As filed with the Securities and Exchange Commission on November 23, 1999
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: May 21, 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)
-1-
The Company filed a Form 8-K on September 27, 1999 and November 2, 1999 without
the requisite financial information. Accordingly, the Company is filing this
Form 8 K/A.
Item 7. Financial Statements and Exhibits
Index to Financial Statements
Page
Pro Forma Balance Sheet (unaudited) at September 30, 1999........... F- 1
Notes to Pro Forma Balance Sheet (unaudited) at September 30, 1999.. F- 3
Pro Forma Statement of Operations (unaudited) of the Company
for the nine months ended September 30, 1999...................... F- 4
Notes to Pro Forma Statement of Operations (unaudited) for
the nine months ended September 30, 1999.......................... F- 6
Pro Forma Statement of Operations (unaudited) of the Company
for the year ended December 31, 1998.............................. F-10
Notes to Pro Forma Statement of Operations (unaudited) for
the year ended December 31, 1998.................................. F-12
Pine Tree Plaza - Janesville
Independent Auditors' Report........................................ F-24
Historical Summary of Gross Income and Direct Operating Expenses
for the period from September 15, 1998 to December 31, 1998 of
Pine Tree Plaza - Janesville...................................... F-25
Notes to the Historical Summary of Gross Income and Direct
Operating Expenses for the period from September 15, 1998 to
December 31, 1998 of Pine Tree Plaza - Janesville................. F-26
The Ryan Properties
Independent Auditors' Report........................................ F-28
Combined Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1998 of
The Ryan Properties............................................... F-29
Notes to the Combined Historical Summary of Gross Income and Direct
Operating Expenses for the year ended December 31, 1998 of
The Ryan Properties............................................... F-30
-2-
Page
Rose Plaza West
Independent Auditors' Report........................................ F-34
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1998 of Rose Plaza West........... F-35
Notes to the Historical Summary of Gross Income and Direct
Operating Expenses for the year ended December 31, 1998 of
Rose Plaza West................................................... F-36
Baytowne Square & Shoppes
Independent Auditors' Report........................................ F-38
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1998 of Baytowne Square & Shoppes. F-39
Notes to the Historical Summary of Gross Income and Direct
Operating Expenses for the year ended December 31, 1998 of
Baytowne Square & Shoppes......................................... F-40
Loehmann's Plaza
Independent Auditors' Report........................................ F-42
Historical Summary of Gross Income and Direct Operating Expenses
for the year ended December 31, 1998 of Loehmann's Plaza.......... F-43
Notes to the Historical Summary of Gross Income and Direct
Operating Expenses for the year ended December 31, 1998 of
Loehmann's Plaza.................................................. F-44
Exhibits
23.1 Consent of KPMG dated November 23, 1999
-3-
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: November 23, 1999
-4-
Inland Real Estate Corporation
Pro Forma Consolidated Balance Sheet
September 30, 1999
(unaudited)
The following unaudited Pro Forma Consolidated Balance Sheet of the Company is
presented to give effect to the acquisition of the property indicated in Note B
of the Notes to the Pro Forma Consolidated Balance Sheet as though this
transaction occurred September 30, 1999. This unaudited Pro Forma Consolidated
Balance Sheet should be read in conjunction with the September 30, 1999
Financial Statements and the notes thereto as filed on Form 10-Q.
This unaudited Pro Forma Consolidated Balance Sheet is not necessarily
indicative of what the actual financial position would have been at September
30, 1999, 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 Consolidated Balance Sheet
September 30, 1999
(unaudited)
September 30, September 30,
1999 Pro Forma 1999
Historical(A) Adjustments(B) Pro Forma
------------- ------------- -------------
Assets
- ------
Net investment in
properties.................. $866,322,801 18,490,000 884,812,801
Cash and cash equivalents..... 41,699,875 (18,218,185) 23,481,690
Restricted cash............... 23,127,298 - 23,127,298
Accounts and rents
receivable.................. 20,192,634 - 20,192,634
Other assets.................. 18,040,556 - 18,040,556
------------- ------------- -------------
Total assets.................. $969,383,164 271,815 969,654,979
============= ============= =============
Liabilities and Stockholders' Equity
- ------------------------------------
Accounts payable and accrued
expenses.................... $ 2,252,416 - 2,252,416
Accrued real estate taxes..... 19,793,996 - 19,793,996
Distributions payable......... 4,133,564 - 4,133,564
Security deposits............. 1,963,869 13,729 1,977,598
Mortgages payable............. 422,296,612 - 422,296,612
Unearned income............... 1,304,586 - 1,304,586
Other liabilities............. 10,910,434 258,086 11,168,520
Due to Affiliates............. 1,417,382 - 1,417,382
------------- ------------- -------------
Total liabilities............. 464,072,859 271,815 464,344,674
------------- ------------- -------------
Minority interest............. 27,472,519 - 27,472,519
Common Stock.................. 549,715 - 549,715
Additional paid in capital
(net of Offering costs)..... 507,941,066 - 507,941,066
Accumulated distributions in
excess of net income........ (29,704,742) - (29,704,742)
Accumulated other
comprehensive income (loss). (948,253) - (948,253)
------------- ------------- -------------
Total Stockholders' equity.... 477,837,786 - 477,837,786
------------- ------------- -------------
Total liabilities and
Stockholders' equity........ $969,383,164 271,815 969,654,979
============= ============= =============
See accompanying notes to pro forma balance sheet.
F-2
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Balance Sheet
(continued)
September 30, 1999
(unaudited)
(A) The September 30, 1999 Historical column represents the historical balance
sheet as presented in the September 30, 1999 10-Q as filed with the SEC.
(B) This pro forma adjustment relates to the acquisition of the subject property
as though it was acquired on September 30, 1999, based on the terms
described in the note that follows:
Acquisition of Property:
On October 18, 1999, the Company acquired Pine Tree Center from an
unaffiliated third party for the purchase price of approximately
$18,490,000 on an all cash basis, funded from cash and cash equivalents.
F-3
Inland Real Estate Corporation
Pro Forma Consolidated Statement of Operations
For the nine months ended September 30, 1999
(unaudited)
The following unaudited Pro Forma Consolidated 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 Consolidated Statement of Operations as
though they occurred on the earlier of January 1, 1998 or the date operations
commenced. No pro forma adjustment was made for Randall Plaza, Eagle-Buffalo
Grove, Oak Forest Phase III, West River Crossing and Hickory Creek, as these
properties were completed in 1999 and there were no significant operations
prior to acquisition. This unaudited Pro Forma Consolidated Statement of
Operations should be read in conjunction with the September 30, 1999 Financial
Statements and the notes thereto as filed on Form 10-Q.
