Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 13 to our Prospectus which is dated April 7, 1998 updates
information contained in the "Real Property Investments" and "Plan of
Distribution" sections of the Prospectus. Any word that is capitalized in this
supplement but not defined shall have the same meaning as in our Prospectus.
Real Property Investments
On October 8, 1998, we purchased the entire fee simple interest in a Community
Center located at 1025-1253 East Golf Road, Schaumburg, Illinois known as
"Woodfield Commons". We purchased Woodfield Commons from an unaffiliated third
party for approximately $27,000,000.
On October 14, 1998, we purchased the entire fee simple interest in a
Neighborhood Retail Center located at 8515-8575 Edinburgh Drive, Brooklyn Park,
Minnesota known as "Edinburgh Festival Center". We purchased Edinburgh
Festival Center from an unaffiliated third party for approximately $9,125,000.
As part of the purchase of Edinburgh Festival Center, we assumed the existing
mortgage with a balance of approximately $1,452,000. The paydown should occur
by the end of the year.
Plan of Distribution
We commenced this Offering on April 7, 1998. As of September 30, 1998, we had
accepted subscriptions for 10,724,937 shares (which amounts to $113,736,044
after subtracting out Selling Commissions, the Marketing Contribution and the
Due Diligence Expense Allowance Fee). Inland Securities Corporation, an
Affiliate of our Advisor, is dealer-manager of this Offering and is entitled to
receive selling commissions and certain other fees, as discussed further in our
Prospectus. As of September 30, 1998, the commissions and fees payable to
Inland Securities Corporation totaled $11,207,559. Our Advisor is entitled to
receive an Advisor Asset Management fee, as described more fully in our
Prospectus. An Affiliate of the Advisor is also entitled to receive Property
Management Fees for management and leasing services, as also described more
fully in our Prospectus. We may pay Acquisition Expenses up to .5% of the
money that we raise in this Offering but in no event will we pay Acquisition
Expenses that exceed 6% of the purchase price of any individual property.
SUPPLEMENT NO. 13
DATED OCTOBER , 1998
TO OUR PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
We are providing this Supplement No. 13 to you in order to supplement our
Prospectus. We previously supplemented our Prospectus by providing you with
Supplement No. 12 dated October 7, 1998. Supplement No. 12 combined all of the
information contained in Supplement Nos. 1 through 11. Therefore, you must
read this Supplement No. 13, Supplement No. 12 and the Prospectus for the most
up to date information. This Supplement No. 13 updates information in the
"Real Property Investments" and "Plan of Distribution" sections of our
Prospectus. Any word that is capitalized in this Supplement but not defined
shall have the same meaning as in our Prospectus.
Real Property Investments
Woodfield Commons, Schaumburg, IL
On October 8, 1998, we purchased the entire fee simple interest in a
Neighborhood Retail Center located at 1025-1253 East Golf Road in Schaumburg,
Illinois known as "Woodfield Commons". We purchased Woodfield Commons from
Woodfield Commons L.P., an unaffiliated third party, for approximately
$27,000,000. We paid for Woodfield Commons using cash and cash equivalents.
The purchase price was approximately $130.37 per square foot, which we
concluded was fair and reasonable based on, among other things, an appraisal
that we received and presented to our board of directors.
Woodfield Commons is comprised of three centers, Woodfield Commons West,
Woodfield Commons East and a retail strip which is adjacent to Woodfield
Commons West. Woodfield Commons West is a stand alone one-story building which
is occupied by Toys R Us. Woodfield Commons West was built in 1973. Woodfield
Commons East is a one-story "L-shaped" shopping center and was built in 1975.
The retail strip adjacent to Woodfield Commons West was constructed in 1997.
In total, Woodfield Commons contains 207,106 leasable square feet. As of
September 30, 1998, Woodfield Commons was 94% leased. When we evaluated
Woodfield Commons as a potential acquisition, we considered a variety of
factors including location, demographics, tenant mix, price per square foot,
existing rental rates compared to market rates, and occupancy. We believe that
the center is located within a vibrant economic area. The center contains a
diverse tenant mix including major national tenants. We did not consider
any other factors when we decided to acquire this property.
We do not anticipate making any significant repairs and improvements to
Woodfield Commons over the next few years. However, if we were to make any
repairs or improvements, a substantial portion of any monies spent on repairs
and improvements would be paid by the tenants, pursuant to our leases with
these tenants.
