<PAGE> 1
As filed with the Securities and Exchange Commission on January 7, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: December 24, 1996
(Date of earliest event reported)
INLAND REAL ESTATE CORPORATION
(Exact name of registrant as specified in the charter)
Maryland 000-28382 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)
(630) 218-8000
(Registrant's telephone number including area code)
n/a
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
Grand & Hunt Club Outlot Center, Gurnee, Illinois
On December 24, 1996, the Company acquired a Neighborhood Retail
Center located at Grand Avenue and Hunt Club Road in Gurnee, Illinois known as
Grand & Hunt Club Outlot Center ("Hunt Club") from Butler Real Estate, Inc., an
unaffiliated third party, for approximately $3.6 million. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $169.26 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 of directors.
Hunt Club was built in 1996 and consists of a one-story building
aggregating 21,222 rentable square feet. As of January 1, 1997, Hunt Club was
100% leased. In evaluating Hunt Club 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. Although 100% of the rentable square feet at
Hunt Club is leased to two tenants, the Company's management believes that
retenanting of any space which is vacated in the future should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the tenants at the facility. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and
improvements to Hunt Club over the next few years because the facility was
completed in 1996. Nevertheless, a substantial portion of any such cost would
be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at Hunt Club expressed as a percentage of total gross leasable
area and the average effective annual base rent per square foot.
<TABLE>
<CAPTION>
Occupancy Rate
as of Effective Annual Rental
January 1, 1997 Per Square Foot
---------------- ---------------
<S> <C>
100% $18.61
</TABLE>
Tenants leasing more than 10% of the total square footage are Super
Crown Books, which leases 16,722 square feet, or approximately 78.8% of the
rentable square feet, and Helzberg's Diamond Shops d/b/a Jewelry 3 ("Jewelry
3"), which leases 4,500 square feet, or approximately 21.2% of the rentable
square feet. Super Crown Books is a national chain of discount book stores and
Jewelry 3 is a jewelry store chain. The lease with Super Crown Books requires
Super Crown Books to pay base rent equal to $16.75 per square foot per annum
payable monthly from January 1, 1997 until February 28, 2002 and $17.75 per
square foot per annum payable monthly from March 1, 2002 until February 28,
2007. The Super Crown Books lease contains no option to renew. The lease with
Jewelry 3 requires Jewelry 3 to pay base rent equal to $25.50 per square foot
per annum payable monthly until December 31, 2001 and $29.32 per square foot
per annum payable monthly from January 1, 2002 until December 31, 2006. The
Jewelry 3 lease contains no option to renew.
2
<PAGE> 3
For federal income tax purposes, the Company's depreciable basis in
Hunt Club will be approximately $2,600,000. 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.
Information regarding real estate taxes payable in 1996 for the tax
year ended 1995 (the most recent tax year for which information is generally
available) is not available since Hunt Club was completed in 1996. Prior to
the completion of Hunt Club in 1996, the property was vacant land. The Company
believes that any tax information relating to the vacant land would not be
useful to investors.
At January 1, 1997, a total of 21,222 square feet were leased to two
tenants at Hunt Club. The following tables set forth certain information with
respect to the amount of and expiration of leases at this Neighborhood Retail
Center.
<TABLE>
<CAPTION>
Current
Square Feet Lease Renewal Annual Rent per
Lessee Leased Ends Option Rent Square Foot
------ ----------- -------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
Super Crown Books 16,722 02/2007 None $280,094 $16.75
Jewelry 3 4,500 12/2006 None 114,750 25.50
</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 by
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
- ------------ ---------- --------------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1997-2001 - - - $394,844 - - -
2002 - - - 408,779 - - -
2003-2005 - - - 428,756 - - -
2006 1 4,500 $131,940 428,756 $29.32 21.2% 30.77%
</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 Hunt Club property, as of
December 17, 1996, of $3,610,000 million. Appraisals are estimates of value
and should not be relied on as a measure of true worth or realizable value.
The Quarry Outlot, Hodgkins, Illinois
On December 24, 1996, the Company acquired a Neighborhood Retail Center
located at La Grange Road and Joliet Road in Hodgkins, Illinois known as The
Quarry Outlot ("The Quarry") from Butler Real
3
<PAGE> 4
Estate, Inc., an unaffiliated third party, for approximately $1.8 million. The
purchase price was funded using cash and cash equivalents. The purchase price
was approximately $186.53 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 of directors.
