As filed with the Securities and Exchange Commission on October 13, 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: 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
The Company filed a Form 8-K on August 12, 1998, without the requisite financial
information. Accordingly, the Company is filing this Form 8-K/A.
In addition, the Company has acquired four additional properties.
Fairview Heights Plaza, Fairview Heights, Illinois
On August 24, 1998, the Company acquired the entire fee simple interest in
a Neighborhood Retail Center located at 81 Ludwig Drive in Fairview
Heights, Illinois known as "Fairview Heights Plaza" from Fairview Heights
Associates, L.P., an unaffiliated third party, for approximately
$11,241,000. The purchase price was funded using cash and cash
equivalents. The purchase price was approximately $67.11 per square
foot, which the Company concluded was fair and reasonable based on, among
other things an appraisal received by the Company and presented to the
Company's board of directors.
Fairview Heights Plaza, built in 1991, is a one-story, multi-tenant retail
facility containing 167,491 leasable square feet. As of September 30,
1998, Fairview Heights Plaza was 100% leased. In evaluating Fairview
Heights Plaza as a potential acquisition, the Company considered a variety
of factors including location, demographics, tenant mix, price per square
foot, existing rental rates compared to market rates, and occupancy. The
Company believes that the center is located within a vibrant economic
area. The center is located approximately 12 miles from St. Louis,
Missouri and is connected to St. Louis by both a major highway and a newly
completed metro station. Population in the Fairview Heights area has
increased over the last six years and the area is considered a major
shopping location with hotels, a regional mall and other centers
containing national tenants. The Company did not consider any other
factors materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and
improvements to Fairview Heights Plaza over the next few years. A
substantial portion of any monies spent on repairs and improvements would
be paid by the tenants, pursuant to the terms of the existing leases.
The table below sets forth certain information with respect to the
occupancy rate at Fairview Heights Plaza expressed as a percentage of
total gross leasable area and the average effective annual base rent per
square foot:
2
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 7.34
1996 100 7.44
1995 100 7.37
1994 99 7.34
1993 71 5.70
Tenants leasing more than 10% of the total gross leasable area of the
property are 1/2 Price Store, a discount store, Michaels, a craft supply
store, Sports Authority, a sporting goods store, and Sears Home Life,
a home goods store. These leases require the tenants to pay base annual
rent on a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
1/2 Price Store 60,137 36 6.55 Currently 08/31/99
7.05 09/01/99 08/31/04
7.55 09/01/04 12/31/09
Option 1 8.05 01/01/09 12/31/14
8.55 01/01/15 12/31/19
Option 2 9.05 01/01/20 12/31/24
Michaels 22,176 13 8.75 Currently 01/31/99
9.75 02/01/99 01/31/04
Option 1 10.75 02/01/04 01/31/09
Option 2 11.75 02/01/09 01/31/14
Sports Authority 40,588 24 7.25 Currently 07/31/11
Option 1 7.75 08/01/11 07/31/16
Option 2 8.25 08/01/16 07/31/21
Option 3 8.75 08/01/21 07/31/26
Option 4 8.75 08/01/26 07/31/31
Sears Home Life 36,360 22 7.50 Currently 04/30/01
3
For federal income tax purposes, the Company's depreciable basis in
Fairview Heights Plaza will be approximately $8,500,000. Depreciation
expense, for tax purposes, will be computed using the straight-line
method. Buildings and improvements are depreciated based upon estimated
useful lives of 40 years.
Real estate taxes payable in 1998 for the tax year ended 1997 (the most
recent tax year for which information is generally available) are
$160,295. The real estate taxes payable were calculated by multiplying
the assessed value by a township multiplier of 1.0359 and a tax rate of
5.8652%.
On September 30, 1998, a total of 167,491 square feet was leased to eight
tenants at Fairview Heights Plaza. The following tables set forth certain
information with respect to the amount of and expiration of the leases at
this Neighborhood Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
1/2 Price Store 60,137 12/09 1/10 yr. 393,897 6.55
1/5 yr.
E. Davis 4,030 07/03 - 56,420 11.68
Michaels 22,176 01/04 2/5 yr. 194,440 8.77
Sports Authority 40,588 07/11 4/5 yr. 294,263 7.25
Now Hear This 1,680 10/01 - 25,200 15.00
Blimpie 1,473 06/03 - 21,018 14.27
US Army Corp of
Engineers 1,047 09/00 - 17,280 16.50
Sears Home Life 36,360 04/01 - 272,700 7.50
<TABLE>
<CAPTION>
4
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 1,274,050 - - -
1999 - - - 1,274,787 - - -
2000 1 1,047 17,276 1,327,723 16.50 .63 1.30
2001 2 38,040 298,740 1,314,083 7.85 22.71 22.73
2002 - - - 1,016,080 - - -
2003 2 5,503 82,371 1,016,816 14.97 3.29 8.10
2004 1 22,176 216,216 934,445 9.75 13.24 23.14
2005 - - - 748,297 - - -
2006 - - - 748,297 - - -
2007 - - - 748,297 - - -
(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, 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 Fairview Heights
Plaza property, as of July 9, 1998, of $11,400,000. Appraisals are
estimates of value and should not be relied on as a measure of true worth
or realizable value.
5
Orland Greens, Orland Park, Illinois
On September 17, 1998, the Company acquired the entire fee simple interest
in a Neighborhood Retail Center located at 15006-80 LaGrange Road in
Orland Park, Illinois known as "Orland Greens" from the RREEF Funds, an
unaffiliated third party, for approximately $5,100,000. The purchase
price was funded using cash and cash equivalents. The purchase price was
approximately $113.25 per square foot, which the Company concluded was
fair and reasonable based on, among other things, an appraisal received by
the Company and presented to the Company's board of directors.
Orland Greens, built in 1984, is a one-story, multi-tenant retail facility
containing 45,031 leasable square feet. As of September 30, 1998, Orland
Greens was 100% leased. In evaluating Orland Greens as a potential
acquisition, the Company considered a variety of factors, including
location, demographics, tenant mix, price per square foot, existing rental
rates compared to marked rates and occupancy. The Company believes that
the center is located within a vibrant economic area. The Company did not
consider any other factors materially relevant to the decision to acquire
the property.
The Company does not anticipate making any significant repairs and
improvements to Orland Greens over the next few years. A substantial
portion of any monies spent on repairs and improvements would be paid by
the tenants, pursuant to the terms of the existing leases.
The table below sets forth certain information with respect to the
occupancy rate at Orland Greens expressed as a percentage of total gross
leasable area and the average effective annual base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 96 9.66
1996 96 9.63
1995 99 9.43
1994 99 9.40
1993 89 7.17
6
Tenants leasing more than 10% of the total gross leasable area of the
property are Walgreens, a pharmacy, and MacFrugal's, a discount store.
These leases require the tenants to pay base annual rent on a monthly
basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Walgreens 12,048 27% 7.30 Currently 09/30/21
MacFrugal's 15,305 34% 6.75 Currently 07/31/00
Option 1 7.25 08/01/00 01/31/06
Option 2 7.75 02/01/06 01/31/11
Option 3 8.25 02/01/11 01/31/16
Option 4 8.75 02/01/16 01/31/21
Option 5 9.25 02/01/21 01/31/26
For federal income tax purposes, the Company's depreciable basis in Orland
Greens will be approximately $3,800,000. Depreciation expense, for tax
purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40
years.
Real estate taxes payable in 1997 for the tax year ended 1996 (the most
recent tax year for which information is generally available) were
$252,719. The real estate taxes payable were calculated by multiplying
the assessed value by an equalizer of 2.1517 and a tax rate of 8.87%.
On September 30, 1998, a total of 45,031 square feet was leased to
fourteen tenants at Orland Greens. The following tables set forth certain
information with respect to the amount of and expiration of the leases at
this Neighborhood Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Walgreens 12,048 09/21 - 87,950 7.30
Bedmart 3,600 10/99 - 41,400 11.50
MacFrugal's 15,305 01/06 4/5 yr. 103,309 6.75
HIQ Computers 1,575 02/00 - 22,050 14.00
Bo Rics 1,525 03/99 - 27,831 18.25
Parcel Plus 1,240 06/02 - 19,840 16.00
Little Caesars 1,240 03/99 1/5 yr. 16,740 13.50
C.P. Studios 1,240 07/99 - 19,840 16.00
Lee Nails 930 08/01 - 16,740 18.00
Standard Fed Bank 2,790 12/01 - 47,430 17.00
Hair Salon 1,674 05/03 - 21,762 13.00
Currency Exchange 600 12/99 - 21,000 35.00
Disc Replay 454 09/99 - 10,668 23.50
Able Camera 810 06/01 - 14,175 17.50
<TABLE>
<CAPTION>
7
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 463,097 - - -
1999 6 8,659 143,890 487,304 16.62 19.23 29.53
2000 2 4,365 78,210 348,314 17.92 9.69 22.45
2001 2 1,740 33,060 278,580 19.00 3.86 11.87
2002 1 1,240 22,320 246,760 18.00 2.75 9.05
2003 1 1,674 25,529 224,440 15.25 3.72 11.37
2004 - - - 198,911 - - -
2005 - - - 198,911 - - -
2006 1 15,305 110,961 198,911 7.25 33.99 55.78
2007 - - - 87,950 - - -
(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 at the time of releasing.
</TABLE>
The Company received a letter appraisal prepared by an independent
appraiser who is a member in good standing of the American Institute of
Real Estate Appraisers which reported a fair market value for the Orland
Greens property, as of July 27, 1998, of at least $5,350,000. Appraisals
are estimates of value and should not be relied on as a measure of true
worth or realizable value.
8
Bakers Shoe Store, Chicago, IL
On September 25, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 133 South State Street in Chicago,
Illinois known as "Bakers Shoe Store" from Edison Brothers, an unaffiliated
third party, for approximately $963,000. The purchase price was funded using
cash and cash equivalents. The purchase price was approximately $48.15 per
square foot, which the Company concluded was fair and reasonable based on,
among other things an appraisal received by the Company and presented to the
Company's board of directors.
Bakers Shoe Store, built in 1891, is a four-story, commercial building
containing 20,000 leasable square feet. As of September 30, 1998, Bakers Shoe
Store was 100% leased. In evaluating Bakers Shoe Store as a potential
acquisition, the Company considered a variety of factors including location,
demographics, price per square foot, existing rental rates compared to market
rates, and occupancy. The Company believes that the center is located within a
vibrant economic area. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
The Company does not anticipate making any significant repairs and improvements
to Bakers Shoe Store over the next few years. A substantial portion of any
monies spent on repairs and improvements would be paid by the tenants, pursuant
to the terms of the existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Bakers Shoe Store expressed as a percentage of total gross leasable
area and the average effective annual base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 *
1996 100 *
1995 100 *
1994 100 *
1993 100 *
* Edison Brothers, the parent of Bakers Shoe Store, has owned and occupied the
property for over thirty years.
