SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K


[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For The Fiscal Year Ended December 31, 2000

or

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 333-64391
Inland Retail Real Estate Trust, Inc.
(Exact name of registrant as specified in its charter)

Maryland	36-4246655
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

2901 Butterfield Road,	Oak Brook, Illinois 60523
(Address of principal executive office)	(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:
None	None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class:	Name of each exchange on which registered:
None	None

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  X  No     

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. [X]

As of February 27, 2001, the aggregate market value of the shares of common stock held by non-affiliates of the registrant was approximately $138,376,771 (based on the price for which each share was sold).

As of February 27, 2001, there were 14,276,362 shares of common stock outstanding.

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INLAND RETAIL REAL ESTATE TRUST, INC.
(A Maryland corporation)

TABLE OF CONTENTS

	Part I	Page
Item 1.	Business	3
Item 2.	Properties	8
Item 3.	Legal Proceedings	10
Item 4.	Submission of Matters to a Vote of Security Holders	10
	Part II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	11
Item 6.	Selected Financial Data	15
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7(a)	Quantitative and Qualitative Disclosures About Market Risk	22
Item 8.	Consolidated Financial Statements and Supplementary Data	23
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
	Part III
Item 10.	Directors and Executive Officers of the Registrant	46
Item 11.	Executive Compensation	49
Item 12.	Security Ownership of Certain Beneficial Owners and Management	50
Item 13.	Certain Relationships and Related Transactions	51
	Part IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	52
	SIGNATURES	54

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PART I

Item 1. Business

General

Inland Retail Real Estate Trust, Inc. (the "Company") was formed as a Maryland corporation on September 3, 1998.

On February 11, 1999, the Company commenced a public offering on a best efforts basis of up to 50,000,000 shares of common stock (the "Shares") at $10.00 per Share, subject to discounts in certain cases, and up to 4,000,000 Shares at $9.50 per Share pursuant to the Company's Distribution Reinvestment Program ("DRP"), pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933, as amended. As of May 3, 1999, the Company had received and accepted subscriptions for the minimum offering of 200,000 Shares or $2,000,000. As of December 31, 2000, the Company had sold 12,680,875 Shares to the public resulting in gross proceeds of $126,076,986 and additional 253,680 Shares pursuant to the DRP for $2,409,958of additional gross proceeds. As of December 31, 2000, the Company has repurchased 58,785 common Shares for $532,001. In addition, Inland Retail Real Estate Advisory Services, Inc. (the "Advisor") purchased 20,000 Shares for $200,000 preceding the commencement of the offering.

The Registration Statement also includes the Soliciting Dealer Warrants that the Company will offer to sell to the Dealer Manager of the offering, at the rate of one Soliciting Dealer Warrant (for a price of $.0008 per Warrant) for each 25 Shares sold during the offering, up to a maximum of 2,000,000 Soliciting Dealer Warrants. Each Warrant will entitle the holder to purchase one Share from the Company at a price of $12.00 per Share. As of December 31, 2000, the Company sold the Dealer Manager 506,713 Soliciting Dealer Warrants for a total of $405.

On February 1, 2001, the Operating Partnership commenced a follow-on offering on a best effort basis of up to 50,000,000 additional Shares. This follow-on offering will expire on February 1, 2002, unless extended by the Company to a date no later than February 1, 2003.

Description of Business

General

The Company was organized to acquire and manage a diversified portfolio of real estate, primarily multi-tenant shopping centers. It is anticipated that the Company will initially focus on acquiring properties in the southeastern states, primarily Florida, Georgia, North Carolina and South Carolina. The Company may also acquire single-user retail properties in locations throughout the United States, certain of which may be sale and leaseback transactions, net leased to creditworthy tenants. The Advisor has been retained to manage, for a fee, the Company's day-to-day affairs, subject to the supervision of the Company's Board of Directors.

The Company is the general partner of Inland Retail Real Estate Limited Partnership, an Illinois limited partnership (the "Operating Partnership"), organized for the purpose of acquiring, developing, owning, operating, improving, leasing, and otherwise managing for investment purposes, income producing commercial properties on behalf of the Company.

As of December 31, 2000, the Operating Partnership owned a portfolio of twelve properties and a vacant land parcel. Each of the properties is a shopping center, located in Florida or Georgia and containing an aggregate of approximately 2,073,068 square feet of gross leasable area ("GLA"). As of December 31, 2000, approximately 99% of GLA in the properties was leased. The vacant land parcel is approximately 2.72 acres on which the Company intends to construct a 16,130 square foot shopping center in 2001.

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The Company's headquarters are located at 2901 Butterfield Road, Oak Brook, Illinois 60523 and its telephone number is (630) 218-8000.

Acquisition Strategies

The Company intends, through entities owned or controlled directly or indirectly by the Company, to acquire and manage real estate primarily (i) improved for use as retail establishments, principally multi-tenant shopping centers, with GLA ranging from 10,000 to 300,000 square feet, but also including single-user retail facilities; or (ii) improved with other commercial facilities which provide goods or services (all of the foregoing, collectively "Retail Centers" or individually a "Retail Center").

The Retail Centers will be located mainly in the states east of the Mississippi River (the Company's "Primary Geographical Area of Investment"), but initially will be focused in the southeastern states, primarily Florida, Georgia, North Carolina and South Carolina. The Company may also, through entities owned or controlled directly or indirectly by the Company, acquire, among other real estate, single-user commercial properties located anywhere throughout the United States if they are leased on a basis pursuant to which a creditworthy tenant is responsible for the base rent and all costs and expenses in connection with and related to property taxes, insurance, repairs and maintenance applicable to the leased space (a "Triple-Net Lease Basis"), including such properties acquired in sale and leaseback transactions ("Triple-Net Single User Retail Properties Outside the Primary Geographical Area of Investment"). The Retail Centers in the Primary Geographical Area of Investment and the Triple-Net Single-User Retail Properties Outside the Primary Geographical Area of Investment are collectively referred to as the Company's "Primary Property Investments."

Each real property and improvements thereon acquired, or considered or proposed to be acquired, by the Company, directly or indirectly, is referred to as a "Property" and all of such properties are collectively referred to as the "Properties."

Key elements of the Company's acquisition strategy include:

• Selectively acquiring diversified types and well-located Properties of the type described as the Company's Primary Property Investments.

• Acquiring Properties usually on an all-cash basis to provide the Company with a competitive advantage over potential purchasers who must secure financing. The Company may, however, acquire Properties subject to existing indebtedness if it believes this is in its best interest. The Company intends to acquire mortgage financing concurrently or subsequent to the purchase.

• Diversifying geographically within the Primary Geographical Area of Investment by acquiring Properties primarily located in major consolidated metropolitan statistical areas in order to minimize the potential adverse impact of economic downturns in certain markets.

• Use the Company's UPREIT structure to acquire Properties for cash, Shares, limited partnership interests ("LP Common Units") of the Operating Partnership, preferred limited partnership interests of the Operating Partnership ("LP Preferred Units") (LP Common Units and LP Preferred Units are collectively referred to as "LP Units"), equity interests ("Interests") in a Property Partnership (as defined below), or a combination thereof, thereby deferring some or all of a seller's potential taxable gain, and enhancing the ability of the Company to consummate transactions and to structure more competitive acquisitions than competitors that may lack the Company's ability to acquire Properties for cash, Shares, LP Units, Interests, or a combination thereof. A "Property Partnership" (collectively the "Property Partnerships") may be an entity such as a limited liability company, a general or limited partnership, or a trust, that owns one or more of the Properties, and which will be owned or controlled directly or indirectly by the Operating Partnership.

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Operating Strategies

Key elements of the Company's operating strategy include:

• Actively managing costs and minimizing operating expenses by centralizing all management, leasing, marketing, financing, accounting, renovation and data processing activities.

• Improving rental income and cash flow by aggressively marketing rentable space.

• Emphasizing regular maintenance and periodic renovation to meet the needs of tenants and to maximize long-term returns.

• Maintaining a diversified tenant base at its Retail Centers, consisting primarily of retail tenants providing consumer goods and services.

• In general, limiting mortgage indebtedness to an aggregate amount not to exceed 55% of the combined fair market value of all of its Properties, and aggregate borrowings to 300% of the Company's net assets (which is defined to mean generally the Company's total assets (other than intangibles) at cost, before deducting depreciation and other non-cash reserves, less total liabilities, calculated at least quarterly). The proceeds from any such borrowings will be used primarily to allow the Company to acquire additional Properties. See "Financing Strategy." The anticipated amount of leverage will be achieved over time; however, initially the aggregate borrowing on the Properties will exceed 55% of their combined fair market value.

Investment Objectives

The Company's investment objectives are to: (i) make regular distributions to its stockholders; (ii) provide a hedge against inflation by entering into leases which contain clauses for scheduled rent escalations or participation in the growth of tenant sales, permitting the Company to increase distributions and realize capital appreciation; and (iii) preserve stockholders' capital. It is the Company's policy to acquire Properties primarily for income as distinguished from primarily for possible capital gain. There can be no assurance that these investment objectives will be met.

Financing Strategy

Generally, the Company intends to acquire Properties free and clear of permanent mortgage indebtedness by paying the entire purchase price of each Property in cash or for Shares, LP Units, Interests, or a combination of the foregoing. However, if it is determined to be in the best interest of the Company, the Company will, in certain instances, incur indebtedness to acquire Properties. With respect to Properties purchased on an all-cash basis (or for Shares, LP Units, Interests, or a combination thereof), the Company may later incur mortgage indebtedness by obtaining loans secured by selected Properties, if favorable financing terms are available. The proceeds from such loans would be used to acquire additional Properties. The Company may also incur indebtedness to finance improvements to its Properties. The Company anticipates that, in general, aggregate borrowings secured by all of the Company's Properties will not exceed 55% of their combined fair market value. The Company's Articles of Incorporation provide that the aggregate amount of borrowing in relation to the Company's Net Assets shall, in the absence of a satisfactory showing that a higher level of borrowing is appropriate, not exceed 300% of Net Assets. Any excess in borrowing over such 300% of Net Assets level shall be (i) approved by a majority of the Company's Independent Directors, (ii) disclosed to stockholders in the Company's next quarterly report to stockholders, along with justification for such excess, and (iii) subject to approval of the stockholders.

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Developments During the 2000 Fiscal Year

During 2000, the Company invested approximately $63,790,198 for the acquisition of three shopping centers purchased containing a total GLA of approximately 632,586 square feet. See Item 2 for a more detailed description of these properties. In December 2000 the Company also funded a second mortgage receivable for $1,100,000 and purchased a vacant land parcel for $957,802 that the Company intends to develop.

Tax Status

The Company is qualified and has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the "Code"). So long as the Company qualifies for taxation as a REIT, the Company generally will not be subject to Federal income tax to the extent it distributes at least 95% of its REIT taxable income to its shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property and to Federal income and excise taxes on its undistributed income.

Competition

In seeking new investment opportunities, the Company competes with other real estate investors, including pension funds, insurance companies, foreign investors, real estate partnerships, other real estate investment trusts, private individuals and other domestic real estate companies, many of which have greater financial and other resources than the Company. With respect to Properties presently owned or to be owned by the Company, the Company competes with other owners of like properties for tenants. There can be no assurance that the Company will be able to successfully compete with such entities in its development, acquisition and leasing activities in the future.