This unaudited Pro Forma Consolidated Statement of Operations is not
necessarily indicative of what the actual results of operations would have been
for the nine months ended September 30, 1999, 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-4
Inland Real Estate Corporation
Pro Forma Consolidated Statement of Operations
For the nine months ended September 30, 1999
(unaudited)
September 30,
1999 Pro Forma September 30,
Historical Adjustments 1999
(A) (B) Pro Forma
------------ ------------ -----------
Rental income................... $61,345,482 9,611,035 70,956,517
Additional rental income........ 23,018,272 2,974,544 25,992,816
Interest income................. 3,705,402 - 3,705,402
Other income.................... 350,234 - 350,234
------------ ------------ ------------
Total income.................. 88,419,390 12,585,579 101,004,969
------------ ------------ ------------
Professional services and
general and administrative
fees.......................... 1,271,761 - 1,271,761
Advisor asset management fee.(D) 2,575,000 803,771 3,378,771
Property operating expenses..... 28,267,721 3,759,943 32,027,664
Interest expense................ 18,032,843 357,273 18,390,116
Depreciation (C)................ 14,149,684 2,962,432 17,112,116
Amortization.................... 63,881 - 63,881
Acquisition costs expensed...... 513,805 - 513,805
------------ ------------ ------------
Total expenses.................. 64,874,695 7,883,419 72,758,114
------------ ------------ ------------
23,544,695 4,702,160 28,246,855
Minority interest in earnings(E) 62,105 (1,318,872) (1,256,767)
------------ ------------ ------------
Net income...................... 23,606,800 3,383,288 26,990,088
Other comprehensive income (loss):
Unrealized holding gain (loss)
on investment securities.... (948,253) - (948,253)
------------ ------------ ------------
Comprehensive income............ $22,655,547 3,383,288 26,041,835
============ ============ ============
Weighted average common stock
outstanding................... 52,208,291 52,208,291
============ ============
Net income per weighted average
common stock outstanding,
basic and diluted............. $ .45 .50
============ ============
See accompanying notes to pro forma consolidated statement of operations.
F-5
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
For the nine months ended September 30, 1999
(unaudited)
(A) The 1999 Historical column represents the historical statement of
operations of the Company for the nine months ended September 30, 1999
(unaudited), as filed with the SEC on Form 10-Q.
(B) Total pro forma adjustments for the nine months ended September 30, 1999
are as though the acquisitions of the following properties occurred the
earlier of January 1, 1998 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 Woodland Commons and Ryan - Cliff Lake. Pro forma
adjustments for interest expense on these properties were based on the
following terms.
Woodland Commons
As part of the acquisition of Woodland Commons, the Company assumed the
existing first mortgage loan, maturing September 22, 2001, with a balance
of $11,470,000. The loan requires interest only monthly payments at a rate
of 6.24% per annum.
Ryan Properties - Cliff Lake
As part of the acquisition of Ryan - Cliff Lake, the Company assumed the
existing first mortgage loan, maturing January 31, 2008, with a balance of
$5,129,540. The loan requires monthly principal and interest payments at a
rate of 7.86% per annum based on a 30 year amortization.
F-6
<TABLE> Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the nine months ended September 30, 1999
(unaudited)
(B) Total pro forma adjustments for 1999 acquisitions are as though they were acquired the earlier of
January 1, 1998 or the date operations commenced.
<CAPTION>
Baytowne
Plymouth Circuit City Woodland Loehmanns Shoppes & Supervalue Supervalue
Collection Traverse City Commons Plaza Square Plymouth Indianapolis
----------- ----------- ----------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 6,939 18,451 253,910 104,622 132,184 98,027 102,786
Additional rental
income.......... 1,016 - 55,845 39,195 30,246 - -
----------- ----------- ----------- ----------- ---------- ------------ ------------
Total income...... 7,955 18,451 309,755 143,817 162,430 98,027 102,786
----------- ----------- ----------- ----------- ---------- ------------ ------------
Advisor asset
management fee.. - - - - - - -
Property operating
expenses........ 1,374 830 69,783 38,700 36,882 4,411 4,625
Interest expense.. - - 77,537 - - - -
Depreciation...... - - - - - - -
----------- ----------- ----------- ----------- ---------- ------------ ------------
Total expenses.... 1,374 830 147,320 38,700 36,882 4,411 4,625
----------- ----------- ----------- ----------- ---------- ------------ ------------
Net income (loss). $ 6,581 17,621 162,435 105,117 125,548 93,616 98,161
=========== =========== =========== =========== ========== ============ ============
Gateway Eagle Dominicks Oak Lawn Ryan United Rose Plaza
Square Lindenhurst Hammond Towne Center Properties Audio West
----------- ----------- ----------- ------------ ---------- ----------- -----------
Rental income..... $ 150,095 177,665 298,028 207,587 6,558,627 196,680 198,539
Additional rental
income.......... 47,706 - - 87,347 2,407,011 - 53,731
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total income...... 197,801 177,665 298,028 294,934 8,965,638 196,680 252,270
----------- ----------- ----------- ------------ ---------- ----------- -----------
Advisor asset
management fee.. - - - - - - -
Property operating
expenses........ 60,348 7,995 13,411 100,647 2,949,275 8,860 65,083
Interest expense.. - - - - 279,736 - -
Depreciation...... - - - - - - -
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total expenses.... 60,348 7,995 13,411 100,647 3,229,011 8,860 65,083
----------- ----------- ----------- ------------ ---------- ----------- -----------
Net income (loss). $ 137,453 169,670 284,617 194,287 5,736,627 187,830 187,187
=========== =========== =========== ============ ========== =========== ===========
</TABLE>
F-7
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the nine months ended September 30, 1999
(unaudited)
Total
Pro Forma Pro Forma
Pine Tree Adjustment Adjustment
----------- ----------- -----------
Rental income..... $1,106,895 - 9,611,035
Additional rental
income.......... 252,420 - 2,974,544
----------- ----------- -----------
Total income...... 1,359,315 - 12,585,579
----------- ----------- -----------
Advisor asset
management fee.. - 803,771 803,771
Property operating
expenses........ 397,729 - 3,759,943
Interest expense.. - - 357,273
Depreciation...... - 2,962,432 2,962,432
----------- ----------- -----------
Total expenses.... 397,729 3,766,203 7,883,419
----------- ----------- -----------
Net income (loss). $ 961,586 (3,766,203) 4,702,160
=========== =========== ===========
F-8
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the nine months ended September 30, 1999
(unaudited)
(C) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years for buildings and fifteen years
for improvements.
(D) Advisor Asset Management Fees are calculated as .5% per annum of the
Average Invested Assets (as defined).
(E) The consolidated financial statements include the accounts of the Company,
Joliet Commons LLC, Ryan LLC and Ryan Cliff Lake LLC.
In October 1998, the Company entered into the Joliet Commons LLC, an
Illinois limited liability company, with an unaffiliated third party in
order to purchase Joliet Commons Shopping Center. The transaction was
structured such that the Company contributed approximately $52,000 for a 1%
interest in the Joliet Commons LLC and the third party contributed a
property with a fair market value of approximately $19,733,000 and debt of
approximately $14,569,000 to the Joliet Commons LLC for a 99% interest.
