Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 15 to our Prospectus which is dated April 7, 1998 updates
information contained in the "Real Property Investments" and "Plan of
Distribution" sections of the Prospectus. Any word that is capitalized in this
supplement but not defined shall have the meaning we give to that term in the
Prospectus.
Real Property Investments
Inland Joliet Commons L.L.C., Joliet, Illinois
On October 30, 1998, we consummated a joint venture transaction with B.I.J.
Limited Partnership, an Illinois limited partnership ("BIJ"). To effect the
transaction, we formed a limited liability company known as "Inland Joliet
Commons L.L.C." (the "LLC") to own and operate Joliet Commons Shopping Center
("Joliet Commons Shopping Center") located at U.S. 30 and Willow Road in
Joliet, Illinois. Pursuant to the LLC Operating Agreement (the "Agreement"),
we contributed approximately $52,000 in cash to obtain a one percent (1%)
equity interest in the LLC. BIJ contributed Joliet Commons Shopping Center to
the LLC, which was valued at approximately $5,100,000, ($19,800,000 less
indebtedness of $14,700,000), to obtain a ninety-nine percent (99%) equity
interest in the LLC. In accordance with the Agreement, BIJ may transfer its
equity interest in the LLC to certain persons as provided for in the Agreement.
Each holder of an equity interest in the LLC has the option to convert its
equity interest into shares of our common stock (an "Exchange"). No holder of
an equity interest in the LLC, however, may Exchange its equity interest for a
period of one year from the effective date of the Agreement.
Additionally, the Agreement provides that if our stock is not publicly traded
on a national securities exchange or designated on the NASDAQ National Market
System within a period of two years from the effective date of the Agreement,
then any holder of an equity interest in the LLC may require us to purchase all
or any portion of its equity interest at a price calculated pursuant to the
formula set forth in the Agreement. Our obligation to purchase a holder's
equity interest in the LLC terminates if and when our stock becomes publicly
traded on a national securities exchange or is designated on the NASDAQ
National Market System. In connection with this transaction, we also entered
into a Registration Rights Agreement which grants to a holder of an equity
interest in the LLC the right, subject to certain restrictions, to request that
we register all or any portion of the shares of our stock which the holder
receives as a result of an Exchange.
Real Property Investments - Potential Property Acquisitions
We anticipate purchasing the entire fee simple interest in two properties,
Springboro Plaza located in Springboro, Ohio and Riverplace Centre located in
Noblesville, Indiana. We anticipate purchasing both of these properties from a
seller who is an an unaffiliated third party. We anticipate purchasing
Springboro Plaza for approximately $9,337,000. We anticipate purchasing
Riverplace Centre for approximately $6,117,000.
Plan of Distribution
We commenced this Offering of 25,000,000 shares on April 7, 1998. As of October
30, 1998, we had sold 12,311,943 shares resulting in net proceeds of
$131,120,390. Inland Securities Corporation, an Affiliate of our Advisor, is
dealer-manager of this Offering and is entitled to receive selling commissions
and certain other fees, as discussed further in our Prospectus. As of October
30, 1998, the commissions and fees payable to Inland Securities Corporation
totaled $12,865,980. Our Advisor is entitled to receive an Advisor Asset
Management fee, as described more fully in our Prospectus. We also pay an
Affiliate of the Advisor fees to manage and lease our properties. This
arrangement is also described more fully in our Prospectus. We may pay
Acquisition Expenses up to .5% of the money that we raise in this Offering but
in no event will we pay Acquisition Expenses on an individual property that
exceed 6% of the purchase price of any individual property.
SUPPLEMENT NO. 15
DATED NOVEMBER 4, 1998
TO OUR PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
We are providing this Supplement No. 15 to you in order to supplement our
Prospectus. We previously supplemented our Prospectus by providing you with
Supplement No. 14 dated October 19, 1998, Supplement No. 13 dated October 15,
1998 and Supplement No. 12 dated October 7, 1998. Supplement No. 12 combined
all of the information contained in Supplement Nos. 1 through 11. Therefore,
you must read this Supplement No. 15, Supplement No. 14, Supplement No. 13,
Supplement No. 12 and the Prospectus for the most up to date information. This
Supplement No. 15 updates information in the "Real Property Investments" and
"Plan of Distribution" sections of our Prospectus. Any word that is
capitalized in this Supplement but not defined shall have the meaning we give
to that term in the Prospectus.
Real Property Investments
Inland Joliet Commons L.L.C., Joliet, Illinois
On October 30, 1998, we consummated a joint venture transaction with B.I.J.
