As filed with the Securities and Exchange Commission on February 24, 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: February 8, 1999
(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)
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Item 2. Acquisition or Disposition of Assets
Since our last Form 8-K filing on February 5, 1999, we have acquired two
additional properties. 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.
Baytowne Shoppes and Baytowne Square, Champaign, Illinois
On February 8, 1999, we purchased the entire fee simple interest in two
Neighborhood Retail Centers located just south of I-74 and North Prospect
Avenue in Champaign, Illinois known as "Baytowne Shoppes and Baytowne Square."
We purchased the Baytowne shopping centers from Clinton C. Atkins, an
unaffiliated third party, for a total purchase price of approximately
$12,655,000 or approximately $106.81 per square foot. We paid the purchase
price for this property using cash and cash equivalents. We believe the
purchase price was fair and reasonable based on, among other things, an
appraisal from a third party that we received and presented to our board of
directors.
Baytowne Shoppes, built in 1993, is comprised of a one-story, multi-tenant
retail facility. Baytowne Square, built in 1995, is comprised of a one-story,
multi-tenant retail facility and a ground lease on an outlot. In total, the
Baytowne shopping centers contain 118,842 leasable square feet. As of February
8, 1999, the Baytowne shopping centers were 97% leased (100% leased if the
master lease, which lasts for one year, is considered). We considered a
variety of factors including location, demographics, tenant mix, price per
square foot, existing rental rates compared to market rates, and occupancy. We
believe that the centers are located within a vibrant economic area.
We do not anticipate making any significant repairs and improvements to the
Baytowne shopping centers over the next few years. However, if we were to make
any repairs or improvements, pursuant to the leases, the center's tenants would
be obligated to pay a substantial portion of any monies spent on repairs and
improvements.
The table below sets forth the occupancy rate at Baytowne Shoppes, constructed
in 1993, expressed as a percentage of total gross leasable area and the average
annual base rent per square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1998 90 12.39
1997 100 12.00
1996 94 11.59
1995 76 8.63
1994 95 11.52
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The table below sets forth the occupancy rate at Baytowne Square, constructed
in 1995, 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, (%) ($)
------------ ------------ -------------
1998 98 12.26
1997 98 12.56
1996 98 11.80
1995 52 10.50
Two tenants, Staples, an office supply store, and PetSmart, a pet supply store,
each lease more than 10% of the total gross leasable area of the property.
These leases require the tenants to pay base annual rent on a monthly basis as
follows:
Base Rent
Per Square
Approximate Foot Per
GLA % of Total Annum Lease Term
Lessee Leased GLA ($) Beginning To
----------- ----------- ----------- ------------ ------------ ---------
Staples 20,300 17 10.34 Currently 09/30/00
11.08 10/01/00 09/30/05
11.82 10/01/05 09/30/10
Option 1 12.81 10/01/10 09/30/15
Option 2 13.79 10/01/15 09/30/20
Option 3 14.78 10/01/20 09/30/25
PetSmart 20,020 17 10.48 Currently 01/31/02
10.98 02/01/02 01/31/07
11.48 02/01/07 01/31/12
Option 1 11.98 02/01/12 01/31/17
12.48 02/01/17 01/31/22
12.98 02/01/22 01/31/27
13.48 02/01/27 01/31/32
For federal income tax purposes, our depreciable basis in the Baytowne shopping
centers will be approximately $8,800,000. 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 1998 for the tax year ended 1997 were $191,050.
The real estate taxes payable were calculated by multiplying the assessed value
by a tax rate of 8.0242%.
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On February 8, 1999, a total of 114,782 square feet was leased to twenty-one
tenants at the Baytowne shopping centers. The following tables set forth
information with respect to the amount of and expiration of the leases at these
Neighborhood Retail Centers:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Commercial Credit 1,800 12/03 2/5 yr. 23,400 13.00
Pier One 9,038 02/06 - 117,494 13.00
Staples 20,300 09/10 3/5 yr. 209,902 10.34
Lands End 9,423 12/02 2/5 yr. 91,592 9.72
Mil-Mar Shoes 10,806 02/06 3/5 yr. 107,952 9.99
PetSmart 20,020 01/12 4/5 yr. 209,809 10.48
Factory Card 10,000 02/06 2/5 yr. 120,000 12.00
Berean Books 11,935 03/03 2/5 yr. 142,743 11.96
Bussy Bank 1,200 03/01 1/5 yr. 18,000 15.00
Computer
Renaissance 1,500 02/03 1/5 yr. 18,600 12.40
Red Wings Shoes 1,500 02/04 1/5 yr. 18,000 12.00
Boys Scouts 3,760 08/00 - 40,006 10.64
Avco Financial 1,500 10/03 - 18,000 12.00
Best Wok 1,500 07/03 1/5 yr. 21,000 14.00
Oreck 1,500 11/00 1/5 yr. 19,500 13.00
Mail Boxes Etc. 1,140 01/01 - 12,540 11.00
Dental Center 2,430 08/99 4/5 yr. 27,605 11.36
Jenny Craig 2,430 12/02 - 30,982 12.75
Nails 1,500 07/01 - 17,250 11.50
USA Mobile 1,500 05/01 1/5 yr. 18,000 12.00
Vacant 4,060
Wendy's
(Ground Lease) - 10/15 2/5 yr. 50,000 -
-4-
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1 2,430 24,604 1,235,919 11.36 2.04 1.99
2000 2 5,260 59,506 1,210,190 11.31 4.43 4.92
2001 4 5,340 66,390 1,183,867 12.43 4.50 5.61
2002 2 11,853 136,048 1,239,934 11.48 9.97 10.97
2003 5 18,235 233,026 1,113,895 12.78 15.34 20.92
2004 1 1,500 19,875 880,869 13.25 1.26 2.26
2005 - - - 860,994 - - -
2006 3 29,844 366,251 876,016 12.27 25.11 41.81
2007 - - - 509,765 - - -
2008 - - - 519,775 - - -
(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 Baytowne shopping centers,
as of January 8, 1999, of $12,750,000. 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.
