As filed with the Securities and Exchange Commission on April 9, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 25, 1998
(Date of earliest event reported)
Inland Real Estate Corporation
(Exact name of registrant as specified in the charter)
Maryland 0-28382 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
Downers Grove Market, Downers Grove, Illinois
On March 25, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Ogden and Williams Street in Downers
Grove, Illinois known as "Downers Grove Market" from T-L Downers Grove Plaza,
Inc., an unaffiliated third party, for approximately $17,679,000. The purchase
price was funded using cash and cash equivalents. The purchase price was
approximately $169.27 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.
Downers Grove Market was completed in 1998 and consists of a one-story, multi-
tenant retail facilities aggregating 104,449 rentable square feet. As of
February 28, 1998, Downers Grove Market was 78% leased (100% leased if the
master lease, which lasts for one year, is considered). In evaluating Downers
Grove Market 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 Downers Grove Market 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.
One tenant leases more than 10% of the total square footage, Dominick's Finer
Foods, 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
- ----------- ----------- ----------- ------------ ------------ ---------
Dominick's Finer
Foods 72,385 69.3% $ 17.77 Current 11/30/17
For federal income tax purposes, the Company's depreciable basis in Downers
Grove Market will be approximately $13,500,000. 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.
Construction of Downers Grove Market was completed in 1998 and therefore, prior
year's real estate taxes are not relevant.
-2-
On March 25, 1998, a total of 104,449 square feet was leased to fourteen
tenants at Downers Grove Market. The Company will receive rental payments
under a master lease agreement on any tenants not yet occupying their space.
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
------ ---------- ----- ------ ----------- -----------
Lighthouse 1,200 04/03 1/5 yr $ 25,200 $21.00
Sally Beauty 1,600 05/03 - 26,400 16.50
Hallmark 5,175 02/03 - 62,100 12.00
Luxury Nails 1,200 03/03 - 19,875 16.56
Sport A Tan 4,000 04/05 - 68,000 17.00
Wolf Camera 2,000 03/03 - 38,000 19.00
Oberweiss 2,600 03/08 - 48,100 18.50
Hollywood Video 6,979 03/08 - 153,538 22.00
Great Clips 1,050 03/03 - 22,050 21.00
One Hour Cleaners 1,400 03/03 - 29,400 21.00
TSR Wireless 1,410 04/03 - 30,315 21.50
Panda Express 1,992 05/03 - 41,832 21.00
Starbuck's 1,458 05/03 - 36,450 25.00
Dominick's Finer
Foods 72,385 11/17 - 1,289,842 17.82
<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 - - - $1,887,695 - - -
1999 - - - 1,887,695 - - -
2000 - - - 1,888,995 - - -
2001 - - - 1,896,295 - - -
2002 - - - 1,919,239 - - -
2003 10 18,485 $352,588 1,920,539 $ 19.07 17.70% 18.36%
2004 - - - 1,588,050 - - -
2005 1 4,000 75,000 1,589,350 18.75 3.83 4.72
2006 - - - 1,515,650 - - -
2007 - - - 1,516,950 - - -
(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>
-3-
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 Downers Grove Market
property, as of March 2, 1998, of $17,900,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
St. James Crossing, Clarendon Hills, Illinois
On March 31, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Ogden Avenue and Route 83 in Clarendon
Hills, Illinois known as "St. James Crossing" from H.P. St. James Partners,
Ltd., an unaffiliated third party, for approximately $7,477,000. The purchase
price was funded using cash and cash equivalents. The purchase price was
approximately $150.23 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.
St. James Crossing was built in 1990 and consists of two one-story, multi-
tenant retail facilities aggregating 49,769 rentable square feet. As of March
31, 1998, St. James Crossing was 91% leased (100% leased if the master lease,
which lasts for one year, is considered). In evaluating St. James Crossing 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 St. James Crossing 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 St. James Crossing 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 94% $16.41
1996 100 14.89
1995 94 13.73
1994 92 13.19
1993 94 13.87
-4-
Tenants leasing more than 10% of the total square footage include Nevada Bob's,
a golf supply store and Cucina Roma, a restaurant. 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
- ----------- ----------- ----------- ------------ ------------ ---------
Nevada Bob's 7,562 15% $11.50 current 03/31/99
12.00 04/01/99 03/31/01
12.50 04/01/01 03/31/02
Cucina Roma 5,954 12% 17.94 current 09/30/98
18.66 10/01/98 09/30/99
20.18 10/01/99 09/30/01
option 1 20.99 10/01/01 09/30/02
21.83 10/01/02 09/30/03
22.70 10/01/03 09/30/04
23.61 10/01/04 09/30/05
24.56 10/01/05 09/30/06
For federal income tax purposes, the Company's depreciable basis in St. James
Crossing will be approximately $5,600,000. 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 $84,909.
-5-
On March 31, 1998, a total of 45,265 square feet was leased to twenty-one
tenants at St. James Crossing. 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
------ ---------- ----- ------ ----------- -----------
Apple Valley 2,560 04/00 1/5 yr. $ 47,928 $18.72
Morgan Perris 3,840 10/96 1/3 yr. 63,360 16.50
Alphagraphics 2,240 11/97 1/5 yr. 36,336 16.22
A Shade Better 1,600 02/00 1/5 yr. 27,156 16.97
Nevada Bob's 7,562 03/02 1/5 yr. 83,172 11.00
Geiger Jewelers 1,300 09/98 - 22,860 17.58
Countrywide 1,820 11/00 1/3 yr. 29,124 16.00
Neumann's Medical 1,300 05/98 1/3 yr. 22,500 17.31
Sushi House 1,330 12/00 1/5 yr. 20,796 15.64
Body Wrap and Beyond 1,040 10/00 1/3 yr. 19,236 18.50
Rainbow Cleaners 1,040 04/97 1/3 yr. 24,024 23.10
Great Ash 1,040 09/97 - 19,236 18.50
Compass Travel 1,040 01/01 1/2 yr. 17,160 16.50
Moondance Diner 3,353 07/99 1/7 yr. 61,188 18.25
Oak Brook Open MRI 1,769 03/02 2/2 yr. 28,308 16.00
Nabi Gallery 932 04/99 1/3 yr. 15,504 16.64
Cabinetry Gallery 1,293 02/99 1/3 yr. 30,588 23.66
Cucina Roma 5,954 09/01 1/5 yr. 102,732 17.25
Oreck Vacuum 1,102 11/02 1/5 yr. 17,628 16.00
K Burchett Commod. 1,560 11/00 1/3 yr. 28,080 18.00
Australian Sun Tan 1,590 04/03 1/5 yr. 28,440 18.00
Vacant 4,504
<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 6,440 $109,406 $752,341 $16.99 12.94% 14.54%
1999 3 5,578 109,453 664,218 19.62 11.21 16.48
2000 8 11,990 232,559 575,961 19.40 24.10 40.38
2001 2 6,994 138,352 356,565 19.78 14.05 38.80
2002 4 12,673 190,968 222,504 15.07 25.46 85.83
2003 1 1,590 32,627 32,627 20.52 3.19 100.00
(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>
-6-
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 St. James Crossing
property, as of March 20, 1998, of not less than $7,500,000. Appraisals are
estimates of value and should not be relied on as a measure of true worth or
realizable value.
Chestnut Court, Darien, Illinois
On March 31, 1998, the Company acquired the entire fee simple interest in a
Community Center located at Lemont Road and 75th Street in Darien, Illinois
known as "Chestnut Court" from H.P. Chestnut Court L.P., an unaffiliated third
party, for approximately $16,144,000. The purchase price was funded using cash
and cash equivalents. The purchase price was approximately $94.95 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.
Chestnut Court was built in 1987 and consists of a one-story, multi-tenant
retail facility and a single-tenant outlot building aggregating 170,027
rentable square feet. As of March 31, 1998, Chestnut Court was 85% leased
(100% leased if the master lease, which lasts for one year, is considered). In
evaluating Chestnut Court 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 $450,000 in parking lot and roof
repairs and improvements to Chestnut Court over the next few years. The
Company received $116,000 in credits at closing toward the payment of these
costs.
The table below sets forth certain information with respect to the occupancy
rate at Chestnut Court 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 65% $ 7.11
1996 63 8.48
1995 84 8.97
1994 91 10.46
1993 96 10.05
-7-
One tenant leases more than 10% of the total square footage, Steinmart, a
discount apparel 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
- ----------- ----------- ----------- ------------ ------------ ---------
Steinmart 36,266 21% $ 6.25 current 09/30/03
6.75 10/01/03 09/30/08
option 1 7.25 10/01/08 09/30/13
option 2 7.75 10/01/13 09/30/18
option 3 8.25 10/01/18 09/30/23
option 4 8.75 10/01/23 09/30/28
For federal income tax purposes, the Company's depreciable basis in Chestnut
Court will be approximately $12,300,000. 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 $264,747.