Business Risks

All real property investments are subject to some degree of risk. The Company is subject to risks existing due to a concentration of any single tenant within the portfolio. Currently, the largest tenant is Wal-Mart, which has one lease totaling 204,170 square feet, or approximately 10% of the total GLA owned by the Company. Annualized base rental income of this lease is projected to be $1,104,559 for the year ended December 31, 2001, or approximately 7% of the total annualized base income based on the Company's portfolio of Properties as of December 31, 2000.

Winn-Dixie, the second largest tenant, is an anchor tenant in three of the properties owned by the Company, whose gross rental income from its three stores in the Company's properties represents 7% of the Company's total gross rental income from all of its properties as of December 31, 2001, has undergone a restructuring, and its credit rating has recently been down graded. The Company has been assured by management of Winn-Dixie that the stores located in the Company's specific properties are not closing as part of the restructuring.

The loss of these tenants or any other major tenant of the Company or their inability to pay rent could have an adverse effect on the Company's business.

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Sports Authority, a tenant in one of the Company's properties has also undergone a restructuring, closing some of its unprofitable stores. However, it is the Company's understanding that there are no current plans to close the store which occupies space in the Company's property. Store closings do not relieve tenants of their obligations under existing leases.

Two tenants, Service Merchandise and Carmike Cinema each occupy one space in Company properties and have recently filed for bankruptcy protection under federal law. These tenants have the right under bankruptcy laws to terminate their leases with us, but these tenants have neither assumed nor rejected their leases with the Company. The Service Merchandise store is based on a smaller, newer format which Service Merchandise has indicated it intends to continue to operate and has been paying rent on a current basis. At closing, a master lease was established with the Seller escrowing funds to assure rent and reimbursements for two years, as well as payment of estimated tenant improvements and leasing commissions. The Company's Carmike Cinema space has no other local competition. Representatives of Carmike have approached the Company to discuss a possible reduction in rental rates, however there is no current indication that they intend to cease operating at this location.

Hit or Miss, a women's discount clothing store had signed a lease for 8,000 square feet at one of the Company's properties. However, prior to occupancy and paying rent, Hit or Miss filed for bankruptcy protection and rejected the lease. The Company is actively pursuing other tenants for this space.

Employees

As of December 31, 2000 and 1999, the Company had one direct employee. The Company's employees are not covered by a collective bargaining agreement and the Company considers its employee relations to be satisfactory.

Financial Information About Industry Segments

The Company is in the business of owning, managing, operating, leasing, acquiring, developing, investing in and disposing of shopping centers and free- standing properties. The Company internally evaluates each property individually as a segment.

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Item 2. Properties

As of December 31, 2000, the Company, through separate limited partnerships or limited liability companies, has acquired fee ownership of twelve shopping centers containing an aggregate of approximately 2,073,004 gross leasable square feet located in Florida and Georgia.

	Gross Leasable Area	Date	Year Built/	Amount of Mortgages Payable at	No. of Tenants as of	Major
Property	(Sq Ft)	Acq.	Renovated	12/31/00	12/31/00	Tenants*
Shopping Centers
Lake Walden Square
Plant City, FL	262,451	05/99	1992	9,941,942	31	Kash N' Karry Foods
						K-Mart
						Carmike Cinemas
Merchants Square
Zephyrhills, FL	74,849	06/99	1993	3,167,437	13	Kash N' Karry Foods
						Fashion Bug
Town Center Commons
Kennesaw, GA	72,108	07/99	1998	4,750,000	10	JC Penney Home Store
						Baptist Book Store
Boynton Commons
Boynton Beach, FL	210,552	07/99	1998	15,125,000	18	Sports Authority
						Bed, Bath & Beyond
						Barnes & Noble
						Petsmart
Lake Olympia Square
Ocoee, FL	85,776	09/99	1995	5,772,532	18	Winn-Dixie
						Tutor Time Child Care   Systems
Bridgewater Marketplace
Orlando, FL	58,050	09/99	1998	2,987,500	11	Winn-Dixie
Bartow Marketplace
Cartersville, GA	375,067	09/99	1995	13,475,000	17	Wal-Mart
						Lowe's Home Center

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	Gross Leasable Area	Date	Year Built/	Amount of Mortgages Payable at	No. of Tenants as of	Major
Property	(Sq Ft)	Acq.	Renovated	12/31/00	12/31/00	Tenants*
Countryside Shopping Center
Naples, FL	73,965	10/99	1997	6,720,000	6	Winn-Dixie
						Promedco of Southwest   Florida
Casselberry Commons
Casselberry, FL	227,664	12/99	1973/	8,703,000	36	Ross Stores
			1998			Publix
Conway Plaza
Orlando, FL	119,123	02/00	1966/	5,000,000	21	Beall's
			1981/			Publix
			1999
Pleasant Hill Square
Duluth, GA	282,137	05/00	2000	17,120,000	20	JC Penney
						Toys R Us
						JoAnn Fabrics
Gateway Market Center
St. Petersburg, FL	231,326	07/00	1999/	15,637,500	15	Beall's
			2000			Publix
						TJ Maxx
						Office Depot
						Home Place of America
Development Project
Acworth
Acworth, GA	-	12/00	-	-	-
	2,073,068			108,399,911 1

* Major tenants include tenants leasing more than 10% of the gross leasable area of a property.

See Schedule III on page 41 for initial property costs.

The majority of the income from the Properties consists of rent received under long-term leases. Most of the leases provide for the payment of fixed minimum rent monthly in advance and for the payment by tenants of a pro rata share of the real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees and certain building repairs of the shopping center. Certain of the major tenant leases provide that the landlord is obligated to pay certain of these expenses above or below specific levels. Some of the leases also provide for the payment of percentage rent calculated as a percentage of a tenant's gross sales above predetermined thresholds.

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The following table lists the approximate physical occupancy levels for the Company's investment properties as of the end of each quarter during 2000 and 1999. N/A indicates the property was not owned by the Company at the end of the quarter.

	2000				1999
Properties:	at 03/31  (%)	at 06/30  (%)	at 09/30  (%)	at 12/31  (%)	at 03/31  (%)	at 06/30  (%)	at 09/30  (%)	at 12/31  (%)
Lake Walden Square   Plant City, FL	94	84	95	95	N/A	93	93	94
Merchants Square   Zephyrhills, FL	100	100	100	100	N/A	100	100	100
Town Center Commons   Kennesaw, GA	93*	93*	93*	93	N/A	N/A	100	100
Boynton Commons   Boynton Beach, FL	97*	96*	96*	96*	N/A	N/A	95*	95*
Lake Olympia Square   Ocoee, FL	100	85	85	85	N/A	N/A	96	100
Bridgewater Marketplace   Orlando, FL	97*	98*	98*	98	N/A	N/A	97*	92*
Bartow Marketplace   Cartersville, GA	100	100	100	100	N/A	N/A	100	100
Countryside   Naples, Fl	98	98	97	97	N/A	N/A	N/A	98
Casselberry Commons   Casselberry, FL	97*	95*	95*	95*	N/A	N/A	N/A	97*
Conway Plaza   Orlando, Fl	97*	97*	97*	97*	N/A	N/A	N/A	N/A
Pleasant Hill   Duluth, GA	N/A	92*	94*	94*	N/A	N/A	N/A	N/A
Gateway Marketplace   St. Petersburg, Fl	N/A	N/A	98	98	N/A	N/A	N/A	N/A

* As part of the purchase of some of these Properties, the Company receives payments under master lease agreements on some of the space which was vacant at the time of the purchase, which results in economic occupancy ranging from 95% to 100% at December 31, 2000 and 1999 for each of these shopping centers. The master lease agreements are for periods ranging from one to two years from the purchase date or until the spaces are leased. The percentages in the above table do not include unleased space covered by master lease agreements.

Item 3. Legal Proceedings

The Company is not subject to any material pending legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of 2000.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Market Information

There is no established public trading market for the Company's shares of common stock ("Shares").

On February 1, 2001, the Company commenced a follow-on offering on a best effort basis of up to 50,000,000 additional Shares. This follow-on offering will expire on February 1, 2002, unless extended by the Company to a date no later than February 1, 2003.

The Company will provide the following programs to facilitate investment in the Shares and to provide limited liquidity for stockholders until such time as a market for the Shares develops:

The Distribution Reinvestment Program ("DRP") will, subject to certain Share ownership restrictions, allow stockholders who purchase Shares pursuant to the Company's initial public offering (the "Offering") to automatically reinvest distributions by purchasing additional Shares from the Company. Such purchases under the DRP will not be subject to selling commissions or the marketing contribution and due diligence expense allowance and, initially will be made at a price of $9.50 per Share. That price will continue to be used until the public offering price per Share in the Offering is increased from $10 per Share (if it is ever increased) or until the termination of the Offering, whichever first occurs. Thereafter, participants may acquire Shares under the DRP at a price equal to 95% of the "market price" of a Share on the date of purchase until such time (if ever) as the Shares are listed on a national stock exchange or included for quotation on a national market system. In the event of such listing or inclusion, Shares purchased by the Company for the DRP will be purchased on such exchange or market at the then prevailing market price, and will be sold to participants at that price.

The Share Repurchase Program ("SRP") may, subject to certain restrictions, provide eligible stockholders with limited, interim liquidity by enabling them to sell Shares back to the Company. The prices at which Shares may be sold back to the Company are as follows:

• During the Offering period (which will end on February 11, 2001) at $9.05 per Share;
• During the 12 months following the end of the Offering period at $9.25 per Share;
• During the next 12 months at $9.50 per Share;
• During the next 12 months at $9.75 per Share; and
• Thereafter, at the greater of: (i) $10 per Share; or (ii) a price equal to 10 times the Company's "funds available for distribution" per weighted average Share outstanding for the prior calendar year.

A stockholder must have beneficially held the Shares for at least one year prior to offering them for sale to the Company through the SRP.

The Company will make repurchases under the SRP, if requested, at least once quarterly on a first-come, first-served basis. Subject to funds being available, the Company will limit the number of Shares repurchased during any calendar year to one half of one percent (0.5%) of the weighted average number of Shares outstanding during the prior calendar year. Funding for the SRP will come exclusively from proceeds the Company receives from the sale of Shares under the DRP and such other operating funds, if any, as the Company's Board of Directors, at its sole discretion, may reserve for this purpose.

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The Company's Board of Directors, at its sole discretion, may choose to terminate the SRP after the end of the Offering period, or reduce the number of Shares purchased under the SRP, if it determines that the funds allocated to the SRP are needed for other purposes, such as the acquisition, maintenance or repair of properties, or for use in making a declared distribution. A determination by the Board of Directors to eliminate or reduce the SRP will require the unanimous affirmative vote of the Independent Directors.

The Company cannot guarantee that the funds set aside for the SRP will be sufficient to accommodate all requests made each year. If no funds are available for the SRP when repurchase is requested, the stockholder may: (i) withdraw the request; or (ii) ask that the Company honor the request at such time, if any, when funds are available. Such pending requests will be honored on a first-come, first-served basis.