The Quarry was built in 1996 and consists of a one-story building
aggregating 9,650 rentable square feet. As of January 1, 1997, The Quarry
was 100% leased. In evaluating The Quarry 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. Although 100% of the rentable
square feet at The Quarry is leased to three tenants, the Company's management
believes that retenanting of any space which is vacated in the future should be
accomplished relatively quickly and at rental rates comparable to those
currently paid by the tenants at the facility. The Company did not consider
any other factors materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and
improvements to The Quarry over the next few years because the facility was
completed in 1996. Nevertheless, a substantial portion of any such cost would
be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at The Quarry expressed as a percentage of total gross leasable
area and the average effective annual base rent per square foot.
<TABLE>
<CAPTION>
Occupancy Rate
as of Effective Annual Rental
January 1, 1997 Per Square Foot
---------------- ---------------
<S> <C>
100% $20.88
</TABLE>
Tenants leasing more than 10% of the total square footage are
Helzberg's Diamond Shops d/b/a Jewelry 3 ("Jewelry 3"), which leases 4,700
square feet, or approximately 48.7% of the rentable square feet, Casual Male
Big and Tall ("Casual Male"), which leases 3,150 square feet, or approximately
32.6% of the rentable square feet, and Dunkin Donuts/ Baskin Robbins, which
leases 1,800 square feet, or approximately 18.7% of the rentable square feet.
Jewelry 3 is a jewelry store chain, Casual Male is a retailer of clothing for
men, and Dunkin Donuts/ Baskin Robbins is a national chain of retail stores
selling donuts and ice cream. The lease with Jewelry 3 requires Jewelry 3 to
pay base rent equal to $24.00 per square foot per annum payable monthly until
December 31, 2001 and $26.35 per square foot per annum payable monthly from
January 1, 2002 until December 31, 2006. The Jewelry 3 lease contains no
option to renew. The lease with Casual Male requires Casual Male to pay base
rent equal to $15.00 per square foot per annum payable monthly until August 31,
1999, $16.00 per square foot per annum payable monthly from September 1, 1999
until August 31, 2003, $17.00 per square foot per annum payable monthly from
September 1, 2003 until August 31, 2006 and $18.70 per square foot per annum
payable monthly from September 1, 2006 until December 31, 2006. The Casual
Male lease contains no option to renew. The lease with Dunkin Donuts/ Baskin
Robbins requires Dunkin Donuts/ Baskin Robbins to pay base rent equal to $23.00
per square foot per annum payable monthly until October 31, 2001 and $25.30 per
square foot per annum payable monthly from November 1, 2001 until October 31,
2006. The Dunkin Donut/ Baskin Robbins lease contains no option to renew.
4
<PAGE> 5
For federal income tax purposes, the Company's depreciable basis in
The Quarry will be approximately $1,275,000. 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.
Information regarding real estate taxes payable in 1996 for the tax
year ended 1995 (the most recent tax year for which information is generally
available) is not available since The Quarry was completed in 1996. Prior to
the completion of The Quarry in 1996, the property was vacant land. The
Company believes that any tax information relating to the vacant land would not
be useful to investors.
At January 1, 1997, a total of 9,650 square feet were leased to
three tenants at The Quarry. 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>
Jewelry 3 4,700 12/2006 None $112,800 $24.00
Casual Male 3,150 12/2006 None 47,250 15.00
Dunkin Donuts/ Baskin 1,800 10/2006 None 41,400 23.00
Robbins
</TABLE>
<TABLE>
<CAPTION>
Percent of
Average Total Percent of
Base Rent Building Annual Base
Approx. GLA of Annual Base Per Square GLA Rent
Number 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>
1997 - - - $201,450 - - -
1998 - - - 201,450 - - -
1999 - - - 202,500 - - -
2000 - - - 204,600 - - -
2001 - - - 205,290 - - -
2002 - - - 219,785 - - -
2003 - - - 220,835 - - -
2004 - - - 222,935 - - -
2005 - - - 222,935 - - -
2006 3 9,650 $224,720 224,720 $23.29 100% 100%
</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.