9
One tenant, Bakers Shoes, leases 100% of the total gross leasable area of the
property. This lease requires the tenant 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
----------- ----------- ----------- ------------ ------------ ---------
Bakers Shoes 20,000 100 5.00 Current 12/31/03
For federal income tax purposes, the Company's depreciable basis in Bakers Shoe
Store will be approximately $320,000. Depreciation expense, for tax purposes,
will be computed using the straight-line method. Buildings and improvements
are depreciated based upon estimated useful lives of 40 years.
Real estate taxes payable in 1997 for the tax year ended 1996 (the most recent
tax year for which information is available) were $105,454.72. The real estate
taxes payable were calculated by multiplying the assessed value by an equalizer
of 2.1517 and a tax rate of 9.897%.
On September 30, 1998, a total of 20,000 square feet was leased to one tenant
at Bakers Shoe Store. The following tables set forth certain information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Bakers Shoe Store 20,000 11/02 1/5 yr. 100,000 5.00
10
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 100,000 - - -
1999 - - - 100,000 - - -
2000 - - - 100,000 - - -
2001 - - - 100,000 - - -
2002 1 20,000 20,000 100,000 5.00 100 100
(1) No assumptions were made regarding the releasing of expired leases. It is the opinion
of the Company's management that the space will be released at market rates 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 Bakers Shoe Store property, as of
June 16, 1998, of $975,000. Appraisals are estimates of value and should not
be relied on as a measure of true worth or realizable value.
Two Rivers Plaza, Bolingbrook, Illinois
On October 1, 1998, the Company acquired the entire fee simple interest in a
Neighborhood Retail Center located at 1108-1128 and 1158 Boughton Road in
Bolingbrook, Illinois known as "Two Rivers Plaza" from an
unaffiliated third party, for approximately $6,770,000. The purchase price was
funded using cash and cash equivalents. The purchase price was approximately
$116.93 per square foot, which the Company concluded was fair and reasonable
based on, among other things an appraisal received by the Company and
presented to the Company's board of directors.
Two Rivers Plaza, built in 1994, is a one-story, multi-tenant retail facility
containing 57,900 leasable square feet. As of September 30, 1998, Two Rivers
Plaza was 100% leased. In evaluating Two Rivers Plaza as a potential
acquisition, the Company considered a variety of factors including location,
demographics, tenant mix, price per square foot, existing rental rates compared
to market rates, and occupancy. The Company believes that the center is
located within a vibrant economic area. The center has good curb appeal and
will draw from other surrounding centers. Approximately 94% of the tenants are
considered credit tenants. The Company did not consider any other factors
materially relevant to the decision to acquire the property.
11
The Company does not anticipate making any significant repairs and improvements
to Two Rivers Plaza over the next few years. A substantial portion of any
monies spent on repairs and improvements would be paid by the tenants, pursuant
to the terms of the existing leases.
The table below sets forth certain information with respect to the occupancy
rate at Two Rivers Plaza expressed as a percentage of total gross leasable area
and the average effective annual base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1997 100 11.27
1996 100 11.23
1995 100 11.47
1994 100 10.39
1993 * *
* Construction was completed in 1994.
Tenants leasing more than 10% of the total gross leasable area of the property
are Marshall's, a discount store, Toy Works, a toy store, and Sizes Unlimited,
a clothing store. These leases require the tenants to pay base annual rent on
a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Marshall's 30,600 53 8.75 Currently 09/30/04
9.50 10/01/04 01/31/10
Option 1 9.75 02/01/11 01/31/15
Option 2 10.25 02/01/15 01/31/20
Option 3 10.75 02/01/20 01/31/25
Toy Works 11,400 20 13.00 Currently 09/30/99
14.50 11/01/99 01/31/05
Option 1 16.00 02/01/05 01/31/10
Option 2 17.50 02/01/10 01/31/15
Sizes Unlimited 6,500 11 12.00 Currently 01/31/99
12.50 02/01/99 01/31/03
13.00 02/01/03 01/31/07
Option 1 15.00 02/01/07 01/31/12
Option 2 17.00 02/01/12 01/31/17
12
Two of the property's tenants, Sizes Unlimited and Toy Works, may each terminate
their leases, at their option, in the event that they do not meet certain sales
thresholds. Currently, neither tenant is meeting its sales threshold as set
forth in each tenant's respective lease. The Property Manager advised the
Company's Board of Directors that if either or both of the tenants fail to meet
the sales thresholds and the tenant opts to terminate its lease that the space
could be re-leased at comparable terms.
For federal income tax purposes, the Company's depreciable basis in Two Rivers
Plaza will be approximately $4,900,000. Depreciation expense, for tax
purposes, will be computed using the straight-line method. Buildings and
improvements are depreciated based upon estimated useful lives of 40 years.
Real estate taxes payable in 1998 for the tax year ended 1997 (the most recent
tax year for which information is generally available) were $34,926. The real
estate taxes payable were calculated by multiplying the assessed value by an
equalizer of 1.0 and a tax rate of 7.8367%.
On September 30, 1998, a total of 57,900 square feet was leased to seven
tenants at Two Rivers Plaza. The following tables set forth certain
information with respect to the amount of and expiration of the leases at this
Neighborhood Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Sizes Unlimited 6,500 01/07 2/5 yr. 78,000 12.00
Famous Footwear 5,000 10/99 2/5 yr. 60,000 12.00
Toy Works 11,400 01/05 2/5 yr. 148,200 13.00
Sears Optical
(Cole Vision) 1,360 12/99 1/5 yr. 25,840 19.00
Supercuts 1,440 09/04 - 31,464 21.85
Signature Cleaners 1,600 11/04 - 46,800 29.25
Marshall's 30,600 01/10 3/5 yr. 267,842 8.75
13
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - - - 655,338 - - -
1999 2 6,360 85,840 661,304 13.50 10.98 12.98
2000 - - - 595,386 - - -
2001 - - - 598,287 - - -
2002 - - - 601,327 - - -
2003 - - - 607,710 - - -
2004 2 3,040 93,417 610,967 30.73 5.25 15.29
2005 1 11,400 165,300 540,500 14.50 19.69 30.58
2006 - - - 375,200 - - -
2007 1 6,500 84,500 375,200 13.00 11.23 22.52
(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 at the time of
releasing.
</TABLE>
The Company received a letter 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 Two Rivers Plaza
property, as of September 16, 1998, of $6,825,000. Appraisals are estimates of
value and should not be relied on as a measure of true worth or realizable
value.
14
Item 5. Other Items
Potential Property Acquisitions
The Company is considering the following potential property acquisitions
which are subject to further negotiation and execution of definitive
agreements and receipt by the Company of acceptable appraisals and
environmental reports. There can be no assurance that the Company will
complete any transaction described herein.
Park Center Plaza, Tinley Park, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Community Center located at 16024 S. Harlem Avenue in Tinley Park,
Illinois known as "Park Center Plaza" from an unaffiliated third party for
approximately $15,500,000. Park Center Plaza was constructed in 1988 and
consists of a one-story, multi-tenant retail facility containing 193,179
leasable square feet. Its major tenant is Cub Foods Store.
The Marketplace at Six Corners, Chicago, Illinois
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at Irving Park Road at Cicero Avenue,
Chicago, Illinois known as "The Marketplace at Six Corners" from an
unaffiliated third party for approximately $19,000,000. The Marketplace
at Six Corners consists of two one-story, multi-tenant, retail centers and
was built in 1997. The major tenants at the center are Jewel/Osco and
Marshall's.
Edinburgh Festival Center, Brooklyn Park, Minnesota
The Company anticipates purchasing the entire fee simple interest in a
Neighborhood Retail Center located at 8515-8575 Edinburgh Drive, Brooklyn
Park, Minnesota known as "Edinburgh Festival Center" from an unaffiliated
third party for approximately $9,125,000. Edinburgh Festival Center
consists of two one-story, multi-tenant, retail centers and was built in
1997. The major tenant at the center is Knowlan's Super Markets.
15
New Construction Projects
Hickory Creek Market Place, Frankfort, Illinois
The Company anticipates acquiring, upon its completion, the entire fee
simple interest in a Neighborhood Retail Center which is to be built at
LaGrange Road and St. Francis Road in Frankfort, Illinois, to be known as
"Hickory Creek Market Place" from an unaffiliated developer for
approximately $8,652,000. On September 15, 1998, the Company made an
initial deposit of $500,000.
Westriver Crossing, Joliet, Illinois
The Company anticipates acquiring, upon its completion, the entire fee
simple interest in a Neighborhood Retail Center which is to be built at
Essington Road and Caton Farm Road in Joliet, Illinois, to be known as
"Westriver Crossing" from an unaffiliated developer for approximately
$5,540,000. On September 15, 1998, the Company made an initial deposit of
$500,000.
Oak Forest Commons Phase III, Oak Forest, Illinois
The Company anticipates acquiring, upon its completion, the entire fee
simple interest in a Neighborhood Retail Center which is to be built at
159th Street and Central Avenue in Oak Forest, Illinois, to be known as
"Oak Forest Commons Phase III" from an unaffiliated developer for
approximately $1,092,000. The property is contiguous to the Oak Forest
Commons center currently owned by the Company. On September, 15, 1998,
the Company made an initial deposit of $100,000.
Staples Office Supply Store, Freeport, Illinois
On April 22, 1998, the Company entered into a construction loan agreement
under which it agreed to loan an unaffiliated third party $2,507,038. As
collateral for the loan, the property owner, a trust, executed a mortgage
in favor of the Company and assigned the related leases. The beneficiary
of the trust guaranteed the loan and assigned their beneficial ownership
interest in the trust to the Company. Disbursements are to be made
periodically as work progresses in connection with construction of a
24,049 square foot Staples Office Supply Store to be built at Route 26 and
North Powell Road in Freeport, Illinois. On April 23, 1998, the Company
made the first loan advance (approximately $870,000) toward the
construction loan to Chicago Title and Trust Company. It will be
disbursed to various contractors upon submission of signed lien waivers to
Chicago Title and Trust Company. The Company will earn interest on the
outstanding loan balance at the rate of 9.5% per annum, paid monthly in
advance.
16
Stuarts Crossing, St. Charles, Illinois
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.
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.
Joint Venture Transactions
Inland Joliet Commons L.L.C., Joliet, Illinois
The Company anticipates entering into a joint venture arrangement under
which it would contribute approximately $50,000 in cash to acquire a 1%
equity interest in an Illinois limited liability company ("L.L.C.") which
will own Joliet Commons Shopping Center located at U.S. 30 and Willow
Road, Joliet, Illinois. An unaffiliated third party would contribute the
center, valued at approximately $19,800,000 and subject to indebtedness of
approximately $14,700,000 to the L.L.C. in return for a 99% interest in
the L.L.C. The unaffiliated third party would have an option to convert
its interests in the L.L.C. into shares of stock of the Company after one
year from the eventual closing date.
