As filed with the Securities and Exchange Commission on March 19, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: January 22, 1998
(Date of earliest event reported)
Inland Real Estate Corporation
(Exact name of registrant as specified in the charter)
Maryland 33-79012 36-3953261
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2901 Butterfield Road
Oak Brook, Illinois 60523
(Address of Principal Executive Offices)
(630) 218-8000
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
-1-
Item 2. Acquisition or Disposition of Assets
West Chicago Dominick's, West Chicago, IL
On January 22, 1998, the Company acquired the entire fee simple interest in a
Single-User Retail Center located at 1935 Neltor Boulevard in West Chicago,
Illinois known as "West Chicago Dominick's" from R.K. West Chicago L.L.C., an
unaffiliated third party, for approximately $6,300,000. The purchase price was
funded using cash and cash equivalents. The purchase price was approximately
$81.82 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.
West Chicago Dominick's was built in 1990 and consists of a one-story, single-
tenant retail facility aggregating 77,000 rentable square feet. As of February
28, 1998, West Chicago Dominick's was 100% leased. In evaluating West Chicago
Dominick's as a potential acquisition, the Company considered a variety of
factors including location, demographics, tenant mix, price per square foot,
existing rental rates compared to market rates, and occupancy. The Company
believes that the center is located within a vibrant economic area. The
Company's management believes that retenanting of any space which is vacated in
the future should be accomplished relatively quickly and at rental rates
comparable to those currently paid by the tenant 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 West Chicago Dominick's over the next few years. Nevertheless, pursuant to
the lease, a substantial portion of any cost of repairs and improvements would
be paid by the tenant.
The table below sets forth certain information with respect to the occupancy
rate at West Chicago Dominick's 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% $8.16
1996 100 8.16
1995 100 8.16
1994 100 8.16
1993 100 8.16
-2-
One tenant leases 100% of the total square footage, Dominick's Finer Foods, a
grocery store. This lease requires the payment of base annual rent, payable
monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Dominick's Finer
Foods 77,000 100% $ 8.16 Currently 12/31/10
Option 1 8.16 01/01/11 12/31/30
For federal income tax purposes, the Company's depreciable basis in West
Chicago Dominick's will be approximately $4,860,000. 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) are not available as
tenant pays real estate taxes directly.
On February 28, 1998, a total of 77,000 square feet was leased to one tenant at
West Chicago Dominick's. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Single-User
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Dominick's Finer
Foods 77,000 12/10 1/20 yr. $628,320 $ 8.16
<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-
2007 - - - $628,320 - - -
(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 West Chicago Dominick's, as of October
20,1997, of $6,800,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
-3-
Maple Plaza, Downers Grove, IL
On January 30, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 2241 Maple Avenue in Downers Grove,
Illinois known as "Maple Plaza" from Maple Plaza Partnership, an unaffiliated
third party, for approximately $3,165,000. The purchase price was funded using
cash and cash equivalents. The purchase price was approximately $101.12 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.
Maple Plaza was built in 1988 and consists of a one-story, multi-tenant retail
facility aggregating 31,298 rentable square feet. As of February 28, 1998,
Maple Plaza was 100% leased. In evaluating Maple 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. The Company's management believes that
retenanting of any space which is vacated in the future should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the tenants at the facility. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Maple 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.
The table below sets forth certain information with respect to the occupancy
rate at Maple 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% $11.93
1996 96 11.42
1995 100 10.92
1994 100 11.04
1993 100 11.15
-4-
Tenants leasing more than 10% of the total square footage include Copy Center,
Inc., a printer, J.C. Licht Company, a paint store and Goodyear Tire and
Rubber, a tire 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
- ----------- ----------- ----------- ------------ ------------ ---------
Copy Center, Inc. 4,800 15% $ 14.00 Current 10/31/98
J.C. Licht Co. 6,000 19% 11.98 Current 07/31/98
Goodyear Tire &
Rubber 5,250 17% 8.80 Current 03/31/03
Option 1 9.02 04/01/03 03/31/18
For federal income tax purposes, the Company's depreciable basis in Maple Plaza
will be approximately $2,503,000. 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 $44,566.
