As filed with the Securities and Exchange Commission on May 20, 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: May 6, 1997
(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)
-1-
Item 2. Acquisition or Disposition of Assets
Cobblers Mall, Elgin, Illinois
On May 6, 1997, the Company acquired a Neighborhood Retail Center located at
Summit Road and Route 58 in Elgin, Illinois known as Cobblers Mall from
Hamilton Partners, an unaffiliated third party, for approximately $10.953
million. The purchase price was funded using cash and cash equivalents. The
purchase price was approximately $106.71 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.
Cobblers Mall was built in 1993 and consists of a one-story, multi-tenant
retail facility aggregating 102,643 rentable square feet. As of May 6, 1997,
Cobblers Mall was 91% leased (100% leased if the master lease, which lasts for
one year, is considered). In evaluating Cobblers Mall 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 occupancy. The Company believes that the center is
located within a vibrant economic area. Although approximately 63% of the
rentable square feet at Cobblers Mall is leased to one tenant, 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 Cobblers Mall over the next few years. Nevertheless, a substantial portion
of any cost of repairs and improvements would be paid by the tenants.
The table below sets forth certain information with respect to the occupancy
rate at Cobblers Mall expressed as a percentage of total gross leasable area
and the average effective annual base rent per square foot.
Occupancy Rate
as of
Year Ending December 31, Effective Annual Rental
December 31, of Each Year Per Square Foot
1996 90.65% $9.62
1995 90.80 9.26
1994 85.93 8.63
1993 79.93 5.62
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The sole tenant leasing more than 10% of the total square footage is Jewel/Osco,
a regional grocery/pharmacy chain, which leases 64,938 square feet, or
approximately 63.27% of the rentable square feet. The lease with Jewel/Osco
requires Jewel/Osco to pay base rent equal to $9.85 per square foot per annum
payable monthly until March 31, 2013. The lease with Jewel/Osco contains no
option to renew.
For federal income tax purposes, the Company's depreciable basis in Cobblers
Mall will be approximately $10,900,000. 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)
were $400,919. The real estate taxes payable were calculated by multiplying
Cobblers Malls assessed value by an equalizer of 2.1243 and a tax rate of
10.097%.
[The remainder of this page intentionally left blank]
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On May 6, 1997, a total of 93,043 square feet were leased to thirteen tenants at
Cobblers Mall. The following tables set forth certain information with respect
to the amount of and expiration of leases at this Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Ft
1.Goodyear 6,464 04/2008 None $67,224 $10.40
2.Victory Beauty 1,920 09/2001 1/5yr. 20,160 10.50
3.Baskin Robbins 1,220 11/2003 None 18,100 13.70
4.Panda Restaurant 1,900 11/2004 1/8 yr. 30,950 16.00
5.Carol Stream 1,600 05/2004 None 24,933 15.00
Dental
Association
6.Fantastic Sams 1,120 11/1998 1/5 yr. 19,445 17.31
7.Mail Boxes etc. 1,280 09/1998 None 20,480 16.00
8.Staceys 3,792 02/1999 1/6yr. 47,400 12.50
Hallmark
9.Video Smideo 3,000 07/2000 1/5yr. 47,580 15.60
10.Tropical 2,000 04/2000 None 29,700 14.85
Illusions
11.Jewel/Osco 64,938 03/2013 None 636,639 9.85
12.Bedding Expert 2,160 07/1997 None 25,920 12.00
13.Cleaners 1,649 11/1998 None 34,629 21.00
14.Vacant* 9,600 - - - -
*master lease for the first year in the amount of $169,080.
-4-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total 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 2,160 $25,920 $1,024,776 $12.00 2.10% 2.53%
1998 2 2,400 39,925 998,856 16.64 2.34 4.00
1999 1 3,792 47,400 924,302 12.50 3.69 5.13
2000 2 5,000 77,280 876,902 15.46 4.87 8.81
2001 1 1,920 20,160 799,622 10.50 1.87 2.52
2002 - - - 779,462 - - -
2003 1 1,220 16,714 779,462 13.70 1.19 2.14
(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.
