As filed with the Securities and Exchange Commission on August 12, 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: August 6, 1998
(Date of earliest event reported)
Inland Real Estate Corporation
(Exact name of registrant as specified in the charter)
Maryland 0-28382 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
Since the filing of the last Form 8-K by the Company on May 28, 1998, the
Company has acquired six additional properties. As of the acquisition of
Stuarts Crossing on August 6, 1998, the aggregate purchase prices of these
properties exceeded 10 percent of the total assets of the Company as of
December 31, 1997, and accordingly, the Company is filing this Form 8-K.
Woodland Heights Shopping Center, Streamwood, IL
On June 5, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 225 Irving Park Road in Streamwood,
Illinois known as "Woodland Heights Shopping Center" from Woodland Heights
Associates, an unaffiliated third party, for approximately $9,600,000
(approximately $79.44 per square foot). The purchase price was funded using
cash and cash equivalents. The Company believes that the purchase price was
fair and reasonable based on, among other things, an appraisal received by the
Company and presented to the Company's board of directors.
Woodland Heights Shopping Center, built in 1956 and expanded in 1985 and
renovated in 1997, is a one-story, multi-tenant retail facility containing
120,436 leasable square feet. As of June 30, 1998, Woodland Heights Shopping
Center was 86% leased (100% leased if the master lease, which lasts for one
year, is considered). The Company believes the space currently being master
leased will be leased to new tenants prior to the termination of the master
lease. In evaluating Woodland Heights Shopping Center as a potential
acquisition, the Company considered a variety of factors including location,
demographics, tenant mix, price per square foot, occupancy and the fact that
overall rental rates at the center are comparable to market rates. As part of
an overall renovation project in 1997, the Jewel/Osco store was expanded to
60,626 square feet, a new facade and new signage was created for the other
tenants, new roofing was installed throughout the center, the parking lot was
resurfaced and new parking lot lighting was installed. The Company believes
that the center is located within a vibrant economic area. 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 Woodland Heights Shopping Center over the next few years. A substantial
portion of any monies spent on repairs and improvements would be paid by the
tenants pursuant to the terms of existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Woodland Heights Shopping Center expressed as a percentage of total
gross leasable area and the average effective annual base rent per leasable
square foot:
Occupancy Rate
as of Effective
December 31, Annual Rental
Year Ending of Each Year Per Square Ft
December 31, % $
------------ ------------ -------------
1997 86 6.09
1996 87 6.06
1995 86 6.07
1994 95 7.65
1993 100 7.47
-2-
Two tenants lease more than 10% of the total gross leasable area of the
property: Jewel Food Store, a grocery store and the U.S. Postal Service. The
leases with these tenants require each of the to pay base annual rent on a
monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Jewel Food Store 60,626 50 5.00 Currently 11/30/12
Option 1 5.00 12/01/12 11/30/47
U.S. Postal Service 17,750 15 8.00 Currently 11/30/99
9.00 12/01/99 11/30/04
For federal income tax purposes, the Company's depreciable basis in Woodland
Heights Shopping Center is approximately $7,000,000. Depreciation expense, for
tax purposes, is 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 available) were $451,843. The real estate
taxes were calculated by multiplying the assessed value by an equalizer of
2.1517% and a tax rate of 10.584%.
On June 30, 1998, a total of 103,586 square feet was leased to twelve tenants
at Woodland Heights Shopping Center. The following tables set forth certain
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
U.S. Postal
Service 17,750 11/04 - 142,000 8.00
Home to Home 1,600 10/98 1/3 yr. 21,618 13.23
1/2 yr.
1/3 yr.
