Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 5 to the Company's Prospectus dated April 7, 1998 updates
certain information in the sections of the Prospectus entitled "Investment
Objectives and Policies", "Real Property Investments", "Management's Discussion
and Analysis of the Financial Condition and Results of Operations" and "Plan of
Distribution." Unless otherwise defined, capitalized terms used herein shall
have the same meaning as in the Prospectus.
Investment Objectives and Policies
The Company's Board has approved an increase in Distributions beginning June 1,
1998, from the current level of $.87 per Share per annum, paid monthly to $.88
per Share per annum, paid monthly.
Real Property Investments
On May 15, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 6901 West Ogden Avenue in Berwyn,
Illinois known as "Berwyn Plaza" from an unaffiliated third party for a
purchase price of approximately $1,830,000.
Plan of Distribution
The Company commenced the offering on April 7, 1998. As of May 19, 1998, the
Company had accepted subscriptions for 2,778,954 shares ($27,664,488 net of
Selling Commissions, the Marketing Contribution and the Due Diligence Expense
Allowance Fee). Inland Securities Corporation, an Affiliate of the Advisor,
serves as dealer-manager of the Offering and is entitled to receive selling
commissions and certain other fees, as referenced in the Prospectus. As of May
19, 1998, these commissions and fees totaled $2,904,006. An Affiliate of the
Advisor is also entitled to receive Property Management Fees for management and
leasing services.
SUPPLEMENT NO. 5
DATED MAY 28, 1998
TO THE PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 5 is provided for the purpose of supplementing the
Prospectus dated April 7, 1998 of Inland Real Estate Corporation (the
"Company") as previously supplemented by Supplement No. 1 dated April 9, 1998,
Supplement No. 2 dated April 21, 1998, Supplement No. 3 dated April 27, 1998
and Supplement No. 4 dated May 5, 1998 and must be read in conjunction
therewith. This Supplement No. 5 updates certain information in the sections of
the Prospectus entitled "Investment Objectives and Policies", "Real Property
Investments", "Management's Discussion and Analysis of the Financial Condition
and Results of Operations", and "Plan of Distribution." Unless otherwise
defined, capitalized terms used herein shall have the same meaning as in the
Prospectus.
Investment Objectives and Policies
The Company's Board has approved an increase in Distributions beginning June 1,
1998, from the current level of $.87 per Share per annum, paid monthly to $.88
per Share per annum, paid monthly.
Real Property Investments
Berwyn Plaza, Berwyn, IL
On May 15, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 6901 West Ogden Avenue in Berwyn,
Illinois known as "Berwyn Plaza" from Berwyn Plaza Partnership, an unaffiliated
third party, for approximately $1,830,000. The purchase price was funded using
cash and cash equivalents. The purchase price was approximately $100.89 per
square foot, which the Company concluded was fair and reasonable and within the
range of values indicated in an appraisal received by the Company and presented
to the Company's board of directors.
Berwyn Plaza was built in 1983 and consists of a one-story, multi-tenant retail
facility aggregating 18,138 rentable square feet. As of May 15, 1998, Berwyn
Plaza was 100% leased. In evaluating Berwyn Plaza as a potential acquisition,
the Company considered a variety of factors including location, demographics,
tenant mix, price per square foot, existing rental rates compared to market
rates, and occupancy. The Company believes that the center is located within a
vibrant economic area. Although approximately 74% of the rentable square feet
at Berwyn Plaza is leased to one tenant, the Company's management believes that
retenanting of any space which is vacated in the future should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the vacating 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 Berwyn Plaza over the next few years. Nevertheless, pursuant to the leases,
a substantial portion of any cost of repairs and improvements would be paid by
the tenants.
-1-
The table below sets forth certain information with respect to the occupancy
rate at Berwyn Plaza expressed as a percentage of total gross leasable area and
the average effective annual base rent per square foot:
Occupancy Rate
as of Effective
Year Ending December 31, Annual Rental
December 31, of Each Year Per Square Ft
------------ ------------ -------------
1997 100% $10.23
1996 100 9.90
1995 100 10.01
1994 100 10.45
1993 100 10.48
Tenants leasing more than 10% of the total square footage include Walgreens, a
drug store and Radio Shack, an electronics store. These leases require the
payment of base annual rent, payable monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Walgreens 13,506 74% $ 8.51 Currently 07/31/23
Radio Shack 2,000 11 11.70 Currently 02/28/99
Option 1 12.50 03/01/99 02/28/04
For federal income tax purposes, the Company's depreciable basis in Berwyn
Plaza will be approximately $1,400,000. Depreciation expense, for tax
purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes payable in 1997 for the tax year ended 1996 (the most recent
tax year for which information is generally available) were $106,167.
On May 15, 1998, a total of 18,138 square feet was leased to five tenants at
Berwyn Plaza. The following tables set forth certain information with respect
to the amount of and expiration of the leases at this Neighborhood Retail
Center:
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Walgreens 13,506 07/23 - $114,936 $ 8.51
Radio Shack 2,000 02/99 1/5 yr. 23,400 11.70
Baskin Robbins 1,000 10/99 - 14,400 14.40
Currency Exchange 736 09/98 - 13,800 18.75
Mr. Beef 896 05/00 - 18,897 21.09
-2-
<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 1 736 $ 13,800 $ 185,433 $ 18.75 4.06% 7.44%
1999 2 3,000 37,800 172,233 12.60 16.54 21.95
2000 1 896 20,097 135,033 22.43 4.94 14.88
2001-
2007 - - - 114,936 - - -
(1) No assumptions were made regarding the releasing of expired leases. It is the opinion
of the Company's management that the space will be released at market rates.
</TABLE>
The Company received an appraisal prepared by an independent appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers
which reported a fair market value for Berwyn Plaza, as of December 10, 1997,
of $1,900,000. Appraisals are estimates of value and should not be relied on
as a measure of true worth or realizable value.
Management's Discussion and Analysis of Financial Conditions
and Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this quarterly report on
Form 10-Q constitute "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. These forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the Company's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. These
factors include, among other things, limitations on the area in which the
Company may acquire properties; risks associated with borrowings secured by the
Company's properties; competition for tenants and customers; federal, state or
local regulations; adverse changes in general economic or local conditions;
competition for property acquisitions with third parties that have greater
financial resources than the Company; inability of lessees to meet financial
obligations; uninsured losses; risks of failing to qualify as a REIT; and
potential conflicts of interest between the Company and its affiliates
including the Advisor.
-3-
Liquidity and Capital Resources
As of July 24, 1996, the Company had received subscriptions for a total of
5,000,000 Shares, offered on a best efforts basis, at $10.00 per Share, thereby
completing the Company's initial Offering. On July 24, 1996, the Company
commenced an offering of an additional 10,000,000 Shares, the Second Offering,
at $10.00 per Share, on a best efforts basis. As of July 10, 1997, the Company
had received subscriptions for a total of 10,000,000 Shares, thereby completing
the Company's Second Offering. On July 14, 1997, the Company commenced an
offering of an additional 20,000,000 Shares, the Third Offering, at $10.00 per
Share, on a best efforts basis. As of March 19, 1998, the Company had received
subscriptions for a total of 20,000,000 Shares, thereby completing the Third
Offering. In addition, as of March 31, 1998, the Company has distributed
1,070,778 Shares through the Company's Distribution Reinvestment Program. As
of March 31, 1998, the Company has repurchased 53,100 Shares through the
Company's Share Repurchase Program. As a result, as of March 31, 1998, Gross
Offering Proceeds total $357,939,054 net of Shares repurchased through the
Share Repurchase Program.
The Company's capital needs and resources are expected to undergo changes as a
result of the completion of the Company's first follow-on public offering of
Shares, the commencement of the second follow-on Offerings and the acquisition
of properties. Operating cash flow is expected to increase as these additional
properties are added to the portfolio. Distributions to Stockholders are
determined by the Company's Board of Directors and are dependent upon a number
of factors, including the amount of funds available for distribution, the
Company's financial condition, capital expenditures, and the annual
distribution required to maintain REIT status under the Code.
Cash and cash equivalents consists of cash and short-term investments. Cash
and cash equivalents at March 31, 1998 and December 31, 1997 were $77,208,219
and $51,145,587 respectively. The increase in cash and cash equivalents since
December 31, 1997 is due to the additional sales proceeds raised and
additional loan proceeds from financing secured by the Company's properties.
Partially offsetting the increase in cash and cash equivalents was the purchase
of additional properties since December 31, 1997 and the payment of Offering
Costs relating to the Second and Third Offerings. The Company intends to use
cash and cash equivalents to purchase additional properties, to pay
distributions and to pay Offering Costs.
As of March 31, 1998, the Company had acquired fifty-nine properties. The
properties owned by the Company are currently generating sufficient cash flow
to cover operating expenses of the Company plus pay a monthly distribution on
weighted average shares. Commencing with the fourth quarter of 1996, the
Company increased the monthly distributions from $.80 to $.83 per annum on
weighted average shares. Beginning March 1, 1997, the Company increased the
monthly distribution paid to $.85 per annum on weighted average shares.
Beginning August 1, 1997, the Company increased the monthly distribution paid
to $.87 per annum on weighted average shares. Distributions declared for the
three months ended March 31, 1998 were $6,263,131, a portion of which
represents a return of capital for federal income tax purposes. The return of
capital portion of the distributions cannot be determined at this time and will
be calculated at year end.
-4-
Management of the Company monitors the various qualification tests the Company
must meet to maintain its status as a real estate investment trust. Large
ownership of the Company's stock is tested upon purchase to determine that no
more than 50% in value of the outstanding stock is owned directly, or
indirectly, by five or fewer persons or entities at any time. Management of
the Company also determines, on a quarterly basis, that the Gross Income, Asset
and Distribution Tests as described in the section of the Prospectus entitled
"Federal Income Tax Considerations--Taxation of the Company--REIT Qualification
Tests" are met. On an ongoing basis, as due diligence is performed by
management of both the Company and the Advisor on potential real estate
purchases or temporary investment of uninvested capital, management of both
entities determines that the income from the new asset will qualify for REIT
purposes. For the three months ended March 31, 1998, the Company qualified as
a REIT.
