<PAGE> 1
Inland Real Estate Corporation
Sticker Supplement
Supplement No. 1 to the Company's Prospectus discloses information
regarding both a recently completed and a pending acquisition of property. The
Company commenced the Offering on July 24, 1996 and as of August 1, 1996 the
Company had accepted subscriptions for 17,400 shares ($157,470 net of Selling
Commissions) which are being offered on a best-efforts basis.
On August 2, 1996 the Company completed the acquisition of a 112,310
rentable square foot multi-tenant retail facility known as Salem Square located
in Countryside, Illinois. The two largest tenants, each of whom lease in
excess of 10% of the rentable square feet are T.J. Maxx (63,535 sq. ft.) and
Marshalls (29,827 sq. ft.). The facility was purchased from an unaffiliated
third party for approximately $6.2 million.
The Company has also entered into an agreement to purchase a 98,686 square
foot neighborhood retail facility known as Hawthorn Village Commons located in
Vernon Hills, Illinois for approximately $8.4 million. The purchase of the
center is conditioned on the Company completing its due diligence and approval
by the Company's board.
<PAGE> 2
SUPPLEMENT NO. 1
DATED AUGUST 5, 1996
TO THE PROSPECTUS DATED JULY 24, 1996
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 1 is provided for the purpose of supplementing the
Prospectus dated July 24, 1996 of Inland Real Estate Corporation (the
"Company") and must be read in conjunction therewith. Unless otherwise
defined, capitalized terms used herein shall have the same meaning as in the
Prospectus.
REAL PROPERTY INVESTMENTS
SALEM SQUARE SHOPPING CENTER, COUNTRYSIDE, ILLINOIS
On August 2, 1996, the Company acquired Salem Square Shopping Center
("Salem Square") from Salem Square Ltd., an Illinois limited partnership and
American National Bank & Trust of Chicago, not individually but as trustee
under Trust No. 57190, an unaffiliated third party, for approximately $6.2
million which was funded entirely out of the Company's cash and cash
equivalents. The purchase price was approximately $55 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 and presented to the
Company's board. Salem Square was built in two phases in 1961 and 1985 and
consists of a single-story commercial multi-tenant retail facility aggregating
112,310 rentable square feet.
In evaluating Salem Square 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, 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 Mid-America Real
Estate Corporation, the population within a five mile radius of Salem Square is
240,000, with an average household income in excess of $62,000 per year, higher
than the national average. Further, although 75% of the rentable square feet at
Salem Square is leased to two discount clothing retailers, the Company's
management believes that the current rental rates for these two tenants are
below prevailing market rates, and that if one or both of these tenants vacated
their leased space before the end of the respective lease term, the space could
be released at rates higher than the current rental rates. The Company did not
consider any other factors materially relevant to the decision to acquire the
property. The Company did consider other factors such as traffic patterns in
the area.
The Company anticipates making approximately $140,000 in repairs and
improvements to Salem Square over the next few years, including painting,
parking lot repair, landscaping, and tuckpointing. 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 Salem Square 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.
1
<PAGE> 3
<TABLE>
<CAPTION>
Year Ending Occupancy Effective Annual Rental
December 31, Rate Per Square Foot
------------ --------- -----------------------
<S> <C> <C>
1991 100% $5.95
1992 100 5.95
1993 100 6.09
1994 100 6.09
1995 100 6.40
</TABLE>
As of July 1, 1996, Salem Square was 97% leased. Tenants leasing more
than 10% of the total square footage are Marshalls, which leases 29,827 square
feet, and T.J. Maxx, which leases 63,535 square feet. Marshalls and T.J. Maxx
both are retailers of clothing for men, women and children, and home
furnishings.
The lease with Marshalls requires Marshalls to pay base rent equal to
$4.75 per square foot per annum payable monthly until January 31, 2002. The
lease also grants Marshalls two options to renew the lease for separate four
year terms. If the first option is exercised, Marshalls will be required to
pay a base rent equal to $5.35 per square foot per annum payable monthly from
February 1, 2002 through January 31, 2006. If the second option is exercised,
Marshalls will be required to pay a base rent equal to $5.85 per square foot
per annum payable monthly from February 1, 2006 through January 31, 2010. The
lease also requires Marshalls to pay percentage rent equal to 1% of gross sales
in excess of the annual fixed minimum rent (currently $141,678) plus Marshalls'
portion of real estate taxes paid on the property aggregating approximately
$71,900 in 1995. In 1995, 1% of gross sales did not exceed the annual fixed
minimum rent, so no percentage rent was payable by Marshalls.
