10-K 1 irc-12312013x10k.htm 10-K IRC-12.31.2013-10K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
ý      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For The Fiscal Year Ended December 31, 2013

or

o         Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from                       to                      

Commission File Number 001-32185
 
(Exact name of registrant as specified in its charter) 
Maryland
 
36-3953261
(State or other jurisdiction
 
(I.R.S. Employer Identification No.)
of incorporation or organization)
 
 
 
 
 
2901 Butterfield Road, Oak Brook, Illinois
 
60523
(Address of principal executive offices)
 
(Zip code)
 
Registrant’s telephone number, including area code:  630-218-8000
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
 
Name of each exchange on which registered:
Common Stock, $0.01 par value
 
New York Stock Exchange
8.125% Series A Cumulative Redeemable Preferred Stock
 
New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
 
Title of each class:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ý No  o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o No  ý
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes  ý No  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).  Yes  ý No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):
Large accelerated filer x
 
Accelerated filer o
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o No ý
 
As of June 28, 2013, the aggregate market value of the shares of common stock held by non-affiliates of the registrant was $889,242,793.
 
As of February 28, 2014 there were 99,750,023 shares of common stock outstanding.
 
Documents Incorporated by Reference:  Portions of the registrant’s proxy statement for the annual stockholders meeting to be held in 2013 are
incorporated by reference into Part III, Items 10, 11, 12, 13 and 14.



INLAND REAL ESTATE CORPORATION
(a Maryland corporation)
 
TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
 
 
 
 
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
 
 
 
Item 15.
 
 
 
 
 
 
 
 


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PART I

In this report, all references to “we,” “our” and “us” refer collectively to Inland Real Estate Corporation and its consolidated subsidiaries.  All amounts in this Form 10-K are stated in thousands with the exception of per share amounts, per square foot amounts, square feet, number of properties, number of states, number of leases and number of employees.

Item 1.  Business
 
General
 
We strive to be a leading owner and operator of high quality, necessity and value based retail centers located in prime locations throughout the Central and Southeastern United States. We seek to generate predictable, sustainable cash flows and to continually enhance shareholder value through the expert management and strategic improvement of our portfolio of premier retail properties.

We are a Maryland corporation formed on May 12, 1994.  To date, we have focused on acquiring and owning open-air neighborhood, community and power shopping centers and single-tenant retail properties located primarily in the Central United States. Through wholly-owned subsidiaries, Inland Commercial Property Management, Inc. and Inland TRS Property Management, Inc., we manage all properties we own interests in and properties for certain third parties and related parties. Approximately fifty-nine percent of our total retail portfolio (consolidated plus unconsolidated) gross leasable area (“GLA”) is located in the Chicago Metropolitan Statistical Area (“MSA”), with our second largest market concentration being approximately seventeen percent in the Minneapolis-St. Paul MSA.  As of December 31, 2013, we owned interests in 157 investment properties, including those owned through our unconsolidated joint ventures, comprised of:

Fifty-three neighborhood retail centers totaling approximately 3,797,000 gross leasable square feet;
Thirty-one community centers totaling approximately 3,869,000 gross leasable square feet;
Thirty-six power centers totaling approximately 5,687,000 gross leasable square feet;
One lifestyle center totaling approximately 564,000 gross leasable square feet; and
Thirty-six single-user properties totaling approximately 996,000 gross leasable square feet.
The following chart shows the allocation of our portfolio by property type, based on percentage of gross leasable square feet:
Management has implemented internal growth initiatives that utilize our financing, acquisition, leasing and property management expertise to drive income growth:
Continue to improve our tenant diversification and expand our geographic concentration, with increased footprints in the Central and Southeastern U.S.
Continue to enhance the value of our portfolio through additional repositioning and redevelopment initiatives.
Redeploy capital from dispositions of non-core, limited growth assets into acquisitions of high quality retail assets.
Continue to reduce the cost and extend the term of our debt and reduce our overall leverage over time, which will improve our financial flexibility and liquidity by maintaining access to multiple sources of capital.

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In addition to our internal growth initiatives, management has implemented external growth initiatives, through the following types of joint ventures: 

joint venture with Inland Private Capital Corporation (“IPCC”), through which we source, acquire and manage properties for individuals and entities intending to invest in Delaware Statutory Trust (“DST”) entities;

asset-based joint ventures with New York State Teachers Retirement System (“NYSTRS”) and PGGM Private Real Estate Fund (“PGGM”), through which we source, acquire and manage Midwest retail properties. These joint ventures with NYSTRS and PGGM enable us to generate fee income via the acquisition, leasing, and property management services we provide to the ventures. 

development joint venture with MAB American Retail Partners, LLC ("MAB") to develop grocery-anchored shopping centers in select markets throughout the southeastern U.S.
 
Our joint venture with IPCC, originally formed in 2006, leverages our respective skill sets to access the growth potential of the DST market and increase our fee income.  In accordance with the agreement, we source properties and provide financing, acquisition and asset management expertise through the venture, while IPCC provides syndication expertise and access, through Inland Securities Corporation, to a network of broker dealers that market the properties to DST investors.  We believe our joint venture with IPCC enables us to effectively manage our resources due to the revolving nature of the investment capital and is a capital-efficient means to generate additional transaction fee income and a long-term asset and management fee income stream which is received for managing properties for these entities. 

Our former joint venture with NYSTRS was formed in 2004, and each partner owned a 50 percent interest in the 13 properties in the venture and shared equally in the profits and losses. In June 2013, we brought this joint venture full cycle when we acquired the 50 percent ownership interest of our partner in the joint venture entity for approximately $121,100 in cash. Our decision to acquire our partner's interest was based on advancing our strategic goals to increase the size and quality of our consolidated portfolio, simplify the ownership structure and strengthen our balance sheet by consolidating a portfolio with less leverage than our existing portfolio.

The PGGM joint venture was formed in June 2010 to acquire grocery-anchored and community retail centers in Midwestern U.S. markets. The joint venture was fully funded during the initial two-year investment period and in October 2012, we completed an amendment to the partnership agreement, to increase the maximum contributions of each partner. As of December 31, 2013, the PGGM joint venture had acquired stabilized retail assets worth approximately $638,000 in acquisition value. PGGM owns a 45 percent equity interest and we own a 55 percent equity interest in the joint venture and share in the profits and losses at the respective ownership percentages.

In November 2013, we entered into a joint venture to develop grocery-anchored shopping centers in select markets throughout the southeastern U.S. with MAB, an affiliate of Melbourne, Australia-based MAB Corporation. The five-year development program is expected to target metropolitan areas in the Carolinas, Georgia, Florida, Virginia and Washington D.C. MAB Corporation is a privately owned property development company and fund manager that has completed retail, office, multi-family and industrial projects at locations in Australia, New Zealand and the U.S. Under the terms of the joint venture agreement, we have exclusive rights to all grocery-anchored, build-to-suit opportunities in the southeastern U.S. sourced by MAB. Upon site approval by us, we will provide 90% of the equity required to fund approved project costs, while MAB will be responsible for the remaining 10% of the equity, plus venture management, sourcing and acquisition of sites, project financing and all property and development duties. The joint venture agreement also provides that we will purchase each grocery-anchored center at a discount to fair market value after stabilization. A typical project likely will consist of a 50,000-square-foot grocery store with approximately 20,000 square feet of additional retail space.

Competition
 
In seeking new investment opportunities, we compete with other real estate companies, and at our current investment properties, we compete with other owners of similar properties for tenants. 
 
Our business is competitive.  We compete with other property owners on the basis of location, rental rates, operating expenses, visibility, quality of the property, volume of traffic, strength and name recognition of other tenants at each location and other factors.  These competitive factors affect the level of occupancy and rental rates that we are able to achieve at our investment properties.  In addition, our tenants compete against other forms of retailing such as catalog companies and e-commerce websites that offer similar retail products.  To remain competitive, we evaluate all of the factors affecting our centers and try to position them accordingly.  We believe that retailers consider consumer demographics; quality, design and location of

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properties; the diversity of the retailers and anchor tenants at our investment property locations; management and operational expertise; and rental rates, when making their leasing decisions.  Considering these factors, we believe the overall quality and location of our individual properties allow us to effectively compete for retailers in our markets.  Because our revenues are ultimately linked to our tenant’s success, we are indirectly affected by the same competitive factors, such as consumer spending habits and on-line shopping, as our tenants.
 
Segments
 
We assess and measure operating results on an individual property basis.  Since all of our investment properties exhibit highly similar economic characteristics, generally have tenants that offer products catering to the day-to-day living needs of individuals and offer similar degrees of risk and opportunities for growth, the shopping centers have been aggregated and reported as one operating segment.  See footnote 17 to the accompanying consolidated financial statements for a discussion of our segment reporting.  Information for each of the last five fiscal years about revenues, a measure of income and total assets, can be found in Item 6 of this Form 10-K.
 
Significant Tenants

We derive significant revenues from anchor tenants such as Safeway, Roundy's and TJX Companies, Inc, which are the three largest anchor tenants in our consolidated portfolio and accounted for 3.9%, 3.3% and 3.2%, respectively of our consolidated annualized base rent for the year ended December 31, 2013.

In October 2013, Safeway announced that they would be exiting the Chicagoland market by closing all of the Dominick's stores. We have six Dominick's stores in our consolidated portfolio, two already dark and four that were operating and one operating store in our unconsolidated portfolio. As of December 31, 2013, the Dominick's stores in our portfolio closed, however, Safeway remains obligated under all of the leases and we expect that they will continue to honor their lease obligations.

Subsequent to the end of the year, we sold a consolidated Dominick's store, located in Countryside, Illinois to an unaffiliated third party at price above our current carrying value. Additionally, we have been notified by Dominick's that the leases for one of the consolidated Dominick's stores and the one unconsolidated store have been assigned to grocery operators.