Limited Partnership, an Illinois limited partnership ("BIJ"). To effect the
transaction, we formed a limited liability company known as "Inland Joliet
Commons L.L.C." (the "LLC") to own and operate Joliet Commons Shopping Center
("Joliet Commons Shopping Center") located at U.S. 30 and Willow Road in
Joliet, Illinois. Pursuant to the LLC Operating Agreement (the "Agreement"),
we contributed approximately $52,000 in cash to obtain a one percent (1%)
equity interest in the LLC. BIJ contributed Joliet Commons Shopping Center to
the LLC, which was valued at approximately $5,100,000, ($19,800,000 less
indebtedness of $14,700,000), to obtain a ninety-nine percent (99%) equity
interest in the LLC. In accordance with the Agreement, BIJ may transfer its
equity interest in the LLC to certain persons as provided for in the Agreement.
Each holder of an equity interest in the LLC has the option to convert its
equity interest into shares of our common stock (an "Exchange"). No holder of
an equity interest in the LLC, however, may Exchange its equity interest for a
period of one year from the effective date of the Agreement.
Additionally, the Agreement provides that if our stock is not publicly traded
on a national securities exchange or designated on the NASDAQ National Market
System within a period of two years from the effective date of the Agreement,
then any holder of an equity interest in the LLC may require us to purchase all
or any portion of its equity interest at a price calculated pursuant to the
formula set forth in the Agreement. Our obligation to purchase a holder's
equity interest in the LLC terminates if and when our stock becomes publicly
traded on a national securities exchange or is designated on the NASDAQ
National Market System. In connection with this transaction, we also entered
into a Registration Rights Agreement which grants to a holder of an equity
interest in the LLC the right, subject to certain restrictions, to request that
we register all or any portion of the shares of our stock which the holder
receives as a result of an Exchange.
-1-
Joliet Commons Shopping Center is a Community Center located at U.S. 30 and
Willow Road in Joliet, Illinois. It was built in 1995 and is a one-story,
multi-tenant retail facility. Joliet Commons Shopping Center contains 159,184
leasable square feet. As of November 1, 1998, Joliet Commons Shopping Center
was 97% leased (100% leased if the master lease, which lasts for one year, is
considered). When we evaluated Joliet Commons Shopping Center as a potential
acquisition, we considered a variety of factors including location,
demographics, tenant mix, price per square foot, existing rental rates compared
to market rates, and occupancy. We believe that the center is located within a
vibrant economic area. We did not consider any other factors when we decided
to acquire the property.
We do not anticipate making any significant repairs and improvements to Joliet
Commons Shopping Center over the next few years. However, if we were to make
any repairs or improvements, a substantial portion of any monies spent on
repairs and improvements would be paid by the tenants, pursuant to the terms of
our leases with these tenants.
The table below sets forth the occupancy rate at Joliet Commons Shopping Center
expressed as a percentage of total gross leasable area and the average annual
base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 11.74
1996 81 9.54
1995 59 6.72
Tenants leasing more than 10% of the total gross leasable area of the property
are Cinemark, a theater, Petsmart, a pet store, Barnes and Noble, a book store,
Old Navy, a clothes store and M.C. Sports, a sporting goods store. These
leases require the tenants to pay base annual rent on a monthly basis as
follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Year Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Cinemark 35,152 22 12.70 Currently 12/31/02
13.20 01/01/03 12/31/07
13.70 01/01/08 12/31/16
Petsmart 25,425 16 8.72 Currently 01/31/05
9.22 02/01/05 01/31/10
Option 1 9.72 02/01/10 01/31/15
Option 2 10.22 02/01/15 01/31/20
Option 3 10.72 02/01/20 01/31/25
Option 4 11.22 02/01/25 01/31/30
Option 5 11.72 02/01/30 01/31/35
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Base Rent
Per Square
Approximate Foot Per
GLA % of Total Year Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Barnes and Noble 20,000 13 13.45 Currently 01/31/01
14.20 02/01/01 01/31/06
Option 1 14.95 02/01/06 01/31/11
Option 2 15.70 02/01/11 01/31/16
Old Navy 17,000 11 11.00 Currently 07/31/00
13.00 08/01/00 07/31/05
Option 1 14.00 08/01/05 07/31/10
Option 2 15.00 08/01/10 07/31/15
M.C. Sports 15,000 9 8.50 Currently 01/31/99
9.25 02/01/99 01/31/01
10.00 02/01/01 01/31/06
Option 1 11.00 02/01/06 01/31/11
Option 2 12.00 02/01/11 01/31/16
For federal income tax purposes, the depreciable basis in Joliet Commons
Shopping Center will be approximately $15,400,000. When we calculate
depreciation expense, for tax purposes, we will use the straight-line method.