The lease with T.J. Maxx requires T.J. Maxx to pay base rent equal to
$5.75 per square foot per annum payable monthly until November 30, 2004. The
lease also grants three options to renew the lease for separate five year
terms. If T.J. Maxx exercises one or more of these options, the base rent per
square foot per annum will be: $5.82 (for the period from December 1, 2004
through November 30, 2009); $6.30 (for the period from December 1, 2009 through
November 20, 2014); and $6.79 (for the period from December 1, 2014 through
November 30, 2019). The lease also requires the payment of percentage rent
annually based on 1% of adjusted gross sales in excess of the annual fixed
minimum rent (currently $413,526). In 1995, 1% of gross sales did not exceed
the annual fixed minimum rent, so no percentage rent was payable.
For federal income tax purposes, the Company's depreciable basis in Salem
Square will be approximately $4,500,000. Depreciation expense, for tax
purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes payable in 1995 for the tax year ended 1994 (the most
recent tax year for which information is available) were $270,729. The real
estate taxes payable were calculated by multiplying Salem Square's assessed
value times 36%, and then multiplying the product by an equalizer of 2.1135 and
a tax rate of 7.290%.
2
<PAGE> 4
At July 1, 1996, a total of 110,568 square feet were leased to five
tenants at Salem Square. 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 Foot Lease Ends Renewal Current Percentage Rent per
Lessee Leased ---------- Options Annual Rent Rent Square Foot
------ ------ ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Trak Auto 6,000 01/31/00 1/5 yr. $ 66,000 None $ 11.00
Famous Footwear 5,500 08/31/99 None 59,510 None 10.82
Dress Barn 3,706 06/30/98 1/5 yr. 50,031 None 13.50
Marshalls 29,827 01/30/02 2/4 yr. 141,678 None 4.75
T.J. Maxx 63,535 11/30/04 3/5 yr. 413,526 None 5.75
</TABLE>
<TABLE>
<CAPTION>
Percent of
Average Total Percent of
Base Rent Building Annual Base
Approx. GLA Annual Base Per Square GLA Rent
Number of of Expiring Rent of Foot 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 - - - $682,542 - - -
1997 - - - 682,542 - - -
1998 1 3,706 $ 50,028 682,542 $13.50 3.33 7.33
1999 1 5,500 59,510 632,514 10.82 4.90 9.41
2000 1 6,000 66,000 573,004 11.00 5.34 11.52
2001 - - - 507,004 - - -
2002 1 29,827 141,678 507,004 4.75 26.56 27.94
2003 - - - 365,326 - - -
2004 1 63,535 365,326 365,326 5.75 56.57 100.00
2005 - - - - - - -
</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 Salem Square property, as
of July 15, 1996, of $6,260,000. Appraisals are estimates of value and should
not, however, be relied on as a measure of true worth or realizable value.
3
<PAGE> 5
HAWTHORN VILLAGE COMMONS, VERNON HILLS, ILLINOIS
The Company anticipates purchasing a Neighborhood Retail Center located
in Vernon Hills, Illinois known as Hawthorn Village Commons ("Hawthorn
Village"). Under the proposed terms of the acquisition, the Company would
purchase 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 Partnership--JMB-I, an Illinois limited
partnership, an unaffiliated third party, for approximately $8.4 million. The
Company anticipates funding the purchase using: (i) the proceeds of a five-year
loan in the amount of $3,955,000 from an unaffiliated lender; and (ii) cash and
cash equivalents. Prior to the maturity date of this loan, the loan requires
interest only payments at an annual rate of 145 basis points plus the rate
payable on five-year U.S. Treasury Notes at the time of closing of the
acquisition. The loan also requires a 1% origination fee to be paid to the
lender. A closing date for the acquisition has not been scheduled pending
completion of due diligence on the property which the Advisor is undertaking on
behalf of the Company and approval of the Company's board. No acquisition fees
will be payable in connection with the acquisition of Hawthorn Village. There
can be no assurance that the Company will complete the acquisition of Hawthorn
Village.
Hawthorn Village was built in 1978 and remodeled in 1993 and consists of
two one-story buildings comprising a multi-tenant neighborhood retail facility
aggregating 98,686 rentable square feet. The center is anchored by Dominick's
Finer Foods, which leases 46,984 square feet, and Walgreens, which leases
11,974 square feet.
PLAN OF DISTRIBUTION
The Company commenced the Offering on July 24, 1996 and as of August 1,
1996 the Company had accepted subscriptions for 17,400 shares ($157,470 net of
Selling Commissions) which are being offered on a best-efforts basis.
4
<PAGE> 6
INDEX TO FINANCIAL STATEMENTS
PAGE
----
<TABLE>
<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-8
Notes to Pro Forma Statement of Operations (unaudited)
for the year ended December 31, 1995 ............................... F-10
Pro Forma Balance Sheet (unaudited) at March 31, 1996 .............. F-20
Notes to Pro Forma Balance Sheet (unaudited) at March 31, 1996 ..... F-22
Pro Forma Statement of Operations (unaudited) of the Company
for the three months ended March 31, 1996 .......................... F-27
Notes to Pro Forma Statement of Operations (unaudited)
for the three months ended March 31, 1996 .......................... F-29
</TABLE>
221934
5
<PAGE> 7
Inland Monthly Income Fund III, Inc.