-5-
On February 28, 1998, a total of 31,298 square feet was leased to thirteen
tenants at Maple Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Copy Center Inc. 4,800 10/98 - $67,200 $14.00
J.C. Licht Company 6,000 07/98 - 71,880 11.98
Goodyear Tire &
Rubber 5,250 03/03 1/15 yr. 46,200 8.80
Zander's Cafe 1,748 02/00 1/3 yr. 22,724 13.00
Discount Cigarettes 1,100 03/99 - 13,750 12.50
Dairy Queen 1,100 08/02 1/10 yr. 16,412 14.92
Subway Restaurant 1,100 02/03 1/15 yr. 23,892 21.72
BoRics Hair Salon 1,375 11/99 1/5 yr. 17,187 12.50
Feng Lin 1,300 06/01 - 14,300 11.00
Radio Shack 2,600 02/08 - 26,390 10.15
Domino's Pizza 1,300 06/98 - 16,900 13.00
Super One Hour
Cleaners 1,500 02/02 - 27,540 18.36
Kohinoor Restaurant 2,125 12/99 - 22,121 10.41
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. GLA Annual Base Total Per Square Building GLA Rent
Year Number of of Expiring Rent of Annual Foot Under Represented Represented
Ending Leases Leases Expiring Base Expiring by Expiring By Expiring
December 31, Expiring (Sq. Ft.) Leases Rent (1) Leases Leases Leases
- ----------- --------- ----------- ----------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 3 12,100 $ 155,974 $387,337 $ 12.89 38.66% 40.27%
1999 3 4,600 54,714 234,680 11.89 14.70 23.31
2000 1 1,748 23,598 181,627 13.50 5.59 12.99
2001 1 1,300 15,600 159,564 12.00 4.15 9.78
2002 1 1,100 17,770 145,090 16.15 3.51 12.25
2003 3 7,850 101,080 127,687 12.88 25.08 79.16
2004-
2007 - - - 26,650 - - -
(1) No assumptions were made regarding the releasing of expired leases. It is the opinion
of the Company's management that the space will be released at market rates.
</TABLE>
-6-
The Company received 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 the Maple Plaza property, as of December
12, 1997, of $3,195,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
Orland Park, Orland Park, Illinois
On February 2, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 159th and 80th in Orland Park, Illinois
known as "Orland Park" from 159-80 L.L.C., an unaffiliated third party, for
approximately $1,250,000. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $147.05 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.
Orland Park was built in 1997 and consists of a one-story, multi-tenant retail
facility aggregating 8,500 rentable square feet. As of February 28, 1998,
Orland Park was 85% leased (100% leased if the master lease, which lasts for
one year, is considered). In evaluating Orland Park as a potential
acquisition, the Company considered a variety of factors including location,
demographics, tenant mix, price per square foot, existing rental rates compared
to market rates, and occupancy. The Company believes that the center is
located within a vibrant economic area. The Company's management believes that
retenanting of any space which is vacated in the future should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the tenants at the facility. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Orland Park 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 Orland Park 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 85% $13.26
-7-
Tenants leasing more than 10% of the total square footage include Video Update,
a video rental store and All Cleaners, a dry cleaner. 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
- ----------- ----------- ----------- ------------ ------------ ---------
Video Update 5,475 64% $ 15.00 Currently 10/31/02
16.50 11/01/02 12/31/06
Option 1 16.50 01/01/07 10/31/07
18.00 11/01/07 10/31/12
19.50 11/01/12 12/31/15
All Cleaners 1,700 20% $ 18.00 Currently 10/31/00
19.00 11/01/00 10/31/02
Option 1 20.00 11/01/02 03/31/04
21.00 04/01/04 10/31/05
22.35 11/01/05 10/31/07
For federal income tax purposes, the Company's depreciable basis in Orland Park
will be approximately $788,000. 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.
