As filed with the Securities and Exchange Commission on March 16, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 30, 1997
(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 7. Financial Statements and Exhibits
Index to Financial Statements
Page
Pro Forma Balance Sheet (unaudited) at December 31, 1997............ F- 1
Notes to Pro Forma Balance Sheet (unaudited) at December 31, 1997... F- 3
Pro Forma Statement of Operations (unaudited) of the Company
for the year ended December 31, 1997.............................. F- 5
Notes to Pro Forma Statement of Operations (unaudited) for
the year ended December 31, 1997.................................. F- 7
Independent Auditors' Report........................................ F-14
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Terramere Plaza........... F-15
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Terramere Plaza.. F-16
Independent Auditors' Report........................................ F-18
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Wilson Plaza.............. F-19
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Wilson Plaza..... F-20
Independent Auditors' Report........................................ F-22
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Iroquois Center........... F-23
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Iroquois Center.. F-24
Independent Auditors' Report........................................ F-26
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Fashion Square............ F-27
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Fashion Square... F-28
Independent Auditors' Report........................................ F-30
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1996 of Naper West................ F-31
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1996 of Naper West....... F-32
-2-
Index to Financial Statements
(continued)
Independent Auditors' Report........................................ F-34
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Woodfield Plaza........... F-35
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Woodfield Plaza.. F-36
Independent Auditors' Report........................................ F-38
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 of Lake Park Plaza........... F-39
Notes to Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 of Lake Park Plaza.. F-40
-3-
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 16, 1998
-4-
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1997
(unaudited)
The following unaudited Pro Forma Balance Sheet of the Company is presented to
give effect to the acquisitions of the properties indicated in Note B of the
Notes to the Pro Forma Balance Sheet as though these transactions occurred
December 31, 1997. This unaudited Pro Forma Balance Sheet should be read in
conjunction with the December 31, 1997 Financial Statements and the notes
thereto as files on Form 10-K.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at December 31, 1997, nor does it
purport to represent the future financial position of the Company. Unless
otherwise defined, capitalized terms used herein shall have the same meaning as
in the Prospectus.
F-1
Inland Real Estate Corporation
Pro Forma Balance Sheet
December 31, 1997
(unaudited)
December 31,
December 31, 1997
1997 Pro Forma Pro Forma
Historical(A) Adjustments(B) Balance Sheet
------------- ------------- --------------
Assets
- ------
Net investment in
properties.................. $270,645,355 37,775,000 308,420,355
Cash and cash equivalents..... 51,145,587 - 51,145,587
Restricted cash............... 2,073,799 - 2,073,799
Accounts and rents
receivable.................. 4,926,643 690,735 5,617,378
Other assets.................. 4,798,747 - 4,798,747
------------- ------------- -------------
Total assets.................. $333,590,131 38,465,735 372,055,866
============= ============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 1,193,874 - 1,193,874
Accrued real estate taxes..... 7,031,732 703,315 7,735,047
Distributions payable (C)..... 1,777,113 - 1,777,113
Security deposits............. 754,359 9,956 764,315
Mortgages payable............. 106,589,710 - 106,589,710
Unearned income............... 495,535 - 495,535
Other liabilities............. 493,116 - 493,116
Due to Affiliates............. 377,825 - 377,825
------------- ------------- -------------
Total liabilities............. 118,673,264 713,271 119,386,535
------------- ------------- -------------
Common Stock (D).............. 249,470 43,899 293,369
Additional paid in capital
(net of Offering costs) (D). 220,640,608 37,708,565 258,349,173
Accumulated distributions in
excess of net income........ (5,973,211) - (5,973,211)
------------- ------------- -------------
Total Stockholders' equity.... 214,916,867 37,752,464 252,669,331
------------- ------------- -------------
Total liabilities and
Stockholders' equity........ $333,590,131 38,465,735 372,055,866
============= ============= =============
See accompanying notes to pro forma balance sheet.
F-2
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
(A) The December 31, 1997 Historical column represents the historical balance
sheet as presented in the December 31, 1997 10-K as filed with the SEC.