Hollywood Video 8,000 09/07 2/5 yr. 114,000 14.25
Lifestyles 2,000 09/00 1/2 yr. 24,000 12.00
Jewel Food Store 60,626 11/12 1/35 yr. 303,130 5.00
New Horizon's
Hair Design 2,000 12/03 1/5 yr. 28,000 14.00
Streamwood Currency
Exchange 1,050 11/00 - 17,724 16.88
Danny's Pizza 1,010 09/06 - 11,110 11.00
Bo Mei Restaurant 2,100 03/03 - 26,250 12.50
Woodland Cleaners 1,050 12/98 1/5 yr. 15,750 15.00
Subway 1,600 01/01 2/5 yr. 20,000 12.50
Video Galaxy 4,800 11/98 - 67,200 14.00
Vacant 16,850
-3-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 3 7,450 104,118 789.018 13.98 6.19 13.20
1999 - - - 687,224 - - -
2000 2 3,050 42,260 706,310 13.86 2.53 5.98
2001 1 1,600 21,600 665,860 13.50 1.33 3.24
2002 - - - 645,310 - - -
2003 2 4,100 55.300 660,000 13.49 3.40 8.38
2004 1 17,750 159,750 604,700 9.00 14.74 26.42
2005 - - - 445,960 - - -
2006 1 1,010 15,150 445,960 15.00 .84 3.40
2007 1 8,000 127,680 430,810 15.96 6.64 29.64
(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 existing at
the time of releasing.
</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 Woodland Heights Shopping Center
property, as of May 28, 1998, of $9,650,000. Appraisals are estimates of value
and should not be relied on as a measure of true worth or realizable value.
Walgreens Property, Woodstock, IL
On June 23, 1998, the Company acquired the entire fee simple interest in a
Single-user retail property located at 331 N. Irving Avenue in Woodstock,
Illinois known as "the Walgreens property" from Woodstock Walgreen Venture, an
unaffiliated third party, for approximately $1,162,000 (approximately $73.82
per square foot). The purchase price was funded using cash and cash
equivalents. The Company believes that the purchase price was fair and
reasonable based on, among other things, an appraisal received by the Company
and presented to the Company's board of directors.
-4-
The Walgreens property, built in 1973, is a one-story, single-user retail
facility aggregating 15,856 leasable square feet. As of June 30, 1998, the
Walgreens property was 100% leased. In evaluating the Walgreens property as a
potential acquisition, the Company considered a variety of factors including
location, demographics, price per square foot, occupancy and the fact that
overall rental rates at the center are comparable to market rates. The Company
believes that the center is located within a vibrant economic area. This
property has been recently renovated to include a drive-up facility. The
Company did not consider any other factors materially relevant to the decision
to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to the Walgreens property over the next few years. A substantial portion of
any monies spent on repairs and improvements would be paid by the tenant
pursuant to the terms of the existing lease.
The table below sets forth certain information with respect to the occupancy
rate at the Walgreens property expressed as a percentage of total gross
leasable area and the average effective annual base rent per leasable square
foot:
Occupancy Rate
as of Effective
December 31, Annual Rental
Year Ending of Each Year Per Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 6.99
1996 100 6.99
1995 100 6.99
1994 100 6.99
1993 100 6.99
One tenant leases the total gross leasable area of the property: Walgreens, a
drug store. The lease with this tenant requires it to pay base annual rent on
a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Walgreens 15,856 100 6.99 Current 03/31/30
For federal income tax purposes, the Company's depreciable basis in the
Walgreens property is approximately $760,000. Depreciation expense, for tax
purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes for this property are paid by the tenant and are not
available from the seller.
-5-
On June 30, 1998, a total of 15,856 square feet was leased to one tenant at the
Walgreens property. The following tables set forth certain information with
respect to the amount of and expiration of the leases at this Single User
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Walgreens 15,856 03/30 - $110,800 $6.99
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998-
2007 - - - $110,800 - - -
(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 existing at the
of releasing.
</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 Walgreens property, as of May 26,
1998, of $1,200,000. Appraisals are estimates of value and should not be
relied on as a measure of true worth or realizable value.
Schaumburg Plaza Shopping Center, Schaumburg, Illinois
On June 30, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at Barrington Road and Weathersfield Road in
Schaumburg, Illinois known as "Schaumburg Plaza" from George Hanus, an
unaffiliated third party for approximately $6,987,300 (approximately $113.64
per square foot). As part of the acquisition of Schaumburg Plaza, the Company
assumed the existing debt of $3,924,183. This debt requires monthly payments
of interest only at a rate of 9.25% per annum through September 2004, and then
requires monthly payments of principal and interest at a rate of 9.25% per
annum, based on a 30 year amortization schedule through December 2009. The
balance of the purchase price was funded using cash and cash equivalents. The
Company believes the purchase price was fair and reasonable based on, among
other things, an appraisal received by the Company and presented to the
Company's board of directors.
