As filed with the Securities and Exchange Commission on January 13, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 30, 1997
(Date of earliest event reported)
Inland Real Estate Corporation
(Exact name of registrant as specified in the charter)
Maryland 33-79012 36-3953261
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2901 Butterfield Road
Oak Brook, Illinois 60523
(Address of Principal Executive Offices)
(630) 218-8000
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
-1-
Item 2. Acquisition or Disposition of Assets
Dominick's, Glendale Heights, Illinois
On September 30, 1997, the Company acquired the entire fee simple interest in a
Single User Retail Center located at 23W127 Army Trail Road, in Glendale
Heights, Illinois which is leased to Dominick's Finer Foods ("Dominick's") from
S-Prime Partners, an unaffiliated third party, for approximately $8,196,000.
The purchase price was funded using cash and cash equivalents. The purchase
price was approximately $118.96 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.
Dominick's was built in 1997 and consists of a one-story, single-tenant retail
facility aggregating 68,923 rentable square feet. As of September 30, 1997,
Glendale Heights was 100% leased. In evaluating Dominick's 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 100% of the rentable square
feet at Dominick's 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
over the next few years because the facility was completed in 1997.
Nevertheless, pursuant to the lease, a substantial portion of any cost of
repairs and improvements would be paid by the tenants.
This facility was completed in 1997 and since that time has been fully occupied
by Dominick's Finer Foods.
The sole tenant is Dominick's Finer Foods who leases 100% of the rentable
square feet. Dominick's Finer Foods is a regional grocery store chain. The
lease with Dominick's Finer Foods requires Dominick's Finer Foods to pay base
rent equal to $11.75 per square foot per annum payable monthly until April 30,
2007 and $11.90 per square foot per annum payable monthly from June 1, 2007
until May 31, 2017. The Dominick's Finer Foods lease also contains five
options to renew the lease each for a five year period. If the first option is
exercised, Dominick's Finer Foods will be required to pay base rent equal to
$12.40 per square foot per annum payable monthly from June 1, 2017 until May
31, 2022. If the second option is exercised, Dominick's Finer Foods will be
required to pay base rent equal to $12.90 per square foot per annum payable
monthly from June 1, 2022 until May 31, 2027. If the third option is
exercised, Dominick's Finer Foods will be required to pay base rent equal to
$13.40 per square foot per annum payable monthly from June 1, 2027 until May
31, 2032. If the fourth option is exercised, Dominick's Finer Foods will be
required to pay base rent equal to $13.90 per square foot per annum payable
monthly from June 1, 2032 until May 31, 2037. If the fifth option is
exercised, Dominick's Finer Foods will be required to pay base rent equal to
$14.40 per square foot per annum payable monthly from June 1, 2037 until May
31, 2042.
-2-
For federal income tax purposes, the Company's depreciable basis in Dominick's
will be approximately $6,900,000. 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 1997 for the tax year ended
1996 (the most recent tax year for which information is generally available) is
not available since Dominick's was completed in 1997. Prior to the completion
of the Dominick's, the property was used as a nursery. The Company believes
that any tax information relating to the nursery would not be useful to
investors.
On September 30, 1997, a total of 68,923 square feet was leased to one tenant.
The following tables set forth certain information with respect to the amount
and expiration of the lease at this Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Dominick's Finer
Foods 68,923 05/17 1/20 yr. $809,845 $11.75
<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-
2007 - - - $809,845 - - -
</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 Glendale Heights Dominick's
property, as of June 16, 1997, of $8,200,000.00. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
-3-
Party City, Oak Brook Terrace, Illinois
On November 6, 1997, the Company acquired the entire fee simple interest in a
Single User Retail Center located at 17W700 22nd Street in Oak Brook Terrace,
Illinois known as "Party City" from D/M 22nd Street L.L.C., an unaffiliated
third party, for approximately $1,975,000. The purchase price was funded using
cash and cash equivalents. The purchase price was approximately $197.50 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.
Party City was built in 1985 and consists of a one-story, single-tenant retail
facility aggregating 10,000 rentable square feet. As of December 31, 1997,
Party City was 100% leased. In evaluating Party City 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 100% of the rentable
square feet at Party City 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 Party City over the next few years. Nevertheless, pursuant to the lease, a
substantial portion of any cost of repairs and improvements would be paid by the
tenant.
Party City had been vacant for the prior three years. The current lease term
began in June 1997.