Orland Park was constructed in 1997, and therefore, information regarding real
estate taxes payable in 1997 for the tax year ended 1996 is not material
On February 28, 1998, a total of 7,175 square feet was leased to two tenants at
Orland Park. 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
------ ---------- ----- ------ ----------- -----------
Video Update 5,475 12/06 1/9 yr. $ 82,125 $ 15.00
All Cleaners 1,700 10/02 1/5 yr. 30,600 18.00
Vacant 1,325
-8-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. GLA Annual Base Total Per Square Building GLA Rent
Year Number of of Expiring Rent of Annual Foot Under Represented Represented
Ending Leases Leases Expiring Base Expiring by Expiring By Expiring
December 31, Expiring (Sq. Ft.) Leases Rent (1) Leases Leases Leases
- ----------- --------- ----------- ----------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998-
2000 - - - $112,725 - - -
2001 - - - 114,425 - - -
2002 1 1,700 $ 32,300 114,425 $ 19.00 20.0% 28%
2003-
2005 - - - 90,338 - - -
2006 1 5,475 90,338 90,338 16.50 64.4% 100%
(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 the Orland Park property, as of November
20, 1997, of $1,300,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
Lake Park Plaza, Michigan City, Indiana
On February 10, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 4301 Franklin Street in Michigan City,
Indiana known as "Lake Park Plaza" from Larsen-Cooper-Doren General
Partnership, an unaffiliated third party, for approximately $12,275,000. The
purchase price was funded using cash and cash equivalents. The purchase price
was approximately $53.45 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.
Lake Park Plaza was built in 1990 and consists of a one-story, multi-tenant
retail facility aggregating 229,639 rentable square feet. As of February 28,
1998, Lake Park Plaza was 100% leased. In evaluating Lake Park 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 73%
of the rentable square feet at Lake Park Plaza is leased to two tenants, the
Company's management believes that retenanting of any space which is vacated in
the future should be accomplished relatively quickly and at rental rates
comparable to those currently paid by the tenants at the facility. The Company
did not consider any other factors materially relevant to the decision to
acquire the property.
-9-
The Company does not anticipate making any significant repairs and improvements
to Lake Park 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.
The table below sets forth certain information with respect to the occupancy
rate at Lake Park 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 96% $5.81
1996 96 5.63
1995 97 5.63
1994 100 5.63
1993 * *
*Information on 1993, not available from seller.
Tenants leasing more than 10% of the total square footage include Wal-Mart,
a discount department store and Roundy's, a grocery 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
- ----------- ----------- ----------- ------------ ------------ ---------
Wal-Mart 114,557 50% $ 3.66 Currently 08/31/10
Roundy's 52,882 23% $ 6.00 Currently 12/31/11
For federal income tax purposes, the Company's depreciable basis in Lake Park
Plaza will be approximately $8,800,000. 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 $260,518.
On February 28, 1998, a total of 227,839 square feet was leased to twenty
tenants at Lake Park Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
-10-
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Wal-Mart 114,557 10/10 - $419,279 $ 3.66
Roundy's 52,882 11/11 - 317,292 6.00
Jo-Ann Fabrics 15,000 01/03 1/5 yr. 93,750 6.25
Rainbow Stores 4,200 01/02 1/5 yr. 42,000 10.00
Famous Footwear 4,800 01/98 - 43,200 9.00
Dollar Tree 4,000 02/01 1/3 yr. 41,000 10.25
Colortyme 3,200 04/98 - 38,400 12.00
Cash of Indiana 2,800 06/99 1/5 yr. 27,720 9.90
Terry Snyder 1,600 11/98 1/5 yr. 9,296 5.81
Ameritech Cellular 1,400 02/00 - 18,200 13.00
Sally Beauty
Company 1,400 09/00 - 18,200 13.00
Seno Formal Wear 1,400 12/98 1/5 yr. 18,200 13.00
Mail Box Depot 1,400 12/99 - 15,400 11.00
Hicks Chiropractor 1,400 06/99 - 15,400 11.00
China Garden 1,400 12/04 1/5 yr. 32,400 23.14
Banc One 1,400 06/98 1/5 yr. 15,400 11.00
Nail Luv Salon 1,200 09/00 1/3 yr. 15,600 13.00
Eyeglass Emporium 1,400 10/00 - 16,800 12.00
Cost Cutters 1,000 12/02 - 16,800 12.00
Vacant 11,400
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. GLA Annual Base Total Per Square Building GLA Rent
Year Number of of Expiring Rent of Annual Foot Under Represented Represented
Ending Leases Leases Expiring Base Expiring by Expiring By Expiring
December 31, Expiring (Sq. Ft.) Leases Rent (1) Leases Leases Leases
- ----------- --------- ----------- ----------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 2 4,600 $ 53,800 $1,340,611 $ 11.70 2.00% 4.01%
1999 3 9,000 90,920 1,288.811 10.10 3.92 7.05
2000 4 5,400 79,800 1,206,845 14.78 2.35 6.61
2001 3 9,600 103,300 1,154,867 10.76 4.18 8.94
2002 2 12,800 236,600 1,051,567 18.48 5.57 22.50
2003 3 18,000 161,397 897,967 8.97 7.84 17.97
2004 2 2,800 34,650 771,221 12.38 1.22 4.49
2005 - - - 736,571 - - -
2006 - - - 736,571 - - -
2007 - - - 736,571 - - -
(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>
-11-
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 the Lake Park Plaza property, as of
August 18, 1997, of $12,500,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Homewood Plaza, Homewood, Illinois
On February 23, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 175th and Halsted in Homewood, Illinois
known as "Homewood Plaza" from George Hanus, an unaffiliated third party, for
approximately $1,936,300. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $101.90 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.
