Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 10 to the Company's Prospectus dated April 7, 1998 updates
certain information in the sections of the Prospectus entitled "Real Property
Investments" and "Plan of Distribution." Unless otherwise defined, capitalized
terms used herein shall have the same meaning as in the Prospectus.
Real Property Investments
On August 24, 1998, the Company acquired the entire simple interest in a
Neighborhood Retail Center located at 81 Ludwig Drive in Fairview Heights,
Illinois, known as "Fairview Heights Plaza" from Fairview Heights Associates,
L.P., an unaffiliated third party for a purchase price of approximately
$11,241,000.
Plan of Distribution
The Company commenced the Offering on April 7, 1998. As of August 23, 1998, the
Company had accepted subscriptions for 8,975,160 shares ($89,347,718 net of
Selling Commissions, the Marketing Contribution and the Due Diligence Expense
Allowance Fee). Inland Securities Corporation, an Affiliate of the Advisor,
serves as dealer-manager of the Offering and is entitled to receive selling
commissions and certain other fees, as referenced in the Prospectus. As of
August 23, 1998, these commissions and fees totaled $9,379,042. The Advisor is
entitled to receive an Advisor Asset Management fee, as described more fully in
the Prospectus. An Affiliate of the Advisor is also entitled to receive
Property Management Fees for management and leasing services, as described more
fully in the Prospectus.
SUPPLEMENT NO. 10
DATED August 27, 1998
TO THE PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 10 is provided for the purpose of supplementing the
Prospectus dated April 7, 1998 of Inland Real Estate Corporation (the
"Company") as previously supplemented by Supplement No. 9 dated August 12,
1998, (which Supplement No. 9 superseded Supplement Nos. 1 through 8) and must
be read in conjunction therewith. This Supplement No. 10 updates certain
information in the sections of the Prospectus entitled "Real Property
Investments" and "Plan of Distribution." Unless otherwise defined, capitalized
terms used herein shall have the same meaning as in the Prospectus.
Real Property Investments
Fairview Heights Plaza, Fairview Heights, Illinois
On August 24, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 81 Ludwig Drive in Fairview Heights,
Illinois known as "Fairview Heights Plaza" from Fairview Heights Associates,
L.P., an unaffiliated third party, for approximately $11,241,000. The purchase
price was funded using cash and cash equivalents. The purchase price was
approximately $67.11 per square foot, which the Company concluded was fair and
reasonable based on, among other things an appraisal received by the Company
and presented to the Company's board of directors.
Fairview Heights Plaza, built in 1991, is a one-story, multi-tenant retail
facility containing 167,491 leasable square feet. As of July 31, 1998,
Fairview Heights Plaza was 100% leased. In evaluating Fairview Heights Plaza
as a potential acquisition, the Company considered a variety of factors
including location, demographics, tenant mix, price per square foot, existing
rental rates compared to market rates, and occupancy. The Company believes
that the center is located within a vibrant economic area. The center is
located approximately 12 miles from St. Louis, Missouri and is connected to St.
Louis by both a major highway and a newly complpeted metro station. Population
in the Fairview Heights area has increased over the last six years and the area
is considered a major shopping location with hotels, a regional mall and other
centers containing national tenants. The Company did not consider any other
factors materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Fairview Heights Plaza over the next few years. A substantial portion of
any monies spent on repairs and improvements would be paid by the tenants,
pursuant to the terms of the existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Fairview Heights Plaza expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot:
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Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 7.34
1996 100 7.44
1995 100 7.37
1994 99 7.34
1993 71 5.70
Tenants leasing more than 10% of the total gross leasable area of the property
are 1/2 Price Store, a discount store, Michaels, a craft supply store, Sports
Authority, a sporting goods store, and Sears Home Life, a home goods store.
These leases require the tenants to pay base annual rent on a monthly basis as
follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
1/2 Price Store 60,137 36 6.55 Currently 08/31/99
7.05 09/01/99 08/31/04
7.55 09/01/04 12/31/09
Option 1 8.05 01/01/09 12/31/14
8.55 01/01/15 12/31/19
Option 2 9.05 01/01/20 12/31/24
Michaels 22,176 13 8.75 Currently 01/31/99
9.75 02/01/99 01/31/04
Option 1 10.75 02/01/04 01/31/09
Option 2 11.75 02/01/09 01/31/14
Sports Authority 40,588 24 7.25 Currently 07/31/11
Option 1 7.75 08/01/11 07/31/16
Option 2 8.25 08/01/16 07/31/21
Option 3 8.75 08/01/21 07/31/26
Option 4 8.75 08/01/26 07/31/31
Sears Home Life 36,360 22 7.50 Currently 04/30/01
For federal income tax purposes, the Company's depreciable basis in Fairview
Heights Plaza will be approximately $8,500,000. 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 1998 for the tax year ended 1997 (the most recent
tax year for which information is generally available) are $160,295. The real
estate taxes payable were calculated by multiplying the assessed value by a
township multiplier of 1.0359 and a tax rate of 5.8652%.
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On July 31, 1998, a total of 167,491 square feet was leased to eight tenants at
Fairview Heights Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
1/2 Price Store 60,137 12/09 1/10 yr. 393,897 6.55
1/5 yr.
E. Davis 4,030 07/03 - 56,420 11.68
Michaels 22,176 01/04 2/5 yr. 194,440 8.77
Sports Authority 40,588 07/11 4/5 yr. 294,263 7.25
Now Hear This 1,680 10/01 - 25,280 15.05
Blimpie 1,473 06/03 - 20,281 13.77
US Army Corp of
Engineers 1,047 09/00 - 17,280 16.50
Sears Home Life 36,360 04/01 - 272,700 7.50
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 1,274,050 - - -
1999 - - - 1,274,787 - - -
2000 1 1,047 17,276 1,327,723 16.50 .63 1.30
2001 2 38,040 298,740 1,314,083 7.85 22.71 22.73
2002 - - - 1,016,080 - - -
2003 2 5,503 82,371 1,016,816 14.97 3.29 8.10
2004 1 22,176 216,216 934,445 9.75 13.24 23.14
2005 - - - 748,297 - - -
2006 - - - 748,297 - - -
2007 - - - 748,297 - - -
(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, at the time of
releasing.
</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 Fairview Heights Plaza property, as
of July 9, 1998, of $11,400,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
-3-
Plan of Distribution
The Company commenced the Offering on April 7, 1998, and as of August 23, 1998
had accepted subscriptions for 8,975,160 shares ($89,347,718 net of Selling
Commissions, the Marketing Contribution and the Due Diligence Expense Allowance
Fees).
Inland Securities Corporation, an Affiliate of the Advisor, serves as dealer
manager of the Offering and is entitled to receive selling commissions and
certain other fees, as referenced in the Prospectus. As of August 23, 1998,
these commissions and fees totaled $9,379,042. An Affiliate of the Advisor is
also entitled to receive Property Management Fees for management and leasing
services. The Company incurred Property Management Fees of approximately
$1,149,000 for the six months ended June 30, 1998 and $1,120,000 for the year
ended December 31, 1997. The Advisor may also receive an annual Advisor Asset
Management Fee of not more than 1% of the Average Invested Assets, paid
quarterly. For the six months ended June 30, 1998, the Company had incurred
Advisor Asset Management Fees of $980,376. For the year ended December 31,
1997, the Company had incurred Advisor Asset Management Fees of $843,000.
-4-