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> 8
Inland Monthly Income Fund III, Inc.
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
Assets ------------- -------------- -------------
- ------
<S> <C> <C> <C>
Net investment in
properties.................. $ 17,342,538 34,077,230 51,419,768
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 34,749,764 53,500,641
============ ========== ==========
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 29,762 49,758
Additional paid in capital
(net of Offering costs)..... 16,835,183 25,564,903 42,400,086
Accumulated distributions in
excess of net income........ (240,113) - (240,113)
------------ ---------- ----------
Total Stockholders' equity.... 16,615,066 25,594,665 42,209,731
------------ ---------- ----------
Total liabilities and
Stockholders' equity........ $ 18,750,877 34,749,764 53,500,641
============ ========== ==========
</TABLE>
See accompanying notes to pro forma balance sheet.
F-2
<PAGE> 9
Inland Monthly Income Fund III, Inc.
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 and includes the following properties acquired by the Company as of
December 31, 1995.
Walgreens, Decatur, Illinois
On January 31, 1995, the Company acquired this property from
Inland Property Sales, Inc. ("IPS"), an Affiliate of the Advisor, for
the total purchase price of $1,209,053, including acquisition costs of
$482, and the assumption of the first mortgage loan with a balance
of $750,727 at December 31, 1995, which is secured by the property. This
mortgage has an interest rate of 7.655% and amortizes over a 25-year
period. The Company is responsible for monthly payments of principal and
interest of $5,689.
Eagle Crest Shopping Center, Naperville, Illinois
On March 1, 1995, the Company acquired this property from IPS for the
purchase price of $4,816,970, including acquisition costs of $11,059, and
the assumption of the first mortgage loan of approximately $3,534,000,
which was secured by the property. The balance of the purchase price was
funded through a loan from IPS, totaling $1,212,427, with interest accruing
at 10.5%. On April 20, 1995, the Company paid off the first mortgage
secured by this property. The deferred portion of the purchase price,
totaling $1,212,427, was paid to IPS in May 1995 from Gross Offering
Proceeds. In addition, accrued interest of $22,009 was paid from Company
operations.
Montgomery-Goodyear Shopping Center, Montgomery, Illinois
On September 14, 1995, the Company acquired this property from an
unaffiliated third party for a purchase price of $1,145,992, including
closing costs of $5,992, a portion of which was evidenced by a promissory
note payable to Inland Mortgage Investment Corporation ("IMIC"), an
Affiliate of the Advisor, in the gross amount of $600,000. The remainder
of the purchase price net of prorations, of approximately $535,000 was
funded with proceeds of the Offering. The promissory note was paid in full
in October 1995, with interest at a rate of 10.9% per annum. The total
amount paid was $604,260, of which $600,000 was principal paid from Gross
Offering Proceeds and $4,260 was interest paid from Company operations.
F-3
<PAGE> 10
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1995
(unaudited)
Hartford Plaza, Naperville, Illinois
On September 14, 1995, the Company acquired this newly constructed
property from an unaffiliated third party for a purchase price of
$4,414,015 including closing costs of $14,015, and deposited $150,000
in an escrow account for leasehold improvements to the Blockbuster,
Inc. space. A portion of the purchase price was evidenced by a promissory
note payable to IMIC, in the gross amount of $600,000. The remainder of
the purchase price was funded with proceeds of the Offering. The
promissory note was paid in full in October 1995 with interest at a rate of
10.9% per annum. The total amount paid was $605,102, of which $600,000
was principal paid from Gross Offering Proceeds and $5,102 was interest
paid from Company operations.
Nantucket Square Shopping Center, Schaumburg, Illinois
On September 20, 1995, the Company acquired this property from
an unaffiliated third party for a purchase price of $4,257,918,
including closing costs of $4,913, a portion of which was evidenced by a
promissory note payable to IMIC, in the gross amount of $3,550,000. The
remainder of the purchase price was funded with proceeds of the Offering.
In addition, as part of the purchase, the Company agreed to pay
$51,135 for tenant improvements for two tenants expanding their space,
which was added to the cost of the property. The promissory note was
paid in full in December 1995 with interest at a rate of 10.5% per annum.
The principal amount paid was $3,550,000 from Gross Offering Proceeds
and interest of $62,011 was paid from Company operations.
Antioch Plaza, Antioch, Illinois
On December 28, 1995, the Company acquired Antioch Plaza from
an unaffiliated third party for a purchase price of $1,750,365,
including closing costs of $365, a portion of which was evidenced by a
promissory note payable to Inland Real Estate Investment Corporation, an
affiliate of the Advisor ("IREIC"), in the gross amount of $660,000. As of
December 31, 1995, the unpaid balance of this note was $360,000. The
note which bore interest at a rate of 9.5% per annum was repaid in full on
January 9, 1996 and the total amount paid was $661,163, of which
$660,000 was principal paid from Gross Offering Proceeds and $1,163 was
interest paid from Company operations. The remainder of the purchase
price, net of prorations of approximately $1,100,000 was funded with
proceeds of the Offering.