Homewood Plaza was built in 1993 and consists of a one-story, multi-tenant
retail facility aggregating 19,000 rentable square feet. As of February 28,
1998, Homewood Plaza was 100% leased. In evaluating Homewood 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 92%
of the rentable square feet at Homewood Plaza is leased to two tenants, the
Company's management believes that retenanting of any space which is vacated in
the future should be accomplished relatively quickly and at rental rates
comparable to those currently paid by the tenants at the facility. The Company
did not consider any other factors materially relevant to the decision to
acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Homewood 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.
The table below sets forth certain information with respect to the occupancy
rate at Homewood 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% $10.89
1996 100 11.97
1995 100 11.97
1994 100 11.97
1993* 40 5.13
* Construction of Homewood Plaza was completed in late 1993.
-12-
Tenants leasing more than 10% of the total square footage include Super Trak
Auto, an auto parts store, and Blockbuster Video, a video rental 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
- ----------- ----------- ----------- ------------ ------------ ---------
Super Trak Auto 10,000 53% $10.00 Currently 01/31/99
10.50 02/01/99 01/31/04
Option 1 11.00 02/01/04 01/31/09
Option 2 11.50 02/01/09 01/31/14
Blockbuster Video 7,500 39% 13.00 Currently 12/31/03
Option 1 13.00 01/01/04 12/31/04
14.56 01/01/05 12/31/09
16.31 01/01/10 12/31/13
For federal income tax purposes, the Company's depreciable basis in Homewood
Plaza will be approximately $1,394,000. 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 $35,251.
On February 28, 1998, a total of 19,000 square feet was leased to three tenants
at Homewood Plaza. The following tables set forth certain information with
respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Super Trak Auto 10,000 12/03 2/5 yr. $100,000 $10.00
Blockbuster Video 7,500 01/04 1/10 yr. 97,500 13.00
Redwing Shoes 1,500 05/02 1/5 yr. 22,500 15.00
-13-
<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 - - - $220,000 - - -
1999 - - - 220,000 - - -
2000 - - - 225,000 - - -
2001 - - - 225,000 - - -
2002 1 1,500 $ 22,500 225,000 $ 15.00 8% 10%
2003 1 7,500 97,500 202,500 10.50 39% 48%
2004 1 10,000 105,000 105,000 13.00 53% 100%
(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 the Homewood Plaza property, as of
October 3, 1997, of $1,975,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Wisner/Milwaukee Plaza, Chicago, Illinois
On February 23, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 2865 N. Milwaukee in Chicago, Illinois
known as "Wisner/Milwaukee Plaza" from George Hanus, an unaffiliated third
party, for approximately $1,885,300. The purchase price was funded using cash
and cash equivalents. The purchase price was approximately $128.45 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.
Wisner/Milwaukee Plaza was built in 1994 and consists of a one-story, multi-
tenant retail facilities aggregating 14,677 rentable square feet. As of
February 28, 1998, Wisner/Milwaukee Plaza was 100% leased. In evaluating
Wisner/Milwaukee 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.
The Company's management believes that retenanting of any space which is
vacated in the future at Wisner/Milwaukee plaza should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the tenants at the facility. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
-14-
The Company does not anticipate making any significant repairs and improvements
to Wisner/Milwaukee 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.