Woodland Commons, Buffalo Grove, Illinois
On February 10, 1999, we purchased the entire fee simple interest in a
Community Retail Center located at 480 Half Day Road in Buffalo Grove, Illinois
known as "Woodland Commons." We purchased Woodland Commons from Woodland
Commons Corp., an unaffiliated third party, for approximately $20,036,000 or
approximately $117.84 per square foot. We paid the purchase price for this
property by 1) assuming an existing loan with a balance of $10,735,000 and 2)
using cash and cash equivalents. The loan requires interest only payments at a
rate of 6.25% per annum through September, 2001, at which time the interest
rate will be reset. The loan matures September, 2006 and can be repaid at any
time without penalty. We believe the purchase price was fair and reasonable
based on, among other things, an appraisal from a third party that we received
and presented to our board of directors.
-5-
Woodland Commons, built in 1991, is a one-story, multi-tenant retail facility.
Woodland Commons contains 170,051 leasable square feet. As of February 10,
1999, Woodland Commons was 97% leased. However approximately 12% of the center
is not currently occupied. The tenant for this space is currently negotiating
with us to buy out of their lease and we are in negotiations with a potential
tenant to lease the space. We considered a variety of factors including
location, demographics, tenant mix, price per square foot, existing rental
rates compared to market rates, and occupancy. We believe that the center is
located within a vibrant economic area.
We do not anticipate making any significant repairs and improvements to
Woodland Commons over the next few years. However, if we were to make any
repairs or improvements, pursuant to the leases, the center's tenants would be
obligated to pay a substantial portion of any monies spent on repairs and
improvements.
The table below sets forth the occupancy rate at Woodland Commons expressed as
a percentage of total gross leasable area and the average annual base rent per
square foot:
Occupancy Rate Effective
as of Annual Rental
December 31, Rate Per Leasable
Year Ending of Each Year Square Ft
December 31, (%) ($)
------------ ------------ -------------
1998 100 13.48
1997 92 12.36
1996 99 12.90
1995 97 12.30
1994 * *
* The center was not owned by the current seller at this time and the
information is not available.
One tenant, Dominick's Finer Foods, a grocery store, leases more than 10% 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
----------- ----------- ----------- ------------ ------------ ---------
Dominick's 70,183 41 10.25 Currently 03/30/01
11.00 10/01/01 09/30/06
12.00 10/01/06 09/30/11
Option 1 12.00 10/01/11 09/30/16
Option 2 12.00 10/01/16 09/30/21
Option 3 12.00 10/01/21 09/30/26
Option 4 12.00 10/01/26 09/30/31
Option 5 12.00 10/01/31 09/30/36
Option 6 12.00 10/01/36 09/30/41
Option 7 12.00 10/01/41 09/30/46
Option 8 12.00 10/01/46 09/30/51
-6-
For federal income tax purposes, our depreciable basis in Woodland Commons will
be approximately $15,200,000. 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 1998 for the tax year ended 1997 were $340,556.
The real estate taxes payable were calculated by multiplying the assessed value
by a tax rate of 7.276%.