The lease at the unconsolidated location, part of Woodland Commons, located in Buffalo Grove, Illinois has been assigned and will be operated as a Mariano's grocery store. The lease at the consolidated location, part of Downers Grove Marketplace, located in Downers Grove, Illinois has been assigned and will be operated as a Caputo's grocery store. We are still awaiting notification of any lease assignments for our four remaining locations, although we do not anticipate a lease assignment of the two previously non-operating locations.

Tax Status
 
We have qualified and elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) for federal income tax purposes commencing with the tax year ended December 31, 1995.  Because we qualify for taxation as a REIT, we generally are not subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our taxable income to our stockholders, subject to certain adjustments.  If we fail to qualify as a REIT in any taxable year, without the benefit of certain relief provisions of the Code, we will be subject to federal and state income taxes on our taxable income at regular corporate tax rates. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income, property or net worth and federal income and excise taxes on our undistributed income. 
 
We engage in certain activities through our wholly owned taxable REIT subsidiaries (“TRS entities”), Inland Venture Corporation (“IVC”), Inland Exchange Venture Corporation (“IEVC”) and Inland TRS Property Management, Inc.  These TRS entities engage in activities that would otherwise produce income that would not be REIT qualifying income, including, but not limited to, managing properties owned through certain of our joint ventures and the sales of ownership interests through our IPCC joint venture.  The TRS entities are subject to federal and state income and franchise taxes from these activities.

Employees
 
As of December 31, 2013, we employed a total of 129 people, none of whom are represented by a union.
 

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Environmental Matters
 
We review and monitor compliance with federal, state and local provisions, which have been enacted or adopted regulating the discharge of material into the environment, or otherwise relating to the protection of the environment.  For the year ended December 31, 2013, we did not incur any material capital expenditures for environmental control facilities nor do we anticipate incurring material amounts during the remainder of the current fiscal year or the year ending December 31, 2015.
 
We believe that all of our investment properties comply in all material respects with all federal, state and local environmental laws, ordinances and regulations regarding hazardous or toxic substances.  The environmental condition of our investment properties may be adversely affected by our tenants, by conditions of near-by properties or by unrelated third parties.  All of our investment properties have been subjected to Phase I or similar environmental audits at the time they were acquired.  These audits, performed by independent consultants, generally involve a review of records and visual inspection of the property.  These audits do not include soil sampling or ground water analysis.  These audits may not, however, reveal all potential environmental liabilities.  Additionally, we periodically engage third party environmental specialists to complete site inspections on certain investment properties, namely those occupied by dry cleaners, oil change facilities and print shops, to ensure that the environmental condition of the respective property has not changed. No audits have revealed, nor are we aware of any environmental liability that we believe will have a material adverse effect on our operations. 
 
Green Initiatives
 
We are a member of the U.S. Green Building Council (“USGBC”), which allows us the ability to monitor and comment on conservation and sustainability trends in the marketplace.  We made a commitment to improving energy efficiency since sustainability became a national concern and long before Leadership in Energy and Environmental Design (“LEED”) certification became possible for existing buildings and operations.  Over the past decade, many initiatives have been undertaken at the centers we own and manage that have resulted in reductions of energy consumption, waste and improved maintenance cycles.  Also, the savings we have obtained through the implementation of these initiatives makes our properties more competitive in the leasing marketplace.  Some initiatives that we have implemented are:
 
Locally grown drought and salt tolerant native grasses and perennials are utilized with smart irrigation controllers ensuring lower fuel waste for delivery, plant materials that can thrive in the environment and reduced water usage.
Electric timers allow each light pole to be remotely activated as needed with up to 30% turned off by midnight.  New pulse start ballasts and bulbs are being phased in to replace old ballasts.  New fixture head designs and configurations improve the quality of lighting at the same or less wattage.  Electricity savings results in a payback of three years.
New HVAC equipment is specified at a minimum of 12 SEER (Seasonal Energy Efficiency Ratings) and economizers to reduce mechanical cooling loads and variable speed blowers reduce energy consumption.
Roof replacements are being specified with minimum R-19 insulation and TPO (Thermoplastic Polyolefin) membrane systems to reduce cooling loads and improve heat retention.
Alternative transportation is supported through the use of bicycle racks at all shopping centers and establishment of public bus stops on or adjacent to properties.
Many national tenants have implemented their own initiatives including the use of energy management systems, use of more natural lighting, reduction of waste production, improved recycling programs and use of more renewable source materials.

Intellectual Property
 
The Inland name and our logo are used under license from The Inland Group, Inc. The license permits our use of the Inland name and our logo in connection with the business of acquiring, owning, operating, managing and disposing of neighborhood retail centers and community centers in the continental United States. The term of the license is indefinite but shall be terminable upon the occurrence of certain events, including but not limited to a change of control, the filing of a claim or lien upon a substantial portion of our assets which is not released, expunged or dismissed within 60 days of filing and which would have a material adverse effect on our business or a general assignment of our assets for the benefit of any creditor.
 

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Executive Officers
 
The following sets forth certain information with regard to our executive officers as of January 1, 2014:
 
Mark E. Zalatoris, age 56, has served as our president and chief executive officer since April 2008 and previously served as executive vice president and chief operating officer from 2004 to 2008, and as chief financial officer and senior vice president from 2000 to 2004.
 
Brett A. Brown, age 49, has served as our executive vice president since 2011 and chief financial officer and treasurer since 2008. From 2008 to 2011, Mr. Brown served as our senior vice president. Mr. Brown joined us in May 2004 as vice president and chief financial officer.
 
Beth Sprecher Brooks, age 59, has served as our senior vice president since 2008 and as our general counsel and secretary since 2006. Ms. Sprecher Brooks joined us in November 2002, became assistant vice president in 2003 and vice president in 2005. 
 
D. Scott Carr, age 48 has served as our executive vice president of portfolio management and chief investment officer since 2011 and has served as the president of Inland Commercial Property Management, Inc., a wholly-owned subsidiary of ours, since 1995. Mr. Carr became senior vice president of portfolio management in 2008.

William W. Anderson, age 55, has served as our senior vice president, transactions, since 2012 and previously served as our vice president, transactions since 2000.
 
Certifications
 
We have filed with the SEC the chief executive officer and chief financial officer certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K.  In addition, we have filed the certification of our chief executive officer with the New York Stock Exchange (“NYSE”) for 2013 as required pursuant to Section 303A.12(a) of the NYSE Listed Company Manual.  Our chief executive officer certified that he was not aware of any violation by us of the NYSE’s corporate governance listing standards as of the date of the certification.

Algonquin Commons

In June 2012, a Company subsidiary ceased paying the monthly debt service on the two mortgage loans secured by Algonquin Commons. The Company subsidiary had hoped to reach an agreement with the special servicer that would have revised the loan structure to make continued ownership of the property economically feasible. In January 2013, the Company subsidiary received notice that a complaint had been filed by the purported successor to the lender, alleging events of default under the loan documents and, among other things, seeking to foreclose on the property. In connection with the complaint, the plaintiff filed a motion for appointment of a receiver and the court granted the motion and issued an order effective February 28, 2013, appointing a receiver for the property. As a result, the receiver and its affiliated management company are now managing and operating Algonquin Commons and are collecting all rents for the property. Please see our full disclosure of this matter in Item 3, "Legal Proceedings" which is incorporated into this Item 1 "Business."

Access to Company Information
 
We make available, free of charge, through our website, and by responding to requests addressed to our director of investor relations, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.  These reports are available as soon as reasonably practical after such material is electronically filed or furnished to the SEC.  Our website address is www.inlandrealestate.com.  This reference to our website is not intended to incorporate any information contained on our website or on other websites to which we provide hyperlinks by reference into this annual report on Form 10-K.
 


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Item 1A.  Risk Factors
 
Set forth below are the risk factors that we believe are material to our investors.  The occurrence of any of the risks discussed in this Annual Report on Form 10-K could have a material adverse effect on our business, financial condition, results of operations and ability to pay distributions.
 
Real Estate Risks
 
Our performance and value are subject to risks associated with our real estate assets and with the real estate industry.  Our economic performance and the value of our real estate assets, and consequently the value of your shares, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to you will be adversely affected.  The following factors, among others, may adversely affect the income generated by our properties:
 
downturns in the national, regional and local economic climate;
competition from other retail properties and other retail channels;
local real estate market conditions, such as oversupply or reduction in demand for retail properties;
changes in interest rates and availability of financing;
vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;
increased operating costs, including, but not limited to, insurance expense, utilities, real estate taxes, state and local taxes, and heightened security costs;
decreased tenant recovery income as a result of decreased occupancy;
civil disturbances, natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses; and
declines in the financial condition of our tenants and our ability to collect rents from our tenants.
 
Our retail tenants face competition from numerous retail channels, which may reduce our profitability and ability to pay distributions. Retailers at our properties face continued competition from discount or value retailers, factory outlet centers, wholesale clubs, mail order catalogs and operators, television shopping networks and Internet shopping. Such competition could adversely affect our tenants and, consequently, our revenues and funds available for distribution.

Tenants may vacate spaces at the end of their leases or in breach of their leases, fail to pay their rent, declare bankruptcy or seek to restructure their leases.  We derive substantially all of our revenue from leasing space at our investment properties.  Thus, our results may be negatively affected by the failure of tenants to pay rent when due.  We may experience substantial delays and expense enforcing rights against tenants who do not pay their rent or who seek the protection of the bankruptcy laws. Even if a tenant does not seek the protection of the bankruptcy laws, the tenant may from time to time experience a downturn in its business which may weaken its financial condition and its ability to make rental payments when due, leading the tenant to seek revisions to its leases.