The table below sets forth certain information with respect to the occupancy
rate at Wisner/Milwaukee 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% $14.12
1996 100 14.12
1995 76 11.98
1994 55 8.28
Tenants leasing more than 10% of the total square footage include Blockbuster
Video, a video rental store, and Spincycle, a laundromat. 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
- ----------- ----------- ----------- ------------ ------------ ---------
Blockbuster Video 6,600 45% $15.00 Currently 11/30/99
Option 1 16.50 12/01/99 11/30/02
Spincycle 5,139 35% 13.50 Currently 07/31/01
Option 1 14.45 08/01/01 07/31/06
For federal income tax purposes, the Company's depreciable basis in
Wisner/Milwaukee Plaza will be approximately $1,376,000. 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 $62,504.
-15-
On February 28, 1998, a total of 14,677 square feet was leased to four tenants
at Wisner/Milwaukee Plaza. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Blockbuster Video 6,600 11/99 1/3 yr. $99,000 $15.00
Giordanos 1,500 12/99 1/5 yr. 22,500 15.00
Spincycle* 5,139 12/01 1/5 yr. 69,376 13.50
Dollar Store 1,438 02/01 1/3 yr. 16,321 11.35
* In addition, Wisner/Milwaukee Plaza receives $12,000 per annum relating to the
rental of a billboard, through the term of this lease.
<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 - - - $207,198 - - -
1999 2 8,100 $ 121,500 207,198 $15.00 55.2% 58.6%
2000 - - - 85,698 - - -
2001 2 6,577 85,698 85,698 $13.03 44.8% 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 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 the Wisner/Milwaukee Plaza property, as
of October 1, 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.
-16-
Elmhurst City Center, Elmhurst, Illinois
On February 25, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at York Road and Schiller Street in
Elmhurst, Illinois known as "Elmhurst City Center" for a total purchase price
of approximately $4,775,000. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $114.40 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.
Elmhurst City Center consists of a 13,250 square foot building occupied by
Ruby's Apparel Shop, a 13,687 square foot building occupied by Walgreens and a
12,180 square foot building occupied by seven other tenants. The Ruby's
Apparel Shop building was owned by Jerold Ruby and the other two buildings were
owned by One City Center, L.L.C. The Company took an assignment of the
contract between Jerold Ruby and One City Center, L.L.C. and purchased the
entire property as one acquisition from One City Center, L.L.C. Heidi Lawton,
Independent Director of the Company, is the owner of Lawton Realty Group which
controls One City Center, L.L.C., and accordingly, Ms. Lawton did not vote on
the acquisition of this property. The action was approved by the remaining
Directors. One City Center, L.L.C. purchased the two buildings in the fall of
1997. See "Certain Relationships and Related Transactions".
Although Ruby's Apparel Shop has been in existence for approximately fifty
years, the additional buildings were constructed in 1994. The total property
aggregates 39,117 rentable square feet. As of February 28, 1998, Elmhurst City
Center was 99% leased. In evaluating Elmhurst City 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. Over the next eighteen months, Ruby's
Apparel Shop will be vacating its space and the Company will be retenanting the
space. The Company will continue to receive rental payments during this
eighteen month period. The Company's management believes that retenanting of
the Ruby space and any other space vacated should be accomplished relatively
quickly and at rental rates comparable to those currently paid by the tenants
at the facility. The Company did not consider any other factors materially
relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Elmhurst City 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.
-17-
The table below sets forth certain information with respect to the occupancy
rate at Elmhurst City 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% $12.79
1996 100 12.75
1995 100 12.75
1994 100 5.62
1993 100 13.00
Tenants leasing more than 10% of the total square footage include Ruby's
Apparel Shop, a retail clothing store, Walgreens, a pharmacy, and Famous
Footwear, a shoe 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
- ----------- ----------- ----------- ------------ ------------ ---------
Ruby's 13,250 34% $ 13.00 Current 07/31/99
Walgreens 13,687 35% $ 11.50 Current 12/31/05
12.47 01/01/06 12/31/44
Famous Footwear 5,115 13% $ 13.50 Current 09/30/99
Option 1 14.50 10/01/99 09/30/04
Option 2 15.50 10/01/04 09/30/09
Option 3 16.50 10/01/09 09/30/14
For federal income tax purposes, the Company's depreciable basis in Elmhurst
City Center will be approximately $2,578,500. 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 $59,271.