-6-
Schaumburg Plaza, built in 1994, is a one-story, multi-tenant retail facility
aggregating 61,485 leasable square feet. As of June 30, 1998, Schaumburg Plaza
was 93% leased. (100% leased if the master lease, which lasts for one year, is
considered). In evaluating Schaumburg Plaza as a potential acquisition, the
Company considered a variety of factors including location, demographics,
tenant mix, price per square foot, occupancy and the fact that overall rental
rates at the center are comparable to market rates. The center is newly built
with several strong anchor tenants: Sears, Trak Auto and Ulta III. The Company
believes that the center is at a prime location within a vibrant economic area.
The Company did not consider any other factors materially relevant to the
decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Schaumburg Plaza over the next few years. A substantial portion of any
monies spent on repairs and improvements would be paid by the tenants, pursuant
to the terms of the existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Schaumburg Plaza expressed as a percentage of total gross leasable area
and the average effective annual base rent per leasable square foot:
Occupancy Rate
as of Effective
December 31, Annual Rental
Year Ending of Each Year Per Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 12.14
1996 100 11.92
1995 100 11.92
1994 95 *
1993 * *
*Construction was completed on Schaumburg Plaza in the fourth quarter of 1994.
Three tenants lease more than 10% of the total gross leasable area of the
property: Sears, a hardware store, Trak Auto, an auto parts store and Ulta III,
a cosmetic store. The leases with these tenants require each of them to pay
base annual rent on a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Sears 20,076 32.54 12.00 Currently 09/30/04
Option 1 13.00 10/01/04 09/30/09
14.00 10/01/09 09/30/14
Trak Auto 20,000 32.53 8.50 Currently 12/31/99
Option 1 9.00 01/01/00 12/31/04
9.50 01/01/05 12/31/10
10.00 01/31/10 12/31/14
-7-
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Ulta III 8,500 13.82 11.00 Currently 01/31/00
Option 1 12.00 02/01/00 01/31/05
For federal income tax purposes, the Company's depreciable basis in Schaumburg
Plaza is approximately $5,200,000. Depreciation expense, for tax purposes, is
computed using the straight-line method. Buildings and improvements are
depreciated based upon estimated useful lives of 40 years. Real estate taxes
paid in 1997 for the tax year ended 1996 (the most recent tax year for which
information is generally available) were $414,144. The real estate taxes were
calculated by multiplying the assessed value by an equalizer of 2.1517% and a
tax rate of 9.094%.
On June 30, 1998, a total of 61,485 square feet was leased to eight tenants at
Schaumburg Plaza. The following tables set forth certain information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approx. Current Rent per Square
GLA Lease Renewal Annual Rent Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Sears 20,076 10/04 1/10 yr. 240,912 12.00
Trak Auto 20,000 06/04 1/10 yr. 170,000 8.50
Ulta III 8,500 01/00 1/5 yr. 93,500 11.00
Fuddruckers 5,520 06/09 1/15 yr. 131,000 23.73
Nationwide 1,500 10/00 - 21,000 14.00
Acceptance
Hair Cuttery 1,450 12/99 1/5 yr. 23,180 15.99
Vacant 4,439
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. Base Total Per Square Building GLA Rent
GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring by Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 672,348 - - -
1999 1 1,450 23,186 672,348 15.99 2.36 3.45
2000 2 10,000 107,500 676,384 10.75 16.26 15.89
2001 - - - 568,884 - - -
-8-
Average Percent of Percent of
Base Rent Total Annual Base
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>
2002 - - - 568,884 - - -
2003 - - - 568,884 - - -
2004 2 40,076 420,672 568,884 10.50 65.18 73.95
2005 - - - 167,697 - - -
2006 - - - 167,697 - - -
2007 - - - 167,697 - - -
(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 existing at the time of
releasing.
</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 Schaumburg Plaza property, as of
October 11, 1997, of $7,000,000. Appraisals are estimates of value and should
not be relied on as a measure of true worth or realizable value.
Winnetka Commons Shopping Center, New Hope, Minnesota
On July 1, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 3520-3566 Winnetka Avenue North in New
Hope, Minnesota known as "Winnetka Commons" from WCSC Associates Limited
Partnership, an unaffiliated third party, for approximately $4,435,000
(approximately $104.65 per square foot). The purchase price was funded using
cash and cash equivalents. The Company believes that the purchase price was
fair and reasonable based on, among other things, an appraisal received by the
Company and presented to the Company's board of directors.