On March 31, 1998, a total of 142,412 square feet was leased to twenty-one
tenants at Chestnut Court. 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
------ ---------- ----- ------ ----------- -----------
Loyola Medical
Center 12,000 04/01 3/5 yr. $126,000 $10.50
Steinmart 36,266 08/13 4/5 yr. 226,663 6.25
Cosmetic Center 6,039 11/98 2/5 yr. 81,828 13.55
Factory Card Outlet 10,000 10/98 1/5 yr. 129,996 13.00
Radio Shack 2,185 09/99 1/5 yr. 30,588 14.00
Blockbuster Video 6,100 06/02 1/5 yr. 128,100 21.00
Chiro-Med 1,410 05/01 2/3 yr. 22,620 16.04
Candy Blossoms 2,642 Monthly - 33,024 12.50
Pro-Am Music 4,800 10/00 1/3 yr. 62,400 13.00
Just Ducky 14,136 01/03 - 148,993 10.54
Wilton Homewares 5,400 11/98 1/2 yr. 62,748 11.62
Irv's Menswear 15,679 10/99 - 148,951 9.50
J. Vincent Salon 2,921 07/01 1/5 yr. 41,700 14.28
China Buffet 4,007 10/07 - 50,088 12.50
Graham Crackers 1,218 07/99 - 16,440 13.50
Mueller Eye Care 1,480 04/99 1/3 yr. 20,724 14.00
Ace Cleaners 1,332 01/02 1/5 yr. 13,992 10.50
Lemont St. Cafe 3,360 10/99 2/5 yr. 53,712 15.99
Orthosport 6,415 09/99 1/3 yr. 79,284 12.36
Harry's 3,422 03/99 - 47,908 14.00
She's Boutique 1,600 02/01 - 19,200 12.00
Vacant 27,615
-8-
<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 11,439 $ 146,952 $1,520,159 $ 12.85 6.73% 9.67
1999 6 30,399 342,957 1,384,361 11.28 17.88 24.77
2000 2 8,160 123,110 1,061,963 15.09 4.80 11.59
2001 4 17,931 216,772 946,639 12.09 10.55 22.90
2002 2 7,432 144,284 739,867 19.41 4.37 19.50
2003 2 24,136 314,826 595,583 13.04 14.20 52.86
2004 - - - 304,901 - - -
2005 - - - 304,901 - - -
2006 - - - 304,901 - - -
2007 1 4,007 61,908 306,704 15.45 2.36 20.19
(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 Chestnut Court property,
as of March 23, 1998, of $16,500,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
Item 5. Other Items
The Company's Board has approved an increase in Distributions beginning June 1,
1998, from the current level of $.87 per Share to $.88 per Share.
Potential Property Acquisitions
Staples Office Supply Store, Freeport, Illinois
The Company anticipates purchasing the entire fee simple interest in a single-
user retail property located at Route 26 and North Powell Road in Freeport,
Illinois, known as "Staples Office Supply" from an unaffiliated third party for
a purchase price of approximately $2,694,235. The Company anticipates
construction on Staples Office Supply to be completed by October 15, 1998. When
completed, it is anticipated that the single-user retail property will aggregate
24,049 rentable square feet.
-9-
Bergen Plaza Shopping Center, Oakdale, Minnesota
The Company anticipates purchasing the entire fee simple interest in a Community
Center located at I-694 and 10th Street North in Oakdale, Minnesota known as
"Bergen Plaza" from an unaffiliated third party for a purchase price of
approximately $17,247,680. Bergen Plaza is a multi-tenant shopping center
complex consisting of five buildings aggregating 270,610 rentable square feet.
Its major tenants are K-Mart, Northwest Fabrics, Fashion Bug, Big Top Liquors,
and Blockbuster Video.
Berwyn Plaza Shopping Center, Berwyn, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located in Berwyn, Illinois, known as "Berwyn Plaza"
from an unaffiliated third party for a purchase price of approximately
$1,830,000. Berwyn Plaza was built in 1983 and consists of a one-story, multi-
tenant retail facility aggregating 32,900 rentable square feet. Its major
tenant is Walgreens.
Wauconda Shopping Center, Wauconda, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at 620 West Liberty Street in Wauconda,
Illinois known as "Wauconda Shopping Center" from an unaffiliated third party
for a purchase price of approximately $2,525,000. Wauconda Shopping Center was
built in 1988 and consists of a four-tenant shopping center aggregating 126,324
rentable square feet. Its major tenant is Sears, Roebuck & Co.
Western Howard Plaza Shopping Center, Chicago, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at 2341-57 W. Howard in Chicago, Illinois
known as "Western Howard Plaza" from an unaffiliated third party for a purchase
price of approximately $1,947,348. Western Howard Plaza was built in 1985 and
consists of a one-story, multi-tenant retail facility aggregating 12,784
leasable square feet. Its major tenant is Super Gap.
Hollywood Video, Bridgeview, Illinois
The Company anticipates purchasing the entire fee simple interest in a single-
user retail property located at the corner of 103rd Street and Harlem Avenue in
Bridgeview, Illinois known as "Hollywood Video" from an unaffiliated third party
for a purchase price of approximately $1,330,000. Hollywood Video was built in
1995 and consists of a one-story, single-tenant facility aggregating 8,000
leasable square feet. Its only tenant (leasing 100% of the leasable area) is
Hollywood Video.
High Point Centre, Madison, Wisconsin
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at 7475 Mineral Point Road in Madison,
Wisconsin known as "High Point Centre" from an unaffiliated third party for a
purchase price of approximately $10,354,000. High Point Centre was constructed
in 1984 and consists of a one-story, multi-tenant retail facility aggregating
86,476 rentable square feet. Its major tenant is Pier 1 Imports.
-10-
Schaumburg Plaza Shopping Center, Schaumburg, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at 355 S. Barrington Road in Schaumburg,
Illinois known as "Schaumburg Plaza Shopping Center" from an unaffiliated third
party for a purchase price of approximately $6,986,000 and will assume the
existing debt of approximately $3,972,000. Schaumburg Plaza Shopping Center was
constructed in 1994 and consists of a one-story, multi-tenant retail facility
aggregating 61,485 rentable square feet. Major tenants include Sears and Super
Trak.
Inland Joliet Commons L.L.C.
The Company anticipates entering into a joint venture arrangement whereby the
Company intends to contribute approximately $50,000 in cash to acquire a 1%
equity interest in an Illinois limited liability company ("L.L.C."). The
unaffiliated joint venture partner will contribute Joliet Commons Shopping
Center located at U.S. 30 and Willow Road, Joliet, Illinois, to the L.L.C. The
property will be valued at $19,800,000 and the L.L.C. will assume the existing
debt of approximately $14,700,000.
Completing each of these transactions is subject to negotiation and execution of
definitive agreements as well as receipt by the Company of acceptable
environmental and appraisal reports. There can be no assurance that the Company
will complete the transactions described above.
-11-
Item 7. Financial Statements and Exhibits
Index to Financial Statements
Page
Pro Forma Balance Sheet (unaudited) at December 31, 1997............ F- 1
Notes to Pro Forma Balance Sheet (unaudited) at December 31, 1997... F- 3
Pro Forma Statement of Operations (unaudited) of the Company
for the year ended December 31, 1997.............................. F- 9
Notes to Pro Forma Statement of Operations (unaudited) for
the year ended December 31, 1997.................................. F-11
Independent Auditors' Report........................................ F-25
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Woodfield Plaza........... F-26
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Woodfield Plaza.. F-27
Independent Auditors' Report........................................ F-29
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Shops at Coopers Grove.... F-30
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Shops at
Coopers Grove..................................................... F-31
Independent Auditors' Report........................................ F-33
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Maple Plaza............... F-34
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Maple Plaza...... F-35
Independent Auditors' Report........................................ F-37
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Lake Park Plaza........... F-38
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Lake Park Plaza.. F-39
Independent Auditors' Report........................................ F-41
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of St. James Crossing........ F-42
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of
St. James Crossing................................................ F-43
-12-
Index to Financial Statements
(continued)
Independent Auditors' Report........................................ F-45
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Chestnut Court............ F-46
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Chestnut Court... F-47
Independent Auditors' Report........................................ F-49
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Bergen Plaza.............. F-50
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Bergen Plaza..... F-51
Independent Auditors' Report........................................ F-53
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Berwyn Plaza.............. F-54
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Berwyn Plaza..... F-55
Independent Auditors' Report........................................ F-57
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Wauconda Shopping Center.. F-58
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Wauconda
Shopping Center................................................... F-59
Independent Auditors' Report........................................ F-61
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Mill Creek................ F-62
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Mill Creek....... F-63
-13-
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: April 9, 1998
-14-
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1997
(unaudited)
The following unaudited Pro Forma Balance Sheet of the Company is presented to
give effect to the acquisitions of the properties indicated in Note B of the
Notes to the Pro Forma Balance Sheet as though these transactions occurred
December 31, 1997. No pro forma adjustments were made for the following
properties which were completed in 1998; Oak Forest Commons, Downers Grove
Market and Staples Office Supply Store. This unaudited Pro Forma Balance Sheet
should be read in conjunction with the December 31, 1997 Financial Statements
and the notes thereto as files on Form 10-K.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at December 31, 1997, nor does it
purport to represent the future financial position of the Company. Unless
otherwise defined, capitalized terms used herein shall have the same meaning as
in the Prospectus.