Loss of revenues from significant tenants could reduce distributions to preferred and common stockholders and have a material adverse effect on our business. We derive significant revenues from anchor tenants such as Safeway, Roundy's and TJX Companies, Inc., which are the three largest anchor tenants in our consolidated portfolio and accounted for 3.9%, 3.3% and 3.2%, respectively of our consolidated annualized base rent for the year ended December 31, 2013. Vacated anchor space can reduce rental revenues generated by other spaces in the shopping center because of the loss of the departed anchor tenant's customer drawing power. Certain anchors have the right to vacate but continue to pay rent for the balance of the term, which could hinder our efforts to re-tenant that space. If a significant tenant vacates a property, then other tenants at the property may be entitled to terminate their leases or reduce the amount of their rental obligations. The loss of a significant number of the locations of these anchor tenants, or the inability of them to pay rent, could have a material adverse effect on our business. Distributions to stockholders could be adversely affected by the loss of revenues in the event a tenant becomes bankrupt or insolvent; experiences a downturn in its business; materially defaults on its leases; does not renew its leases as they expire; or renews at lower rental rates.


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Leases on approximately 5% of total leased square feet in our consolidated portfolio and approximately 3% in our unconsolidated portfolio expire during 2014.  As leases expire, we may not be able to renew or re-lease space at rates comparable to, or better than, the rates contained in the expiring leases, or at all.  Leases on approximately 591,000 square feet, or approximately 5% of total leasable square feet of approximately 10,846,000 in our consolidated portfolio, will expire prior to December 31, 2014.  Leases on approximately 110,000 square feet, or approximately 3% of total leasable square feet of approximately 4,066,000 in our unconsolidated portfolio, will expire prior to December 31, 2014.  If we fail to renew or re-lease space at rates that are at least comparable to the rates on expiring leases, revenues at the impacted properties will decline.  Further, we may have to spend significant sums of money to renew or re-lease space covered by expiring leases.
 
We compete with numerous other parties or entities for real estate and tenants.  We compete with numerous other persons or entities seeking to buy real estate assets, or to attract tenants to properties we already own, including REITs or other real estate operating companies.  These persons or entities may have greater experience and financial strength.  There is no assurance that we will be able to acquire additional real estate assets or attract tenants on favorable terms, if at all.  For example, our competitors may be willing to purchase properties at prices that result in yields below what we believe is our minimum required yield or may offer space at properties that compete with ours at rental rates below our existing rates, causing us to lose existing or potential tenants and pressuring us to reduce our rental rates to retain existing tenants or convince new tenants to lease space at our properties.
 
Property taxes may increase.  We are required to pay taxes based on the assessed value of our investment properties determined by various taxing authorities such as state or local governments.  These taxing authorities may increase the tax rate imposed on a property or may reassess property value, either of which would increase the amount of taxes due on that property.
 
We face risks associated with property acquisitions.  Our acquisition activities and their success are subject to the following risks:
 
we may be unable to obtain financing for acquisitions on favorable terms or at all;
acquired properties may fail to perform as expected;
the actual costs of repositioning and redeveloping acquired properties may be higher than our estimates;
we are seeking to expand our market area and may acquire properties in areas where we do not have substantial experience in, or knowledge of, the market and may lack business relationships and may be unfamiliar with local governmental and permitting procedures; and
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.
 
Properties that we acquire may be subject to unknown liabilities that affect the value and profitability of these properties. Properties that we own or may acquire may be subject to existing liabilities that are unknown at the time we acquire such properties, which could affect the value of and revenue generated by the property. Unknown liabilities might include:
 
liabilities for cleanup or remediation of undisclosed environmental conditions;
claims of tenants, vendors or other persons dealing with the entities prior to our acquisition of such properties (that had not been asserted or threatened prior to our acquisition; and
liabilities incurred in the ordinary course of business.
 
We may not be able to quickly vary our portfolio.  Investments in real estate are relatively illiquid and generally cannot be disposed of quickly. In addition, the federal tax code restricts REIT's ability to dispose of properties that are not applicable to other types of real estate companies. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on terms favorable to us within a time frame that we would need to avoid losses in the value of properties in our portfolio.
 
Market disruptions may adversely affect the value of our investment properties.  Market volatility has exerted, and may in the future exert downward pressure on the value of certain of our investment properties and our unconsolidated joint ventures.  For example, during the years ended December 31, 2013, 2012 and 2011, we recorded approximately $5,748, $722 and $2,841, respectively of impairment charges related to certain consolidated properties.  The impairment charges were required because we determined that the carrying value of the properties were higher than their fair values and required adjustment.  Similarly,

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during the years ended December 31, 2013 and 2011, we recorded approximately $692 and $7,824, respectively (amounts equal to our pro rata share of impairment charges on certain unconsolidated development joint venture projects) to reflect the properties at fair value and we recorded approximately $10,468 and $5,223, respectively in impairment losses to record our investment in certain unconsolidated joint ventures at their fair values. No impairment adjustments to unconsolidated investments or unconsolidated joint venture properties were recorded or required during the year ended December 31, 2012. There is no assurance we will be able to recover any of these charges upon sales of the impacted properties.

Investment Risks
 
Indebtedness that we incur may adversely impact our liquidity and operating flexibility and may impact our ability to pay dividends on our preferred stock and distributions on our common stock.  As of December 31, 2013, we had approximately $849,024 in face value of indebtedness, $494,809 of which was secured by mortgages on certain of our investment properties. We may incur additional indebtedness and become more highly leveraged, which could further adversely impact our financial position and operating flexibility and limit our cash available to pay dividends or make distributions. As a result, we may not have sufficient funds remaining to pay dividends or make distributions on our preferred and common stock.  Increases in our borrowing and the resulting increase in our leverage could affect our financial condition and make it more difficult for us to comply with our financial covenants governing our indebtedness.

If we pay distributions that exceed our cash flow from operations, we will have less funds available for other purposes and the amount of distributions may not be sustainable.  For the year ended December 31, 2013, we paid distributions totaling approximately $8,937 and $54,011 to our preferred and common stockholders, respectively.  Our net cash provided by operating activities was approximately $69,006. For the year ended December 31, 2012, we paid distributions totaling approximately $7,719 and $50,815 to our preferred and common stockholders, respectively.  Our net cash provided by operating activities was approximately $68,955.  To the extent that net cash provided by operating activities declines we may be forced to consider reducing our distributions or the amount that we pay in cash in order to preserve a cushion between the amount of cash distributions paid and net cash provided by operating activities.  To the extent that we pay cash distributions exceeding net cash provided by operating activities, the amount of our distribution payments may not be sustainable or we may use funds generated by financing or investing activities which could further reduce the amount of cash available for other purposes including acquiring new investment properties, funding capital expenditures on existing investment properties, funding cash requirements for our various joint ventures or repaying debt.  If these other requirements cannot be reduced, we will likely be forced to reduce the amount of our cash distributions.
 
We have changed the amount of our distributions in the past and may change our distribution policy in the future.  Recognizing the need to maintain maximum financial flexibility in light of the state of the capital markets, in 2009 we reduced the amount we paid monthly in distributions to $0.0475 per common share.  We have continued to pay this amount monthly and we currently expect to continue to pay monthly cash distributions at this rate in 2014, but we may change our distribution policy again at any time in the future.
 
The decision to declare and pay distributions on our common stock in the future, as well as the timing, amount and composition of any future distributions, will depend on our earnings, cash flows from operations, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements under the REIT provisions of the Code, state law and any other factors we deem relevant. Any change in our distribution policy or the amount of distributions we pay to common stockholders could have a material adverse effect on the market price of our preferred and common stock.
 
Our shareholders have experienced dilution as a result of our stock offerings and they may experience further dilution if we issue additional stock.  The issuance of additional shares of our common or preferred stock may have a dilutive effect on our earnings and funds from operations per share and will reduce the percentage of that class of stock outstanding owned by investors who do not participate in these issuances.  Shareholders are not entitled to vote on whether or not we issue additional stock already authorized for issuance.  In addition, depending on the terms and pricing of future issuances of our stock and the value of our properties, our existing shareholders may experience dilution in the value of their shares.
 
Changes in market conditions could adversely affect the market price of our preferred and common stock.  The trading price of our shares of preferred or common stock, like other publicly traded equity securities, depends on various market conditions that may change from time to time.  Among the market conditions that could affect the market price of our preferred and common stock are the following:
 

9


the extent of investor interest in our securities;
the general reputation of real estate investment trusts and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies;
material economic concerns;
changes in tax laws;
our financial performance; and
general stock and bond market conditions.

Our common stock may trade at prices that are higher or lower than our net asset value per share of common stock.  If, among other things, our future earnings or cash distributions are less than expected, it is likely that the market price of our preferred and common stock will decline.
 
Our objectives may conflict with those of our joint venture partners.  We own certain of our investment properties, through joint ventures with third parties.  In some cases, we control the joint venture and in some cases we are a minority partner.  Investments in joint ventures involve risks that are not otherwise present with properties which we own entirely.  For example, a joint venture partner may file for bankruptcy protection or may have economic or business interests or goals which are inconsistent with our goals or interests.  Further, although we may own a controlling interest in a joint venture and may have authority over major decisions such as the sale or refinancing of investment properties, we may have fiduciary duties to the joint venture partners or the joint venture itself that may cause, or require, us to take or refrain from taking actions that we would otherwise take if we owned the investment properties outright.  Certain joint venture commitments require us to invest cash in non-operating property under development and in properties that do not necessarily meet our investment criteria but which are offered for syndication through our joint venture with IPCC.  In some cases, capital has been committed for periods longer than expected, for example, when development or syndication takes longer than anticipated thus impacting our liquidity and capital resources.

Loss of our key personnel could adversely affect the value of our common shares and operations. We are dependent on the efforts of our key executive personnel. Although we believe qualified replacements could be found for these key executives, the loss of their services could adversely affect the value of our common shares and operations.