</TABLE>
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 Cobblers Mall property, as of April
22, 1997, of $11 million. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
Mallard Mall, Elk Grove Village, Illinois
On May 6, 1997, the Company acquired a Neighborhood Retail Center located at
the northeast corner of Meacham Road and Nerge Road in Elk Grove Village,
Illinois known as Mallard Mall from Hamilton Partners, an unaffiliated third
party, for approximately $8.1 million. The purchase price was funded using cash
and cash equivalents. The purchase price was approximately $97.65 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.
-5-
Mallard Mall was built in 1993 and consists of a one-story, multi-tenant retail
facility aggregating 82,949 rentable square feet. As of May 6, 1997, Mallard
Mall was 95% leased (100% when the master lease, which lasts for one year, is
considered). In evaluating Mallard Mall 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 occupancy. The Company believes that the center which is located
within a vibrant economic area. Although approximately 68% of the rentable
square feet at Mallard Mall is leased to one tenant, 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 Mallard Mall over the next few years. Nevertheless, a substantial portion
of any cost of repairs and improvements would be paid by the tenants.
The table below sets forth certain information with respect to the occupancy
rate at Mallard Mall expressed as a percentage of total gross leasable area and
the average effective annual base rent per square foot.
Occupancy Rate
as of Effective
Year Ending December 31, Annual Rental
December 31, of Each Year Per Square Ft
1996 95.00% $11.74
1995 95.00 12.43
1994 94.57 11.93
1993 91.02 9.89
The sole tenant leasing more than 10% of the total square footage is Eagle
Foods, a retail grocery chain, which leases 56,668 square feet, or
approximately 68.32% of the rentable square feet. The lease with Eagle Foods
requires Eagle Foods to pay base rent equal to $12.40 per square foot per annum
payable monthly until February 28, 2011. The lease with Eagle Foods also
grants Eagle Foods four options to renew the lease for a 5-year term each. The
base rent throughout all of these terms will be at the current rate of $12.40
per square foot per annum payable monthly.
For federal income tax purposes, the Company's depreciable basis in Mallard
Mall will be approximately $8,100,000. 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.
-6-
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)
were $361,057. The real estate taxes payable were calculated by multiplying
Mallard Malls assessed value by an equalizer of 2.1243 and a tax rate of
9.548%.
On May 6, 1997, a total of 79,128 square feet were leased to ten tenants at
Mallard Mall. The following tables set forth certain information with respect
to the amount of and expiration of leases at this Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Ft
1.Payless Shoes 2,354 01/2002 None $37,075 $15.76
2.Family 4,007 01/1999 None 61,942 15.50
Bookstore
3.Eagle Foods 56,668 01/2011 4/5yr. 702,683 12.40
4.Hollywood Video 7,720 09/2006 2/5yr. 123,200 16.00
5.Fannie May 1,128 03/2003 None 29,328 26.00
6.Jimmy Z Hair 1,200 05/1998 1/5yr. 20,772 17.31
7.Taylor Street 2,112 12/2001 1/5yr. 29,568 14.00
Bistro
8.Shike Dance 1,120 09/1999 1/3yr. 15,781 14.09
School
9.Mallard Cleaners 1,360 09/2001 None 28,796 21.17
10.Gallary 1,459 08/1999 1/3yr. 18,967 13.00
Americana
11.Vacant* 3,821 - - - -
*master lease for the first year in the amount of $80,000.
-7-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total 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 - - - $1,068,112 - - -
1998 2 2,320 $36,553 1,068,112 $15.76 2.80% 3.42%
1999 2 5,466 80,909 1,031,559 14.80 6.59 7.84
2000 - - - 950,650 - - -
2001 2 3,472 58,364 950,650 16.81 4.19 6.14
2002 1 2,354 37,075 892,286 15.75 2.84 4.16
2003 1 1,128 29,328 855,211 26.00 1.36 3.43
(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.
</TABLE>
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 Mallard Mall property, as of April
10, 1997, of $8.2 million. Appraisals are estimates of value and should not
be relied on as a measure of true worth or realizable value.
-8-
Ameritech Outlot Building, Joliet, Illinois
On May 9, 1997, the Company acquired a Neighborhood Retail Center located at
3330 West Mall Loop Drive in Joliet, Illinois known as Ameritech Outlot
Building ("Ameritech Outlot") from LJ Partners, an unaffiliated third party,
for approximately $1.050 million. The purchase price was funded using cash and
cash equivalents. The purchase price was approximately $233.13 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.