F-1
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1997
(unaudited)
December 31,
December 31, 1997
1997 Pro Forma Pro Forma
Historical(A) Adjustments(B) Balance Sheet
------------- ------------- --------------
Assets
- ------
Net investment in
properties.................. $270,645,355 110,188,281 380,833,635
Cash and cash equivalents..... 51,145,587 - 51,145,587
Restricted cash............... 2,073,799 - 2,073,799
Accounts and rents
receivable.................. 4,926,643 3,053,174 7,979,817
Other assets.................. 4,798,747 - 4,798,747
------------- ------------- -------------
Total assets.................. $333,590,131 113,241,454 446,831,585
============= ============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 1,193,874 - 1,193,874
Accrued real estate taxes..... 7,031,732 3,253,342 10,285,074
Distributions payable (C)..... 1,777,113 - 1,777,113
Security deposits............. 754,359 90,335 844,694
Mortgages payable............. 106,589,710 9,500,000 116,089,710
Unearned income............... 495,535 - 495,535
Other liabilities............. 493,116 - 493,116
Due to Affiliates............. 377,825 - 337,825
------------- ------------- -------------
Total liabilities............. 118,673,264 12,843,677 131,516,941
------------- ------------- -------------
Common Stock (D).............. 249,470 116,742 366,212
Additional paid in capital
(net of Offering costs) (D). 220,640,608 100,281,035 320,921,643
Accumulated distributions in
excess of net income........ (5,973,211) - (5,973,211)
------------- ------------- -------------
Total Stockholders' equity.... 214,916,867 100,397,777 315,314,644
------------- ------------- -------------
Total liabilities and
Stockholders' equity........ $333,590,131 113,241,454 446,831,585
============= ============= =============
See accompanying notes to pro forma balance sheet.
F-2
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
(A) The December 31, 1997 Historical column represents the historical balance
sheet as presented in the December 31, 1997 10-K as filed with the SEC.
(B) The following pro forma adjustment relates to the acquisition of the
subject properties as though they were acquired on December 31, 1997. The
terms are described in the notes that follow.
Pro Forma Adjustments
---------------------------------------------------
West
Woodfield Coopers Chicago Maple
Plaza Grove Dominick's Plaza
------------ ------------ ------------ ------------
Assets
- ------
Net investment in
properties........... $19,200,000 5,800,000 6,300,000 3,165,000
Accounts and rents
receivable........... 404,735 326,400 - 27,150
------------ ------------ ------------ ------------
Total assets........... $19,604,735 6,126,400 6,300,000 3,192,150
============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 404,735 340,000 - 46,800
Security deposits...... - 4,533 - 27,150
Mortgage payable....... - - - -
------------ ------------ ------------ ------------
Total liabilities...... 404,735 344,533 - 73,950
------------ ------------ ------------ ------------
Common Stock........... 22,326 6,723 7,326 3,626
Additional paid in capital
(net of Offering
Costs)............... 19,177,674 5,775,144 6,292,674 3,114,574
------------ ------------ ------------ ------------
Total Stockholders'
equity............... 19,200,000 5,781,867 6,300,000 3,118,200
------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity. 19,604,735 6,126,400 6,300,000 3,192,150
============ ============ ============ ============
F-3
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
Pro Forma Adjustments
---------------------------------------------------
Lake Park Homewood Wisner Mill
Plaza Plaza Plaza Creek
------------ ------------ ------------ ------------
Assets
- ------
Net investment in
properties........... 12,275,000 1,936,300 1,885,300 11,295,000
Accounts and rents
receivable........... 286,000 130,008 72,600 589,760
------------ ------------ ------------ ------------
Total assets........... 12,561,000 2,066,308 1,957,900 11,884,760
============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 298,580 130,008 72,600 608,000
Security deposits...... 9,956 - 3,235 36,333
Mortgage payable....... - - - 9,500,000
------------ ------------ ------------ ------------
Total liabilities...... 308,536 130,008 75,835 10,144,333
------------ ------------ ------------ ------------
Common Stock........... 14,247 2,252 2,188 2,024
Additional paid in capital
(net of Offering
Costs)............... 12,238,217 1,934,048 1,879,877 1,738,403
------------ ------------ ------------ ------------
Total Stockholders'
equity............... 12,252,464 1,936,300 1,882,065 1,740,427
------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity. 12,561,000 2,066,308 1,957,900 11,884,760
============ ============ ============ ============
F-4
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
Pro Forma Adjustments
---------------------------------------------------
Prairie St. James Chestnut Bergen
Square Crossing Court Plaza
------------ ------------ ------------ ------------
Assets
- ------
Net investment in
properties........... 3,101,000 7,477,000 16,144,000 17,247,680
Accounts and rents
receivable........... 55,000 83,000 194,600 729,000
------------ ------------ ------------ ------------
Total assets........... 3,156,000 7,560,000 16,338,600 17,976,680
============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 58,650 88,305 299,390 751,353
Security deposits...... 9,128 - - -
Mortgage payable....... - - - -
------------ ------------ ------------ ------------
Total liabilities...... 67,778 88,305 299,390 751,353
------------ ------------ ------------ ------------
Common Stock........... 3,591 8,688 18,650 20,029
Additional paid in capital
(net of Offering
Costs)............... 3,084,631 7,463,007 16,020,560 17,205,298
------------ ------------ ------------ ------------
Total Stockholders'
equity............... 3,088,222 7,471,695 16,039,210 17,225,327
------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity. 3,156,000 7,560,000 16,338,600 17,976,680
============ ============ ============ ============
F-5
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
Pro Forma Adjustments
-------------------------
Total
Berwyn Pro Forma
Plaza Wauconda Adjustments
------------ ------------ ------------
Assets
- ------
Net investment in
properties........... 1,837,000 2,525,000 110,188,280
Accounts and rents
receivable........... 113,604 41,317 3,053,174
------------ ------------ ------------
Total assets........... 1,950,604 2,566,317 113,241,454
============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 113,604 41,317 3,253,342
Security deposits...... - - 90,335
Mortgage payable....... - - 9,500,000
------------ ------------ ------------
Total liabilities...... 113,604 41,317 12,843,677
------------ ------------ ------------
Common Stock........... 2,136 2,936 116,742
Additional paid in capital
(net of Offering
Costs)............... 1,834,864 2,522,064 100,281,035
------------ ------------ ------------
Total Stockholders'
equity............... 1,837,000 2,525,000 100,397,777
------------ ------------ ------------
Total liabilities and
Stockholders' equity. 1,950,604 2,566,317 113,241,454
============ ============ ============
F-6
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
Acquisitions of Property:
On January 2, 1998, the Company acquired Woodfield Plaza from an
unaffiliated third party for the purchase price of $19,200,000 on an all
cash basis, funded from cash and cash equivalents.
On January 9, 1998, the Company acquired Coopers Grove from an unaffiliated
third party for the purchase price of $5,800,000 on an all cash basis,
funded from cash and cash equivalents.
On January 22, 1998, the Company acquired West Chicago Dominick's from an
unaffiliated third party for the purchase price of approximately $6,300,000
on an all cash basis, funded from cash and cash equivalents.
On January 30, 1998, the Company acquired Maple Plaza from an unaffiliated
third party for the purchase price of $3,165,000 on an all cash basis,
funded from cash and cash equivalents.
On February 10, 1998, the Company acquired Lake Park Plaza from an
unaffiliated third party for the purchase price of approximately
$12,275,000 on an all cash basis, funded from cash and cash equivalents.
On February 23, 1998, the Company acquired Homewood Plaza from an
unaffiliated third party for the purchase price of approximately $1,936,300
on an all cash basis, funded from cash and cash equivalents.