We have a high concentration of properties in the Chicago and the Minneapolis-St. Paul MSA's, and adverse economic and other developments in that area could have a material adverse effect on us. As of December 31, 2013, approximately fifty-nine percent of our total retail portfolio (consolidated plus unconsolidated) GLA was located in the Chicago, Illinois MSA, with our second largest market concentration being approximately seventeen percent in the Minneapolis-St. Paul, Minnesota MSA. As a result, we are particularly susceptible to adverse economic and other developments in these areas, including increased unemployment, industry slowdowns, business layoffs or downsizing, relocations of businesses, decreased consumer confidence, changes in demographics, increases in real estate and other taxes, increased regulation, and natural disasters, any of which could have a material adverse effect on us.
 
Certain provisions of Maryland law or our charter or bylaws or opposition from large stockholders could delay, defer or prevent a takeover or change in our control that would be beneficial our stockholders. Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control.  Such an acquisition or change of control could provide you with the opportunity to realize a premium over the then-prevailing market price of your shares.  In some cases, such provisions may have the effect of permitting us and our board of directors to negotiate a change-in-control transaction on terms most favorable to us and our stockholders, but in other cases they may have the effect of delaying such a transaction or preventing it from happening at all.  These MGCL provisions include:
“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” for certain periods. An “interested stockholder” is generally any person who beneficially owns 10% or more of the voting power of our shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding voting stock. A person is not an interested stockholder under the statute if our board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. Business combinations with an interested stockholder are prohibited for five years after the most recent date on which the

10


stockholder becomes an interested stockholder. After that period, the MGCL imposes two super-majority voting requirements on such combinations, and
“control share” provisions that provide that “control shares” of our company acquired in a “control share acquisition” have no voting rights unless holders of two-thirds of our voting stock (excluding interested shares) consent. “Control shares” are shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors. A “control share acquisition” is the direct or indirect acquisition of ownership or control of “control shares” from a party other than the issuer.

We have opted out of the control share provisions of the MGCL by means of a provision in our bylaws.  However, we may opt in to the control share provisions of the MGCL in the future by amending our bylaws, which our board of directors can do without stockholder approval.

Our charter and bylaws contain provisions that also may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be beneficial stockholders.  In an effort to protect our ability to qualify as a REIT, our charter generally provides that no single person or group of persons (an entity is considered a person) may own more than 9.8% of our outstanding shares of common stock (unless permitted by the board).  Although the board may waive the application of these provisions to certain persons, they are not obligated to do so.  This 9.8% ownership limit and other provisions of our charter and bylaws may prevent or discourage a third party from making a tender offer or other business combination proposal such as a merger that might have been beneficial to our stockholders.

Daniel L. Goodwin is one of our directors and beneficially owns a significant amount of our common stock both individually and through The Inland Group, Inc. (“The Inland Group”).  Mr. Goodwin is one of the founders of The Inland Group and owns a controlling interest in that entity.  The Company has engaged and may continue to engage in certain transactions with affiliates of The Inland Group.  See the “Certain Relationships and Related Party Transactions” section in the Company’s annual meeting proxy statement and Note 7, “Transactions with Related Parties” to the consolidated financial statements in this Annual Report on Form 10-K for details regarding certain of these transactions.  Without the support of the Company’s significant stockholders such as Mr. Goodwin and The Inland Group, change of control transactions, such as mergers, sales of assets and business combinations that could give stockholders the opportunity to realize a premium over the then-prevailing market prices for common shares may be more difficult to consummate, and this difficulty may discourage third parties from approaching the Company to propose such transactions.  The interests of the Company’s significant stockholders may differ from the interests of other stockholders, and those significant stockholders may vote their shares accordingly. 

Financing Risks
 
We often need to borrow money to finance our business.  Our ability to internally fund operating or capital needs is limited since we must distribute at least 90% of our taxable income, subject to certain adjustments, to stockholders to qualify as a REIT.  Consequently, we may have to borrow money to fund operating or capital needs or to satisfy the distribution requirements, imposed by the Code, to maintain status as a REIT.  Borrowing money exposes us to various risks.  For example, our investment properties may not generate enough cash to pay the principal and interest obligations on loans or we may violate a loan covenant that results in the lender accelerating the maturity date of a loan.  As of December 31, 2013, our borrowings totaled approximately $849,024 in face value of consolidated debt.  Approximately $494,809 of this debt is secured by mortgages on certain of our investment properties and is non-recourse to us.  The remaining $354,215 is comprised of unsecured debt reflecting draws on our line of credit facility and borrowings under our term loans and the face value of our convertible notes.
 
If we fail to make timely payments on our debt, including those cases where a lender has accelerated the maturity date due to a violation of a loan covenant, the lenders could foreclose on the investment properties securing the loan and we could lose our entire investment on any foreclosed properties.  Once a loan becomes due, we must either pay the remaining balance or borrow additional money to pay off the maturing loan.  We may not, however, be able to obtain a new loan, or the terms of the new loan, such as the interest rate or payment schedule, may not be as favorable as the terms of the maturing loan.  Thus, we may be forced to sell a property at an unfavorable price to pay off the maturing loan or agree to less favorable loan terms.  In addition, we may have limited availability under our line of credit facility which may reduce our ability to borrow funds.
 
A total of approximately $168,360 and $37,849 of our indebtedness, including required monthly principal amortization, matures on or before December 31, 2014 and 2015, respectively.  We intend to repay this debt using available cash, by borrowing amounts under our unsecured line of credit facility or by refinancing the maturing debt, or some combination of all these. There is no assurance we will be able to do so and we may incur significantly higher borrowing costs, all of which could have a material adverse effect on our results of operations and financial condition. Included in the debt maturing in 2014 are

11


two mortgage loans, with an aggregate outstanding principal balance of approximately $90,247, secured by Algonquin Commons. Subject to an outstanding $18,600 payment guaranty on the principal amount of the second phase of the property and carve-out guarantees, these mortgage loans are otherwise generally non-recourse.

As of December 31, 2013, we owed approximately $366,200, or 43% of total outstanding debt, on indebtedness that bore interest at variable rates with a weighted average of 2.13% per annum.  These rates are reset each month.  A 1.0% annualized increase in these variable rates would have increased our interest expense by approximately $3,662 for the year ended December 31, 2013.  We may borrow additional amounts that bear interest at variable rates.  If interest rates increase, the amount of interest that we would be required to pay on these borrowings will also increase.  Additionally, if lending requirements become stricter, we may find it difficult to encumber properties with terms similar to our current loan terms.  This could result in a decrease in the number of properties we are able to purchase or principal and/or interest payments higher than recent historical levels.  Higher interest payments could have a material adverse effect on our results of operations and would result in a decrease in the amount of cash available for distribution to holders of our common stock.
 
Our degree of leverage could limit our ability to obtain additional financing, negatively affect the market price of our common stock and reduce cash available for distributions and other uses.  As of December 31, 2013, we had approximately $849,024 in total face value of indebtedness outstanding on a consolidated basis (excluding unconsolidated joint venture debt).  Additionally, there was a total face value of approximately $317,025 of outstanding debt incurred by our unconsolidated joint ventures, of which our pro rata share was approximately $170,089. Debt to total market capitalization ratio, which measures total debt as a percentage of the aggregate of total debt plus the market value of outstanding equity securities, is often used by analysts to gauge leverage for a REIT.  Our debt to total market capitalization ratio was approximately 42.3%, excluding unconsolidated joint venture debt, and 46.8%, including our pro rata share of unconsolidated joint venture debt, as of December 31, 2013.  This ratio will increase with declines in our stock price, which closed at $10.52 on December 31, 2013, or with increases in our borrowing, all of which could have a material adverse effect on the trading price of our stock.  In addition, our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes.  Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.  In addition, a greater amount of debt relative to our peer group could have a negative effect on our stock price.
 
Covenants in our debt agreements could adversely affect our financial condition.  The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to borrow additional monies secured by the property or to discontinue insurance coverage, among other things.  Covenants on our unsecured line of credit facility also limit our ability to incur indebtedness above certain levels and require us to satisfy certain conditions before borrowing, such as maintaining certain total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt, among others.  If we breach covenants in our debt agreements, the lenders can declare a default and, if the debt is secured, can take possession of the property securing the defaulted loan unless we are able to repay the loan.  Failure to comply with these covenants could cause a default under the applicable debt agreement, and we may then be required to repay this debt.  Under those circumstances, we may not have sufficient resources to repay this debt.
 
To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective and may reduce the overall returns on your investment.  From time to time we have used, and may in the future use, derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets.  Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements.  Our actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from our currently anticipated hedging strategy.

To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to credit risk, basis risk and legal enforceability risks.  In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract.  If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us.  Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective.   Finally, legal enforceability risks encompass general contractual risks including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract.  We do not believe the risk of counterparty nonperformance is material due to the current economic conditions.


12


A Company subsidiary stopped making payments on the debt encumbering Algonquin Commons and is defending a resulting lawsuit that seeks, among other things, to enforce its partial guarantee of the loan; if the Company subsidiary is required to perform under the partial guarantee, paying the guarantee could have a material adverse effect on our cash flows and results of operations for the period and the year in which the payment would be made.  In June 2012, a Company subsidiary ceased paying the monthly debt service on the two mortgage loans secured by both phases of the investment property known as Algonquin Commons, which is owned by a wholly owned subsidiary of the Company, because the property was not generating sufficient cash flow to resume paying both principal and interest payments on the outstanding debt.  The total outstanding principal balance of the debt on both phases of the property is $90,247, of which $71,647 is non-recourse and approximately $18,600, for which the payment guarantee is additional collateral, has been guaranteed by the Company subsidiary.  In January 2013, the Company subsidiary received notice that a complaint had been filed by the purported successor to the lender alleging events of default under the loan documents and seeking to foreclose on the property. Effective February 28, 2013, the court granted a motion of the plaintiff and appointed a receiver for the property. As a result, the receiver and its affiliated management company are managing and operating Algonquin Commons and are collecting all rents for the property. The Company cannot currently estimate the impact the dispute will have on its consolidated financial statements and may not be able to do so until a final outcome has been reached. Although the Company subsidiary believes the payment guaranty was terminated and is of no further force and effect, if the Company subsidiary is required to fulfill its obligations under its partial guarantee of the loan, we believe that paying the guarantee could have a material adverse effect on cash flows and results of operations for the period and the year in which the payment would be made. 