(B) The following pro forma adjustment relates to the acquisition of the
subject properties as though they were acquired on December 31, 1997. The
terms are described in the notes that follow.
Pro Forma Adjustments
--------------------------------------
West Total
Woodfield Chicago Lake Park Pro Forma
Plaza Dominick's Plaza Adjustments
------------ ------------ ------------ ------------
Assets
- ------
Net investment in
properties........... $19,200,000 6,300,000 12,275,000 37,775,000
Accounts and rents
receivable........... 404,735 - 286,000 690,735
------------ ------------ ------------ ------------
Total assets........... $19,604,735 6,300,000 12,561,000 38,465,735
============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate
taxes................ 404,735 - 298,580 703,315
Security deposits...... - - 9,956 9,956
Mortgage payable....... - - - -
------------ ------------ ------------ ------------
Total liabilities...... 404,735 - 308,536 713,271
------------ ------------ ------------ ------------
Common Stock........... 22,326 7,326 14,247 43,899
Additional paid in capital
(net of Offering
Costs)............... 19,177,674 6,292,674 12,238,217 37,708,565
------------ ------------ ------------ ------------
Total Stockholders'
equity............... 19,200,000 6,300,000 12,252,464 37,752,464
------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity. 19,604,735 6,300,000 12,561,000 38,465,735
============ ============ ============ ============
F-3
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
December 31, 1997
(unaudited)
Acquisition of Properties:
On January 2, 1998, the Company acquired Woodfield Plaza from an
unaffiliated third party for the purchase price of $19,200,000 on an all
cash basis, funded from cash and cash equivalents.
On January 22, 1998, the Company acquired West Chicago Dominick's from an
unaffiliated third party for the purchase price of approximately $6,300,000
on an all cash basis, funded from cash and cash equivalents.
On February 10, 1998, the Company acquired Lake Park Plaza from an
unaffiliated third party for the purchase price of approximately
$12,275,000 on an all cash basis, funded from cash and cash equivalents.
(C) No pro forma assumptions have been made for the additional payment of
distributions resulting from the additional proceeds raised.
(D) Additional Offering Proceeds of $43,899,000, net of additional Offering
costs of $6,146,536 are reflected as received as of December 31, 1997,
prior to the purchase of the properties. Offering costs consist
principally of registration costs, printing and selling costs, including
commissions.
F-4
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
The following unaudited Pro Forma Statement of Operations of the Company is
presented to effect the acquisitions of the properties indicated in Note B and
Note C of the Notes to the Pro Forma Statement of Operations as though they
occurred the earlier of January 1, 1997 or the date operations commenced. This
unaudited Pro Forma Statement of Operations should be read in conjunction with
the December 31, 1997 Financial Statements and the notes thereto as filed on
Form 10-K.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the year ended
December 31, 1997, nor does it purport to represent the future financial
position of the Company. Unless otherwise defined, capitalized terms used
herein shall have the same meaning as in the Prospectus.
F-5
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
Pro Forma
Adjustments
-----------
1997 1997 1998
Historical Acquisitions Acquisitions 1997
(A) (B) (C) Pro Forma
------------ ------------ ------------ -----------
Rental income..... $21,112,365 9,903,951 4,079,715 35,096,031
Additional rental
income.......... 6,592,983 3,622,583 1,227,234 11,442,800
Interest
income(D)....... 1,615,520 - - 1,615,520
Other income...... 100,717 - - 100,717
------------ ------------ ------------ ------------
Total income.... 29,421,585 13,526,534 5,306,949 48,255,068
------------ ------------ ------------ ------------
Professional services
and general and
administrative
fees............ 482,954 - - 482,954
Advisor asset
management fee.(G) 843,000 1,832,719 377,750 3,053,469
Property operating
expenses........ 8,863,024 4,476,786 1,360,069 14,699,879
Interest expense.. 5,654,564 1,338,640 - 6,993,204
Depreciation (E).. 4,556,445 2,371,640 860,500 7,788,585
Amortization...... 124,884 - - 124,884
Acquisition costs
expensed........ 249,493 - - 249,493
------------ ------------ ------------ ------------
Total expenses.... 20,774,364 10,019,785 2,598,319 33,392,468
------------ ------------ ------------ ------------
Net income...... $ 8,647,221 3,506,749 2,708,630 14,862,600
============ ============ ============ ============
Weighted average
common stock shares
outstanding (F). 15,225,983 19,615,883
============ ============
Net income per weighted
average common stock
outstanding (F). $ .57 .76
============ ============
See accompanying notes to pro forma statement of operations.