-18-
On February 28, 1998, a total of 38,697 square feet was leased to nine tenants
at Elmhurst City Center. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Ruby's Apparel
Shop 13,250 07/99 - $172,250 $13.00
Walgreens 13,687 12/44 - 157,401 11.50
Famous Footwear 5,115 09/99 3/5 yr 69,053 13.50
Sunshine Nails 1,200 09/99 - 18,000 15.00
Fantastic Sams 1,200 10/99 1/5 yr 19,464 16.22
Bruegger's Bagels 2,025 10/04 1/5 yr 34,425 17.00
Fresco's 900 07/99 - 13,050 14.50
Phone Shop 900 01/01 - 14,400 16.00
Elmhurst City
Center 420 04/00 1/5 yr 4,918 11.71
Vacant 420
<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 - - - $502,961 - - -
1999 5 21,665 $ 292,147 503,413 $ 13.48 55.4% 58.0%
2000 1 420 5,040 211,266 12.00 1.1 2.4
2001 1 900 14,400 210,276 16.00 2.3 6.8
2002 - - - 195,876 - - -
2003 - - - 195,876 - - -
2004 1 2,025 40,500 197,901 20.00 5.2 20.5
2005 - - - 157,401 - - -
2006 - - - 170,677 - - -
2007 - - - 170,677 - - -
(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>
-19-
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 the Elmhurst City Center property, as of
January 14, 1998, of $4,785,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Mill Creek, Palos Park, Illinois
On March 4, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at LaGrange Road and 131st Street in Palos
Park, Illinois known as "Mill Creek" from Jaeger Trust Properties, L.L.C., an
unaffiliated third party, for approximately $11,360,000. As part of the
purchase, the Company assumed the existing mortgage with a principal balance of
$9,500,000. The mortgage requires interest only payments at the rate of 8% per
annum through September 1999. The Company paid a $92,000 loan assumption fee
to the lender. The balance of the purchase price was funded using cash and cash
equivalents. The purchase price was approximately $110.90 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.
Mill Creek was built in 1989 and consists of a one-story, multi-tenant retail
facility aggregating 102,433 rentable square feet. As of February 28, 1998,
Mill Creek was 97% leased (100% leased if the Master lease, which lasts for one
year, is considered). In evaluating Mill Creek as a potential acquisition, the
Company considered a variety of factors including location, demographics,
tenant mix, price per square foot, existing rental rates compared to market
rates, and occupancy. The Company believes that the center is located within a
vibrant economic area. The Company's management believes that retenanting of
any space which is vacated in the future should be accomplished relatively
quickly and at rental rates comparable to those currently paid by the tenants
at the facility. The Company did not consider any other factors materially
relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Mill Creek over the next few years. Nevertheless, 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 Mill Creek 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 98% $11.07
1996 95 12.14
1995 99 10.86
1994 * *
1993 * *
*Information for 1994 and 1993 was not available from seller.
-20-
One tenant leases more than 10% of the total square footage, Jewel Foods, a
grocery store. This lease requires the payment of base annual rent, payable
monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Jewel Foods 64,938 63% $ 9.40 Currently 04/30/10
For federal income tax purposes, the Company's depreciable basis in Mill Creek
will be approximately $8,175,000. 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 $579,007.