Cash Flows From Operating Activities
Net cash provided by operating activities increased from $1,575,693 for the
three months ended March 31, 1997 to $8,191,805 for the three months ended
March 31, 1998. This increase is due primarily to the purchase of additional
properties. As of March 31, 1998, the Company had acquired fifty-nine
properties, as compared to twenty-four properties as of March 31, 1997.
Cash Flows From Investing Activities
Cash flows used in investing activities were utilized primarily for the
purchase of and additions to properties.
Cash Flows From Financing Activities
For the three months ended March 31, 1998, the Company generated $130,446,863
of cash flows from financing activities as compared to $27,550,217 of cash
flows generated from financing activities for the three months ended March 31,
1997. This increase is due primarily to the increase in proceeds raised from
the Offering of $108,707,257 for the three months ended March 31, 1998, as
compared to $27,207,053 of Offering proceeds raised for the three months ended
March 31, 1997. This increase is also due to $38,702,000 in financing placed
on fifteen of the Company's properties for the three months ended March 31,
1998, as compared to $12,840,000 in financing placed on three of the Company's
properties for the three months ended March 31, 1997. This increase is
partially offset by an increase in the cash used for the payment of Offering
costs for the three months ended March 31, 1998 and 1997. The increase is also
partially offset by an increase in the amount of distributions paid for the
three months ended March 31, 1998 of $5,592,993 as compared to the
distributions paid for the three months ended March 31, 1997 of $1,740,481.
In February 1998, the Company committed to additional financing secured by
Woodfield Shopping Center property for $9,600,000 from an unaffiliated lender.
Loan fees total approximately $85,500 in connection with this mortgage. The
mortgage loan has a term of seven years and, prior to maturity date, requires
payment of interest only, at 6.65%. Funding of the loan is expected to occur
during the second quarter 1998.
-5-
The Advisor has guaranteed payment of all public offering expenses (excluding
selling commissions, the marketing contribution and the due diligence expense
allowance fee) in excess of 5.5% of the Gross Offering Proceeds of the Offering
(the "Gross Offering Proceeds") or all organization and offering expenses
(including such selling expenses) which together exceed 15% of the Gross
Offering Proceeds. As of March 31, 1998, organizational and offering costs did
not exceed this limitation.
Results of Operations
As of March 31, 1998, subscriptions for a total of 35,933,050 Shares were
received from the public resulting in $357,939,054 in Gross Offering Proceeds,
which includes the Advisor's capital contribution of $200,000 and Shares
purchased through the DRP. At March 31, 1998, the Company owned forty-three
Neighborhood Retail Centers, seven Community Centers and nine Single-user
retail properties.
Funds from operations ("FFO") means net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus depreciation of real property
and amortization and other non-cash items. FFO and funds available for
distribution are calculated as follows:
March 31, March 31,
1998 1997
---- ----
Net income................................... $ 4,037,415 884,700
Depreciation................................. 2,200,954 741,920
------------ ------------
Funds from operations(1)................... 6,238,369 1,626,620
Normal amortizing principal payments of debt. (16,980) (18,659)
Deferred rent receivable (2)................. (289,037) (99,411)
Acquisition cost expenses.................... 44,036 9,090
Rental income received under
Master lease agreements (4)................. 542,940 71,599
------------ ------------
Funds available for distribution............. $ 6,519,328 1,589,239
============ ============
(1) FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs. FFO should
not be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a
measure of liquidity.
(2) Certain tenant leases contain provisions providing for stepped rent
increases. GAAP requires the Company to record rental income for the
period of occupancy using the effective monthly rent, which is the average
monthly rent for the entire period of occupancy during the term of the
lease.
-6-
(3) Acquisition costs expenses include costs and expenses relating to the
acquisition of properties. These costs are estimated to be up to .5% of
the Gross Offering Proceeds and are paid from the Proceeds of the
Offering.
(4) As part of several purchases, the Company will receive rent under master
lease agreements on some of the spaces currently vacant for periods
ranging from one to two years or until the spaces are leased. Generally
accepted accounting principles require that as these payments are
received, they be recorded as a reduction in the purchase price of the
properties rather than as rental income.
Total income for the three months ended March 31, 1998 and 1997 was $13,268,496
and $4,857,771, respectively. This increase was due to the purchase of
additional properties. As of March 31, 1998, the Company had acquired fifty-
nine properties, as compared to twenty-four properties as of March 31, 1997.
The purchase of additional properties also resulted in increases in property
operating expenses to Affiliates and non-affiliates and depreciation expense.
The decrease in mortgage interest to Affiliates for the three months ended March
31, 1998, as compared to the three months ended March 31, 1997, is due to the
payoff of the acquisition financing totaling $8,000,000. The Company continues
to have a mortgage collateralized by the Walgreens, Decatur property payable to
an Affiliate.
The increase in mortgage interest to non-affiliates for the three months ended
March 31, 1998, as compared to the three months ended March 31, 1997, is due to
financing placed on previously acquired centers as well as mortgages assumed as
part of the purchases of Aurora Commons, Rivertree Court, Fashion Square and
Shoppes at Mill Creek. The mortgages payable totaled $154,129,456 as of March
31, 1998 as compared to $106,589,710 as of ended March 31, 1997.
Interest income is the result of cash and cash equivalents being invested in
short-term investments until a property is purchased.
The increases in professional services to Affiliates and non-affiliates and
general and administrative expenses to Affiliates and non-affiliates for the
three months ended March 31, 1998, as compared to the three months ended March
31, 1997, is due to the management of an increased number of real estate assets
and an increased number of investors.
The increase in acquisition cost expenses to Affiliates and non-affiliates is
due to the increased number of properties considered for acquisition by the
Company and not purchased.
-7-
The following table lists the approximate physical occupancy levels for the
Company's investment properties as of the end of each quarter during 1998 and
1997. N/A indicates the property was not owned by the Company at the end of the
quarter.
1997 1998
------------------------ ------------------------
at at at at at at at at
Properties 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
---------- ----- ----- ----- ----- ----- ----- ----- -----
Walgreens 100% 100% 100% 100% 100%
Decatur, Illinois
Eagle Crest 97% 97% 97% 97% 95%
Naperville, Illinois
Montgomery-Goodyear 77% 77% 77% 77% 77%
Montgomery, Illinois
Hartford/Naperville Plaza 100% 100% 94% 100% 100%
Naperville, Illinois
Nantucket Square 94% 94% 96% 96% 96%
Schaumburg, Illinois
Antioch Plaza 59% 59% 68% 68% 68%
Antioch, Illinois
Mundelein Plaza 100% 96% 97% 100% 95%
Mundelein, IL
Regency Point 100% 100% 97% 97% 97%
Lockport, IL
Prospect Heights 83% 83% 83% 83% 83%
Prospect Heights, IL
Montgomery-Sears 85% 85% 85% 95% 95%*
Montgomery, IL
Zany Brainy 100% 100% 100% 100% 100%
Wheaton, IL
Salem Square 97% 97% 97% 97% 97%
Countryside, IL
Hawthorn Village 97% 98% 99% 99% 100%
Vernon Hills, IL
Six Corners 94% 94% 94% 90% 93%
Chicago, IL
Spring Hill Fashion Ctr. 96% 96% 96% 100% 98%
West Dundee, IL
Crestwood Plaza 100% 100% 100% 100% 100%
Crestwood, IL
Park St. Claire 100% 100% 100% 100% 100%
Schaumburg, IL
Lansing Square 90% 90% 90% 90% 90%
Lansing, IL
Summit of Park Ridge 82% 81% 84% 83% 83%
Park Ridge, IL
Grand and Hunt Club 100% 100% 100% 100% 100%
Gurnee, IL
Quarry Outlot 100% 100% 100% 100% 100%
Hodgkins, IL
-8-
1997 1998
------------------------ ------------------------
at at at at at at at at
Properties 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
---------- ----- ----- ----- ----- ----- ----- ----- -----
Maple Park Place 99% 97% 98% 98% 98%
Bolingbrook, IL
Aurora Commons 99% 100% 100% 98% 98%*
Aurora, IL
Lincoln Park Place 100% 100% 100% 60% 60%*
Chicago, IL
Ameritech N/A 100% 100% 100% 100%
Joliet, IL
Dominicks-Schaumburg N/A 100% 100% 100% 100%
Schaumburg, IL
Dominicks-Highland Park N/A 100% 100% 100% 100%
Highland Park, IL
Niles Shopping Center N/A 100% 87% 60% 60%*
Niles, IL
Mallard Crossing N/A 95% 95% 95% 95%*
Elk Grove Village, IL
Cobblers Crossing N/A 91% 89% 89% 89%*
Elgin, IL
Calumet Square N/A 100% 100% 100% 100%
Calumet City, IL
Sequoia Shopping Center N/A 96% 97% 93% 93%*
Milwaukee, WI
Riversquare Shopping Ctr. N/A 100% 100% 95% 95%
Naperville, IL
Rivertree Court N/A N/A 97% 99% 99%*
Vernon Hills, IL
Shorecrest Plaza N/A N/A 96% 96% 96%*
Racine, WI
Dominicks-Glendale Heights N/A N/A 100% 100% 100%
Glendale Heights, IL
Party City Store N/A N/A N/A 100% 100%
Oak Brook Terrace, IL
Eagle Country Market N/A N/A N/A 100% 100%
Roselle, IL
Dominicks-Countryside N/A N/A N/A 100% 100%
Countryside, IL
Terramere Plaza N/A N/A N/A 80% 80%
Arlington Heights, IL
Wilson Plaza N/A N/A N/A 100% 100%
Batavia, IL
Iroquois Center N/A N/A N/A 81% 81%
Naperville, IL
Fashion Square N/A N/A N/A 88% 80%
Skokie, IL
Naper West N/A N/A N/A 86% 88%*
Naperville, IL
Dominicks-West Chicago N/A N/A N/A N/A 100%
West Chicago, IL
-9-
1997 1998
------------------------ ------------------------
at at at at at at at at
Properties 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
---------- ----- ----- ----- ----- ----- ----- ----- -----
Shops at Coopers Grove N/A N/A N/A N/A 96%*
Country Club Hills, IL
Maple Plaza N/A N/A N/A N/A 100%
Downers Grove, IL
Orland Park Retail N/A N/A N/A N/A 84%*
Orland Park, IL
Wisner/Milwaukee Plaza N/A N/A N/A N/A 100%
Chicago, IL
Homewood Plaza N/A N/A N/A N/A 100%
Homewood, IL
Elmhurst City Center N/A N/A N/A N/A 99%*
Elmhurst, IL
Shoppes of Mill Creek N/A N/A N/A N/A 97%*
Palos Park, IL
Oak Forest Commons N/A N/A N/A N/A 99%*
Oak Forest, IL
Prairie Square N/A N/A N/A N/A 94%*
Sun Prairie, WI
Downers Grove Plaza N/A N/A N/A N/A 84%*
Downers Grove, IL
St. James Crossing N/A N/A N/A N/A 88%*
Westmont, IL
Woodfield Plaza N/A N/A N/A N/A 97%
Schaumburg, IL
Lake Park Plaza N/A N/A N/A N/A 95%*
Michigan City, IN
Chestnut Court N/A N/A N/A N/A 85%*
Darien, IL
* As part of the purchase of these properties the Company receives rent under
master lease agreements on the vacant space, which results in 100% economic
occupancy at March 31, 1998 for each of these centers, except Niles Shopping
Center where the master lease agreement results in 73% economic occupancy.