F-6
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
(A) The 1997 Historical column represents the historical statement of
operations of the Company for the year ended December 31, 1997, as filed
with the SEC on Form 10-K.
(B) Total pro forma adjustments for the year ended December 31, 1997 are as
though the 1997 acquisitions of the following properties occurred the
earlier of January 1, 1997 or the date operations commenced (May 13, 1997
for the Glendale Heights Dominicks). All properties were purchased on an
all cash basis except for Maple Park, Aurora Commons, Lincoln Park Place
and Rivertree Court. Pro forma adjustments for interest expense on these
properties were based on the following terms.
Maple Park Shopping Center
The Company funded the purchase using (i) the proceeds of a short-term loan
maturing April 7, 1997 in the amount of $8 million from Inland Mortgage
Investment Corporation ("IMIC"), an affiliate of the Company (the "Short-
Term Loan"), and (ii) cash and cash equivalents. The Short-Term Loan bears
interest at a rate of 9.0% per annum and requires a loan fee of 1/4%.
Aurora Commons Shopping Center
As part of the acquisition of Aurora Commons Shopping Center, the Company
assumed the existing mortgage loan, maturing December 31, 2001, with the
balance funded with cash and cash equivalents. The loan bears interest at
a rate of 9% per annum with monthly payments of principal and interest on
the first day of each month.
Lincoln Park Place Shopping Center
The Company funded the purchase of Lincoln Park Place Shopping Center using
the proceeds of a short-term loan maturing February 7, 1997 in the amount
of $2,016,110 from Inland Mortgage Investment Corporation ("IMIC"), an
affiliate of the Company (the "Short-Term Loan"). The Company did not pay
any fees in connection with the Short-Term Loan, which bears interest at a
rate of 9% per annum.
F-7
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the year ended December 31, 1997
(unaudited)
Rivertree Court
As part of the acquisition of Rivertree Court, the Company assumed the
existing first mortgage loan, maturing January 1, 1999, with a balance of
$15,700,000. The loan requires interest only monthly payments at a rate of
10.03% per annum.
Fashion Square
As part of the acquisition of Fashion Square, the Company assumed the
existing bond financing, in the remaining principal balance of $6,200,000.
Monthly interest only payments are due on the financing through December 1,
2014 maturity date. The interest rate changes weekly and is currently
4.1%. The bond financing is secured by a Letter of Credit issued by
LaSalle National Bank, who receives an annual fee of 1.25% of the
outstanding principal balance.
F-8
<TABLE>
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(B) Total pro forma adjustments for 1997 acquisitions are as though they were acquired the earlier of January 1, 1997 or
the date operations commenced.