There can be no assurance that the Company will complete this joint
venture transaction because it is subject to further negotiation and the
execution of definitive agreements.
17
Item 7. Financial Statements and Exhibits
INDEX TO FINANCIAL STATEMENTS
Page
Inland Real Estate Corporation
Pro Forma Balance Sheet at June 30, 1998 (unaudited) F-1
Notes to Pro Forma Balance Sheet at June 30, 1998 (unaudited) F-3
Pro Forma Statement of Operations for the six months ended
June 30, 1998 (unaudited) F-7
Notes to Pro Forma Statement of Operations for the six months
ended June 30, 1998 (unaudited) F-9
Pro Forma Statement of Operations for the year ended
December 31, 1997 (unaudited) F-14
Notes to Pro Forma Statement of Operations for the year
ended December 31, 1997 (unaudited) F-16
High Point Centre
Independent Auditors' Report F-39
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-40
Notes to the Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-41
Woodland Heights Shopping Center
Independent Auditors' Report F-43
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-44
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-45
18
Eastgate Shopping Center
Independent Auditors' Report F-47
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-48
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-49
Winnetka Commons
Independent Auditors' Report F-51
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-52
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-53
Fairview Heights Plaza
Independent Auditors' Report F-55
Historical Summary of Gross Income and Direct Operating Expenses
for the Year ended December 31, 1997 F-56
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997
Plaza F-57
Orland Greens
Independent Auditors' Report F-59
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-60
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-61
Edinburgh Festival Center
Independent Auditors' Report F-63
Historical Summary of Gross Income and Direct Operating Expenses
for the period from July 1, 1997 (commencement of operations)
to December 31, 1997 F-64
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the period from July 1, 1997 (commencement of
operations) to December 31, 1997 F-65
19
Park Center Plaza
Independent Auditors' Report F-67
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-68
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-69
Woodfield Commons Shopping Center
Independent Auditors' Report F-71
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-72
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-73
Two Rivers Plaza
Independent Auditors' Report F-75
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1997 F-76
Notes to the Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1997 F-77
20
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: October 13, 1998
21
Inland Real Estate Corporation
Pro Forma Balance Sheet
June 30, 1998
(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 June
30, 1998. No pro forma adjustments were made for the Staples Office Supply
Store which is currently under construction. This unaudited Pro Forma Balance
Sheet should be read in conjunction with the June 30, 1998 Financial Statements
and the notes thereto as filed on Form 10-Q.
This unaudited Pro Forma Balance Sheet is not necessarily indicative of what
the actual financial position would have been at June 30, 1998, 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
June 30, 1998
(unaudited)
June 30, June 30,
1998 Pro Forma 1998
Historical(A) Adjustments(B) Pro Forma
------------- ------------- --------------
Assets
- ------
Net investment in
properties.................. $442,229,360 106,854,000 549,083,360
Cash and cash equivalents..... 95,648,994 - 95,648,994
Restricted cash............... 4,664,594 - 4,664,594
Accounts and rents
receivable.................. 8,600,822 1,369,310 9,970,132
Other assets.................. 3,609,535 - 3,609,535
------------- ------------- -------------
Total assets.................. $554,753,305 108,223,310 662,976,615
============= ============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 1,909,491 - 1,909,491
Accrued real estate taxes..... 11,254,363 1,681,590 12,935,953
Distributions payable (C)..... 2,954,326 - 2,954,326
Security deposits............. 1,142,129 151,920 1,294,049
Mortgages payable............. 167,572,782 15,825,000 183,397,782
Unearned income............... 560,113 - 560,113
Other liabilities............. 2,511,406 - 2,511,406
Due to Affiliates............. 596,588 - 596,588
------------- ------------- -------------
Total liabilities............. 188,501,198 17,658,510 206,159,708
------------- ------------- -------------
Common Stock (D).............. 418,237 105,308 523,545
Additional paid in capital
(net of Offering costs) (D). 377,330,643 90,459,492 467,790,135
Accumulated distributions in
excess of net income........ (11,496,773) - (11,496,773)
------------- ------------- -------------
Total Stockholders' equity.... 366,252,107 90,564,800 456,816,907
------------- ------------- -------------
Total liabilities and
Stockholders' equity........ $554,753,305 108,223,310 662,976,615
============= ============= =============
See accompanying notes to pro forma balance sheet.
F-2
<TABLE> Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1998
(unaudited)
(A) The June 30, 1998 Historical column represents the historical balance sheet as presented in the
June 30, 1998 10-Q 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 June 30, 1998. The terms are described in the notes that follow.
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------------------------------------
Winnetka Fairview Orland Bakers Edinburgh
Commons Eastgate Heights Greens Shoes Festival
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
- ------
Net investment in
properties................ $ 4,435,000 7,731,000 11,241,000 5,100,000 963,000 9,107,000
Accounts and rents
receivable................ 11,000 132,000 84,155 130,000 55,000 -
------------ ------------ ------------ ------------ ------------ ------------
Total assets................ $ 4,446,000 7,863,000 11,325,155 5,230,000 1,018,000 9,107,000
============ ============ ============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate taxes... 11,000 148,750 84,155 132,600 55,000 -
Security deposits........... 14,694 - 2,505 19,298 - 8,402
Mortgage payable............ - - - - - 4,625,000
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities........... 25,694 148,750 86,660 151,898 55,000 4,633,402
------------ ------------ ------------ ------------ ------------ ------------
Common Stock................ 5,140 8,970 13,068 5,905 1,120 5,202
Additional paid in capital
(net of Offering Costs)... 4,415,166 7,705,280 11,225,427 5,072,197 961,880 4,468,396
------------ ------------ ------------ ------------ ------------ ------------
Total Stockholders' equity.. 4,420,306 7,714,250 11,238,495 5,078,102 963,000 4,473,598
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity...... $ 4,446,000 7,863,000 11,325,155 5,230,000 1,018,000 9,107,000
============ ============ ============ ============ ============ ============
F-3
F-3
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1998
(unaudited)
Pro Forma Adjustments
---------------------------------------------------
Marketplace Total
Woodfield Park at Six Pro Forma
Commons Two Rivers Center Corners Adjustments
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
- ------
Net investment in
properties................ $27,000,000 6,770,000 15,500,000 19,007,000 106,854,000
Accounts and rents
receivable................ 352,000 18,300 401,350 185,505 1,369,310
------------ ------------ ------------ ------------ ------------
Total assets................ $27,352,000 6,788,300 15,901,350 19,192,505 108,223,310
============ ============ ============ ============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued real estate taxes... 374,750 18,300 670,530 186,505 1,681,590
Security deposits........... 100,355 6,666 - - 151,920
Mortgage payable............ - - - 11,200,000 15,825,000
------------ ------------ ------------ ------------ ------------
Total liabilities........... 475,105 24,966 670,530 11,386,505 17,658,510
------------ ------------ ------------ ------------ ------------
Common Stock................ 31,252 7,864 17,710 9,077 105,308
Additional paid in capital
(net of Offering Costs)... 26,845,643 6,755,470 15,213,110 7,796,923 90,459,492
------------ ------------ ------------ ------------ ------------
Total Stockholders' equity.. 26,876,895 6,763,334 15,230,820 7,806,000 90,564,800
------------ ------------ ------------ ------------ ------------
Total liabilities and
Stockholders' equity...... $27,352,000 6,788,300 15,901,350 19,192,505 108,223,310
============ ============ ============ ============ ============
F-4
</TABLE>
F-4
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1998
(unaudited)
Acquisitions of Property:
On July 1, 1998, the Company acquired Winnetka Commons from an unaffiliated
third party for the purchase price of approximately $4,435,000 on an all
cash basis, funded from cash and cash equivalents.
On July 7, 1998, the Company acquired Eastgate from an unaffiliated third
party for the purchase price of approximately $7,731,000 on an all cash
basis, funded from cash and cash equivalents.
On August 24, 1998, the Company acquired Fairview Heights from an
unaffiliated third party for the purchase price of approximately
$11,241,000 on an all cash basis, funded from cash and cash equivalents.
On September 17, 1998, the Company acquired Orland Greens from an
unaffiliated third party for the purchase price of approximately $5,100,000
on an all cash basis, funded from cash and cash equivalents.
On September 25, 1998, the Company acquired Bakers Shoes from an
unaffiliated third party for the purchase price of approximately $963,000
on an all cash basis, funded from cash and cash equivalents.
On October 1, 1998, the Company acquired Two Rivers from an unaffiliated
third party for the purchase price of approximately $6,770,000 on an all
cash basis, funded from cash and cash equivalents.
F-5
Inland Real Estate Corporation
Notes to Pro Forma Balance Sheet
(continued)
June 30, 1998
(unaudited)
Probable Acquisitions of Property:
The Company anticipates the acquisition of Edinburgh Festival Center from
an unaffiliated third party for the purchase price of approximately
$9,107,000 on an all cash basis, funded from cash and cash equivalents.
The Company anticipates the acquisition of Woodfield Commons from an
unaffiliated third party for the purchase price of approximately
$27,000,000 on an all cash basis, funded from cash and cash equivalents.
The Company anticipates the acquisition of Park Center from an unaffiliated
third party for the purchase price of approximately $15,500,000 on an all
cash basis, to be funded from cash and cash equivalents.
The Company anticipates the acquisition of a Staples Office Supply Store to
be constructed in 1998. The total price will be approximately $2,694,000
and will be funded from cash and cash equivalents.
The Company anticipates the acquisition of Marketplace at Six Corners from
an unaffiliated third party for the purchase price of approximately
$19,007,000 on an all cash basis, to be 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 $105,308,000, net of additional Offering
costs of $14,743,200 are reflected as received as of June 30, 1998, prior
to the purchase of the properties. Offering costs consist principally of
registration costs, printing and selling costs, including commissions.
F-6
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the six months ended June 30, 1998
(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 of
the Notes to the Pro Forma Statement of Operations as though they occurred on
the earlier of January 1, 1997 or the date operations commenced. Pro forma
adjustments for Oak Forest Commons and Downers Grove Market are as of March 5,
1998 and March 25, 1998, respectively, as these are the dates that operations
commenced. Construction is not complete on the Staples Office Supply Store and
therefore, no pro forma adjustment has been made. This unaudited Pro Forma
Statement of Operations should be read in conjunction with the June 30, 1998
Financial Statements and the notes thereto as filed on Form 10-Q.
