
expenses........ 141,482 71,615 180,819 102,067 5,502 435,021 407,404 1,343,910
Interest expense.. - 351,900 - - - - 310,468 662,368
Depreciation (E).. 128,233 162,500 46,900 83,200 4,422 150,000 194,467 769,722
---------- ------- ------- ------- ------ --------- --------- ---------
Total expenses.... 269,715 586,015 227,719 185,267 9,924 585,021 912,339 2,776,000
---------- ------- ------- ------- ------ --------- --------- ---------
Net income...... $ 436,078 18,364 52,608 218,525 23,749 519,680 411,119 1,680,123
========== ======= ======= ======= ====== ========= ========= =========
</TABLE>
F-11
<PAGE> 19
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Acquisition of Mundelein Plaza, Mundelein, Illinois
Reconciliation of Gross Income and Direct Operating Expenses for the year
ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Mundelein Plaza
------------------------------------
*As Pro Forma
Reported Adjustments Total
---------- ----------- -------
<S> <C> <C> <C>
Rental income.................... $ 639,124 - 639,124
Additional rental income......... 66,669 - 66,669
---------- -------- -------
Total income..................... 705,793 - 705,793
---------- -------- -------
Property operating expenses...... 141,482 - 141,482
Interest expense................. - - -
Depreciation (E)................. - 128,233 128,233
---------- -------- -------
Total expenses................... 141,482 128,233 269,715
---------- -------- -------
Net income....................... $ 564,311 (128,233) 436,078
========== ======== =======
</TABLE>
Acquisition of Regency Point, Lockport, Illinois
As part of the acquisition, the Company will assume the existing first
mortgage loan of $4,473,200, along with a related interest rate swap
agreement.
The first mortgage loan has a floating interest rate of 180 basis points
over the 30-day LIBOR rate, which rate is adjusted monthly. The interest
rate swap agreement, in conjunction with the first mortgage, provides for
Bank One, Chicago, to receive from or pay to the Company the difference
between 6.11% and the 30-day LIBOR rate, so that the first mortgage loan
has an effective rate of 7.91% per annum. The pro forma adjustment for
interest expense for 1995 was estimated using the described loan terms.
The related interest rate swap agreement was terminated on April 18, 1996
resulting in $48,419 proceeds to the Company. The pro forma adjustment
does not give effect to the termination of this agreement.
F-12
<PAGE> 20
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Reconciliation of Gross Income and Direct Operating Expenses for the year
ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Regency Point
----------------------------------
*As Pro Forma
Reported Adjustments Total
---------- ----------- -------
<S> <C> <C> <C>
Rental income.................... $ 541,085 - 541,085
Additional rental income......... 63,294 - 63,294
---------- ---------- -------
Total income..................... 604,379 - 604,379
---------- ---------- -------
Property operating expenses...... 71,615 - 71,615
Interest expense................. - 351,900 351,900
Depreciation (E)................. - 162,500 162,500
--------- ---------- -------
Total expenses................... 71,615 514,400 586,015
---------- ------------ ----------
Net income....................... $ 532,764 (514,400) 18,364
=========== =========== ===========
</TABLE>
Acquisition of Prospect Heights Plaza, Prospect Heights, Illinois
Reconciliation of Gross Income and Direct Operating Expenses for the year
ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Prospect Heights
---------------------------------
*As Pro Forma
Reported Adjustments Total
---------- ----------- -------
<S> <C> <C> <C>
Rental income.................... $ 164,152 - 164,152
Additional rental income......... 116,175 - 116,175
---------- ----------- -------
Total income..................... 280,327 - 280,327
---------- ----------- -------
Property operating expenses...... 180,819 - 180,819
Interest expense................. - - -
Depreciation (E)................. - 46,900 46,900
---------- ---------- -------
Total expenses................... 180,819 46,900 227,719
---------- ---------- --------
Net income....................... $ 99,508 (46,900) 52,608
=========== =========== ===========
</TABLE>
F-13
<PAGE> 21
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Acquisition of Montgomery-Sears, Montgomery, Illinois
Reconciliation of Gross Income and Direct Operating Expenses for the year
ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Montgomery-Sears
------------------------------------
*As Pro Forma
Reported Adjustments Total
---------- ----------- -------
<S> <C> <C> <C>
Rental income.................... $ 327,610 - 327,610
Additional rental income......... 76,182 - 76,182
---------- ----------- -------
Total income..................... 403,792 - 403,792
---------- ----------- -------
Property operating expenses...... 102,067 - 102,067
Interest expense................. - - -
Depreciation (E)................. - 83,200 83,200
---------- ---------- -------
Total expenses................... 102,067 83,200 185,267
---------- ---------- -------
Net income....................... $ 301,725 (83,200) 218,525
=========== =========== ===========
</TABLE>
Acquisition of Zany Brainy, Wheaton, Illinois
This pro forma adjustment reflects the purchase of Zany Brainy as if the
Company had purchased the property as of January 1, 1995. Operations for
this property for the period from November 22, 1995 (date of occupancy) to
December 31, 1995 were estimated using the lease and operating expense
information supplied by the seller. This property was purchased on an all
cash basis.