Party City Corporation, a party goods store, leases 10,000 square feet, or
approximately 100% of the rentable square feet. The lease with Party City
requires Party City to pay base rent equal to $20.00 per square foot per annum
payable monthly until May 2002 and $21.50 per square foot per annum payable
monthly from June 2002 until May 2007. The lease contains two options to
renew, each for five years. If the first option is exercised, Party City will
pay base rent equal to $23.00 per square foot per annum payable monthly from
June 2007 until May 2012. If the second option is exercised, Party City will
pay base rent equal to $24.50 per square foot per annum payable monthly from
June 2012 until May 2017.
For federal income tax purposes, the Company's depreciable basis in Party City
will be approximately $1,225,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $10,236. Taxes
paid in 1997 might not be reflective of future taxes due to leasing of space.
-4-
On December 31, 1997, a total of 10,000 square feet was leased to one tenant at
Party City. The following tables set forth certain information with respect to
the amount of and expiration of the lease at this Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ----------- ----- ------- ----------- -----------
Party City
Corporation 10,000 5/2007 2/5 yr. $200,000 $20.00
<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-
2002 - - - $200,000 - - -
2003-
2006 - - - 215,000 - - -
2007 1 10,000 $ 215,000 215,000 $ 21.50 100% 100%
(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 Party City property, as of October
1, 1997, of $2,000,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
Roselle Eagle, Roselle, Illinois
On November 26, 1997, the Company acquired the entire fee simple interest in a
Single-User Retail Center located at 550 West Lake Street in Roselle, Illinois
known as "Roselle Eagle" from Capital Ventures, an unaffiliated third party, for
approximately $2,900,000. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $68.59 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.
-5-
Roselle Eagle was built in 1990 and consists of a single-tenant retail facility
aggregating 42,283 rentable square feet. As of December 31, 1997, Roselle Eagle
was 100% leased. In evaluating Roselle Eagle as a potential acquisition, the
Company considered a variety of factors including location, demographics,
tenant, 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 100% of the rentable square feet at Roselle Eagle 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 Roselle Eagle over the next few years. Nevertheless, pursuant to the lease,
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 Roselle Eagle 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 100% $7.95
1995 100% 7.95
1994 100% 7.95
1993 100% 7.95
1992 100% 7.95
Eagle Food Centers, a grocery store, leases 42,283 square feet or 100% of the
total square footage. The lease with Eagle requires Eagle to pay base rent
equal to $7.95 per square foot per annum payable monthly until January 31,
2011. The lease with Eagle contains five options to renew, each for
consecutive five year periods at a rate of $7.95 per square foot per annum
payable monthly throughout the term.
For federal income tax purposes, the Company's depreciable basis in Roselle
Eagle will be approximately $2,100,000. 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.
Real estate taxes payable in 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $72,194.
-6-
On December 31, 1997, a total of 42,283 square feet was leased to one tenant at
Roselle Eagle. The following tables set forth certain information with respect
to the amount of and expiration of the lease at this Single-user Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ -------- ----- ------ ----------- -----------
Eagle Food
Centers, L.P. 42,283 01/2011 5/5 yr. $335,979 $7.95
<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-
2007 - - - $335,979 - - -
(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 Roselle Eagle property, as of
October 7, 1997, of $2,925,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Countryside Shopping Center, Countryside, Illinois
On December 15, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Joliet Road and Willow Springs Road in
Countryside, Illinois known as "Countryside Shopping Center" from Arnold Lees
Corporation, an unaffiliated third party, for approximately $2,300,000. The
purchase price was funded using cash and cash equivalents. The purchase price
was approximately $36.89 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.
-7-
Countryside Shopping Center was built in 1975 and consists of a one-story,
multi-tenant retail facility aggregating 62,344 rentable square feet. As of
December 31, 1997, Countryside Shopping Center was 100% leased to one tenant,
who in turn, sub-leases space to three tenants. In evaluating Countryside
Shopping Center as a potential acquisition, the Company considered a variety of
factors including location, demographics, tenant mix, price per square foot,
existing rental rate compared to market rates, and occupancy. The Company
believes that the center is located within a vibrant economic area. Although
100% of the rentable square feet at Countryside Shopping Center 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 Countryside Shopping Center over the next few years. Nevertheless, pursuant
to the lease, 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 Countryside Shopping Center 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 100% $4.28
1995 100% 4.20
1994 100% 4.16
1993 100% 4.16
1992 100% 4.16
Dominick's Finer Foods, a grocery store, leases 100% of the total square
footage. The lease with Dominick's requires Dominick's to pay base rent equal
to $4.28 per square foot per annum payable monthly until June 2000. The lease
with Dominick's contains three options to renew, each for consecutive five year
periods at a rate of $4.28 per square foot per annum payable monthly.