F-4
<PAGE> 11
<TABLE>
<CAPTION>
Inland Monthly Income Fund III, Inc.
Pro Forma Balance Sheet
December 31, 1995
(unaudited)
(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.
Pro Forma Adjustments
--------------------------------------------------------------
Mundelein Regency Prospect Montgomery- Zany
Plaza Point Heights Sears Brainy
--------- ------- -------- ---------- -------
Assets
- ------
<S> <C> <C> <C> <C> <C>
Net investment in
properties.................. $ 5,658,230 5,700,000 2,165,000 3,419,000 2,455,000
Cash and cash equivalents..... - - - - -
Restricted cash............... - - - - -
Accounts and rent
receivable.................. 84,375 16,867 38,771 27,842 -
Other assets.................. - - - - -
--------- --------- --------- --------- ---------
Total assets.................. $ 5,742,605 5,716,867 2,203,771 3,446,842 2,455,000
============ ============ ============ ============ ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 7,500 - - - -
Accrued real estate taxes..... 89,010 16,867 63,517 32,655 -
Distributions payable (C)..... - - - - -
Security deposits............. 15,000 28,621 8,600 - -
Mortgage payable.............. - 4,473,200 - - -
Notes payable to Affiliate.... - - - - -
Other liabilities............. - - - - -
--------- --------- --------- --------- ---------
Total liabilities............. 111,510 4,518,688 72,117 32,655 -
--------- --------- --------- --------- ---------
Common Stock(D)............... 6,548 1,393 2,479 3,970 2,855
Additional paid in capital
(net of Offering costs)(D).. 5,624,547 1,196,786 2,129,175 3,410,217 2,452,145
Accumulated distributions in
excess of net income........ - - - - -
--------- --------- --------- --------- ---------
Total Stockholders' equity.... 5,631,095 1,198,179 2,131,654 3,414,187 2,455,000
--------- --------- --------- --------- ---------
Total liabilities and
Stockholders' equity........ $ 5,742,605 5,716,867 2,203,771 3,446,842 2,455,000
============ ============ ============ ============ ============
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------
Hawthorn Total
Salem Village Pro Forma
Square Commons Adjustment
------ ------- ----------
Assets
- ------
<S> <C> <C> <C>
Net investment in
properties.................. 6,230,000 8,450,000 34,077,230
Cash and cash equivalents..... - -
Restricted cash............... - - -
Accounts and rent
receivable.................. 270,729 194,400 632,984
Other assets.................. 39,550 39,550
--------- --------- ----------
Total assets................. $ 6,500,729 8,683,950 34,749,764
========== =========== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ - - 7,500
Accrued real estate taxes..... 270,729 194,400 667,178
Distributions payable (C)..... - - -
Security deposits............. - - 52,221
Mortgage payable.............. - 3,955,000 8,428,200
Notes payable to Affiliate.... - - -
Other liabilities............. - - -
--------- --------- -----------
Total liabilities............. 270,729 4,149,400 9,155,099
--------- --------- -----------
Common Stock(D)............... 7,244 5,273 29,762
Additional paid in capital
(net of Offering costs)(D).. 6,222,756 4,529,277 25,564,903
Accumulated distributions in
excess of net income........ - - -
--------- --------- -----------
Total Stockholders' equity.... 6,230,000 4,534,550 25,594,665
--------- --------- ----------
Total liabilities and
Stockholders' equity........ $ 6,365,365 8,683,950 34,749,764
=========== ========= ==========
</TABLE>
F-5
<PAGE> 12
Inland Monthly Income Fund III, Inc.
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-6
<PAGE> 13
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1995
(unaudited)
Acquisition of Salem Square
On August 2, 1996, the Company acquired this property from an
unaffiliated third party for the purchase price of $6,230,000, on an
all cash basis, funded from Offering Proceeds.
Acquisition of Hawthorn Village Commons
The Company, through the Advisor, is currently completing its due
diligence and anticipates purchasing this property in August 1996
from an unaffiliated third party for the purchase price of $8,450,000.
In conjunction with the purchase of this property, the Company
intends to borrow $3,955,000 from an unaffiliated lender. The term of
the loan will be five years with interest only payments at a rate of
1.45% plus the 5-year U.S. Treasury Note rate at the time of closing,
which currently is approximately 8.1%. A 1% loan fee will be paid to the
lender. The balance of the purchase price will be funded from offering
Proceeds.
(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 $29,761,238, net of additional
Offering costs of $4,166,573, 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-7
<PAGE> 14
Inland Monthly Income Fund III, Inc.
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-8
<PAGE> 15
Inland Monthly Income Fund III, Inc.