Ameritech Outlot was built in 1995 and consists of a one-story, single tenant
retail outlot building aggregating 4,504 rentable square feet. As of April 30,
1997, Ameritech Outlot was 100% leased. In evaluating Ameritech Outlot 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 Ameritech Outlot is leased to one tenant,
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 tenant 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 Ameritech Outlot over the next few years because the facility was completed
in 1995. Nevertheless, a substantial portion of any such cost would be paid by
the tenant.
The table below sets forth certain information with respect to the occupancy
rate at Ameritech Outlot expressed as a percentage of total gross leasable area
and the average effective annual base rent per square foot.
Effective
Annual Rental
December 31, Occupancy Rate Per Square Ft
1996 100% $23.77
1995 100 23.08
-9-
The sole tenant is Ameritech Cellular who leases 100% of the rentable square
feet. Ameritech Cellular is a cellular phone service provider and retailer.
The lease with Ameritech Cellular requires Ameritech Cellular to pay base rent
equal to $24.49 per square foot per annum payable monthly until March 31, 1998,
$25.22 per square foot per annum payable monthly from April 1, 1998 until March
31, 1999, $25.98 per square foot per annum payable monthly from April 1, 1999
until March 31, 2000, $26.76 per square foot per annum payable monthly from
April 1, 2000 until March 31, 2001, $27.56 per square foot per annum payable
monthly from April 1, 2001 until March 31, 2002, $28.39 per square foot per
annum payable monthly from April 1, 2002 until March 31, 2003, $29.24 per
square foot per annum payable monthly from April 1, 2003 until March 31, 2004
and $30.11 per square foot per annum payable monthly from April 1, 2004 until
March 31, 2005. The Ameritech Cellular lease also contains two options to
renew the lease for five year periods each. If the first option is exercised,
Ameritech Cellular will be required to pay base rent equal to $31.01 per square
foot per annum payable monthly from April 1, 2005 until March 31, 2006, with
annual increases of 3% until March 31, 2010. If the second option is
exercised, Ameritech Cellular will be required to pay base rent equal to $35.95
per square foot per annum payable monthly from April 1, 2010 until March 31,
2011, with annual increases of 3% until March 31, 2015.
For federal income tax purposes, the Company's depreciable basis in Ameritech
Outlot will be approximately $788,000. 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 Ameritech Outlot was completed in 1996.
At May 9, 1997, a total of 4,504 square feet was leased to one tenant at
Ameritech Outlot. The following tables set forth certain information with
respect to the amount of and expiration of leases at this Neighborhood Retail
Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Ft
Ameritech 5,405 03/2005 2/5yr. $110,303 $24.49
Cellular
-10-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total 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 - - - $109,492 - - -
1998 - - - 112,769 - - -
1999 - - - 116,158 - - -
2000 - - - 119,649 - - -
2001 - - - 123,229 - - -
2002 - - - 126,934 - - -
2003 - - - 130,740 - - -
2004 - - - 134,636 - - -
2005 1 4,504 $135,615 135,615 $30.11 100% 100%
2006 - - - - - - -
(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.
</TABLE>
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 Ameritech Outlot property, as of
April 22, 1997, of $1.1 million. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
-11-
Item 5. Other Events
The Company anticipates reducing the amount of Shares available for the
Distribution Reinvestment Program from 2.0 million Shares to 625,000 Shares.
As of May 8, 1997, 273,536.62 Shares have been issued pursuant to the
Distribution Reinvestment Program. In the event that more than 625,000 Shares
are needed for the Distribution Reinvestment Program, the Company will increase
the number of Shares accordingly.
Item 6. Resignations of Registrants Directors.
On May 14, 1997 Douglas R. Finlayson, M.D. resigned from his position as a
director of the Company due to personal reasons. On May 14, 1997, the
resignation became effective. There have been no disagreements between the
Company and Dr. Finlayson on any matter relating to the Companys operations,
policies or practices.
Item 7. Financial Statements and Exhibits
Financial statements of businesses acquired to be subsequently filed.
-12-
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: May 20, 1997
-13-