This unaudited Pro Forma Statement of Operations is not necessarily indicative
of what the actual results of operations would have been for the six months
ended June 30, 1998, 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-7
Inland Real Estate Corporation
Pro Forma Statement of Operations
For the six months ended June 30, 1998
(unaudited)
Pro Forma
Adjustments
-----------
June 30,
1998 1998 June 30,
Historical Acquisitions 1998
(A) (B) Pro Forma
------------ ------------ -----------
Rental income..... $21,431,176 7,779,416 29,210,592
Additional rental
income.......... 7,185,041 3,232,954 10,417,995
Interest
income(C)....... 1,834,865 - 1,834,865
Other income...... 62,314 - 62,314
------------ ------------ ------------
Total income.... 30,513,396 11,012,369 41,525,765
------------ ------------ ------------
Professional services
and general and
administrative
fees............ 366,355 - 366,355
Advisor asset
management fee.(F) 980,376 830,559 1,810,935
Property operating
expenses........ 9,477,710 3,896,347 13,374,057
Interest expense.. 5,331,747 453,100 5,784,847
Depreciation (D).. 5,018,934 2,092,453 7,111,387
Amortization...... 97,548 - 97,548
Acquisition costs
expensed........ 108,901 - 108,901
------------ ------------ ------------
Total expenses.... 21,381,571 7,272,458 28,654,029
------------ ------------ ------------
Net income...... $ 9,131,825 3,739,911 12,871,736
============ ============ ============
Weighted average
common stock
outstanding (E). 33,594,462 43,167,916
============ ============
Net income per weighted
average common stock
outstanding, basic and
diluted (E)..... $ .27 .30
============ ============
See accompanying notes to pro forma statement of operations.
F-8
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
For the six months ended June 30, 1998
(unaudited)
(A) The 1998 Historical column represents the historical statement of
operations of the Company for the six months ended June 30, 1998
(unaudited), as filed with the SEC on Form 10-Q.
(B) Total pro forma adjustments for the six months ended June 30, 1998 are as
though the 1998 acquisitions of the following properties occurred the
earlier of January 1, 1997 or the date operations commenced and are based
on information provided by the seller. All properties were purchased on an
all cash basis except for Mill Creek, Schaumburg Plaza and Edinburgh
Festival. Pro forma adjustments for interest expense on these properties
were based on the following terms.
Mill Creek Shopping Center
As part of the acquisition of Mill Creek Shopping Center, the Company
assumed the existing mortgage loan of $9,500,000, maturing September 10,
1999, with the balance funded with cash and cash equivalents. The loan
requires interest only monthly payments at a rate of 8% per annum.
Schaumburg Plaza
As part of the acquisition of Schaumburg Plaza, the Company assumed the
existing debt of $3,924,183. The debt requires monthly interest only
payments at a rate of 9.25% per annum through September 2004 and then
requires principal and interest payments through December 2009 at a rate of
9.25% per annum based on a 30 year amortization schedule.
Edinburgh Festival
As part of the acquisition of Edinburgh Festival, the Company will assume
the existing first mortgage loan, maturing September 30, 2008, with a
balance of $4,625,000. The loan requires interest only monthly payments at
a rate of 6.30% per annum.
F-9
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1998
(unaudited)
(B) 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
Coopers Chicago Maple Lake Park Orland
Grove Dominick's Plaza Plaza Park
----------- ----------- ----------- ----------- -----------
Rental income..... $ 12,649 36,150 30,776 130,540 11,631
Additional rental
income.......... 9,364 - 11,154 49,688 5,600
----------- ----------- ----------- ----------- -----------
Total income...... 22,013 36,150 41,930 180,228 17,231
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 1,271 3,625 2,638 13,452 2,083
Property operating
expenses........ 10,754 1,085 13,041 60,970 7,200
Interest expense.. - - - - -
Depreciation...... 3,213 9,062 6,950 33,000 5,208
----------- ----------- ----------- ----------- -----------
Total expenses.... 15,238 13,772 22,629 107,422 14,492
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 6,775 22,378 19,301 72,806 2,739
=========== =========== =========== =========== ===========
Homewood Wisner Mill Prairie Elmhurst
Plaza Plaza Creek Square City Center
----------- ----------- ----------- ----------- -----------
Rental income..... $ 29,096 29,958 180,896 78,950 84,667
Additional rental
income.......... 22,945 12,915 123,799 29,500 15,971
----------- ----------- ----------- ----------- -----------
Total income...... 52,041 42,873 304,695 108,450 100,637
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 2,812 2,738 18,933 7,750 3,979
Property operating
expenses........ 25,287 14,844 142,668 34,380 23,473
Interest expense.. - - 126,667 - -
Depreciation...... 6,970 6,880 45,417 21,950 9,948
----------- ----------- ----------- ----------- -----------
Total expenses.... 35,069 24,462 333,685 64,080 37,400
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 16,972 18,411 (28,990) 44,370 63,238
=========== =========== =========== =========== ===========
F-10
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1998
(unaudited)
St. James Chestnut Bergen Berwyn Western &
Crossing Court Plaza Plaza Howard
----------- ----------- ----------- ----------- -----------
Rental income..... $ 189,704 319,057 490,456 60,841 70,092
Additional rental
income.......... 54,985 82,340 190,947 50,285 24,948
----------- ----------- ----------- ----------- -----------
Total income...... 244,689 401,397 681,403 111,126 95,040
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 18,693 40,360 43,119 6,888 6,377
Property operating
expenses........ 65,996 134,035 227,516 57,382 34,369
Interest expense.. - - - - -
Depreciation...... 46,750 100,900 125,767 17,222 15,942
----------- ----------- ----------- ----------- -----------
Total expenses.... 131,439 275,295 396,402 81,492 56,688
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 113,250 126,102 285,001 29,634 38,352
=========== =========== =========== =========== ===========
High Point Woodland Walgreens Schaumburg
Wauconda Center Heights Woodstock Plaza
----------- ----------- ----------- ----------- -----------
Rental income..... $ 80,746 331,704 342,420 48,013 373,663
Additional rental
income.......... 21,603 78,007 313,058 - 177,341
----------- ----------- ----------- ----------- -----------
Total income...... 102,349 409,711 655,478 48,013 551,004
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 6,313 32,787 46,400 5,035 34,935
Property operating
expenses........ 26,209 80,420 363,700 - 215,485
Interest expense.. - - - - 180,746
Depreciation...... 22,094 97,672 112,778 10,978 86,667
----------- ----------- ----------- ----------- -----------
Total expenses.... 54,616 210,879 522,878 16,013 517,833
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 47,733 198,832 132,600 32,000 33,171
=========== =========== =========== =========== ===========
F-11
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1998
(unaudited)
Winnetka Fairview Orland
Commons Eastgate Heights Greens
----------- ----------- ----------- -----------
Rental income..... $ 225,717 422,415 641,370 226,763
Additional rental
income.......... 161,656 123,597 137,716 179,945
----------- ----------- ----------- -----------
Total income...... 387,373 546,012 779,086 406,708
----------- ----------- ----------- -----------
Advisor asset
management fee.. 22,175 38,655 52,305 25,500
Property operating
expenses........ 134,458 148,597 163,116 171,852
Interest expense.. - - - -
Depreciation...... 46,667 86,250 141,666 63,333
----------- ----------- ----------- -----------
Total expenses.... 203,300 273,502 357,087 260,685
----------- ----------- ----------- -----------
Net income (loss). $ 184,073 272,510 421,999 146,023
=========== =========== =========== ===========
Bakers Edinburgh Woodfield Two
Shoes Festival Commons Rivers
----------- ----------- ----------- -----------
Rental income..... $ 50,000 407,106 926,843 327,595
Additional rental
income.......... - 192,500 454,500 56,118
----------- ----------- ----------- -----------
Total income...... 50,000 599,606 1,381,343 383,713
----------- ----------- ----------- -----------
Advisor asset
management fee.. 4,815 45,535 135,000 33,850
Property operating
expenses........ 2,500 211,588 488,791 124,102
Interest expense.. - 145,687 - -
Depreciation...... 5,333 113,333 337,500 81,666
----------- ----------- ----------- -----------
Total expenses.... 12,648 516,143 961,291 239,618
----------- ----------- ----------- -----------
Net income (loss). $ 37,352 83,463 420,052 144,095
=========== =========== =========== ===========
F-12
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the six months ended June 30, 1998
(unaudited)
Marketplace Total 1998
Park at Acquisitions
Center Six Corners Pro Forma
----------- ----------- ------------
Rental income..... $ 726,598 893,000 7,779,416
Additional rental
income.......... 361,021 291,451 3,232,954
----------- ----------- ------------
Total income...... 1,087,619 1,184,451 11,012,369
----------- ----------- ------------
Advisor asset
management fee.. 77,500 95,035 830,559
Property operating
expenses........ 605,738 306,791 3,896,347
Interest expense.. - - 453,100
Depreciation...... 193,750 237,587 2,092,453
----------- ----------- ------------
Total expenses.... 876,988 639,413 7,272,458
----------- ----------- ------------
Net income (loss). $ 210,631 545,038 3,739,911
=========== =========== ============
(C) No pro forma adjustment has been made relating to interest income which
would have been earned on the additional Offering Proceeds raised.
(D) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years.
(E) The pro forma weighted average common stock shares for the six months ended
June 30, 1998 was calculated by estimating the additional shares sold to
purchase each of the Company's properties on a weighted average basis.
(F) Advisor Asset Management Fees are calculated as 1% per annum of the Average
Invested Assets (as defined).
F-13
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. No
pro forma adjustments have been made for Orland Park, Oak Forest Commons,
Downers Grove Market and Marketplace at Six Corners as these centers were
completed in 1997 and 1998 and no significant operations existed for the year
ended December 31, 1997. Construction had not begun on Staples Office Supply
Store and therefore, there were no operations for the year ended December 31,
1997. 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-14
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 21,690,127 52,706,443
Additional rental
income.......... 6,592,983 3,622,583 8,767,020 18,982,586
Interest
income(D)....... 1,615,520 - - 1,615,520
Other income...... 100,717 - - 100,717
------------ ------------ ------------ ------------
Total income.... 29,421,585 13,526,534 30,457,147 73,405,266
------------ ------------ ------------ ------------
Professional services
and general and
administrative
fees............ 482,954 - - 482,954
Advisor asset
management fee.(G) 843,000 1,832,719 2,283,371 4,959,090
Property operating
expenses........ 8,863,024 4,476,786 11,555,296 24,895,106
Interest expense.. 5,654,564 1,338,640 1,284,941 8,278,145
Depreciation (E).. 4,556,445 2,371,640 5,680,352 12,608,437
Amortization...... 124,884 - - 124,884
Acquisition costs
expensed........ 249,493 - - 249,493
------------ ------------ ------------ ------------
Total expenses.... 20,774,364 10,019,785 20,803,960 51,598,109
------------ ------------ ------------ ------------
Net income...... $ 8,647,221 3,506,749 9,653,187 21,807,157
============ ============ ============ ============
Weighted average
common stock
outstanding (F). 15,225,983 38,954,901
============ ============
Net income per weighted
average common stock
outstanding, basic and
diluted (F)..... $ .57 .56
============ ============
See accompanying notes to pro forma statement of operations.