The master lease agreements are for periods ranging from one to two years
from the purchase date or until the spaces are leased.
Subsequent Events
In January 1998, the Company paid a distribution of $2,447,251 to the
Stockholders.
On April 16, 1998, the Company purchased the Bergen Plaza Shopping Center from
an unaffiliated third party for approximately $17,248,000. The property is
located in Oakdale, Minnesota and contains approximately 270,610 square feet of
leasable space. Its anchor tenants include Rainbow Foods and Kmart.
-10-
On April 24, 1998, the Company purchased the High Point Centre Shopping Center
from an unaffiliated third party for approximately $10,354,000. The property is
located in Madison, Wisconsin and contains approximately 86,204 square feet of
leasable space. Its anchor tenant is Pier 1 Imports.
On April 29, 1998, the Company purchased the Western Howard Plaza Shopping
Center from an unaffiliated third party for approximately $1,913,000. The
property is located in Chicago, Illinois and contains approximately 12,784
square feet of leasable space. Its tenants are The Gap, Pearle Vision and
Payless Shoes.
On May 5, 1998, the Company purchased the Wauconda Shopping Center from an
unaffiliated third party for approximately $2,525,000. The property is located
in Wauconda, Illinois and contains approximately 31,357 square feet of leasable
space. Its anchor tenant is Sears Paint and Hardware.
On April 22, 1998, the Company entered into a construction loan agreement with
an unaffiliated third party, the borrower, for an entire loan amount of
$2,507,038. Disbursements are to be made periodically as work progresses in
connection with the construction of a Staples Office Supply store to be built in
Freeport, Illinois. The construction loan matures on October 15, 1998 and,
prior to maturity, requires the borrower to make payments of interest only, on
amounts disbursed at a rate of 9.5%. The Company made an initial advance of
$864,134 on April 22, 1998.
On April 7, 1998, the Company commenced an offering of an additional 27,000,000
Shares at $11.00 per Share, on a best efforts basis, (the "Fourth Offering").
As of May 13, 1998, the Company had accepted subscriptions for 2,393,152 shares.
On behalf of the Company, the Advisor is currently exploring the purchase of
additional shopping centers from unaffiliated third parties.
Plan of Distribution
The Company commenced the Offering on April 7, 1998, and as of May 19, 1998 had
accepted subscriptions for 2,778,954 shares ($27,664,488 net of Selling
Commissions, the Marketing Contribution and the Due Diligence Expense Allowance
Fees).
Inland Securities Corporation, an Affiliate of the Advisor, serves as dealer
manager of the Offering and is entitled to receive selling commissions and
certain other fees, as referenced in the Prospectus. As of May 19, 1998, these
commissions and fees totaled $2,904,006. An Affiliate of the Advisor is also
entitled to receive Property Management Fees for management and leasing
services. The Company incurred Property Management Fees of approximately
$1,120,000 for the year ended December 31, 1997 and $229,307 for the year ended
December 31, 1996. The Advisor may also receive an annual Advisor Asset
Management Fee of not more than 1% of the Average Invested Assets, paid
quarterly. For the year ended December 31, 1997, the Company had incurred
Advisor Asset Management Fees of $843,000.
-11-
Index to Financial Statements
Page
Balance Sheets, March 31, 1998 and December 31, 1997................ F- 1
Statements of Operations for the three months ended
March 31, 1998 and 1997........................................... F- 3
Statements of Stockholders Equity, March 31, 1998
and December 31, 1997............................................. F- 4
Statements of Cash Flows for the three months ended
March 31, 1998 and 1997........................................... F- 5
Notes to Financial Statements....................................... F- 7
Pro Forma Balance Sheet (unaudited) at March 31, 1998............... F-21
Notes to Pro Forma Balance Sheet (unaudited) at March 31, 1998...... F-23
Pro Forma Statement of Operations (unaudited) for the three
months ended March 31, 1998....................................... F-26
Notes to Pro Forma Statement of Operations (unaudited) for the
three months ended March 31, 1998................................. F-28
Pro Forma Statement of Operations (unaudited) for the year
ended December 31, 1997........................................... F-32
Notes to Pro Forma Statement of Operations (unaudited) for
the year ended December 31, 1997.................................. F-34
-12-
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Balance Sheets
March 31, 1998 and December 31, 1997
(unaudited)
Assets
------
1998 1997
Investment properties (Notes 1, 4 and 5): ---- ----
Land............................................ $113,382,037 75,801,319
Building and improvements....................... 286,373,103 200,509,519
------------- -------------
399,755,140 276,310,838
Less accumulated depreciation................... 7,866,437 5,665,483
------------- -------------
Net investment properties....................... 391,888,703 270,645,355
------------- -------------
Cash and cash equivalents including amounts
held by property manager (Note 1)............... 77,208,219 51,145,587
Restricted cash (Note 1).......................... 3,181,123 2,073,799
Accounts and rents receivable (Notes 1 and 5)..... 8,052,881 4,926,643
Deposits and other assets........................ 1,033,920 3,924,431
Deferred organization costs (net of accumulated
amortization of $12,358 and $10,985 at March 31,
1998 and December 31, 1997, respectively)
(Note 1)........................................ 15,104 16,477
Loan fees (net of accumulated amortization
of $172,400 and $131,266 at March 31, 1998 and
December 31, 1997, respectively) (Note 1)....... 1,298,633 857,839
------------- -------------
Total assets.................................. $482,678,583 333,590,131
============= =============
See accompanying notes to financial statements.
F-1
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Balance Sheets
(continued)
March 31, 1998 and December 31, 1997
(unaudited)
Liabilities and Stockholders' Equity
------------------------------------
1998 1997
Liabilities: ---- ----
Accounts payable................................ $ 258,305 47,550
Accrued offering costs to Affiliates............ 794,033 544,288
Accrued offering costs to non-affiliates........ 86,331 36,574
Accrued interest payable to Affiliates.......... 4,627 4,641
Accrued interest payable to non-affiliates...... 865,699 560,821
Accrued real estate taxes....................... 9,209,918 7,031,732
Distributions payable (Note 7).................. 2,447,251 1,777,113
Security deposits............................... 1,035,016 754,359
Mortgages payable (Note 6)...................... 154,129,456 106,589,710
Unearned income................................. 966,508 495,535
Other liabilities............................... 1,506,433 493,116
Due to Affiliates (Note 2)...................... 501,319 337,825
------------- -------------
Total liabilities............................. 171,804,896 118,673,264
------------- -------------
Stockholders' Equity (Notes 1 and 2):
Common stock, $.01 par value, 106,000,000 Shares
authorized; 35,933,050 and 35,879,950, issued
and outstanding at March 31, 1998 and 25,026,140
and 24,973,340 issued and outstanding at
December 31, 1997, respectively............... 358,800 249,733
Additional paid-in capital (net of offering
costs of $38,866,440 and $28,341,719 at March
31, 1998 and December 31, 1997, respectively,
of which $34,001,630 and $24,172,634 was paid
to Affiliates, respectively).................. 318,713,814 220,640,345
Accumulated distributions in excess
of net income................................. (8,198,927) (5,973,211)
------------- -------------
Total stockholders' equity.................... 310,873,687 214,916,867
------------- -------------
Total liabilities and stockholders' equity........ $482,678,583 333,590,131
============= =============
See accompanying notes to financial statements.
F-2
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Statements of Operations
For the three months ended March 31, 1998 and 1997
(unaudited)
1998 1997
---- ----
Income:
Rental income (Notes 1 and 5)................... $ 9,424,416 3,603,584
Additional rental income........................ 3,020,925 1,061,507
Interest income................................. 776,364 156,436
Other income.................................... 46,791 36,244
------------ ------------
13,268,496 4,857,771
------------ ------------
Expenses:
Professional services to Affiliates............. 18,000 9,500
Professional services to non-affiliates......... 98,198 30,410
General and administrative expenses
to Affiliates................................. 70,761 16,936
General and administrative expenses
to non-affiliates............................. 31,056 28,312
Advisor asset management fee.................... 432,183 233,337
Property operating expenses to Affiliates....... 494,528 172,537
Property operating expenses to non-affiliates... 3,466,494 1,686,924
Mortgage interest to Affiliates................. 13,888 44,454
Mortgage interest to non-affiliates............. 2,318,476 961,287
Depreciation.................................... 2,200,954 741,920
Amortization.................................... 42,507 38,364
Acquisition cost expenses to Affiliates......... 30,000 2,289
Acquisition cost expenses to non-affiliates..... 14,036 6,801
------------ ------------
9,231,081 3,973,071
------------ ------------
Net income.................................... $ 4,037,415 884,700
============ ============
Net income per weighted average common stock shares
outstanding, basic and diluted (29,073,250 and
9,384,792 for the three months ended March 31,
1998 and 1997, respectively..................... $ .14 .09
============ ============
See accompanying notes to financial statements.