<CAPTION>
Niles
Maple Park Aurora Lincoln Shopping Cobblers Mallard Calumet Ameritech
Place Commons Park Place Center Mall Mall Square Outlot
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 39,736 82,740 14,159 98,780 341,053 356,037 130,663 36,768
Additional rental
income.......... 8,168 26,594 5,714 39,507 189,843 138,412 146,565 8,091
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Total income...... 47,904 109,334 19,873 138,287 530,896 494,449 277,228 44,859
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 10,039 30,055 6,352 43,952 205,189 161,720 152,445 9,746
Interest expense.. - - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Total expenses.... 10,039 30,055 6,352 43,952 205,189 161,720 152,445 9,746
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Net income (loss). 37,865 79,279 13,521 94,335 325,707 332,729 124,783 35,113
=========== =========== =========== =========== =========== ============ =========== ===========
Highland Glendale
Schaumburg Sequoia Park River Rivertree Shorecrest Heights
Dominicks Plaza Dominicks Square Court Plaza Dominicks Party City
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 269,510 182,563 405,156 358,182 1,923,392 311,714 303,692 166,666
Additional rental
income.......... - 67,441 - 157,773 588,600 128,728 - 33,000
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 269,510 250,004 405,156 515,955 2,511,992 440,442 303,692 199,666
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 5,390 78,364 8,103 166,076 732,510 154,027 7,592 39,000
Interest expense.. - - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 5,390 78,364 8,103 166,076 732,510 154,027 7,592 39,000
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). 264,120 171,640 397,053 349,879 1,779,482 286,415 296,099 160,666
=========== =========== =========== =========== =========== ============ ============ ===========
F-9
F-9
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(B) Total pro forma adjustments for 1997 acquisitions are as though they were acquired the earlier of January 1, 1997 or
the date operations commenced.
<CAPTION>
Roselle Wilson Terramere Iroquois Fashion Naper West
Eagle Countryside Plaza Plaza Center Square Plaza
----------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..... 307,980 256,000 136,100 419,563 1,376,053 808,935 1,578,508
Additional rental
income.......... 77,500 - 50,500 376,745 446,667 543,963 588,773
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total income...... 385,480 256,000 186,600 793,309 1,822,720 1,352,897 2,167,281
----------- ----------- ----------- ----------- ----------- ------------ ------------
Advisor asset
management fee.. - - - - - - -
Property operating
expenses........ 100,000 87,000 61,100 406,416 551,333 741,680 718,696
Interest expense.. - - - - - - -
Depreciation...... - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total expenses.... 100,000 87,000 61,100 406,416 551,333 741,680 718,696
----------- ----------- ----------- ----------- ----------- ------------ ------------
Net income (loss). 285,480 169,000 125,500 389,892 1,271,387 611,217 1,448,585
=========== =========== =========== =========== =========== ============ ============
Total
1997
Pro Forma Acquisitions
Adjustments Pro Forma
----------- -------------
<S> <C> <C>
Rental income..... - 9,903,951
Additional rental
income.......... - 3,622,583
----------- ------------
Total income...... - 13,526,534
----------- ------------
Advisor asset
management fee.. 1,832,719 1,832,719
Property operating
expenses........ - 4,476,786
Interest expense.. 1,338,640 1,338,640
Depreciation...... 2,371,640 2,371,640
----------- ------------
Total expenses.... 5,542,999 10,019,785
----------- ------------
Net income (loss). (5,542,999) 3,506,749
=========== ============
</TABLE>
F-10
F-10
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
(C) Total pro forma adjustments for 1998 acquisitions are as though they were
acquired the earlier of January 1, 1997 or the date operations commenced.
West Total 1998
Woodfield Chicago Lake Park Acquisitions
Plaza Dominick's Plaza Pro Forma
----------- ----------- ----------- -------------
Rental income..... 2,235,315 628,320 1,216,080 4,079,715
Additional rental
income.......... 755,071 - 472,163 1,227,234
----------- ----------- ----------- -------------
Total income...... 2,990,386 628,320 1,688,243 5,306,949
----------- ----------- ----------- -------------
Advisor asset
management fee.. 192,000 63,000 122,750 377,750
Property operating
expenses........ 873,792 18,850 467,427 1,360,069
Interest expense.. - - - -
Depreciation...... 483,000 157,500 220,000 860,500
----------- ----------- ----------- -------------
Total expenses.... 1,548,792 239,350 810,177 2,598,319
----------- ----------- ----------- -------------
Net income (loss). 1,441,594 388,970 878,066 2,708,630
=========== =========== =========== =============
F-11
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Woodfield Plaza, Schaumburg, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Woodfield Plaza
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $2,235,315 - 2,235,315
Additional rental income.. 755,071 - 755,071
----------- ----------- -----------
Total income.............. 2,990,386 - 2,990,386
----------- ----------- -----------
Advisor asset
management fee.......... - 192,000 192,000
Property operating
expenses................ 801,632 72,160 873,792
Interest expense.......... - - -
Depreciation.............. - 483,000 483,000
----------- ----------- -----------
Total expenses............ 801,632 747,160 1,548,792
----------- ----------- -----------
Net income (loss)......... $2,188,754 (747,160) 1,441,594
=========== =========== ===========
Acquisition of West Chicago Dominick's, West Chicago, Illinois
This pro forma adjustment reflects the purchase of West Chicago Dominick's
as if the Company had acquired the property as of January 1, 1997, and is
based on information provided by the Seller.