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.. 164,161 429,997 672,255 1,266,413
Depreciation (E).. 169,894 111,767 769,722 1,051,383
----------- ----------- ----------- -----------
Total expenses.... 683,908 816,982 2,785,887 4,286,777
----------- ----------- ----------- -----------
Net income(loss) $ 496,514 (68,832) 1,670,236 2,097,918
=========== =========== =========== ===========
Weighted average
common stock shares
outstanding (F). 943,156 3,914,756
=========== ===========
Net income per weighted
average common stock
outstanding (F). $ .53 .54
=========== ===========
</TABLE>
See accompanying notes to pro forma statement of operations.
F-9
<PAGE> 16
Inland Monthly Income Fund III, Inc.
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 1995 acquisitions as though they 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
Interest
income (D)...... - - - - - - -
----------- ----------- ------------ ----------- ------------ ------------ ------------
Total income.... 10,651 97,450 120,562 15,739 480,998 22,750 748,150
----------- ----------- ------------ ----------- ------------ ------------ ------------
Professional
services and
general and
administrative - - - - - - -
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-10
<PAGE> 17
Inland Monthly Income Fund III, Inc.
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-11
<PAGE> 18
Inland Monthly Income Fund III, Inc.
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-12
<PAGE> 19
Inland Monthly Income Fund III, Inc.
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
-------------------------------------------------------------
Mundelein Regency Prospect Montgomery- Zany
Plaza Point Heights Sears Brainy
--------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
Rental
income.......... 639,124 541,085 164,152 327,610 28,643
Additional
Rental income... 66,669 63,294 116,175 76,182 5,030
Interest
income (D)...... - - - - -
-------- -------- --------- ---------- --------
Total income.... 705,793 604,379 280,327 403,792 33,673
-------- -------- --------- ---------- --------
Professional
services and
general and
administrative - - - - -
Property operating
expenses........ 141,482 71,615 180,819 102,067 5,502
Interest expense.. - 351,900 - - -
Depreciation (E).. 128,233 162,500 46,900 83,200 4,422
-------- -------- --------- ---------- --------
Total expenses.... 269,715 586,015 227,719 185,267 9,924
-------- -------- --------- ---------- --------
Net income........ 436,078 18,364 52,608 218,525 23,749
========= ======== ======== ========== =========
<CAPTION>
Pro Forma Adjustments
-------------------------------------------
Hawthorn Total
Salem Village 1995
Square Commons Pro Forma
-------- -------- ---------
<S> <C> <C> <C>
Rental
income.......... 717,522 970,313 3,388,449
Additional
Rental income... 387,179 353,145 1,067,674
Interest
income (D)...... - - -
--------- --------- ---------
Total income.... 1,104,701 1,323,458 4,456,123
--------- --------- ---------
Professional
services and
general and
administrative - - -
Property operating
expenses........ 435,021 407,404 1,343,910
Interest expense.. - 320,355 672,255
Depreciation (E).. 150,000 194,467 769,722
--------- --------- ---------
Total expenses.... 585,021 922,226 2,785,887
--------- --------- ---------
Net income...... 519,680 401,232 1,670,236
======== ========= =========
</TABLE>
F-13
<PAGE> 20
Inland Monthly Income Fund III, Inc.
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
Interest income..... - - -
----------- ----------- -----------
Total income........ 705,793 - 705,793
----------- ----------- -----------
Professional services
and general and
administrative.... - - -
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>
F-14
<PAGE> 21
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
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.
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
Interest income..... - - -
----------- ----------- ---------
Total income........ 604,379 - 604,379
----------- ----------- ---------
Professional services
and general and
administrative.... - - -
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>
F-15
<PAGE> 22
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
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
Interest income..... - - -
---------- -------- -------
Total income........ 280,327 - 280,327
---------- -------- -------
Professional services
and general and
administrative.... - - -
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-16
<PAGE> 23
Inland Monthly Income Fund III, Inc.
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
Interest income..... - - -
---------- -------- -------
Total income........ 403,792 - 403,792
---------- -------- -------
Professional services
and general and
administrative.... - - -
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-17
<PAGE> 24
Inland Monthly Income Fund III, Inc.
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
Interest income..... - - -
---------- -------- ---------
Total income........ 1,104,701 - 1,104,701
---------- -------- ---------
Professional services
and general and
administrative.... - - -
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>
F-18
<PAGE> 25
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1995
(unaudited)
Aquisition 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
Interest income..... - - -
---------- -------- ---------
Total income........ 1,323,458 - 1,323,458
---------- -------- ---------
Professional services
and general and
administrative.... - - -
Property operating
expenses.......... 407,404 - 407,404
Interest expense.... - 320,355 320,355
Depreciation (E).... - 194,467 194,467
---------- -------- ---------
Total expenses...... 407,404 514,822 922,226
---------- -------- ---------
Net income.......... $ 916,054 (514,822) 401,232
========== ======== =========
</TABLE>
In conjunction with the purchase of this property, the Company intends to
borrow $3,955,000 from an unaffiliated lender. The term of the loan will
be five years with interest only payments at a rate of 1.45% plus the 5-
year U.S. Treasury Note rate at the time of closing, which currently is
approximately 8.1%. The pro forma adjustment for interest expense for
1995 was estimated using the described loan terms.