Federal Income Tax Risks
 
If we fail to qualify as a REIT in any taxable year, our operations and distributions to stockholders will be adversely affected.  We intend to operate so as to continue qualifying as a REIT under the Code. A REIT generally is not taxed at the corporate level on income it currently distributes to its stockholders. Qualification as a REIT involves the application of highly technical and complex rules for which there are only limited judicial or administrative interpretations. The determination of various factual matters and circumstances is not entirely within our control and may affect our ability to qualify, or continue to qualify, as a REIT. New legislation, new regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to qualifying as a REIT or the federal income tax consequences of qualification.
 
We may fail to qualify as a REIT if, among other things:
 
less than 75% of the value of our total assets consists of cash and cash items (including receivables), real estate assets (including mortgages and interests in mortgages) and government securities at the close of each fiscal quarter;
securities of any one issuer (other than permitted securities, such as government securities or mortgages) represent more than 5% of the value of our total assets; however, up to 25% of the value of our total assets may be represented by securities of one or more taxable REIT subsidiaries;
we own more than 10% of the outstanding voting securities of any one issuer or more than 10% of the value of the outstanding securities of a single issuer other than certain permitted securities, such as government securities or mortgages, and securities in a taxable REIT subsidiary;
less than 75% of our gross income (excluding income from prohibited transactions) is derived from real estate sources.  These sources include mortgage interest, rents from real property, amounts received as consideration to enter into real estate leases or to make a loan secured by a mortgage and gains from the sale of real estate assets;
less than 95% of our gross income is derived from the income items included in the 75% test and also includes interest income, dividend income and gains from the sale of securities; or
we fail to distribute at least 90% of our taxable income, subject to certain adjustments, to stockholders.
 
If we were to fail to qualify as a REIT in any taxable year and were not entitled to relief under the Code:
 
we would not be allowed to deduct dividends paid to stockholders when computing our taxable income;
we would be subject to federal (including any applicable alternative minimum tax) and state income tax on our taxable income at regular corporate rates;
we would be disqualified from being taxed as a REIT for the four taxable years following the year during which we failed to qualify, unless entitled to relief under certain statutory provisions;

13


we would have less cash to pay distributions to stockholders; and
we may be required to borrow additional funds or sell some of our assets in order to pay corporate tax obligations we may incur as a result of being disqualified.

We face possible adverse changes in tax laws.  From time to time, changes in federal, state and local tax laws or regulations are enacted, which may result in an increase in our tax liability.  The shortfall in tax revenues at the federal, state and municipal government levels in recent years may lead to an increase in the frequency and size of these changes.  If these changes occur, we may be required to pay additional taxes on our income, property or net worth and may be assessed interest and penalties on such additional taxes.
 
In certain circumstances, we may be subject to federal and state income taxes as a REIT, which would reduce our cash available to pay distributions.  Even if we maintain our status as a REIT, we may become subject to federal income taxes and related state taxes. For example, if we have net income from a “prohibited transaction,” we will incur taxes equal to the full amount of the income from the prohibited transaction. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We also may decide to retain income we earn from the sale or other disposition of our property and pay income tax directly on this income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have to file income tax returns to receive a refund of the income tax paid on their behalf. We also may be subject to state and local taxes on our income, property or net worth, either directly or at the level of the other companies through which we indirectly own our assets. Any federal or state taxes paid by us will reduce our cash available to pay distributions.
 
Distributions to tax-exempt investors may be classified as unrelated business tax income.   The Code may classify distributions paid to a tax-exempt investor as unrelated business tax income, or UBTI, if the investor borrows money to purchase our shares.
 
In order to maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions.  In order to maintain our REIT status, we may need to borrow funds on a short-term basis to meet the real estate investment trust distribution requirements, even if the then prevailing market conditions are not favorable for these borrowings.  To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our taxable income, subject to certain adjustments, each year.  In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.  We may need short-term debt or long-term debt, proceeds from asset sales, creation of joint ventures or sale of common stock to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments.
 
Recent tax-rate changes could reduce after-tax returns for holders of our common and preferred stock. The maximum rates on ordinary dividend income and long-term capital gains received after December 31, 2012, by individuals, estates, and trusts increased from 35% and 15%, respectively, to 39.6% and 20%, respectively. In addition, for taxable years beginning after December 31, 2012, certain U.S. holders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare tax on dividends and certain other investment income, including capital gains from the sale or other disposition of our common and preferred stock.

Insurance Risks
 
Some potential losses are not covered by insurance.  We continue to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism in particular, but we cannot anticipate what coverage will be available on commercially reasonable terms in future policy years.  There are other types of losses, such as from wars, acts of nuclear, biological or chemical terrorism or the presence of mold at our properties, for which we cannot obtain insurance at all or at a reasonable cost.  With respect to these losses and losses from acts of terrorism, earthquakes or other catastrophic events, if we experience a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those properties.

Potential liability for environmental contamination could result in substantial costs.  Under federal, state and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our properties simply because of our current or past ownership or operation of our real estate.  If environmental problems arise, we may have to make substantial payments because:

14


 
as owner or operator we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
the law typically imposes clean up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination;
even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the cleanup costs; and
governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs.
 
These costs could be substantial and in extreme cases could exceed the value of the contaminated property.  The presence of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may materially and adversely affect our ability to borrow against, sell or rent an affected property.
 
In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination.  Changes in laws increasing the potential liability for environmental conditions existing at our properties, or increasing the restrictions on the handling, storage or discharge of hazardous or toxic substances or petroleum products or other actions, may result in significant unanticipated expenditures.
 
Environmental laws also govern the presence, maintenance and removal of asbestos.  These laws require that owners or operators of buildings containing asbestos:
 
properly manage and maintain the asbestos;
notify and train those who may come into contact with asbestos; and
undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building.
 
These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.
 
Some of our properties are located in urban, industrial and previously developed areas where fill or current or historic industrial uses of the areas have caused site contamination.  It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys for each property we seek to acquire.  These assessments generally include a visual inspection of the properties and the surrounding areas, an examination of current and historical uses of the properties and the surrounding areas and a review of relevant state, federal and historical documents, but do not involve invasive techniques such as soil and ground water sampling.  Where appropriate, on a property-by-property basis, our practice is to have these consultants conduct additional testing, including sampling for asbestos, for lead in drinking water, for soil contamination where underground storage tanks are or were located or where other past site usage create a potential environmental problem, and for contamination in groundwater.  Even though these environmental assessments are conducted, there is still the risk that:
 
the environmental assessments and updates did not identify all potential environmental liabilities;
a prior owner created a material environmental condition that is not known to us or the independent consultants preparing the assessments;
new environmental liabilities have developed since the environmental assessments were conducted; and
future uses or conditions such as changes in applicable environmental laws and regulations could result in environmental liability for us.
 
Inquiries about indoor air quality may necessitate special investigation and, depending on the results, remediation beyond our regular indoor air quality testing and maintenance programs.  Indoor air quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, and biological contaminants such as molds, pollen, viruses and bacteria.  Indoor exposure to chemical or biological contaminants above certain levels can be alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals.  If these conditions were to occur at one of our

15


properties, we may need to undertake a targeted remediation program, including without limitation, steps to increase indoor ventilation rates and eliminate sources of contaminants.  These remediation programs could be costly, necessitate the temporary relocation of some or all of the property’s tenants or require rehabilitation of the affected property.
 
Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations and requirements could result in substantial costs.  The Americans with Disabilities Act generally requires that public buildings, including shopping centers, be made accessible to disabled persons.  Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants.  We may be required to invest substantial amounts of capital to make, among other things, substantial alterations in one or more of our properties, including the removal of access barriers, to comply with the Americans with Disabilities Act.
 
Our properties are also subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements.  If we fail to comply with these requirements, we could incur fines or private damage awards.  We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures.

We face risks relating to cybersecurity attacks, loss of confidential information and other business disruptions. Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data and other electronic security breaches. Such cyber attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. There is no guarantee that our efforts to prevent, detect and mitigate these threats, including password protection, backup servers and periodic testing, will be successful in preventing a cyber attack. Cybersecurity incidents could compromise the confidential information of our tenants, employees and third party vendors and disrupt and effect the efficiency of our business operations.

16


Item 1B.  Unresolved Staff Comments
 
As of the date of this Annual Report on Form 10-K, we had no outstanding unresolved comments from the Commission staff regarding our periodic or current reports.

17


Item 2.  Properties
 
As of December 31, 2013, we owned fee simple interests in 105 investment properties (excluding properties owned by unconsolidated joint ventures), comprised of 13 single-user retail properties, 40 Neighborhood Retail Centers, 25 Community Centers, 26 Power Centers and 1 Lifestyle Center.  These investment properties are located in the states of Florida (2), Illinois (69), Indiana (6), Minnesota (18), Nebraska (1), Ohio (2), and Wisconsin (7).  Most tenants of the investment properties are responsible for the payment of some or all of the real estate taxes, insurance and common area maintenance.  For additional details related to investment property encumbrances, see “Real Estate and Accumulated Depreciation” (Schedule III) herein.
Property
 
City
 
State
 
Gross
Leasable
Area
(Sq Ft)
 
Date
Acq.
 