F-15
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 Dominick's). 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-16
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-17
<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-18
F-18
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-19
F-19
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.
All properties were purchased on an all cash basis except Edinburgh
Festival. The pro forma adjustment for interest expense on this property
was based on the following terms:
As part of the acquisition of Edinburgh Festival, the Company assumed the
existing first mortgage loan, maturing September 30, 2008, with a balance
of $4,625,000. The loan requires interest only monthly payments at a rate
of 6.30% per annum.
West
Woodfield Coopers Chicago Maple Lake Park
Plaza Grove Dominick's Plaza Plaza
----------- ----------- ----------- ----------- -----------
Rental income..... $2,235,315 577,096 628,320 369,317 1,216,080
Additional rental
income.......... 755,071 401,492 - 129,431 472,163
----------- ----------- ----------- ----------- -----------
Total income...... 2,990,386 978,588 628,320 498,748 1,688,243
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 192,000 58,000 63,000 31,650 122,750
Property operating
expenses........ 873,792 488,067 18,850 133,667 543,398
Interest expense.. - - - - -
Depreciation...... 483,000 146,600 157,500 83,400 293,000
----------- ----------- ----------- ----------- -----------
Total expenses.... 1,548,792 692,667 239,350 248,717 959,148
----------- ----------- ----------- ----------- -----------
Net income (loss). $1,441,594 285,921 388,970 250,031 729,095
=========== =========== =========== =========== ===========
F-20
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
December 31, 1997
(unaudited)
Homewood Wisner Elmhurst Mill Prairie
Plaza Plaza City Center Creek Square
----------- ----------- ----------- ----------- -----------
Rental income..... $ 220,375 206,312 508,377 1,085,374 315,796
Additional rental
income.......... 132,016 59,636 95,827 725,135 87,777
----------- ----------- ----------- ----------- -----------
Total income...... 332,391 265,948 604,204 1,810,509 403,573
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 19,363 18,853 47,750 113,600 31,000
Property operating
expenses........ 166,951 101,312 140,836 823,792 130,448
Interest expense.. - - - 760,000 -
Depreciation...... 46,500 45,900 119,375 272,500 87,800
----------- ----------- ----------- ----------- -----------
Total expenses.... 232,814 166,065 307,961 1,969,892 249,248
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 99,577 99,883 296,243 (159,383) 154,325
=========== =========== =========== =========== ===========
St. James Chestnut Bergen Western & Berwyn
Crossing Court Plaza Howard Plaza
----------- ----------- ----------- ----------- -----------
Rental income..... $ 720,615 1,197,317 1,681,564 210,288 176,345
Additional rental
income.......... 183,197 306,682 980,649 69,180 131,460
----------- ----------- ----------- ----------- -----------
Total income...... 903,812 1,503,999 2,662,213 279,468 307,805
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 74,770 161,440 172,477 19,130 18,370
Property operating
expenses........ 265,225 593,967 1,105,206 88,145 147,830
Interest expense.. - - - - -
Depreciation...... 187,000 403,600 431,200 47,825 45,925
----------- ----------- ----------- ----------- -----------
Total expenses.... 526,995 1,159,007 1,708,883 155,100 212,125
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 376,817 344,992 953,330 124,368 95,680
=========== =========== =========== =========== ===========
F-21
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
December 31, 1997
(unaudited)
High Point Woodland Walgreens Winnetka
Wauconda Center Heights Woodstock Commons
----------- ----------- ----------- ----------- -----------
Rental income..... $ 230,703 1,078,701 684,840 110,800 453,321
Additional rental
income.......... 72,913 251,518 754,544 - 343,033
----------- ----------- ----------- ----------- -----------
Total income...... 303,616 1,330,219 1,439,384 110,800 796,354
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 25,250 103,540 96,000 11,620 44,350
Property operating
expenses........ 72,912 305,583 844,901 4,986 327,566
Interest expense.. - - - - -
Depreciation...... 63,125 308,437 233,333 25,333 93,333
----------- ----------- ----------- ----------- -----------
Total expenses.... 161,287 717,560 1,174,234 41,939 465,249
----------- ----------- ----------- ----------- -----------
Net income (loss). $ 142,329 612,659 265,150 68,861 331,105
=========== =========== =========== =========== ===========
Fairview
Schaumburg Park Heights Orland
Plaza Eastgate Center Plaza Greens
----------- ----------- ----------- ----------- -----------
Rental income..... $ 734,658 844,830 1,386,980 1,280,215 442,337
Additional rental
income.......... 315,191 200,749 532,465 315,356 492,656
----------- ----------- ----------- ----------- -----------
Total income...... 1,049,849 1,045,579 1,919,445 1,595,571 934,993
----------- ----------- ----------- ----------- -----------
Advisor asset
management fee.. 69,873 77,310 155,000 112,410 51,000
Property operating
expenses........ 511,999 436,950 1,210,493 385,880 469,956
Interest expense.. 379,254 - - - -
Depreciation...... 173,333 172,500 387,500 283,333 126,667
----------- ----------- ----------- ----------- -----------
Total expenses.... 1,134,459 686,760 1,752,993 781,623 647,623
----------- ----------- ----------- ----------- -----------
Net income (loss). $ (84,610) 358,819 166,452 813,948 287,370
=========== =========== =========== =========== ===========
F-22
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
December 31, 1997
(unaudited)
Edinburgh Total 1998
Bakers Festival Woodfield Two Acquisitions
Shoes Center Commons Rivers Pro Forma
----------- ----------- ----------- ----------- ------------
Rental income..... $ 100,000 413,667 1,921,834 678,750 21,690,127
Additional rental
income.......... - 168,097 643,583 147,199 8,767,020
----------- ----------- ----------- ----------- ------------
Total income...... 100,000 581,764 2,565,417 825,949 30,457,147
----------- ----------- ----------- ----------- ------------
Advisor asset
management fee.. 9,630 45,535 270,000 67,700 2,283,371
Property operating
expenses........ 4,500 201,513 976,853 179,718 11,555,296
Interest expense.. - 145,687 - - 1,284,941
Depreciation...... 10,667 113,333 675,000 163,333 5,680,352
----------- ----------- ----------- ----------- ------------
Total expenses.... 24,797 506,068 1,921,853 410,751 20,803,960
----------- ----------- ----------- ----------- ------------
Net income (loss). $ 75,203 75,696 643,564 415,198 9,653,187
=========== =========== =========== =========== ============
F-23
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
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 Coopers Grove, Country Club Hills, 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:
Coopers Grove
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 577,096 - 577,096
Additional rental income.. 401,492 - 401,492
----------- ----------- -----------
Total income.............. 978,588 - 978,588
----------- ----------- -----------
Advisor asset
management fee.......... - 58,000 58,000
Property operating
expenses................ 428,031 60,036 488,067
Depreciation.............. - 146,600 146,600
----------- ----------- -----------
Total expenses............ 428,031 264,636 692,667
----------- ----------- -----------
Net income (loss)......... $ 550,557 (264,636) 285,921
=========== =========== ===========
F-24
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
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
=========== =========== ===========
Acquisition of Maple Plaza, Downers Grove, 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:
Maple Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 369,317 - 369,317
Additional rental income.. 129,431 - 129,431
----------- ----------- -----------
Total income.............. 498,748 - 498,748
----------- ----------- -----------
Advisor asset
management fee.......... - 31,650 31,650
Property operating
expenses................ 133,667 - 133,667
Depreciation.............. - 83,400 83,400
----------- ----------- -----------
Total expenses............ 133,667 115,050 248,717
----------- ----------- -----------
Net income (loss)......... $ 365,081 (115,050) 250,031
=========== =========== ===========
F-25
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, Michigan City, Indiana
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 75,971 543,398
Depreciation.............. - 293,000 293,000
----------- ----------- -----------
Total expenses............ 467,427 491,721 959,148
----------- ----------- -----------
Net income (loss)......... $1,220,816 (491,721) 729,095
=========== =========== ===========
Acquisition of Homewood Plaza, Homewood, 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:
Homewood Plaza
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 200,375 - 200,375
Additional rental income.. 132,016 - 132,016
----------- ----------- -----------
Total income.............. 332,391 - 332,391
----------- ----------- -----------
Advisor asset
management fee.......... - 19,363 19,363
Property operating
expenses................ 166,951 - 166,951
Depreciation.............. - 46,500 46,500
----------- ----------- -----------
Total expenses............ 166,951 65,863 232,814
----------- ----------- -----------
Net income (loss)......... $ 165,440 (65,863) 99,577
=========== =========== ===========
F-26
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Wisner Plaza, Chicago, 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:
Wisner Plaza
-----------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 206,312 - 206,312
Additional rental income.. 59,636 - 59,636
----------- ----------- -----------
Total income.............. 265,948 - 265,948
----------- ----------- -----------
Advisor asset
management fee.......... - 18,853 18,853
Property operating
expenses................ 101,312 - 101,312
Depreciation.............. - 45,900 45,900
----------- ----------- -----------
Total expenses............ 101,312 64,753 166,065
----------- ----------- -----------
Net income (loss)......... $ 164,636 (64,753) 99,883
=========== =========== ===========
Acquisition of Elmhurst City Center, Elmhurst, Illinois
This pro forma adjustment reflects the purchase of Elmhurst City Center as
if the Company had acquired the property as of January 1, 1997, and is
based on information provided by the Seller.