5
<PAGE> 6
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 Quarry property, as of
December 9, 1996, of $1,850,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Crestwood Plaza Shopping Center, Crestwood, Illinois
On December 27, 1996, the Company acquired a Neighborhood Retail Center
located at 13335 South Cicero Avenue in Crestwood, Illinois known as Crestwood
Plaza Shopping Center ("Crestwood Plaza") from Inland Property Sales, Inc., an
affiliated third party, for approximately $1.81 million. The purchase price was
funded using cash and cash equivalents. The purchase price was approximately
$90.24 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 of directors.
Crestwood Plaza was built in 1992 and consists of a one-story building
aggregating 20,044 rentable square feet. As of December 27, 1996, Crestwood
Plaza was 100% leased. In evaluating Crestwood Plaza 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. Although 100% of the
rentable square feet at Crestwood Plaza is leased to two tenants, the Company's
management believes that retenanting of any space which is vacated in the
future should be accomplished relatively quickly and at rental rates comparable
to those currently paid by the tenants at the facility. The Company did not
consider any other factors materially relevant to the decision to acquire the
property.
The Company does not anticipate making any significant repairs and
improvements to Crestwood Plaza over the next few years. Nevertheless, a
substantial portion of any such cost would be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at Crestwood Plaza expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot.
<TABLE>
<CAPTION>
Occupancy Rate
Year Ending as of December 31 Effective Annual Rental
December 31, of Each Year Per Square Foot
------------ -------------------- ---------------
<S> <C> <C>
1996 100% $10.13
1995 100% $10.13
1994 100% $10.13
1993 100% $10.13
1992 100% $10.13
</TABLE>
6
<PAGE> 7
Tenants leasing more than 10% of the total square footage are
Entenmann's Inc., which leases 13,644 square feet, or approximately 68% of the
rentable square feet, and Pet Supplies Plus, which leases 6,400 square feet, or
approximately 32% of the rentable square feet. Entenmann's is a national
retailer of baked goods, and Pet Supplies Plus is a national retail pet supply
chain. The lease with Entenmann's requires Entenmann's to pay base rent equal
to $9.25 per square foot per annum payable monthly until October 31, 2002. The
Entenmann's lease contains no option to renew. The lease with Pet Supplies
Plus requires Pet Supplies Plus to pay base rent equal to $12.00 per square
foot per annum payable monthly until January 31, 1998. The lease with Pet
Supplies Plus also grants Pet Supplies Plus one option to renew the lease for a
five-year term. If this option is exercised, Pet Supplies Plus will be
required to pay a base rent of $12.99 per square foot per annum payable monthly
from February 1, 1998 until January 31, 2003.
For federal income tax purposes, the Company's depreciable basis in
Crestwood Plaza will be approximately $1,480,000. 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 1996 for the tax year ended 1995 (the
most recent tax year for which information is available) were $51,494. The
real estate taxes payable were calculated by multiplying Crestwood Plaza's
assessed value by an equalizer of 2.1243 and a tax rate of 9.316%.
At December 27, 1996, a total of 20,044 square feet were leased to two
tenants at Crestwood Plaza. The following tables set forth certain information
with respect to the amount of and expiration of leases at this Neighborhood
Retail Center.
<TABLE>
<CAPTION>
Current
Square Feet Lease Renewal Annual Rent per
Lessee Leased Ends Option Rent Square Foot
------ ----------- -------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
Entenmann's Inc. 13,644 10/2002 None
$126,207 $9.25
Pet Supplies Plus 6,400 01/1998 1/ 5 yr. 76,800 12.00
</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 by
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
- ------------ ---------- --------------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 - - - $203,007 - - -
1998 1 6,400 $76,800 203,007 $12.00 32% 37.83%
1999-2001 - - - 126,207 - - -
2002 1 13,644 126,207 126,207 9.25 68% 100%
</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.
7
<PAGE> 8
The Company received a letter 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 Crestwood Plaza
property, as of December 17, 1996, of not less than $1,850,000. Appraisals are
estimates of value and should not be relied on as a measure of true worth or
realizable value.
Park St. Clair Plaza, Schaumburg, Illinois
On December 31, 1996, the Company acquired a Neighborhood Retail Center
located at the corner of Higgins and Meacham Roads in Schaumburg, Illinois
known as Park St. Clair Plaza ("Park St. Clair") from KHF Land Partnership, an
unaffiliated third party, for approximately $1.525 million. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $128.59 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 of directors.
