Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 4 to the Company's Prospectus dated April 7, 1998 updates
certain information in the sections of the Prospectus entitled "Real Property
Investments" and "Plan of Distribution." Unless otherwise defined, capitalized
terms used herein shall have the same meaning as in the Prospectus.
Real Property Investments
On April 30, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 2357 West Howard in Chicago, Illinois
known as "Western & Howard" from an unaffiliated third party for a purchase
price of approximately $1,913,000.
On May 5, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 620 West Liberty in Wauconda, Illinois
known as "Wauconda Shopping Center" from an unaffiliated third party for a
purchase price of approximately $2,525,000.
Plan of Distribution
The Company commenced the offering on April 7, 1998. As of May 4, 1998, the
Company had accepted subscriptions for 1,319,948 shares ($13,140,083 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
4, 1998, these commissions and fees totaled $1,379,345. An Affiliate of the
Advisor is also entitled to receive Property Management Fees for management and
leasing services.
SUPPLEMENT NO. 4
DATED MAY 5, 1998
TO THE PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 4 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 and Supplement No. 3 dated April 27, 1998
and must be read in conjunction therewith. This Supplement No. 4 updates
certain information in the sections of the Prospectus entitled "Real Property
Investments" and "Plan of Distribution." Unless otherwise defined, capitalized
terms used herein shall have the same meaning as in the Prospectus.
Real Property Investments
Western & Howard, Chicago, Illinois
On April 30, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 2357 West Howard in Chicago, Illinois
known as "Western & Howard" from Michael Tansey, an unaffiliated third party,
for approximately $1,913,000. The purchase price was funded using cash and
cash equivalents. The purchase price was approximately $149.64 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.
Western & Howard was built in 1985 and consists of a one-story, multi-tenant
retail facility aggregating 12,784 rentable square feet. As of April 30, 1998,
Western & Howard was 100% leased. In evaluating Western & Howard 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 center's tenants are
national tenants. The Company believes each of these tenants is creditworthy.
The Company believes that the center is located within a highly populated and
vibrant economic area. This center has been 100% occupied by the same three
tenants since 1985 when it was built. Remaining lease terms range from three
to seven years. 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 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 Western & Howard 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 Western & Howard 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% $16.45
1996 100 16.89
1995 100 17.01
1994 100 17.01
1993 100 17.01
Tenants leasing more than 10% of the total square footage are Super Gap, a
clothing store, Payless Shoes, a discount shoe store and Pearle Vision, an
eyeglass center. 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
- ----------- ----------- ----------- ------------ ------------ ---------
Super Gap 7,944 62% $ 17.00 Currently 01/31/01
Option 1 20.40 02/01/01 01/31/06
Payless Shoes 2,840 22 11.00 Currently 10/31/01
Pearle Vision 2,000 16 21.99 Currently 05/31/00
26.40 06/01/00 05/31/05
For federal income tax purposes, the Company's depreciable basis in Western &
Howard will be approximately $1,200,000. 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 $59,595.
-2-
On April 30, 1998, a total of 12,784 square feet was leased to three tenants at
Western & Howard. 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
------ ---------- ----- ------ ----------- -----------
Super Gap 7,944 01/01 1/5 yr. $135,048 $17.00
Payless Shoes 2,840 10/01 - 31,240 11.00
Pearle Vision 2,000 05/05 - 43,980 21.99
<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 - - - $210,268 - - -
1999 - - - 210,268 - - -
2000 - - - 210,268 - - -
2001 2 10,784 $166,288 219,088 $ 15.42 84.4% 75.9%
2002 - - - 52,800 - - -
2003 - - - 52,800 - - -
2004 - - - 52,800 - - -
2005 1 2,000 52,800 52,800 26.40 15.6 100.0
(1) No assumptions were made regarding the releasing of expired leases. It is the opinion
of the Company's management that the space will be released at market rates.