F-14
<PAGE> 22
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Acquisition of Salem Square, Countryside, Illinois
Reconciliation of Gross Income and Direct Operating Expenses for the
year ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Salem Square
-----------------------------------
*As Pro Forma
Reported Adjustments Total
---------- ----------- ---------
<S> <C> <C> <C>
Rental income.................... $ 717,522 - 717,522
Additional rental income......... 387,179 - 387,179
---------- ----------- ---------
Total income..................... 1,104,701 - 1,104,701
---------- ----------- ---------
Property operating expenses...... 435,021 - 435,021
Interest expense................. - - -
Depreciation (E)................. - 150,000 150,000
---------- ----------- ---------
Total expenses................... 435,021 150,000 585,021
---------- ---------- ---------
Net income....................... $ 669,680 (150,000) 519,680
=========== =========== ==========
</TABLE>
Acquisition of Hawthorn Village Commons, Vernon Hills, Illinois
Reconciliation of Gross Income and Direct Operating Expenses for the year
ended December 31, 1995 prepared in accordance with Rule 3.14 of
Regulation S-X (*) to the Pro Forma Adjustments:
<TABLE>
<CAPTION>
Hawthorn Village Commons
--------------------------------------
*As Pro Forma
Reported Adjustments Total
------------- ------------- ---------
<S> <C> <C> <C>
Rental income.................... $ 970,313 - 970,313
Additional rental income......... 353,145 - 353,145
---------- ----------- ---------
Total income..................... 1,323,458 - 1,323,458
---------- ----------- ---------
Property operating expenses...... 407,404 - 407,404
Interest expense................. - 310,468 310,468
Depreciation (E)................. - 194,467 194,467
---------- ----------- ---------
Total expenses................... 407,404 504,935 912,339
---------- ----------- ---------
Net income....................... $ 916,054 (504,935) 411,119
=========== =========== ===========
</TABLE>
F-15
<PAGE> 23
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
The Company funded the purchase of Hawthorn Village Commons using: (i) the
proceeds of a short-term loan maturing August 23, 1996 in the amount of
$2.9 million from Inland Mortgage Investment Corporation ("IMIC"), an
Affiliate of the Company (the "Short-Term Loan"), and (ii) cash and cash
equivalents. The Company did not pay any fees in connection with the
Short-Term Loan, which bears interest at a rate of eight percent per
annum. A majority of the Company's board, including a majority of the
Independent Directors has approved the terms and conditions of the Short-
Term Loan. The Company expects to repay the Short-Term Loan using the
proceeds of a loan (the "Mortgage Loan") in the amount of $3,955,000 from
an unaffiliated lender. The Company has signed a commitment letter with,
and has paid a 1% origination fee to, the lender of the Mortgage Loan. The
Mortgage Loan will have a term of five years and, prior to the maturity
date, will require payments of interest only, at an annual rate of 7.85%.
If the Company is unable to close the Mortgage Loan or otherwise obtain
funds to repay the Short-Term Loan before August 23, 1996, then the
interest rate on the Short-Term Loan will increase from eight percent to
thirteen percent per annum.
(D) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(E) Depreciation expense is computed using the straight-line method, based
upon an estimated useful life of thirty years.
(F) The pro forma weighted average common stock shares for the year ended
December 31, 1995 was calculated by estimating the additional shares sold
to purchase each of the Company's properties on a weighted average basis.