F-3
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Statements of Stockholders' Equity
March 31, 1998 and December 31, 1997
(unaudited)
Accumulated
Additional Distributions
Common Paid-in in excess of
Stock Capital net income Total
----------- ------------ ------------ -----------
Balance January 1, 1997..... $ 81,000 70,512,073 (1,492,835) 69,100,238
Net income.................. - - 8,647,221 8,647,221
Distributions declared
($.86 for the year ended
December 31, 1997 per
weighted average common
stock shares outstanding). - - (13,127,597) (13,127,597)
Proceeds from Offering (net
of Offering costs of
$17,841,611).............. 168,935 150,548,904 - 150,717,839
Repurchase of Shares........ (465) (420,369) - (420,834)
----------- ------------ ------------ ------------
Balance December 31, 1997... 249,470 220,640,608 (5,973,211) 214,916,867
Net income.................. - - 4,037,415 4,037,415
Distributions declared
($.22 for the three months
ended March 31, 1998 per
weighted average common
stock shares outstanding). - - (6,263,131) (6,263,131)
Proceeds from Offering (net
of Offering costs of
$10,524,721............... 108,975 98,076,276 - 98,185,251
Repurchases of Shares....... (3) (2,712) - (2,715)
----------- ------------ ------------ ------------
Balance March 31, 1998...... $ 358,442 318,714,172 (8,198,927) 310,873,687
=========== ============ ============ ============
See accompanying notes to financial statements.
F-4
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Statement of Cash Flows
For the three months ended March 31, 1998 and 1997
(unaudited)
1998 1997
Cash flows from operating activities: ---- ----
Net income.................................... $ 4,037,415 884,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................ 2,200,954 741,920
Amortization................................ 42,507 38,364
Rental income under master lease agreements. 542,940 71,599
Straight line rental income................. (289,037) (99,411)
Changes in assets and liabilities:
Accounts and rents receivable............. (2,837,201) (652,705)
Other assets.............................. (128,019) (218,111)
Accrued interest payable.................. 304,864 (52,421)
Accrued real estate taxes................. 2,178,186 363,177
Accounts payable.......................... 210,755 155,624
Unearned income........................... 470,973 310,980
Other liabilities......................... 1,013,317 (32,820)
Due to Affiliates......................... 163,494 (8,400)
Security deposits......................... 280,657 73,197
-------------- ------------
Net cash provided by operating activities....... 8,191,805 1,575,693
-------------- ------------
Cash flows from investing activities:
Restricted cash............................... (1,107,324) (995,290)
Additions to investment properties............ (49,282) (52,042)
Purchase of investment properties............. (114,437,960) (11,429,015)
Deposits on investment properties............. 3,018,530 (2,494,140)
-------------- ------------
Net cash used in investing activities........... (112,576,036) (14,970,487)
-------------- ------------
Cash flows from financing activities:
Proceeds from offering........................ 108,707,257 27,207,053
Payments of offering costs.................... (10,225,219) (2,502,720)
Loan proceeds................................. 38,702,000 12,840,000
Loan fees..................................... (481,928) (193,584)
Distributions paid............................ (5,592,993) (1,740,481)
Repayment of notes from Affiliates............ - (8,000,000)
Principal payments of debt.................... (662,254) (60,051)
-------------- ------------
Net cash provided by financing activities....... 130,446,863 27,550,217
-------------- ------------
Net increase in cash and cash equivalents....... 26,062,632 14,155,423
Cash and cash equivalents at beginning of period 51,145,587 8,491,735
-------------- ------------
Cash and cash equivalents at end of period...... $ 77,208,219 22,647,158
============== ============
See accompanying notes to financial statements.
F-5
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Statement of Cash Flows
(continued)
For the three months ended March 31, 1998 and 1997
(unaudited)
Supplemental schedule of noncash investing and financing activities:
1998 1997
---- ----
Purchase of investment properties................ $(123,937,960) (28,992,900)
Assumption of mortgage debt.................... 9,500,000 9,563,885
Note payable to Affiliate...................... - 8,000,000
-------------- -------------
$(114,437,960) (11,429,015)
============== =============
Distributions payable............................ $ 2,447,251 749,856
============== =============
Cash paid for interest........................... $ 2,027,500 1,058,162
============== =============
See accompanying notes to financial statements.
F-6
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
March 31, 1998
(unaudited)
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Readers of
this Quarterly Report should refer to the Company's audited financial
statements for the fiscal year ended December 31, 1997, which are included in
the Company's 1997 Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial statements
have been omitted from this Report. In the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation have been included.
(1) Organization and Basis of Accounting
Inland Real Estate Corporation (the "Company") was formed on May 12, 1994. The
Company may acquire existing Neighborhood Retail Centers and Community Centers
located primarily within an approximate 400-mile radius of its headquarters in
Oak Brook, Illinois. The Company may also acquire single-user retail
properties in locations throughout the United States, certain of which may be
sale and leaseback transactions, net leased to creditworthy tenants. The
Company is also permitted to construct or develop properties, or render
services in connection with such development or construction, subject to the
Company's compliance with the rules governing real estate investment trusts
under the Code, as amended. Inland Real Estate Advisory Services, Inc. (the
"Advisor"), an Affiliate of the Company, is the advisor to the Company.
On October 14, 1994, the Company commenced an initial public offering, on a
best efforts basis, ("Initial Offering") of 5,000,000 shares of common stock
("Shares"). As of July 24, 1996, the Company had received subscriptions for a
total of 5,000,000 Shares, thereby completing the Initial Offering. On July
24, 1996, the Company commenced an offering of an additional 10,000,000 Shares
at $10.00 per Share, on a best efforts basis, (the "Second Offering"). As of
July 10, 1997, the Company had received subscriptions for a total of 10,000,000
Shares, thereby completing the Second Offering. On July 14, 1997, the Company
commenced an offering of an additional 20,000,000 Shares at $10.00 per Share,
on a best efforts basis, (the "Third Offering"). As of March 19, 1998, the
Company had received subscriptions for a total of 20,000,000 Shares, thereby
completing the Third Offering. In addition, as of March 31, 1998, the Company
has distributed 1,070,778 Shares through the Company's Distribution
Reinvestment Program ("DRP"). As of March 31, 1998, the Company has
repurchased a total of 53,100 Shares through the Share Repurchase Program. As
a result, as of March 31, 1998, Gross Offering Proceeds total $357,939,054 net
of Shares repurchased through the Share Repurchase Program.
F-7
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
The Company qualified as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, as amended, for federal income tax purposes
commencing with the tax year ending December 31, 1995. Since the Company
qualified for taxation as a REIT, the Company generally will not be subject to
federal income tax to the extent it distributes its REIT taxable income to its
stockholders. If the Company fails to qualify as a REIT in any taxable year,
the Company will be subject to federal income tax on its taxable income at
regular corporate tax rates. Even if the Company qualifies for taxation as a
REIT, the Company may be subject to certain state and local taxes on its income
and property and federal income and excise taxes on its undistributed income.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
The Company considers all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents and are carried at cost, which
approximates fair value.
Restricted cash at March 31, 1998 includes $823,474 held in escrow for the
principal payments on the Aurora Commons mortgage payable and $146,465 held in
escrow by the mortgagee for the payment of real estate taxes at Aurora Commons
and Shoppes at Mill Creek Shopping Center. Restricted cash at March 31, 1998
also includes amounts held as vacancy escrows on Cobblers Crossing, Mallard
Crossing, Shorecrest Shopping Center, Sequoia Shopping Center, Shoppes at
Coopers Grove, Orland Park Retail, Prairie Square, Lake Park Plaza, Chestnut
Court and St. James Crossing. The monthly amounts drawn for rent under the
master lease escrows decrease the basis of the respective properties.
Restricted cash at March 31, 1998 also includes $556,025 held in escrow for the
second phase of construction at Oak Forest Commons and $95,985 held in escrow
for possible vacancies upon completion of the second phase at Oak Forest
Commons. Restricted cash at March 31, 1998 also includes $325,000 for tenant
improvement costs at Fashion Square.
Statement of Financial Accounting Standards No. 121 requires the Company to
record an impairment loss on its property to be held for investment whenever
its carrying value cannot be fully recovered through estimated undiscounted
future cash flows from operations and sale of properties. The amount of the
impairment loss to be recognized would be the difference between the property's
carrying value and the property's estimated fair value. As of March 31, 1998,
the Company does not believe any such impairments of its properties exists.
F-8
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
Depreciation expense is computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 30 years for
the building and building improvements and 15 years for the site improvements.
Loan fees are amortized on a straight line basis over the life of the related
loans.
Deferred organization costs are amortized over a 60-month period.
Offering costs are offset against the Stockholders' equity accounts. Offering
costs consist principally of printing, selling and registration costs.
Rental income is recognized on a straight-line basis over the term of each
lease. The difference between rental income earned on a straight-line basis
and the cash rent due under the provisions of the lease agreements is recorded
as deferred rent receivable.
The Company believes that the interest rates associated with the mortgages
payable and notes payable to Affiliates approximate the market interest rates
for these types of debt instruments, and as such, the carrying amount of the
mortgages payable and notes payable to Affiliates approximate their fair value.
Certain reclassifications were made to the 1997 financial statements to conform
with the 1998 presentation.
(2) Transactions with Affiliates
The Advisor and its Affiliates are entitled to reimbursement for salaries and
expenses of employees of the Advisor and its Affiliates relating to each of the
Offerings. Such expenses include postage, data processing and marketing and
are reimbursed at cost. The collective costs to Affiliates incurred relating
to the Offerings were $873,048 and $1,047,694 as of March 31, 1998 and December
31, 1997, respectively, of which all was paid as of March 31, 1998 and $24,374
was unpaid as of December 31, 1997. In addition, an Affiliate of the Advisor
serves as dealer manager of each of the Offerings and is entitled to receive
selling commissions, a marketing contribution and a due diligence expense
allowance fee from the Company in connection with each of the Offerings. Such
amounts incurred were $33,128,582 and $23,124,939 as of March 31, 1998 and
December 31, 1997, respectively, of which $794,033 and $519,914 was unpaid as
of March 31, 1998 and December 31, 1997, respectively. Approximately
$28,314,000 and $19,581,000 of these commissions had been passed through from
the Affiliate to unaffiliated soliciting broker/dealers as of March 31, 1998
and December 31, 1997, respectively.