Year Built/
Renovated
 
Financial
Occupancy
(1)
 
Average Rent Per Square Foot (2)
 
Anchor Tenants (3)
Single-User
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carmax
 
Schaumburg
 
IL
 
93,333

 
12/98
 
1998
 
100
%
 
$
22.47

 
Carmax
Carmax
 
Tinley Park
 
IL
 
94,518

 
12/98
 
1998
 
100
%
 
20.36

 
Carmax
Cub Foods
 
Hutchinson
 
MN
 
60,208

 
01/03
 
1999
 
100% (4)

 
9.79

 
Cub Foods (4)
Disney
 
Celebration
 
FL
 
166,131

 
07/02
 
1995
 
100
%
 
17.37

 
Walt Disney World
Dominick's
 
Countryside
 
IL
 
62,344

 
12/97
 
1975/2001
 
100% (4)

 
4.28

 
Dominick's Finer Foods (4)
Freeport Commons (f/k/a Staples)
 
Freeport
 
IL
 
24,049

 
12/98
 
1998
 
100
%
 
11.00

 
Staples
Fresh Market
 
Lincolnshire
 
IL
 
20,414

 
10/12
 
2013
 
100
%
 
16.12

 
The Fresh Market
Glendale Heights Retail
 
Glendale Heights
 
IL
 
68,879

 
09/97
 
1997
 
100% (4)

 
11.90

 
Dominick's Finer Foods (4)
Mosaic Crossing
 
West Chicago
 
IL
 
78,271

 
01/98
 
1990/2013
 
100
%
 
4.00

 
Old Time Pottery
PetSmart
 
Gurnee
 
IL
 
25,692

 
04/01
 
1997
 
100
%
 
15.62

 
PetSmart
Pick 'N Save
 
Waupaca
 
WI
 
63,780

 
03/06
 
2002
 
100
%
 
11.47

 
Pick 'N Save
Roundy's
 
Menomonee Falls
 
WI
 
103,611

 
11/10
 
2010
 
100
%
 
16.25

 
Super Pick 'N Save
Verizon
 
Joliet
 
IL
 
4,504

 
05/97
 
1995
 
100
%
 
41.92

 
None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neighborhood Retail Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22nd Street Plaza Outlot
 
Oakbrook Terrace
 
IL
 
9,970

 
11/97
 
1985/2004
 
100
%
 
44.75

 
None
Big Lake Town Square
 
Big Lake
 
MN
 
67,858

 
01/06
 
2005
 
100
%
 
11.92

 
Coborn's Super Store
Brunswick Market Center
 
Brunswick
 
OH
 
119,540

 
12/02
 
1997/1998
 
96
%
 
12.53

 
Buehler's Fresh Foods
Cliff Lake Centre
 
Eagan
 
MN
 
74,182

 
09/99
 
1988
 
86
%
 
17.10

 
None
Cobbler Crossing
 
Elgin
 
IL
 
102,643

 
05/97
 
1993
 
96
%
 
11.19

 
Jewel Food Stores
Downers Grove Market
 
Downers Grove
 
IL
 
103,419

 
03/98
 
1998
 
96% (4)

 
17.68

 
Dominick's Finer Foods (4)
Dunkirk Square
 
Maple Grove
 
MN
 
79,130

 
09/99
 
1998
 
97
%
 
14.00

 
Rainbow
Eastgate Center
 
Lombard
 
IL
 
129,101

 
07/98
 
1959/2000
 
86
%
 
6.26

 
Ace Hardware, Illinois Secretary of State, Illinois Dept. of Employment
Edinburgh Festival
 
Brooklyn Park
 
MN
 
91,563

 
10/98
 
1997
 
89
%
 
9.39

 
Festival Foods
Elmhurst City Centre
 
Elmhurst
 
IL
 
39,090

 
02/98
 
1994
 
100
%
 
16.00

 
Walgreens (5)
Forest Lake Marketplace
 
Forest Lake
 
MN
 
93,853

 
09/02
 
2001
 
96
%
 
13.31

 
Cub Foods
Gateway Square
 
Hinsdale
 
IL
 
39,710

 
03/99
 
1985
 
100
%
 
24.45

 
None
Golf Road Plaza
 
Niles
 
IL
 
25,992

 
04/97
 
1982
 
100
%
 
12.52

 
None
Grand Hunt Center Outlot
 
Gurnee
 
IL
 
21,194

 
12/96
 
1996
 
100
%
 
20.40

 
None
Hammond Mills
 
Hammond
 
IN
 
78,801

 
05/99 12/98
 
1998/1999/2011
 
100
%
 
12.87

 
Food 4 Less
Hickory Creek Market Place
 
Frankfort
 
IL
 
55,831

 
08/99
 
1999
 
49
%
 
20.20

 
None
Iroquois Center
 
Naperville
 
IL
 
140,981

 
12/97
 
1983
 
70
%
 
9.99

 
Planet Fitness, Xilin Association, Big Lots
Maple View
 
Grayslake
 
IL
 
105,642

 
03/05
 
2000/2005
 
94
%
 
14.62

 
Jewel Food Stores
Medina Marketplace
 
Medina
 
OH
 
92,446

 
12/02
 
1956/1999/ 2010
 
100% (4)

 
11.10

 
Giant Eagle
Mundelein Plaza
 
Mundelein
 
IL
 
16,803

 
03/96
 
1990
 
90
%
 
13.74

 
None
Nantucket Square
 
Schaumburg
 
IL
 
56,981

 
09/95
 
1980
 
100
%
 
13.80

 
Go Play/Kidtown USA
Oak Forest Commons
 
Oak Forest
 
IL
 
108,330

 
03/98
 
1998
 
82
%
 
12.42

 
Food 4 Less, O'Reilly Auto Parts
Oak Forest Commons III
 
Oak Forest
 
IL
 
7,424

 
06/99
 
1999
 
40
%
 
17.69

 
None
Park Square
 
Brooklyn Park
 
MN
 
12,320

 
08/02
 
1986/1988/ 2006
 
100
%
 
30.62

 
None
Plymouth Collection
 
Plymouth
 
MN
 
45,915

 
01/99
 
1999
 
95
%
 
17.90

 
Golf Galaxy
Ravinia Plaza
 
Orland Park
 
IL
 
101,605

 
10/06
 
1990
 
96
%
 
15.63

 
Whole Foods Market, Pier 1 Imports, Eva's Bridal
Regal Showplace
 
Crystal Lake
 
IL
 
89,928

 
03/05
 
1998
 
100
%
 
19.41

 
Regal Cinemas
River Square
 
Naperville
 
IL
 
58,260

 
06/97
 
1988/2000
 
98
%
 
23.45

 
None
Rose Plaza
 
Elmwood Park
 
IL
 
24,204

 
11/98
 
1997
 
100
%
 
19.27

 
Binny's Beverage Depot
Schaumburg Plaza
 
Schaumburg
 
IL
 
63,485

 
06/98
 
1994
 
100
%
 
13.67

 
Jo-Ann Stores, Party City
Shoppes at Mill Creek
 
Palos Park
 
IL
 
102,422

 
03/98
 
1989
 
96
%
 
13.05

 
Jewel Food Stores
Shops at Cooper's Grove
 
Country Club Hills
 
IL
 
72,518

 
01/98
 
1991
 
14
%
 
16.50

 
None
Six Corners Plaza
 
Chicago
 
IL
 
80,596

 
10/96
 
1966/2005
 
96
%
 
13.29

 
L.A. Fitness, CW Price
St. James Crossing
 
Westmont
 
IL
 
49,994

 
03/98
 
1990
 
89
%
 
17.68

 
None
Townes Crossing
 
Oswego
 
IL
 
105,989

 
08/02
 
1988
 
90
%
 
10.50

 
Jewel Food Stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

18


Property
 
City
 
State
 
Gross
Leasable
Area
(Sq Ft)
 
Date
Acq.
 
Year Built/
Renovated
 
Financial
Occupancy
(1)
 
Average Rent Per Square Foot (2)
 
Anchor Tenants (3)
Neighborhood Retail Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wauconda Crossings
 
Wauconda
 
IL
 
90,167

 
08/06
 
1997
 
97% (4)

 
13.51

 
Dominick's Finer Foods (4), Walgreens
Wauconda Shopping Center
 
Wauconda
 
IL
 
34,286

 
05/98
 
1988
 
83
%
 
13.46

 
Dollar Tree
Westriver Crossings
 
Joliet
 
IL
 
32,452

 
08/99
 
1999
 
85
%
 
17.88

 
None
Winfield Pointe Center
 
Winfield
 
IL
 
19,888

 
04/13
 
1989
 
75
%
 
18.69

 
None
Woodland Heights
 
Streamwood
 
IL
 
120,436

 
06/98
 
1956/1997
 
92
%
 
7.82

 
Jewel Food Stores, U.S. Postal Service
Community Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apache Shoppes
 
Rochester
 
MN
 
60,780

 
12/06
 
2005/2006
 
100
%
 
11.83

 
Trader Joe's, Chuck E. Cheese
Aurora Commons
 
Aurora
 
IL
 
126,908

 
01/97
 
1988
 
41
%
 
14.27

 
None
Bergen Plaza
 
Oakdale
 
MN
 
257,952

 
04/98
 
1978
 
91
%
 
6.27

 
K-Mart, Rainbow, Dollar Tree
Bohl Farm Marketplace
 
Crystal Lake
 
IL
 
97,287

 
12/00
 
2000
 
99
%
 
13.96

 
Dress Barn, Barnes & Noble, Buy Buy Baby
Burnsville Crossing
 
Burnsville
 
MN
 
97,210

 
09/99
 
1989/2010
 
99
%
 
9.89

 
PetSmart, Becker Furniture World
Chatham Ridge
 
Chicago
 
IL
 
175,991

 
02/00
 
1999
 
88
%
 
21.46

 
Food 4 Less, Marshall's, Anna's Linens
Chestnut Court
 
Darien
 
IL
 
172,918

 
03/98
 
1987/2009
 
95% (4)

 
11.53

 
Office Depot (4), X-Sport Fitness, Tuesday Morning, Jo-Ann Stores, Oakridge Hobbies & Toys, Ross Dress for Less
Goldenrod Marketplace
 