F-16
<PAGE> 24
Inland Real Estate Corporation
Pro Forma Balance Sheet
June 30, 1996
(unaudited)
The following unaudited Pro Forma Balance Sheet of the Company is presented to
effect the acquisition of the Regency Point Shopping Center, Prospect Heights
Plaza, Montgomery-Sears Shopping Center, the Zany Brainy store, Salem Square
and Hawthorn Village Commons as though these transactions occurred June 30,
1996. This unaudited Pro Forma Balance Sheet should be read in conjunction
with the June 30, 1996 Financial Statements and the notes thereto as filed on
Form 10-Q.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at June 30, 1996, nor does it
purport to represent the future financial position of the Company. Unless
otherwise defined, capitalized terms used herein shall have the same meaning as
in the Prospectus.
F-17
<PAGE> 25
Inland Real Estate Corporation
Pro Forma Balance Sheet
June 30, 1996
(unaudited)
<TABLE>
<CAPTION>
June 30,
June 30, 1996
1996 Pro Forma Pro Forma
Assets Historical(A) Adjustments(B) Balance Sheet
------ ------------- ----------------------------
<S> <C> <C> <C>
Net investment in
properties.................. $ 34,031,575 17,078,850 51,110,425
Cash and cash equivalents..... 9,190,952 - 9,190,952
Accounts and rents
receivable.................. 799,181 450,824 1,250,005
Other assets.................. 138,189 39,550 177,739
------------ ---------- ----------
Total assets.................. $ 44,159,897 17,569,224 61,729,121
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
------------------------------------
<S> <C> <C> <C>
Accounts payable and accrued
expenses.................... $ 329,746 - 329,746
Accrued real estate taxes..... 730,398 465,168 1,195,566
Distributions payable (C)..... 269,137 - 269,137
Security deposits............. 108,354 - 108,354
Mortgage payable.............. 5,205,586 3,955,000 9,160,586
Other liabilities............. 96,817 - 96,817
Due to Affiliates............. 545,878 - 545,878
------------ ---------- -----------
Total liabilities............. 7,285,916 4,420,168 11,706,084
------------ ---------- -----------
Common Stock.................. 43,270 15,289 58,559
Additional paid in capital
(net of Offering costs)..... 37,525,808 13,133,767 50,659,575
Accumulated distributions in
excess of net income........ (695,097) - (695,097)
------------ ---------- -----------
Total Stockholders' equity.... 36,873,981 13,149,056 50,023,037
------------ ---------- -----------
Total liabilities and
Stockholders' equity........ $ 44,159,897 17,569,224 61,729,121
============= ============= =============
</TABLE>
See accompanying notes to pro forma balance sheet.
F-18
<PAGE> 26
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1996
(unaudited)
(A) The June 30, 1996 Historical column represents the historical balance
sheet as presented in the June 30, 1996 10-Q as filed with the SEC.
(B) The following pro forma adjustment relates to the acquisition or probable
acquisition of the subject properties as though they were acquired on June
30, 1996. The terms are described in the notes that follow.
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------
Hawthorn Total
Zany Salem Village Pro Forma
Assets Brainy Square Commons Adjustments
------ -------- ------ -------- -----------
<S> <C> <C> <C> <C>
Net investment in properties.. $2,455,000 6,173,850 8,450,000 17,078,850
Cash and cash equivalents..... - - - -
Accounts and rents receivable. - 262,606 188,218 450,824
Other assets.................. - - 39,550 39,550
---------- ---------- ---------- -----------
Total assets.................. $2,455,000 6,436,456 8,677,768 17,569,224
=========== =========== =========== ===========
</TABLE>
<TABLE>
Liabilities and Stockholders' Equity
------------------------------------
<S> <C> <C> <C> <C>
Accounts payable and accrued
expenses.................... $ - - - -
Accrued real estate taxes..... - 270,728 194,440 465,168
Distributions payable(C)...... - - - -
Security deposits............. - - - -
Mortgage payable.............. - - 3,955,000 3,955,000
Notes payable to Affiliate.... - - - -
Other liabilities............. - - - -
---------- --------- --------- ---------
Total liabilities............. - 270,728 4,149,440 4,420,168
---------- --------- --------- ---------
Common Stock (D).............. $ 2,855 7,169 5,265 15,289
Additional paid in capital
(net of Offering Costs)(D).. 2,452,145 6,158,559 4,523,063 3,133,767
Accumulated distributions in
excess of net income........ - - - -
---------- --------- --------- ----------
Total Stockholders' equity.... 2,455,000 6,165,728 4,528,328 13,149,056
---------- ---------- --------- ----------
Total liabilities and
Stockholders' equity........ $2,455,000 6,436,456 8,677,768 17,569,224
=========== =========== ========== ==========
</TABLE>
F-19
<PAGE> 27
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1996
(unaudited)
Acquisition of the Zany Brainy Store, Wheaton, Illinois
On July 1, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $2,455,000 on an all cash basis,
funded from Offering Proceeds.
