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As filed with the Securities and Exchange Commission on July 12, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 1, 1996
(Date of earliest event reported)
Inland Monthly Income Fund III, Inc.
(Exact name of registrant as specified in the charter)
Maryland 33-79012 36-3953261
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2901 Butterfield Road
Oak Brook, Illinois 60521
(Address of Principal Executive Offices)
(708) 218-8000
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition of Disposition of Assets
Capitalized terms not otherwise defined herein shall have the same meaning as
in the prospectus of Inland Monthly Income Fund, III. (the "Company") dated May
7, 1996 (the "Prospectus").
Zany Brainy, Wheaton, Illinois
On July 1, 1996, the Company acquired fee simple title to a single-user retail
property in Wheaton, Illinois (the "Zany Brainy Store"), which facility has
been leased to Children's Concepts, Inc. which does business as Zany Brainy
("Zany Brainy"), from an unaffiliated third party for a purchase price of
$2,455,000 on an all cash basis. Zany Brainy sells children's books, computer
software, toys, and related items.
The Zany Brainy Store, built in 1995, is a single-user retail property
aggregating 12,499 rentable square feet and is leased to Zany Brainy.
The lease with Zany Brainy requires a base rent of $22.00 per square foot per
annum until November 2000, which increases for the period December 2000 to
November 2005 to the lesser of $24 per square foot per annum or a calculated
amount using the consumer price index. The lease with Zany Brainy contains two
renewal options of five years each.
For federal income tax purposes, the Company's depreciable basis in the Zany
Brainy Store will be approximately $1,617,000. 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 $1,292 for vacant
land. Real estate taxes to be paid in 1997 for the tax year ended 1996 are
expected to be $35,000 for improved land.
The following tables set forth certain information with respect to the amount
of and expiration of the Zany Brainy lease.
<TABLE>
<CAPTION>
Square Current
Foot Lease Renewal Annual Rent Per
Lessee Leased Ends Options Rent Square Foot
- --------------- -------- ---------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Zany Brainy 12,499 11/2006 2/5 $ 274,978 $ 22.00
</TABLE>
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<TABLE>
<CAPTION>
Average Percent of Percent of
Approx. Base Rent Total Annual
GLA of Annual Total Per Square Building GLA Base Rent
Number of Expiring Base Rent Annual Foot Under Represented Represented
Year Ending Leases Leases of Expiring Base Expiring By Expiring By Expiring
December 31, Expiring (square feet) Leases Rent(1) Leases Leases Leases
- ------------ ---------- ------------ ----------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1996-1999 - - - $274,978 - - -
2000 - - - $289,560 (2) - - -
2001-2004 - - - $299,976 - - -
2005 1 12,499 $299,976 $299,976 $ 24.00 100% 100%
</TABLE>
(1) No assumptions were made regarding the releasing of expired leases. It is
management of the Company's current opinion that the space will be
released at market rates.
(2) The base rent will increase in December 2000 to the lesser of $24.00 per
square foot per annum or $274,978* (1.0 plus the sum of CPI for the
first five years plus .025). For presentation purposes, $24.00 per square
foot per annum was used.
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
reflecting a market value of the Zany Brainy Store as of July 1, 1996 of
$2,490,000. It should be noted, however, that appraisals are estimates of value
and should not be relied on as a measure of true worth or realizable value.
Item 7. Financial Statements and Exhibits
See Item 7 on Form 8-K, filed on June 14, 1996, incorporated herein by
reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Inland Monthly Income Fund III, Inc.
(Registrant)
By:/s/ CYNTHIA M. HASSETT
----------------------
Cynthia M. Hassett
Chief Financial and Accounting Officer
Date: JULY 11, 1996
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