Park St. Clair was built in 1994 and consists of a one-story building
aggregating 11,859 rentable square feet. As of December 31, 1996, Park St.
Clair was 100% leased. In evaluating Park St. Clair 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. Although 100% of the
rentable square feet at Park St. Clair is leased to two tenants, the Company's
management believes that retenanting of any space which is vacated in the
future should be accomplished relatively quickly and at rental rates comparable
to those currently paid by the tenants at the facility. The Company did not
consider any other factors materially relevant to the decision to acquire the
property.
The Company does not anticipate making any significant repairs and
improvements to Park St. Clair over the next few years. Nevertheless, a
substantial portion of any such cost would be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at Park St. Clair expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot.
<TABLE>
<CAPTION>
Occupancy Rate
Year Ending as of December 31 Effective Annual Rental
December 31, of Each Year Per Square Foot
------------ -------------------- ---------------
<S> <C> <C>
1996 100% $15.06
1995 35% $5.70
1994 35% $5.65
</TABLE>
Tenants leasing more than 10% of the total square footage are Hallmark
Cards ("Hallmark"), which leases 7,669 square feet, or approximately 65% of the
rentable square feet, and Ameritech Mobile Comm ("Ameritech"), which leases
4,190 square feet, or approximately 35% of the rentable square feet. Hallmark
is a national retailer of greeting cards, and Ameritech is a mobile
telecommunications provider. The lease with Hallmark requires Hallmark to pay
base rent equal to $14.00 per square foot per annum
8
<PAGE> 9
payable monthly until November 30, 2001. The lease with Hallmark also grants
Hallmark one option to renew the lease for a five-year term. If this option is
exercised, Hallmark will be required to pay a base rent of $19.00 per square
foot per annum payable monthly from December 1, 2001 until November 30, 2006.
The lease with Ameritech requires Ameritech to pay base rent equal to $17.00
per square foot per annum payable monthly until September 30, 1997, $17.50 per
square foot per annum payable monthly until September 30, 1998 and $18.00 per
square foot per annum payable monthly until September 30, 1999. The lease with
Ameritech also grants Ameritech one option to renew the lease for a five-year
term. If this option is exercised, Ameritech will be required to pay a base
rent of $18.00 per square foot per annum payable monthly from October 1, 1998
until September 30, 2004.
For federal income tax purposes, the Company's depreciable basis in
Park St. Clair will be approximately $1,220,000. 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 1996 for the tax year ended 1995 (the
most recent tax year for which information is available) were $38,938. The
real estate taxes payable were calculated by multiplying Park St. Clair's
assessed value by an equalizer of 2.1243 and a tax rate of 8.967%.
At December 31, 1996, a total of 11,859 square feet were leased to two
tenants at Park St. Clair. The following tables set forth certain information
with respect to the amount of and expiration of leases at this Neighborhood
Retail Center.
<TABLE>
<CAPTION>
Current
Square Feet Lease Renewal Annual Rent per
Lessee Leased Ends Options Rent Square Foot
------ ----------- -------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
Hallmark Cards 7,669 11/2001 1/ 5 yr. $107,366 $14.00
Ameritech Mobile 4,190 09/1999 1/ 5 yr. 71,230 17.00
Comm
</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 by
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
- ------------ ---------- --------------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 - - - 179,120 - - -
1998 - - - 181,215 - - -
1999 1 4,190 75,420 195,568 18.00 35.3% 38.56%
2000 - - - 122,704 - - -
2001 1 7,669 145,711 145,711 19.00 64.7% 100%
</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.
9
<PAGE> 10
The Company received a letter 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 Park St. Clair
property, as of December 31, 1996, of not less than $1.6 million. Appraisals
are estimates of value and should not be relied on as a measure of true worth
or realizable value.
Lansing Square Shopping Center, Lansing, Illinois
On December 31, 1996, the Company acquired a Neighborhood Retail Center
located at Torrence Avenue and Interstate 80/94 in Lansing, Illinois known as
Lansing Square Shopping Center ("Lansing Square") from Lansing Square RPF II
Limited Partnership, an unaffiliated third party, for approximately $16.3
million. The purchase price was funded using cash and cash equivalents as well
as the proceeds of a series of loans from LaSalle Bank. The proceeds of the
loans from LaSalle Bank (the "LaSalle Loans") totalling $12,850,000, were
received on December 30, 1996. The LaSalle Loans are secured by properties the
Company previously acquired. Of the total of $12,850,000, approximately
$8,000,000 was used in the acquisition of Lansing Square. The LaSalle Loans
require the payment of interest only at a rate of 7.6%, fixed for five years
and then variable for an additional two years. The purchase price for Lansing
Square was approximately $69.80 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 of
directors.