On February 23, 1998, the Company acquired Wisner Plaza from an
unaffiliated third party for the purchase price of approximately $1,885,300
on an all cash basis, funded from cash and cash equivalents.
On March 4, 1998, the Company acquired Mill Creek from an unaffiliated
third party for the purchase price of $11,360,000. As part of the
purchase, the Company assumed the existing debt of $9,500,000. The
mortgage requires interest only payments at the rate of 8% per annum
through September 1999. The balance of the purchase price was funded from
cash and cash equivalents.
On March 5, 1998, the Company acquired Oak Forest Commons from an
unaffiliated third party for the purchase price of approximately
$12,460,000 on an all cash basis, funded from cash and cash equivalents.
Oak Forest Commons was constructed in 1998.
On March 6, 1998, the Company acquired Prairie Square from an unaffiliated
third party for the purchase price of $3,101,000 on an all cash basis,
funded from cash and cash equivalents.
On March 25, 1998, the Company acquired Downers Grove Market from an
unaffiliated third party for the purchase price of approximately
$17,679,000 on an all cash basis, funded from cash and cash equivalents.
Downers Grove Market was constructed in 1998.
F-7
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
On March 31, 1998, the Company acquired St. James Crossing from an
unaffiliated third party for the purchase price of approximately $7,477,000
on an all cash basis, funded from cash and cash equivalents.
On March 31, 1998, the Company acquired Chestnut Court from an unaffiliated
third party for the purchase price of approximately $16,144,000 on an all
cash basis, funded from cash and cash equivalents.
Probable Acquisitions of Property:
The Company anticipates acquiring Bergen Plaza from an unaffiliated third
party for the purchase price of approximately $17,247,680 on an all cash
basis, funded from cash and cash equivalents.
The Company anticipates acquiring Berwyn Plaza from an unaffiliated third
party for the purchase price of approximately $1,837,000 on an all cash
basis, funded from cash and cash equivalents.
The Company anticipates acquiring Wauconda from an unaffiliated third party
for the purchase price of approximately $2,525,000 on an all cash basis,
funded from cash and cash equivalents.
The Company anticipates financing the construction of a Staples Office
Supply Store to be constructed in 1998. The total price will be
approximately $2,694,000 and will be funded from cash and cash equivalents.
(C) No pro forma assumptions have been made for the additional payment of
distributions resulting from the additional proceeds raised.
(D) Additional Offering Proceeds of $116,742,000, net of additional Offering
costs of $16,344,223 are reflected as received as of December 31, 1997,
prior to the purchase of the properties. Offering costs consist
principally of registration costs, printing and selling costs, including
commissions.
F-8
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
The following unaudited Pro Forma Statement of Operations of the Company is
presented to effect the acquisitions of the properties indicated in Note B and
Note C of the Notes to the Pro Forma Statement of Operations as though they
occurred the earlier of January 1, 1997 or the date operations commenced. No
pro forma adjustments have been made for Oak Forest Commons and Downers Grove
Market as these centers were completed in 1998 and no significant operations
existed for the year ended December 31, 1997. Construction has not begun on
Staples Office Supply Store and therefore, there were no operations for the
year ended December 31, 1997. This unaudited Pro Forma Statement of Operations
should be read in conjunction with the December 31, 1997 Financial Statements
and the notes thereto as filed on Form 10-K.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the year ended
December 31, 1997, nor does it purport to represent the future financial
position of the Company. Unless otherwise defined, capitalized terms used
herein shall have the same meaning as in the Prospectus.
F-9
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
Pro Forma Adjustments
---------------------------
1997 1997 1998
Historical Acquisitions Acquisitions 1997
(A) (B) (C) Pro Forma
------------ ------------ ------------ ------------
Rental income..... $21,112,365 9,903,951 10,840,529 41,856,845
Additional rental
income.......... 6,592,983 3,622,583 4,437,622 14,653,188
Interest
income(D)....... 1,615,520 - - 1,615,520
Other income...... 100,717 - - 100,717
------------ ------------ ------------ ------------
Total income.... 29,421,585 13,526,534 15,278,151 58,226,270
------------ ------------ ------------ ------------
Professional services
and general and
administrative
fees............ 482,954 - - 482,954
Advisor asset
management fee.(G) 843,000 1,832,719 1,102,523 3,778,242
Property operating
expenses........ 8,863,024 4,476,786 5,337,410 18,677,220
Interest expense.. 5,654,564 1,338,640 760,000 7,753,204
Depreciation (E).. 4,556,445 2,371,640 2,747,050 9,675,135
Amortization...... 124,884 - - 124,884
Acquisition costs
expensed........ 249,493 - - 249,493
------------ ------------ ------------ ------------
Total expenses.... 20,774,364 10,019,785 9,946,983 40,741,132
------------ ------------ ------------ ------------
Net income...... $ 8,647,221 3,506,749 5,331,168 17,485,138
============ ============ ============ ============
Weighted average
common stock shares
outstanding (F). 15,225,983 26,900,183
============ ============
Net income per weighted
average common stock
outstanding (F). $ .57 .65
============ ============
See accompanying notes to pro forma statement of operations.
F-10
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
(A) The 1997 Historical column represents the historical statement of
operations of the Company for the year ended December 31, 1997, as filed
with the SEC on Form 10-K.
(B) Total pro forma adjustments for the year ended December 31, 1997 are as
though the 1997 acquisitions of the following properties occurred the
earlier of January 1, 1997 or the date operations commenced (May 13, 1997
for the Glendale Heights Dominick's). All properties were purchased on an
all cash basis except for Maple Park, Aurora Commons, Lincoln Park Place
and Rivertree Court. Pro forma adjustments for interest expense on these
properties were based on the following terms.
Maple Park Shopping Center
The Company funded the purchase using (i) the proceeds of a short-term loan
maturing April 7, 1997 in the amount of $8 million from Inland Mortgage
Investment Corporation ("IMIC"), an affiliate of the Company (the "Short-
Term Loan"), and (ii) cash and cash equivalents. The Short-Term Loan bears
interest at a rate of 9.0% per annum and requires a loan fee of 1/4%.
Aurora Commons Shopping Center
As part of the acquisition of Aurora Commons Shopping Center, the Company
assumed the existing mortgage loan, maturing December 31, 2001, with the
balance funded with cash and cash equivalents. The loan bears interest at
a rate of 9% per annum with monthly payments of principal and interest on
the first day of each month.
Lincoln Park Place Shopping Center
The Company funded the purchase of Lincoln Park Place Shopping Center using
the proceeds of a short-term loan maturing February 7, 1997 in the amount
of $2,016,110 from Inland Mortgage Investment Corporation ("IMIC"), an
affiliate of the Company (the "Short-Term Loan"). The Company did not pay
any fees in connection with the Short-Term Loan, which bears interest at a
rate of 9% per annum.
F-11
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
Rivertree Court
As part of the acquisition of Rivertree Court, the Company assumed the
existing first mortgage loan, maturing January 1, 1999, with a balance of
$15,700,000. The loan requires interest only monthly payments at a rate of
10.03% per annum.
Fashion Square
As part of the acquisition of Fashion Square, the Company assumed the
existing bond financing, in the remaining principal balance of $6,200,000.
Monthly interest only payments are due on the financing through 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.
F-12
<TABLE>
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(B) Total pro forma adjustments for 1997 acquisitions are as though they were acquired the earlier of January 1, 1997 or
the date operations commenced.
<CAPTION>
Niles
Maple Park Aurora Lincoln Shopping Cobblers Mallard Calumet Ameritech
Place Commons Park Place Center Mall Mall Square Outlot
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 39,736 82,740 14,159 98,780 341,053 356,037 130,663 36,768
Additional rental
income.......... 8,168 26,594 5,714 39,507 189,843 138,412 146,565 8,091
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Total income...... 47,904 109,334 19,873 138,287 530,896 494,449 277,228 44,859
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 10,039 30,055 6,352 43,952 205,189 161,720 152,445 9,746
Interest expense.. - - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Total expenses.... 10,039 30,055 6,352 43,952 205,189 161,720 152,445 9,746
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Net income (loss). 37,865 79,279 13,521 94,335 325,707 332,729 124,783 35,113
=========== =========== =========== =========== =========== ============ =========== ===========
Highland Glendale
Schaumburg Sequoia Park River Rivertree Shorecrest Heights
Dominicks Plaza Dominicks Square Court Plaza Dominicks Party City
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 269,510 182,563 405,156 358,182 1,923,392 311,714 303,692 166,666
Additional rental
income.......... - 67,441 - 157,773 588,600 128,728 - 33,000
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 269,510 250,004 405,156 515,955 2,511,992 440,442 303,692 199,666
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 5,390 78,364 8,103 166,076 732,510 154,027 7,592 39,000
Interest expense.. - - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 5,390 78,364 8,103 166,076 732,510 154,027 7,592 39,000
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). 264,120 171,640 397,053 349,879 1,779,482 286,415 296,099 160,666
=========== =========== =========== =========== =========== ============ ============ ===========
F-38
F-13
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(B) Total pro forma adjustments for 1997 acquisitions are as though they were acquired the earlier of January 1, 1997 or
the date operations commenced.