There is no requirement that stockholders sell their Shares to the Company. The SRP is only intended to provide interim liquidity for stockholders until a liquidity event occurs, such as the listing of the Shares on a national securities exchange, inclusion of the Shares for quotation on a national market system, or a merger with a listed company. No assurance can be given that any such liquidity event will occur.

Shares purchased by the Company under the SRP will be canceled and will have the status of authorized but unissued Shares. Shares acquired by the Company through the SRP will not be reissued unless they are first registered with the SEC under the Securities Act of 1933, as amended (the "Act") and under appropriate state securities laws or otherwise issued in compliance with such laws.

Stockholders

As of February 28, 2001, there were 3,772 stockholders of record of the Company.

Distributions

The Company has been paying monthly distributions since June 1999. Distributions were initially set at the level of $.70 per Share per annum, effective May 31, 1999, beginning with the distribution paid on June 7, 1999. The distribution level was increased to $.73 per Share per annum, effective July 1, 1999, beginning with the distribution paid on August 7, 1999. The distribution level was increased to $.75 per Share per annum, effective November 1, 1999, beginning with the distribution paid on December 7, 1999. The distribution level was increased to $.76 per Share per annum, effective April 1, 2000, beginning with the distribution paid on May 7, 2000. The distribution level was increased to $.77 per Share per annum, effective August 1, 2000, beginning with the distribution paid on September 7, 2000. The distribution level was increased to $.78 per Share per annum, effective October 1, 2000, beginning with the distribution paid on November 7, 2000. The distribution level was increased to $.80 per Share per annum, effective December 1, 2000, beginning with the distribution paid on January 7, 2001.

The Company declared distributions to stockholders totaling $.77 and $.72 per weighted average number of Shares outstanding during the years ended December 31, 2000 and 1999, respectively. Of these amounts, $.42 and $.16 qualifies as distributions taxable as ordinary income and $.35 and $.56 constitutes a return of capital for federal income tax purposes for the years ended December 31, 2000 and 1999, respectively.

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Use of Proceeds from Registered Securities

The Company has registered pursuant to a registration statement under the Securities Act of 1933 (SEC File Number 333-64391) the offering on a best efforts basis of 50,000,000 Shares at $10.00 per share, subject to discounts in certain cases; up to 4,000,000 Shares at $9.50 per Share pursuant to the Company's DRP; 2,000,000 Soliciting Dealer Warrants at $.0008 per Soliciting Dealer Warrant; and 2,000,000 Shares issuable upon exercise of the Soliciting Dealer Warrants at an exercise price of $12.00 per share (the "Offering"). The Offering commenced on February 11, 1999 and has not terminated. The maximum aggregate Offering price of the securities registered is $562,001,600. Inland Securities Corporation, an affiliate of the Advisor, is the Dealer Manager of the Offering.

As of December 31, 2000, the Company has sold the following securities for the following aggregate offering prices:

*	12,680,875	Shares on a best efforts basis for $126,076,986;
*	253,680	Shares pursuant to the DRP for $2,409,958;
*	506,713	Soliciting Dealer Warrants for $405; and
*	-0-	Shares pursuant to the exercise of Soliciting Dealer Warrants,
		and repurchased the following securities for the following amount:
*	(58,785)	Shares pursuant to the Share Repurchase Program for $532,001
*		For a net total of 12,875,770 Shares for $127,954,943 of gross proceeds as of    December 31, 2000 (not including Soliciting Dealer Warrants).

The above-stated number of Shares sold and the gross offering proceeds received from such sales do not include the 20,000 Shares purchased by the Advisor for $200,000 preceding the commencement of the Offering.

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From the February 11, 1999 effective date of the Offering through December 31, 2000 (the "Cumulative Period"), the following expenses have been incurred for the Company's account in connection with the issuance and distribution of the registered securities:

		E=Estimated
Type of Expense	Amount	A=Actual
Underwriting discounts and commissions	$ 10,683,397	A
Finders' fees	-
Expenses paid to or for underwriters	-
Other expenses to affiliates	1,010,835	A
Other expenses to non-affiliates	4,827,374	A
Total expenses	$ 16,521,606

The underwriting discounts and commissions, and the expenses paid to or for underwriters, were paid to Inland Securities Corporation. Inland Securities Corporation reallowed all or a portion of the commissions and expenses to Soliciting Dealers.

Total expenses of $16,521,606 include $282,137 which were unpaid at December 31, 2000. The net offering proceeds to the Company for the Cumulative Period, after deducting the total expenses paid and accrued as described in the above table, are $111,633,337.

For the Cumulative Period, the Company used the net offering proceeds as follows:

		E=Estimated
Use of Proceeds	Amount	A=Actual
Construction of plant, building and facilities	$           -
Purchases of real estate	59,912,902	A
Acquisition of other businesses	-
Repayment of indebtedness	23,319,880	A
Working capital	1,284,873	E
Temporary investments	27,115,682	E
Other uses	-

Of the amount used for purchases of real estate, $10,502,117 was paid to affiliates of the Advisor in connection with the acquisition of properties from such affiliates. Pending purchases of real estate, the Company temporarily invested net offering proceeds in short-term interest bearing accounts.

-14-

Item 6. Selected Financial Data

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

For the years ended December 31, 2000 and 1999

(not covered by the Independent Auditors' Report)

		2000	1999
Total assets	$	218,187,913	143,988,136
Mortgages payable	$	108,399,911	93,099,852
Total income	$	22,123,913	6,030,093
Net income	$	2,060,514	167,996
Net income per common share, basic and   diluted (b)	$	.24	.07
Distributions declared	$	6,615,454	1,396,861
Distributions per common share (b)	$	.77	.72
Funds From Operations (b)(c)	$	6,642,262	1,397,319
Funds available for distribution (c)	$	6,478,653	1,449,161
Cash flows provided by operating activities	$	5,603,580	2,647,680
Cash flows used in investing activities	$	(67,307,169)	(34,426,975)
Cash flows provided by financing activities	$	71,498,936	46,446,459
Weighted average number of common   shares outstanding, basic and diluted		8,590,250	2,522,628

-15-

2. The above selected financial data should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this annual report.
3. The net income and distributions per share are based upon the weighted average number of common shares outstanding. The $.77 per share distributions for the year ended December 31, 2000, represented 99.6% of the Company's Funds From Operations ("FFO") and 102.11% of funds available for distribution for that period. See Footnote (c) below for information regarding the Company's calculation of FFO. Distributions by the Company of its current and accumulated earnings and profits for federal income tax purposes are taxable to stockholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the stockholder's basis in the shares to the extent thereof, and thereafter as taxable gain (a return of capital). These distributions in excess of earnings and profits will have the effect of deferring taxation of the amount of the distributions until the sale of the stockholder's shares. For the year ended December 31, 2000, $3,002,877 (or 45.4% of the $6,615,454 distributions declared for 2000) represented a return of capital. The balance of the distributions constitutes ordinary income. In order to maintain its qualification as a REIT, the Company must make annual distributions to stockholders of at least 95% of its REIT taxable income, or approximately $3,432,000 for 2000. REIT taxable income does not include net capital gains. Under certain circumstances, the Company may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements. Distributions are determined by the Company's Board of Directors and are dependent on a number of factors, including the amount of funds available for distribution, the Company's financial condition, any decision by the Board of Directors to reinvest funds rather than to distribute the funds, the Company's capital expenditures, the annual distribution required to maintain REIT status under the Code and other factors the Board of Directors may deem relevant.
4. One of the Company's objectives is to provide cash distributions to its stockholders from cash generated by the Company's operations. Cash generated from operations is not equivalent to the Company's net operating income as determined under GAAP. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a standard known as "Funds from Operations" or "FFO" for short, which it believes more accurately reflects the operating performance of a REIT such as the Company. As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding gains (or losses) from debt restructuring and sales of property plus depreciation on real property and amortization and after adjustments for unconsolidated partnerships and joint ventures in which the REIT holds an interest. The Company has adopted the NAREIT definition for computing FFO because management believes that, subject to the following limitations, FFO provides a basis for comparing the performance and operations of the Company to those of other REITs. The calculation of FFO may vary from entity to entity since capitalization and expense policies tend to vary from entity to entity. Items which are capitalized do not impact FFO, whereas items that are expensed reduce FFO.

-16-

Consequently, the presentation of FFO by the Company may not be comparable to other similarly titled measures presented by other REITs. FFO is not intended to be an alternative to "Net Income" as an indicator of the Company's performance nor to "Cash Flows from Operating Activities" as determined by GAAP as a measure of the Company's capacity to pay distributions. FFO and funds available for distribution are calculated as follows:

		2000	1999
Net income	$	2,060,514	167,996
Depreciation		4,581,748	1,229,323
Funds from operations (1)		6,642,262	1,397,319
Principal amortization of debt		(237,561)	(109,916)
Deferred rent receivable (2)		(493,180)	(135,116)
Acquisition cost expenses (3)		148,494	83,587
Income received under master lease   agreements and principal escrow (4)		418,638	213,287
Funds available for distribution	$	6,478,653	1,449,161
		========	========

1. FFO does not represent cash generated from operating activities calculated in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity.
2. Certain tenant leases contain provisions providing for stepped rent increases. GAAP requires the Company to record rental income for the period of occupancy using the effective monthly rent, which is the average monthly rent for the entire period of occupancy during the term of the lease.
3. Acquisition cost expenses include costs and expenses relating to the acquisition of properties. These costs were estimated to be up to .5% of the gross Offering proceeds and were paid from the proceeds of the Offering.
4. As part of several purchases, the Company receives payments under master lease agreements on some of the space which was vacant at the time of the purchase, for periods ranging from one to two years from the date of the purchase or until the spaces are leased. In addition, the Company received payments from other escrow arrangements. GAAP requires that as these payments are received, they be recorded as a reduction in the purchase price of the properties rather than as rental income.

-17-

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this annual report on Form 10-K constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, limitations on the area in which the Company may acquire properties; risks associated with borrowings secured by the Company's properties; competition for tenants and customers; federal, state or local regulations; adverse changes in general economic or local conditions; competition for property acquisitions with third parties that have greater financial resources than the Company; inability of lessees to meet financial obligations; uninsured losses; risks of failing to qualify as a REIT; and potential conflicts of interest between the Company and its affiliates including the Advisor .

Liquidity and Capital Resources

Cash and cash equivalents consists of cash and short-term investments. Cash and cash equivalents, at December 31, 2000 and 1999 were $24,664,511 and $14,869,164, respectively. The Company intends to use cash and cash equivalents to pay offering costs, purchase additional properties, pay distributions, retire debt and meet working capital requirements.

As of December 31, 2000, the Company had acquired twelve properties plus a vacant land parcel. The properties owned by the Company are currently generating sufficient cash flow to cover operating expenses of the Company plus pay a monthly distribution on weighted average shares. Beginning December 1, 2000, the Company increased the distributions paid to stockholders from $.78 per annum to $.80 per annum on weighted average shares. The Company paid an average of $.77 per weighted average share. Distributions declared for the year ended December 31, 2000 were $6,615,454, of which $3,002,877 represents a return of capital for federal income tax purposes. Distributions are determined by the Company's Board of Directors and are dependent on a number of factors, including the amount of funds available for distribution, the Company's financial condition, any decision by the Board of Directors to reinvest funds rather than to distribute the funds, the Company's capital expenditures, the annual distribution required to maintain REIT status under the Code and other factors the Board of Directors may deem relevant.