F-9
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
As of March 31, 1998, the Company had incurred $38,893,902 of organization and
offering costs to Affiliates and non-affiliates. Pursuant to the terms of the
offering, the Advisor is required to pay organizational and offering expenses
(excluding sales commissions, the marketing contribution and the due diligence
expense allowance fee) in excess of 5.5% of the gross proceeds of the Offering
(the "Gross Offering Proceeds") or all organization and offering expenses
(including selling commissions) which together exceed 15% of gross offering
proceeds. Through the completion of the third Offering, organizational and
offering expenses did not exceed the 5.5% or 15% limitations. The Company
anticipates that these costs will not exceed these limitations upon completion
of the offerings, however, any excess amounts will be reimbursed by the
Advisor.
The Advisor and its Affiliates are entitled to reimbursement for salaries and
expenses of employees of the Advisor and its Affiliates relating to the
administration of the Company. Such costs are included in professional
services to Affiliates, general and administrative expenses to Affiliates and
acquisition costs expensed.
The Advisor has contributed $200,000 to the capital of the Company for which it
received 20,000 Shares.
The Advisor may receive an annual Advisor Asset Management Fee of not more than
1% of the Average Invested Assets, paid quarterly. For any year in which the
Company qualifies as a REIT, the Advisor must reimburse the Company: (i) to
the extent that the Advisor Asset Management Fee plus Other Operating Expenses
paid during the previous calendar year exceed 2% of the Company's Average
Invested Assets for the calendar year or 25% of the Company's Net Income for
that calendar year; and (ii) to the extent that Stockholders have not received
an annual Distribution equal to or greater than the 8% Current Return. For the
three months ended March 31, 1998, the Company has incurred $432,183 of such
fees, all of which remains unpaid at March 31, 1998.
An Affiliate of the Advisor is entitled to receive Property Management Fees for
management and leasing services. The Company incurred and paid Property
Management Fees of $494,528 and $172,537 for the three months ended March 31,
1998 and 1997, respectively, all of which has been paid.
F-10
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
(3) Stock Option and Dealer Warrant Plan
The Company adopted an Independent Director Stock Option Plan which granted
each Independent Director an option to acquire 3,000 Shares as of the date they
become a Director and an additional 500 Shares on the date of each annual
stockholders' meeting commencing with the annual meeting in 1995 if the
Independent Director is a member of the Board on such date. The options for
the initial 3,000 Shares granted shall be exercisable as follows: 1,000 Shares
on the date of grant and 1,000 Shares on each of the first and second
anniversaries of the date of grant. The succeeding options are exercisable on
the second anniversary of the date of grant. As of March 31, 1998, options for
1,000 Shares have been exercised for $9.05 per Share.
In addition to sales commissions, Soliciting Dealers will also receive one
Soliciting Dealer Warrant for each 40 Shares sold by such Soliciting Dealer
during the offerings, subject to state and federal securities laws. The holder
of a Soliciting Dealer Warrant will be entitled to purchase one Share from the
Company at a price of $13.20 during the period commencing with the first date
upon which the Soliciting Dealer Warrants are issued and ending on the Exercise
Period. Notwithstanding the foregoing no Soliciting Dealer Warrant will be
exercisable until one year from the date of issuance. As of March 31, 1998,
none of these warrants were exercised.
F-11
<TABLE> INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(4) Investment Properties Initial Cost (A) Gross amount at which carried
<CAPTION> -------------------------- at end of period
Net -----------------------------------------
Buildings Adjustments Land Buildings
Date and to and and
Acq Land improvements Basis (B) improvements improvements Total
------- ------------ ------------- ------------ ------------- ------------- -------------
Single-user Retail
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Walgreens/Decatur
Decatur, IL............. 01/95 $ 78,330 1,130,723 - 78,330 1,130,723 1,209,053
Zany Brainy
Wheaton, IL............. 07/96 838,000 1,626,033 664 838,000 1,626,697 2,464,697
Ameritech
Joliet, IL.............. 05/97 170,000 883,293 2,544 170,000 885,837 1,055,837
Dominicks-Schaumburg
Schaumburg, IL.......... 05/97 2,294,437 8,388,263 2,679 2,294,437 8,390,942 10,685,379
Dominicks-Highland Park
Highland Park, IL....... 06/97 3,200,000 9,593,565 2,200 3,200,000 9,595,765 12,795,765
Dominicks-Glendale Heights
Glendale Heights, IL.... 09/97 1,265,000 6,934,230 9,194 1,265,000 6,943,424 8,208,424
Party City
Oakbrook Terrace, IL.... 11/97 750,000 1,230,030 - 750,000 1,230,030 1,980,030
Eagle Country Market
Roselle, IL............. 11/97 966,667 1,935,350 1,150 966,667 1,936,500 2,903,167
Dominicks-West Chicago
West Chicago, IL........ 01/98 1,980,130 4,320,285 648 1,980,130 4,320,933 6,301,063
Neighborhood Retail Centers
- ---------------------------
Eagle Crest Shopping Center
Naperville, IL.......... 03/95 1,878,618 2,938,352 115,828 1,878,618 3,054,180 4,932,798
Montgomery-Goodyear
Montgomery, IL.......... 09/95 315,000 834,659 (11,158) 315,000 823,501 1,138,501
Hartford/Naperville Plaza
Naperville, IL.......... 09/95 990,000 3,427,961 13,002 990,000 3,440,963 4,430,963
Nantucket Square
Schaumburg, IL.......... 09/95 1,908,000 2,349,918 (69,881) 1,908,000 2,280,037 4,188,037
Antioch Plaza
Antioch, IL............. 12/95 268,000 1,360,445 (120,629) 268,000 1,239,816 1,507,816
------------ ------------- ------------ ------------- ------------- -------------
Subtotal $16,902,182 46,953,107 (53,760) 16,902,182 46,899,348 63,801,530
-12-
F-12
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(4) Investment Properties (Continued) Initial Cost (A) Gross amount at which carried
-------------------------- at end of period
Net -----------------------------------------
Buildings Adjustments Land Buildings
Date and to and and
Acq Land improvements Basis (B) improvements improvements Total
------- ------------ ------------- ------------ ------------- ------------- -------------
Subtotal $16,902,182 46,953,107 (53,760) 16,902,182 46,899,348 63,801,530
Mundelein Plaza
Mundelein, IL........... 03/96 1,695,000 3,965,560 (53,429) 1,695,000 3,912,131 5,607,131
Regency Point
Lockport, IL............ 04/96 1,000,000 4,720,800 (19,377) 1,000,000 4,701,423 5,701,423
Prospect Heights
Prospect Heights, IL.... 06/96 494,300 1,683,755 (9,724) 494,300 1,674,031 2,168,331
Montgomery-Sears
Montgomery, IL.......... 06/96 768,000 2,714,173 (122,122) 768,000 2,592,052 3,360,052
Salem Square
Countryside, IL......... 08/96 1,735,000 4,449,217 (16,960) 1,735,000 4,432,257 6,167,257
Hawthorn Village
Vernon Hills, IL........ 08/96 2,619,500 5,887,640 46,891 2,619,500 5,934,531 8,554,031
Six Corners
Chicago, IL............. 10/96 1,440,000 4,538,152 3,638 1,440,000 4,541,790 5,981,790
Spring Hill Fashion Corner
West Dundee, IL......... 11/96 1,794,000 7,415,396 3,955 1,794,000 7,419,351 9,213,351
Crestwood Plaza
Crestwood, IL........... 12/96 325,577 1,483,183 4,750 325,577 1,487,933 1,813,510
Quarry Outlot
Hodgkins, IL............ 12/96 522,000 1,278,431 8,872 522,000 1,287,303 1,809,303
Grand and Hunt Club
Gurnee, IL.............. 12/96 969,840 2,622,575 (52,811) 969,840 2,569,764 3,539,604
Summit of Park Ridge
Park Ridge, IL.......... 12/96 672,000 2,497,950 5,886 672,000 2,503,836 3,175,836
Park St. Claire
Schaumburg, IL.......... 12/96 319,578 986,920 226,674 319,578 1,213,594 1,533,172
Aurora Commons
Aurora, IL.............. 01/97 3,220,000 8,318,661 3,901 3,220,000 8,322,562 11,542,562
------------ ------------- ------------ ------------- ------------- ------------
Subtotal $34,476,977 99,515,520 (23,615) 34,476,977 99,491,905 133,968,882
-13-
F-13
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(4) Investment Properties (Continued) Initial Cost (A) Gross amount at which carried
-------------------------- at end of period
Net -----------------------------------------
Buildings Adjustments Land Buildings
Date and to and and
Acq Land improvements Basis (B) improvements improvements Total
------- ------------ ------------- ------------ ------------- ------------- -------------
Subtotal $34,476,977 99,515,520 (23,615) 34,476,977 99,491,905 133,968,882
Lincoln Park Place
Chicago, IL............. 01/97 819,000 1,299,902 (36,530) 819,000 1,263,372 2,082,372
Niles Shopping Center
Niles, IL............... 04/97 850,000 2,408,467 (31,837) 850,000 2,376,630 3,226,630
Mallard Crossing
Elk Grove Village, IL... 05/97 1,778,667 6,331,943 (37,901) 1,778,667 6,294,042 8,072,709
Cobblers Crossing
Elgin, IL............... 05/97 3,200,000 7,763,940 (97,688) 3,200,000 7,666,252 10,866,252
Calumet Square
Calumet City, IL........ 06/97 527,000 1,537,316 6,664 527,000 1,543,980 2,070,980
Sequoia Shopping Center
Milwaukee, WI........... 06/97 1,216,914 1,802,336 (11,780) 1,216,914 1,790,556 3,007,470
Riversquare Shopping Center
Naperville, IL.......... 06/97 2,853,226 3,124,732 103,872 2,853,226 3,228,604 6,081,830
Shorecrest Plaza
Racine, WI.............. 07/97 1,150,000 4,749,758 (17,469) 1,150,000 4,732,289 5,882,289
Dominicks-Countryside
Countryside, IL......... 12/97 1,375,000 925,106 - 1,375,000 925,106 2,300,106
Terramere Plaza