Elmhurst City Center
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 508,377 - 508,377
Additional rental income.. 95,827 - 95,827
----------- ----------- -----------
Total income.............. 604,204 - 604,204
----------- ----------- -----------
Advisor asset
management fee.......... - 47,750 47,750
Property operating
expenses................ 140,836 - 140,836
Depreciation.............. - 119,375 119,375
----------- ----------- -----------
Total expenses............ 140,836 167,125 307,961
----------- ----------- -----------
Net income (loss)......... $ 463,368 (167,125) 296,243
=========== =========== ===========
F-27
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Mill Creek, Palos Park, 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:
Mill Creek
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,085,374 - 1,085,374
Additional rental income.. 725,135 - 725,135
----------- ----------- -----------
Total income.............. 1,810,509 - 1,810,509
----------- ----------- -----------
Advisor asset
management fee.......... - 113,600 113,600
Property operating
expenses................ 778,792 45,000 823,792
Interest expense.......... - 760,000 760,000
Depreciation.............. - 272,500 272,500
----------- ----------- -----------
Total expenses............ 778,792 1,191,100 1,969,892
----------- ----------- -----------
Net income (loss)......... $1,031,537 (1,191,100) (159,383)
=========== =========== ===========
Acquisition of Prairie Square, Sun Prairie, Wisconsin
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:
Prairie Square
-----------------------------------
Year Ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 315,796 - 315,796
Additional rental income.. 87,777 - 87,777
----------- ----------- -----------
Total income.............. 403,573 - 403,573
----------- ----------- -----------
Advisor asset
management fee.......... - 31,000 31,000
Property operating
expenses................ 130,448 - 130,448
Depreciation.............. - 87,800 87,800
----------- ----------- -----------
Total expenses............ 130,448 118,800 249,248
----------- ----------- -----------
Net income (loss)......... $ 273,125 (118,800) 154,325
=========== =========== ===========
F-28
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of St. James Crossing, Westmont, 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:
St. James Crossing
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 720,615 - 720,615
Additional rental income.. 183,197 - 183,197
----------- ----------- -----------
Total income.............. 903,812 - 903,812
----------- ----------- -----------
Advisor asset
management fee.......... - 74,770 74,770
Property operating
expenses................ 257,225 8,000 265,225
Depreciation.............. - 187,000 187,000
----------- ----------- -----------
Total expenses............ 257,225 269,770 526,995
----------- ----------- -----------
Net income (loss)......... $ 646,587 (269,770) 376,817
=========== =========== ===========
Acquisition of Chestnut Court, Darien, 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:
Chestnut Court
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,197,317 - 1,197,317
Lease termination income.. 765,504 (765,504) -
Additional rental income.. 306,682 - 306,682
----------- ----------- -----------
Total income.............. 2,269,503 (765,504) 1,503,999
----------- ----------- -----------
Advisor asset
management fee.......... - 161,440 161,440
Property operating
expenses................ 593,967 - 593,967
Depreciation.............. - 403,600 403,600
----------- ----------- -----------
Total expenses............ 593,967 565,040 1,159,007
----------- ----------- -----------
Net income (loss)......... $1,675,536 (1,330,544) 344,992
=========== =========== ===========
F-29
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Bergen Plaza, Oakdale, Minnesota
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:
Bergen Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,681,564 - 1,681,564
Additional rental income.. 980,649 - 980,649
----------- ----------- -----------
Total income.............. 2,662,213 - 2,662,213
----------- ----------- -----------
Advisor asset
management fee.......... - 172,477 172,477
Property operating
expenses................ 1,105,206 - 1,105,206
Depreciation.............. - 431,200 431,200
----------- ----------- -----------
Total expenses............ 1,105,206 603,677 1,708,883
----------- ----------- -----------
Net income (loss)......... $1,557,007 (603,677) 953,330
=========== =========== ===========
Acquisition of Western & Howard, Chicago, Illinois
This pro forma adjustment reflects the purchase of Western & Howard as if
the Company had acquired the property as of January 1, 1997, and is based
on information provided by the Seller.
Western & Howard
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 210,288 - 210,288
Additional rental income.. 69,180 - 69,180
----------- ----------- -----------
Total income.............. 279,468 - 279,468
----------- ----------- -----------
Advisor asset
management fee.......... - 19,130 19,130
Property operating
expenses................ 88,145 - 88,145
Depreciation.............. - 47,825 47,825
----------- ----------- -----------
Total expenses............ 88,145 66,955 155,100
----------- ----------- -----------
Net income (loss)......... $ 191,323 (66,955) 124,368
=========== =========== ===========
F-30
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Berwyn Plaza, Berwyn, 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:
Berwyn Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 176,345 - 176,345
Additional rental income.. 131,460 - 131,460
----------- ----------- -----------
Total income.............. 307,805 - 307,805
----------- ----------- -----------
Advisor asset
management fee.......... - 18,370 18,730
Property operating
expenses................ 135,830 12,000 147,830
Depreciation.............. - 45,925 45,925
----------- ----------- -----------
Total expenses............ 135,830 76,295 212,125
----------- ----------- -----------
Net income (loss)......... $ 171,975 (76,295) 95,680
=========== =========== ===========
Acquisition of Wauconda, Wauconda, 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:
Wauconda
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 230,703 - 230,703
Additional rental income.. 72,913 - 72,913
----------- ----------- -----------
Total income.............. 303,616 - 303,616
----------- ----------- -----------
Advisor asset
management fee.......... - 25,250 25,250
Property operating
expenses................ 72,912 - 72,912
Depreciation.............. - 63,125 63,125
----------- ----------- -----------
Total expenses............ 72,912 88,375 161,287
----------- ----------- -----------
Net income (loss)......... $ 230,704 (88,375) 142,329
=========== =========== ===========
F-31
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of High Point Centre, Madison, Wisconsin
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:
High Point Centre
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,078,701 - 1,078,701
Additional rental income.. 251,518 - 251,518
----------- ----------- -----------
Total income.............. 1,330,219 - 1,330,219
----------- ----------- -----------
Advisor asset
management fee.......... - 103,540 103,540
Property operating
expenses................ 258,583 47,000 305,583
Depreciation.............. - 308,437 308,437
----------- ----------- -----------
Total expenses............ 258,583 458,977 717,560
----------- ----------- -----------
Net income (loss)......... $1,071,636 (458,977) 612,659
=========== =========== ===========
Acquisition of Woodland Heights, Streamwood, 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:
Woodland Heights
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 684,840 - 684,840
Additional rental income.. 754,544 - 754,544
----------- ----------- -----------
Total income.............. 1,439,384 - 1,439,384
----------- ----------- -----------
Advisor asset
management fee.......... - 96,000 96,000
Property operating
expenses................ 844,901 - 844,901
Depreciation.............. - 233,333 233,333
----------- ----------- -----------
Total expenses............ 844,901 329,333 1,174,234
----------- ----------- -----------
Net income (loss)......... $ 594,483 (329,333) 265,150
=========== =========== ===========
F-32
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Walgreens, Woodstock, Illinois
This pro forma adjustment reflects the purchase of the Walgreens property
as if the Company had acquired the property as of January 1, 1997, and is
based on information provided by the seller.
Walgreens
------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 110,800 - 110,800
Additional rental income.. - - -
----------- ----------- -----------
Total income.............. 110,800 - 110,800
----------- ----------- -----------
Advisor asset
management fee.......... - 11,620 11,620
Property operating
expenses................ - 4,986 4,986
Depreciation.............. - 25,333 25,333
----------- ----------- -----------
Total expenses............ - 41,939 41,939
----------- ----------- -----------
Net income (loss)......... $ 110,800 (41,939) 68,861
=========== =========== ===========
Acquisition of Winnetka Commons, New Hope, Minnesota
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:
Winnetka Commons
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 453,321 - 453,321
Additional rental income.. 343,033 - 343,033
----------- ----------- -----------
Total income.............. 796,354 - 796,354
----------- ----------- -----------
Advisor asset
management fee.......... - 44,350 44,350
Property operating
expenses................ 327,566 - 327,566
Depreciation.............. - 93,333 93,333
----------- ----------- -----------
Total expenses............ 327,566 137,683 465,249
----------- ----------- -----------
Net income (loss)......... $ 468,788 (137,683) 331,105
=========== =========== ===========
F-33
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Schaumburg Plaza, Schaumburg, Illinois
This pro forma adjustment reflects the purchase of Schaumburg Plaza as if
the Company had acquired the property as of January 1, 1997, and is based
on information provided by the Seller.
Schaumburg Plaza
-------------------------------------
Year ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 734,658 - 734,658
Additional rental income.. 315,191 - 315,191
----------- ----------- -----------
Total income.............. 1,049,849 - 1,049,849
----------- ----------- -----------
Advisor asset
management fee.......... - 69,873 69,873
Property operating
expenses................ 511,999 - 511,999
Interest expense.......... 379,254 - 379,254
Depreciation.............. - 173,333 173,333
----------- ----------- -----------
Total expenses............ 891,253 243,206 1,134,459
----------- ----------- -----------
Net income (loss)......... $ 158,596 (243,206) (84,610)
=========== =========== ===========
Acquisition of Eastgate, Lombard, 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:
Eastgate
------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 844,830 - 844,830
Additional rental income.. 200,749 - 200,749
----------- ----------- -----------
Total income.............. 1,045,579 - 1,045,579
----------- ----------- -----------
Advisor asset
management fee.......... - 77,310 77,310
Property operating
expenses................ 436,950 - 436,950
Depreciation.............. - 172,500 172,500
----------- ----------- -----------
Total expenses............ 436,950 249,810 686,760
----------- ----------- -----------
Net income (loss)......... $ 608,629 (249,810) 358,819
=========== =========== ===========
F-34
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Park Center, Tinley Park, 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:
Park Center
------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,386,980 - 1,386,980
Additional rental income.. 532,465 - 532,465
----------- ----------- -----------
Total income.............. 1,919,445 - 1,919,445
----------- ----------- -----------
Advisor asset
management fee.......... - 155,000 155,000
Property operating
expenses................ 1,191,299 19,194 1,210,493
Depreciation.............. - 387,500 387,500
----------- ----------- -----------
Total expenses............ 1,191,299 561,694 1,752,993
----------- ----------- -----------
Net income (loss)......... $ 728,146 (561,694) 166,452
=========== =========== ===========
Acquisition of Fairview Heights Plaza, Fairview Heights, 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:
Fairview Heights
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,280,215 - 1,280,215
Additional rental income.. 315,356 - 315,356
----------- ----------- -----------
Total income.............. 1,595,571 - 1,595,571
----------- ----------- -----------
Advisor asset
management fee.......... - 112,410 112,410
Property operating
expenses................ 377,902 7,978 385,880
Depreciation.............. - 283,333 283,333
----------- ----------- -----------
Total expenses............ 377,902 403,721 781,623
----------- ----------- -----------
Net income (loss)......... $1,217,669 (403,721) 813,948
=========== =========== ===========
F-35
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Orland Greens, Orland Park, 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:
Orland Greens
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 442,337 - 442,337
Additional rental income.. 492,656 - 492,656
----------- ----------- -----------
Total income.............. 934,993 - 934,993
----------- ----------- -----------
Advisor asset
management fee.......... - 51,000 51,000
Property operating
expenses................ 465,281 4,675 469,956
Depreciation.............. - 126,667 126,667
----------- ----------- -----------
Total expenses............ 465,281 182,342 647,623
----------- ----------- -----------
Net income (loss)......... $ 469,712 (182,342) 287,370
=========== =========== ===========
Acquisition of Bakers Shoes, Chicago, Illinois
This pro forma adjustment reflects the purchase of Bakers Shoes as if the
Company had acquired the property as of January 1, 1997, and is based on
information provided by the Seller.