Lansing Square was built in 1991 and consists of three one-story
buildings aggregating 233,508 rentable square feet. As of December 31, 1996,
Lansing Square was 90.3% leased. In evaluating Lansing 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 in a vibrant economic area. Although 75.5% of the
rentable square feet at Lansing Square is leased to three tenants, the
Company's management believes that retenanting of any space which is vacated in
the future should be accomplished relatively quickly and at rental rates
comparable to those currently paid by the tenants at the facility. The Company
did not consider any other factors materially relevant to the decision to
acquire the property.
The Company does not anticipate making any significant repairs and
improvements to Lansing Square over the next few years. Nevertheless, a
substantial portion of any such cost would be paid by the tenants.
The table below sets forth certain information with respect to the
occupancy rate at Lansing Square expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot.
<TABLE>
<CAPTION>
Occupancy Rate
Year Ending as of December 31 Effective Annual Rental
December 31, of Each Year Per Square Foot
------------ -------------------- ---------------
<S> <C> <C>
1995 76.0% $5.81
1994 75.0 7.28
1993 92.0 7.38
1992 90.8 7.26
</TABLE>
10
<PAGE> 11
Tenants leasing more than 10% of the total square footage are Sams
Club, which leases 107,927 square feet, or approximately 46% of the rentable
square feet, Baby Superstore, which leases 43,596 square feet, or approximately
19% of the rentable square feet, and Office Max, which leases 24,700 square
feet, or approximately 11% of the rentable square feet. Sams Club is a
national warehouse club, Baby Superstore is a national retailer of merchandise
for infants and children and Office Max is a national office supply chain. The
lease with Sams Club requires Sams Club to pay base rent equal to $7.31 per
square foot per annum payable monthly until November 30, 2011. The Sams Club
lease contains no option to renew. The lease with Baby Superstore requires
Baby Superstore to pay base rent equal to $6.50 per square foot per annum
payable monthly until October 31, 2000 and $7.00 per square foot per annum
payable monthly until December 31, 2001. The Baby Superstore lease contains no
option to renew. The lease with Office Max requires Office Max to pay base
rent equal to $7.25 per square foot per annum payable monthly until April 30,
1997, $7.75 per square foot per annum payable monthly until April 30, 2002 and
$8.25 per square foot per annum payable monthly until January 31, 2008. The
Office Max lease contains no option to renew.
For federal income tax purposes, the Company's depreciable basis in
Lansing Square will be approximately $13,000,000. 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 1996 for the tax year ended 1995 (the
most recent tax year for which information is available) were $1,252,577. The
real estate taxes payable were calculated by multiplying Lansing Square's
assessed value by an equalizer of 2.1243 and a tax rate of 11.494%.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
11
<PAGE> 12
At December 31, 1996, a total of 210,810 square feet were leased to
eighteen tenants at Lansing 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>
Current Rent per
Square Feet Lease Renewal Annual Square
Lessee Leased Ends Options Rent Foot
-------- ------------ ------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Sam's Club 107,927 11/2011 None $788,946 $7.31
Office Max 24,700 01/2008 None 179,075 7.25
Baby
Superstore 43,596 01/2006 None 283,374 6.50
Furniture Max 8,000 07/2002 None 116,000 14.50
Blockbuster 6,275 12/2001 None 100,400 16.00
Ameritech 3,600 06/2000 None 59,328 16.48
Wolf Camera 1,200 06/2002 1/5 yr. 23,376 19.48
Norwest
Financial 1,500 01/1999 1/5 yr. 19,500 13.00
Racers Row 1,500 09/2000 None 23,250 15.50
Cost Cutters 900 11/2001 None 14,751 16.39
Papa Johns 1,200 01/2007 None 16,800 14.00
Great American
Bagels 2,400 10/2000 None 34,800 14.50
Sterling
Vision 1,200 05/1999 None 18,000 15.00
Pappy's Gyros 1,200 08/1997 1/5 yr. 19,200 16.00
Dunkin Donuts 1,112 04/2002 None 21,128 19.00