On February 28, 1998, a total of 98,783 square feet were leased to twenty
tenants at Mill Creek. The following tables set forth certain information with
respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
The Mole Hole of
Palos 2,203 06/99 - $40,756 $18.50
Coren Jewelers 1,620 08/99 - 30,780 19.00
TBD Eyeware 2,250 02/00 1/2 yr 33,750 15.00
Mill Creek Dental 1,826 04/03 - 32,868 18.00
Are You Traveling,
Inc. 1,774 06/00 - 24,836 14.00
Palos Park Cleaners 1,125 12/03 - 30,375 27.00
Subway 1,139 05/00 2/5 yr 22,951 20.15
Avanti Hair Salon 2,110 08/99 1/5 yr 37,980 18.00
Sasche Women's
Apparel 1,200 07/99 - 13,920 11.60
Cigarettes Cheaper 1,215 07/99 - 20,655 17.00
Card Smart 2,400 02/03 1/4 yr 28,800 12.00
Park Men's Shop 4,850 12/00 1/5 yr 48,500 10.00
Accent Tan Span II 1,133 01/01 - 18,128 16.00
Amlings Flowerland 2,265 03/00 1/5 yr 33,975 15.00
Celluland
Communication 1,133 04/00 1/5 yr 16,995 15.00
Wild Birds
Unlimited 2,000 02/01 - 24,000 12.00
Good Sensations 1,251 12/99 - 18,765 15.00
The Expresso
Elegante 1,161 11/99 1/5 yr 23,220 20.00
Pintracker 1,200 02/02 - 16,800 14.00
Jewel Companies
Inc. 64,938 04/10 - 610,417 9.40
Vacant 3,650
-21-
<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 - - - $1,130,234 - - -
1999 7 10,760 $ 189,546 1,144,084 $ 17.62 10.50% 16.57%
2000 6 13,411 191,670 959,058 14.29 13.09 19.99
2001 3 4,333 62,961 771,297 14.53 4.23 8.16
2002 - - - 710,586 - - -
2003 3 5,351 100,169 710,586 18.72 5.22 14.10
2004-
2007 - - - 610,417 - - -
(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 the Mill Creek property, as of December
31, 1998, of $11,400,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
-22-
Oak Forest Commons, Oak Forest, Illinois
On March 5, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 159th and Central in Oak Forest, Illinois
known as "Oak Forest Commons" from T-L Oak Forest Commons, Inc., an
unaffiliated third party, for approximately $11,809,000. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $114.96 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. The Company
placed an additional $650,000 in an escrow to complete a remaining 4,500 square
feet of Oak Forest Commons.
Oak Forest Commons was built in 1998 and consists of three one-story, multi-
tenant retail facilities aggregating 103,860 rentable square feet. As of
February 28, 1998, Oak Forest Commons was 99% leased (100% leased if the master
lease, which lasts for one year, is considered). In evaluating Oak Forest
Commons as a potential acquisition, the Company considered a variety of factors
including location, demographics, tenant mix, price per square foot, existing
rental rates compared to market rates, and occupancy. The Company believes
that the center is located within a vibrant economic area. The Company's
management believes that retenanting of any space which is vacated in the
future should be accomplished relatively quickly and at rental rates comparable
to those currently paid by the tenants at the facility. The Company did not
consider any other factors materially relevant to the decision to acquire the
property.
The Company does not anticipate making any significant repairs and improvements
to Oak Forest Commons over the next few years. Nevertheless, a substantial
portion of any cost of repairs and improvements would be paid by the tenants.
One tenant leases more than 10% of the total square footage, Dominick's Finer
Foods, a grocery store. This lease requires the payment of base annual rent,
payable monthly as follows:
Base Rent
Per Square
Square Feet % of Total Foot Per Lease Term
Lessee Leased Square Feet Annum Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Dominick's Finer
Foods 72,385 66.8% $ 12.39 Current
For federal income tax purposes, the Company's depreciable basis in Oak Forest
Commons will be approximately $8,975,000. 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.
Oak Forest Commons was constructed in 1996 and 1997 and therefore, prior year's
real estate taxes are not relevant.
-23-
On February 28, 1998, a total of 102,780 square feet were leased to twelve
tenants at Oak Forest Commons. The following tables set forth certain
information with respect to the amount of and expiration of the lease at this
Neighborhood Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Dominick's Finer
Foods 72,385 09/17 4/5 yr $896,493 $12.39
Hollywood Video 6,931 10/07 2/5 yr 119,560 17.25
One Hour Cleaners 1,320 12/02 1/5 yr 22,440 17.00
Chop Suey 1,080 02/03 1/5 yr 16,200 15.00
Great Clips 1,080 01/03 1/5 yr 19,440 18.00
Lucky Nails 1,080 12/02 - 15,120 14.00
Sears Optical 1,200 03/03 1/5 yr 21,500 18.00
Hallmark 4,000 02/03 2/5 yr 44,000 11.00
Murrays 10,000 12/07 2/5 yr 100,000 10.00
Sally Beauty 1,600 01/03 1/5 yr 25,600 16.00
Hickory Tobacco 1,120 01/03 1/5 yr 19,040 17.00
Ken & Dick's Pizza 984 04/03 1/5 yr 16,728 17.00
-24-
<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 - - - $1,297,399 - - -
1999 - - - 1,297,399 - - -
2000 - - - 1,301,355 - - -
2001 - - - 1,304,521 - - -
2002 3 3,520 $ 61,636 1,306,681 $ 17.51 3.39% 4.72%
2003 5 8,864 132,608 1,274,418 14.96 8.53 10.41
2004 - - - 1,142,890 - - -
2005 - - - 1,142,890 - - -
2006 - - - 1,142,890 - - -
2007 2 16,931 243,907 1,143,970 14.41 16.30 21.32
(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 the Oak Forest Commons property, as of
January 1, 1998, of $13,100,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
-25-
Prairie Square, Sun Prairie, Wisconsin
On March 6, 1998, the Company acquired a Neighborhood Retail Center located at
2015-2111 McCoy Road in Sun Prairie, Wisconsin known as "Prairie Square"
from Prairie Square L.L.C., an unaffiliated third party, for approximately
$3,100,000. The purchase price was funded using cash and cash equivalents.