Bakers Shoes
------------------------------------
Year Ended
December 31, Pro Forma
1997 Adjustments Total
----------- ----------- -----------
Rental income............. $ 100,000 - 100,000
Additional rental income.. - - -
----------- ----------- -----------
Total income.............. 100,000 - 100,000
----------- ----------- -----------
Advisor asset
management fee.......... - 9,630 9,630
Property operating
expenses................ 4,500 - 4,500
Depreciation.............. - 10,667 10,667
----------- ----------- -----------
Total expenses............ 4,500 20,297 24,797
----------- ----------- -----------
Net income (loss)......... $ 95,500 (20,297) 75,203
=========== =========== ===========
F-36
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Edinburgh Festival Center, Brooklyn Park, Minnesota
Reconciliation of Gross income and Direct Operating Expenses for the period
from July 1, 1997 (commencement of operations) to December 31, 1997
prepared in accordance with Rule 3.14 of Regulation S-X (*) to the Pro
Forma Adjustments:
Edinburgh Festival Center
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 413,667 - 413,667
Additional rental income.. 168,097 - 168,097
----------- ----------- -----------
Total income.............. 581,764 - 581,764
----------- ----------- -----------
Advisor asset
management fee.......... - 45,535 45,535
Property operating
expenses................ 201,513 - 201,513
Interest expense.......... 145,687 - 145,687
Depreciation.............. - 113,333 113,333
----------- ----------- -----------
Total expenses............ 347,200 158,868 506,068
----------- ----------- -----------
Net income (loss)......... $ 234,564 (158,868) 75,696
=========== =========== ===========
Acquisition of Woodfield Commons, 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 Commons
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $1,921,834 - 1,921,834
Additional rental income.. 643,583 - 643,583
----------- ----------- -----------
Total income.............. 2,565,417 - 2,565,417
----------- ----------- -----------
Advisor asset
management fee.......... - 270,000 270,000
Property operating
expenses................ 931,032 45,821 976,853
Depreciation.............. - 675,000 675,000
----------- ----------- -----------
Total expenses............ 931,032 990,821 1,921,853
----------- ----------- -----------
Net income (loss)......... $1,634,385 (990,821) 643,564
=========== =========== ===========
F-37
Inland Real Estate Corporation
Notes to Pro Forma Statement of Operations
(continued)
For the year ended December 31, 1997
(unaudited)
Acquisition of Two Rivers, Bolingbrook, 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:
Two Rivers
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income............. $ 678,750 - 678,750
Additional rental income.. 147,199 - 147,199
----------- ----------- -----------
Total income.............. 825,949 - 825,949
----------- ----------- -----------
Advisor asset
management fee.......... - 67,700 67,700
Property operating
expenses................ 179,718 - 179,718
Depreciation.............. - 163,333 163,333
----------- ----------- -----------
Total expenses............ 179,718 231,033 410,751
----------- ----------- -----------
Net income (loss)......... $ 646,231 (231,033) 415,198
=========== =========== ===========
(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-38
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 High Point Centre 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 High Point Centre'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 High Point Centre for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
April 15, 1998
F-39
High Point Centre
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,078,701
Operating expense and real estate
tax recoveries................................ 251,518
-----------
Total Gross Income.............................. 1,330,919
-----------
Direct operating expenses:
Real estate taxes............................... 147,562
Operating expenses.............................. 78,273
Management fees................................. 12,000
Insurance....................................... 5,176
Utilities....................................... 15,572
-----------
Total direct operating expenses................. 258,583
-----------
Excess of gross income over
direct operating expenses..................... $1,071,636
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-40
High Point Centre
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
High Point Centre is located in Madison, Wisconsin. It consists of
approximately 86,000 square feet of gross leasable area and was 100% leased
and occupied at December 31, 1997. Approximately 10% of High Point Centre
is leased to one tenant representing approximately 13% of total rental
income. Inland Real Estate Corporation has signed a sale and purchase
agreement for the purchase of High Point Centre 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 High Point
Centre's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of High Point
Centre 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
High Point Centre leases retail space under various lease agreements with
its tenants. All leases are accounted for as operating leases. The leases
include provisions under which High Point Centre 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 $48,627 for the
year ended December 31, 1997.
F-41
High Point Centre
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 $ 1,051,960
1999 972,278
2000 748,162
2001 653,440
2002 548,338
Thereafter 1,531,731
-----------
$ 5,506,909
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of High Point Centre. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
High Point Centre is managed by an affiliate of the seller pursuant to the
terms of a management agreement for an annual fee of $12,000. Subsequent
to the sale of High Point Centre (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-42
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 Woodland Heights 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 Woodland Heights 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 Woodland Heights Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
May 28, 1998
F-43
Woodland Heights Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 684,840
Operating expense and real estate
tax recoveries................................ 609,728
Percentage rent................................. 144,816
-----------
Total Gross Income.............................. 1,439,384
-----------
Direct operating expenses:
Real estate taxes............................... 455,110
Operating expenses.............................. 320,239
Management fees................................. 38,307
Insurance....................................... 17,725
Utilities....................................... 13,520
-----------
Total direct operating expenses................. 844,901
-----------
Excess of gross income over
direct operating expenses..................... $ 594,483
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-44
Woodland Heights Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Woodland Heights Shopping Center is located in Streamwood, Illinois. It
consists of approximately 120,436 square feet of gross leasable area and
was 86% leased and occupied at December 31, 1997. Approximately 50% of
Woodland Heights Shopping Center is leased to one tenant representing
approximately 34% of base rental income. Inland Real Estate Corporation
has signed a sale and purchase agreement for the purchase of Woodland
Heights Shopping Center 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 Woodland
Heights Shopping Center's revenues and expenses. The Historical Summary
has been prepared on the accrual basis of accounting and requires
management of Woodland Heights Shopping 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
Woodland Heights Shopping 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 Woodland Heights
Shopping Center 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. Certain of the leases provide for payment of
contingent rentals based on a percentage applied to the amount by which the
tenants' sales exceed predetermined levels. Certain leases contain renewal
options for various periods at various rental rates.
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 $84,084 for the
year ended December 31, 1997.
F-45
Woodland Heights 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 $ 785,428
1999 713,022
2000 728,200
2001 675,880
2002 645,562
Thereafter 4,077,930
-----------
$ 7,626,022
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Woodland Heights Shopping
Center. Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Woodland Heights Shopping Center had not received its final real estate tax
bill for 1997. 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.
Woodland Heights Shopping Center is managed by an affiliate of the seller
pursuant to the terms of a management agreement for an annual fee of 5% of
base and percentage rents. Subsequent to the sale of Woodland Heights
Shopping 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-46
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 Eastgate 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 Eastgate 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 Eastgate Shopping Center for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
May 28, 1998
F-47
Eastgate Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 844,830
Operating expense and real estate
tax recoveries................................ 184,481
Other income.................................... 16,268
-----------
Total Gross Income.............................. 1,045,579
-----------
Direct operating expenses:
Real estate taxes............................... 119,007
Operating expenses.............................. 129,262
Management fees................................. 125,143
Insurance....................................... 12,574
Utilities....................................... 50,964
-----------
Total direct operating expenses................. 436,950
-----------
Excess of gross income over
direct operating expenses..................... $ 608,629
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-48
Eastgate Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Eastgate Shopping Center is located in Lombard, Illinois. It consists of
approximately 132,500 square feet of gross leasable area and was 86% leased
and occupied at December 31, 1997. Approximately 20% of Eastgate Shopping
Center is leased to one tenant representing approximately 25% of base
rental income. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Eastgate Shopping Center 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 Eastgate
Shopping Center's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of
Eastgate Shopping 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
Eastgate Shopping 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 Eastgate Shopping Center 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. Certain leases contain renewal options for various periods at
various rental rates.
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 $47,688 for the
year ended December 31, 1997.
F-49
Eastgate 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 $ 850,838
1999 728,528
2000 607,207
2001 434,352
2002 346,391
Thereafter 311,329
-----------
$ 3,278,645
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Eastgate Shopping Center.
Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Eastgate Shopping Center is managed by an affiliate of the seller pursuant
to the terms of a management agreement for an annual fee of 5% of base
rents and reimbursement of salaries for related property management
personnel of approximately $69,000 for the year ended December 31, 1997.
Subsequent to the sale of Eastgate Shopping 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-50
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 Winnetka Commons 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 Winnetka Commons 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 Winnetka Commons Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
June 19, 1998
F-51
Winnetka Commons Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 453,321
Operating expense and real estate
tax recoveries................................ 321,438
Percentage rent................................. 21,595
-----------
Total Gross Income.............................. 796,354
-----------
Direct operating expenses:
Real estate taxes............................... 182,096
Operating expenses.............................. 85,231
Management fees................................. 13,207
Insurance....................................... 42,153
Utilities....................................... 4,879
-----------
Total direct operating expenses................. 327,566
-----------
Excess of gross income over
direct operating expenses..................... $ 468,788
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-52
Winnetka Commons Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Winnetka Commons Shopping Center is located in New Hope, Minnesota. It
consists of approximately 42,000 square feet of gross leasable area and was
100% leased and occupied at December 31, 1997. Approximately 28% of
Winnetka Commons Shopping Center is leased to one tenant representing
approximately 30% of base rental income. Inland Real Estate Corporation
has signed a sale and purchase agreement for the purchase of Winnetka
Commons Shopping Center 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 Winnetka
Commons Shopping Center's revenues and expenses. The Historical Summary
has been prepared on the accrual basis of accounting and requires
management of Winnetka Commons Shopping 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
Winnetka Commons Shopping 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 Winnetka Commons
Shopping Center is reimbursed for common area, real estate, and insurance
costs. Certain of the leases provide for payment of contingent rentals
based on a percentage applied to the amount by which the tenants' sales
exceed predetermined levels. Certain leases contain renewal options for
various periods at various rental rates.
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 $22,544 for the
year ended December 31, 1997.
F-53
Winnetka Commons 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 $ 457,564
1999 464,388
2000 441,459
2001 368,997
2002 308,234
Thereafter 4,327,364
-----------
$ 6,368,006
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Winnetka Commons Shopping
Center. Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Winnetka Commons Shopping Center is managed pursuant to the terms of a
management agreement for an annual fee of 5% of base rents. Subsequent to
the sale of Winnetka Commons Shopping 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-54
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 Fairview Heights Plaza 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 Fairview Heights 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 Fairview Heights Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 21, 1998
F-55
Fairview Heights Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,280,215
Operating expense and real estate
tax recoveries................................ 314,592
Other income.................................... 764
-----------
Total Gross Income.............................. 1,595,571
-----------
Direct operating expenses:
Operating expenses.............................. 113,763
Real estate taxes............................... 168,311
Utilities....................................... 8,194
Insurance....................................... 23,623
Management fees................................. 64,011
-----------
Total direct operating expenses................. 377,902
-----------
Excess of gross income over
direct operating expenses..................... $1,217,669
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-56
Fairview Heights Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Fairview Heights Plaza is located in Fairview Heights, Illinois. It
consists of 168,291 square feet of gross leasable area and was 100% leased
and occupied at December 31, 1997. Approximately 30% of Fairview Heights
Plaza is leased to one tenant representing 32% of base rental income.
Inland Real Estate Corporation has signed a sale and purchase agreement for
the purchase of Fairview Heights 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 Fairview
Heights Plaza's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of
Fairview Heights 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
Fairview Heights 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 Fairview Heights 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 $53,597 for the
year ended December 31, 1997.