In September 1999, the Company entered into the Ryan and Ryan Cliff Lake
LLCs, Delaware limited liability companies, with an unaffiliated third
party in order to purchase nine shopping centers: Bally's Total Fitness,
Burnsville Crossing, Byerly's Burnsville, Cliff Lake, Park Place Center,
The Quarry, Rainbow Maple Grove, Riverdale Commons and Shingle Creek. Ryan
Cliff Lake LLC is owned 99% by Ryan LLC and 1% by the Company. The
transaction was structured such that the Company contributed approximately
$71,604,000 for an approximate 77% interest in the Ryan LLC and the third
party contributed the nine properties with a fair market value of
approximately $99,427,000 and debt of approximately $65,500,000 to the Ryan
LLC for an approximate 23% interest. The Company is the managing member of
the Joliet Commons LLC, Ryan LLC and Ryan Cliff Lake LLC. The non-managing
member (third party seller) has a right on or after January 1, 2001 to
tender up to 1/2 of its interest in the Inland Ryan LLC to the managing
member (the Company) to be paid in cash. The remaining interest may be
tendered to the managing member on or after June 30, 2002. If the non-
managing member has not tendered all of its interest by August 31, 2004,
then at any time after that date, the managing member, at its sole and
exclusive option, may require the tender of all remaining non-managing
member interests. Due to the Company's ability as managing member to
directly control the LLCs, they are consolidated for financial reporting
purposes. The third parties' interests are reflected as minority interest
in the accompanying financial statements.
F-9
Inland Real Estate Corporation
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1998
(unaudited)
The following unaudited Pro Forma Consolidated 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 Consolidated Statement of
Operations as though they occurred the earlier of January 1, 1998 or the date
as though they occurred the earlier of January 1, 1998 or the date operations
commenced. No pro forma adjustments have been made for Oak Forest Commons,
Downers Grove Market, Stuarts Crossing and Staples as these properties were
completed in 1998 and no significant operations existed prior to the
acquisition by the Company. No pro forma adjustments have been made for
Plymouth Collection, Circuit City-Traverse City, Eagle-Lindenhurst, Randall
Plaza, Eagle-Buffalo Grove, Oak Forest Commons Phase III, Oak Lawn Town Center,
West River Crossing and Hickory Creek Market as these centers were completed in
late 1998 and 1999 and no significant operations existed for the year ended
December 31, 1998. This unaudited Pro Forma Consolidated Statement of
Operations should be read in conjunction with the December 31, 1998 Financial
Statements and the notes thereto as filed on Form 10-K.
This unaudited Pro Forma Consolidated Statement of Operations is not
necessarily indicative of what the actual results of operations would have been
for the year ended December 31, 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-10
Inland Real Estate Corporation
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1998
(unaudited)
Pro Forma Adjustments
--------------------------------------
1998 1998 1999
Historical Acquisitions Acquisitions 1998
(A) (B) (C) Pro Forma
------------ ------------ ------------ -----------
Rental income.......... $51,133,774 14,538,127 15,529,352 81,201,253
Additional rental
income............... 16,679,388 5,387,567 4,397,945 26,464,900
Interest income........ 5,185,534 - - 5,185,534
Other income........... 303,582 - - 303,582
------------ ------------ ------------ ------------
Total income......... 73,302,278 19,925,694 19,927,297 113,155,269
------------ ------------ ------------ ------------
Professional services
and general and
administrative fees.. 1,582,948 - - 1,582,948
Advisor asset
management fee (E)... 965,108 1,796,473 886,232 3,647,813
Property operating
expenses............. 21,017,360 6,526,630 5,707,261 33,251,251
Interest expense....... 13,421,599 1,393,886 1,112,454 15,927,939
Depreciation (D)....... 11,496,515 3,879,631 5,045,575 20,421,721
Amortization........... 166,635 - - 166,635
Acquisition costs
expensed............. 437,783 - - 437,783
------------ ------------ ------------ ------------
Total expenses......... 49,087,948 13,596,620 12,751,522 75,436,090
------------ ------------ ------------ ------------
Income before minority
interest in earnings. 24,214,330 6,329,074 7,175,775 37,719,179
Minority interest
in earnings (F)...... (128,459) (445,249) (1,642,925) (2,216,633)
------------ ------------ ------------ ------------
Net income........... $24,085,871 5,883,825 5,532,850 35,502,546
============ ============ ============ ============
Weighted average
common stock
outstanding.......... 40,359,796 40,359,796
============ ============
Net income per weighted
average common stock
outstanding, basic and
diluted.............. $ .60 .88
============ ============
See accompanying notes to pro forma consolidated statement of operations.
F-11
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1998
(unaudited)
(A) The 1998 Historical column represents the historical statement of
operations of the Company for the year ended December 31, 1998, as filed
with the SEC on Form 10-K.
(B) Total pro forma adjustments for the year ended December 31, 1998 are as
though the 1998 acquisitions of the following properties occurred the
earlier of January 1, 1998 or the date operations commenced. All
properties were purchased on an all cash basis, except for Shoppes at Mill
Creek, Schaumburg Plaza, Edinburgh Festival and Joliet Commons. 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 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 6.75% per annum.
Joliet Commons
As part of the acquisition of Joliet Commons, the Company assumed the
existing first mortgage loan, maturing October 31, 2007, with a balance of
$14,588,408. The loan requires monthly principal and interest payments at
a rate of 7.79% per annum based on a 30 year amortization schedule.
F-12
<TABLE>
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
(B) Total pro forma adjustments for 1998 acquisitions are as though they were acquired the earlier of January 1, 1998 or
the date operations commenced.
