Inland Real Estate Corporation
Sticker Supplement
This Supplement No. 3 to the Company's Prospectus 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 23, 1998, the Company made the first loan advance toward the
construction of the Staples Office Supply Store located in Freeport, Illinois.
The advance of approximately $870,000 was made to Chicago Title and Trust
Company and will be disbursed to various contractors upon submission of signed
lien waivers to Chicago Title and Trust Company. The Company will earn
interest on the outstanding loan balance at the rate of 9.5% per annum, paid
monthly in advance.
On April 24, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 7475 Mineral Point Road in Madison,
Wisconsin known as "High Point Centre" from an unaffiliated third party for a
purchase price of approximately $10,354,000.
Plan of Distribution
The Company commenced the offering on April 7, 1998. As of April 27, 1998, the
Company had accepted subscriptions for 628,329 shares ($6,255,015 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
April 27, 1998, these commissions and fees totaled $656,604. An Affiliate of
the Advisor is also entitled to receive Property Management Fees for management
and leasing services.
SUPPLEMENT NO. 3
DATED APRIL 27, 1998
TO THE PROSPECTUS DATED APRIL 7, 1998
OF INLAND REAL ESTATE CORPORATION
This Supplement No. 3 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
and Supplement No. 2 dated April 21, 1998 and must be read in conjunction
therewith. This Supplement No. 3 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
Staples Office Supply Store, Freeport, Illinois
On April 23, 1998, the Company made the first loan advance toward the
construction of the Staples Office Supply Store located in Freeport, Illinois.
The advance of approximately $870,000 was made to Chicago Title and Trust
Company and will be disbursed to various contractors upon submission of signed
lien waivers to Chicago Title and Trust Company. The Company will earn
interest on the outstanding loan balance at the rate of 9.5% per annum, paid
monthly in advance.
High Point Centre, Madison, Wisconsin
On April 24, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 7475 Mineral Point Road in Madison,
Wisconsin known as "High Point Centre" from The Gialamas Company, an
unaffiliated third party, for approximately $10,354,000. The purchase price
was funded using cash and cash equivalents. The purchase price was
approximately $119.73 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.
High Point Centre was built in 1984 and consists of a one-story, multi-tenant
retail facility aggregating 86,476 rentable square feet. As of April 24, 1998,
High Point Centre was 99% leased (100% leased if the master lease, which lasts
for one year, is considered). In evaluating High Point Centre 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 High Point Centre,
adjacent to this areas regional mall, is strategically located in the newest
and fastest growing sector of the metro Madison area. This area, along with
High Point Centre, has long enjoyed high occupancy rates. 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.
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The Company does not anticipate making any significant repairs and improvements
to High Point Centre 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 High Point Centre 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 99% $11.46
1996 97 11.42
1995 97 11.07
1994 100 10.75
1993 100 10.43
One tenant leases more than 10% of the total square footage, Pier 1 Imports, a
home furnishing 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
- ----------- ----------- ----------- ------------ ------------ ---------
Pier 1 Imports 8,976 10% $ 15.25 Current 02/28/00
17.25 03/01/00 02/28/05
For federal income tax purposes, the Company's depreciable basis in High Point
Centre will be approximately $7,800,000. 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 1998 for the tax year ended 1997 (the most recent
tax year for which information is generally available) were $147,561.
On April 24, 1998, a total of 85,324 square feet was leased to twenty-eight
tenants at High Point Centre. The following tables set forth certain
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center:
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Square Feet Lease Renewal Current Rent per
Lessee Leased Ends Option Annual Rent Square Foot
------ ---------- ----- ------ ----------- -----------
Pier 1 Imports 8,976 02/05 - $136,884 $15.25
Paper Heaven 3,760 06/99 - 47,000 12.50
Catura's Gallery 1,754 06/00 1/3 yr. 21,925 12.50
Hong Kong Cafe 2,862 08/04 3/5 yr. 40,068 14.00
Suiters Ltd. 2,608 03/01 3/5 yr. 28,688 11.00
TQ Diamonds 1,512 04/00 - 21,213 14.03
Easycuts 1,800 04/01 - 27,450 15.25
Pilgrim Cleaners 2,800 09/04 - 42,700 15.25
Inches A Weigh 1,668 04/01 1/5 yr. 20,850 12.50
Cottonwood Futons 2,000 06/99 2/5 yr. 27,000 13.50
Total Awards 4,650 06/01 2/5 yr. 46,500 10.00
Dimaggio Design 6,360 03/00 2/5 yr. 61,756 9.71
American Paging 3,336 01/00 2/5 yr. 53,042 15.90
Frugal Muse Books 6,100 09/04 - 73,200 12.00
Salon 2000 7,525 10/06 3/5 yr. 86,538 11.50
Rundell's Mens Wear 2,682 11/98 - 34,866 13.00
Computer Renaissance 2,308 12/99 1/5 yr. 31,158 13.50
A A Tailors 600 06/00 - 7,416 12.36
Madison Outfitters 1,450 08/00 2/3 yr. 17,400 12.00
Cobbler Shop 1,512 09/99 2/5 yr. 20,412 13.50
Intimate Hours 1,431 08/01 1/5 yr. 17,888 12.50
Garden Market 2,350 05/02 - 26,438 11.25
Nevada Bobs 4,990 02/07 1/5 yr. 64,870 13.00
A & W Gold Foods 2,850 12/00 3/5 yr. 23,997 8.42
Angels for all
Reasons 1,150 08/99 - 11,500 10.00
Avco Financial
Services 1,710 10/02 1/5 yr. 22,230 13.00
California Closets 1,300 10/99 - 16,900 13.00
Exclusive Co. 3,280 06/01 1/5 yr. 43,985 13.41
Vacant 1,152
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<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 2,682 $ 34,866 $1,068,567 $ 13.00 3.10% 3.26%
1999 6 12,030 157,455 1,060,491 13.09 13.91 14.85
2000 7 17,862 223,438 935,558 12.51 20.66 23.88
2001 6 15,437 208,379 751,303 13.50 17.85 27.74
2002 2 4,060 50,430 555,651 12.42 4.69 9.08
2003 - - - 517,359 - - -
2004 3 11,762 188,204 529,498 16.00 13.60 35.54
2005 1 8,796 154,836 347,551 17.25 10.38 44.55
2006 1 7,525 116,638 198,973 15.50 8.70 58.62
2007 1 4,990 84,830 84,830 17.00 5.77 100.00
(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 High Point Centre, as of April 15, 1998,
of $10,400,000. Appraisals are estimates of value and should not be relied on
as a measure of true worth or realizable value.
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Plan of Distribution
The Company commenced the Offering on April 7, 1998, and as of April 27, 1998
had accepted subscriptions for 628,329 shares ($6,255,015 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 April 27, 1998,
these commissions and fees totaled $656,604. 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.
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