On February 10, 1999, a total of 165,064 square feet was leased to thirty-nine
tenants at Woodland Commons. The following tables set forth information with
respect to the amount of and expiration of the leases at this Neighborhood
Retail Center:
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Ameritech 1,044 01/01 1/5 yr. 21,788 20.87
Animal Instincts 1,643 11/00 - 25,467 15.50
Ashley's Flowers 871 10/01 - 21,792 25.02
Blockbuster Video 6,000 10/01 - 89,517 14.86
Boyer's Coffee 1,705 02/00 - 34,509 20.24
Cigar Exchange 1,865 05/03 - 34,297 18.39
Cigarettes Cheaper 1,244 02/00 - 27,318 21.96
Clark Chiropractic
Rehab 1,514 05/00 - 26,510 17.51
Coldwell Banker 7,114 09/03 1/5 yr. 78,254 11.00
Countryside Dental 1,452 02/00 - 31,421 21.64
Deb-Betts 1,538 12/02 - 24,962 16.23
Diamond Connection 1,144 10/01 - 24,069 21.15
Dominick's 70,183 09/11 8/5 yr. 719,376 10.25
Exposure Tax 1,011 01/02 - 23,061 22.81
Fitigues 1,643 11/02 1/5 yr. 26,666 16.23
General Nutrition 1,043 01/01 - 20,204 28.00
Johnny Navo's
Pasta House 2,207 04/01 - 37,497 16.99
Loves Yogurt 2,128 03/02 - 26,111 12.27
Mail Box, Etc. 1,044 01/02 - 23,156 22.18
Marcia's Dance
Studio 1,643 05/00 - 30,396 18.50
Michael Thomas 5,989 04/08 - 110,677 18.48
Michael's Red Hots 4,435 12/06 - 83,101 18.57
Nationwide Mutual
Insurance 1,243 10/00 - 21,131 17.00
One Hour Moto Photo 1,605 12/03 1/5 yr. 30,495 19.00
Paradise Records 2,128 07/03 1/5 yr. 31,920 15.00
Pearl Vision 1,522 07/03 - 30,288 19.90
Picture Us
Galleries 1,243 05/01 - 21,131 17.00
Rainbow Cleaners 2,440 11/01 1/5 yr. 61,732 25.30
Seong Hea's
Martial Arts 1,243 12/03 - 19,888 16.00
Simon Sezzz 2,900 08/99 - 50,750 17.50
Sir Speedy 2,064 01/00 - 31,249 15.14
Anna's Gifts 1,653 09/03 - 24,645 15.00
-7-
Approximate Current Rent per
GLA Lease Renewal Annual Rent Square Foot
Lessee Leased Ends Option ($) ($)
------ ---------- ----- ------ ----------- -----------
Subway 1,044 01/02 - 24,743 23.70
Uniquely Sweet 823 01/00 - 18,336 22.28
Woodland Travel 1,243 01/01 - 27,968 22.50
Yen Yen Restaurant 4,320 03/03 - 66,264 15.30
Vacant 4,987
Sears Hardware
(not currently
occupied) 21,173 07/05 - 147,784 7.00
Wendy's
(Ground Lease) - 12/28 4/5 yr. 40,000 -
Harris Bank
(Ground Lease) - 12/11 3/10 yr. 94,028 -
<TABLE>
<CAPTION>
Average Percent of Percent of
Base Rent Total Annual Base
Annual Base Total Per Square Building GLA Rent
Approx. GLA Rent of Annual Foot Under Represented Represented
Year Number of of Expiring Expiring Base Expiring by Expiring By Expiring
Ending Leases Leases Leases Rent (1) Leases Leases Leases
December 31, Expiring (Sq. Ft.) ($) ($) ($) (%) (%)
- ----------- --------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 2 3,771 57,386 2,311,599 15.22 2.22 2.48
2000 8 12,883 242,719 2,295,580 18.84 7.58 10.57
2001 11 19,911 402,764 2,080,807 20.23 11.71 19.36
2002 5 7,397 137,024 1,735,598 8.52 4.35 7.89
2003 7 19,322 321,980 1,608,293 16.66 11.36 20.02
2004 - - - 1,294,477 - - -
2005 1 21,173 174,677 1,297,416 8.25 12.45 13.46
2006 1 4,435 102,180 1,143,211 23.04 2.61 8.94
2007 - - - 1,093,668 - - -
2008 1 5,989 117,444 1,093,668 19.61 3.52 10.74
(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 Woodland Commons property,
as of January 13, 1999, of $21,900,000. 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.
-8-
Item 5. Other Events
Oak Lawn Town Center, Oak Lawn, Illinois
We anticipate purchasing the entire fee simple interest a property known as
"Oak Lawn Town Center" located in Oak Lawn, Illinois. Oak Lawn Town Center was
constructed in 1998. It is a single-story, multi-tenant Neighborhood Retail
Center containing a total of 12,506 leasable square feet. We anticipate
purchasing the Oak Lawn Town Center for approximately $2,400,000.
Gateway Square, Hinsdale, Illinois
We anticipate purchasing the entire fee simple interest in a property known as
"Gateway Square" located in Hinsdale, Illinois. This property was constructed
in 1985 and is a single-story, multi-tenant Neighborhood Retail Center
containing 40,150 leasable square feet. We anticipate purchasing this property
for approximately $6,940,000.
We previously included Colonial Plaza Shopping Center and Champlin Marketplace
as potential acquisitions. After completing our due diligence, we have
determined not to acquire these properties.
Item 7. Financial Statements and Exhibits
To be subsequently filed.
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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 24, 1999
-10-