<CAPTION>
Dominicks Orland
Coopers West Maple Park Lake Homewood Wisner Elmhurst
Grove Chicago Plaza Retail Park Plaza Plaza City Center
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 12,649 36,150 30,776 11,631 103,540 29,096 29,958 84,667
Additional rental
income.......... 9,364 - 11,154 5,600 49,688 22,945 12,915 15,971
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 22,013 36,150 41,930 17,231 153,228 52,041 42,873 100,638
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 10,754 1,085 13,041 7,200 60,970 25,287 14,844 23,473
Interest expense.. - - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 10,754 1,085 13,041 7,200 60,970 25,287 14,844 23,473
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). $ 11,259 35,065 28,889 10,031 92,258 26,754 28,029 77,165
=========== =========== =========== =========== =========== ============ ============ ===========
Shoppes Western/
at Mill Prairie St. James Chestnut Bergen Howard High Point
Creek Square Crossing Court Plaza Plaza Center Wauconda
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 180,896 78,950 189,704 319,057 490,456 70,092 331,704 80,746
Additional rental
income.......... 123,799 29,500 54,985 82,340 190,947 24,948 78,007 21,603
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 304,695 108,450 244,689 401,397 681,403 95,040 409,711 102,349
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 142,668 34,380 65,996 134,035 227,516 34,369 80,420 26,209
Interest expense.. 126,667 - - - - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 269,335 34,380 65,996 134,035 227,516 34,369 80,420 26,209
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). $ 35,360 74,070 178,693 267,362 453,887 60,671 329,291 76,140
=========== =========== =========== =========== =========== ============ ============ ===========
F-13
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Berwyn Woodland Walgreens Schaumburg Winnetka Fairview Orland
Plaza Heights Woodstock Plaza Commons Eastgate Heights Greens
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 60,841 342,420 48,013 373,663 225,717 440,016 826,805 331,752
Additional rental
income.......... 50,285 313,058 - 177,341 161,656 128,747 206,021 446,300
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 111,126 655,478 48,013 551,004 387,373 568,763 1,032,826 778,052
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 57,382 363,700 2,160 215,485 134,458 154,789 254,613 365,860
Interest expense.. - - - 90,746 - - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 57,382 363,700 2,160 306,231 134,458 154,789 254,613 365,860
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). $ 53,744 291,778 45,853 244,773 252,915 413,974 778,213 412,192
=========== =========== =========== =========== =========== ============ ============ ===========
Bakers Two Rivers Woodfield Edinburgh Joliet Springboro Riverplace Elmwood
Shoes Plaza East/West Festival Commons Plaza Center Park
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 75,000 509,060 1,481,413 654,972 1,590,889 725,616 530,642 229,140
Additional rental
income.......... - 109,400 685,011 293,148 509,508 160,915 182,490 53,554
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 75,000 618,460 1,266,424 948,120 2,100,397 886,531 713,132 282,694
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. - - - - - - - -
Property operating
expenses........ 3,375 138,290 789,419 326,596 575,093 211,789 196,674 87,228
Interest expense.. - - - 230,672 945,801 - - -
Depreciation...... - - - - - - - -
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 3,375 138,290 789,419 557,268 1,520,894 211,789 196,674 87,228
----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). $ 71,625 480,170 1,377,005 390,852 579,502 674,742 516,458 195,466
=========== =========== =========== =========== =========== ============ ============ ===========
F-14
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Marketplace Hollywood Total
at Six Carmax - Carmax- Park Center Video- Pro forma Pro forma
Corners Tinley Park Schaumburg Plaza Hammond Adjustment Adjustment
----------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $1,691,010 320,690 524,293 1,387,791 88,312 - 14,538,127
Additional rental
income.......... 362,730 - - 810,599 3,038 - 5,387,567
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total income...... 2,053,740 320,690 524,293 2,198,390 91,350 - 19,925,694
----------- ----------- ----------- ----------- ----------- ------------ ------------
Advisor asset
management fee.. - - - - - 1,796,473 1,796,473
Property operating
expenses........ 456,575 21,645 31,456 1,223,021 14,775 - 6,526,630
Interest expense.. - - - - - - 1,393,886
Depreciation...... - - - - - 3,879,631 3,879,631
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total expenses.... 456,575 21,645 31,456 1,223,021 14,775 5,676,104 13,596,620
----------- ----------- ----------- ----------- ----------- ------------ ------------
Net income (loss). $1,597,165 299,045 492,837 975,369 76,575 (5,676,104) 6,329,074
=========== =========== =========== =========== =========== ============ ============
</TABLE>
F-15
<TABLE>
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
(C) Total pro forma adjustments for the year ended December 31, 1998 are as though the 1999 acquisitions of the following properties
occurred the earlier of January 1, 1998 or the date operations commenced. All properties were purchased on an all cash basis,
except for Woodland Commons and the Ryan properties.
<CAPTION>
Baytowne
Woodland Loehmanns Shoppes & Supervalue Supervalue Gateway Dominicks United
Commons Plaza Square Plymouth Indianapolis Square Hammond Audio
------------ ----------- ----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income..... $ 2,263,916 1,296,960 1,276,249 522,813 548,196 681,661 350,622 138,833
Additional rental
income.......... 598,652 470,334 290,362 - - 228,990 - -
------------ ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total income...... 2,862,568 1,767,294 1,566,611 522,813 548,196 910,651 350,622 138,833
------------ ----------- ----------- ----------- ----------- ------------ ------------ -----------
Advisor asset
management fee.. 100,183 67,825 63,275 27,327 28,672 34,700 18,430 12,415
Property operating
expenses........ 858,216 485,980 353,131 23,525 24,670 285,849 15,780 6,247
Interest expense.. 669,908 - - - - - - -
Depreciation...... 550,514 311,854 335,902 144,328 154,596 145,012 288,941 49,054
------------ ----------- ----------- ----------- ----------- ------------ ------------ -----------
Total expenses.... 2,178,821 865,659 752,308 195,180 207,938 465,561 323,151 67,716
------------ ----------- ----------- ----------- ----------- ------------ ------------ -----------
Net income (loss). $ 683,747 901,635 814,303 327,633 340,258 455,090 27,471 71,117
============ =========== =========== =========== =========== ============ ============ ===========
Ryan Rose Plaza Total
Properties West Pine Tree Proforma
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Rental income..... $ 8,034,077 267,617 148,408 15,529,352
Additional rental
income.......... 2,716,003 68,204 25,400 4,397,945
------------ ----------- ----------- -----------
Total income...... 10,750,080 335,821 173,808 19,927,297
------------ ----------- ----------- -----------
Advisor asset
management fee.. 497,137 13,818 22,450 886,232
Property operating
expenses........ 3,504,530 87,509 61,824 5,707,261
Interest expense.. 442,546 - - 1,112,454
Depreciation...... 2,867,840 68,366 129,175 5,045,575
------------ ----------- ----------- -----------
Total expenses.... 7,312,053 169,693 213,449 12,751,522
------------ ----------- ----------- -----------
Net income (loss). $ 3,438,027 166,128 (39,641) 7,175,775
============ =========== =========== ===========
</TABLE>
F-16
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Woodland Commons, Buffalo Grove, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Woodland Commons
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $2,263,916 - 2,263,916
Additional rental income.......... 598,652 - 598,652
----------- ----------- -----------
Total income...................... 2,862,568 - 2,862,568
----------- ----------- -----------
Advisor asset management fee...... - 100,183 100,183
Property operating expenses....... 810,416 47,800 858,216
Interest expense.................. 669,908 - 669,908
Depreciation...................... - 550,514 550,514
----------- ----------- -----------
Total expenses.................... 1,480,324 698,497 2,178,821
----------- ----------- -----------
Net income (loss)................. $1,382,244 (698,497) 683,747
=========== =========== ===========
As part of the acquisition of Woodland Commons, the Company assumed the
existing first mortgage loan, maturing September 22, 2001, with a balance of
$11,470,000. The loan requires interest only monthly payments at a rate of
6.24% per annum.