Management of the Company monitors the various qualification tests the Company must meet to maintain its status as a real estate investment trust. Large ownership of the Company's stock is tested upon purchase to determine that no more than 50% in value of the outstanding stock is owned directly, or indirectly, by five or fewer persons or entities at any time. Management of the Company also determines, on a quarterly basis, that the Gross Income, Asset and Distribution Tests imposed by the REIT requirements are met. On an ongoing basis, as due diligence is performed by the Advisor on potential real estate purchases or temporary investment of uninvested capital, management determines that the income from the new asset will qualify for REIT purposes.

-18-

Cash Flows From Operating Activities

Net cash provided by operating activities generated $5,603,580 for the year ended December 31, 2000 from the operation of the nine properties purchased in 1999 and the addition of three properties purchased through out 2000. For the year ended December 31, 1999 net cash provided by operating activities included $2,647,680 from operations of the properties acquired during 1999.

Cash Flows From Investing Activities

The Company used $67,307,169 in cash for investing activities during the year ended December 31,2000 as compared to $34,426,975 for 1999. Substantially all of the cash was used to purchase properties in both 2000 and 1999. In the year ended December 31, 2000 the Company used approximately $1,255,000 to purchase investment securities. The Company used $1,100,000 to fund a second mortgage receivable in December 2000.

Cash Flows From Financing Activities

For the years ended December 31, 2000 and 1999, the Company generated $71,498,936 and $46,446,459, respectively, of cash flows from financing activities. This was due primarily to proceeds raised of $74,387,155 and $54,099,789 from the sale of Shares for the years ended December 31, 2000 and 1999, respectively. The Company's cash flow from financing activities was partially offset by the cash used to pay costs associated with selling Shares. For the years ended December 31, 2000 and 1999, the Company paid Offering costs totaling $11,046,314 and $5,193,155, respectively. In the year ended December 31, 2000 the Company received $37,757,500 from the issuance of debt secured by the additional properties purchased during 2000. In 1999 the Company purchased all its properties subject to debt and incurred no additional debt on its own behalf. In addition, for the years ended December 31, 2000 and 1999, the Company paid distributions of $6,098,704 and $1,065,394, respectively, and loan fees of $511,259 and $184,865, respectively.

The Advisor has guaranteed payment of all public offering expenses (excluding selling commissions, the marketing contribution and the due diligence expense allowance) in excess of 5.5% of the gross Offering proceeds or all organization and offering expenses (including such selling expenses) which together exceed 15% of the gross Offering proceeds. As of December 31, 2000, organizational and offering costs totaling $16,521,606 did not exceed these limitations and the Company anticipates that these costs will not exceed these limitations upon completion of the Offering. Any excess amounts at the completion of the Offering will be reimbursed by the Advisor.

The weighted average annual interest rate on the mortgages payable outstanding at December 31, 2000 and 1999 was approximately 7.82% and 7.43%, respectively.

Results of Operations

Through December 31, 2000, the Company had incurred a total of $16,521,606 for costs incurred with the Offering, of which $282,137 remained unpaid.

Rental income, additional rental income, property operating expenses, mortgage interest and depreciation are all a result of the operations from the twelve properties through December 31, 2000.

The Company began its operations in May 1999 with the purchase of the first of nine properties purchased through out 1999. The Company purchased three additional properties in 2000. Total income for the years ended December 31, 2000 and 1999 was $22,123,913 and $6,030,093, respectively.

-19-

Winn-Dixie, an anchor tenant in three of the properties owned by the Company, whose gross rental income from its three stores in the Company's properties represents 7% of the Company's total gross rental income from all of its properties as of December 31, 2000, has undergone a restructuring, and its credit rating has recently been down graded. The Company has been assured by management of Winn-Dixie that the stores located in the Company's specific properties are not closing as part of the restructuring.

.

Sports Authority, a tenant in one of the Company's properties has also undergone a restructuring, closing some of its unprofitable stores. However, it is the Company's understanding that there are no current plans to close the store which occupies space in the Company property. Store closings do not relieve tenants of their obligations under existing leases.

Two tenants, Service Merchandise and Carmike Cinema each occupy one space in Company properties and have filed for bankruptcy protection under federal law. These tenants have the right under bankruptcy laws to terminate their leases with us, but these tenants have neither assumed nor rejected their leases with the Company. The Service Merchandise store is based on a smaller, newer format which Service Merchandise has indicated it intends to continue to operate and has been paying rent on a current basis. At closing, a master lease was established with the Seller escrowing funds to assure rent and reimbursements for two years, as well as payment of estimated tenant improvements and leasing commissions. The Company's Carmike Cinema space has no other local competition. Representatives of Carmike have approached the Company to discuss a possible reduction in rental rates, however there is no current indication that they intend to cease operating at this location.

Hit or Miss, a women's discount clothing store had signed a lease for 8,000 square feet at one of the Company's properties. However, prior to occupancy and paying rent, Hit or Miss filed for bankruptcy protection and rejected the lease. The Company is actively pursuing other tenants for this space.

Subsequent Events

As of February 27, 2001, subscriptions for a total of 14,005,307 Shares were received for total gross Offering proceeds of $139,500,406 and additional 311,630 Shares were issued pursuant to the DRP for $2,960,486 of additional gross proceeds. The Company has repurchased 58,785 shares through our Share Repurchase Program resulting in distributions totaling $729,204.

-20-

In January 2001, the Company paid a distribution of $848,217 to its Stockholders. The Company paid a distribution of $909,393 to its Stockholders in February 2001.

On January 19, 2001, the Company purchased a shopping center known as Columbia Promenade from an unaffiliated third party for approximately $7,338,000, by paying approximately $1,792,000 in cash and mortgage financing of $5,546,000. The Company's wholly owned Florida limited liability company, Inland Southeast Columbia, L.L.C., owns the entire fee simple interest in Columbia Promenade. The property is located in Kissimee, Florida and contains approximately 65,870 gross leasable square feet. Publix (a supermarket) occupies approximately 67% of the total gross leasable area of the property.

On February 13, 2001, the Company purchased an existing freestanding retail property known as Lowe's Warner Robbins, Georgia from an unaffiliated third party for approximately $9,450,000, by paying the entire purchase price in cash. The property is expected to be financed in the future. The Company's wholly owned Georgia limited liability company, Inland Southeast Warner Robbins, L.L.C., owns the entire fee simple interest in Lowe's Warner Robbins, Georgia. The property is located in Warner Robbins, Georgia, and contains approximately 131,575 gross leasable square feet. Lowe's (a home improvement retail store) leases the entire property.

On February 13, 2001, the Company purchased an existing freestanding retail property known as K Mart, Macon Georgia from an unaffiliated third party for approximately $9,050,000, by paying the entire purchase price in cash. The property is expected to be financed in the future. The Company's wholly owned Georgia limited liability company, Inland Southeast Macon, L.L.C., owns the entire fee simple interest in K Mart, Macon Georgia. The property is located in Macon, Georgia, and contains approximately 102,098 gross leasable square feet. K Mart (a discount department store) leases the entire property and pays all real estate taxes, insurance and common area maintenance costs.

On behalf of the Company, the Advisor is currently exploring the purchase of additional shopping centers from unaffiliated third parties.

Impact of Accounting Principles

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". This statement, effective for all fiscal quarters of all fiscal years beginning after June 15, 2000, established accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments imbedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that the changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company believes that the adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" will not have a material impact on the consolidated financial statements of the Company.

On December 2, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") 101 "Revenue Recognition in Financial Statements." The staff determined that a lessor should defer recognition of contingent rental income (i.e., percentage/excess rent) until the specified target (i.e., breakpoint) that triggers the contingent rental income is achieved. The Company records percentage rental revenue in accordance with that SAB.

-21-

Inflation

For the Company's multi-tenant shopping centers, inflation is likely to increase rental income from leases to new tenants and lease renewals, subject to market conditions. The Company's rental income and operating expenses for those properties owned or to be owned and operated under triple-net leases are not likely to be directly affected by future inflation, since rents are or will be fixed under the leases and property expenses are the responsibility of the tenants. The capital appreciation of triple-net leased properties is likely to be influenced by interest rate fluctuations. To the extent that inflation determines interest rates, future inflation may have an effect on the capital appreciation of triple-net leased properties. As of December 31, 2000, the Company did not own any triple-net leased properties.

Item 7(a). Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to interest rate changes primarily as a result of its long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company's interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives the Company borrows primarily at fixed rates or variable rates with the lowest margins available and in some cases, with the ability to convert variable rates to fixed rates. The Company may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes.

The Company's interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.

	2001	2002	2003	2004	2005
Maturing debt:
Fixed rate debt	$ 257,199	278,462	303,957	13,801,418	27,898,414
Variable rate debt	11,932,500	-	-	-	5,000,000
Average interest rate on outstanding debt:
Fixed rate debt	7.55%	7.55%	7.55%	7.51%	7.47%
Variable rate debt	8.48%	8.48%	8.48%	8.48%	8.50%

The fair value of the Company's debt approximates its carrying amount.

Approximately $19,920,000 or 18% of the Company's mortgages payable at December 31, 2000, have variable interest rates averaging 8.55%. An increase in the variable interest rate on certain mortgages payable constitutes a market risk.

-22-

Item 8. Consolidated Financial Statements and Supplementary Data

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)


Index

	Page
Independent Auditors' Report	24
Financial Statements:
Consolidated Balance Sheets at December 31, 2000 and 1999	25
Consolidated Statements of Operations for the years ended December 31, 2000 and 1999	27
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000 and 1999	27
Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 1999	29
Notes to Consolidated Financial Statements	31
Real Estate and Accumulated Depreciation (Schedule III)	41

Schedules not filed:

All schedules other than the one listed in the Index have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

-23-

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders

Inland Retail Real Estate Trust, Inc.:

We have audited the consolidated financial statements of Inland Retail Real Estate Trust, Inc. (the Company) as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Inland Retail Real Estate Trust, Inc. as of December 31, 2000 and 1999 and the results of their operations and their cash flows for the years ended December 31, 2000 and 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Chicago, Illinois
February 1, 2001, except as
to Note 12 which is as of
February 27, 2001

-24-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)


Consolidated Balance Sheets

December 31, 2000 and 1999


Assets

		2000		1999
Investment Properties (Note 5):
Land	$	46,628,264	$	33,260,261
Land held for development		957,802		-
Building and site improvements		144,289,027		93,978,854
		191,875,093		127,239,115
Less accumulated depreciation		(5,811,071)		(1,229,323)
Net investment properties		186,064,022		126,009,792
Mortgage receivable (Note 6)		1,100,000		-
Cash and cash equivalents		24,664,511		14,869,164
Restricted cash (Note 1)		864,271		1,246,889
Investment in securities (Note 1)		1,537,467		-
Accounts and rents receivable, (net of allowance of $273,581 and $0   as of December 31, 2000 and 1999, respectively)		2,747,257		1,331,213
Real estate tax and insurance escrows		134,167		227,123
Loan fees (net of accumulated amortization of $177,194 and $20,432   as of December 31, 2000 and 1999, respectively)		518,930		164,433
Leasing fees (net of accumulated amortization of $17,246 and $3,346   as of December 31, 2000 and 1999, respectively)		61,394		34,106
Deferred acquisition costs		330,876		91,880
Other assets		165,018		13,536
Total assets	$	218,187,913	$	143,988,136
		=========		=========

See accompanying notes to consolidated financial statements.

