As filed with the Securities and Exchange Commission on February 5, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 18, 1998
(Date of earliest event reported)
Inland Real Estate Corporation
(Exact name of registrant as specified in the charter)
Maryland 0-28382 36-3953261
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
2901 Butterfield Road
Oak Brook, Illinois 60523
(Address of Principal Executive Offices)
(630) 218-8000
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
-1-
Item 2. Acquisition or Disposition of Assets
Since our last Form 8-K filing on December 14, 1998, we have acquired four
additional properties and, on January 27, 1999, our board of directors approved
five properties for potential acquisition which are noted in Item 5. With the
acquisition of these properties and with the anticipated purchases noted in
Item 5, the aggregate purchase price of these properties exceeds 10 percent of
our total assets as of December 31, 1997, and accordingly, we are filing this
Form 8-K.
Hollywood Video, Hammond, Indiana
On December 18, 1998, we purchased the entire fee simple interest in a single-
user retail center located at 1738 165th Street in Hammond, Indiana known as
"Hollywood Video". We purchased Hollywood Video from KTJ Limited Partnership
Twenty L.P., an unaffiliated third party, for approximately $1,374,000 or
approximately $183.49 per square foot. We paid the purchase price for this
property using cash and cash equivalents. We believe the purchase price was
fair and reasonable based on, among other things, an appraisal from a third
party that we received and presented to our board of directors.
Hollywood Video, built in 1998, is a one-story, single tenant retail facility.
Hollywood Video contains 7,488 leasable square feet. As of December 18, 1998,
Hollywood Video was 100% leased. We considered a variety of factors including
location, demographics, tenant mix, price per square foot, existing rental
rates compared to market rates, and occupancy. We believe that the center is
located within a vibrant economic area.
We do not anticipate making any significant repairs and improvements to this
property over the next few years. However, if we were to make any repairs or
improvements, pursuant to the lease, the center's tenant would be obligated to
pay a substantial portion of any monies spent on repairs and improvements.
One tenant, Hollywood Video, leases 100% of the total gross leasable area of
the property. This lease requires the tenant to pay base annual rent on a
monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Hollywood Video 7,488 100 19.00 Currently 03/31/03
21.38 04/01/03 03/31/13
Option 1 24.05 04/01/13 03/31/18
option 2 27.05 04/01/18 03/31/23
-2-
For federal income tax purposes, our depreciable basis in Hollywood Video will
be approximately $1,000,000. When we calculate depreciation expense, for tax
purposes, we will use the straight-line method. We depreciate buildings and
improvements based upon estimated useful lives of 40 years.
On December 18, 1998, a total of 7,488 square feet was leased to one tenant at
Hollywood Video. The following tables set forth information with respect to
the amount of and expiration of the lease at this single-user retail center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Hollywood Video 7,488 04/13 2/5 yr. 142,272 19.00
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999-
2003 - - - 142,272 - - -
2004-
2008 - - - 160,093 - - -
</TABLE>
We received an appraisal prepared by an independent appraiser who is a member
in good standing of the American Institute of Real Estate Appraisers. The
appraisal reported a fair market value for the Hollywood Video property, as of
January 1, 1998, of $1,400,000. You should note that appraisals are estimates
of value and, therefore, you should not rely upon them as a measure of true
worth or realizable value.
Plymouth Collection Center, Plymouth, Minnesota
On January 6, 1999, we purchased the entire fee simple interest in a
Neighborhood Retail Center located at 4135 Berkshire Lane in Plymouth,
Minnesota known as "Plymouth Collection Center." We purchased Plymouth
Collection Center from Baker Plymouth Collection, LLC, an unaffiliated third
party, for approximately $6,626,000 or approximately $162.34 per square foot.
We paid the purchase price for this property using cash and cash equivalents.
We believe the purchase price was fair and reasonable based on, among other
things, an appraisal from a third party that we received and presented to our
board of directors.
-3-
Plymouth Collection Center, built in 1998, is a one-story, multi-tenant retail
facility. Plymouth Collection Center contains 40,815 leasable square feet. As
of January 6, 1999, Plymouth Collection Center was 100% leased. We considered
a variety of factors including location, demographics, tenant mix, price per
square foot, existing rental rates compared to market rates, and occupancy. We
believe that the center is located within a vibrant economic area.
We do not anticipate making any significant repairs and improvements to
Plymouth Collection Center over the next few years. However, if we were to
make any repairs or improvements, pursuant to the leases, the center's tenants
would be obligated to pay a substantial portion of any monies spent on repairs
and improvements.