The purchase price was approximately $86.70 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.
Prairie Square was built in 1995 and consists of two one-story, multi-tenant
retail facilities aggregating 35,755 rentable square feet. As of February 28,
1998, Prairie Square was 94% leased (100% leased if the master lease, which
lasts for one year is considered). In evaluating Prairie Square as a potential
acquisition, the Company considered a variety of factors including location,
demographics, tenant mix, price per square foot, existing rental rates compared
to market rates, and occupancy. The Company believes that the center is
located within a vibrant economic area. The Company's management believes that
retenanting of any space which is vacated in the future should be accomplished
relatively quickly and at rental rates comparable to those currently paid by
the tenants at the facility. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Prairie Square 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 Prairie Square expressed as a percentage of total gross leasable area
and the average effective annual base rent per square foot.
Occupancy Rate
as of Effective
Year Ending December 31, Annual Rental
December 31, of Each Year Per Square Ft
------------ ------------ -------------
1997 94% $ 9.33
1996 79 8.16
1995 71 7.30
-26-
Tenants leasing more than 10% of the total square footage include Famous
Footwear, a shoe store, and Blockbuster Video, a video rental 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
- ----------- ----------- ----------- ------------ ------------ ---------
Famous Footwear 5,000 14% $ 9.00 Currently 09/30/00
Blockbuster Video 6,500 18% 11.00 Currently 08/31/00
For federal income tax purposes, the Company's depreciable basis in Prairie
Square will be approximately $2,635,000. 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 $54,104.
On February 28, 1998, a total of 33,455 square feet were leased to sixteen
tenants at Prairie Square. The following tables set forth certain information
with respect to the amount of and expiration of the lease at this Neighborhood
Retail Center.
Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
Hallmark 3,200 12/02 - $27,200 $ 8.50
Famous Footwear 5,000 09/00 - 45,000 9.00
Formal Wear 1,300 12/98 1/6 yr. 14,300 11.00
Big Apple Bagels 1,900 12/01 1/3 yr. 20,900 11.00
Nature's Way 1,200 12/00 - 13,200 11.00
Post Net 1,360 12/00 - 14,280 10.50
Coffee Gallery 1,200 12/98 1/3 yr. 13,200 11.00
Carlson Travel 1,520 12/99 - 16,720 11.00
K-Nails 1,200 12/00 - 13,800 11.50
Cash Store 1,031 01/00 1/4 yr. 11,341 11.00
Country Charm 1,644 12/98 1/2 yr. 16,308 9.92
Mr. Gyro 1,200 03/99 - 13,200 11.00
Great Clips 1,200 12/00 1/5 yr. 13,800 1.50
The Basketcase 2,000 12/98 1/2 yr. 21,000 10.50
Radio Shack 2,000 01/01 1/5 yr. 18,000 9.00
Blockbuster Video 6,500 08/00 - 71,500 11.00
Master Lease 2,300
-27-
<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 4 6,144 $ 66,239 $345,860 $ 10.78 17.18% 19.15%
1999 2 2,720 29,920 280,301 11.00 7.61% 10.67%
2000 7 17,491 184,281 251,331 10.54 48.92% 73.32%
2001 2 3,900 39,850 67,050 10.22 10.91% 59.43%
2002 1 3,200 27,200 27,200 8.50 8.95% 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 the Prairie Square property, as of
January 1, 1998, of $3,150,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Item 7. Financial Statements and Exhibits
To be subsequently filed.
-28-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Inland Real Estate Corporation
(Registrant)
By:/s/ KELLY TUCEK
Kelly Tucek
Chief Financial and Accounting Officer
Date: March 19, 1998
-29-
