Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 2 to the Company's Prospectus 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 April 16, 1998, the Company acquired the entire fee simple interest in a
Community Center located at 7101 10th Street North in Oakdale, Minnesota known
as "Bergen Plaza" from an unaffiliated third party for a purchase price of
approximately $17,247,680.
Plan of Distribution
The Company commenced the offering on April 7, 1998. As of April 20, 1998, the
Company had accepted subscriptions for 124,773 shares ($1,242,124 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
April 20, 1998, these commissions and fees totaled $130,388. An Affiliate of
the Advisor is also entitled to receive Property Management Fees for management
and leasing services.
SUPPLEMENT NO. 2
DATED APRIL 21, 1998
TO THE PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 2 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. 1 dated April 9, 1998,
and must be read in conjunction therewith. This Supplement No. 2 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
Bergen Plaza, Oakdale, Minnesota
On April 16, 1998, the Company acquired the entire fee simple interest in a
Community Center located at 7101 10th Street North in Oakdale, Minnesota known
as "Bergen Plaza" from Bergen Investments L.L.C., an unaffiliated third party,
for approximately $17,247,680 (approximately $63.74 per square foot). The
purchase price was funded using cash and cash equivalents. The Company
believes that the purchase price 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.
Bergen Plaza, built in 1978 and expanded to in 1988 through 1990, consists of a
multi-tenant retail center complex consisting of five buildings aggregating
270,610 rentable square feet. As of April 20, 1998, Bergen Plaza was 98%
leased (100% leased if the master lease, which lasts for 24 months, is
considered). In evaluating Bergen 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 and that the grocery anchor tenant enhances our first
acquisition in the Minnesota market. Although approximately 56% of the rentable
square feet at Bergen Plaza is leased to two tenants, the Company 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 anticipates spending approximately $225,000 for roof and parking
lot repairs to Bergen Plaza over the next few years. The Company received a
credit at closing of approximately $225,000 toward these costs.
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The table below sets forth certain information with respect to the occupancy
rate at Bergen Plaza 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
------------ ------------ -------------
1997 97.57% $6.47
1996 93.27 6.46
1995 96.53 6.09
1994 95.77 6.20
1993 93.72 6.30
Tenants leasing more than 10% of the total square footage include Rainbow
Foods, a grocery store and Kmart, a discount department store. These leases
require the payment of base annual rent, payable monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Rainbow Foods 64,189 24% $ 6.20 Currently 07/31/09
Option 1 6.20 08/01/09 07/31/24
Kmart 87,680 32 3.14 Currently 10/31/04
For federal income tax purposes, the Company's depreciable basis in Bergen
Plaza 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 paid in 1997 for the 1997 tax year (the most recent tax year
for which information is generally available) were $751,354.
On April 20, 1998, a total of 265,411 square feet was leased to thirty-eight
tenants at Bergen Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the leases at this Community
Center:
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Rainbow Foods 64,189 07/09 1/15 yr. $397,968 $ 6.20
Kmart 87,680 10/04 - 275,315 3.14
Burger King 3,100 06/09 - 73,067 23.57
Big Top Liquors 7,200 10/99 - 58,968 8.19
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Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Hunan Garden
Restaurant 4,050 09/99 1/5 yr. 36,450 9.00
Carpet Mart 4,800 11/02 - 24,000 5.00
True Value Hardware 3,777 01/07 1/10 yr. 12,000 3.18
Petco 19,513 04/06 1/10 yr. 107,321 5.50
Classroom
Connections 4,200 07/99 - 37,800 9.00
Grand Tan 2,437 01/99 - 24,370 10.00
Bubbles Ultra
Cleaning 1,600 09/00 - 17,600 11.00
Pack 'N Mail 1,600 09/99 - 12,960 8.10
Outlaw's R.C. World 1,600 07/01 - 17,600 11.00
One Hour
Martinizing 1,600 07/99 - 20,000 12.50
Streg Hair Design 1,600 12/99 - 19,200 12.00
P.J. Sportsbar 3,002 08/01 - 31,521 10.50
Bon Jons Flowers 2,000 02/00 1/5 yr. 18,000 9.00
Pioneer Credit
Union 5,881 01/06 1/10 yr. 41,994 7.14
Rack 'em Up
Billiards 5,592 02/99 - 44,736 8.00
Jo Bridal & Tuxedo 3,118 05/02 - 32,739 10.50
First Nail 528 07/99 1/3 yr. 6,336 12.00
Fan Man 1,400 11/98 - 11,200 8.00
Ideas for Framing 1,400 09/99 - 14,420 10.30
Gourmet Coffee 1,400 09/98 - 15,400 11.00
Little Caesar's
Pizza 1,392 12/99 1/10 yr. 13,920 10.00
Groe One-hour Photo 1,500 04/03 - 18,756 12.50
Great Clips 1,200 10/99 - 16,800 14.00
Bartlett
Chiropratic 900 01/00 - 13,500 15.00
Western State Bank 3,200 07/03 1/9 yr. 36,800 11.50
Dr. Coyle Pet
Clinic 1,384 06/99 - 16,608 12.00
Smokers Haven 1,045 03/00 1/3 yr. 16,719 16.00
Cousins Submarine
Sandwich 2,052 04/02 1/7 yr. 20,520 10.00
Cost Cutters 1,200 09/02 - 18,000 15.00
Oakdale Optical 1,200 05/02 - 15,120 12.60
Blockbuster Video 6,615 05/02 1/10 yr. 85,983 13.00
Dr. Timm, D.D.S. 1,000 08/99 - 17,000 17.00
Miniapple
Montessori 4,824 05/02 - 64,786 13.43
Erik's Bike Shop 4,632 05/03 - 37,056 8.00
Vacant 5,199
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<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. GLA Annual Base Total Per Square Building GLA Rent
Year Number of of Expiring Rent of Annual Foot Under Represented Represented
Ending Leases Leases Expiring Base Expiring by Expiring By Expiring
December 31, Expiring (Sq. Ft.) Leases Rent (1) Leases Leases Leases
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 3 6,000 $ 63,400 $1,782,831 $ 10.57 2.22% 3.56%
1999 14 35,183 339,568 1,725,031 9.65 13.00 19.68
2000 4 5,545 65,820 1,395,078 11.87 2.05 4.72
2001 2 4,602 51,521 1,338,861 11.20 1.70 3.85
2002 7 23,809 320,650 1,298,712 13.47 8.80 24.69
2003 2 6,132 55,806 978,062 9.10 2.27 5.71
2004 1 87,680 275,312 922,256 3.14 32.40 29.85
2005 - - - 646,941 - - -
2006 2 25,394 149,312 646,941 5.88 9.38 23.08
2007 1 3,777 26,590 497,629 7.04 1.40 5.34
(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 Bergen Plaza property, as of
February 20, 1998, of $17,770,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
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Plan of Distribution
The Company commenced the Offering on April 7, 1998, and as of April 20, 1998
had accepted subscriptions for 124,773 shares ($1,242,124 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 April 20, 1998,
these commissions and fees totaled $130,388. 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
$1,120,000 for the year ended December 31, 1997 and $229,307 for the year ended
December 31, 1996. 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 year ended December 31, 1997, the Company had incurred
Advisor Asset Management Fees of $843,000.
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