Acquisition of Loehmann's Plaza, Brookfield, Wisconsin
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Loehmann's Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $1,296,960 - 1,296,960
Additional rental income.......... 470,334 - 470,334
----------- ----------- -----------
Total income...................... 1,767,294 - 1,767,294
----------- ----------- -----------
Advisor asset management fee...... - 67,825 67,825
Property operating expenses....... 477,480 8,500 485,980
Depreciation...................... - 311,854 311,854
----------- ----------- -----------
Total expenses.................... 477,480 388,179 865,659
----------- ----------- -----------
Net income (loss)................. $1,289,814 (388,179) 901,635
=========== =========== ===========
F-17
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Baytowne Shoppes and Baytowne Square, Champaign, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Baytowne Shoppes and Baytowne Square
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $1,276,249 - 1,276,249
Additional rental income.......... 290,362 - 290,362
----------- ----------- -----------
Total income...................... 1,566,611 - 1,566,611
----------- ----------- -----------
Advisor asset management fee...... - 63,275 63,275
Property operating expenses....... 331,731 21,400 353,131
Depreciation...................... - 335,902 335,902
----------- ----------- -----------
Total expenses.................... 331,731 420,577 752,308
----------- ----------- -----------
Net income (loss)................. $1,234,880 (420,577) 814,303
=========== =========== ===========
Acquisition of Supervalue-Plymouth, Plymouth, Minnesota
This pro forma adjustment reflects the purchase of the Supervalue-Plymouth
property as if the Company had acquired the property as of January 1, 1998 and
is based on information provided by the seller.
Supervalue-Plymouth
-------------------------------------
Year ended
December 31, Pro Forma
1998 Adjustments Total
----------- ----------- -----------
Rental income..................... $ 522,813 - 522,813
Additional rental income.......... - - -
----------- ----------- -----------
Total income...................... 522,813 - 522,813
----------- ----------- -----------
Advisor asset management fee...... - 27,327 27,327
Property operating expenses....... - 23,525 23,525
Depreciation...................... - 144,328 144,328
----------- ----------- -----------
Total expenses.................... - 195,180 195,180
----------- ----------- -----------
Net income (loss)................. $ 522,813 (195,180) 327,633
=========== =========== ===========
F-18
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Supervalue-Indianapolis, Indianapolis, Indiana
This pro forma adjustment reflects the purchase of the Supervalue-Plymouth
property as if the Company had acquired the property as of January 1, 1998 and
is based on information provided by the seller.
Supervalue-Indianapolis
-------------------------------------
Year ended
December 31, Pro Forma
1998 Adjustments Total
----------- ----------- -----------
Rental income..................... $ 548,196 - 548,196
Additional rental income.......... - - -
----------- ----------- -----------
Total income...................... 548,196 - 548,196
----------- ----------- -----------
Advisor asset management fee...... - 28,672 28,672
Property operating expenses....... - 24,670 24,670
Depreciation...................... - 154,596 154,596
----------- ----------- -----------
Total expenses.................... - 207,938 207,938
----------- ----------- -----------
Net income (loss)................. $ 548,196 (207,938) 340,258
=========== =========== ===========
Acquisition of Gateway Square, Hinsdale, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Gateway Square
-------------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $ 681,661 - 681,661
Additional rental income.......... 228,990 - 228,990
----------- ----------- -----------
Total income...................... 910,651 - 910,651
----------- ----------- -----------
Advisor asset management fee...... - 34,700 34,700
Property operating expenses....... 281,389 4,460 285,849
Depreciation...................... - 145,012 145,012
----------- ----------- -----------
Total expenses.................... 281,389 184,172 465,561
----------- ----------- -----------
Net income (loss)................. $ 629,262 (184,172) 445,090
=========== =========== ===========
F-19
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Dominicks-Hammond, Hammond, Indiana
This pro forma adjustment reflects the purchase of the Dominicks-Hammond
property as if the Company had acquired the property as of August 1, 1998, the
date significant operations began and is based on information provided by the
seller.
Dominicks-Hammond
-----------------------------------
Year ended
December 31, Pro Forma
1998 Adjustments Total
----------- ----------- -----------
Rental income..................... $ 350,622 - 350,622
Additional rental income.......... - - -
----------- ----------- -----------
Total income...................... 350,622 - 350,622
----------- ----------- -----------
Advisor asset management fee...... - 18,430 18,430
Property operating expenses....... - 15,780 15,780
Depreciation...................... - 288,941 288,941
----------- ----------- -----------
Total expenses.................... - 323,151 323,151
----------- ----------- -----------
Net income (loss)................. $ 350,622 (323,151) 27,471
=========== =========== ===========
Acquisition of United Audio, Schaumburg, Illinois
This pro forma adjustment reflects the purchase of the United Audio property
as if the Company had acquired the property as of June 1, 1998, the date
significant operations began, and is based on information provided by the
seller.
United Audio
-----------------------------------
Year ended
December 31, Pro Forma
1998 Adjustments Total
----------- ----------- -----------
Rental income..................... $ 138,833 - 138,833
Additional rental income.......... - - -
----------- ----------- -----------
Total income...................... 138,833 - 138,833
----------- ----------- -----------
Advisor asset management fee...... - 12,415 12,415
Property operating expenses....... - 6,247 6,247
Depreciation...................... - 49,054 49,054
----------- ----------- -----------
Total expenses.................... - 67,716 67,716
----------- ----------- -----------
Net income (loss)................. $ 138,833 (67,716) 71,117
=========== =========== ===========
F-20
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Ryan Properties, Minnesota
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Ryan Properties
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $8,034,077 - 8,034,077
Additional rental income.......... 2,716,003 - 2,716,003
----------- ----------- -----------
Total income...................... 10,750,080 - 10,750,080
----------- ----------- -----------
Advisor asset management fee...... - 497,137 497,137
Property operating expenses....... 3,161,428 343,102 3,504,530
Interest expense.................. 442,546 - 442,546
Depreciation...................... - 2,867,840 2,867,840
----------- ----------- -----------
Total expenses.................... 3,603,974 3,708,079 7,312,053
----------- ----------- -----------
Net income (loss)................. $7,146,106 (3,708,079) 3,438,027
=========== =========== ===========
Acquisition of Rose Plaza West, Naperville, Illinois
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Rose Plaza West
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $ 267,617 - 267,617
Additional rental income.......... 68,204 - 68,204
----------- ----------- -----------
Total income...................... 335,821 - 335,821
----------- ----------- -----------
Advisor asset management fee...... - 13,818 13,818
Property operating expenses....... 85,758 1,751 87,509
Depreciation...................... - 68,366 68,366
----------- ----------- -----------
Total expenses.................... 85,758 83,935 169,693
----------- ----------- -----------
Net income (loss)................. $ 250,063 (83,935) 166,128
=========== =========== ===========
F-21
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
Acquisition of Pine Tree Plaza, Janesville, Wisconsin
Reconciliation of Gross income and Direct Operating Expenses for the year
ended December 31, 1998 prepared in accordance with Rule 3.14 of Regulation S-
X (*) to the Pro Forma Adjustments:
Pine Tree Plaza
-----------------------------------
*As Pro Forma
Reported Adjustments Total
----------- ----------- -----------
Rental income..................... $ 148,408 - 148,408
Additional rental income.......... 25,400 - 25,400
----------- ----------- -----------
Total income...................... 173,808 - 173,808
----------- ----------- -----------
Advisor asset management fee...... - 22,450 22,450
Property operating expenses....... 59,341 2,483 61,824
Depreciation...................... - 129,175 129,175
----------- ----------- -----------
Total expenses.................... 59,341 154,108 213,449
----------- ----------- -----------
Net income (loss)................. $ 114,467 (154,108) (39,641)
=========== =========== ===========
F-22
Inland Real Estate Corporation
Notes to Pro Forma Consolidated Statement of Operations
(continued)
For the year ended December 31, 1998
(unaudited)
(D) Depreciation expense is computed using the straight-line method, based upon
an estimated useful life of thirty years for buildings and fifteen years
for improvements.