Acquisition of Salem Square
On August 2, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $6,173,850, on an all cash basis,
funded from Offering Proceeds.
Acquisition of Hawthorn Village Commons
On August 15, 1996, the Company acquired this property from an unaffiliated
third party for the purchase price of $8,450,000.
The Company funded the purchase using: (i) the proceeds of a short-term
loan maturing August 23, 1996 in the amount of $2.9 million from Inland
Mortgage Investment Corporation ("IMIC"), an Affiliate of the Company (the
"Short-Term Loan"), and (ii) cash and cash equivalents. The Company did
not pay any fees in connection with the Short-Term Loan, which bears
interest at a rate of eight percent per annum. A majority of the Company's
board, including a majority of the Independent Directors has approved the
terms and conditions of the Short-Term Loan. The Company expects to repay
the Short-Term Loan using the proceeds of a loan (the "Mortgage Loan") in
the amount of $3,955,000 from an unaffiliated lender. The Company has
signed a commitment letter with, and has paid a 1% origination fee to, the
lender of the Mortgage Loan. The Mortgage Loan will have a term of five
years and, prior to the maturity date, will require payments of interest
only, at an annual rate of 7.85%. If the Company is unable to close the
Mortgage Loan or otherwise obtain funds to repay the Short-Term Loan before
August 23, 1996, then the interest rate on the Short-Term Loan will
increase from eight percent to thirteen percent per annum.
(C) No pro forma assumptions have been made for the additional payment of
distributions resulting from the additional proceeds raised.
(D) Additional Offering Proceeds of $15,289,000, net of additional Offering
costs of $2,139,944 are reflected as received as of June 30, 1996, prior to
the purchase of the properties. Offering costs consist principally of
registration costs, printing and selling costs, including commissions.
F-20
<PAGE> 28
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the six months ended June 30, 1996
(unaudited)
The following unaudited Pro Forma Statement of Operations of the Company is
presented to effect the acquisitions of Mundelein Plaza, Regency Point Shopping
Center, Prospect Heights Plaza, Montgomery-Sears Shopping Center, the Zany
Brainy store, Salem Square and Hawthorn Village Commons as of January 1, 1996.
This unaudited Pro Forma Statement of Operations should be read in conjunction
with the June 30, 1996 Financial Statements and the notes thereto as filed on
Form 10-Q.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the six months
ended June 30, 1996, nor does it purport to represent the future financial
position of the Company. Unless otherwise defined, capitalized terms used
herein shall have the same meaning as in the Prospectus.
F-21
<PAGE> 29
Inland Real Estate Corporation
Pro Forma Statement of Operations
for the six months ended June 30, 1996
(unaudited)
<TABLE>
<CAPTION>
1996 Total
Historical Pro Forma 1996
(A) Adjustments(B) Pro Forma
------------- -------------- ------------
<S> <C> <C> <C>
Rental income............... $ 1,320,636 1,460,272 2,780,908
Additional rental income.... 389,624 606,777 996,401
Interest income (C)......... 124,589 - 124,589
Other income................ 52,806 - 52,806
------------- -------------- ------------
Total income.............. 1,887,655 2,067,049 3,954,704
------------- -------------- ------------
Professional services and
general and
administrative fees (D)... 104,311 - 104,311
Advisor asset management
fee....................... 125,532 129,968 255,500
Property operating expenses. 518,722 718,815 1,237,537
Interest expense............ 107,127 243,234 350,361
Depreciation (E)............ 277,500 341,537 619,037
Amortization................ 2,746 - 2,746
Acquisition costs expensed.. 17,150 - 17,150
------------- -------------- ------------
Total expenses.............. 1,153,088 1,433,554 2,586,642
------------- -------------- ------------
Net income................ $ 734,567 633,495 1,368,062
============= ============== ============
Weighted average
common stock shares
outstanding (F)........... 3,558,960 5,087,860
============= ============
Net income per weighted
average common stock
outstanding (F)........... $ .25 .27
============= ============
</TABLE>
See accompanying notes to pro forma statement of operations.