West Chicago Dominick's
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 628,320 - 628,320
Additional rental income.. - - -
----------- ----------- -----------
Total income.............. 628,320 - 628,320
----------- ----------- -----------
Advisor asset
management fee.......... - 63,000 63,000
Property operating
expenses................ - 18,850 18,850
Depreciation.............. - 157,500 157,500
----------- ----------- -----------
Total expenses............ - 239,350 239,350
----------- ----------- -----------
Net income (loss)......... $ 628,320 (239,350) 388,970
=========== =========== ===========
F-12
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Lake Park Plaza,
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1997 prepared in accordance with Rule 3.14 of Regulation
S-X (*) to the Pro Forma Adjustments:
Lake Park Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,216,080 - 1,216,080
Additional rental income.. 472,163 - 472,163
----------- ----------- -----------
Total income.............. 1,688,243 - 1,688,243
----------- ----------- -----------
Advisor asset
management fee.......... - 122,750 122,750
Property operating
expenses................ 467,427 - 467,427
Interest expense.......... - - -
Depreciation.............. - 220,000 220,000
----------- ----------- -----------
Total expenses............ 467,427 342,750 810,177
----------- ----------- -----------
Net income (loss)......... $1,220,816 (342,750) 878,066
=========== =========== ===========
(D) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(E) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(F) The pro forma weighted average common stock shares for the year ended
December 31, 1997 was calculated by estimating the additional shares sold
to purchase each of the Company's properties on a weighted average basis.
(G) Advisor Asset Management Fees are calculated as 1% of the Average Invested
Assets (as defined).
F-13
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Terramere Plaza Shopping Center for
the year ended December 31, 1996. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Terramere Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Terramere Plaza for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 17, 1997
F-14
Terramere Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Gross income:
Base rental income.............................. $ 509,076
Operating expense and real estate
tax recoveries................................ 334,503
Other income.................................... 6,175
-----------
Total Gross Income.............................. 849,754
-----------
Direct operating expenses:
Real estate taxes............................... 247,803
Operating expenses.............................. 60,964
Management Fees................................. 32,258
Utilities....................................... 18,550
Insurance....................................... 7,511
-----------
Total direct operating expenses................. 367,086
-----------
Excess of gross income over
direct operating expenses..................... $ 482,668
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-15
Terramere Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
1. Business
Terramere Plaza Shopping Center (Terramere Plaza) is located in Arlington
Heights, Illinois. It consists of approximately 41,000 square feet of
gross leasable area and was 94% leased and occupied at December 31, 1996.
Inland Real Estate Corporation has signed a sale and purchase agreement for
the purchase of Terramere Plaza from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Terramere
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Terramere Plaza
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Terramere Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Terramere Plaza is reimbursed for common
area, real estate, and insurance costs.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $335 for the
year ended December 31, 1996.
F-16
Terramere Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1996 are as follows:
Year Amount
---- ------
1997 $ 462,628
1998 423,722
1999 225,562
2000 141,407
2001 96,008
Thereafter 131,872
-----------
$1,481,199
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Terramere Plaza. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Terramere Plaza is managed pursuant to the terms of a management agreement
for an annual fee of 4% of cash receipts. Subsequent to the sale of
Terramere Plaza (note 1), the current management agreement will cease. Any
new management agreement may cause future management fees to differ from
the amounts reflected in the Historical Summary.