The table below sets forth the occupancy rate at Plymouth Collection Center
expressed as a percentage of total gross leasable area and the average annual
base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1998 95 16.02
Three tenants, Golf Galaxy, a golf supply store, Paper Warehouse, a discount
party and card store, and Vintage Liquors, a liquor store, each lease more than
10% of the total gross leasable area of the property. 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
----------- ----------- ----------- ------------ ------------ ---------
Golf Galaxy 17,748 43 15.50 Currently 07/31/03
17.20 08/01/03 07/31/08
19.15 08/01/08 07/31/13
Option 1 19.15 08/01/13 07/31/18
Option 2 19.15 08/01/18 07/31/23
Paper Warehouse 9,216 23 14.50 Currently 08/31/03
15.50 09/01/03 02/28/08
Option 1 17.00 03/01/08 02/28/13
Option 2 18.00 03/01/13 02/28/18
Vintage Liquors 4,581 11 15.00 Currently 08/31/01
15.75 09/01/01 08/31/03
16.50 09/01/03 08/31/05
17.25 09/01/05 08/31/07
18.00 09/01/07 08/31/08
-4-
For federal income tax purposes, our depreciable basis in Plymouth Collection
Center will be approximately $5,100,000. When we calculate depreciation
expense, for tax purposes, we will use the straight-line method. We depreciate
buildings and improvements based upon estimated useful lives of 40 years.
On January 6, 1999, a total of 40,815 square feet was leased to eight tenants
at Plymouth Collection Center. The following tables set forth information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Golf Galaxy 17,748 07/13 2/5 yr. 275,094 15.50
Paper Warehouse 9,216 08/08 2/5 yr. 133,632 14.50
Vintage Market 4,581 08/08 - 68,715 15.00
Pilgrim Drycleaners 1,400 08/08 1/5 yr. 25,200 18.00
Caribou Coffee 1,540 05/08 1/5 yr. 32,340 21.00
Leeann Chin 2,500 08/08 2/5 yr. 52,500 21.00
Thomas John's
Tobacconists 1,710 09/03 1/5 yr. 32,490 19.00
Air Touch
Communication 2,120 12/04 1/6 yr. 42,400 20.00
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - - - 662,371 - - -
2000 - - - 664,081 - - -
2001 - - - 670,131 - - -
2002 - - - 682,396 - - -
2003 2 3,830 85,970 691,406 22.45 9.38 12.43
2004 - - - 648,259 - - -
2005 - - - 659,979 - - -
2006 - - - 663,415 - - -
2007 - - - 669,295 - - -
2008 5 19,237 374,088 679,353 19.45 47.13 55.07
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion
of our management that the space will be re-leased at market rates at the time of re-leasing.
</TABLE>
-5-
We received an appraisal prepared by an independent appraiser who is a member
in good standing of the American Institute of Real Estate Appraisers. The
appraisal reported a fair market value for the Plymouth Collection Center
property, as of October 1, 1998, of $7,250,000. You should note that
appraisals are estimates of value and, therefore, you should not rely upon them
as a measure of true worth or realizable value.
Circuit City, Traverse City, Michigan
On January 20, 1999, we purchased the entire fee simple interest in a single-
user retail center located at 3123 West South Airport Road in Traverse City,
Michigan known as "Circuit City-Traverse City." We purchased Circuit City-
Traverse City from Circuit City Stores, Inc., an unaffiliated third party, for
approximately $2,900,000 or approximately $135.91 per square foot. We paid the
purchase price for this property using cash and cash equivalents. We believe
the purchase price was fair and reasonable based on, among other things, an
appraisal from a third party that we received and presented to our board of
directors.
Circuit City-Traverse City, built in 1998, is a one-story, single-tenant
retail facility. Circuit City-Traverse City contains 21,337 leasable square
feet. As of February 1, 1999, Circuit City-Traverse City was 100% leased. We
considered a variety of factors including location, demographics, tenant mix,
price per square foot, existing rental rates compared to market rates, and
occupancy. We believe that the center is located within a vibrant economic
area.
We do not anticipate making any significant repairs and improvements to Circuit
City-Traverse City over the next few years. However, if we were to make any
repairs or improvements, pursuant to the lease, the center's tenant would be
obligated to pay a substantial portion of any monies spent on repairs and
improvements.
One tenant, Circuit City Stores, Inc., leases 100% of the total gross leasable
area of the property. This lease requires the tenant to pay base annual rent
on a monthly basis as follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Circuit City
Stores, Inc. 21,337 100 13.84 01/20/99 01/19/09
Option 1 15.22 01/20/09 01/19/19
Option 2 18.26 01/20/19 01/19/29
For federal income tax purposes, our depreciable basis in Circuit City-Traverse
City will be approximately $2,200,000. When we calculate depreciation expense,
for tax purposes, we will use the straight-line method. We depreciate
buildings and improvements based upon estimated useful lives of 40 years.