F-22
<PAGE> 30
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the six months ended June 30, 1996
(unaudited)
(A) The June 30, 1996 Historical column represents the historical statement of
operations of the Company for the six months ended June 30, 1996, as filed
with the SEC on Form 10-Q.
(B) Total pro forma adjustments for the six months ended June 30, 1996 are as
though the acquisitions of the following properties occurred on January 1,
1996 on an all cash basis except for the following:
In the purchase of Regency Point the Company assumed the existing first
mortgage loan of $4,473,200, along with a related interest rate swap
agreement. The first mortgage loan has a floating interest rate of 180
basis points over the 30-day LIBOR rate, which rate is adjusted monthly.
The interest rate swap agreement, in conjunction with the first mortgage,
provides for Bank One, Chicago, to receive from or pay to the Company the
difference between 6.11% and the 30-day LIBOR rate, so that the first
mortgage loan has an effective rate of 7.91% per annum. The pro forma
adjustment for interest expense for 1996 was estimated using the described
loan terms. The related interest rate swap agreement was terminated on
April 18, 1996 resulting in $48,419 proceeds to the Company. The pro forma
adjustment does not give effect to the termination of this agreement.
The Company funded the purchase of Hawthorn Village Commons using: (i) the
proceeds of a short-term loan maturing August 23, 1996 in the amount of
$2.9 million from Inland Mortgage Investment Corporation ("IMIC"), an
Affiliate of the Company (the "Short-Term Loan"), and (ii) cash and cash
equivalents. The Company did not pay any fees in connection with the
Short-Term Loan, which bears interest at a rate of eight percent per annum.
A majority of the Company's board, including a majority of the Independent
Directors has approved the terms and conditions of the Short-Term Loan. The
Company expects to repay the Short-Term Loan using the proceeds of a loan
(the "Mortgage Loan") in the amount of $3,955,000 from an unaffiliated
lender. The Company has signed a commitment letter with, and has paid a 1%
origination fee to, the lender of the Mortgage Loan. The Mortgage Loan will
have a term of five years and, prior to the maturity date, will require
payments of interest only, at an annual rate of 7.85%. If the Company is
unable to close the Mortgage Loan or otherwise obtain funds to repay the
Short-Term Loan before August 23, 1996, then the interest rate on the
Short-Term Loan will increase from eight percent to thirteen percent per
annum.
F-23
<PAGE> 31
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1996
(unaudited)
<TABLE>
<CAPTION> Hawthorn
Mundelein Regency Prospect Montgomery- Zany Salem Village Pro Forma
Plaza Point Heights Sears Brainy Square Commons Adjustments Total
---------- -------- --------- ---------- ------ ------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 163,381 139,271 89,105 163,700 137,489 341,273 426,053 - 1,460,272
Additional rental
income.......... 32,975 16,034 83,593 57,012 24,144 212,817 180,202 - 606,777
Interest income... - - - - - - - - -
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total income...... 196,356 155,305 172,698 220,712 161,633 554,090 606,255 - 2,067,049
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Professional services
and general and
administrative.. - - - - - - - - -
Advisor asset
management fee.. - - - - - - - 129,968 129,968
Property operating
expenses........ 53,986 19,046 91,364 66,944 30,331 240,177 216,967 - 718,815
Interest expense.. - - - - - - - 243,234 243,234
Depreciation (D).. - - - - - - - 341,537 341,537
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses.... 53,986 19,046 91,364 66,944 30,331 240,177 216,967 714,739 1,433,554
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income........ $ 142,370 136,259 81,334 153,768 131,302 313,913 389,288 (714,739) 633,495
=========== =========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
F-24
<PAGE> 32
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1996
(unaudited)
(C) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(D) Additional professional services and general and administrative fees could
not be reasonably estimated, therefore no pro forma adjustment was made.
(E) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(F) The pro forma weighted average common stock shares for the six months ended
June 30, 1996 was calculated by estimating the additional shares sold to
purchase each of the Company's properties on a weighted average basis.
F-25