For federal income tax purposes, the Company's depreciable basis in Countryside
Shopping Center will be approximately $1,600,000. 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.
Real estate taxes payable in 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $191,264. The real
estate taxes payable were calculated by multiplying 1,141,073 assessed value by
an equalizer of 2.1517 and a tax rate of 7.790%.
-8-
On December 31, 1997, a total of 62,344 square feet was leased to one tenant at
Countryside Shopping Center. The following tables set forth certain
information with respect to the amount of and expiration of the lease at this
Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
Dominick's Finer
Foods 62,344 06/2000 3/5 yr. $ 266,601 $ 4.28
<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>
1997 - - - $266,601 - - -
1998 - - - 266,601 - - -
1999 - - - 266,601 - - -
2000 1 62,344 $ 266,601 266,601 $ 4.28 100% 100%
(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 Countryside Shopping Center
property, as of October 13, 1997, of $2,300,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
Terramere Plaza, Arlington Heights, Illinois
On December 19, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Lake-Cook Road and Arlington Heights Road
in Arlington Heights, Illinois known as "Terramere Plaza" from C.B. Institution
Fund VIII, an unaffiliated third party, for approximately $4,405,000. The
purchase price was funded using cash and cash equivalents. The purchase price
was approximately $107.53 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.
-9-
Terramere Plaza was built in 1980 and consists of two one-story, multi-tenant
retail facilities aggregating 40,965 rentable square feet. As of December 31,
1997, Terramere Plaza was 89% leased. In evaluating Terramere 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 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 anticipates making approximately $195,000 of repairs and
improvements to Terramere Plaza for a new roof and parking lot overlay over the
next few years.
The table below sets forth certain information with respect to the occupancy
rate at Terramere 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
------------ ------------ -------------
1996 100% $12.47
1995 100% 12.21
1994 98% 11.89
1993 92% 11.72
There are no tenants leasing more than 10% of the total square footage at
Terramere Plaza.
For federal income tax purposes, the Company's depreciable basis in Terramere
Plaza will be approximately $3,300,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $247,803.
On December 31, 1997, a total of 36,255 square feet were leased to eighteen
tenants at Terramere Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
-10-
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
White Hen 2,400 12/01 1/5 yr. $16,800 $ 7.00
Scholastics Sports 750 10/00 - 9,000 12.00
Associated Travel 990 08/01 - 15,840 16.00
Mail Boxes Etc. 875 02/98 1/5 yr. 11,576 13.23
Otavio & Sons 1,255 03/05 - 20,933 16.68
Artist's Frame 2,255 10/00 - 28,581 12.67
Palmer Video 2,120 04/99 - 25,440 12.00
Kim's Temple 2,210 03/99 1/5 yr. 26,564 12.02
Yen Yen 3,430 03/03 - 43,801 12.77
Appell Dental 1,030 01/99 1/5 yr. 13,390 13.00
Pompei Rest. 2,370 04/98 - 32,588 13.75
Baird & Warner 3,000 03/00 - 51,000 17.00
Fancy Colours 3,950 03/99 1/8 yr. 55,932 14.16
Fast Food Pg
Rest. Inc. 1,447 06/02 1/5 yr. 18,811 13.00
European Tan 1,200 06/99 - 16,631 13.86
A-1 Lock 1,718 10/01 - 18,211 10.60
Jeffery Scott, Ltd. 3,000 02/99 - 45,000 15.00
Illusions 2,255 12/02 - 30,443 13.50
Vacant 4,710
<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 2 3,245 $44,164 $483,969 $13.61 7.92% 9.13%
1999 6 13,510 188,254 445,244 13.93 32.98 42.28
2000 3 6,005 90,629 261,145 15.09 14.66 34.70
2001 3 5,108 51,950 171,756 10.17 12.47 30.25
2002 2 3,702 54,115 123,343 14.62 9.04 43.87
2003 1 3,430 48,294 69,227 14.08 8.37 69.76
2004 - - - 20,933 - - -
2005 1 1,255 20,933 20,933 16.68 3.06 100.00
(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 Terramere Plaza property, as of
December 11, 1997, of $4,550,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
-11-
Wilson Plaza, Batavia, Illinois
On December 22, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Wilson Street and Prairie Street in
Batavia, Illinois known as "Wilson Plaza" from American National Bank and
Trust, as trustee under trust agreement dated June 18, 1986, Trust No. 67678,
an unaffiliated third party, for approximately $1,300,000. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $116.49 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.