F-57
Fairview Heights Plaza
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 $ 1,252,530
1999 1,285,969
2000 1,314,733
2001 1,158,472
2002 1,046,609
Thereafter 5,953,085
-----------
$12,011,398
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Fairview Heights Plaza.
Costs such as mortgage interest, depreciation, amortization and
professional fees are excluded from the Historical Summary.
Fairview Heights Plaza is managed pursuant to the terms of a management
agreement for 5% of gross rents per month. Subsequent to the sale of
Fairview Heights 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-58
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 Orland Greens 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 Orland Greens'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 Orland Greens for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 4, 1998
F-59
Orland Greens
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 442,337
Percentage rental income........................ 154,099
Operating expense and real estate
tax recoveries................................ 338,557
-----------
Total Gross Income.............................. 934,993
-----------
Direct operating expenses:
Operating expenses.............................. 76,722
Bad debt expense................................ 72,638
Real estate taxes............................... 265,354
Utilities....................................... 6,649
Insurance....................................... 6,518
Management fees................................. 37,400
-----------
Total direct operating expenses................. 465,281
-----------
Excess of gross income over
direct operating expenses..................... $ 469,712
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-60
Orland Greens
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Orland Greens is located in Orland Park, Illinois. It consists of
approximately 45,000 square feet of gross leasable area and was 96% leased
and occupied at December 31, 1997. Approximately 61% of Orland Greens is
leased to two tenants representing 45% of base rental income. Inland Real
Estate Corporation has signed a sale and purchase agreement for the
purchase of Orland Greens 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 Orland
Greens's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of Orland Greens
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
Orland Greens leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Orland Greens is reimbursed for common area,
real estate, and insurance costs. Certain of the leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenants' sale exceed predetermined levels. Certain leases
contain renewal options at various periods at various rental rates.
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 $2,935 for the
year ended December 31, 1997.
F-61
Orland Greens
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 $ 454,909
1999 410,169
2000 304,158
2001 296,042
2002 210,072
Thereafter 1,991,200
-----------
$ 3,666,550
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Orland Greens. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
For the year ended December 31, 1997, Orland Greens has reserved
approximately $72,000 relating to estimated uncollectible operating expense
recoveries.
Orland Greens had not received its final real estate tax bill for 1997.
Real estate tax expense is estimated 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.
Orland Greens is managed pursuant to the terms of a management agreement
for 4% of gross rents per month. Subsequent to the sale of Orland Greens
(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-62
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 Edinburgh Festival Center for the
period from July 1, 1997 (commencement of operations) to 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 Edinburgh Festival 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 Edinburgh Festival Center for the period July 1, 1997
(commencement of operations) to December 31, 1997, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 20, 1998
F-63
Edinburgh Festival Center
Historical Summary of Gross Income and Direct Operating Expenses
For the period from July 1, 1997 (commencement of operations)
to December 31, 1997
Gross income:
Base rental income.............................. $ 413,667
Percentage rental income........................ 7,613
Operating expense and real estate
tax recoveries................................ 160,484
-----------
Total Gross Income.............................. 581,764
-----------
Direct operating expenses:
Operating expenses.............................. 67,492
Real estate taxes............................... 88,893
Utilities....................................... 11,753
Insurance....................................... 6,780
Management fees................................. 26,595
Interest expense................................ 145,687
-----------
Total direct operating expenses................. 347,200
-----------
Excess of gross income over
direct operating expenses..................... $ 234,564
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-64
Edinburgh Festival Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
For the Period from July 1, 1997 (commencement of operations)
to December 31, 1997
1. Business
Edinburgh Festival Center (Edinburgh) is located in Brooklyn Park,
Minnesota. It consists of approximately 92,000 square feet of gross
leasable area and was 91% leased and occupied at December 31, 1997.
Construction on Edinburgh was substantially completed on July 1, 1997 and
commenced operations as of this date. Accordingly, the Historical Summary
of Gross Income and Direct Operating Expenses (Historical Summary) has been
presented from the period from July 1, 1997 to December 31, 1997.
Approximately 59% of Edinburgh is leased to one tenant representing 56% of
base rental income. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Edinburgh 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
Edinburgh's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of
Edinburgh 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
Edinburgh leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Edinburgh is reimbursed for common area,
real estate, and insurance costs. Certain of the leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenants' sales exceed predetermined levels. Certain leases
contain renewal options at various periods at various rental rates.
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 $26,922 for the
year ended December 31, 1997.
F-65
Edinburgh Festival Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
For the period from July 1, 1997 (commencement of operations)
to 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 $ 732,880
1999 739,193
2000 745,506
2001 752,134
2002 750,096
Thereafter 7,350,065
-----------
$11,069,874
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Edinburgh. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Edinburgh is managed pursuant to the terms of a management agreement for 5%
of gross rents per month. Subsequent to the sale of Edinburgh (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.
Inland Real Estate Corporation will assume the outstanding mortgage debt
related to Edinburgh of approximately $4,625,000 in connection with the
acquisition. The debt to be assumed is due September, 2008, has an annual
interest rate of 6.30%, and requires interest only payments.
F-66
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 Park Center Plaza 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 Park Center 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 Park Center Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 10, 1998
F-67
Park Center Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,386,980
Operating expense and real estate
tax recoveries................................ 532,465
-----------
Total Gross Income.............................. 1,919,445
-----------
Direct operating expenses:
Operating expenses.............................. 159,571
Real estate taxes............................... 849,534
Utilities....................................... 70,006
Insurance....................................... 44,616
Management fees................................. 67,572
-----------
Total direct operating expenses................. 1,191,299
-----------
Excess of gross income over
direct operating expenses..................... $ 728,146
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-68
Park Center Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Park Center Plaza is located in Tinley Park, Illinois. It consists of
193,179 square feet of gross leasable area and was 72% leased and occupied
at December 31, 1997. Approximately 32% of Park Center Plaza is leased to
one tenant representing 29% of base rental income. Inland Real Estate
Corporation has signed a sale and purchase agreement for the purchase of
Park Center 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 Park
Center Plaza's revenues and expenses. The Historical Summary has been
prepared on the accrual basis of accounting and requires management of Park
Center 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
Park Center 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 Park Center 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 $8,022 for the
year ended December 31, 1997.
F-69
Park Center Plaza
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 $ 1,424,393
1999 1,053,200
2000 985,081
2001 929,497
2002 811,641
Thereafter 4,885,661
-----------
$10,089,473
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Park Center Plaza. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Park Center Plaza had not received its final real estate tax bill for 1997.
Real estate tax expense is estimated 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.
Park Center Plaza is managed pursuant to the terms of a management
agreement for the greater of $5,000 or 3% of gross rents per month.
Subsequent to the sale of Park Center 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-70
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 Commons 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 Woodfield Commons 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 Woodfield Commons Shopping Center for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
August 27, 1998
F-71
Woodfield Commons Shopping Center
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $1,921,834
Operating expense and real estate
tax recoveries................................ 651,634
Tenant service income........................... (8,051)
-----------
Total Gross Income.............................. 2,565,417
-----------
Direct operating expenses:
Operating expenses.............................. 120,071
Real estate taxes............................... 724,600
Utilities....................................... 7,996
Insurance....................................... 8,742
Management fees................................. 69,623
-----------
Total direct operating expenses................. 931,032
-----------
Excess of gross income over
direct operating expenses..................... $1,634,385
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-72
Woodfield Commons Shopping Center
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Woodfield Commons Shopping Center (Woodfield Commons) is located in
Schaumburg, Illinois. It consists of approximately 206,000 square feet of
gross leasable area. During 1997, a portion of Woodfield Commons was
demolished and was in the process of being rebuilt as of December 31, 1997.
Approximately 40,000 of the square feet was under construction as of
December 31, 1997. The remaining 166,000 available square feet was 93%
leased and occupied at December 31, 1997. Approximately 34% of Woodfield
Commons is leased to two tenants representing approximately 28% of base
rental income. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Woodfield Commons 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 Woodfield
Common's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of Woodfield
Commons 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 Commons 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 Commons is reimbursed for common
area, real estate, and insurance costs. Certain of the leases provide for
payment of contingent rentals based on a percentage applied to the amount
by which the tenants' sales exceed predetermined levels. Certain leases
contain renewal options at various periods at various rental rates.
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 $65,487 for the
year ended December 31, 1997.
F-73
Woodfield Commons 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 $ 2,201,712
1999 2,294,128
2000 2,146,297
2001 1,936,006
2002 1,779,084
Thereafter 11,590,830
-----------
$21,948,057
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Woodfield Commons. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Woodfield Commons had not received its final real estate tax bill for 1997.
Real estate tax expense is estimated 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.
An affiliate of the seller provides management services for Woodfield
Commons based on a percentage of gross income for such services.
Subsequent to the sale of Woodfield Commons (note 1), Woodfield Commons
will be managed by an affiliate of Inland Real Estate Corporation and 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-74
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 Two Rivers Plaza 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 Two Rivers 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 Two Rivers Plaza for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
September 25, 1998
F-75
Two Rivers Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
Gross income:
Base rental income.............................. $ 678,750
Operating expense and real estate
tax recoveries................................ 147,199
-----------
Total Gross Income.............................. 825,949
-----------
Direct operating expenses:
Operating expenses.............................. 41,937
Real estate taxes............................... 79,428
Utilities....................................... 9,203
Insurance....................................... 12,783
Management fees................................. 36,367
-----------
Total direct operating expenses................. 179,718
-----------
Excess of gross income over
direct operating expenses..................... $ 646,231
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-76
Two Rivers Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1997
1. Business
Two Rivers Plaza (Two Rivers) is located in Bolingbrook, Illinois. It
consists of approximately 58,000 square feet of gross leasable area and was
100% leased and occupied at December 31, 1997. Approximately 53% of Two
Rivers is leased to one tenant representing approximately 40% of base
rental income. Inland Real Estate Corporation has signed a sale and
purchase agreement for the purchase of Two Rivers from an unaffiliated
third party (the Seller). Two Rivers is located on a land parcel which
includes four other buildings (the Complex). The other buildings will not
be acquired by Inland Real Estate Corporation; however, they do share in
the total operating expenses and utilities of the Complex (note 4).
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 Two
Rivers's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of Two Rivers 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
Two Rivers leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Two Rivers is reimbursed for common area,
real estate, and insurance costs. Certain leases contain renewal options
at various periods at various rental rates.
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 $8,860 for the
year ended December 31, 1997.
F-77
Two Rivers Plaza
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 $ 672,515
1999 672,039
2000 618,418
2001 622,329
2002 624,369
Thereafter 2,637,049
-----------
$ 5,846,719
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Two Rivers. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Operating expenses and utilities are allocated to Two Rivers generally
based upon its relative square footage to the total square footage of the
Complex.
An affiliate of the Seller provides management services for Two Rivers
pursuant to the terms of a management agreement for 5% of gross rents or a
minimum of $3,000 per month. Subsequent to the sale of Two Rivers (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-78