Little Minds 1,200 09/2001 None 17,400 14.50
Discus CD's 1,200 06/1999 1/3 yr. 18,000 15.00
Pet Store 2,100 12/2006 None 29,400 14.00
Vacant 22,698 -- -- -- --
</TABLE>
12
<PAGE> 13
<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 by
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
- ------------ ---------- --------------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1 1,200 $19,200 $1,794,141 $16.00 .51% 1.07%
1998 - - - 1,783,586 - - -
1999 3 3,900 59,250 1,793,960 15.19 1.67 3.30
2000 3 7,500 127,663 1,746,430 17.02 3.21 7.31
2001 3 8,375 151,265 1,654,491 18.06 3.59 9.14
2002 3 10,312 169,720 1,511,946 16.46 4.42 11.23
2003 - - - 1,346,893 - - -
2004 - - - 1,349,043 - - -
2005 - - - 1,349,593 - - -
2006 2 45,696 337,722 1,349,643 7.39 19.57 25.02
</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 a letter 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 Lansing Square
property, as of January 1, 1997, of $16.3 million. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
The Summit of Park Ridge, Park Ridge, Illinois
On December 31, 1996, the Company acquired a Neighborhood Retail Center
located at 100-150 Euclid Avenue in Park Ridge, Illinois known as The Summit of
Park Ridge ("The Summit") from WHPX-S Real Estate Limited Partnership, an
unaffiliated third party, for approximately $3.2 million. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $96.25 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 of directors.
The Summit was built in 1986 and consists of a one-story building
aggregating 33,248 rentable square feet. As of December 31, 1996, The Summit
was 89% leased. In evaluating The Summit 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. The Company's management believes
that retenanting of any space which is vacated in the future should be
accomplished relatively quickly and at rental rates comparable to those
currently paid by the tenants at the facility. The Company did not consider
any other factors materially relevant to the decision to acquire the property.
13
<PAGE> 14
The Company does not anticipate making any significant repairs and
improvements to The Summit over the next few years. Nevertheless, a
substantial portion of any such cost would be paid by the tenants.
Tenants leasing more than 10% of the total square footage are Giappo's
Pizza, which leases 3,683 square feet, or approximately 11% of the rentable
square feet, and Le Peep Restaurant ("Le Peep"), which leases 3,621 square
feet, or approximately 11% of the rentable square feet. The lease with
Giappo's Pizza requires Giappo's Pizza to pay base rent equal to $12.00 per
square foot per annum payable monthly until July 31, 1997, $13.00 per square
foot per annum payable monthly until July 31, 1998, $14.00 per square foot per
annum payable monthly until July 31, 2000, $15.00 per square foot per annum
payable monthly until July 31, 2004 and $16.00 per square foot per month
payable monthly until July 31, 2007. The Giappo's Pizza lease contains no
option to renew. The lease with Le Peep requires Le Peep to pay base rent
equal to $15.50 per square foot per annum payable monthly until December 31,
1998 and $17.00 per square foot per annum payable monthly until December 31,
2002. The lease with Le Peep also grants Le Peep one option to renew the lease
for a seven-year term. If this option is exercised, Le Peep will be required
to pay a base rent of $19.00 per square foot per annum payable monthly from
January 1, 2003 until December 31, 2009.
For federal income tax purposes, the Company's depreciable basis in
The Summit will be approximately $2,500,000. 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 1996 for the tax year ended 1995 (the
most recent tax year for which information is available) were $171,743. The
real estate taxes payable were calculated by multiplying The Summit's assessed
value by an equalizer of 2.1243 and a tax rate of 9.016%.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
14
<PAGE> 15
At December 31, 1996, a total of 31,800 square feet were leased to
fourteen tenants at The Summit. The following tables set forth certain
information with respect to the amount of and expiration of leases at this
Neighborhood Retail Center.