Wilson Plaza was built in 1986 and consists of a one-story, multi-tenant retail
facility aggregating 11,160 rentable square feet. As of December 31, 1997,
Wilson Plaza was 100% leased. In evaluating Wilson 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 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 Wilson Plaza over the next few years. Nevertheless, pursuant to the leases,
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 Wilson 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
------------ ------------ -------------
1996 100% $12.64
1995 100% $12.44
1994 100% $12.39
1993 100% $12.39
1992 100% $12.39
-12-
Tenants leasing more than 10% of the total square footage include White Hen
Pantry, a convenience store, Dimples Donuts, a donut shop, and Riverside
Liquors, a liquor 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
- ----------- ----------- ----------- ------------ ------------ ---------
White Hen Pantry 2,400 22% $ 12.00 Currently 08/31/02
Option 1 14.08 09/01/02 08/31/07
Option 2 15.17 09/01/07 08/31/12
Option 3 16.25 09/01/12 08/31/17
Dimples Donuts 2,100 19% $ 12.50 Currently 12/31/98
12.75 01/01/99 12/31/00
13.00 01/01/01 12/31/01
Option 1 13.00 01/01/02 12/31/02
13.25 01/01/03 12/31/03
13.50 01/01/04 12/31/04
13.75 01/01/05 12/31/05
14.00 01/01/06 12/31/06
Riverside Liquors 2,485 22% 9.36 Currently 04/31/01
For federal income tax purposes, the Company's depreciable basis in Wilson
Plaza will be approximately $975,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $25,089.
On December 31, 1997, a total of 11,160 square feet were leased to seven
tenants at Wilson Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
White Hen Pantry 2,400 08/02 3/5 yr. $28,800 $12.00
Dimples Donuts 2,100 12/01 1/5 yr. 26,250 12.50
Wilsons Cleaners 1,050 07/02 3/5 yr. 16,275 15.50
Subway Sandwiches 1,050 02/00 - 15,750 15.00
Rosati's Pizza 1,025 11/02 2/5 yr. 14,350 14.00
Riverside Liquors 2,485 04/01 - 23,260 9.36
Fantastic Sams 1,050 11/01 - 15,225 14.50
-13-
<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 - - - $139,910 - - -
1999 - - - 141,485 - - -
2000 1 1,050 $ 16,800 142,003 $ 16.00 9% 12%
2001 3 5,635 65,785 125,991 11.67 51% 52%
2002 3 4,475 60,463 60,463 13.51 40% 100%
(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 Wilson Plaza property, as of
September 21, 1997, of $1,320,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
Iroquois Center, Naperville, Illinois
On December 29, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Ogden Avenue and Iroquois Avenue in
Naperville, Illinois known as "Iroquois Center" from Graystone Realty
Corporation, an unaffiliated third party, for approximately $11,900,000. The
purchase price was funded using cash and cash equivalents. The purchase price
was approximately $84.40 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.
Iroquois Center was built in 1983 and consists of two one-story, multi-tenant
retail facilities aggregating 140,981 rentable square feet. As of December 29,
1997, Iroquois Center was 81% leased. In evaluating Iroquois Center 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 30%
of the rentable square feet at Iroquois Center 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.
-14-
The Company does not anticipate making any significant repairs and improvements
to Iroquois Center over the next few years. Nevertheless, pursuant to the
terms of the leases, 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 Iroquois Center 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 79% $8.67
1995 78% 8.59
1994 78% 6.81
1993 74% Not Available
1992 63% Not Available
Tenants leasing more than 10% of the total square footage include Total
Beverage, a liquor and beverage store and Sears, a hardware 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
- ----------- ----------- ----------- ------------ ------------ ---------
Total Beverage 20,000 14% $ 13.00 Currently 01/31/03
14.00 02/01/03 01/31/08
Option 1 15.00 02/01/08 01/31/13
Option 2 16.00 02/01/13 01/31/18
Option 3 17.00 02/01/18 01/31/23
Sears 21,824 15% 5.46 Currently 05/31/98
5.96 06/01/98 05/31/99
6.46 06/01/99 05/31/00
7.45 06/01/00 05/31/01
7.70 06/01/01 05/31/02
Option 1 8.69 06/01/02 05/31/05
10.92 06/01/05 05/31/08
Option 2 10.92 06/01/08 05/31/14
Option 3 12.91 06/01/14 05/31/20
For federal income tax purposes, the Company's depreciable basis in Iroquois
Center will be approximately $8,170,000. 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.
-15-
Real estate taxes payable in 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $205,422.