</TABLE>
The Company received a letter appraisal prepared by an independent appraiser
who is a member in good standing of the American Institute of Real Estate
Appraisers which reported a fair market value for the Western & Howard
property, as of April 3, 1998, of $1,965,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
-3-
Wauconda Shopping Center, Wauconda, Illinois
On May 5, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 620 West Liberty in Wauconda, Illinois
known as "Wauconda Shopping Center" from Michael Scott, an unaffiliated third
party, for approximately $2,525,000. The purchase price was funded using cash
and cash equivalents. The purchase price was approximately $81.04 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.
Wauconda Shopping Center was built in 1988 and consists of a one-story, multi-
tenant retail facility aggregating 31,157 rentable square feet. As of May 5,
1998, Wauconda Shopping Center was 100% leased. In evaluating Wauconda
Shopping Center as a potential acquisition, the Company considered a variety of
factors including location, demographics, tenant mix, price per square foot,
existing rental rates compared to market rates, and occupancy. The Company
believes that the center is located within a vibrant economic area. The
center's anchor tenant is a national tenant. Although approximately 69% of the
rentable square feet at Wauconda Shopping Center is leased to one tenant, the
Company's management believes that retenanting of any space which is vacated in
the future should be accomplished relatively quickly and at rental rates
comparable to those currently paid by the 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 Wauconda Shopping Center over the next few years. Nevertheless, pursuant to
the leases, a substantial portion of any cost of repairs and improvements would
be paid by the tenants.
The table below sets forth certain information with respect to the occupancy
rate at Wauconda Shopping Center expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot:
Occupancy Rate
as of Effective
Year Ending December 31, Annual Rental
December 31, of Each Year Per Square Ft
------------ ------------ -------------
1997 100% $8.12
1996 100 8.00
1995 100 *
1994 100 *
1993 100 *
*Information not available from seller.
-4-
Tenants leasing more than 10% of the total square footage are Sears Hardware, a
paint and hardware store and Spasso, Ltd., a restaurant. These leases require
the payment of base annual rent, payable monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Sears Hardware 21,600 69% $ 6.75 Currently 09/30/01
7.25 10/01/01 09/30/06
Option 1 7.25 10/01/06 09/30/11
Spasso, Ltd. 4,667 15% 14.28 Currently 12/31/00
For federal income tax purposes, the Company's depreciable basis in Wauconda
Shopping Center will be approximately $2,000,000. Depreciation expense, for
tax purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes payable in 1998 for the tax year ended 1997 (the most recent
tax year for which information is generally available) are $40,120.
On May 5, 1998, a total of 31,157 square feet was leased to four tenants at
Wauconda Shopping Center. The following tables set forth certain information
with respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Sears Hardware 21,600 09/06 1/5 yr. $145,800 $ 6.75
Mr. E's Bagels 2,445 09/00 1/5 yr. 20,342 8.32
E & E Systems 2,445 12/98 - 21,149 8.65
Spasso, Ltd. 4,667 12/00 - 67,674 14.50
-5-
<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 2,445 $ 21,149 $253,937 $ 8.65 7.85% 8.32%
1999 - - - 234,450 - - -
2000 2 7,112 88,650 234,450 12.46 22.82 37.81
2001 - - - 145,800 - - -
2002 - - - 156,600 - - -
2003 - - - 156,600 - - -
2004 - - - 156,600 - - -
2005 - - - 156,600 - - -
2006 1 21,600 156,600 156,600 7.25 69.33 100.00
(1) No assumptions were made regarding the releasing of expired leases. It is the opinion
of the Company's management that the space will be released at market rates.
</TABLE>
The Company received an appraisal prepared by an independent appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers
which reported a fair market value for Wauconda Shopping Center, as of March 1,
1998, of $2,600,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
-6-
Plan of Distribution
The Company commenced the Offering on April 7, 1998, and as of May 4, 1998 had
accepted subscriptions for 1,319,948 shares ($13,140,083 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 4, 1998, these
commissions and fees totaled $1,379,345. 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.
-7-