Orlando
 
FL
 
91,497

 
12/13
 
2013
 
86
%
 
26.39

 
LA Fitness, Marshall's
Greentree Centre & Outlot
 
Racine
 
WI
 
169,268

 
02/05
 
1990/1993
 
94
%
 
8.18

 
Pick 'N Save, K - Mart
Hawthorn Village Commons
 
Vernon Hills
 
IL
 
98,806

 
08/96
 
1979
 
96
%
 
15.66

 
Dollar Tree, Hobby Lobby
Lake Park
 
Michigan City
 
IN
 
114,867

 
02/98
 
1990
 
87
%
 
5.15

 
Jo-Ann Stores, Hobby Lobby, Party City
Lansing Square
 
Lansing
 
IL
 
92,881

 
12/96
 
1991
 
18
%
 
17.41

 
None
Marketplace at Six Corners
 
Chicago
 
IL
 
116,975

 
11/98
 
1997
 
95
%
 
16.41

 
Jewel Food Stores, Marshall's
Orchard Crossing
 
Ft. Wayne
 
IN
 
130,131

 
04/07
 
2008
 
83
%
 
14.75

 
Gordmans, Dollar Tree
Park Avenue Centre
 
Highland Park
 
IL
 
64,943

 
06/97
 
1996/2005
 
100
%
 
12.10

 
Staples, TREK Bicycle Store, Illinois Bone and Joint
Park Center
 
Tinley Park
 
IL
 
132,288

 
12/98
 
1988
 
85
%
 
14.67

 
Charter Fitness, Chuck E. Cheese, Old Country Buffet, Sears Outlet
Park St. Claire
 
Schaumburg
 
IL
 
83,259

 
05/97 12/96
 
1994/1996
 
100% (4)

 
18.30

 
Dominick's Finer Foods (4)
Shingle Creek Center
 
Brooklyn Center
 
MN
 
39,146

 
09/99
 
1986
 
79
%
 
10.73

 
None
Shops at Orchard Place
 
Skokie
 
IL
 
159,091

 
12/02
 
2000
 
73
%
 
27.69

 
DSW Shoe Warehouse, Ulta, Pier 1 Imports, Petco, Walter E Smithe, Party City
Skokie Fashion Square
 
Skokie
 
IL
 
84,857

 
12/97
 
1984/2010
 
96
%
 
13.23

 
Ross Dress for Less, Produce World
Skokie Fashion Square II
 
Skokie
 
IL
 
7,151

 
11/04
 
1984/2010
 
100
%
 
42.94

 
None
Thatcher Woods Center
 
River Grove
 
IL
 
187,710

 
04/02
 
1969/1999
 
98% (4)

 
11.62

 
Walgreens, CW Price, Hanging Garden Banquet, Binny's Beverage Depot, Sears Outlet, Dominick's Finer Foods (4)
The Plaza
 
Brookfield
 
WI
 
107,952

 
02/99
 
1985
 
94
%
 
14.62

 
CVS, Guitar Center, Hooters
Two Rivers Plaza
 
Bolingbrook
 
IL
 
57,900

 
10/98
 
1994
 
100
%
 
12.02

 
Marshall's, Pier 1 Imports
University Center (f/k/a Bally Total Fitness)
 
St. Paul
 
MN
 
43,000

 
09/99
 
1998
 
85
%
 
9.87

 
High School for the Recording Arts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Power Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Baytowne Shoppes/Square
 
Champaign
 
IL
 
118,305

 
02/99
 
1993
 
99% (4)

 
13.11

 
Staples, PetSmart, Party City, Citi Trends, Ulta
Bradley Commons
 
Bourbonnais
 
IL
 
174,348

 
11/11
 
2007/2011
 
97
%
 
13.82

 
Shoe Carnival, Ulta, Bed, Bath & Beyond, Dick's Sporting Goods, Petco
Crystal Point
 
Crystal Lake
 
IL
 
357,914

 
07/04
 
1976/1998/ 2012
 
97
%
 
9.89

 
Best Buy, K-Mart, Bed, Bath & Beyond, The Sports Authority, World Market, Ross Dress for Less, The Fresh Market
Deertrace Kohler
 
Kohler
 
WI
 
149,924

 
07/02
 
2000
 
98
%
 
10.38

 
The Boston Store, TJ Maxx, Dollar Tree, Ulta, Jo-Ann Stores
Deertrace Kohler II
 
Kohler
 
WI
 
24,292

 
08/04
 
2003/2004
 
100
%
 
17.79

 
None
Joliet Commons
 
Joliet
 
IL
 
158,853

 
10/98
 
1995
 
100
%
 
13.94

 
Movies 10, PetSmart, Barnes & Noble, Old Navy, Party City, Jo-Ann Stores, BC Osaka Hibachi Grill
Joliet Commons Phase II
 
Joliet
 
IL
 
40,395

 
02/00
 
1999
 
100
%
 
13.54

 
Office Max
Mankato Heights Plaza
 
Mankato
 
MN
 
155,173

 
04/03
 
2002
 
93% (4)

 
13.60

 
TJ Maxx, Michael's, Old Navy, Pier 1 Imports, Petco
Maple Park Place
 
Bolingbrook
 
IL
 
210,746

 
01/97
 
1992/2004
 
98% (4)

 
12.20

 
X-Sport Fitness, Office Depot (4), The Sports Authority, Best Buy, Ross Dress for Less
Orland Park Place
 
Orland Park
 
IL
 
592,495

 
04/05
 
1980/1999
 
95
%
 
12.03

 
K & G Superstore, Old Navy, Stein Mart, Tiger Direct, Barnes & Noble, DSW Shoe Warehouse, Bed, Bath & Beyond, Binny's Beverage Depot, Nordstrom Rack, Dick's Sporting Goods, Marshall's, Buy Buy Baby, HH Gregg, Ross Dress for Less
Orland Park Place Outlots
 
Orland Park
 
IL
 
11,900

 
08/07
 
2007
 
0
%
 
0.00

 
None
Orland Park Place Outlots II
 
Orland Park
 
IL
 
22,966

 
04/12
 
2007
 
91
%
 
31.43

 
None
Park Place Plaza
 
St. Louis Park
 
MN
 
88,999

 
09/99
 
1997/2006
 
100
%
 
17.39

 
Office Max, PetSmart
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19


Property
 
City
 
State
 
Gross
Leasable
Area
(Sq Ft)
 
Date
Acq.
 
Year Built/
Renovated
 
Financial
Occupancy
(1)
 
Average Rent Per Square Foot (2)
 
Anchor Tenants (3)
Power Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pine Tree Plaza
 
Janesville
 
WI
 
186,523

 
10/99
 
1998
 
90
%
 
11.03

 
Gander Mtn., TJ Maxx, Staples, Michaels, Old Navy, Petco
Randall Square
 
Geneva
 
IL
 
216,678

 
05/99
 
1999
 
92
%
 
14.16

 
Marshall's, Bed, Bath & Beyond, PetSmart, Michael's, Party City, Old Navy
Rivertree Court
 
Vernon Hills
 
IL
 
308,635

 
07/97
 
1988/2011
 
96
%
 
13.14

 
Best Buy, Discovery Clothing, TJ Maxx, Michaels, Harlem Furniture, Gordmans, Old Navy, Pier 1 Imports, Ross Dress for Less
Rochester Marketplace
 
Rochester
 
MN
 
70,213

 
09/03
 
2001/2003
 
100
%
 
15.40

 
Staples, PetSmart
Salem Square
 
Countryside
 
IL
 
116,992

 
08/96
 
1973/1985/ 2009
 
100
%
 
8.79

 
TJ Maxx/Home Goods, Marshall's
Schaumburg Promenade
 
Schaumburg
 
IL
 
91,831

 
12/99
 
1999
 
100
%
 
13.38

 
Ashley Furniture, DSW Shoe Warehouse, Destination XL
Shakopee Outlot
 
Shakopee
 
MN
 
12,285

 
03/06
 
2007
 
85
%
 
18.97

 
None
Shakopee Valley Marketplace
 
Shakopee
 
MN
 
146,362

 
12/02
 
2000/2001
 
99
%
 
9.88

 
Kohl's, Office Max
Shoppes at Grayhawk
 
Omaha
 
NE
 
81,000

 
02/06
 
2001/2004
 
80% (4)

 
25.25

 
Michael's, Lowe's (6)
University Crossings
 
Granger
 
IN
 
111,651

 
10/03
 
2003
 
94
%
 
13.70

 
Marshall's, Petco, Dollar Tree, Pier 1 Imports, Ross Medical Education Center, Babies R Us (6)
Valparaiso Walk
 
Valparaiso
 
IN
 
137,500

 
12/12
 
2005
 
100
%
 
13.77

 
Best Buy, Michael's, Marshall's, Bed, Bath & Beyond
Warsaw Commons
 
Warsaw
 
IN
 
87,826

 
04/13
 
2012
 
96
%
 
13.02

 
Dollar Tree, TJ Maxx, PetSmart, Ulta
Woodfield Commons E/W
 
Schaumburg
 
IL
 
207,452

 
10/98
 
1973/1975/ 1997/2007/ 2012
 
92
%
 
18.61

 
Toys R Us, Discovery Clothing, REI, Hobby Lobby, Ross Dress for Less
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lifestyle Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Algonquin Commons
 
Algonquin
 
IL
 
563,704

 
02/06
 
2004/2005
 
93% (4)

 
13.78

 
PetSmart, Office Max, Pottery Barn, Old Navy, DSW Shoe Warehouse, Discovery Clothing, Dick's Sporting Goods, Trader Joe's, Ulta, Charming Charlie, Ross Dress for Less, Gordmans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
10,846,413

 
 
 
 
 
92
%
 
13.62

 
 

As of December 31, 2013, we owned fee simple interests in 29 investment properties through our unconsolidated joint ventures and we owned DST interests in the 23 properties owned through our IPCC joint venture. Total properties are comprised of 23 single-user retail properties, 13 Neighborhood Retail Centers, 6 Community Centers, and 10 Power Centers.  These investment properties are located in the states of Alabama (4), Arkansas (1), Georgia (2), Illinois (10), Kentucky (1), Minnesota (10), Missouri (1), Ohio (15), Texas (1) and Wisconsin (7).  Most tenants of the investment properties are responsible for the payment of some or all of the real estate taxes, insurance and common area maintenance. 
Property
 
City
 
State
 
Gross
Leasable
Area
(Sq Ft)
 
Date
Acq.
 