Winnetka Commons, built in 1990, is a one-story, multi-tenant retail facility
aggregating 42,415 leasable square feet. As of July 1, 1998, Winnetka Commons
was 100% leased. In evaluating Winnetka Commons as a potential acquisition,
the Company considered a variety of factors including location, demographics,
tenant mix, price per square foot, occupancy and the fact that overall rental
rates at the center are comparable to market rates. The Company believes that
the center is located within a steady growth economic area and is well
maintained. The Company did not consider any other factors materially relevant
to the decision to acquire the property.
-9-
The Company does not anticipate making any significant repairs and improvements
to Winnetka Commons over the next few years. A substantial portion of any
monies spent on repairs and improvements would be paid by the tenants pursuant
to the terms of the existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Winnetka Commons expressed as a percentage of total gross leasable area
and the average effective annual base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 10.50
1996 96 10.44
1995 90 9.89
1994 94 8.69
1993 94 8.91
Two tenants lease more than 10% of the total gross leasable area of the
property: Walgreen's, a national drug store and Big Wheel/Rossi, a foreign car
parts store. The leases with these tenants require them to pay base annual
rent on a monthly basis as follows:
Base Rent
Per Square
Foot Per
Approx. % of Total Annum Lease Term
Lessee GLA Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
Walgreens Drug 11,890 28.03 10.60 Currently 05/31/10
11.60 06/01/10 05/31/20
12.60 06/01/20 05/31/30
Big Wheel/Rossi 6,227 14.68 6.50 Currently 03/31/02
Option 1 7.50 05/01/02 03/31/07
For federal income tax purposes, the Company's depreciable basis in Winnetka
Commons is approximately $2,800,000. Depreciation expense, for tax purposes,
is 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 1998 (the most recent tax year for which
information is generally available) are $175,660. The real estate taxes were
calculated by multiplying the taxable market value by a tax rate of 5.6911%.
On July 1, 1998, a total of 42,415 square feet was leased to sixteen tenants at
Winnetka Commons. The following tables set forth certain information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
-10-
Approx. Current Rent per Square
GLA Lease Renewal Annual Rent Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Tires Plus 4,200 09/00 2/5 yr. 56,700 13.50
Back in Shape 1,542 09/01 - 16,962 11.00
McGlynn's Bakery 1,702 11/99 1/5 yr. 14,467 8.50
Hot Comics 1,400 05/01 - 10,500 7.50
Big Wheel/Rossi 6,227 03/02 1/5 yr. 40,476 6.50
A.J. Floral 1,200 09/02 - 13,200 11.00
Jade Cafe' 1,812 03/05 - 19,932 11.00
Winnetka Liquors 2,388 02/07 - 20,298 8.50
Travel Masters 900 10/01 - 7,650 8.50
Tobacco Outlet 900 06/00 1/3 yr. 11,250 12.50
New Hope For Hair 900 11/00 - 13,950 15.50
H & R Block 900 4/02 - 11,250 12.50
Frankie's Pizza 1,670 05/04 - 20,875 12.50
Brueggers Bagels 2,764 08/05 - 41,626 15.06
Dunn Bros. Coffee 2,020 01/06 - 28,280 14.00
Walgreens Drug 11,890 11/30 - 126,034 10.60
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. Base Total Per Square Building GLA Rent
GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring by Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- -------- --------- ----------- ----------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 645,356 - - -
1999 1 1,702 15,318 461,058 9.00 4.01 3.32
2000 3 6,000 82,350 456,717 13.73 14.15 18.03
2001 4 5,512 67,461 386,925 12.24 13.00 17.44
2002 3 8,327 66,576 323,395 8.00 19.63 20.59
2003 - - - 260,033 - - -
2004 - - - 263,936 - - -
2005 2 4,576 76,100 266,324 16.63 10.79 28.57
2006 1 2,020 34,340 191,418 17.00 4.76 17.94
2007 1 2,388 32,238 158,272 13.50 5.63 20.37
(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 existing at the time of
releasing.
</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 Winnetka Commons property, as of
June 15, 1998, of $4,700,000. Appraisals are estimates of value and should not
be relied on as a measure of true worth or realizable value.