F-17
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Wilson Plaza Shopping Center for the
year ended December 31, 1996. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Wilson Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Wilson Plaza for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
November 13, 1997
F-18
Wilson Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Gross income:
Base rental income.............................. $ 132,484
Operating expense and real estate
tax recoveries................................ 50,017
-----------
Total Gross Income.............................. 182,501
-----------
Direct operating expenses:
Real estate taxes............................... 25,090
Operating expenses.............................. 20,012
Utilities....................................... 329
Management Fees................................. 4,140
Insurance....................................... 949
-----------
Total direct operating expenses................. 50,520
-----------
Excess of gross income over
direct operating expenses....................... $ 131,981
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-19
Wilson Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
1. Business
Wilson Plaza is located in Batavia, Illinois. It consists of approximately
11,000 square feet of gross leasable area and was 100% leased and occupied
at December 31, 1996. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Wilson Plaza from an unaffiliated
third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Wilson
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Wilson Plaza to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Wilson Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Wilson Plaza is reimbursed for common area,
real estate, and insurance costs.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $6,243 for the
year ended December 31, 1996.
F-20
Wilson Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1996 are as follows:
Year Amount
---- ------
1997 $ 140,180
1998 115,653
1999 101,578
2000 95,469
2001 86,287
Thereafter 44,861
----------
$ 584,028
==========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Wilson Plaza. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Wilson Plaza is managed pursuant to the terms of a management agreement for
an annual fee of 3% of base rents. Subsequent to the sale of Wilson Plaza
(note 1), the current management agreement will cease. Any new management
agreement may cause future management fees to differ from the amounts
reflected in the Historical Summary.
F-21
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Iroquois Center for the year ended
December 31, 1996. This Historical Summary is the responsibility of the
management of Inland Real Estate Corporation. Our responsibility is to express
an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Iroquois Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Iroquois Plaza for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 4, 1997
F-22
Iroquois Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Gross income:
Base rental income.............................. $1,336,054
Operating expense and real estate
tax recoveries................................ 469,685
Other income.................................... 52,418
-----------
Total Gross Income.............................. 1,858,157
-----------
Direct operating expenses:
Operating expenses.............................. 284,117
Real estate taxes............................... 205,423
Utilities....................................... 20,327
Insurance....................................... 15,242
-----------
Total direct operating expenses................. 525,109
-----------
Excess of gross income over
direct operating expenses..................... $1,333,048
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-23
Iroquois Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
1. Business
Iroquois Center is located in Naperville, Illinois. It consists of
approximately 141,500 square feet of gross leasable area and was 98% leased
and occupied at December 31, 1996. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Iroquois Center
from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Iroquois
Center's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of Iroquois
Center to make estimates and assumptions that affect the reported amounts
of the revenues and expenses during the reporting period. Actual results
may differ from those estimates.
3. Gross Income
Iroquois Center leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Iroquois Center is reimbursed for common
area, real estate, and insurance costs.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $44,760 for the
year ended December 31, 1996.
F-24
Iroquois Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1996 are as follows:
Year Amount
---- ------
1997 $ 1,413,081
1998 1,285,944
1999 1,057,493
2000 929,941
2001 899,651
Thereafter 1,920,263
------------
$ 7,506,373
============
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Iroquois Center. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Real estate tax expense is estimated upon bills for 1995. The difference
between the estimate and the final tax bill is not expected to have a
material impact on the Historical Summary.
Iroquois Center is managed pursuant to the terms of a management agreement
for an annual fee of 4% of gross revenues (as defined). Subsequent to the
sale of Iroquois Center (note 1), the current management agreement will
cease. Any new management agreement may cause future management fees to
differ from the amounts reflected in the Historical Summary.