-25-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)


Consolidated Balance Sheets
(continued)

December 31, 2000 and 1999


Liabilities and Stockholders' Equity

		2000		1999
Liabilities:
Accounts payable	$	80,230	$	74,094
Accrued offering costs due to affiliates (Note 3)		227,589		1,309,642
Accrued offering costs due to non-affiliates (Note 3)		54,548		1,554,262
Accrued interest payable to non-affiliates		629,208		419,003
Distributions payable (Note 12)		848,217		331,467
Security deposits		313,925		232,370
Mortgages payable (Note 8)		108,399,911		93,099,852
Unearned income		359,618		9,585
Other liabilities		1,323,098		1,359,209
Due to affiliates (Note 3)		169,933		582,787
Total liabilities		112,406,277		98,972,271
Minority interest in partnership		2,000		2,000
Stockholders' Equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized,     none outstanding		-		-
Common stock, $.01 par value, 100,000,000 shares authorized,     12,895,770 and 5,433,839 issued and outstanding at December     31, 2000 and 1999, respectively		128,957		54,338
Additional paid-in capital (net of costs of Offering of
$16,521,606 and $8,057,059 at December 31, 2000 and 1999,     respectively, of which $11,694,232 and $5,193,155 was paid or     accrued to Affiliates, respectively)		111,504,380		46,188,392
Accumulated distributions in excess of net income		(5,783,805)		(1,228,865)
Accumulated other comprehensive loss		(69,896)		-
Total stockholders' equity		105,779,636		45,013,865
Commitments and contingencies (Notes 7, 8, 11 and 12)
Total liabilities and stockholders' equity	$	218,187,913	$	143,988,136
		=========		=========

See accompanying notes to consolidated financial statements.

-26-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Consolidated Statements of Operations

For the years ended December 31, 2000 and 1999

		2000		1999
Income:
Rental income (Notes 1 and 7)	$	16,349,483	$	4,339,614
Additional rental income		4,734,088		1,452,868
Interest and dividend income		845,013		237,261
Other income		195,329		350
		22,123,913		6,030,093
Expenses:
Professional services to affiliates		6,019		22,878
Professional services to non-affiliates		182,276		53,966
General and administrative expenses to affiliates		251,703		144,638
General and administrative expenses to non-affiliates		196,748		63,987
Advisor asset management fee (Note 3)		120,000		-
Property operating expenses to affiliates		926,978		203,235
Property operating expenses to non-affiliates		5,352,184		1,668,823
Mortgage interest to non-affiliates		8,126,587		2,365,854
Mortgage interest to affiliates		-		2,028
Depreciation		4,581,748		1,229,323
Amortization		170,662		23,778
Acquisition cost expenses to non-affiliates		148,376		27,788
Acquisition cost expenses to affiliates		118		55,799
		20,063,399		5,862,097
Net income	$	2,060,514	$	167,996
Other comprehensive loss:
Unrealized loss on investment securities		69,896		-
Comprehensive income	$	1,990,618	$	167,996
		==========		==========
Net income per common share, basic and diluted	$	.24	$	.07
		==========		==========
Weighted average number of common shares outstanding, basic   and diluted		8,590,250		2,522,628
		==========		==========

See accompanying notes to consolidated financial statements.

-27-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Consolidated Statements of Stockholders' Equity

For the years ended December 31, 2000 and 1999

	Number of  Shares	Common   Stock	Additional Paid-in  Capital	Accumulated Distributions in excess of net Income	Accumulated Other Comprehensive    Loss	Total
Balance at December 31, 1998	2,000	$      200	$ 199,800	$                -	$              -	$     200,000
Net income	-	-	-	167,996	-	167,996
Distributions declared ($.72 per   weighted average number of common   shares outstanding)	-	-	-	(1,396,861)	-	(1,396,861)
Proceeds from Offering including DRP   (net of Offering costs of $8,057,059)	5,431,839	54,138	45,988,592	-	-	46,042,730
Balance at December 31, 1999	5,433,839	$   54,338	$ 46,188,392	$  (1,228,865)	$              -	$  45,013,865
Net income	-	-	-	2,060,514	-	2,060,514
Unrealized loss on investment securities	-	-	-	-	(69,896)	(69,896)
Distributions declared ($.77 per   weighted average number of common   shares outstanding)	-	-	-	(6,615,454)	-	(6,615,454)
Proceeds from Offering including DRP   (net of Offering costs $8,464,547)	7,520,716	75,207	65,847,401	-	-	65,922,608
Retired stock	(58,785)	(588)	(531,413)	-	-	(532,001)
Balance at December 31, 2000	12,895,770	$ 128,957	$ 111,504,380	$ (5,783,805)	$      (69,896)	$ 105,779,636
	=========	=========	===========	=============	==========	============

See accompanying notes to consolidated financial statements.

-28-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Consolidated Statements of Cash Flows

For the years ended December 31, 2000 and 1999

		2000		1999
Cash flows from operating activities:
Net income before comprehensive loss	$	2,060,514	$	167,996
Adjustments to reconcile net income before other     comprehensive loss to net cash provided by     operating activities:
Depreciation		4,581,748		1,229,323
Amortization		170,662		23,778
Principal escrow		53,086		41,178
Rental income under master lease		365,552		172,109
Straight line rental income		(493,180)		(135,116)
Changes in assets and liabilities:
Accounts and rents receivable		(922,864)		(1,196,097)
Other assets		(151,482)		(105,416)
Real estate tax and insurance escrows		92,956		(227,123)
Accrued interest payable to non-affiliates		210,205		419,003
Accounts payable		6,136		74,094
Unearned income		350,033		9,585
Other liabilities		(388,487)		1,359,209
Security deposits		81,555		232,370
Due to affiliates		(412,854)		582,787
Net cash provided by operating activities		5,603,580		2,647,680
Cash flows from investing activities:
Restricted cash		382,618		(1,246,889)
Purchase of investment securities, net of margin     account of $352,376		(1,254,987)		-
Purchase of investment properties		(64,747,654)		(32,922,748)
Additions to investment properties		(306,962)		(219,886)
Funding of mortgage receivable		(1,100,000)		-
Deferred acquisition costs		(238,996)		-
Leasing fees		(41,188)		(37,452)
Net cash used in investing activities		(67,307,169)		(34,426,975)
Cash flows from financing activities:
Proceeds from offering		74,387,155		54,099,789
Payment of offering costs		(11,046,314)		(5,193,155)
Repurchase of shares		(532,001)		-
Proceeds from issuance of debt		37,757,500		-
Principal payments of debt		(22,457,441)		(1,209,916)
Loan fees		(511,259)		(184,865)
Distributions paid		(6,098,704)		(1,065,394)
Net cash provided by financing activities		71,498,936		46,446,459
Net increase in cash and cash equivalents		9,795,347		14,667,164
Cash and cash equivalents, at beginning of year		14,869,164		202,000
Cash and cash equivalents, at end of year	$	24,664,511	$	14,869,164
		==========		==========

See accompanying notes to consolidated financial statements.

-29-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Consolidated Statements of Cash Flows
(continued)

For the years ended December 31, 2000 and 1999

Supplemental schedule of noncash investing and financing activities:

		2000	1999
Purchase of investment properties	$		127,220,327
Assumption of mortgage debt		-	94,309,768
	$	-	32,910,559
		=========	=========
Distributions payable	$	848,217	331,467
		=========	=========
Cash paid for interest	$	7,807,708	1,948,879
		=========	=========

See accompanying notes to consolidated financial statements.
-30-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements

For the years ended December 31, 2000 and 1999

(1)  Organization and Basis of Accounting

Inland Retail Real Estate Trust, Inc. (the "Company") was formed on September 3, 1998 to acquire and manage a diversified portfolio of real estate, primarily multi-tenant shopping centers. It is anticipated that the Company will initially focus on acquiring properties in the southeastern states, primarily Florida, Georgia, North Carolina and South Carolina. The Company may also acquire single-user retail properties in locations throughout the United States, certain of which may be sale and leaseback transactions, net leased to creditworthy tenants. Inland Retail Real Estate Advisory Services, Inc. (the "Advisor"), an affiliate of the Company, is the advisor to the Company. On February 11, 1999, the Company commenced an initial public offering ("Offering"), on a best efforts basis of 50,000,000 shares of common stock ("Shares") at $10 per Share and 4,000,000 Shares at $9.50 per Share which may be distributed pursuant to the Company's Distribution Reinvestment Program ("DRP"). As of December 31, 2000, the Company had received subscriptions for a total of 12,680,875 Shares. In addition the Company has distributed 253,680 Shares pursuant to the Company's DRP.

On February 1, 2001, the Company commenced a follow-on offering on a best effort basis of up to 50,000,000 additional Shares. This follow-on offering will expire on February 1, 2002, unless extended by the Company to a date no later than February 1, 2003.

The Company is qualified and has elected to be taxed as a real estate investment trust ("REIT") under section 856 through 860 of the Internal Revenue Code of 1986. Since the Company qualifies for taxation as a REIT, the Company generally will not be subject to Federal income tax to the extent it distributes at least 95% of its REIT taxable income to its stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property and Federal income and excise taxes on its undistributed income.

The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principle ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Certain reclassifications were made to 1999 financial statements to conform with the 2000 presentations.

The Company classifies its investment in securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security until maturity. All securities not included in trading or held-to-maturity are classified as available for sale. Investment in securities at December 31, 2000 consist principally of preferred stock investments in various real estate investment trusts and are classified as available-for-sale securities and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. A decline in the market value of any available-for-sale security below cost that is deemed to be other than temporary results in a reduction in the carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. Dividend income is recognized when earned. No sales of investment securities available-for-sale were made during 2000. Additionally, The Companyhas purchased its securities through a margin account. As of December 31, 2000, the Company has recorded a payable of $352,376 for securities purchased on margin.

-31-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

FASB Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is effective for fiscal years beginning after June 15, 2000, establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments imbedded in other contracts, be reported in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that the changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company believes that the adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" will not have a material impact on the consolidated financial statements of the Company.

Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-lived Assets and for Long-life Assets to be Disposed of", requires the Company to record an impairment loss on its property to be held for investment whenever its carrying value cannot be fully recovered through estimated undiscounted future cash flows from operations and sale of properties. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the properties estimated fair value. As of December 31, 2000 and 1999, the Company does not believe any such impairment of its properties exists.

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents and are carried at cost, which approximates market.

Depreciation expense is computed using the straight-line method. Buildings and improvements are depreciated based upon estimated useful lives of 30 years and 15 years for the site improvements. Furniture and equipment is depreciated over five years. Tenant improvements are amortized on a straight-line basis over the life of the related leases.

Leasing fees are amortized on a straight-line basis over the life of the related lease.