Arlington Heights, IL... 12/97 1,435,000 2,966,411 14,903 1,435,000 2,981,314 4,416,314
Wilson Plaza
Batavia, IL............. 12/97 310,000 984,720 10,550 310,000 995,270 1,305,270
Iroquois Center
Naperville, IL.......... 12/97 3,668,347 8,258,584 11,500 3,668,347 8,270,084 11,938,431
Fashion Square
Skokie, IL.............. 12/97 2,393,534 6,822,071 23,045 2,393,534 6,845,116 9,238,650
------------ ------------- ------------ ------------- ------------- ------------
Subtotal $56,053,665 148,490,806 (86,286) 56,053,665 148,404,520 204,458,185
-14-
F-14
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(4) Investment Properties (Continued) Initial Cost (A) Gross amount at which carried
-------------------------- at end of period
Net -----------------------------------------
Buildings Adjustments Land Buildings
Date and to and and
Acq Land improvements Basis (B) improvements improvements Total
------- ------------ ------------- ------------ ------------- ------------- -------------
Subtotal $56,053,665 148,490,806 (86,286) 56,053,665 148,404,520 204,458,185
Shops at Coopers Grove
Country Club Hills, IL.. 01/98 1,400,897 4,398,797 879 1,400,897 4,399,676 5,800,573
Maple Plaza
Downers Grove, IL....... 01/98 1,364,202 1,803,779 9,120 1,364,202 1,812,899 3,177,101
Orland Park Retail
Orland Park, IL......... 02/98 460,867 789,133 (8,459) 460,867 780,674 1,241,541
Wisner/Milwaukee Plaza
Chicago, IL............. 02/98 528,576 1,361,490 13,115 528,576 1,374,605 1,903,181
Homewood Plaza
Homewood, IL............ 02/98 534,599 1,380,841 11,138 534,599 1,391,979 1,926,578
Elmhurst City Center
Elmhurst, IL............ 02/98 2,050,217 2,724,783 (250,927) 2,050,217 2,473,856 4,524,073
Shoppes of Mill Creek
Palos Park, IL.......... 03/98 3,305,949 7,989,051 421 3,305,949 7,989,472 11,295,421
Prairie Square
Sun Prairie, WI......... 03/98 739,575 2,361,425 10,994 739,575 2,372,419 3,111,994
Oak Forest Commons
Oak Forest, IL.......... 03/98 2,795,519 9,013,698 5,762 2,795,519 9,019,460 11,814,979
Downers Grove Market
Downers Grove, IL....... 03/98 6,224,467 11,456,000 (2,268) 6,224,467 11,453,732 17,678,199
St. James Crossing
Westmont, IL............ 03/98 2,610,600 4,866,890 - 2,610,600 4,866,890 7,477,490
Community Centers
- -----------------
Lansing Square
Lansing, IL............. 12/96 4,075,000 12,179,383 18,087 4,075,000 12,197,470 16,272,470
Maple Park Place
Bolingbrook, IL......... 01/97 3,665,909 11,669,428 10,603 3,665,909 11,680,031 15,345,940
------------ ------------- ------------ ------------- ------------- ------------
Subtotal $85,810,042 220,485,504 (267,821) 85,810,042 220,217,683 306,027,725
-15-
F-15
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(4) Investment Properties (Continued) Initial Cost (A) Gross amount at which carried
-------------------------- at end of period
Net -----------------------------------------
Buildings Adjustments Land Buildings
Date and to and and
Acq Land improvements Basis (B) improvements improvements Total
------- ------------ ------------- ------------ ------------- ------------- -------------
Subtotal $85,810,042 220,485,504 (267,821) 85,810,042 220,217,683 306,027,725
Rivertree Court
Vernon Hills, IL........ 07/97 8,651,875 22,861,547 6,233 8,651,875 22,867,780 31,519,655
Naper West
Naperville, IL.......... 12/97 5,335,000 9,584,779 (55,611) 5,335,000 9,529,168 14,864,168
Woodfield Plaza
Schaumburg, IL.......... 01/98 4,612,277 14,589,498 25,563 4,612,277 14,615,061 19,227,338
Lake Park Plaza
Michigan City, IN....... 02/98 3,252,861 9,023,805 (189,292) 3,252,861 8,834,513 12,087,374
Chestnut Court
Darien, IL.............. 03/98 5,719,982 10,424,898 (116,000) 5,719,982 10,308,898 16,028,880
------------ ------------- ------------ ------------- ------------- ------------
Total $113,382,037 286,970,031 (596,928) 113,382,037 286,373,103 399,755,140
============ ============ =========== ============ ============ ============
</TABLE>
-16-
F-16
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
(4) Investment Properties (continued)
(A) The initial cost to the Company, represents the original purchase price of
the property, including amounts incurred subsequent to acquisition, which
were contemplated at the time the property was acquired.
(B) Adjustments to basis includes additions to investment properties and
payments received under master lease agreements. As part of several
purchases, the Company will receive rent under master lease agreements on
the spaces currently vacant for periods ranging from one to two years or
until the spaces are leased. Generally Accepted Accounting Principles
("GAAP") require that as these payments are received, they be recorded as a
reduction in the purchase price of the properties rather than as rental
income. The cumulative amount of such payments was $1,523,995 and $981,055
as of March 31, 1998 and December 31, 1997, respectively. (Note 5)
(5) Operating Leases
As part of the purchases of several of the properties, the Company will receive
rent under master lease agreements on spaces currently vacant for periods
ranging from one to two years or until the spaces are leased and tenants begin
paying rent. GAAP requires the Company to reduce the purchase price of the
properties as these payments are received, rather than record the payments as
rental income.
Certain tenant leases contain provisions providing for stepped rent increases.
GAAP requires the Company to record rental income for the period of occupancy
using the effective monthly rent, which is the average monthly rent for the
entire period of occupancy during the term of the lease. The accompanying
financial statements include increases of $289,037 and $99,411 for the three
months ended March 31, 1998 and 1997, of rental income for the period of
occupancy for which stepped rent increases apply and $1,075,653 and $786,616 in
related accounts receivable as of March 31, 1998 and December 31, 1997,
respectively. The Company anticipates collecting these amounts over the terms
of the related leases as scheduled rent payments are made.
F-17
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
March 31, 1998
(unaudited)
(6) Mortgages Payable
Mortgages payable consist of the following at March 31, 1998 and December 31,
1997:
Current Balance at
Property as Interest Maturity Monthly Mar. 31, Dec. 31,
Collateral Rate Date Payment(a) 1998 1997
- ------------- ---------- --------- ---------- ----------- -----------
Mortgage payable to Affiliate:
Walgreens 7.655% 05/2004 $ 5,689 $ 724,307 727,472
Mortgages payable to non-affiliates:
Regency Point 7.425% 08/2000 (b) 4,359,647 4,373,461
Eagle Crest 7.850% 10/2003 15,668 2,350,000 2,350,000
Nantucket Square 7.850% 10/2003 14,668 2,200,000 2,200,000
Antioch Plaza 7.850% 10/2003 5,834 875,000 875,000
Mundelein Plaza 7.850% 10/2003 18,735 2,810,000 2,810,000
Montgomery-Goodyear 7.850% 10/2003 4,200 630,000 630,000
Montgomery-Sears 7.850% 08/2003 10,967 1,645,000 1,645,000
Hartford/Naperville 7.850% 08/2003 15,401 2,310,000 2,310,000
Zany Brainy 7.590% 01/2004 8,026 1,245,000 1,245,000
Prospect Heights
Plaza 7.590% 01/2004 7,059 1,095,000 1,095,000
Hawthorn Village
Commons 7.590% 01/2004 27,590 4,280,000 4,280,000
Six Corners Plaza 7.590% 01/2004 19,984 3,100,000 3,100,000
Salem Square
Shopping Center 7.590% 01/2004 20,177 3,130,000 3,130,000
Lansing Square 7.800% 01/2004 53,991 8,150,000 8,150,000
Spring Hill Fashion
Mall 7.800% 01/2004 31,070 4,690,000 4,690,000
Aurora Commons (c) 9.000% 10/2001 70,556 9,347,327 9,392,602
Maple Park Place 7.650% 06/2004 49,704 7,650,000 7,650,000
Dominicks-Schaumburg 7.49% 06/2004 34,005 5,345,500 5,345,500
Summit Park Ridge 7.49% 06/2004 10,178 1,600,000 1,600,000
Lincoln Park Place 7.49% 06/2004 6,679 1,050,000 1,050,000
Crestwood Plaza 7.650% 06/2004 5,876 904,380 904,380
Park St. Claire 7.650% 06/2004 4,954 762,500 762,500
Quarry 7.650% 06/2004 5,848 900,000 900,000
Grand/Hunt Club 7.49% 06/2004 11,425 1,796,000 1,796,000
Rivertree Court (d) 10.030% 11/1998 131,226 15,700,000 15,700,000
Niles Shopping Center 7.23% 01/2005 9,932 1,617,500 1,617,500
Ameritech 7.23% 01/2005 3,208 522,375 522,375
Calumet Square 7.23% 01/2005 6,343 1,032,920 1,032,920
F-18
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
Current Balance at
Property as Interest Maturity Monthly Mar. 31, Dec. 31,
Collateral Rate Date Payment(a) 1998 1997
- ------------- ---------- --------- --------- ----------- -----------
Sequoia Shopping
Center 7.23% 01/2005 9,242 1,505,000 1,505,000
Dominick's Highland
Park 7.21% 12/2004 38,453 6,400,000 6,400,000
Fashion Square (e) 4.10% 12/2014 27,642 6,200,000 6,800,000
Mallard Crossing 7.28% 03/2005 25,041 4,050,000 -
Prairie Square 7.00% 03/2005 9,042 1,550,000 -
Orland Park Retail 7.00% 03/2005 3,646 625,000 -
Maple Plaza 7.00% 03/2005 9,231 1,582,500 -
Iroquois Center 7.00% 03/2005 34,708 5,950,000 -
Dominicks-Countryside 6.99% 03/2003 6,699 1,150,000 -
Wilson Plaza 7.00% 03/2005 3,792 650,000 -
Eagle Country Market 7.00% 03/2005 8,458 1,450,000 -
Terramere Plaza 7.00% 03/2005 12,848 2,202,500 -
Shops at Coopers
Grove 7.00% 03/2005 16,917 2,900,000 -
Party City 7.00% 03/2005 5,760 987,500 -
Cobbler Crossing 7.00% 02/2005 31,946 5,476,500 -
Dominicks-Glendale
Heights 7.00% 01/2005 23,917 4,100,000 -
Riversquare Shopping
Center 7.15% 01/2005 18,173 3,050,000 -
Shorecrest Plaza 7.10% 03/2003 17,620 2,978,000 -
Shoppes of Mill
Creek 8.00% 09/1999 63,333 9,500,000 -
------------ -----------
Mortgages Payable.................................... $154,129,456 106,589,710
============ ===========
(a) All payments are interest only, with the exception of the loans secured by
the Walgreens, Regency Point and Aurora Commons properties.