<CAPTION>
Roselle Wilson Terramere Iroquois Fashion Naper West
Eagle Countryside Plaza Plaza Center Square Plaza
----------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 307,980 256,000 136,100 419,563 1,376,053 808,935 1,578,508
Additional rental
income.......... 77,500 - 50,500 376,745 446,667 543,963 588,773
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total income...... 385,480 256,000 186,600 793,309 1,822,720 1,352,897 2,167,281
----------- ----------- ----------- ----------- ----------- ------------ ------------
Advisor asset
management fee.. - - - - - - -
Property operating
expenses........ 100,000 87,000 61,100 406,416 551,333 741,680 718,696
Interest expense.. - - - - - - -
Depreciation...... - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total expenses.... 100,000 87,000 61,100 406,416 551,333 741,680 718,696
----------- ----------- ----------- ----------- ----------- ------------ ------------
Net income (loss). 285,480 169,000 125,500 389,892 1,271,387 611,217 1,448,585
=========== =========== =========== =========== =========== ============ ============
Total
1997
Pro Forma Acquisitions
Adjustments Pro Forma
----------- -------------
<S> <C> <C>
Rental income..... - 9,903,951
Additional rental
income.......... - 3,622,583
----------- ------------
Total income...... - 13,526,534
----------- ------------
Advisor asset
management fee.. 1,832,719 1,832,719
Property operating
expenses........ - 4,476,786
Interest expense.. 1,338,640 1,338,640
Depreciation...... 2,371,640 2,371,640
----------- ------------
Total expenses.... 5,542,999 10,019,785
----------- ------------
Net income (loss). (5,542,999) 3,506,749
=========== ============
</TABLE>
F-39
F-14
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(C) Total pro forma adjustments for 1998 acquisitions are as though they were
acquired the earlier of January 1, 1997 or the date operations commenced.
West
Woodfield Coopers Chicago Maple
Plaza Grove Dominick's Plaza
----------- ----------- ----------- -----------
Rental income..... 2,235,315 577,096 628,320 369,317
Additional rental
income.......... 755,071 401,492 - 129,431
----------- ----------- ----------- -----------
Total income...... 2,990,386 978,588 628,320 498,748
----------- ----------- ----------- -----------
Advisor asset
management fee.. 192,000 58,000 63,000 31,650
Property operating
expenses........ 873,792 444,031 18,850 133,667
Interest expense.. - - - -
Depreciation...... 483,000 146,600 157,500 83,400
----------- ----------- ----------- -----------
Total expenses.... 1,548,792 648,631 239,350 248,717
----------- ----------- ----------- -----------
Net income (loss). 1,441,594 329,957 388,970 250,031
=========== =========== =========== ===========
Lake Park Homewood Wisner Mill
Plaza Plaza Plaza Creek
----------- ----------- ----------- -----------
Rental income..... 1,216,080 220,375 206,312 1,085,374
Additional rental
income.......... 472,163 132,016 59,636 725,135
----------- ----------- ----------- -----------
Total income...... 1,688,243 332,391 265,948 1,810,509
----------- ----------- ----------- -----------
Advisor asset
management fee.. 122,750 19,363 18,853 113,600
Property operating
expenses........ 467,427 166,951 101,312 823,792
Interest expense.. - - - 760,000
Depreciation...... 293,000 46,500 45,900 272,500
----------- ----------- ----------- -----------
Total expenses.... 883,177 232,814 166,065 1,969,892
----------- ----------- ----------- -----------
Net income (loss). 805,066 99,577 99,883 (159,383)
=========== =========== =========== ===========
F-15
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
December 31, 1997
(unaudited)
Prairie St. James Chestnut Bergen
Square Crossing Court Plaza
----------- ----------- ----------- -----------
Rental income..... 315,796 720,615 1,197,317 1,681,564
Additional rental
income.......... 87,777 183,197 306,682 980,649
----------- ----------- ----------- -----------
Total income...... 403,573 903,812 1,503,999 2,662,213
----------- ----------- ----------- -----------
Advisor asset
management fee.. 31,000 74,770 161,440 172,477
Property operating
expenses........ 130,448 257,225 593,967 1,105,206
Interest expense.. - - - -
Depreciation...... 87,800 187,000 403,600 431,200
----------- ----------- ----------- -----------
Total expenses.... 249,248 518,995 1,159,007 1,708,883
----------- ----------- ----------- -----------
Net income (loss). 154,325 384,817 344,992 953,330
=========== =========== =========== ===========
Total 1998
Berwyn Acquisitions
Plaza Wauconda Pro Forma
----------- ----------- ------------
Rental income..... 176,345 230,703 10,840,529
Additional rental
income.......... 131,460 72,913 4,437,622
----------- ----------- ------------
Total income...... 307,805 303,616 15,278,151
----------- ----------- ------------
Advisor asset
management fee.. 18,370 25,250 1,102,523
Property operating
expenses........ 147,830 72,912 5,337,410
Interest expense.. - - 760,000
Depreciation...... 45,925 63,125 2,747,050
----------- ----------- ------------
Total expenses.... 212,125 161,287 9,946,983
----------- ----------- ------------
Net income (loss). 95,680 142,329 5,331,168
=========== =========== ============
F-16
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Woodfield Plaza, Schaumburg, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Woodfield Plaza
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $2,235,315 - 2,235,315
Additional rental income.. 755,071 - 755,071
----------- ----------- -----------
Total income.............. 2,990,386 - 2,990,386
----------- ----------- -----------
Advisor asset
management fee.......... - 192,000 192,000
Property operating
expenses................ 801,632 72,160 873,792
Depreciation.............. - 483,000 483,000
----------- ----------- -----------
Total expenses............ 801,632 747,160 1,548,792
----------- ----------- -----------
Net income (loss)......... $2,188,754 (747,160) 1,441,594
=========== =========== ===========
Acquisition of Coopers Grove, Country Club Hills, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Coopers Grove
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 577,096 - 577,096
Additional rental income.. 401,492 - 401,492
----------- ----------- -----------
Total income.............. 978,588 - 978,588
----------- ----------- -----------
Advisor asset
management fee.......... - 58,000 58,000
Property operating
expenses................ 428,031 16,000 444,031
Depreciation.............. - 146,600 146,600
----------- ----------- -----------
Total expenses............ 428,031 220,600 648,631
----------- ----------- -----------
Net income (loss)......... $ 550,557 (220,600) 329,957
=========== =========== ===========
F-17
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of West Chicago Dominick's, West Chicago, Illinois
This pro forma adjustment reflects the purchase of West Chicago Dominick's
as if the Company had acquired the property as of January 1, 1997, and is
based on information provided by the Seller.