Loan fees are amortized on a straight-line basis over the life of the related loans.

Offering costs are offset against the stockholders' equity accounts and consist principally of printing, selling and registration costs.

Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying consolidated balance sheets.

The Company believes that the interest rates associated with the mortgages payable approximate the market interest rates for these types of debt instruments, and as such, the carrying amount of the mortgages payable approximate their fair value.

The carrying amount of mortgage receivable, cash and cash equivalents, restricted cash, accounts and rents receivable, investments in securities, real estate tax and insurance escrows, other assets, accounts payable, accrued interest payable to non-affiliates, distributions payable, unearned income, and due to affiliates approximate fair value because of the relatively short maturity of these instruments.

-32-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

On December 2, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101 "Revenue Recognition in Financial Statements." The staff determined that a lessor should defer recognition of contingent rental income (i.e., percentage/excess rent) until the specified target (i.e., breakpoint) that triggers the contingent rental income is achieved. The Company records percentage rental revenue in accordance with the SAB.

(2)  Basis of Presentation

The accompanying Consolidated Balance Sheets include the accounts of the Company, as well as the accounts of the operating partnership in which the Company has an approximately 99% controlling general partner interest and all wholly owned subsidiaries. The Advisor owns the remaining approximately 1% limited partner common units in the operating partnership for which it paid $2,000 and which is reflected as a minority interest in the accompanying Consolidated Balance Sheets. The effect of all significant intercompany transactions have been eliminated.

(3)  Transactions with Affiliates

As of December 31, 2000 and 1999, the Company had incurred $16,521,606 and $8,057,059 of offering costs, of which $11,694,232 and $5,193,155 was paid to affiliates. Pursuant to the terms of the Offering, the Advisor is required to pay organizational and offering expenses (excluding sales commissions, the marketing contribution and the due diligence expense allowance) in excess of 5.5% of the gross proceeds of the Offering ("Gross Offering Proceeds") or all organization and offering expenses (including selling commissions) which together exceed 15% of Gross Offering Proceeds. As of December 31, 2000 and 1999, Offering costs did not exceed the 5.5% and 15% limitations and the Company anticipates that these costs will not exceed these limitations upon completion of the Offering. Any excess amounts at the completion of the Offering will be reimbursed by the Advisor.

The Advisor and its affiliates are entitled to reimbursement for salaries and expenses of employees of the Advisor and its affiliates relating to the Offering. In addition, an affiliate of the Advisor is entitled to receive selling commissions, a marketing contribution and a due diligence expense allowance from the Company in connection with the Offering. Such costs are offset against the Stockholders' equity accounts. Such costs totaled $6,907,685 and $4,786,547 for the years ended December 31, 2000 and 1999, respectively, of which $227,589 and $896,544 was unpaid at December 31, 2000 and 1999, respectively.

The Advisor and its affiliates are entitled to reimbursement for salaries and expenses of employees of the Advisor and its affiliates relating to the administration of the Company. Such costs are included in professional services to affiliates and general and administrative expenses to affiliates. During the years ended December 31, 2000 and 1999 the Company incurred $257,840 and $683,055, respectively of these costs, of which $169,933 and $549,089 remained unpaid as of December 31, 2000 and 1999, respectively.

The Advisor has contributed $200,000 to the capital of the Company for which it received 20,000 Shares.

An affiliate of the Advisor provides loan servicing to the Company for a monthly fee. Such fees totaled $48,322 and $14,281 in the years ended December 31, 2000 and 1999, respectively. An agreement with the Company allows for monthly fees totaling .05% of the first $100,000,000 mortgage balance outstanding each month and .03% of the remaining mortgage balance.

-33-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

The Company used the services of an affiliate of the Advisor to facilitate the mortgage financing that the Company obtained on some of the properties purchased. During the years ended December 31, 2000 and 1999 the Company paid loan fees totaling $23,438 and $46,950, respectively, to this affiliate.

The Advisor may receive an annual advisor asset management fee of not more than 1% of the Company's average invested assets, paid quarterly. For any year in which the Company qualifies as a REIT, the Advisor must reimburse the Company (i) to the extent that the advisor asset management fee plus other operating expenses paid during the previous calendar year exceed 2% of the Company's average invested assets for the calendar year or 25% of the Company's net income for that calendar year; and (ii) to the extent that stockholders have not received an annual distribution equal to or greater than the 7% current return. The advisor asset management fee plus other operating expenses paid during the previous calendar year did not exceed 2% of the Company's Average Invested Assets for the calendar year or 25% of the Company's Net Income for that calendar year and Stockholders received an annual Distribution greater than a 7% return. For the year ended December 31, 2000, the Company has incurred $120,000 of asset management fees, of which $30,000 remains unpaid as of December 31, 2000. In 1999 the Company neither paid nor accrued such fees because the Advisor indicated that it would forego such fees.

The property manager, an entity owned principally by individuals who are affiliates of the Advisor, is entitled to receive property management fees, totaling 4.5% of gross operating income, for management and leasing services. The Company incurred and paid property management fees of $926,978 and $225,665 for the years ended December 31, 2000 and 1999, respectively, of which $926,978 and $203,235 were retained by that property manager. The balance was paid to an unaffiliated property manager.

(4)  Stock Option Plan and Soliciting Dealer Warrants

The Company adopted an Independent Director Stock Option Plan which, subject to certain conditions, provides for the grant to each Independent Director of an option to acquire 3,000 Shares following their becoming a Director and for the grant of additional options to acquire 500 Shares on the date of each annual stockholders' meeting commencing with the annual meeting in 2000 if the Independent Director is a member of the board of directors on such date. The options for the initial 3,000 Shares to be granted shall be exercisable as follows: 1,000 Shares on the date of grant and 1,000 Shares on each of the first and second anniversaries of the date of grant. The subsequent options will be exercisable on the second anniversary of the date of grant. The initial options will be exercisable at $9.05 per Share. The subsequent options will be exercisable at the fair market value of a Share on the last business day preceding the annual meeting of stockholders, and shall be $9.05 per Share until the earlier of the termination of the Offering or February 11, 2001. As of December 31, 2000, options to acquire 10,500 Shares of common stock was outstanding. No options had been issued as of December 31, 1999.

In addition to sales commissions, the dealer manager of the Offering ("an affiliate of the Advisor") has the right to purchase one soliciting dealer warrant for $.0008 for each 25 Shares sold by such soliciting dealer during the Offering, subject to state and federal securities laws and subject to the issuance of a maximum of 2,000,000 soliciting dealers warrants to purchase an equivalent number of Shares. The dealer manager intends to reallow such warrants to the soliciting dealers who sold such shares. The holder of a soliciting dealer warrant will be entitled to purchase one Share from the Company at a price of $12 during the period commencing one year from the date of the first issuance of any of the soliciting dealer warrants and ending five years after February 11, 1999. As of December 31, 2000, 506,713 warrants had been issued. As of December 31, 2000, these warrants had no value and none had been exercised.

-34-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

(5)  Investment Properties

An affiliate of the Company initially purchased seven of the investment properties on behalf of the Company. The Company subsequently purchased each property from this affiliate at their cost upon receipt of proceeds from the Offering.

Pro Forma Information (unaudited)

The Company acquired its investment properties at various times. The following table sets forth certain summary unaudited pro forma operating data as if the acquisitions had been consummated as of the beginning of the previous respective period.

		For the year ended	For the year ended
		December 31, 2000	December 31, 1999
Rental income	$	18,368,983	11,802,456
Additional rental income		5,094,872	3,396,268
Total revenues		24,504,197	15,198,724
Advisor asset management fee		269,014	-
Property operating expenses		6,808,115	4,399,898
Total depreciation		5,234,168	3,472,981
Total expenses		22,513,500	16,013,522
Net income (loss)		1,990,697	(814,798)

The unaudited pro forma operating data are presented for comparative purposes only and are not necessarily indicative of what the actual results of operations would have been for each of the periods presented, nor does such data purport to represent the results to be achieved in future periods.

(6)  Mortgage Receivable

On December 21, 2000 the Company funded a $1,100,000 mortgage note receivable on a 49,749 square foot shopping center currently under construction, located in Lauderhill, Florida. The principal amount of $1,100,000 is secured by a second mortgage on the property and personal guaranties of the borrower. The note bears an interest rate of 10% per annum and matures August 31, 2002. The Company, at its option may elect to purchase this property upon completion, subject to certain contingencies.

-35-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

(7)  Leases

Master Lease Agreements

In conjunction with certain acquisitions, the Company receives payments under master lease agreements on some of the space which was vacant at the time of the purchase, for periods ranging from one to two years after the date of the purchase or until the spaces are leased. GAAP requires that as these payments are received, they be recorded as a reduction in the purchase price of the properties rather than as rental income. The cumulative amount of such payments were $537,661 and $172,109 as of December 31, 2000 and 1999, respectively.

Operating Leases

Minimum lease payments to be received in the future under operating leases, excluding rental income under master lease agreements and assuming no expiring leases are renewed, are as follows:

		Minimum Lease
		Payments
2001	$	18,520,158
2002		17,949,863
2003		17,107,330
2004		15,651,166
2005		14,287,902
Thereafter		101,271,544
Total	$	184,787,963
		==========

Remaining lease terms range from one year to fifty-five years. Pursuant to the lease agreements, tenants of the property are required to reimburse the Company for some or all of their pro rata share of the real estate taxes, operating expenses and management fees of the property. Such amounts are included in additional rental income.

Certain tenant leases contain provisions providing for stepped rent increases. GAAP requires the Company to record rental income for the period of occupancy using the effective monthly rent, which is the average monthly rent for the entire period of occupancy during the term of the lease. The accompanying consolidated financial statements include $493,180 and $135,116 for the years ended December 31, 2000 and 1999, respectively, of rental income for the period of occupancy for which stepped rent increases apply and $628,296 and $135,116 in the related accounts and rents receivable as of December 31, 2000 and 1999, respectively. The Company anticipates collecting these amounts over the terms of the related leases as scheduled rent payments are made.

-36-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

(8)  Mortgages Payable

Mortgages payable consist of the following at December 31, 2000 and 1999:

Property as	Interest			Balance at
Collateral	Rate at	Maturity	Monthly	December 31,	December 31,
	12/31/00	Date	Payment	2000	1999
Mortgages payable to non-affiliates:
Lake Walden Square	7.63%	11/2007	$72,584 (a)	$  9,941,942	$ 10,049,869
Merchants Square	7.25%	11/2008	(b)	3,167,437	3,167,437
Town Center Commons	-	04/2000	(c)	-	2,508,000
	7.00%	04/2006	(b)	4,750,000	4,750,000
Boynton Commons	-	03/2000	(c)	-	7,797,580
	7.21%	03/2006	(b)	15,125,000	15,125,000
Lake Olympia Square	8.25%	04/2007	50,978 (a)	5,772,532	5,902,166
Bridgewater Marketplace	-	09/2000	(c)	-	1,792,500
	8.50%	09/2006	(c)	2,987,500	2,987,500
Bartow Marketplace	-	09/2000	(c)	-	4,900,000
	7.75%	09/2004	(b)	13,475,000	13,475,000
Countryside Shopping Center	8.50%	03/2001	(c)	6,720,000	6,720,000
Casselberry Commons	-	04/2000	(c)	-	5,221,800
	7.64%	04/2006	(b)	8,703,000	8,703,000
Conway Plaza*	8.47%	06/2005	(c)	5,000,000	-
Pleasant Hill Square	7.35%	06/2005	(b)	17,120,000	-
Gateway Marketplace*	8.72%	08/2001	(c)	5,212,500	-
Gateway Marketplace	7.94%	08/2005	(b)	10,425,000	-
				$108,399,911	$ 93,099,852
				=========	=========

(a) Payments include principal and interest.