(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-19
<PAGE> 26
Inland Monthly Income Fund III, Inc.
Pro Forma Balance Sheet
March 31, 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 March 31,
1996. This unaudited Pro Forma Balance Sheet should be read in conjunction
with the March 31, 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 March 31, 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-20
<PAGE> 27
Inland Monthly Income Fund III, Inc.
Pro Forma Balance Sheet
March 31, 1996
(unaudited)
<TABLE>
<CAPTION>
March 31,
March 31, 1996
1996 Pro Forma Pro Forma
Historical(A) Adjustments(B) Balance Sheet
------------- -------------- -------------
<S> <C> <C> <C>
Assets
- ------
Net investment in
properties.................. $ 22,950,129 28,419,000 51,369,129
Cash and cash equivalents..... 2,937,473 - 2,937,473
Accounts and rents
receivable.................. 492,081 725,436 1,217,517
Other assets.................. 48,398 39,550 87,948
------------ ---------- ----------
Total assets.................. $ 26,428,081 29,183,986 55,612,067
============ ========== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 418,393 - 418,393
Accrued real estate taxes..... 463,751 789,149 1,252,900
Distributions payable (C)..... 183,457 - 183,457
Security deposits............. 71,133 37,221 108,354
Mortgage payable.............. 748,011 8,428,200 9,176,211
Other liabilities............. 42,120 - 42,120
------------ ---------- ----------
Total liabilities............. 1,926,865 9,254,570 11,181,435
------------ ---------- ----------
Common Stock.................. 29,103 23,175 52,278
Additional paid in capital
(net of Offering costs)..... 24,953,635 19,906,241 44,850,876
Accumulated distributions in
excess of net income........ (481,522) - (481,522)
------------ ---------- ----------
Total Stockholders' equity.... 24,501,216 19,929,416 44,430,632
------------ ---------- ----------
Total liabilities and
Stockholders' equity........ $ 26,428,081 29,183,986 55,612,067
============ ========== ==========
</TABLE>
See accompanying notes to pro forma balance sheet.
F-21
<PAGE> 28
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
March 31, 1996
(unaudited)
(A) The March 31, 1996 Historical column represents the historical balance
sheet as presented in the March 31, 1996 10-Q as filed with the SEC and
includes the following properties acquired by the Company as of March 31,
1996.
Walgreens, Decatur, Illinois
On January 31, 1995, the Company acquired this property from Inland
Property Sales, Inc. ("IPS"), an Affiliate of the Advisor, for the total
purchase price of $1,209,053, including acquisition costs of $482, and the
assumption of the first mortgage loan with a balance of $748,011 at March
31, 1996, which is secured by the property. This mortgage has an interest
rate of 7.655% and amortizes over a 25-year period. The Company is
responsible for monthly payments of principal and interest of $5,689.
Eagle Crest Shopping Center, Naperville, Illinois
On March 1, 1995, the Company acquired this property from IPS for the
purchase price of $4,816,970, including acquisition costs of $11,059, and
the assumption of the first mortgage loan of approximately $3,534,000,
which was secured by the property. The balance of the purchase price was
funded through a loan from IPS, totaling $1,212,427, with interest accruing
at 10.5%. On April 20, 1995, the Company paid off the first mortgage
secured by this property. The deferred portion of the purchase price,
totaling $1,212,427, was paid to IPS in May 1995 from Gross Offering
Proceeds. In addition, accrued interest of $22,009 was paid from Company
operations.
Montgomery-Goodyear Shopping Center, Montgomery, Illinois
On September 14, 1995, the Company acquired this property from an
unaffiliated third party for a purchase price of $1,145,992, including
closing costs of $5,992, a portion of which was evidenced by a promissory
note payable to Inland Mortgage Investment Corporation ("IMIC"), an
Affiliate of the Advisor, in the gross amount of $600,000. The remainder
of the purchase price net of prorations, of approximately $535,000 was
funded with proceeds of the Offering. The promissory note was paid in full
in October 1995, with interest at a rate of 10.9% per annum. The total
amount paid was $604,260, of which $600,000 was principal paid from Gross
Offering Proceeds and $4,260 was interest paid from Company operations.