On December 29, 1997, a total of 114,629 square feet was leased to twenty-seven
tenants at Iroquois Center. The following tables set forth certain information
with respect to the amount of and expiration of the leases at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Total Beverage 20,000 11/07 3/5 yr. $260,000 $13.00
Whole Foods (Dark) 10,000 03/03 - 80,000 8.00
Swingles Furniture 2,400 11/98 - 31,200 13.00
Sears 21,824 05/02 3/6 yr. 119,160 5.46
Starbucks 1,412 02/04 1/5 yr. 28,240 20.00
Kinkos 8,000 08/03 1/5 yr. 80,000 10.00
Cucina Roma 6,575 10/18 - 105,200 16.00
The Chalkboard 9,050 12/98 1/5 yr. 52,580 5.81
Dr. David Newkirk 1,212 10/01 - 21,210 17.50
Fan C Fans 2,000 10/99 - 30,000 15.00
Frank Gironda Salon 1,600 05/98 - 24,800 15.50
American Speedy 1,600 09/01 - 24,000 15.00
Court Sports Plus 1,701 02/98 - 26,365 15.50
Let's Dance 4,879 07/01 - 60,987 12.50
Desktop Express 4,807 12/00 3/3 yr. 62,491 13.00
Sakura of Tokyo 3,030 08/99 - 54,540 18.00
Clothes Clean
Center 1,080 06/01 - 15,606 14.45
West Suburban
Currency 1,136 07/98 - 18,176 16.00
Mail Boxes Etc. 1,065 08/00 - 17,040 16.00
Rausch
Rehabilitation 2,280 08/99 - 35,340 15.50
Illinois Federal
Credit 1,357 03/00 - 20,355 15.00
Ben's Bistro and
Catering 1,704 04/99 1/5 yr. 26,412 15.50
One Hour Photo 1,222 04/99 1/5 yr. 23,218 19.00
Travel Agents Intl. 1,373 08/00 - 25,743 18.75
The Chocolate Crave 994 05/99 1/5 yr. 14,910 15.00
A Wolff Tan Sun
Center 1,116 08/01 - 20,791 18.63
Adreienne's Unusual
Gifts 1,212 07/99 - 18,180 15.00
Vacant 26,352
-16-
<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 5 15,887 $ 153,123 $1,299,906 $ 9.64 11.27% 11.78%
1999 7 12,442 207,550 1,168,467 16.68 8.83 17.76
2000 4 8,602 129,303 983,498 15.03 6.10 13.15
2001 5 9,887 152,622 833,474 15.44 7.01 17.28
2002 1 21,824 168,045 740,309 7.70 15.48 22.70
2003 2 18,000 180,000 576,264 10.00 12.77 31.24
2004 1 1,412 31,064 432,044 22.00 1.00 7.19
2005-
2007 - - - 400,980 - - -
2008 1 20,000 280,000 400,980 14.00 14.19 69.83
(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 Iroquois Center property, as of
December 9, 1997, of $12,100,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Fashion Square, Skokie, Illinois
On December 30, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located on Skokie Boulevard in Skokie, Illinois
known as "Fashion Square" from I.D.S./JMB Balanced Growth, Ltd., an Illinois
Limited Partnership, an unaffiliated third party, for approximately $9,255,000.
The purchase price was funded using cash and cash equivalents of $3,055,000 and
assuming the existing bond financing, in the remaining principal balance of
$6,200,000. Monthly interest only payments are due on the financing through
the December 1, 2014 maturity date. The interest rate changes weekly and is
currently 4.1%. The bond financing is secured by a Letter of Credit issued by
LaSalle National Bank, who receives an annual fee of 1.25% of the outstanding
principal balance. The purchase price was approximately $109.42 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.
-17-
Fashion Square was built in 1984 and consists of a one-story, multi-tenant
retail facility aggregating 84,580 rentable square feet. As of December 30,
1997, Fashion Square was 88% leased. In evaluating Fashion 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 occupancy. The Company believes that the
center is located within a vibrant economic area. Although approximately 38%
of the rentable square feet at Fashion Square 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 Fashion Square over the next few years. Nevertheless, pursuant to the terms
of the leases, 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 Fashion Square 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 89% $ 11.02
1995 89% 11.28
1994 100% 13.64
Tenants leasing more than 10% of the total square footage include Cost Plus, a
home furnishings and accessories store, and Designer Shoe Center, a shoe 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
- ----------- ----------- ----------- ------------ ------------ ---------
Cost Plus 17,190 20% $ 12.00 Currently 01/31/01
12.75 02/01/01 01/31/05
13.50 02/01/05 01/31/08
Option 1 14.00 02/01/08 01/31/13
Option 2 15.00 02/01/13 01/31/18
Option 3 16.00 02/01/18 01/31/23
Designer Shoe
Center 15,000 18% $ 12.70 Currently 05/31/05
Option 1 14.50 06/01/05 05/31/10
Option 2 15.50 06/01/10 05/31/15
Option 3 16.50 06/01/15 05/31/20
Option 4 18.50 06/01/20 05/31/25
-18-
For federal income tax purposes, the Company's depreciable basis in Fashion
Square will be approximately $7,000,000. 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 generally available) were $478,356.