Year Built/
Renovated
 
Financial
Occupancy
(1)
 
Average Rent Per Square Foot (2)
 
Anchor Tenants (3)
Single User (IPCC Joint Venture)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7-Eleven
 
Akron
 
OH
 
2,477

 
11/13
 
1997
 
100
%
 
$
92.70

 
None
7-Eleven
 
Brunswick
 
OH
 
2,480

 
11/13
 
1999
 
100
%
 
57.24

 
None
7-Eleven
 
Chagrin Falls
 
OH
 
1,800

 
11/13
 
1994
 
100
%
 
125.30

 
None
7-Eleven
 
Cleveland
 
OH
 
2,700

 
11/13
 
1995
 
100
%
 
30.46

 
None
7-Eleven
 
Mentor
 
OH
 
1,176

 
11/13
 
1994
 
100
%
 
153.17

 
None
7-Eleven
 
Painesville
 
OH
 
1,100

 
11/13
 
1994
 
100
%
 
94.53

 
None
7-Eleven
 
Stow
 
OH
 
2,700

 
11/13
 
1994
 
100
%
 
45.46

 
None
7-Eleven
 
Streetsboro
 
OH
 
1,800

 
11/13
 
1995
 
100
%
 
49.51

 
None
7-Eleven
 
Strongsville
 
OH
 
2,700

 
11/13
 
1995
 
100
%
 
76.43

 
None
7-Eleven
 
Twinsburg
 
OH
 
2,480

 
11/13
 
1998
 
100
%
 
36.90

 
None
7-Eleven
 
Willoughby
 
OH
 
4,200

 
11/13
 
2002
 
100
%
 
34.53

 
None
7-Eleven
 
Willoughby Hills
 
OH
 
4,200

 
11/13
 
2001
 
100
%
 
29.06

 
None
Dollar General
 
Fortson
 
GA
 
9,100

 
09/13
 
2013
 
100
%
 
9.75

 
None
Dollar General
 
Gale
 
WI
 
9,026

 
09/13
 
2013
 
100
%
 
8.22

 
None
Dollar General
 
LaGrange
 
GA
 
9,100

 
09/13
 
2013
 
100
%
 
9.52

 
None
Dollar General
 
Lafeyette
 
WI
 
9,026

 
09/13
 
2013
 
100
%
 
8.21

 
None
Dollar General
 
Midland City
 
AL
 
12,382

 
09/13
 
2013
 
100
%
 
8.51

 
Dollar General
Dollar General
 
Mobile
 
AL
 
9,100

 
09/13
 
2013
 
100
%
 
10.14

 
None
Dollar General
 
Warrior
 
AL
 
9,100

 
09/13
 
2011
 
100
%
 
10.61

 
None
Dollar General
 
Woodville
 
AL
 
9,026

 
09/13
 
2013
 
100
%
 
8.94

 
None
Family Dollar
 
Cameron
 
TX
 
8,320

 
04/13
 
2012
 
100
%
 
9.59

 
None
Family Dollar
 
Charleston
 
MO
 
8,320

 
04/13
 
2012
 
100
%
 
11.31

 
None

20


Property
 
City
 
State
 
Gross
Leasable
Area
(Sq Ft)
 
Date
Acq.
 
Year Built/
Renovated
 
Financial
Occupancy
(1)
 
Average Rent Per Square Foot (2)
 
Anchor Tenants (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Single User (IPCC Joint Venture)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Family Dollar
 
Wausaukee
 
WI
 
8,000

 
04/13
 
2012
 
100
%
 
12.08

 
None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neighborhood Retail Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Byerly's Burnsville
 
Burnsville
 
MN
 
72,339

 
09/99
 
1988
 
98
%
 
11.67

 
Byerly's Food Store, Erik's Bike Shop
Capitol and 124th Shopping Center
 
Wauwatosa
 
WI
 
54,204

 
09/13
 
1998/2012
 
100
%
 
13.79

 
Wal-Mart, Petco
Caton Crossings
 
Plainfield
 
IL
 
83,792

 
06/03
 
1998
 
100
%
 
11.50

 
Tony's Finer Foods
Champlin Marketplace
 
Champlin
 
MN
 
88,577

 
09/11
 
1999/2005
 
96
%
 
12.75

 
Cub Foods
Diffley Marketplace
 
Egan
 
MN
 
71,903

 
10/10
 
2008
 
86
%
 
15.01

 
Cub Foods
Elston Plaza
 
Chicago
 
IL
 
87,946

 
12/11
 
1983/2010
 
100
%
 
14.88

 
Jewel Food Stores, O'Reilly Auto Parts
Mallard Crossing Shopping Center
 
Elk Grove Village
 
IL
 
82,929

 
05/97
 
1993
 
92
%
 
8.46

 
Food 4 Less
Pilgrim Village
 
Menomonee Falls
 
WI
 
31,331

 
09/13
 
1984/2012
 
85
%
 
22.15

 
Wal-Mart (6), Friends of Nature
Red Top Plaza
 
Libertyville
 
IL
 
151,840

 
06/11
 
1981/2008
 
96
%
 
13.60

 
Jewel Food Stores
Shannon Square Shoppes
 
Arden Hills
 
MN
 
97,638

 
03/04 06/04
 
2003
 
88
%
 
15.68

 
Cub Foods
Shops of Plymouth Town Center
 
Plymouth
 
MN
 
84,003

 
03/99
 
1991
 
100
%
 
10.73

 
The Foursome, Inc., Cub Foods
Stuart's Crossing
 
St. Charles
 
IL
 
85,529

 
08/98
 
1999
 
98
%
 
13.89

 
Jewel Food Stores
Timmerman Plaza
 
Milwaukee
 
WI
 
40,343

 
09/13
 
1965/2013
 
80
%
 
13.76

 
Dollar Tree
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Community Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brownstones Shopping Center
 
Brookfield
 
WI
 
137,816

 
11/11
 
1989/2009
 
95
%
 
14.61

 
Metro Market, TJ Maxx
Cedar Center South
 
University Heights
 
OH
 
136,080

 
10/13
 
1950/2006
 
83
%
 
20.93

 
Tuesday Morning, Whole Foods Market, CVS, Dollar Tree
Four Flaggs
 
Niles
 
IL
 
325,972

 
11/02
 
1973/1998/ 2010
 
98
%
 
10.22

 
Fresh Farms, Party City, Marshall's, PetSmart, Office Depot, Old Navy, Global Clinic, Ashley Furniture, Sears Outlet, Jo-Ann Stores, Shoe Carnival
Village Ten Shopping Center
 
Coon Rapids
 
MN
 
211,472

 
08/03
 
2002
 
98
%
 
7.43

 
Dollar Tree, Life Time Fitness, Cub Foods
Woodbury Commons
 
Woodbury
 
MN
 
116,196

 
02/12
 
1992/2004/ 2012
 
100
%
 
9.44

 
Hancock Fabrics, Schuler Shoes, Dollar Tree, Becker Furniture World
Woodland Commons
 
Buffalo Grove
 
IL
 
170,122

 
02/99
 
1991
 
99
%
 
13.09

 
Dominick's Finer Foods, Jewish Community Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Power Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fort Smith Pavilion
 
Fort Smith
 
AR
 
275,414

 
12/13
 
2009/2011
 
96
%
 
13.89

 
Dick's Sporting Goods, Best Buy, Michael's, Books-A-Million, Old Navy, Shoe Carnival, Ulta, Bed Bath & Beyond, Petco
Joffco Square
 
Chicago
 
IL
 
95,204

 
01/11
 
2008
 
100
%
 
23.38

 
Bed, Bath & Beyond, Best Buy, Jo-Ann Stores
Point at Clark
 
Chicago
 
IL
 
95,455

 
06/10
 
1996
 
95
%
 
28.06

 
DSW Shoe Warehouse, Marshall's, Michael's
Quarry Retail
 
Minneapolis
 
MN
 
281,472

 
09/99
 
1997
 
100
%
 
12.82

 
Home Depot, Rainbow, PetSmart, Office Max, Party City, Michael's
Riverdale Commons
 
Coon Rapids
 
MN
 
231,753

 
09/99
 
1999
 
99
%
 
13.70

 
Rainbow, The Sports Authority, Office Max, Petco, Party City, Home Goods, Michael's
Silver Lake Village
 
St. Anthony
 
MN
 
159,316

 
02/12
 
1996/2005
 
94
%
 
17.29

 
North Memorial Healthcare, Cub Foods, Wal-Mart (6)
Stone Creek Towne Center
 
Cincinnati
 
OH
 
142,824

 
02/12
 
2008
 
98
%
 
22.26

 
Bed, Bath & Beyond, Best Buy, Old Navy
Turfway Commons
 
Florence
 
KY
 
105,471

 
12/11
 
1993/2007
 
96
%
 
12.40

 
Babies 'R' Us, Half Price Books, Guitar Center, Michael's
Westgate
 
Fairview Park
 
OH
 
241,838

 
03/12
 
2007/2011
 
89
%
 
18.83

 
Books-A-Million, Lowe's (6), Petco, Marshall's, Kohl's (6), Earth Fare
Woodfield Plaza
 
Schaumburg
 
IL
 
177,160

 
01/98
 
1992
 
96
%
 
13.01

 
Kohl's, Barnes & Noble, Buy Buy Baby, Joseph A. Banks Clothiers (sublet to David's Bridal), Tuesday Morning
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total