(E) Advisor Asset Management Fees are calculated as .5% of the Average Invested
Assets (as defined).
(F) The consolidated financial statements include the accounts of the Company,
Joliet Commons LLC, Ryan LLC and Ryan Cliff Lake LLC.
In October 1998, the Company entered into the Joliet Commons LLC, an
Illinois limited liability company, with an unaffiliated third party in
order to purchase Joliet Commons Shopping Center. The transaction was
structured such that the Company contributed approximately $52,000 for a 1%
interest in the Joliet Commons LLC and the third party contributed a
property with a fair market value of approximately $19,733,000 and debt of
approximately $14,569,000 to the Joliet Commons LLC for a 99% interest.
In September 1999, the Company entered into the Ryan and Ryan Cliff Lake
LLCs, Delaware limited liability companies, with an unaffiliated third
party in order to purchase nine shopping centers: Bally's Total Fitness,
Burnsville Crossing, Byerly's Burnsville, Cliff Lake, Park Place Center,
The Quarry, Rainbow Maple Grove, Riverdale Commons and Shingle Creek. Ryan
Cliff Lake LLC is owned 99% by Ryan LLC and 1% by the Company. The
transaction was structured such that the Company contributed approximately
$71,604,000 for an approximate 77% interest in the Ryan LLC and the third
party contributed the nine properties with a fair market value of
approximately $99,427,000 and debt of approximately $65,500,000 to the Ryan
LLC for an approximate 23% interest. The Company is the managing member of
the Joliet Commons LLC, Ryan LLC and Ryan Cliff Lake LLC. The non-managing
member (third party seller) has a right on or after January 1, 2001 to
tender up to 1/2 of its interest in the Inland Ryan LLC to the managing
member (the Company) to be paid in cash. The remaining interest may be
tendered to the managing member on or after June 30, 2002. If the non-
managing member has not tendered all of its interest by August 31, 2004,
then at any time after that date, the managing member, at its sole and
exclusive option, may require the tender of all remaining non-managing
member interests. Due to the Company's ability as managing member to
directly control the LLCs, they are consolidated for financial reporting
purposes. The third parties' interests are reflected as minority interest
in the accompanying financial statements.
F-23
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 Pine Tree Plaza - Janesville (Pine
Tree), for the period from September 15, 1998 (substantial completion date) to
December 31, 1998. 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 Current Report on Form 8-K of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Pine Tree'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 the Historical Summary for the period from September 15, 1998
(substantial completion date) to December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
May 6, 1999
F-24
Pine Tree Plaza - Janesville
Historical Summary of Gross Income and Direct Operating Expenses
The period from September 15, 1998 (substantial completion date)
to December 31, 1998
Gross income:
Base rental income.............................. $ 148,408
Operating expense and real estate
tax recoveries................................ 23,018
Percentage rent................................. 2,382
-----------
Total Gross Income.............................. 173,808
-----------
Direct operating expenses:
Operating expenses.............................. 25,293
Real estate taxes............................... 4,235
Utilities....................................... 13,406
Insurance....................................... 11,069
Management Fees................................. 5,338
-----------
Total direct operating expenses................. 59,341
-----------
Excess of gross income over
direct operating expenses..................... $ 114,467
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-25
Pine Tree Plaza - Janesville
Notes to Historical Summary of Gross Income and Direct Operating Expenses
The period from September 15, 1998 (substantial completion date)
to December 31, 1998
1. Business
Pine Tree Plaza - Janesville (Pine Tree) is located in Janesville,
Wisconsin. It consists of approximately 187,000 square feet of gross
leasable area and was approximately 61% leased and occupied at December 31,
1998. Approximately 29% of Pine Tree's square footage is leased to two
tenants representing approximately 40% of base rental income. During 1998,
Pine Tree was under construction and substantially completed as of
September 15, 1998. Accordingly, the Historical Summary of Gross Income
and Direct Operating Expenes ("Historical Summary") includes the gross
income and direct operating expenses of the property for the period from
September 15, 1998 (substantial completion date) to December 31, 1998.
Inland Real Estate Corporation has signed a sale and purchase agreement for
the purchase of Pine Tree from an unaffiliated third party (Seller).
2. Basis of Presentation
The 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 Current Report on Form 8-K of Inland Real Estate
Corporation and is not intended to be a complete presentation of Pine
Tree's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Pine Tree 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
Pine Tree leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Pine Tree 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 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 $8,655 for the
period from September 15, 1998 (substantial completion date) to December
31, 1998.
F-26
Pine Tree Plaza - Janesville
Notes to Historical Summary of Gross Income and Direct Operating Expenses
The period from September 15, 1998 (substantial completion date)
to December 31, 1998
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ 1,135,536
2000 1,135,536
2001 1,135,536
2002 1,111,536
2003 1,771,184
Thereafter 6,696,991
-----------
$12,986,319
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Pine Tree. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
An affiliate of the seller provides management services for Pine Tree based
on a percentage of gross income for such services. Subsequent to the sale
of Pine Tree (note 1), Pine Tree 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-27
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Combined Historical Summary of Gross Income
and Direct Operating Expenses (Historical Summary) of the The Ryan Properties
("the Properties"), for the year ended December 31, 1998. 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 Current Report on Form 8-K of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of the Properties' 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 the Historical Summary for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the Historical
Summary. The supplementary information included in Schedule 1 is presented
forthe purposes of additional analysis and is not a required part of the
Historical Summary. Such information has been subjected to the auding
procedures applied in the audit of the Historical Summary and, in our opinion,
is fairly stated in all material respects in relation to the Historical Summary
taken as a whole.
KPMG LLP
Chicago, Illinois
August 27, 1999
F-28
The Ryan Properties
Combined Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Gross income:
Base rental income.............................. $8,034,077
Percentage rent................................. 2,428
Operating expense and real estate
tax recoveries................................ 2,713,575
-----------
Total Gross Income.............................. 10,750,080
-----------
Direct operating expenses:
Operating expenses.............................. 681,451
Real estate taxes............................... 2,109,323
Utilities....................................... 172,072
Insurance....................................... 57,930
Management Fees................................. 140,652
Interest expense................................ 442,546
-----------
Total direct operating expenses................. 3,603,974
-----------
Excess of gross income over
direct operating expenses..................... $7,146,106
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-29
The Ryan Properties
Combined Historical Summary
of Gross Income and Direct Operating Expenses
December 31, 1998
1. Business
The Ryan Properties ("the Properties") consist of the following:
Gross Occupancy at
Name Leasable Area Location December 31, 1998
Bally Total Fitness 43,000 St. Paul, MN 100%
Park Place Plaza 94,104 St. Louis Park, MN 90% (a)
Riverdale Commons 153,737 Coon Rapids, MN 77% (b)
Shingle Creek 39,486 Brooklyn Center, MN 82%
Shopping Center
Burnsville Crossing 90,835 Burnsville, MN 62%
Byerly's Burnsville 76,190 Burnsville, MN 83%
Quarry Retail 290,648 Minneapolis, MN 98%
Shopping Center
Cliff Lake Centre 74,215 Eagan, MN 94%
Maple Grove Retail 79,130 Maple Grove, MN 81% (c)
Bohl Farm (d) St. Charles, IL (d)
Marketplace
(a) A portion of Park Place Plaza aggregating 5,000 square feet was under
construction during 1998 and was substantially complete on April 24,
1998.