F-25
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Fashion Square Shopping Center for
the year ended December 31, 1996. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Fashion Square Shopping Center's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 19, 1997
F-26
Fashion Square Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Gross income:
Base rental income.............................. $ 865,075
Operating expense and real estate
tax recoveries................................ 543,986
Other income.................................... 90,467
-----------
Total Gross Income.............................. 1,499,528
-----------
Direct operating expenses:
Real estate taxes............................... 478,356
Operating expenses.............................. 171,650
Management Fees................................. 37,726
Utilities....................................... 18,176
Insurance....................................... 13,590
-----------
Total direct operating expenses................. 719,498
-----------
Excess of gross income over
direct operating expenses..................... $ 780,030
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-27
Fashion Square Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
1. Business
Fashion Square Shopping Center (Fashion Square) is located in Skokie,
Illinois. It consists of approximately 84,600 square feet of gross
leasable area and was 77% leased and occupied at December 31, 1996. Inland
Real Estate Corporation has signed a sale and purchase agreement for the
purchase of Fashion Square from an unaffiliated third party (Seller).
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Fashion
Square's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of Fashion
Square to make estimates and assumptions that affect the reported amounts
of the revenues and expenses during the reporting period. Actual results
may differ from those estimates.
3. Gross Income
Fashion Square leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Fashion Square is reimbursed for common
area, real estate, and insurance costs.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $8,291 for the
year ended December 31, 1996.
F-28
Fashion Square Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1996 are as follows:
Year Amount
---- ------
1997 $ 893,710
1998 796,377
1999 578,533
2000 384,158
2001 57,285
Thereafter 374,078
----------
$3,084,141
==========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Fashion Square. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Fashion Square is managed pursuant to the terms of a management agreement
for an annual fee of 4% of rental income (as defined). Subsequent to the
sale of Fashion Square (note 1), the current management agreement will
cease. Any new management agreement may cause future management fees to
differ from the amounts reflected in the Historical Summary.
F-29
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Naper West Shopping Center for the
year ended December 31, 1996. This Historical Summary is the responsibility of
the management of Inland Real Estate Corporation. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Naper West's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Naper West for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 6, 1998
F-30
Naper West Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Gross income:
Base rental income.............................. $1,450,034
Operating expense and real estate
tax recoveries................................ 553,470
-----------
Total Gross Income.............................. 2,003,504
-----------
Direct operating expenses:
Operating expenses.............................. 340,346
Real estate taxes............................... 281,483
Utilities....................................... 26,600
Insurance....................................... 15,730
-----------
Total direct operating expenses................. 664,159
-----------
Excess of gross income over
direct operating expenses..................... $1,339,345
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-31
Naper West Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
1. Business
Naper West is located in Naperville, Illinois. It consists of
approximately 166,000 square feet of gross leasable area and was 95% leased
and occupied at December 31, 1996. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Naper West from an
unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Naper
West's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Naper West to
make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Naper West leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Naper West is reimbursed for common area,
real estate, and insurance costs.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments decreased base rental income by $74,690 for the
year ended December 31, 1996.
F-32
Naper West Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1996
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1996 are as follows:
Year Amount
---- ------
1997 $ 1,364,577
1998 1,040,008
1999 699,957
2000 278,643
2001 237,783
Thereafter 195,443
------------
$ 3,816,411
============
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Naper West. Costs such as
mortgage interest, depreciation, amortization, management fees and
professional fees are excluded from the Historical Summary.
F-33
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Woodfield Plaza Shopping Center for
the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. It is not intended to be a complete
presentation of Woodfield Plaza's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Woodfield Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 14, 1998
F-34
Woodfield Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $2,235,315
Operating expense and real estate
tax recoveries................................ 746,038
Other income.................................... 9,033
-----------
Total Gross Income.............................. 2,990,386
-----------
Direct operating expenses:
Real estate taxes............................... 507,949
Operating expenses.............................. 197,974
Management Fees................................. 62,400
Insurance....................................... 20,614
Utilities....................................... 12,695
-----------
Total direct operating expenses................. 801,632
-----------
Excess of gross income over
direct operating expenses..................... $2,188,754
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-35
Woodfield Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Woodfield Plaza Shopping Center (Woodfield Plaza) is located in Schaumburg,
Illinois. It consists of approximately 177,418 square feet of gross
leasable area and was 100% leased and occupied at December 31, 1997.
Approximately 47% of Woodfield Plaza is leased to one tenant representing
approximately 34% of total revenues. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Woodfield Plaza
from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Woodfield
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Woodfield Plaza
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Woodfield Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Woodfield Plaza is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which the tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $243,743 for
the year ended December 31, 1997.