(b) Payments include interest only at a fixed rate.

(c) Payments include interest only. Payments on these mortgages adjust monthly and are calculated based on a floating rate over LIBOR.

Certain of the mortgages payable are subject to guarantees, in which the Company has guaranteed payment on these notes to the lender.

-37-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

These mortgages are serviced by an Affiliate of the Advisor on behalf of the Company. The Affiliate receives servicing fees at a market rate for such services.

As of December 31, 2000, the required future principal payments on the Company's mortgages payable over the next five years are as follows:

2001	$	12,189,699
2002		278,462
2003		303,957
2004		13,801,418
2005		32,898,414
Thereafter		48,927,961

The Company intends to retire its debt as it becomes due, however, in certain individual cases some debt obligations may be restructured or partially retired. These restructured or partial paydowns may occur if the Company's lenders provide favorable terms.

(9)  Segment Reporting

The Company owns and seeks to acquire multi-tenant shopping centers in the southeastern states, primarily Florida, Georgia, North Carolina, and South Carolina. All of the Company's shopping centers are currently located within Florida and Georgia. The Company's shopping centers are typically anchored by grocery and drugstores complemented with additional stores providing a wide range of other goods and services to shoppers.

The Company assesses and measures operating results on an individual property basis for each of its properties based on net property operations. Since all of the Company's properties exhibit highly similar economic characteristics, cater to the day-to-day living needs of their respective surrounding communities, and offer similar degrees of risk and opportunities for growth, the properties have been aggregated and reported as one operating segment.

-38-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

The property revenues and net property operations are summarized in the following tables as of and for the years ended December 31, 2000 and 1999, along with a reconciliation to net income.

		2000	1999
Property rental income	$	21,083,571	5,792,482
Other income		76,836	-
Total property operating expenses		6,279,162	1,872,058
Mortgage interest		8,126,587	2,367,882
Net property operations		6,754,658	1,552,542
Interest and dividend income		845,013	237,261
Other income		118,493	350
Less non property expenses:
Professional services		188,295	76,844
Advisor asset management fee		120,000	-
General and administrative and     acquisition costs expense		596,945	292,212
Depreciation and amortization		4,752,410	1,253,101
Net income before comprehensive   loss	$	2,060,514	167,996
		==========	==========
Total Assets:
Shopping centers	$	190,390,041	129,003,780
Non-segment assets		27,797,872	14,984,356
	$	218,187,913	143,988,136
		==========	==========

(10)  Earnings per Share

Basic earnings per share ("EPS") is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by reflecting the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

As of December 31, 2000 and 1999, warrants to purchase 506,713 and 214,223, respectively, shares of common stock at a price of $12.00 per share were outstanding, but were not included in the computation of diluted EPS because the warrants exercise price was greater than the average market prices of common shares.

The weighted average number of common shares outstanding were 8,590,250 and 2,522,628 for the years ended December 31, 2000 and 1999, respectively.

-39-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

(11) Commitments and Contingencies

The Company is not subject to any material pending legal proceedings.

(12) Subsequent Events

As of February 27, 2001, subscriptions for a total of 14,005,307 Shares were received for total gross Offering proceeds of $139,500,406 and additional 311,630 Shares were issued pursuant to the DRP for $2,960,486 of additional gross proceeds. The Company has repurchased 80,4575 shares through our Share Repurchase Program resulting in distributions totaling $729,204.

In January 2001, the Company paid a distribution of $848,217 to its Stockholders. The Company paid a distribution of $909,393 to its Stockholders in February 2001.

On January 19, 2001, the Company purchased a shopping center known as Columbia Promenade from an unaffiliated third party for approximately $7,338,000, by paying approximately $1,792,000 in cash and mortgage financing of $5,546,000. The Company's wholly owned Florida limited liability company, Inland Southeast Columbia, L.L.C., owns the entire fee simple interest in Columbia Promenade. The property is located in Kissimee, Florida and contains approximately 65,870 gross leasable square feet. Publix (a supermarket) leases approximately 67% of the total gross leasable area of the property.

On February 13, 2001, the Company purchased an existing freestanding retail property known as Lowe's Warner Robbins, Georgia from an unaffiliated third party for approximately $9,450,000, by paying the entire purchase price in cash. The property is expected to be financed in the future. The Company's wholly owned Georgia limited liability company, Inland Southeast Warner Robbins, L.L.C., owns the entire fee simple interest in Lowe's Warner Robbins, Georgia. The property is located in Warner Robbins, Georgia, and contains approximately 131,575 gross leasable square feet. Lowe's (a home improvement retail store) leases the entire property.

On February 13, 2001, the Company purchased an existing freestanding retail property known as K Mart, Macon Georgia from an unaffiliated third party for approximately $9,050,000, by paying the entire purchase price in cash. The property is expected to be financed in the future. The Company's wholly owned Georgia limited liability company, Inland Southeast Macon, L.L.C., owns the entire fee simple interest in K Mart, Macon Georgia. The property is located in Macon, Georgia, and contains approximately 102,098 gross leasable square feet. K Mart (a discount department store) leases the entire property and pays all real estate taxes, insurance and common area maintenance costs.

On behalf of the Company, the Advisor is currently exploring the purchase of additional shopping centers from unaffiliated third parties.

-40-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Notes to Consolidated Financial Statements
(continued)

For the years ended December 31, 2000 and 1999

(13) Supplemental Financial Information (unaudited)

The following represents the results of operations, for the quarter during the years 2000 and 1999.

	2000
	Dec. 31	Sept. 30	June 30	March 31
Total income	6,390,795	6,206,420	4,511,879	5,014,818
Net income	687,389	812,525	92,267	468,333
Net income , per common   share, basic and diluted:	.06	.09	.01	.08
	1999
	Dec. 31	Sept. 30	June 30	March 31
Total income	3,604,398	1,783,617	642,078	-
Net income/(loss)	98,029	76,056	(6,089)	-
Net income, per common   share, basic and diluted:	.02	.03	(.01)	-

-41-

INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Schedule III
Real Estate and Accumulated Depreciation

December 31, 2000

Initial Cost			Gross amount at which carried
(A)			at end of period (B)
				Buildings and	Adjustments to		Buildings and	Total	Accumulated Depreciation	Date Con- stru	Date
	Encumbrance	Land		Improvements	Basis (C)	Land	Improvements	(D)	(E)	cted	Acq
Multi-tenant Retail
Lake Walden Square
Plant City, FL	9,941,942	3,006,662		11,549,586	41,199	3,006,662	11,590,785	14,597,447	777,121	1992	05/99
Merchants Square
Zephyrhills, FL	3,167,437	992,225		4,749,818	12,620	992,225	4,762,438	5,754,663	303,753	1993	06/99
Town Center Commons
Kennesaw, GA	4,750,000	3,293,792		6,350,835	(18,625)	3,293,792	6,332,210	9,626,002	368,219	1998	07/99
Boynton Commons
Boynton Beach, FL	15,125,000	8,698,355		21,803,370	(5,040)	8,698,355	21,798,330	30,496,685	1,115,923	1998	07/99
Lake Olympia Square (C)
Ocoee, FL	5,772,532	2,567,471		7,306,483	(29,143)	2,562,471	7,282,340	9,844,811	362,746	1995	09/99
Bridgewater Marketplace
Orlando, FL	2,987,500	783,492		5,221,618	(62,781)	783,492	5,158,837	5,942,329	245,788	1998	09/99
Bartow Marketplace
Cartersville, GA	13,475,000	6,098,178		18,308,271	4,071	6,098,178	18,312,342	24,410,520	813,780	1995	09/99
Countryside
Naples, FL	6,720,000	1,117,428		7,478,173	9,570	1,117,428	7,487,743	8,605,171	331,246	1997	10/99
Casselberry Commons
Casselberry, FL	8,703,000	6,702,658		11,191,912	(69,545)	6,702,658	11,122,367	17,825,025	463,752	1973/1998	12/99
Conway Plaza
Orlando, FL	5,000,000	2,215,325		6,332,434	72,449	2,215,325	6,404,883	8,620,208	237,716	1985/1999	02/00
Pleasant Hill
Duluth, GA	17,120,000	4,805,830		29,526,305	(95,822)	4,805,830	29,430,483	34,236,313	571,144	1997/2000	05/00
Gateway Market Center
St. Petersburg, FL	15,637,500	6,351,848		14,576,808	16,456	6,351,848	14,593,264	20,945,112	215,644	1997/2000	07/00

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INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Schedule III
Real Estate and Accumulated Depreciation

December 31, 2000

Initial Cost			Gross amount at which carried
(A)			at end of period (B)
				Buildings and	Adjustments to		Buildings and	Total	Accumulated Depreciation	Date Con- stru	Date
	Encumbrance	Land		Improvements	Basis (C)	Land	Improvements	(D)	(E)	cted	Acq
Development Parcels
Acworth Avenue Retail     Shopping Center
Acworth, GA	-	957,802		-	-	957,802	-	957,802	-		12/00
Sub total	108,399,911	47,591,066		144,395,613	(124,591)	47,586,066	144,276,022	191,862,088	5,806,832
	==========	===========		==========	=========	===========	==========
Furniture and equipment							13,005	13,005	4,239
Total							144,289,027	191,875,093	5,811,071
							==========	=========	=========

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INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)

Schedule III (continued)
Real Estate and Accumulated Depreciation

December 31, 2000

Notes:

1. The initial cost to the Company represents the original purchase price of the property, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.
2. The aggregate cost of real estate owned at December 31, 2000 for federal income tax purposes was approximately $192,403,750 (unaudited).
3. Adjustments to basis include additions to investment properties net of payments received under master lease agreements. As part of several purchases, the Company will receive rent under master lease agreements on the spaces currently vacant for periods ranging from one to two years or until the spaces are leased. GAAP requires that as these payments are received, they be recorded as a reduction in the purchase price of the properties rather than as rental income.
4. Reconciliation of real estate owned:

		2000	1999
Balance at beginning of year	$	127,226,926	-
Purchases of property		64,747,654	127,220,327
Additions		306, 146	219,886
Payments received under master   leases and principal escrow		(418,638)	(213,287)
Balance at end of year	$	191,862,088	127,226,926
		===========	===========

5. Reconciliation of accumulated depreciation:

Balance at beginning of year	$	1,226,910	-
Depreciation expense		4,579,922	1,226,910
Balance at end of year	$	5,806,832	1,226,910
		==========	==========

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Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no disagreements with the Company's accountants or other reportable events during 2000.