F-22
<PAGE> 29
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1996
(unaudited)
Hartford Plaza, Naperville, Illinois
On September 14, 1995, the Company acquired this newly constructed property
from an unaffiliated third party for a purchase price of $4,414,015
including closing costs of $14,015, and deposited $150,000 in an escrow
account for leasehold improvements to the Blockbuster, Inc. space. The
leasehold improvements were completed in January, 1996 and were added to
the cost of the property. A portion of the purchase price was evidenced by
a promissory note payable to IMIC, in the gross amount of $600,000. The
remainder of the purchase price was funded with proceeds of the Offering.
The promissory note was paid in full in October 1995 with interest at a
rate of 10.9% per annum. The total amount paid was $605,102, of which
$600,000 was principal paid from Gross Offering Proceeds and $5,102 was
interest paid from Company operations.
Nantucket Square Shopping Center, Schaumburg, Illinois
On September 20, 1995, the Company acquired this property from an
unaffiliated third party for a purchase price of $4,257,918, including
closing costs of $4,913, a portion of which was evidenced by a promissory
note payable to IMIC, in the gross amount of $3,550,000. The remainder of
the purchase price was funded with proceeds of the Offering. In addition,
as part of the purchase, the Company agreed to pay $51,135 for tenant
improvements for two tenants expanding their space, which was added to the
cost of the property. The promissory note was paid in full in December
1995 with interest at a rate of 10.5% per annum. The principal amount paid
was $3,550,000 from Gross Offering Proceeds and interest of $62,011 was
paid from Company operations.
Antioch Plaza, Antioch, Illinois
On December 28, 1995, the Company acquired Antioch Plaza from an
unaffiliated third party for a purchase price of $1,750,365, including
closing costs of $365, a portion of which was evidenced by a promissory
note payable to Inland Real Estate Investment Corporation, an affiliate of
the Advisor ("IREIC"), in the gross amount of $660,000. The note which
bore interest at a rate of 9.5% per annum was repaid in full on January 9,
1996 and the total amount paid was $661,163, of which $660,000 was
principal paid from Gross Offering Proceeds and $1,163 was interest paid
from Company operations. The remainder of the purchase price, net of
prorations of approximately $1,100,000 was funded with proceeds of the
Offering.
Mundelein Plaza, Mundelein, Illinois
On March 29, 1996, the Company acquired the Mundelein Plaza property
("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.
F-23
<PAGE> 30
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1996
(unaudited)
(B) The following pro forma adjustment relates to the acquisition or probable
acquisition of the subject properties as though they were acquired on March
31, 1996. The terms are described in the notes that follow.
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------------------------
Hawthorn Total
Regency Prospect Montgomery- Zany Salem Village Pro Forma
Point Heights Sears Brainy Square Commons Adjustments
---------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
- ------
Net investment in
properties...... $5,700,000 2,165,000 3,419,000 2,455,000 6,230,000 8,450,000 28,419,000
Cash and cash
equivalents..... - - - - - - -
Accounts and rents
receivable...... 21,072 80,632 54,027 - 328,260 241,445 725,436
Other assets...... - - - - - 39,550 39,550
---------- --------- --------- --------- --------- --------- ----------
Total assets...... $5,721,072 2,245,632 3,473,027 2,455,000 6,558,260 8,730,995 29,183,986
========== ========= ========= ========= ========= ========= ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable
and accrued
expenses........ $ - - - - - - -
Accrued real estate
taxes........... 21,072 123,284 63,382 - 338,411 243,000 789,149
Distributions
payable(C)...... - - - - - - -
Security Deposits. 28,621 8,600 - - - - 37,221
Mortgage payable.. 4,473,200 - - - - 3,955,000 8,428,200
Other liabilities. - - - - - - -
---------- --------- --------- --------- --------- --------- ----------
Total liabilities. 4,522,893 131,884 63,382 - 338,411 4,198,000 9,254,570
---------- --------- --------- --------- --------- --------- ----------
Common Stock (D).. $ 1,393 2,458 3,965 2,855 7,233 5,271 23,175
Additional paid in
capital (net of
Offering
Costs)(D)....... 1,196,786 2,111,290 3,405,680 2,452,145 6,212,616 4,527,724 19,906,241
Accumulated
distributions in
excess of net
income.......... - - - - - - -
---------- --------- --------- --------- --------- --------- ----------
Total Stockholders'
equity.......... 1,198,179 2,113,748 3,409,645 2,455,000 6,219,849 4,532,995 19,929,416
---------- --------- --------- --------- --------- --------- ----------
Total liabilities
and Stockholders'
equity.......... $5,721,072 2,245,632 3,473,027 2,455,000 6,558,260 8,730,995 29,183,986
========== ========= ========= ========= ========= ========= ==========
</TABLE>
F-24
<PAGE> 31
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1996
(unaudited)
Acquisition of Regency Point, Lockport, Illinois
On April 5, 1996, the Company completed the acquisition of the Regency
Point from an unaffiliated third party for a purchase price of $5,700,000.
As part of the acquisition, the Company assumed 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 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 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 $6,230,000 on an all cash basis,
funded from Offering Proceeds.