We will depreciate buildings and improvements based upon estimated useful lives
of 40 years.
Real estate taxes payable in 1998 for the tax year ended 1997 were $339,330.
The real estate taxes payable were calculated by multiplying the assessed value
of the property by an equalizer of 1.0 and a tax rate of 10.2385%.
On November 1, 1998, a total of 154,544 square feet was leased to ten tenants
at Joliet Commons Shopping Center. The following tables set forth information
with respect to the amount of and expiration of the leases at this Community
Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Cinemark 35,152 12/16 - 446,430 12.70
Petsmart 25,425 01/10 5/5 yr. 221,706 8.72
Barnes & Noble 20,000 01/06 2/5 yr. 269,000 13.45
Old Navy 17,000 07/05 2/5 yr. 187,000 11.00
Carpet Outlet 8,000 01/02 2/5 yr. 80,000 10.00
Cosmetic Center 6,607 01/06 2/5 yr. 99,105 15.00
M.C. Sports 15,000 01/06 2/5 yr. 127,500 8.50
LA-Z Recliner Shop 12,720 01/07 2/5 yr. 127,200 10.00
Hometown Buffet 10,000 12/11 2/5 yr. 120,000 12.00
Jewelry 3 4,640 11/05 3/5 yr. 92,800 20.00
Vacant 4,640
-3-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 1,774,636 - - -
1999 - - - 1,785,886 - - -
2000 - - - 1,785,886 - - -
2001 - - - 1,852,082 - - -
2002 1 8,000 84,000 1,880,908 10.50 5.18 4.47
2003 - - - 1,819,628 - - -
2004 - - - 1,819,628 - - -
2005 2 21,640 327,720 1,832,340 15.14 14.00 17.89
2006 3 41,607 536,276 1,504,620 12.89 26.92 35.64
2007 1 12,720 139,920 985,920 11.00 8.23 14.19
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion
of the Company's management that the space will be re-leased at market rates at the time of re-
leasing.
</TABLE>
We received an appraisal prepared by an independent appraiser who is a member
in good standing of the American Institute of Real Estate Appraisers. The
appraisal reported a fair market value for the Joliet Commons Shopping Center
property as of February 25, 1998, of $20,000,000. You should note that
appraisals are estimates of value and therefore you should not rely upon them
as a measure of true worth or realizable value.
-4-
Real Property Investments - Potential Property Acquisitions
Springboro Plaza/Riverplace Centre
We anticipate purchasing the entire fee simple interest in two properties,
Springboro Plaza located in Springboro, Ohio and Riverplace Centre located in
Noblesville, Indiana. We anticipate purchasing both of these properties from a
seller who is an an unaffiliated third party.
Springboro Plaza was built in 1992. It is a single story Community Center
containing 154,034 rentable square feet. Its major tenants are Kroger Foods
and Kmart. We anticipate purchasing Springboro Plaza for approximately
$9,337,000.
Riverplace Centre was built in 1992. It is a single story Neighborhood Retail
Center containing 74,414 rentable square feet. Its major tenants are Kroger
Foods and Fashion Bug. We anticipate purchasing Riverplace Center for
approximately $6,117,000.
Plan of Distribution
We commenced this Offering of 25,000,000 Shares on April 7, 1998. As of
October 30, 1998, we had sold 12,311,943 shares resulting in net proceeds of
$131,120,390.
Inland Securities Corporation, an Affiliate of our Advisor, serves as dealer
manager of this Offering and is entitled to receive selling commissions and
certain other fees, as discussed further in our Prospectus. As of October 30,
1998, the commissions and fees payable to Inland Securities Corporation totaled
$12,865,980. We also pay an Affiliate of our Advisor fees to manage and lease
our properties. We incurred Property Management Fees of approximately
$1,904,860 for the nine months ended September 30, 1998 and $1,120,000 for the
year ended December 31, 1997. Our Advisor may also receive an annual Advisor
Asset Management Fee of not more than 1% of the Average Invested Assets, paid
quarterly. For the nine months ended September 30, 1998, we had incurred
Advisor Asset Management Fees of $1,252,815. For the year ended December 31,
1997, we had incurred Advisor Asset Management Fees of $843,000. We may pay
Acquisition Expenses up to .5% of the money that we raise in this Offering but
in no event will we pay Acquisition Expenses on any individual property that
exceed 6% of the purchase price of any individual property. As of September
30, 1998, the Company had paid Acquisition Expenses of approximately
$2,800,000.
-5-