(b) Riverdale Commons was under construction during 1998 and was
substantially complete on August 14, 1998.
(c) Maple Grove Retail was under construction during 1998 and was
substantially complete on September 11, 1998.
(d) Bohl Farm Marketplace was under construction during 1998 and was
substantially complete on June 1, 1999.
The accompanying combined Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) includes the gross income and direct
operating expenses of the properties under construction during 1998 for the
period from the substantial completion date through December 31, 1998.
Approximately 30% of the total Properties' square footage is leased to two
tenants representing approximately 29% of base rental income.
F-30
The Ryan Properties
Combined Historical Summary
of Gross Income and Direct Operating Expenses
December 31, 1998
Inland Real Estate Corporation ("Inland") has entered into a Contribution
Agreement with The Ryan Compajies US, Inc. ("Ryan"), the owner of the
Properties, whereby Ryan will contribute the Properties to a newly formed
Limited Liability Company (the "LLC") in exchange for an approximate 23%
ownership interest. Inland will contribute cash and debt to the LLC in exhange
for the remaining 77% ownership interesdst and will be the managing member of
the LLC.
2. Basis of Presentation and Combination
The 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 Current Report on Form 8-K of Inland Real Estate Corporation
and is not intended to be a complete presentation of the Property's revenues
and expenses. The Historical Summary has been prepared on the accrual basis of
accounting and requires management of the Properties 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.
The Historical Summary represents the combination of the properties
described in note 1 since the Properties are being acquired from a common
seller.
3. Gross Income
The Properties lease retail space under various lease agreements with their
tenants. All leases are accounted for as operating leases. The leases include
provisions under which the Properties are 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.
In addition, certain of the properties are leased on a triple-net basis
which requires that in addition to paying base rent, the tenant is also
responsible for payment of insurance, taxes and maintenance.
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 approximately
$313,000 for the year ended December 31, 1998.
F-31
The Ryan Properties
Combined Historical Summary
of Gross Income and Direct Operating Expenses
December 31, 1998
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ 11,025,512
2000 10,624,221
2001 10,428,601
2002 10,031,801
2003 9,460,041
Thereafter 86,951,562
-------------
$138,521,738
=============
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of the Properties. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
An affiliate of Ryan provides management services for the Properties based
on a percentage of adjusted gross income for such services. Subsequent to
the formation of the LLC (note 1), the Properties will be managed by an
affiliate of Inland 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.
Inland will assume the outstanding mortgage debt related to Cliff Lake
Centre of approximately $5,123,600 in connection with the acquisition. The
assumed debt which originated December 23, 1997 and matures January 1,
2008, has an annual interest rate of 7.86% payable monthly.
(5) Commitments and Contingencies
Inland has the option to acquire various outlot buildings from Ryan. The
option may be exercised when Ryan completes construction and leases the
outlot buildings.
F-32
<TABLE>
The Ryan Properties
Combining Schedule
December 31, 1998
<CAPTION>
Bally Total Park Place Riverdale Shingle Burnsville Byerly's
Fitness Plaza Commons Creek Crossing Burnsville
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gross income:
Base rental income $ 602,056 1,198,216 414,681 392,001 575,492 746,276
Percentage rent... - - - - 2,428 -
Operating and real
estate tax
recoveries...... 87,049 380,446 43,481 165,630 161,132 311,478
----------- ----------- ----------- ----------- ----------- ------------
Total gross income 689,105 1,578,662 458,162 557,631 739,052 1,057,754
----------- ----------- ----------- ----------- ----------- ------------
Direct operating
expenses:
Operating expenses 333 102,485 24,079 51,414 73,973 33,936
Real estate taxes. 87,049 290,877 31,451 152,137 191,377 275,708
Utilities......... - 23,351 2,778 14,912 23,478 16,287
Insurance......... - 6,491 970 3,877 7,712 4,988
Management fee.... - 20,936 3,394 23,812 9,573 14,434
Interest expense.. - - - - - -
----------- ----------- ----------- ----------- ----------- ------------
Total direct
operating
expenses........ 87,382 444,140 62,672 246,152 306,113 345,353
----------- ----------- ----------- ----------- ----------- ------------
Excess of gross
income over
direct operating
expenses........ $ 601,723 1,134,522 395,490 311,479 432,939 712,401
=========== =========== =========== =========== =========== ============
<CAPTION>
The Cliff Lake Maple Grove Bohl
Quarry Center Retail Farms Totals
----------- ----------- ----------- ----------- -----------
Gross income:
Base rental income $3,051,271 796,871 257,213 - 8,034,077
Percentage rent... - - - - 2,428
Operating and real
estate tax
recoveries...... 1,026,006 486,283 52,070 - 2,713,575
----------- ----------- ----------- ----------- -----------
Total gross income 4,077,277 1,283,154 309,283 - 10,750,080
----------- ----------- ----------- ----------- -----------
Direct operating
expenses:
Operating expenses 189,567 203,414 2,250 - 681,451
Real estate taxes. 775,002 255,452 50,270 - 2,109,323
Utilities......... 59,128 32,138 - - 172,072
Insurance......... 25,253 8,639 - - 57,930
Management fee.... 22,577 45,926 - - 140,652
Interest expense.. - 442,546 - - 442,546
----------- ----------- ----------- ----------- -----------
Total direct
operating
expenses........ 1,071,527 988,115 52,520 - 3,603,974
----------- ----------- ----------- ----------- -----------
Excess of gross
income over
direct operating
expenses........ $3,005,750 295,039 256,763 - 7,146,106
=========== =========== =========== =========== ===========
See accompanying notes to combined historical summary of gross income and
direct operating expenses.