<TABLE>
<CAPTION>
Current Rent per
Square Feet Lease Renewal Annual Square
Lessee Leased Ends Options Rent Foot
-------- ------------ ------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Le Peep
Restaurant 3,621 12/2002 1/7 yr. 56,126 $15.50
Siam Thai
Restaurant 2,454 06/2000 1/4 yr. 43,482 17.72
Big Apple Bagels 1,124 10/2003 None 14,612 13.00
Sav-A-Lot 2,414 01/1999 None 25,554 11.00
Giappo's Pizza 3,683 07/2007 None 29,464 8.00
Fashion Media 2,142 08/2004 None 29,988 14.00
Purple Bear 788 02/1997 None 6,682 8.48
Spoke & Ski 2,020 Month to None 20,200 10.00
Month
Success Lab of
Park Ridge 2,142 12/1997 1/5 yr. 28,917 13.50
H&R Block 2,142 04/2001 1/5 yr. 22,063 10.30
Heavenly Pet
Center 2,000 09/1997 1/2 yr. 18,000 9.00
Hay Caramba! 2,888 02/2006 1/11 yr. 31,479 10.90
Yahav & Silvers
DDS 1,446 10/2000 1/5 yr. 18,798 13.00
Baker's Daughter 788 10/2001 None 7,092 9.00
Vacant 3,596 -- -- -- --
</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 by
Year Ending Leases Leases Expiring Total Annual Expiring by Expiring Expiring
December 31, Expiring (square feet) Leases Base Rent (1) Leases Leases Leases
- ------------ ---------- --------------- ------------ ------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 3 4,930 $53,599 $353,457 $10.81 14.83% 15.16%
1998 -- -- -- 305,544 -- -- --
1999 1 2,414 26,554 316,317 11.00 7.26 8.39
2000 2 3,900 65,175 295,835 16.71 11.73 22.03
2001 2 2,930 33,124 234,614 11.31 8.81 14.11
2002 1 3,621 61,557 203,648 17.00 10.89 30.23
2003 1 1,124 15,736 144,963 14.00 3.38 10.86
2004 1 2,142 34,272 132,206 16.00 6.44 25.92
2005 -- -- -- 100,804 -- -- --
2006 1 2,338 41,876 100,804 14.50 8.69 41.54
</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.
15
<PAGE> 16
The Company received a letter 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 Summit property,
as of December 17, 1996, of not less than $3,250,000. 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
(a) Financial statements of businesses acquired.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended October 31, 1996 of Crestwood Plaza Shopping Center . . . . . . . . . . . . F-2
Notes to Historical Summary of Gross Income and Direct Operating Expenses
for the year ended October 31, 1996 of Crestwood Plaza Shopping Center . . . . . . . . . . . F-3
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1995 of Park St. Clair . . . . . . . . . . . . . . . . . . . . F-6
Notes to Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1995 of Park St. Clair . . . . . . . . . . . . . . . . . . . F-7
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1995 of Lansing Square Shopping Center . . . . . . . . . . . . F-10
Notes to Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1995 of Lansing Square Shopping Center . . . . . . . . . . . F-11
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13
Historical Summary of Gross Income and Direct Operating Expenses
for the period February 1, 1996 to November 30, 1996 of The Summit of Park Ridge . . . . . . . F-14
Notes to Historical Summary of Gross Income and Direct Operating Expenses
for the period February 1, 1996 to November 30, 1996 of The Summit of Park Ridge . . . . . . F-15
(b) Pro forma financial information.
Pro Forma Balance Sheet at December 31, 1995
(unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . . . . . . . . . . F-17
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
Notes to Pro Forma Balance Sheet at December 31, 1995
(unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . . . . . . . . . . F-19
Pro Forma Statement of Operations for the year ended December 31, 1995
(unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . . . . . . . . . . F-26
Notes to Pro Forma Statement of Operations for the year ended
December 31, 1995 (unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . F-28
Pro Forma Balance Sheet at September 30, 1996
(unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . . . . . . . . . . F-42
Notes to Pro Forma Balance Sheet at September 30, 1996
(unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . . . . . . . . . . . F-44
Pro Forma Statement of Operations for the nine months ended
September 30, 1996 (unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . F-49
Notes to Pro Forma Statement of Operations for the nine months ended
September 30, 1996 (unaudited) of Inland Real Estate Corporation . . . . . . . . . . . . . . . F-51
</TABLE>
17
<PAGE> 18
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 Real Estate Corporation
(Registrant)
By: /s/ Kelly Tucek
----------------------------------
Kelly Tucek
Chief Financial and Accounting Officer
Date: January 7, 1997
--------------------