-11-
Eastgate Shopping Center, Lombard, Illinois
On July 7, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 837 South Westmore in Lombard, Illinois
known as "Eastgate Shopping Center" from Shidler Group, an unaffiliated third
party, for approximately $7,731,000 less a credit for $931,000 for anticipated
roof and parking lot repairs (approximately $58.33 per square foot). The
purchase price was funded using cash and cash equivalents. The Company
believes that the purchase price 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.
Eastgate Shopping Center, built in 1959 and renovated in 1987, consists of
three one-story, multi-tenant retail facilities and a single tenant outlot
aggregating 132,208 leasable square feet. As of July 7, 1998, Eastgate
Shopping Center was 89% leased (100% leased if the master lease, which lasts
for two years, is considered). In evaluating Eastgate Shopping Center as a
potential acquisition, the Company considered a variety of factors including
location, demographics, tenant mix, price per square foot, occupancy and the
fact that overall rental rates at the center are comparable to market rates.
Eastgate Shopping Center is an older, well established neighborhood center with
strong, long-term local tenants. The Company believes that the center was
purchased well below replacement cost. The Company did not consider any other
factors materially relevant to the decision to acquire the property.
The Company anticipates spending approximately $931,000 of roof and parking lot
repairs to Eastgate Shopping Center over the next few years. The Company
received a credit at closing of approximately $931,000 toward these costs.
The table below sets forth certain information with respect to the occupancy
rate at Eastgate Shopping Center expressed as a percentage of total gross
leasable area and the average effective annual base rent per leasable square
foot.
Occupancy Rate Effective
as of Annual Rental
December 31, Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 87 9.77
1996 85 9.61
1995 85 9.91
1994 84 9.73
1993 83 9.77
-12-
Two tenants lease more than 10% of the total gross leasable area of the
property: the Illinois Department of Employment and Ace Hardware. The leases
with these tenants require each of them to pay base annual rent on a monthly
basis as follows:
Base Rent
Per Square
Foot Per
Approx. % of Total Annum Lease Term
Lessee GLA Leased GLA ($) Beginning To
- ----------- ----------- ----------- ------------ ------------ ---------
IL Department of
Employment 24,800 18.76 5.87 Currently 11/30/99
6.12 12/01/99 11/30/01
6.37 12/01/01 11/30/02
Ace Hardware 17,000 12.86 5.85 Currently 05/31/03
Option 1 6.89 06/01/03 05/31/10
For federal income tax purposes, the Company's depreciable basis in Eastgate
Shopping Center is approximately $5,800,000. Depreciation expense, for tax
purposes, is computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes paid in 1997 for the tax year ended 1996 (the most recent tax
year for which information is generally available) were $119,000. The real
estate taxes were calculated by multiplying the assessed value by a tax rate of
6.6902%.
On July 7, 1998, a total of 119,495 square feet was leased to forty-two tenants
at Eastgate Shopping Center. The following tables set forth certain
information with respect to the amount of and expiration of the lease at this
Neighborhood Retail Center.