F-36
Woodfield Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 2,046,996
1999 1,985,440
2000 1,910,654
2001 1,875,192
2002 1,901,996
Thereafter 15,702,281
-----------
$25,442,559
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Woodfield Plaza. Costs
such as mortgage interest, depreciation, amortization, estimated real
estate taxes and professional fees are excluded from the Historical
Summary.
Real estate tax expense is estimated based upon bills for 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
Woodfield Plaza is managed pursuant to the terms of a management agreement
for a fixed annual fee of $62,400. Subsequent to the sale of Woodfield
Plaza (note 1), the current management agreement will cease. Any new
management agreement affiliated with Seller may cause future management
fees to differ from the amounts reflected in the Historical Summary.
F-37
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Lake Park Plaza Shopping Center for
the year ended December 31, 1997. This Historical Summary is the
responsibility of the management of Inland Real Estate Corporation. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summary. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and
for inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Lake Park Plaza Shopping Center's revenues and
expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in note 2 of Lake Park Plaza Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
February 6, 1998
F-38
Lake Park Plaza Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,216,080
Operating expense and real estate
tax recoveries................................ 465,497
Other income.................................... 6,666
-----------
Total Gross Income.............................. 1,688,243
-----------
Direct operating expenses:
Operating expenses.............................. 128,428
Real estate taxes............................... 298,580
Utilities....................................... 10,450
Insurance....................................... 29,969
-----------
Total direct operating expenses................. 467,427
-----------
Excess of gross income over
direct operating expenses..................... $1,220,816
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-39
Lake Park Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Lake Park Plaza Shopping Center (Lake Park Plaza) is located in Michigan
City, Indiana. It consists of approximately 229,639 square feet of gross
leasable area and was 96% leased and occupied at December 31, 1997.
Approximately 50% of Lake Park Plaza is leased to one tenant representing
approximately 34% of total revenues. Inland Real Estate Corporation has
signed a sale and purchase agreement for the purchase of Lake Park Plaza
from an unaffiliated third party.
2. Basis of Presentation
The Historical Summary of Gross Income and Direct Operating Expenses
(Historical Summary) has been prepared for the purpose of complying with
Rule 3-14 of the Securities and Exchange Commission Regulation S-X and for
inclusion in the Registration Statement on Form S-11 of Inland Real Estate
Corporation and is not intended to be a complete presentation of Lake Park
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Lake Park Plaza
to make estimates and assumptions that affect the reported amounts of the
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
3. Gross Income
Lake Park Plaza leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Lake Park Plaza is reimbursed for common
area, real estate, and insurance costs. Operating expenses and real estate
tax recoveries reflected in the Historical Summary include amounts for 1997
expenses for which tenants have not yet been billed.
Base rentals are reported as income over the lease term as they become
receivable under the lease provisions. However, when rentals vary from a
straight-line basis due to short-term rent abatements or escalating rents
during the lease term, the income is recognized based on effective rental
rates. Related adjustments increased base rental income by $5,991 for the
year ended December 31, 1997.
F-40
Lake Park Plaza Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1997 are as follows:
Year Amount
---- ------
1998 $ 1,236,345
1999 1,195,014
2000 1,167,037
2001 1,059,454
2002 992,596
Thereafter 6,887,666
-----------
$12,538,112
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Lake Park Plaza. Costs
such as mortgage interest, depreciation, amortization and professional
fees, and management fees are excluded from the Historical Summary.
Lake Park Plaza has not received its final real estate tax bill for 1997.
Real estate tax expense is estimated based upon bills from 1996. The
difference between the estimate and the final tax bill is not expected to
have a material impact on the Historical Summary.
Lake Park Plaza is managed pursuant to the terms of a verbal management
agreement for an annual fee of 4% of gross revenues (as defined).
Subsequent to the sale of Lake Park Plaza (note 1), the current management
agreement will cease. Any new management agreement may cause future
management fees to differ from the amounts reflected in the Historical
Summary.
F-41