On December 30, 1997, a total of 74,080 square feet was leased to fifteen
tenants at Fashion Square. The following tables set forth certain information
with respect to the amount of and expiration of the leases at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Cost Plus 17,190 01/08 3/5 yr. $206,280 $12.00
Designer Shoe
Center 15,000 05/05 4/5 yr. 190,500 12.70
Cosmetic Center 5,280 01/01 1/5 yr. 73,920 14.00
Lenscrafters 7,110 07/99 3/5 yr. 88,662 12.47
Factory Card Outlet 3,500 01/01 1/5 yr. 47,250 13.50
Once Upon a Child 3,000 12/00 - 27,000 9.00
Hair Cuttery 1,050 04/01 - 17,850 17.00
Old Navy Storage 950 12/98 - 4,199 4.42
Sally Beauty 2,500 08/99 1/5 yr. 36,250 14.50
Deutsch Luggage 3,000 08/99 - 45,000 15.00
Fox's 2,000 12/02 - 31,000 15.50
The Answer 4,000 02/02 - 64,000 16.00
Edens Bank 3,000 09/99 - 60,000 20.00
A T & T Wireless 2,500 07/02 - 37,500 15.00
Lane Bryant 4,000 12/02 - 60,000 15.00
Vacant 10,500
-19-
<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 1 950 $ 4,199 $925,411 $ 4.42 1.18% .45%
1999 4 15,610 229,912 922,712 14.73 19.37% 24.92%
2000 1 3,000 30,000 694,300 10.00 3.72% 4.32%
2001 3 9,830 139,020 664,300 14.14 12.20% 20.93%
2002 3 8,500 128,500 538,173 15.12 10.55% 23.88%
2003 - - - 409,673 - - -
2004 - - - 409,673 - - -
2005 1 15,000 109,500 409,673 12.70 18.62% 46.50%
2006 - - - 232,065 - - -
2007 - - - 232,065 - - -
(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 Fashion Square property, as of
December 12, 1997, of $9,400,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Naper West Plaza, Naperville, Illinois
On December 30, 1997, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Route 59 in Naperville, Illinois known as
"Naper West Plaza" from Naper West, Ltd., an unaffiliated third party, for
approximately $14,850,000. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $89.86 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.
-20-
Naper West Plaza was built in 1985 and consists of a one-story, multi-tenant
retail facility, a four-unit retail outlot and a single-tenant outlot,
aggregating 165,261 rentable square feet. As of December 30, 1997, Naper West
Plaza was 85.5% leased (100% leased if the master lease, which terminates
December 31, 1998, is considered). In evaluating Naper West 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. Although approximately 35%
of the rentable square feet at Naper West 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 Naper West Plaza over the next few years. Nevertheless, pursuant to the
terms of the leases, 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 Naper West 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
------------ ------------ -------------
1996 91% $ 9.23
1995 89% 9.43
1994 93% 8.84
Tenants leasing more than 10% of the total square footage include Douglas T.V.,
a T.V. retail store, and T.J. Maxx, a discount clothing 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
- ----------- ----------- ----------- ------------ ------------ ---------
Douglas T.V. 23,764 14% $ 4.84 Currently 12/31/02
Option 1 9.90 01/01/03 12/31/08
T.J. Maxx 33,260 20% 7.50 Currently 11/30/99
Option 1 8.00 12/01/99 11/31/04
-21-
For federal income tax purposes, the Company's depreciable basis in Naper West
Plaza will be approximately $10,800,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $281,483.