(b) Payments on this mortgage are based on a floating interest rate of 180
basis points over the 30-day LIBOR rate, which adjusts monthly, amortizing
over 25 years.
(c) The Company received a credit for interest expense on the debt at closing,
which is included in restricted cash along with an amount set aside by the
Company for principal payments on the debt. Interest income earned on the
restricted cash amounts, when netted with interest expense on the debt,
results in an adjusted interest rate on the debt of approximately 8.2%.
F-19
INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
Notes to Financial Statements
(continued)
(d) The Company received a credit for interest expense on the debt at closing.
(e) As part of the purchase of this property, the Company assumed the existing
mortgage-backed Economic Development Revenue Bonds, Series 1994 offered by
the Village of Skokie, Illinois. The interest rate floats and is reset
weekly by a re-marketing agent. The current rate is 4.10%. The bonds are
further secured by an Irrevocable Letter of Credit, issued by LaSalle Bank
at a fee of 1.25% of the bond outstanding. In addition, there is a .125%
re-marketing fee paid annually.
(7) Subsequent Events
In January 1998, the Company paid a distribution of $2,447,251 to the
Stockholders.
On April 16, 1998, the Company purchased the Bergen Plaza Shopping Center from
an unaffiliated third party for approximately $17,248,000. The property is
located in Oakdale, Minnesota and contains approximately 270,610 square feet of
leasable space. Its anchor tenants include Rainbow Foods and Kmart.
On April 24, 1998, the Company purchased the High Point Centre Shopping Center
from an unaffiliated third party for approximately $10,354,000. The property
is located in Madison, Wisconsin and contains approximately 86,204 square feet
of leasable space. Its anchor tenant is Pier 1 Imports.
On April 29, 1998, the Company purchased the Western Howard Plaza Shopping
Center from an unaffiliated third party for approximately $1,913,000. The
property is located in Chicago, Illinois and contains approximately 12,784
square feet of leasable space. Its tenants are The Gap, Pearle Vision and
Payless Shoes.
On May 5, 1998, the Company purchased the Wauconda Shopping Center from an
unaffiliated third party for approximately $2,525,000. The property is located
in Wauconda, Illinois and contains approximately 31,357 square feet of leasable
space. Its anchor tenant is Sears Paint and Hardware.
On April 22, 1998, the Company entered into a construction loan agreement with
an unaffiliated third party, the borrower, for an entire loan amount of
$2,507,038. Disbursements are to be made periodically as work progresses in
connection with the construction of a Staples Office Supply store to be built
in Freeport, Illinois. The construction loan matures on October 15, 1998 and,
prior to maturity, requires the borrower to make payments of interest only, on
amounts disbursed at a rate of 9.5%. The Company made an initial advance of
$864,134 on April 22, 1998. The Company has agreed to purchase this property
upon completion, contingent upon certain criteria stated in the contract.
On April 7, 1998, the Company commenced an offering of an additional 27,000,000
Shares at $11.00 per Share, on a best efforts basis, (the "Fourth Offering").
As of May 13, 1998, the Company had accepted subscriptions for 2,393,152
shares.
F-20
Inland Real Estate Corporation
Pro Forma Balance Sheet
March 31, 1998
(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
March 31, 1998. No pro forma adjustments were made for the Staples Office
Supply Store which is currently under construction. This unaudited Pro Forma
Balance Sheet should be read in conjunction with the March 31, 1998 Financial
Statements and the notes thereto as files on Form 10-Q.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at March 31, 1998, 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-21
Inland Real Estate Corporation
Pro Forma Balance Sheet
March 31, 1998
(unaudited)
March 31,
March 31, 1998
1998 Pro Forma Pro Forma
Historical(A) Adjustments(B) Balance Sheet
------------- ------------- --------------
Assets
- ------
Net investment in
properties.................. $391,888,703 31,963,680 423,852,383
Cash n cash equivalents..... 77,208,219 - 77,208,219
Restricted cash............... 3,181,123 - 3,181,123
Accounts and rents
receivable.................. 8,052,881 414,843 8,467,724
Other assets.................. 2,347,657 - 2,347,657
------------- ------------- -------------
Total assets.................. $482,678,583 32,378,523 515,057,106
============= ============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 2,008,995 - 2,008,995
Accrued real estate taxes..... 9,209,918 421,625 9,631,543
Distributions payable (C)..... 2,447,251 - 2,447,251
Security deposits............. 1,035,016 15,117 1,050,133
Mortgages payable............. 154,129,456 - 154,129,456
Unearned income............... 966,508 - 966,508
Other liabilities............. 1,506,433 - 1,506,433
Due to Affiliates............. 501,319 - 501,319
------------- ------------- -------------
Total liabilities............. 171,804,896 436,742 172,241,638
------------- ------------- -------------
Common Stock (D).............. 358,800 37,141 395,941
Additional paid in capital
(net of Offering costs) (D). 318,713,814 31,904,640 350,618,454
Accumulated distributions in
excess of net income........ (8,198,927) - (8,198,927)
------------- ------------- -------------
Total Stockholders' equity.... 310,873,687 31,941,781 342,815,468
------------- ------------- -------------
Total liabilities and
Stockholders' equity........ $482,678,583 32,378,523 515,057,106
============= ============= =============
See accompanying notes to pro forma balance sheet.
F-22
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1998
(unaudited)
(A) The March 31, 1998 Historical column represents the historical balance
sheet as presented in the March 31, 1998 10-Q 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 March 31, 1998. The
terms are described in the notes that follow.
Pro Forma Adjustments
--------------------------------------
Bergen High Point
Plaza Center Wauconda
------------ ------------ ------------
Assets
- ------
Net investment in
properties........... $17,247,680 10,354,000 2,525,000
Accounts and rents
receivable........... 110,015 109,240 52,163
------------ ------------ ------------
Total assets........... $17,357,695 10,463,240 2,577,163
============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 113,418 112,619 52,163
Security deposits...... - 15,117 -
Mortgage payable....... - - -
------------ ------------ ------------
Total liabilities...... 113,418 127,736 52,163
------------ ------------ ------------
Common Stock........... 20,051 12,018 2,936
Additional paid in capital
(net of Offering
Costs)............... 17,224,226 10,323,486 2,522,064
------------ ------------ ------------
Total Stockholders'
equity............... 17,244,277 10,335,504 2,525,000
------------ ------------ ------------
Total liabilities and
Stockholders' equity. $17,357,695 10,463,240 2,577,163
============ ============ ============
F-23
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1998
(unaudited)
Pro Forma
Adjustments
------------
Total
Berwyn Pro Forma
Plaza Adjustments
------------ ------------
Assets
- ------
Net investment in
properties........... $ 1,837,000 31,963,680
Accounts and rents
receivable........... 143,425 414,843
------------ ------------
Total assets........... $ 1,980,425 32,378,523
============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 143,425 421,625
Security deposits...... - 15,117
Mortgage payable....... - -
------------ ------------
Total liabilities...... 143,425 436,742
------------ ------------
Common Stock........... 2,136 37,141
Additional paid in capital
(net of Offering
Costs)............... 1,834,864 31,904,640
------------ ------------
Total Stockholders'
equity............... 1,837,000 31,941,781
------------ ------------
Total liabilities and
Stockholders' equity. $ 1,980,425 32,378,523
============ ============
F-24
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
March 31, 1998
(unaudited)
Acquisitions of Property:
On April 16, 1998, the Company acquired Bergen Plaza from an unaffiliated
third party for the purchase price of $17,247,680 on an all cash basis,
funded from cash and cash equivalents.
On April 24, 1998, the Company acquired High Point Centre from an
unaffiliated third party for the purchase price of approximately
$10,354,000 on an all cash basis, funded from cash and cash equivalents.
On May 5, 1998, the Company acquired 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.
On May 15, 1998, the Company acquired 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.
Probable Acquisitions of Property:
The Company anticipates the acquisition 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 $37,141,000, net of additional Offering
costs of $5,199,219 are reflected as received as of March 31, 1998, prior
to the purchase of the properties. Offering costs consist principally of
registration costs, printing and selling costs, including commissions.
F-25
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the three months ended March 31, 1998
(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 of
the Notes to the Pro Forma Statement of Operations as though they occurred on
January 1, 1998 or the date operations commenced. Pro forma adjustments for
Oak Forest Commons and Downers grove Market are as of March 5, 1998 and March
25, 1998, respectively. Construction is not complete on the Staples Office
Supplyu Store and therefore, no pro forma adjustment has been made. This
unaudited Pro Forma Statement of Operations should be read in conjunction with
the March 31, 1998 Financial Statements and the notes thereto as filed on Form
10-Q.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the three months
ended March 31, 1998, 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-26
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the three months ended March 31, 1998
(unaudited)
Pro Forma
Adjustments
-----------
March 31,
1998 1998 March 31,
Historical Acquisitions 1998
(A) (B) Pro Forma
------------ ------------ -----------
Rental income..... $ 9,424,416 1,818,276 11,242,692
Additional rental
income.......... 3,020,925 670,899 3,691,824
Interest
income(C)....... 776,364 - 776,364
Other income...... 46,791 - 46,791
------------ ------------ ------------
Total income.... 13,268,496 2,489,175 15,757,671
------------ ------------ ------------
Professional services
and general and
administrative
fees............ 218,015 - 218,015
Advisor asset
management fee.(F) 432,183 192,182 624,365
Property operating
expenses........ 3,961,022 818,540 4,779,562
Interest expense.. 2,332,364 126,667 2,459,031
Depreciation (D).. 2,200,954 493,263 2,694,217
Amortization...... 42,507 - 42,507
Acquisition costs
expensed........ 44,036 - 44,036
------------ ------------ ------------
Total expenses.... 9,231,081 1,630,652 10,861,733
------------ ------------ ------------
Net income...... $ 4,037,415 858,523 4,895,938
============ ============ ============
Weighted average
common stock shares
outstanding (E). 29,073,250 32,787,350
============ ============
Net income per weighted
average common stock
outstanding (E). $ .14 .15
============ ============
See accompanying notes to pro forma statement of operations.