F-25
<PAGE> 32
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1996
(unaudited)
Acquisition of Hawthorn Village Commons
The Company, through the Advisor, is currently completing its due diligence
and anticipates purchasing this property in August 1996 from an
unaffiliated third party for the purchase price of $8,450,000.
In conjunction with the purchase of this property, the Company intends to
borrow $3,955,000 from an unaffiliated lender. The term of the loan will
be five years with interest only payments at a rate of 1.45% plus the 5-
year U.S. Treasury Note rate at the time of closing, which currently is
approximately 8.1%. A 1% loan fee will be paid to the lender. The
balance of the purchase price will be funded from offering proceeds.
(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 $23,173,739, net of additional Offering
costs of $3,244,323 are reflected as received as of March 31, 1996, prior
to the purchase of the properties. Offering costs consist principally of
registration costs, printing and selling costs, including commissions.
F-26
<PAGE> 33
Inland Monthly Income Fund III, Inc.
Pro Forma Statement of Operations
For the three months ended March 31, 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 March 31, 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 three months
ended March 31, 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-27
<PAGE> 34
Inland Monthly Income Fund III, Inc.
Pro Forma Statement of Operations
for the three months ended March 31, 1996
(unaudited)
<TABLE>
<CAPTION>
1996 Total
Historical Pro Forma 1996
(A) Adjustments(B) Pro Forma
------------ -------------- ------------
<S> <C> <C> <C>
Rental income............... $ 475,038 927,768 1,402,806
Additional rental income.... 242,290 302,808 545,098
Interest income (C)......... 43,751 - 43,751
------------ -------------- ------------
Total income.............. 761,079 1,230,576 1,991,655
------------ -------------- ------------
Professional services and
general and
administrative fees....... 38,168 - 38,168
Advisor asset management
fee....................... 48,540 71,048 119,588
Property operating expenses. 310,613 379,081 689,694
Interest expense............ 15,043 168,543 183,586
Depreciation (D)............ 103,091 203,224 306,315
Amortization................ 1,373 - 1,373
Acquisition costs expensed.. 8,985 - 8,985
------------ -------------- ------------
Total expenses.............. 525,813 821,896 1,347,709
------------ -------------- ------------
Net income................ $ 235,266 408,680 643,946
============= ============== ============
Weighted average
common stock shares
outstanding (E)........... 2,394,092 4,711,592
============= ============
Net income per weighted
average common stock
outstanding (E)........... $ .12 .14
============= ============
</TABLE>
See accompanying notes to pro forma statement of operations.
F-28
<PAGE> 35
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
For the three months ended March 31, 1996
(unaudited)
(A) The March 31, 1996 Historical column represents the historical statement of
operations of the Company for the three months ended March 31, 1996, as
filed with the SEC on Form 10-Q.
(B) Total pro forma adjustments 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.
In conjunction with the purchase of Hawthorn Village Commons, the Company
intends to borrow $3,955,000 from an unaffiliated lender. The term of the
loan will be five years with interest only payments at a rate of 1.45% plus
the 5-year U.S. Treasury Note rate at the time of closing, which currently
is approximately 8.1%. The pro forma adjustment for interest expense for
1996 was estimated using the described loan terms.
F-29
<PAGE> 36
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
For the three months ended March 31, 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 44,552 89,350 68,745 179,308 243,161 - 927,768
Additional rental
income.......... 32,975 16,034 33,410 25,736 12,072 94,295 88,286 - 302,808
Interest income... - - - - - - - - -
---------- ------- ------ ------- ------ ------- ------- -------- ---------
Total income...... 196,356 155,305 77,962 115,086 80,817 273,603 331,447 - 1,230,576
---------- ------- ------ ------- ------ ------- ------- -------- ---------
Professional services
and general and
administrative.. - - - - - - - - -
Advisor asset
management fee.. - - - - - - - 71,048 71,048
Property operating
expenses........ 53,986 19,046 44,325 33,348 15,955 102,663 109,758 - 379,081
Interest expense.. - - - - - - - 168,543 168,543
Depreciation (D).. - - - - - - - 203,224 203,224
---------- ------- ------ ------- ------ ------- ------- -------- ---------
Total expenses.... 53,986 19,046 44,325 33,348 15,955 102,663 109,758 442,815 821,896
---------- ------- ------ ------- ------ ------- ------- -------- ---------
Net income........ $ 142,370 136,259 33,637 81,738 64,862 170,940 221,689 (442,815) 408,680
========== ======= ====== ======= ====== ======= ======= ======== =========
</TABLE>
F-30
<PAGE> 37
Inland Monthly Income Fund III, Inc.
Notes to Pro Forma Statement of Operations
For the three months ended March 31, 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) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(E) The pro forma weighted average common stock shares for the three months
ended March 31, 1996 was calculated by estimating the additional shares
sold to purchase each of the Company's properties on a weighted average
basis.
F-31