On December 30, 1997, a total of 141,269 square feet was leased to twenty-six
tenants at Naper West Plaza. The following tables set forth certain
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
El Famous Burrito 1,888 03/98 1/5 yr. $ 33,984 $18.00
Shogun Steakhouse 2,403 04/02 - 38,351 15.96
H & R Block 1,048 04/00 - 26,410 25.20
White Mountain
Creamery 1,415 05/01 - 25,356 17.92
American Mattress 3,109 12/99 - 38,085 12.25
Roger Dunn Golf 4,981 03/02 1/5 yr. 54,791 11.00
National Monument 1,000 06/00 - 18,500 18.50
DOTS 3,465 01/99 - 41,580 12.00
Douglas T.V. 23,764 12/02 1/5 yr. 115,018 4.84
Once Upon a Child 2,961 09/99 - 42,194 14.25
Nature's Corner 2,363 06/98 - 25,993 11.00
Famous Footwear 5,520 10/99 1/5 yr. 68,172 12.35
Payless Shoes 3,711 12/98 - 51,954 14.00
Dress Barn 3,737 01/99 - 62,782 16.80
Bo Rics 2,204 11/98 1/5 yr. 23,142 10.50
Jenny Craig 2,852 12/98 - 48,484 17.00
Perfume Depot 1,930 10/98 1/5 yr. $ 22,677 $11.75
TJ Maxx 33,260 11/99 1/5 yr. 249,450 7.50
Pepper's Waterbeds 7,128 06/02 - 85,536 12.00
Brady's Craft Mart 9,217 05/99 - 87,561 9.50
American Oak 11,122 08/00 - 55,610 5.00
Computer Renaissance 1,980 09/01 1/5 yr. 37,620 19.00
For Eyes Optical 3,209 09/02 - 49,740 15.50
Casual Male 2,856 10/99 - 57,120 20.00
Jewelry 3 4,146 01/01 1/5 yr. 80,847 19.50
Olive Garden Ground Lease 10/98 1/10 yr. 79,968 -
Vacant 23,992
-22-
<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 7 14,948 $ 286,203 $1,582,296 $ 19.15 9.04% 18.09%
1999 8 64,125 718,417 1,327,620 11.20 38.79 54.11
2000 3 13,170 111,642 615,226 8.48 7.97 18.15
2001 3 7,541 151,385 507,582 20.07 4.56 29.82
2002 5 41,544 359,252 359,252 8.65 25.13 100.00
(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 Naper West Plaza property, as of
December 17, 1997, of $14,950,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
Woodfield Plaza, Schaumburg, Illinois
On January 2, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Golf Road and Basswood Road in
Schaumburg, Illinois known as "Woodfield Plaza" from System Realty Seven, Inc.,
an unaffiliated third party, for approximately $19,200,000. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $108.22 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.
Woodfield Plaza was built in 1992 and consists of a one-story, multi-tenant
retail facility, a free-standing building and an outlot, aggregating 177,418
rentable square feet. As of December 31, 1997, Woodfield Plaza was 100%
leased. In evaluating Woodfield 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. Although approximately 78% of the rentable square feet at
Woodfield Plaza 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.
-23-
The Company does not anticipate making any significant repairs and improvements
to Woodfield Plaza over the next few years. Nevertheless, pursuant to the
terms of the leases, 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 Woodfield 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 100% $ 11.73
1996 100% 10.94
1995 100% 10.50
1994 98% Not Available
Tenants leasing more than 10% of the total square footage include Kohl's, a
department store, Linen 'N Things, a house wares store and Barnes & Noble, a
book 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
- ----------- ----------- ----------- ------------ ------------ ---------
Kohl's 83,258 47% $ 8.75 Currently 10/31/02
9.62 11/01/02 10/31/07
10.58 11/01/07 10/31/12
Linen 'N Things 32,800 18% $ 10.35 Currently 04/30/98
11.25 05/01/98 09/30/00
Barnes & Noble 22,988 13% $ 19.70 Currently 09/30/02
22.85 10/01/02 09/30/07
26.80 10/01/07 10/31/12
For federal income tax purposes, the Company's depreciable basis in Woodfield
Plaza will be approximately $14,500,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $513,949.