F-33
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of the Rose Plaza West ("the
Property"), for the year ended December 31, 1998. 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 Current Report on Form 8-K of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of the Property'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 Pine Tree for the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
October 7, 1999
F-34
Rose Plaza West
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Gross income:
Base rental income.............................. $ 267,617
Operating expense and real estate
tax recoveries................................ 68,204
-----------
Total Gross Income.............................. 335,821
-----------
Direct operating expenses:
Operating expenses.............................. 26,934
Real estate taxes............................... 29,249
Utilities....................................... 5,761
Insurance....................................... 10,453
Management Fees................................. 13,361
-----------
Total direct operating expenses................. 85,758
-----------
Excess of gross income over
direct operating expenses..................... $ 250,063
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-35
Rose Plaza West
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
1. Business
Rose Plaza West (the "Property") is located in Naperville, Illinois. It
consists of approximately 15,000 square feet of gross leasable area and was
approximately 100% leased and occupied at December 31, 1998. Approximately
48% of the Property is leased to one tenant representing approximately 48%
of base rental revenues. Inland Real Estate Corporation has signed a sale
and purchase agreement for the purchase of the Property 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 Current Report on Form 8-K of Inland Real Estate
Corporation and is not intended to be a complete presentation of the
Property's revenues and expenses. The Historical Summary has been prepared
on the accrual basis of accounting and requires management of the Property
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
The Property leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which the Property 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 reduced base rental income by $1,357 for the
year ended December 31, 1998.
F-36
Rose Plaza West
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ 265,429
2000 265,429
2001 295,429
2002 254,023
2003 209,862
Thereafter 662,408
-----------
$ 1,922,580
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of the Property. Costs such
as mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
An affiliate of the seller provides management services for the Property
based on a percentage of gross income for such services. Subsequent to the
sale, the Property 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-37
Independent Auditors' Report
The Board of Directors
Inland Real Estate Corporation:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses (Historical Summary) of Baytowne Square & Shoppes for the
year ended December 31, 1998. 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 Current Report on on Form 8-K of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Baytowne Square & Shoppes' 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 Baytowne Square & Shoppes for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
February 4, 1999
F-38
Baytowne Square & Shoppes
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Gross income:
Base rental income.............................. $1,276,249
Operating expense and real estate
tax recoveries................................ 290,362
-----------
Total Gross Income.............................. 1,566,611
-----------
Direct operating expenses:
Operating expenses.............................. 45,489
Real estate taxes............................... 200,604
Utilities....................................... 27,684
Insurance....................................... 8,934
Management Fees................................. 49,020
-----------
Total direct operating expenses................. 331,731
-----------
Excess of gross income over
direct operating expenses..................... $1,234,880
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-39
Baytowne Square & Shoppes
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
1. Business
Baytown Square and Shoppes (Baytowne) is located in Champaign, Illinois.
It consists of approximately 119,000 square feet of gross leasable area and
was approximately 97% leased and occupied at December 31, 1998.
Approximately 44% of Baytowne is leased to three tenants representing
approximately 45% of base rental income. Inland Real Estate Corporation
has signed a sale and purchase agreement for the purchase of Baytowne 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 Current Report on Form 8-K of Inland Real Estate
Corporation and is not intended to be a complete presentation of Baytowne's
revenues and expenses. The Historical Summary has been prepared on the
accrual basis of accounting and requires management of Baytowne 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
Baytowne leases retail space under various lease agreements with its
tenants. All leases are accounted for as operating leases. The leases
include provisions under which Baytowne 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 $25,291 for the
year ended December 31, 1998.
F-40
Baytowne Square & Shoppes
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ 1,268,971
2000 1,249,956
2001 1,241,552
2002 1,202,808
2003 963,250
Thereafter 4,759,675
-----------
$10,686,212
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Baytowne. Costs such as
mortgage interest, depreciation, amortization and professional fees are
excluded from the Historical Summary.
Baytowne had not received its final real estate tax bill for 1998. Real
estate tax expense is estimated based upon bills for 1997. 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 Baytowne based
on a percentage of gross income for such services. Subsequent to the sale
of Baytowne (note 1), Baytowne 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-41
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 Loehmann's Plaza for the year ended
December 31, 1998. 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 Current Report on Form 8-K of Inland Real Estate
Corporation, as described in note 2. The presentation is not intended to be a
complete presentation of Loehmann's 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 Loehmann's Plaza for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
February 19, 1999
F-42
Loehmann's Plaza
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Gross income:
Base rental income.............................. $1,296,960
Operating expense and real estate
tax recoveries................................ 347,134
Percentage income............................... 123,200
-----------
Total Gross Income.............................. 1,767,294
-----------
Direct operating expenses:
Operating expenses.............................. 168,210
Real estate taxes............................... 193,933
Utilities....................................... 29,661
Insurance....................................... 14,738
Management Fees................................. 70,938
-----------
Total direct operating expenses................. 477,480
-----------
Excess of gross income over
direct operating expenses..................... $1,289,814
===========
See accompanying notes to historical summary of gross income and direct
operating expenses.
F-43
Loehmann's Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
1. Business
Loehmann's Plaza is located in Brookfield, Wisconsin. It consists of
approximately 108,000 square feet of gross leasable area and was
approximately 100% leased and occupied at December 31, 1998. Approximately
64% of Loehmann's Plaza is leased to five tenants representing
approximately 45% of base rental income. Inland Real Estate Corporation
has signed a sale and purchase agreement for the purchase of Loehmann's
Plaza 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 Current Report on Form 8-K of Inland Real Estate
Corporation and is not intended to be a complete presentation of Loehmann's
Plaza's revenues and expenses. The Historical Summary has been prepared on
the accrual basis of accounting and requires management of Loehmann's 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
Loehmann's 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 Loehmann's Plaza 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 $95 for the
year ended December 31, 1998.
F-44
Loehmann's Plaza
Notes to Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1998
Minimum rents to be received from tenants under operating leases in effect
at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ 1,255,466
2000 1,053,111
2001 908,062
2002 831,781
2003 767,735
Thereafter 2,875,754
-----------
$ 7,691,909
===========
4. Direct Operating Expenses
Direct operating expenses include only those costs expected to be
comparable to the proposed future operations of Loehmann's Plaza. Costs
such as mortgage interest, depreciation, amortization and professional fees
are excluded from the Historical Summary.
Loehmann's Plaza had not received its final real estate tax bill for 1998.
Real estate tax expense is estimated based upon bills for 1997. 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 Loehmann's
Plaza based on a percentage of gross income for such services. Subsequent
to the sale of Loehmann's Plaza (note 1), Loehmann's Plaza 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-45
</TABLE>
Consent of KPMG LLP
The Board of Directors
Inland Real Estate Corporation
We consent to incorporation by reference in the Registration Statement (No.
333-70699) on Form S-3 of Inland Real Estate Corporation of our reports
relating to the historical summary of gross income and direct operating expense
of Pine Tree Plaza-Janesville for the period from September 15, 1998 to
December 31, 1998, the combined historical summary of gross income and direct
operating expenses of the Ryan Properties for the year ended December 31, 1998,
the historical summary of gross income and direct operating expenses of the
Rose Plaza West for the year ended December 31, 1998, the historical summary of
gross income and direct operating expense of the Baytowne Square and Shoppes
for the year ended December 31, 1998, and the historical summary of gross
income and direct operating expenses of the Loehmann's Plaza for the year ended
December 31, 1998 which reports appear in the Current Report on Form 8-K of
Inland Real Estate Corporation dated November 23, 1999.
Chicago, Illinois
November 23, 1999