West Chicago Dominick's
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 628,320 - 628,320
Additional rental income.. - - -
----------- ----------- -----------
Total income.............. 628,320 - 628,320
----------- ----------- -----------
Advisor asset
management fee.......... - 63,000 63,000
Property operating
expenses................ - 18,850 18,850
Depreciation.............. - 157,500 157,500
----------- ----------- -----------
Total expenses............ - 239,350 239,350
----------- ----------- -----------
Net income (loss)......... $ 628,320 (239,350) 388,970
=========== =========== ===========
Acquisition of Maple Plaza, Downers Grove, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Maple Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 369,317 - 369,317
Additional rental income.. 129,431 - 129,431
----------- ----------- -----------
Total income.............. 498,748 - 498,748
----------- ----------- -----------
Advisor asset
management fee.......... - 31,650 31,650
Property operating
expenses................ 133,667 - 133,667
Depreciation.............. - 83,400 83,400
----------- ----------- -----------
Total expenses............ 133,667 115,050 248,717
----------- ----------- -----------
Net income (loss)......... $ 365,081 (115,050) 250,031
=========== =========== ===========
F-18
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Lake Park Plaza, Michigan City, Indiana
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Lake Park Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,216,080 - 1,216,080
Additional rental income.. 472,163 - 472,163
----------- ----------- -----------
Total income.............. 1,688,243 - 1,688,243
----------- ----------- -----------
Advisor asset
management fee.......... - 122,750 122,750
Property operating
expenses................ 467,427 - 467,427
Depreciation.............. - 293,000 293,000
----------- ----------- -----------
Total expenses............ 467,427 415,750 883,177
----------- ----------- -----------
Net income (loss)......... $1,220,816 (415,750) 805,066
=========== =========== ===========
Acquisition of Homewood Plaza, Homewood, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Homewood Plaza
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 200,375 - 200,375
Additional rental income.. 132,016 - 132,016
----------- ----------- -----------
Total income.............. 333,391 - 333,391
----------- ----------- -----------
Advisor asset
management fee.......... - 19,363 19,363
Property operating
expenses................ 166,951 - 166,951
Depreciation.............. - 46,500 46,500
----------- ----------- -----------
Total expenses............ 166,951 65,863 232,814
----------- ----------- -----------
Net income (loss)......... $ 165,440 (65,863) 99,577
=========== =========== ===========
F-19
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Wisner Plaza, Chicago, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Wisner Plaza
-----------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 206,312 - 206,312
Additional rental income.. 59,636 - 59,636
----------- ----------- -----------
Total income.............. 265,948 - 265,948
----------- ----------- -----------
Advisor asset
management fee.......... - 18,853 18,853
Property operating
expenses................ 101,312 - 101,312
Depreciation.............. - 45,900 45,900
----------- ----------- -----------
Total expenses............ 101,312 64,753 166,065
----------- ----------- -----------
Net income (loss)......... $ 164,636 (64,753) 99,883
=========== =========== ===========
Acquisition of Mill Creek, Palos Park, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Mill Creek
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,085,374 - 1,085,374
Additional rental income.. 725,135 - 725,135
----------- ----------- -----------
Total income.............. 1,810,509 - 1,810,509
----------- ----------- -----------
Advisor asset
management fee.......... - 113,600 113,600
Property operating
expenses................ 778,792 45,000 823,792
Interest expense.......... - 760,000 760,000
Depreciation.............. - 272,500 272,500
----------- ----------- -----------
Total expenses............ 778,792 1,191,100 1,969,892
----------- ----------- -----------
Net income (loss)......... $1,031,537 (1,191,100) (159,383)
=========== =========== ===========
F-20
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Prairie Square, Sun Prairie, Wisconsin
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Prairie Square
-----------------------------------
Year Ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 315,796 - 315,796
Additional rental income.. 87,777 - 87,777
----------- ----------- -----------
Total income.............. 403,573 - 403,573
----------- ----------- -----------
Advisor asset
management fee.......... - 31,000 31,000
Property operating
expenses................ 130,448 - 130,448
Depreciation.............. - 87,800 87,800
----------- ----------- -----------
Total expenses............ 130,448 118,800 249,248
----------- ----------- -----------
Net income (loss)......... $ 273,125 (118,800) 154,325
=========== =========== ===========
Acquisition of St. James Crossing, Westmont, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
St. James Crossing
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 720,615 - 720,615
Additional rental income.. 183,197 - 183,197
----------- ----------- -----------
Total income.............. 903,812 - 903,812
----------- ----------- -----------
Advisor asset
management fee.......... - 74,770 74,770
Property operating
expenses................ 257,225 - 257,225
Depreciation.............. - 187,000 187,000
----------- ----------- -----------
Total expenses............ 257,225 261,770 518,995
----------- ----------- -----------
Net income (loss)......... $ 646,587 (261,770) 384,817
=========== =========== ===========
F-21
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Chestnut Court, Darien, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Chestnut Court
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,197,317 - 1,197,317
Lease termination income.. 765,504 (765,504) -
Additional rental income.. 306,682 - 306,682
----------- ----------- -----------
Total income.............. 2,269,503 (765,504) 1,503,999
----------- ----------- -----------
Advisor asset
management fee.......... - 161,440 161,440
Property operating
expenses................ 593,967 - 593,967
Depreciation.............. - 403,600 403,600
----------- ----------- -----------
Total expenses............ 593,967 565,040 1,159,007
----------- ----------- -----------
Net income (loss)......... $1,675,536 (1,330,544) 344,992
=========== =========== ===========
Probable Acquisition of Bergen Plaza, Oakdale, Minnesota
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Bergen Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,681,564 - 1,681,564
Additional rental income.. 980,649 - 980,649
----------- ----------- -----------
Total income.............. 2,662,213 - 2,662,213
----------- ----------- -----------
Advisor asset
management fee.......... - 172,477 172,477
Property operating
expenses................ 1,105,206 - 1,105,206
Depreciation.............. - 431,200 431,200
----------- ----------- -----------
Total expenses............ 1,105,206 603,677 1,708,883
----------- ----------- -----------
Net income (loss)......... $1,557,007 (603,677) 953,330
=========== =========== ===========
F-22
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Probable Acquisition of Berwyn Plaza, Berwyn, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Berwyn Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 176,345 - 176,345
Additional rental income.. 131,460 - 131,460
----------- ----------- -----------
Total income.............. 307,805 - 307,805
----------- ----------- -----------
Advisor asset
management fee.......... - 18,370 18,730
Property operating
expenses................ 135,830 12,000 147,830
Depreciation.............. - 45,925 45,925
----------- ----------- -----------
Total expenses............ 135,830 76,295 212,125
----------- ----------- -----------
Net income (loss)......... $ 171,975 (76,295) 95,680
=========== =========== ===========
Probable Acquisition of Wauconda, Wauconda, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Wauconda
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 230,703 - 230,703
Additional rental income.. 72,913 - 72,913
----------- ----------- -----------
Total income.............. 303,616 - 303,616
----------- ----------- -----------
Advisor asset
management fee.......... - 25,250 25,250
Property operating
expenses................ 72,912 - 72,912
Depreciation.............. - 63,125 63,125
----------- ----------- -----------
Total expenses............ 72,912 88,375 161,287
----------- ----------- -----------
Net income (loss)......... $ 230,704 (88,375) 142,329
=========== =========== ===========
F-23
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(D) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(E) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(F) The pro forma weighted average common stock shares for the year ended
December 31, 1997 was calculated by estimating the additional shares sold
to purchase each of the Company's properties on a weighted average basis.
(G) Advisor Asset Management Fees are calculated as 1% of the Average Invested
Assets (as defined).
F-24
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Woodfield Plaza Shopping Center for
the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Woodfield Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Woodfield Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 14, 1998
F-25
Woodfield Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $2,235,315
Operating expense and real estate
tax recoveries................................ 746,038
Other income.................................... 9,033
-----------
Total Gross Income.............................. 2,990,386
-----------
Direct operating expenses:
Real estate taxes............................... 507,949
Operating expenses.............................. 197,974
Management Fees................................. 62,400
Insurance....................................... 20,614
Utilities....................................... 12,695
-----------
Total direct operating expenses................. 801,632
-----------
Excess of gross income over
direct operating expenses..................... $2,188,754
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-26
Woodfield Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Woodfield Plaza Shopping Center (Woodfield Plaza) is located in Schaumburg,
Illinois. It consists of approximately 177,418 square feet of gross
leasable area and was 100% leased and occupied at December 31, 1997.
Approximately 47% of Woodfield Plaza is leased to one tenant representing
approximately 34% of total revenues. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Woodfield Plaza
from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Woodfield
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Woodfield Plaza
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Woodfield Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Woodfield Plaza is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $243,743 for
the year ended December 31, 1997.
F-27
Woodfield Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 2,046,996
1999 1,985,440
2000 1,910,654
2001 1,875,192
2002 1,901,996
Thereafter 15,702,281
-----------
$25,442,559
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Woodfield Plaza. Costs
such as mortgage interest, depreciation, amortization, estimated real
estate taxes and professional fees are excluded from the Historical
Summary.
Real estate tax expense is estimated based upon bills for 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
Woodfield Plaza is managed pursuant to the terms of a management agreement
for a fixed annual fee of $62,400. Subsequent to the sale of Woodfield
Plaza (note 1), the current management agreement will cease. Any new
management agreement may cause future management fees to differ from the
amounts reflected in the Historical Summary.
F-28
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of The Shops at Coopers Grove for the
year ended December 31, 1997. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of The Shops at Coopers Grove's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of The Shops at Coopers Grove for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
March 31, 1998
F-29
The Shops at Coopers Grove
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 577,096
Operating expense and real estate
tax recoveries................................ 401,492
-----------
Total Gross Income.............................. 978,588
-----------
Direct operating expenses:
Real estate taxes............................... 340,627
Operating expenses.............................. 47,290
Utilities....................................... 15,959
Insurance....................................... 24,155
-----------
Total direct operating expenses................. 428,031
-----------
Excess of gross income over
direct operating expenses..................... $ 550,557
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-30
The Shops at Coopers Grove
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
The Shops at Coopers Grove (Coopers Grove) is located in Country Club
Hills, Illinois. It consists of approximately 72,500 square feet of gross
leasable area and was approximately 96% leased and occupied at December 31,
1997. Approximately 77% of The Shops at Coopers Grove is leased to one
tenant representing approximately 78% of total revenues. Inland Real
Estate Corporation has signed a sale and purchase agreement for the
purchase of The Shops at Coopers Grove from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of The Shops
at Coopers Grove's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of The
Shops at Coopers Grove to make estimates and assumptions that affect the
reported amounts of the revenues and expenses during the reporting period.