-1-
The table below sets forth the occupancy rate at Woodfield Commons expressed as
a percentage of total gross leasable area and the average annual base rent per
square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 99 12.24
1996 87 11.19
1995 93 14.71
1994 96 14.01
1993 98 17.42
Tenants leasing more than 10% of the total gross leasable area of the property
are Toys R Us, a toy store, Comp USA, a computer store and Tower Records, a
music store. These leases require the tenants to pay base annual rent on a
monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Toys R Us 47,223 23 2.59 Currently 11/30/01
Option 1 2.59 12/01/01 11/30/06
Option 2 2.59 12/01/06 11/30/11
Option 3 2.59 12/01/11 11/30/16
Comp USA 25,600 12 18.25 Currently 09/30/02
19.25 10/01/02 09/30/07
20.25 10/01/07 09/30/12
Option 1 21.25 10/01/12 09/30/17
Option 2 22.25 10/01/17 09/30/22
Option 3 23.25 10/01/22 09/30/27
Tower Records 23,150 11 19.55 Currently 04/30/03
22.48 05/01/03 04/30/09
Option 1 25.86 05/01/09 04/30/14
Option 2 29.73 05/01/14 04/30/19
Option 3 34.19 05/01/19 04/30/24
For federal income tax purposes, our depreciable basis in Woodfield Commons
will be approximately $20,250,000. When we calculate depreciation expense, for
tax purposes, we will use the straight-line method. We will depreciate
buildings and improvements based upon estimated useful lives of 40 years.
-2-
Real estate taxes payable in 1998 for the tax year ended 1997 (the most recent
tax year for which information is available) were $713,817. The real estate
taxes payable were calculated by multiplying the assessed value of the property
by an equalizer of 2.1489 and a tax rate of 9.240%.
On September 30, 1998, a total of 194,797 square feet was leased to seventeen
tenants at Woodfield Commons. The following tables set forth information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Toys R Us 47,223 11/01 3/5 yr. 122,308 2.59
Party City 11,413 05/08 2/5 yr. 233,967 20.50
Cost Plus 18,900 05/08 3/5 yr. 378,000 20.00
Comp USA 25,600 09/12 3/5 yr. 467,200 18.25
Enterprise Leasing 2,000 06/00 - 32,580 16.29
Areawide Cellular 2,800 08/99 1/5 yr. 45,472 16.24
Tower Records 23,150 10/08 3/5 yr. 452,583 19.55
Apt. Relocation
Consultants 2,400 03/00 - 40,800 17.00
Currency Exchange 1,200 09/98 - 23,376 19.48
Secretary of State 8,200 02/99 - 186,468 22.74
Kames Music 4,428 05/99 - 59,822 13.51
House of Hunan 6,435 03/99 - 101,416 15.76
Men's Wearhouse 5,250 07/05 2/5 yr. 105,000 20.00
Inca Computer 11,795 08/08 2/5 yr. 206,413 17.50
Boogie Nights 8,917 02/01 - 132,417 14.85
Joanne Fabrics 10,634 01/03 2/5 yr. 79,755 7.50
Fitness Warehouse 4,452 05/01 - 72,657 16.32
Vacant 12,309
-3-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 2,672,066 - - -
1999 5 23,063 416,553 2,758,669 18.06 11.14 15.10
2000 1 2,400 40,800 2,345,325 17.00 1.16 1.74
2001 3 60,592 346,502 2,319,164 5.72 29.26 14.94
2002 - - - 1,972,662 - - -
2003 2 12,634 116,375 1,998,262 9.21 6.10 5.82
2004 - - - 2,030,982 - - -
2005 1 5,250 118,125 2,030,982 22.50 2.53 5.82
2006 - - - 1,912,857 - - -
2007 - - - 1,912,857 - - -
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion of our
management that the space will be re-leased at market rates at the time of re-leasing.
</TABLE>
We received an appraisal prepared by an independent appraiser who is a member
in good standing of the American Institute of Real Estate Appraisers. The
appraisal reported a fair market value for Woodfield Commons, as of September
1, 1998, of $27,075,000. You should note that appraisals are estimates of
value and therefore you should not rely upon them as a measure of true worth or
realizable value.
Edinburgh Festival Center, Brooklyn Park, MN
On October 14, 1998, we purchased the entire fee simple interest in a
Neighborhood Retail Center located at 8515-8575 Edinburgh Drive in Brooklyn
Park, Minnesota known as "Edinburgh Festival Center". We purchased Edinburgh
Festival Center from Edinburgh Festival Partners, L.L.P., an unaffiliated third
party, for approximately $9,125,000. As part of the purchase of Edinburgh
Festival Center, we assumed the existing mortgage on the property. This
mortgage had a balance of approximately $6,077,000. The lender has agreed to
allow us to paydown the principal balance of the mortgage by approximately
$1,452,000. We anticipate making this paydown by the end of 1998. We paid the
remainder of the purchase price using cash and cash equivalents. The purchase
price was approximately $99.60 per square foot, which we concluded was fair and
reasonable based on, among other things, an appraisal that we received by and
presented to our board of directors.
-4-
Edinburgh Festival Center, built in 1997, is a one-story, two structure, multi-
tenant retail facility. Edinburgh Festival Center contains 91,584 leasable
square feet. As of September 30, 1998, Edinburgh Festival Center was 97%
leased (100% leased if the master lease, which lasts for five years, is
considered). When we evaluated Edinburgh Festival Center as a potential
acquisition, we considered a variety of factors including location,
demographics, tenant mix, price per square foot, existing rental rates compared
to market rates, and occupancy. We believe that the center is located within a
vibrant economic area. We were attracted to the center because it is newly
constructed and has a grocery store anchor. We did not consider any other
factors when we decided to acquire the property.