-6-
On February 1, 1999, a total of 21,337 square feet was leased to one tenant at
Circuit City-Traverse City. The following tables set forth information with
respect to the amount of and expiration of the lease at this single-user retail
center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Circuit City
Stores, Inc. 21,377 01/09 2/10 yr. 295,220 13.84
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999-
2008 - - - 295,220 - - -
</TABLE>
We received a letter appraisal prepared by an independent appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers.
The appraisal reported a fair market value for the Circuit City-Traverse City
property, as of November 15, 1998, of $3,080,000. You should note that
appraisals are estimates of value and, therefore, you should not rely upon them
as a measure of true worth or realizable value.
Loehmann's Plaza, Brookfield, Wisconsin
On February 1, 1999, we purchased the entire fee simple interest in a
Neighborhood Retail Center located at 17105 Bluemond Road in Brookfield,
Wisconsin known as "Loehmann's Plaza." We purchased Loehmann's Plaza from
Loehmann's Plaza Limited Partnership, Preferred Title Ltd. Partnership, Market
Square of Brookfield Limited Partnership and University Limited Partnership,
unaffiliated third parties, for approximately $13,565,000 or approximately
$125.11 per square foot. We paid the purchase price for this property using
cash and cash equivalents. We believe the purchase price was fair and
reasonable based on, among other things, an appraisal from a third party that
we received and presented to our board of directors.
-7-
Loehmann's Plaza, built in 1985, is a one-story, multi-tenant retail facility.
Loehmann's Plaza contains 107,952 leasable square feet. As of February 1,
1999, Loehmann's Plaza was 100% leased. We considered a variety of factors
including location, demographics, tenant mix, price per square foot, existing
rental rates compared to market rates, and occupancy.
We do not anticipate making any significant repairs and improvements to
Loehmann's Plaza over the next few years. However, if we were to make any
repairs or improvements, pursuant to the leases, the center's tenants would be
obligated to pay a substantial portion of any monies spent on repairs and
improvements.
The table below sets forth the occupancy rate at Loehmann's Plaza expressed as
a percentage of total gross leasable area and the average annual base rent per
square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1998 97 11.63
1997 100 12.46
1996 100 12.57
1995 100 11.88
1994 100 11.90
Three tenants, Schwartz Bookshop, a bookstore, Loehmann's, a women's clothing
store, and V. Richards Market, a grocery store, each lease more than 10% of the
total gross leasable area of the property. 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 ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Schwartz Bookshop 15,178 14 15.26 Current 12/31/99
15.56 01/01/00 12/31/00
15.88 01/01/01 12/31/01
16.19 01/01/02 12/31/02
16.52 01/01/03 12/31/03
16.85 01/01/04 12/31/04
17.18 01/01/05 12/31/05
Option 1 17.53 01/01/06 12/31/06
17.88 01/01/07 12/31/07
18.24 01/01/08 12/31/08
18.60 01/01/09 12/31/09
18.97 01/01/10 12/31/10
19.35 01/01/11 12/31/11
Option 2 19.74 01/01/12 12/31/12
20.13 01/01/13 12/31/13
20.54 01/01/14 12/31/14
20.95 01/01/15 12/31/15
21.37 01/01/16 12/31/16
21.79 01/01/17 12/31/17
-8-
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Loehmann's 15,000 14 3.00 Current 03/31/00
Option 1 3.30 04/01/00 03/31/05
Option 2 3.63 04/01/05 03/31/10
Option 3 3.90 04/01/10 03/31/15
V. Richards Market 12,132 11 4.95 Current 12/31/07
Option 1 4.95 01/01/08 12/31/30
Option 2 4.95 01/01/31 12/31/53
Option 3 4.95 01/01/54 12/31/76
Option 4 4.95 01/01/77 12/31/99
For federal income tax purposes, our depreciable basis in Loehmann's Plaza will
be approximately $10,200,000. When we calculate depreciation expense, for tax
purposes, we will use the straight-line method. We depreciate buildings and
improvements based upon estimated useful lives of 40 years.
Real estate taxes payable in 1997 for the tax year ended 1997 were $159,916.
The real estate taxes payable were calculated by multiplying the assessed value
by a tax rate of .021579.