Actual results may differ from those estimates.
3. Gross Income
The Shops at Coopers Grove leases retail space under various lease
agreements with its tenants. All leases are accounted for as operating
leases. The leases include provisions under which The Shops at Coopers
Grove is reimbursed for common area, real estate, and insurance costs.
Operating expenses and real estate tax recoveries reflected in the
Historical Summary include amounts for 1997 expenses for which the tenants
have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $1,664 for the
year ended December 31, 1997.
F-31
The Shops at Coopers Grove
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 604,547
1999 608,933
2000 601,665
2001 571,556
2002 516,765
Thereafter 3,884,507
-----------
$6,787,973
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of The Shops at Coopers Grove.
Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Coopers Grove has not received its real estate tax bill for 1997. Real
estate tax expense is estimated based upon bills for 1996. The difference
between the estimate and the final tax bill is not expected to have a
material impact on the Historical Summary.
F-32
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Maple Plaza Shopping Center for the
year ended December 31, 1997. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Maple Plaza Shopping Center's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Maple Plaza Shopping Center for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 9, 1998
F-33
Maple Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 369,317
Operating expense and real estate
tax recoveries................................ 129,431
-----------
Total Gross Income.............................. 498,748
-----------
Direct operating expenses:
Operating expenses.............................. 64,387
Real estate taxes............................... 47,796
Utilities....................................... 17,385
Insurance....................................... 4,099
-----------
Total direct operating expenses................. 133,667
-----------
Excess of gross income over
direct operating expenses..................... $ 365,081
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-34
Maple Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Maple Plaza Shopping Center(Maple Plaza) is located in Downers Grove,
Illinois. It consists of approximately 31,298 square feet of gross
leasable area and was 100% leased and occupied at December 31, 1997.
Approximately 19% of Maple Plaza Shopping Center is leased to one tenant
representing approximately 19% of total revenues. Inland Real Estate
Corporation has signed a sale and purchase agreement for the purchase of
Maple Plaza from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Maple
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Maple Plaza to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Maple Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Maple Plaza is reimbursed for common area,
real estate, and insurance costs. Operating expenses and real estate tax
recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $7,977 for the
year ended December 31, 1997.
F-35
Maple Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 277,452
1999 126,697
2000 48,285
Thereafter 73,750
-----------
$ 526,184
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Maple Plaza. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Maple Plaza has not received its real estate tax bill for 1997. Real
estate tax expense is estimated based upon bills for 1996. The difference
between the estimate and the final tax bill is not expected to have a
material impact on the Historical Summary.
Maple Plaza is managed pursuant to the terms of a management agreement for
an annual fee of 3.5% of gross revenues (as defined). rents. Subsequent to
the sale of Maple Plaza (note 1), the current management agreement will
cease. Any new management agreement may cause future management fees to
differ from the amounts reflected in the Historical Summary.
F-36
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Lake Park Plaza Shopping Center for
the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Lake Park Plaza Shopping Center's revenues and
expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Lake Park Plaza Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
February 6, 1998
F-37
Lake Park Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,216,080
Operating expense and real estate
tax recoveries................................ 465,497
Other income.................................... 6,666
-----------
Total Gross Income.............................. 1,688,243
-----------
Direct operating expenses:
Operating expenses.............................. 128,428
Real estate taxes............................... 298,580
Utilities....................................... 10,450
Insurance....................................... 29,969
-----------
Total direct operating expenses................. 467,427
-----------
Excess of gross income over
direct operating expenses..................... $1,220,816
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-38
Lake Park Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Lake Park Plaza Shopping Center (Lake Park Plaza) is located in Michigan
City, Indiana. It consists of approximately 229,639 square feet of gross
leasable area and was 96% leased and occupied at December 31, 1997.
Approximately 50% of Lake Park Plaza is leased to one tenant representing
approximately 34% of total revenues. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Lake Park Plaza
from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Lake Park
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Lake Park Plaza
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Lake Park Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Lake Park Plaza is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $5,991 for the
year ended December 31, 1997.
F-39
Lake Park Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 1,236,345
1999 1,195,014
2000 1,167,037
2001 1,059,454
2002 992,596
Thereafter 6,887,666
-----------
$12,538,112
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Lake Park Plaza. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Lake Park Plaza has not received its final real estate tax bill for 1997.
Real estate tax expense is estimated based upon bills from 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
F-40
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of St. James Crossing Shopping Center
for the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of St. James Crossing Shopping Center's revenues and
expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of St. James Crossing Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
April 2, 1998
F-41
St. James Crossing Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 720,615
Operating expense and real estate
tax recoveries................................ 183,197
------------
Total Gross Income.............................. 903,812
------------
Direct operating expenses:
Real estate taxes............................... 88,305
Operating expenses.............................. 109,502
Management fees................................. 32,674
Insurance....................................... 2,664
Utilities....................................... 24,080
------------
Total direct operating expenses................. 257,225
------------
Excess of gross income over
direct operating expenses..................... $ 646,587
============
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-42
St. James Crossing Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
St. James Crossing Shopping Center (St. James Crossing) is located in
Westmont, Illinois. It consists of approximately 52,000 square feet of
gross leasable area and was 94% leased and occupied at December 31, 1997.
Approximately 14% of St. James Crossing is leased to one tenant
representing approximately 8% of base rental income. Inland Real Estate
Corporation has signed a sale and purchase agreement for the purchase of
St. James Crossing from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of St. James
Crossing's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of St. James
Crossing to make estimates and assumptions that affect the reported amounts
of the revenues and expenses during the reporting period. Actual results
may differ from those estimates.
3. Gross Income
St. James Crossing leases retail space under various lease agreements with
its tenants. All leases are accounted for as operating leases. The leases
include provisions under which St. James Crossing is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $10,761 for the
year ended December 31, 1997.
F-43
St. James Crossing Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 776,978
1999 691,776
2000 465,947
2001 277,221
2002 72,117
-----------
$ 2,284,038
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of St. James Crossing. Costs
such as mortgage interest, depreciation, amortization, and professional
fees are excluded from the Historical Summary.
St. James Crossing had not received its final real estate tax bill for
1997. Real estate tax expense is estimated based upon bills for 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
St. James Crossing is self-managed pursuant to the terms of a management
agreement for an annual fee of 4% of cash basis revenues (as defined).
Subsequent to the sale of St. James Crossing (note 1), the current
management agreement will cease. Any new management agreement may cause
future management fees to differ from the amounts reflected in the
Historical Summary.
F-44
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Chestnut Court Shopping Center for
the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Chestnut Court Shopping Center's revenues and
expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Chestnut Court Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
April 2, 1998
F-45
Chestnut Court Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 1,197,317
Lease termination income........................ 765,504
Operating expense and real estate
tax recoveries................................ 306,682
------------
Total Gross Income.............................. 2,269,503
------------
Direct operating expenses:
Real estate taxes............................... 299,390
Operating expenses.............................. 169,683
Management fees................................. 86,608
Utilities....................................... 30,337
Insurance....................................... 7,949
------------
Total direct operating expenses................. 593,967
------------
Excess of gross income over
direct operating expenses..................... $ 1,675,536
============
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-46
Chestnut Court Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Chestnut Court Shopping Center (Chestnut Court) is located in Darien,
Illinois. It consists of approximately 168,000 square feet of gross
leasable area and was 65% leased and occupied at December 31, 1997. Inland
Real Estate Corporation has signed a sale and purchase agreement for the
purchase of Chestnut Court from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Chestnut
Court's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Chestnut Court
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Chestnut Court leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Chestnut Court is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Chestnut Court received approximately $765,500 of tenant termination income
during the year ended December 31, 1997 related to an early lease
termination.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $567 for the
year ended December 31, 1997.
F-47
Chestnut Court Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 1,204,736
1999 906,089
2000 650,462
2001 428,346
2002 280,379
Thereafter 251,659
-----------
$ 3,721,671
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Chestnut Court. Costs such
as mortgage interest, depreciation, amortization, and professional fees are
excluded from the Historical Summary.
Chestnut Court had not received its final real estate tax bill for 1997.