Approx. Current Rent per Square
GLA Lease Renewal Annual Rent Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
CellOne Antenna 1 06/00 4/5 yr. 3,600 -
John Cole & Assoc. 200 12/98 - 2,400 12.00
James Stephen 400 04/99 - 4,500 11.25
Farmers, Inc. 400 05/99 - 4,500 11.25
Early Times Chimney
Sweeps 1,049 05/01 - 11,015 10.50
Professional
Investigations 400 07/98 - 4,320 10.80
American Family
Insurance 400 06/99 - 4,500 11.25
Service Master 400 04/99 - 4,200 10.50
West-Tech Printing 4,000 02/01 - 28,640 7.16
Dr. Blankenship 1,200 03/01 - 13,800 11.50
Evershine Janitorial
Service 300 09/99 - 3,300 11.00
Eastgate Dental
Association 2,500 10/99 - 28,275 11.31
Eastgate Video 3,200 03/02 1/5 yr. 33,376 10.43
Second Time Around 3,600 09/00 - 32,256 8.96
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Approx. Current Rent per Square
GLA Lease Renewal Annual Rent Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Eastgate Laundry 2,200 05/99 - 22,000 10.00
Creative
Confections 1,900 06/00 - 15,200 8.00
DuPage College 4,000 06/01 - 35,960 8.99
Call Communications 2,206 05/00 - 12,552 5.69
Kumon Math Center 400 12/98 - 4,500 11.25
DuPage Schools
Credit Union 2,325 04/01 1/3 yr. 19,763 8.50
Frank's Barber Shop 900 11/05 1/5 yr. 8,514 9.46
Color Inn #3 1,800 02/99 - 12,600 7.00
Pizza Hut 1,600 09/98 - 20,016 12.51
21 Century Hair
Fashion 1,800 04/00 - 13,500 7.50
IL Dept. of
Employment 24,800 12/02 - 145,576 5.87
LaSalle Craigan
Bank 3,200 12/98 - 38,400 12.00
Little Ones Reruns 3,306 04/99 - 26,448 8.00
Schroeder's Ace
Hardware 17,000 05/03 1/7 yr. 99,450 5.85
Tratorria Aurora 1,600 09/02 1/10 yr. 20,064 12.54
Fashion Exchange 2,000 06/00 - 17,000 8.50
Eastgate Cleaners 2,200 12/06 - 19,778 8.99
Hair by Mark 1,600 09/02 - 20,864 13.04
Early Times Chimney
Sweeps 2,294 05/01 - 13,764 6.00
Uniform Store 2,800 03/01 - 18,200 6.50
White Hen Pantry 2,500 02/11 4/5 yr. 16,550 6.62
State of IL Vehicle 4,368 04/99 1/5 yr. 24,810 5.68
Artworx Studio 464 12/00 1/3 yr. 4,872 10.50
Mr. Wonton 1,800 10/01 1/5 yr. 13,500 7.50
Secretary of State-
Drivers 7,632 05/00 - 47,624 6.24
Dreams Delight Cafe 1,360 05/01 - 16,320 12.00
Midwest Insurance
Group 2,640 05/03 - 29,040 11.00
Midwest Chimney
Supply 750 05/01 - 8,438 11.25
Vacant 12,713
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<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Approx. Base Total Per Square Building GLA Rent
GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring by Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) ($) ($)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 5 5,800 69,636 909,615 12.01 4.39 7.66
1999 10 16,074 135,833 865,445 8.45 12.16 14.07
2000 8 19,603 147,970 740,058 7.55 14.83 19.99
2001 10 21,578 193,898 597,224 8.99 16.32 32.47
2002 4 31,200 235,880 412,147 7.56 23.60 57.23
2003 2 19,640 128,490 176,883 6.54 14.86 72.64
2004 - - - 48,393 - - -
2005 1 900 8,514 49,185 9.46 .68 17.31
2006 1 2,200 22,396 40,671 10.18 1.66 55.07
2007 - - - 20,200 - - -
(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 existing at the time of
releasing.
</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 Eastgate Shopping Center property,
as of April 30, 1998, of $6,950,000. Appraisals are estimates of value and
should not be relied on as a measure of true worth or realizable value.
Stuarts Crossing, St. Charles, IL
On August 6, 1998, the Company acquired title to approximately 27 acres of land
located at the northeast intersection of North Avenue and Kirk Road in St.
Charles, Illinois, to be developed into a 204,000 square foot shopping center
to be known as "Stuarts Crossing" from H.P. Kirk Partners, L.L.C., an
unaffiliated third party. The initial purchase price of $14,176,627, was
funded with cash and cash equivalents.
-15-
Included in the purchase price paid by the Company is $8,824,883 which has been
placed in a development escrow for the construction of a Jewel/Osco Food Store
and adjacent stores. American Stores has signed a lease for a 70,640 square
foot Jewel/Osco Food Store which Hamilton Partners will build utilizing funds
escrowed by the Company. Simultaneously, Hamilton Partners will build and
lease space adjacent to the Jewel/Osco Food Store, also with funds escrowed by
the Company. The Company will receive interest at the rate of 9.0% per annum,
paid monthly, on the development escrow.
When a significant portion of the center is leased, the final price payable to
Hamilton Partners will be based on capitalizing the net operating income at a
rate of 9.5% for the Jewel/Osco Food Store and 9.75% to 10.0% for the adjacent
stores, based on the type of tenant.
Item 7. Financial Statements and Exhibits
To be subsequently filed.
-16-
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: August 12, 1998
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