-24-
On December 31, 1997, a total of 177,418 square feet was leased to ten tenants
at Woodfield Plaza. The following tables set forth certain information with
respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Kohl's 83,258 10/12 - $728,508 $ 8.75
Paul Harris 3,800 04/99 1/5 yr. 62,700 16.50
Famous Footwear 5,610 05/98 - 67,320 12.00
Cosmetic Center 5,482 05/98 - 76,748 14.00
Linen 'N Things 32,800 12/98 - 339,480 10.35
Barnes & Noble 22,988 10/12 - 452,864 19.70
Davids Bridal 12,044 01/09 - 201,135 16.70
Weight Watchers 2,486 11/00 1/5 yr. 39,776 16.00
America's Best 4,000 08/05 1/10 yr. 64,000 16.00
Leather & Comfort 4,950 12/98 - 48,000 9.70
<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 4 48,842 $ 561,083 $2,110,065 $ 11.49 27.53% 26.59%
1999 1 3,800 62,700 1,592,164 16.50 2.14 3.94
2000 1 2,486 42,262 1,530,707 17.00 1.40 2.76
2001 - - - 1,488,445 - - -
2002 - - - 1,492,445 - - -
2003 - - - 1,637,291 - - -
2004 - - - 1,643,313 - - -
2005 1 4,000 72,000 1,643,313 18.00 2.25 4.38
2006 - - - 1,571,313 - - -
2007 - - - 1,571,313 - - -
(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 Woodfield Plaza property, as of
December 5, 1997, of $19,200,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
-25-
The Shops at Coopers Grove, Country Club Hills, Illinois
On January 9, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 183rd and Crawford in Country Club Hills,
Illinois known as the "Shops at Coopers Grove" from Midwest Property Group, an
unaffiliated third party, for approximately $5,800,000. The purchase price was
funded using cash and cash equivalents. The purchase price was approximately
$79.98 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 Shops at Coopers Grove was built in 1991 and consists of a one-story,
multi-tenant retail facility aggregating 72,518 rentable square feet. As of
December 31, 1997, the Shops at Coopers Grove was 96% leased (100% leased if
the master lease, which lasts for one year, is considered). In evaluating The
Shops at Coopers Grove 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 77% of the rentable square feet at the Shops at Coopers
Grove 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 the Shops at Coopers Grove over the next few years. Nevertheless, pursuant
to the terms of the leases, 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 The Shops at Coopers Grove 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 87% $ 7.54
1995 87% 7.48
1994 87% 7.37
1993 85% 7.22
1992 85% 7.22
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One tenant leases more than 10% of the total square footage, Eagle Food Center,
a grocery store. This lease requires 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
- ----------- ----------- ----------- ------------ ------------ ---------
Eagle Food Center 56,118 77% $ 7.99 Currently 06/30/11
Option 1 7.99 07/01/11 06/30/36
For federal income tax purposes, the Company's depreciable basis in the Shops
at Coopers Grove will be approximately $4,400,000. 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 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $324,407.
On December 31, 1997, a total of 69,318 square feet was leased to seven tenants
at the Shops at Coopers Grove. The following tables set forth certain
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Eagle Food Center 56,118 06/11 1/25 yr. $448,382 $ 7.99
Blockbuster Video 6,400 07/02 1/20 yr. 51,200 8.00
Baskin Robbins 1,200 06/01 - 22,800 19.00
Chop Suey 1,200 10/12 - 21,441 17.87
Subway 1,200 04/01 1/5 yr. 18,458 15.38
4-Star Cleaners 1,600 07/01 - 25,599 16.00
Allstate Ins. 1,600 04/00 - 15,199 9.50
Vacant 3,200
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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 - - - $603,083 - - -
1999 - - - 607,679 - - -
2000 1 1,600 $ 16,800 612,403 $ 10.50 2.21% 2.74%
2001 3 4,000 72,788 597,187 18.20 5.52 12.19
2002 2 7,600 77,264 525,647 10.17 10.48 14.70
2003-
2007 - - - 448,383 - - -
(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 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 Shops at Coopers Grove
property, as of December 31, 1997, of not less than $5,800,000. Appraisals are
estimates of value and should not be relied on as a measure of true worth or
realizable value.
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Item 5. Other Events
Potential Property Acquisitions
The Company anticipates purchasing a Neighborhood Retail Center located in
Michigan City, Indiana, known as Lake Park Plaza from an unaffiliated third
party for a purchase price of approximately $12,275,000. Lake Park Plaza was
built in 1990 and consists of a one-story, multi-tenant retail facility
aggregating 229,639 square feet. Tenants leasing more than 10% of the total
square footage include Wal-Mart and Roundy's.
The Company anticipates purchasing a Neighborhood Retail Center located in
Orland park, Illinois, known as Orland Park from an unaffiliated third party
for a purchase price of approximately $1,250,000. Orland park was built in
1997 and consists of a one-story, multi-tenant retail facility aggregating
8,500 square feet. Tenants leasing more than 10% of the total square footage
include Video Update and All Cleaners.
The Company anticipates purchasing a Single User Retail Center located in West
Chicago, Illinois, known as West Chicago Dominick's from an unaffiliated third
party for a purchase price of approximately $6,300,000. West Chicago
Dominick's was built in 1990 and consists of a one-story, single-tenant retail
facility aggregating 77,000 square feet. The center is 100% leased to
Dominick's Finer Foods.
Item 7. Financial Statements and Exhibits
To be subsequently filed.
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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 13, 1998
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