Real estate tax expense is estimated based upon bills for 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
Chestnut Court is self-managed pursuant to the terms of a management
agreement for an annual fee of 4% of rental revenues plus certain
reimbursable expenses (as defined). Subsequent to the sale of Chestnut
Court (note 1), the current management agreement will cease. Any new
management agreement may cause future management fees to differ from the
amounts reflected in the Historical Summary.
F-48
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Bergen Plaza for the year ended
December 31, 1997. This Historical Summary is the responsibility of the
management of Inland Real Estate Corporation. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Bergen Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Bergen Plaza for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
March 9, 1998
F-49
Bergen Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 1,681,564
Operating expense and real estate
tax recoveries................................ 937,791
Other income.................................... 42,858
------------
Total Gross Income.............................. 2,662,213
------------
Direct operating expenses:
Real estate taxes............................... 751,353
Operating expenses.............................. 156,683
Management fees................................. 132,603
Insurance....................................... 24,877
Utilities....................................... 39,690
------------
Total direct operating expenses................. 1,105,206
------------
Excess of gross income over
direct operating expenses..................... $ 1,557,007
============
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-50
Bergen Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Bergen Plaza is located in Oakdale, Minnesota. It consists of
approximately 271,000 square feet of gross leasable area and was 97% leased
and occupied at December 31, 1997. Approximately 56% of Bergen Plaza is
leased to two tenants representing approximately 40% of base rental income.
Inland Real Estate Corporation has signed a sale and purchase agreement for
the purchase of Bergen Plaza from an unaffiliated third party (seller).
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Bergen
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Bergen Plaza to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Bergen Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Bergen Plaza is reimbursed for common area,
real estate, and insurance costs. Operating expenses and real estate tax
recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $2,193 for the
year ended December 31, 1997.
F-51
Bergen Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 1,687,127
1999 1,552,153
2000 1,274,762
2001 1,220,201
2002 1,097,070
Thereafter 4,169,039
-----------
$11,000,352
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Bergen Plaza. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Bergen Plaza has not received its final real estate tax bill for 1997. Real
estate tax expense is estimated based upon bills for 1996. The difference
between the estimate and the final tax bill is not expected to have a
material impact on the Historical Summary.
Bergen Plaza is managed pursuant to the terms of a management agreement
with the Seller for an annual fee of 5% of revenues (as defined) and an
administrative fee equal to 5% of operating expense recoveries (as
defined). Subsequent to the sale of Bergen Plaza (note 1), the current
management agreement will cease. Any new management agreement may cause
future management fees to differ from the amounts reflected in the
Historical Summary.
F-52
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Berwyn Plaza Shopping Center for the
year ended December 31, 1997. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Berwyn Plaza Shopping Center's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Berwyn Plaza Shopping Center for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 15, 1998
F-53
Berwyn Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 176,345
Operating expense and real estate
tax recoveries................................ 131,460
-----------
Total Gross Income.............................. 307,805
-----------
Direct operating expenses:
Real estate taxes............................... 113,604
Operating expenses.............................. 14,462
Management fees................................. 1,830
Insurance....................................... 5,934
-----------
Total direct operating expenses................. 135,830
-----------
Excess of gross income over
direct operating expenses..................... $ 171,975
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-54
Berwyn Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Berwyn Plaza Shopping Center (Berwyn Plaza) is located in Berwyn, Illinois.
It consists of approximately 18,000 square feet of gross leasable area and
was 100% leased and occupied at December 31, 1997. Approximately 74% of
Berwyn Plaza is leased to one tenant representing approximately 65% of the
total revenues. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Berwyn Plaza from an unaffiliated
third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Berwyn
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Berwyn Plaza to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Berwyn Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Berwyn Plaza is reimbursed for common area,
real estate, and insurance costs. Operating expenses and real estate tax
recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $(8,905) for
the year ended December 31, 1997.
F-55
Berwyn Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 182,400
1999 148,800
2000 123,375
2001 115,000
2002 115,000
Thereafter 2,367,083
-----------
$ 3,051,658
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Berwyn Plaza. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Berwyn Plaza has not received its final real estate tax bill for 1997. Real
estate tax expense is estimated based upon bills for 1996. The difference
between the estimate and the final tax bill is not expected to have a
material impact on the Historical Summary.
Berwyn Plaza is managed pursuant to the terms of a management agreement for
a fixed annual fee of 1% of gross revenues (as defined). Subsequent to the
sale of Berwyn Plaza (note 1), the current management agreement will cease.
Any new management agreement may cause future management fees to differ
from the amounts reflected in the Historical Summary.
F-56
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Wauconda Shopping Center for the
year ended December 31, 1997. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Wauconda Shopping Center's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Wauconda Shopping Center for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
March 9, 1998
F-57
Wauconda Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 230,703
Operating expense and real estate
tax recoveries................................ 72,913
-----------
Total Gross Income.............................. 303,616
-----------
Direct operating expenses:
Real estate taxes............................... 41,317
Operating expenses.............................. 15,823
Management fees................................. 12,000
Insurance....................................... 3,772
-----------
Total direct operating expenses................. 72,912
-----------
Excess of gross income over
direct operating expenses..................... $ 230,704
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-58
Wauconda Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Wauconda Shopping Center is located in Wauconda, Illinois. It consists of
approximately 29,700 square feet of gross leasable area and was 100% leased
and occupied at December 31, 1997. Approximately 73% of Wauconda Shopping
Center is leased to one tenant representing approximately 66% of base
rental income. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Wauconda Shopping Center from an
unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Wauconda
Shopping Center's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of
Wauconda Shopping Center to make estimates and assumptions that affect the
reported amounts of the revenues and expenses during the reporting period.
Actual results may differ from those estimates.
3. Gross Income
Wauconda Shopping Center leases retail space under various lease agreements
with its tenants. All leases are accounted for as operating leases. The
leases include provisions under which Wauconda Shopping Center is
reimbursed for common area, real estate, and insurance costs. Operating
expenses and real estate tax recoveries reflected in the Historical Summary
include amounts for 1997 expenses for which the tenants have not yet been
billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $5,356 for the
year ended December 31, 1997.
F-59
Wauconda Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 223,307
1999 206,510
2000 201,508
2001 148,500
2002 156,600
Thereafter 587,250
-----------
$ 1,523,675
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Wauconda Shopping Center.
Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Wauconda Shopping Center has not received its final real estate tax bill
for 1997. Real estate tax expense is estimated based upon bills from 1996.
The difference between the estimate and the final tax bill is not expected
to have a material impact on the Historical Summary.
Wauconda Shopping Center is managed pursuant to the terms of a management
agreement for an annual fee of 5% of base rents. Subsequent to the sale of
Wauconda Shopping Center (note 1), the current management agreement will
cease. Any new management agreement may cause future management fees to
differ from the amounts reflected in the Historical Summary.
F-60
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Mill Creek for the year ended
December 31, 1997. This Historical Summary is the responsibility of the
management of Inland Real Estate Corporation. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Mill Creek's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Mill Creek for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
March 2, 1998
F-61
Mill Creek
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,085,374
Operating expense and real estate
tax recoveries................................ 723,707
Other income 1,428
-----------
Total Gross Income.............................. 1,810,509
----------
Direct operating expenses:
Operating expenses.............................. 96,793
Real estate taxes............................... 615,431
Utilities....................................... 17,553
Insurance....................................... 13,195
Management Fees................................. 36,000
-----------
Total direct operating expenses................. 778,792
-----------
Excess of gross income over
direct operating expenses..................... $1,031,537
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-62
Mill Creek
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Mill Creek is located in Palos Park, Illinois. It consists of 102,428
square feet of gross leasable area and was 98% leased and occupied at
December 31, 1997. Approximately 65% of Mill Creek is leased to one tenant
representing approximately 56% of total revenues. Inland Real Estate
Corporation has signed a sale and purchase agreement for the purchase of
Mill Creek from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Mill
Creek's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Mill Creek to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Mill Creek leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Mill Creek is reimbursed for common area,
real estate, and insurance costs. Operating expenses and real estate tax
recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $21,505 for the
year ended December 31, 1997.
F-63
Mill Creek
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $1,121,833
1999 1,065,478
2000 853,824
2001 712,862
2002 710,586
Thereafter 3,917,515
-----------
$8,382,098
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Mill Creek. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Mill Creek has not received its real estate tax bill for 1997. Real estate
tax expense is estimated based upon bills for 1996. The difference between
the estimate and the final tax bill is not expected to have a material
impact on the Historical Summary.
Mill Creek is managed pursuant to the terms of a management agreement for
$3,000 per month (for a total of $36,000 per year). Subsequent to the sale
of Mill Creek (note 1), the current management agreement will cease. Any
new management agreement may cause future management fees to differ from
the amounts reflected in the Historical Summary.
F-64