On February 1, 1999, a total of 107,952 square feet was leased to twenty-seven
tenants at Loehmann's Plaza. The following tables set forth information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Boutique Optique 1,987 07/01 - 33,958 17.09
Brookfield Cleaners 1,731 09/04 1/5 yr. 28,371 16.39
Chapman's Frame 2,019 05/00 - 31,981 15.84
Chardon Uniforms 952 08/02 2/5 yr. 10,948 11.50
Continental Imports 3,333 09/01 1/3 yr. 53,328 16.00
Cousins Subs 2,353 05/00 1/5 yr. 45,742 19.44
Famous Footwear 6,752 06/05 4/5 yr. 82,712 12.25
Hobby Town 3,758 02/04 - 52,612 14.00
Geppetto's 2,779 06/05 1/5 yr. 41,490 14.93
Glitz 574 06/00 1/3 yr. 12,106 21.09
Harry Nick &
Friends 1,234 05/05 2/5 yr. 23,446 19.00
Schwartz Bookshop 15,178 12/05 2/6 yr. 231,616 15.26
Innovated Spaces 2,114 05/03 - 25,368 12.00
J.L. Gifts 620 01/03 - 9,300 15.00
Karlberg Tanning 2,135 09/04 - 30,039 14.07
Loehmann's 15,000 03/00 3/5 yr. 45,000 3.00
M.E. Lou 2,360 07/03 1/5 yr. 35,400 15.00
Mailboxes Etc. 1,235 03/01 - 21,514 17.42
-9-
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Olson Travel 1,997 05/00 - 34,488 17.27
Shoe Healers 720 10/99 - 13,176 18.30
Stan's Bootery 6,868 05/00 - 80,699 11.75
Supercuts 2,019 05/00 - 37,513 18.58
V. Richards Market 12,132 12/07 4/23 yr. 60,053 4.95
V. Richards Coffee 1,576 12/07 4/5 yr. 26,760 16.98
V. Richards Floral 2,526 12/07 4/5 yr. 42,891 16.98
Yankee Trading Co. 4,000 09/02 1/5 yr. 59,560 14.89
Bombay Bicycle Club 10,000 07/15 3/10 yr. 137,700 13.77
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1 720 13,176 1,307,767 18.30 0.67 1.01
2000 8 34,163 350,830 1,320,090 10.27 31.65 26.58
2001 3 9,974 149,026 991,828 14.94 9.24 15.03
2002 2 4,952 78,377 856,059 15.83 4.59 9.16
2003 4 7,229 111,252 789,304 15.39 6.70 14.09
2004 2 5,489 87,128 686,785 15.87 5.08 12.69
2005 3 19,191 330,918 607,141 17.24 17.78 54.50
2006 - - - 277,782 - - -
2007 3 16,234 141,682 279,382 8.73 15.04 50.71
2008 - - - 137,700 - - -
(1) We made no assumptions regarding the re-leasing of expired leases. It is the opinion of
our management that the space will be re-leased at market rates at the time of re-leasing.
</TABLE>
We received a letter appraisal prepared by an independent appraiser who is a
member in good standing of the American Institute of Real Estate Appraisers.
The appraisal reported a fair market value for the Loehmann's Plaza property,
as of November 2, 1998, of $13,565,000. You should note that appraisals are
estimates of value and, therefore, you should not rely upon them as a measure
of true worth or realizable value.
-10-
Item 5. Other Events
Baytowne Shoppes, Champaign, Illinois
We anticipate purchasing the entire fee simple interest a property known as
"Baytowne Shoppes" located in Champaign, Illinois. Baytowne Shoppes was
constructed in 1993. It includes two single-story, multi-tenant Neighborhood
Retail Centers and an outlot containing a total of 118,482 leasable square
feet. We anticipate purchasing the Baytowne Shoppes for approximately
$12,655,000.
Champlin Marketplace, Champlin, Minnesota
We anticipate purchasing the entire fee simple interest in a property known as
"Champlin Marketplace" located in Champlin, Minnesota. This property is
currently under construction and includes two single-story, multi-tenant retail
centers containing a total of 83,102 leasable square feet. We anticipate
purchasing this property in two phases for a total purchase price of
approximately $12,400,000.
Woodland Commons, Buffalo Grove, Illinois
We anticipate purchasing the entire fee simple interest in a property known as
"Woodland Commons" located in Buffalo Grove, Illinois. This property was
constructed in 1991 and is a single-story, multi-tenant Community Center
containing 178,111 leasable square feet. We anticipate purchasing this
property for approximately $20,946,500.
Cub Foods, Indianapolis, Indiana
We anticipate purchasing the entire fee simple interest in a property known as
"Cub Foods-Indianapolis" located in Indianapolis, Indiana. This property was
constructed in 1991 and is a single-user retail center containing 67,541
leasable square feet. We anticipate purchasing this property for approximately
$5,734,000.
Cub Foods, Plymouth, Minnesota
We anticipate purchasing the entire fee simple interest in a property known as
"Cub Foods-Plymouth" located in Plymouth, Minnesota. This property was
constructed in 1991 and is a single-user retail center containing 67,510
leasable square feet. We anticipate purchasing this property for approximately
$5,464,000.
-11-
Item 7. Financial Statements and Exhibits
To be subsequently filed.
-12-
SIGNATURE
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: February 5, 1999
-13-