F-27
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the three months ended March 31, 1998
(unaudited)
(A) The 1998 Historical column represents the historical statement of
operations of the Company for the three months ended March 31, 1998
(unaudited), as filed with the SEC on Form 10-Q.
(B) Total pro forma adjustments for the three months ended March 31, 1998 are
as though the 1998 acquisitions of the following properties occurred the
earlier of January 1, 1998 or the date operations commenced. All
properties were purchased on an all cash basis except for Mill Creek. Pro
forma adjustments for interest expense on these properties were based on
the following terms.
Mill Creek Shopping Center
As part of the acquisition of Mill Creek Shopping Center, the Company
assumed the existing mortgage loan, maturing September 10, 1999, with the
balance funded with cash and cash equivalents. The loan requires interest
only monthly payments at a rate of 8% per annum.
F-28
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the three months ended March 31, 1998
(unaudited)
(B) Total pro forma adjustments for 1998 acquisitions are as though they were
acquired the earlier of January 1, 1998 or the date operations commenced.
West
Coopers Chicago Maple Lake Park
Grove Dominick's Plaza Plaza
----------- ----------- ----------- -----------
Rental income..... $ 12,649 36,150 30,776 130,540
Additional rental
income.......... 9,364 - 11,154 49,688
----------- ----------- ----------- -----------
Total income...... 22,013 36,150 41,930 180,228
----------- ----------- ----------- -----------
Advisor asset
management fee.. 1,271 3,625 2,638 13,452
Property operating
expenses........ 10,754 1,085 13,041 60,970
Interest expense.. - - - -
Depreciation...... 3,213 9,062 6,950 33,000
----------- ----------- ----------- -----------
Total expenses.... 15,238 13,772 22,629 107,422
----------- ----------- ----------- -----------
Net income (loss). $ 6,775 22,378 19,301 72,806
=========== =========== =========== ===========
Homewood Wisner Mill Prairie
Plaza Plaza Creek Square
----------- ----------- ----------- -----------
Rental income..... $ 29,096 29,958 180,896 78,950
Additional rental
income.......... 22,945 12,915 123,799 29,500
----------- ----------- ----------- -----------
Total income...... 52,041 42,873 304,695 108,450
----------- ----------- ----------- -----------
Advisor asset
management fee.. 2,812 2,738 18,933 7,750
Property operating
expenses........ 25,287 14,844 142,668 34,380
Interest expense.. - - 126,667 -
Depreciation...... 6,970 6,880 45,417 21,950
----------- ----------- ----------- -----------
Total expenses.... 35,069 24,462 333,685 64,080
----------- ----------- ----------- -----------
Net income (loss). $ 16,972 18,411 (28,990) 44,370
=========== =========== =========== ===========
F-29
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the three March 31, 1998
(unaudited)
St. James Chestnut Bergen Berwyn
Crossing Court Plaza Plaza
----------- ----------- ----------- -----------
Rental income..... $ 189,704 319,057 420,391 40,561
Additional rental
income.......... 54,985 82,340 163,669 33,524
----------- ----------- ----------- -----------
Total income...... 244,689 401,397 584,060 74,085
----------- ----------- ----------- -----------
Advisor asset
management fee.. 18,693 40,360 43,119 4,593
Property operating
expenses........ 65,996 134,035 195,014 38,255
Interest expense.. - - - -
Depreciation...... 46,750 100,900 107,800 11,481
----------- ----------- ----------- -----------
Total expenses.... 131,439 275,295 345,933 54,329
----------- ----------- ----------- -----------
Net income (loss). $ 113,250 126,102 238,127 19,756
=========== =========== =========== ===========
Total 1998
High Point Acquisitions
Wauconda Center Pro Forma
----------- ----------- ------------
Rental income..... $ 57,676 261,872 1,818,276
Additional rental
income.......... 15,431 61,585 670,899
----------- ----------- ------------
Total income...... 73,107 323,457 2,489,175
----------- ----------- ------------
Advisor asset
management fee.. 6,313 25,885 192,182
Property operating
expenses........ 18,721 63,490 818,540
Interest expense.. - - 126,667
Depreciation...... 15,781 77,109 493,263
----------- ----------- ------------
Total expenses.... 40,815 166,484 1,630,652
----------- ----------- ------------
Net income (loss). $ 32,292 156,973 858,523
=========== =========== ============
F-30
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the three months ended March 31, 1998
(unaudited)
(C) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(D) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(E) The pro forma weighted average common stock shares for the three months
ended March 31, 1998 was calculated by estimating the additional shares
sold to purchase each of the Company's properties on a weighted average
basis.
(F) Advisor Asset Management Fees are calculated as 1% per annum of the Average
Invested Assets (as defined).
F-31
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-32
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 11,919,230 42,935,546
Additional rental
income.......... 6,592,983 3,622,583 4,689,140 14,904,706
Interest
income(D)....... 1,615,520 - - 1,615,520
Other income...... 100,717 - - 100,717
------------ ------------ ------------ ------------
Total income.... 29,421,585 13,526,534 16,608,370 59,556,489
------------ ------------ ------------ ------------
Professional services
and general and
administrative
fees............ 482,954 - - 482,954
Advisor asset
management fee.(G) 843,000 1,832,719 1,206,063 3,881,782
Property operating
expenses........ 8,863,024 4,476,786 5,771,000 19,110,810
Interest expense.. 5,654,564 1,338,640 760,000 7,753,204
Depreciation (E).. 4,556,445 2,371,640 3,055,487 9,983,572
Amortization...... 124,884 - - 124,884
Acquisition costs
expensed........ 249,493 - - 249,493
------------ ------------ ------------ ------------
Total expenses.... 20,774,364 10,019,785 10,792,550 41,586,699
------------ ------------ ------------ ------------
Net income...... $ 8,647,221 3,506,749 5,815,820 17,969,790
============ ============ ============ ============
Weighted average
common stock shares
outstanding (F). 15,225,983 28,101,983
============ ============
Net income per weighted
average common stock
outstanding (F). $ .57 .64
============ ============
See accompanying notes to pro forma statement of operations.
F-33
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-34
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-35
<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-36
F-36
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-37
F-37
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........ 873,792 488,067 18,850 133,667
Interest expense.. - - - -
Depreciation...... 483,000 146,600 157,500 83,400
----------- ----------- ----------- -----------
Total expenses.... 1,548,792 692,667 239,350 248,717
----------- ----------- ----------- -----------
Net income (loss). $1,441,594 285,921 388,970 250,031
=========== =========== =========== ===========
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........ 543,398 166,951 101,312 823,792
Interest expense.. - - - 760,000
Depreciation...... 293,000 46,500 45,900 272,500
----------- ----------- ----------- -----------
Total expenses.... 959,148 232,814 166,065 1,969,892
----------- ----------- ----------- -----------
Net income (loss). $ 729,095 99,577 99,883 (159,383)
=========== =========== =========== ===========
F-38
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........ 130,448 265,225 593,967 1,105,206
Interest expense.. - - - -
Depreciation...... 87,800 187,000 403,600 431,200
----------- ----------- ----------- -----------
Total expenses.... 249,248 526,995 1,159,007 1,708,883
----------- ----------- ----------- -----------
Net income (loss). $ 154,325 376,817 344,992 953,330
=========== =========== =========== ===========
Total 1998
Berwyn High Point Acquisitions
Plaza Wauconda Center Pro Forma
----------- ----------- ----------- ------------
Rental income..... $ 176,345 230,703 1,078,701 11,919,230
Additional rental
income.......... 131,460 72,913 251,518 4,689,140
----------- ----------- ----------- ------------
Total income...... 307,805 303,616 1,330,219 16,608,370
----------- ----------- ----------- ------------
Advisor asset
management fee.. 18,370 25,250 103,540 1,206,063
Property operating
expenses........ 147,830 72,912 305,583 5,771,000
Interest expense.. - - - 760,000
Depreciation...... 45,925 63,125 308,437 3,055,487
----------- ----------- ----------- ------------
Total expenses.... 212,125 161,287 717,560 10,792,550
----------- ----------- ----------- ------------
Net income (loss). $ 95,680 142,329 612,659 5,815,820
=========== =========== =========== ============
F-39
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 60,036 494,067
Depreciation.............. - 146,600 146,600
----------- ----------- -----------
Total expenses............ 428,031 264,636 692,667
----------- ----------- -----------
Net income (loss)......... $ 550,557 (264,636) 285,921
=========== =========== ===========
F-40
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-41
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 75,971 543,398
Depreciation.............. - 293,000 293,000
----------- ----------- -----------
Total expenses............ 467,427 491,721 959,148
----------- ----------- -----------
Net income (loss)......... $1,220,816 (491,721) 729,095
=========== =========== ===========
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-42
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-43
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 8,000 265,225
Depreciation.............. - 187,000 187,000
----------- ----------- -----------
Total expenses............ 257,225 269,770 526,995
----------- ----------- -----------
Net income (loss)......... $ 646,587 (269,770) 376,817
=========== =========== ===========
F-44
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-45
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-46
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Probable Acquisition of High Point Centre, Madison, 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:
High Point Centre
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,078,701 - 1,078,701
Additional rental income.. 251,518 - 251,518
----------- ----------- -----------
Total income.............. 1,330,219 - 1,330,219
----------- ----------- -----------
Advisor asset
management fee.......... - 103,540 103,540
Property operating
expenses................ 258,583 47,000 305,583
Depreciation.............. - 308,437 308,437
----------- ----------- -----------
Total expenses............ 258,583 458,977 717,560
----------- ----------- -----------
Net income (loss)......... $1,071,636 (458,977) 612,659
=========== =========== ===========
(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-47