We do not anticipate making any significant repairs and improvements to
Edinburgh Festival Center over the next few years. However, if we were to make
any repairs or improvements, a substantial portion of any monies spent on
repairs and improvements would be paid by the tenants, pursuant to the terms of
our leases with these tenants.
The table below sets forth the occupancy rate at Edinburgh Festival Center
expressed as a percentage of total gross leasable area and the average annual
base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 91 9.03
1996 * *
* Edinburgh Festival Center was built in 1997.
One tenant, Knowlan's Festival Grocery, leases more than 10% of the total gross
leasable area of the property. This lease requires the tenant to pay base
annual rent on a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Knowlan's Festival
Grocery 54,212 59 6.90 Currently 05/31/02
7.20 06/01/02 05/31/07
7.50 06/01/07 05/31/12
7.80 06/01/12 05/31/17
Option 1 7.80 06/01/17 05/31/22
Option 2 7.80 06/01/22 05/31/27
Option 3 7.80 06/01/27 05/31/32
Option 4 7.80 06/01/32 05/31/37
-5-
For federal income tax purposes, our depreciable basis in Edinburgh Festival
Center will be approximately $6,800,000. When we calculate depreciation
expense, for tax purposes, we will use the straight-line method. We will
depreciate buildings and improvements based upon estimated useful lives of 40
years.
Real estate taxes payable in 1998 for the tax year ended 1998 are $159,515.
The real estate taxes payable were calculated by adding the tax capacity based
tax and the market value tax.
On September 30, 1998, a total of 88,736 square feet was leased to thirteen
tenants at Edinburgh Festival Center. The following tables set forth
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Fish & Friends 1,869 08/03 1/5 yr. 26,166 14.00
Hollywood Video 7,038 06/07 2/5 yr. 112,608 16.00
Knowlan's Festival
Grocery 54,212 05/17 4/5 yr. 374,063 6.90
Knowlan's Corridor 264 05/17 - 3,696 14.00
Snyder's Drug Store 8,916 06/07 2/5 yr. 89,160 10.00
Edinburgh Dairy
Queen 2,401 05/08 2/5 yr. 31,837 13.26
Caribou Coffee 1,814 05/03 1/5 yr. 21,768 12.00
General Nutrition 1,400 05/03 2/5 yr. 18,200 13.00
Pizza Man 1,120 11/02 1/5 yr. 13,664 12.20
Great Clips 1,400 06/02 - 19,600 14.00
Clean 'N Press 1,260 06/02 1/5 yr. 17,010 13.50
B.P. Liquor 4,640 05/07 2/5 yr. 64,960 14.00
Potpourri Floral 2,450 10/04 - 29,400 12.00
Vacant 2,800
-6-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 812,586 - - -
1999 - - - 823,357 - - -
2000 - - - 825,212 - - -
2001 - - - 835,983 - - -
2002 3 3,780 52,794 842,096 13.97 4.13 6.27
2003 3 5,083 69,762 829,864 13.72 5.55 8.41
2004 1 2,450 36,750 762,287 15.00 2.68 4.82
2005 - - - 726,522 - - -
2006 - - - 727,530 - - -
2007 3 20,594 298,718 728,687 14.51 22.49 40.99
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion of our
management that the space will be re-leased at market rates at the time of re-leasing.
</TABLE>
We received a letter appraisal prepared by an independent appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers.
The appraisal reported a fair market value for the Edinburgh Festival Center
property, as of August 25, 1998, of $9,270,000. You should note that
appraisals are estimates of value and therefore you should not rely upon them
as a measure of true worth or realizable value.
-7-
Plan of Distribution
We commenced this Offering on April 7, 1998. As of September 30, 1998, we had
accepted subscriptions for 10,724,937 shares (which amounts to $113,736,044
after subtracting out Selling Commissions, the Marketing Contribution and the
Due Diligence Expense Allowance Fees).
Inland Securities Corporation, an Affiliate of our Advisor, serves as dealer
manager of this Offering and is entitled to receive selling commissions and
certain other fees, as discussed further in our Prospectus. As of September
30, 1998, the commissions and fees payable to Inland Securities Corporation
totaled $11,207,559. An Affiliate of our Advisor is also entitled to receive
Property Management Fees for management and leasing services. We incurred
Property Management Fees of approximately $1,149,000 for the six months ended
June 30, 1998 and $1,120,000 for the year ended December 31, 1997. Our Advisor
may also receive an annual Advisor Asset Management Fee of not more than 1% of
the Average Invested Assets, paid quarterly. For the six months ended June 30,
1998, we had incurred Advisor Asset Management Fees of $980,376. For the year
ended December 31, 1997, we had incurred Advisor Asset Management Fees of
$843,000. We may pay Acquisition Expenses in an amount estimated to be up to
.5% of the money that we raise in this Offering but in no event will we pay
Acquisition Expenses that exceed 6% of the purchase price of any individual
property. As of September 30, 1998, the Company had paid Acquisition Expenses
of approximately $2,800,000.
-8-