PART III

Item 10.  Directors and Executive Officers of the Registrant

Officers and Directors

The Company's current officers and directors and their positions and offices with the Company are as follows:

Robert D. Parks	Chairman, Chief Executive Officer and Affiliated Director
Barry L. Lazarus	President, Chief Operating Officer, Treasurer, Chief Financial Officer   and Affiliated Director
Daniel K. Deighan	Independent Director
Michael S. Rosenthal	Independent Director
Kenneth E. Masick	Independent Director
Roberta S. Matlin	Vice President - Administration
Steven D. Sanders	Vice President - Acquisitions
Scott W. Wilton	Secretary

The Inland Group, Inc. ("Inland"), a Delaware corporation, together with its subsidiaries and its and their affiliates (collectively, the "Inland Affiliated Companies" or the "Inland Organization"), is a fully integrated real estate company providing property management, leasing, marketing, acquisition, disposition, development, redevelopment, syndication, renovation, construction, finance and other related services. Inland Real Estate Investment Corporation, a Delaware corporation ("IREIC"), a subsidiary of Inland, and one of the Inland Affiliated Companies, is the sponsor and organizer of the Company. Inland Retail Real Estate Advisory Services, Inc., an Illinois corporation (the "Advisor" to the Company), is a wholly owned subsidiary of IREIC. Inland Securities Corporation ("ISC"), another of the Inland Affiliated Companies, is the Dealer Manager of the Company's Offering. ISC was formed in 1984 and is qualified to do business as a securities broker-dealer throughout the United States. Since its formation, ISC has provided the marketing function for distribution of the investment products sponsored by IREIC. ISC does not render such services to anyone other than the Inland Affiliated Companies. The senior management of the Company includes executives of the Inland Affiliated Companies named above.

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  ROBERT D. PARKS (age 57) has been Chairman, Chief Executive Officer and Affiliated Director of the Company since its formation in 1998. Mr. Parks has been with Inland and its affiliates since 1968 and is one of the four original principals of Inland. He is a Director of Inland; Chairman of IREIC; Chairman of the Board and President of the Advisor; a Director of ISC and President, Chief Executive Officer, Chief Operating Officer, and a director of Inland Real Estate Corporation ("IREC"), a REIT which is also sponsored by IREIC. Mr. Parks is responsible for the ongoing administration of existing investment programs, corporate budgeting and administration for IREIC. He oversees and coordinates the marketing of all investments nationwide for IREIC and has overall responsibility for investor relations. Mr. Parks received his B.A. Degree from Northeastern Illinois University and an M.A. from the University of Chicago. He is a registered direct participation program limited principal with the National Association of Securities Dealers, Inc. ("NASD"). He is a member of the Real Estate Investment Association and the National Association of Real Estate Investment Trusts.

  BARRY L. LAZARUS (age 54) has been President, Chief Operating Officer and an Affiliated Director of the Company since its formation in 1998, and has been Treasurer and Chief Financial Officer of the Company since June 1999. After a brief career in public accounting, Mr. Lazarus joined Inland in 1973 as its original controller and was later promoted to Treasurer. From 1973 to 1979 he supervised all corporate and partnership accounting and tax matters, and managed corporate financial affairs. In 1979 Mr. Lazarus relocated to Phoenix, Arizona and formed The Butterfield Company, a development and contracting firm, while also serving as a consultant to investors in several commercial ventures. Between 1979 and 1987 the Butterfield Company successfully completed several projects in conjunction with national real estate firms, including Inland. From 1988 until October 1990 Mr. Lazarus was Vice President of Finance for UDC Homes, Inc., then a New York Stock Exchange Company and the largest homebuilder in the state of Arizona. His duties included obtaining financing for numerous development and construction projects in the Southeastern and Southwestern United States, as well as maintaining investor relations.

  Mr. Lazarus rejoined Inland in October 1990 and became President of Intervest Midwest Real Estate Corporation ("Intervest"), then one of the Inland Affiliated Companies. Intervest, which has its principal office in Atlanta, Georgia, has been active in land acquisition, development, financing and disposition of real estate assets in the Midwest and southeast, for its own account and for others. Mr. Lazarus solely owns Wisconsin and Southern Land Company, Inc., of which he has been President and Director since December 1993. Wisconsin and Southern Land Company, Inc., which has its office in Atlanta, Georgia, is a holding company that acquired Intervest from the Inland Organization in 1994. Intervest, pursuant to a service agreement, currently provides property zoning, development and disposition services to Wisconsin Capital Land Fund, L.P. ("Wisconsin Land Fund"), a private placement real estate equity program sponsored by IREIC. Intervest anticipates that it will have earned a total of $250,000 of compensation for services rendered and to be rendered to Wisconsin Land Fund. Mr. Lazarus continues to serve as President of Intervest. He received his B.B.A. Degree from the University of Wisconsin is a certified public accountant and holds real estate broker licenses in the states of Wisconsin and Georgia.

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  DANIEL K. DEIGHAN (age 60) has been an Independent Director of the Company since September 1998. He is an appraiser, who holds the MAI designation from the American Institute of Real Estate Appraisers (the predecessor to the Appraisal Institute), and has over 25 years of appraisal experience. He has testified as an expert witness in numerous counties throughout Florida, and in some courts in New York in eminent domain and other appraisal matters. Mr. Deighan is President of Florida Property Consultants Group, which has its office in Port St. Lucie, Florida. That firm is successor to Deighan Appraisal Associates, Inc. and its predecessors, which Mr. Deighan formed in 1971. Its business is the providing of expert appraisal, consulting and eminent domain services throughout Florida. Mr. Deighan has also been President of Southern Real Estate Group, Inc. since August 1998, and a commercial real estate brokerage firm. In addition, since February 1996, he has been Vice-President of Southern Property Consultants, Inc., a firm which specializes in real estate tax appeals, and a principal of Florida Residential Consultants, Inc., which provides appraisal services. All of the companies mentioned in this paragraph have their offices in Port St. Lucie, Florida. Deighan Appraisal Associates, Inc. was honored as the "Business of the Year" in 1990 by the Port St. Lucie Chamber of Commerce. Mr. Deighan is Vice Chairman of the Martin County Industrial Development Agency and a past President of the Tri-County Tec Foundation and the Economic Council of Martin County, Florida. He received his B.A. Degree from Sienna College, Albany, New York.

  MICHAEL S. ROSENTHAL (age 43) has been an Independent Director of the Company since October 1998. He is an attorney who has been in private practice since 1984. He has been a shareholder of the Atlanta, Georgia law firm of Wagner, Johnston & Rosenthal, P.C. Since September 1996. From January 1991 through August 1996, Mr. Rosenthal was President and a shareholder of the Atlanta, Georgia law firm of Weinstein, Rosenthal & Tobin, P.C. That law firm's predecessor conducted business as a partnership under the name of Weinstein, Rosenthal & Tobin from 1986 through December 1990, and Mr. Rosenthal served as its managing partner. He represents primarily service industry clients, providing day-to-day business counseling and advice, and services in the areas of mergers and acquisitions, real estate acquisitions and financings, as well as litigation when necessary. Mr. Rosenthal received both his B.A. Degree and his law degree from the University of Florida.

  KENNETH E. MASICK (age 55) has been an Independent Director of the Company since December 1998. He has been a partner of Wolf & Company LLP, certified public accountants, since its formation in 1978. That firm, one of the largest in the Chicagoland area, specializes in audit, tax and consulting services to privately owned businesses. Mr. Masick currently is partner-in-charge of the firm's audit and accounting department and is responsible for the firm's quality control. His accounting experience also includes forecasts and projections, feasibility studies and due diligence activities on acquisitions. Mr. Masick has been in public accounting since his graduation from Southern Illinois University in 1967. He is also licensed as a General Securities Representative. Mr. Masick is a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. He also serves as president and director of Wolf Capital Corporation, a firm specializing in mergers and acquisitions, business valuations and financial consulting, and as a director of Oak Brook Investor Advisory Services, Inc., a securities broker dealer firm. All of the mentioned entities with which Mr. Masick is affiliated have their offices in Oak Brook, Illinois.

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  ROBERTA S. MATLIN (age 56) has been Vice President--Administration of the Company since its formation in 1998. Ms. Matlin joined Inland in 1984 as Director of Investor Administration and currently serves as Senior Vice President--Investments of IREIC, directing IREIC's day-to-day internal operations. She has also been Vice President-Administration of IREC since March 1995. Ms. Matlin is a Director of IREIC, ISC and Inland Real Estate Advisory Services, Inc. the Advisor to IREC. Prior to joining Inland, she spent 11 years with the Chicago Region of the Social Security Administration of the United States Department of Health and Human Services. Ms. Matlin received her B.A. Degree from the University of Illinois. She is registered with the NASD as a general securities principal and investment advisor.

  STEVEN D. SANDERS (age 51) has been involved in the real estate industry, continuously since 1970. His real estate career began with Carlsberg Financial Corporation in Los Angeles, California, a sponsor of national real estate limited partnerships that acquired office, industrial, multi-family, Manufactured home parks and retail properties throughout the United States. As Regional Director of Acquisitions, Mr. Sanders' responsibilities included identification, analysis, negotiations and closings of properties in the eastern United States, on behalf of Carlsberg Financial Corporation sponsored partnerships. In 1979 and 1980, Mr. Sanders worked for R&B Development, Los Angeles, California, as Director of Acquisitions for multi-family properties acquired for ultimate conversions to condominiums. In 1981, he formed Irvine Properties, Inc. which offered real estate consultation, brokerage and management services to local and national investors. In 1984, Mr. Sanders joined Univest Real Estate Corporation, Tampa, Florida, an affiliate of Inland, and spearheaded the acquisition of multi-family properties throughout the state of Florida. In 1988, he formed Florida Country Clubs, Inc., which acquired and operated three golf and country clubs located in Orlando, Florida. In 1991, Mr. Sanders acquired interests in additional golf and country clubs on the east and west coasts of Florida. In 1993 he rejoined Inland at its Oak Brook, Illinois headquarters with the primary responsibility of acquiring shopping centers for IREC. Mr. Sanders is also President of Inland Southeast Property Management Corp., the real estate management agent for the Company's properties. He has been Vice President--Acquisitions of the Company since its formation in 1998.

  SCOTT W. WILTON (age 40) has been our secretary since August 2000. Mr. Wilton joined The Inland Group in January 1995. He is assistant vice president of The Inland Real Estate Group, Inc. and assistant counsel with The Inland Real Estate Group law department. Mr. Wilton is involved in all aspects of our business, including real estate acquisitions and financing, securities law and corporate governance matters, leasing and tenant matters, and litigation management. He received B.S. degrees in economics and history from the University of Illinois at Champaign in 1982 and his law degree from Loyola University of Chicago, Illinois in 1985. Prior to joining The Inland Group, Mr. Wilton worked for the Chicago law firm of Williams, Rutstein, Goldfarb, Sibrava and Midura, Ltd., specializing in real estate and corporate transactions and litigation.

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The election of members of the Board of Directors is conducted on an annual basis. Each individual elected to the Board serves a one-year term or until his or her successor is elected and qualified. Accordingly, the term of office of each director of the Company will expire at the annual meeting of stockholders to be held later this year. It is anticipated that at such meeting each current director will be nominated to stand for reelection as a director to hold office until the Company's annual meeting of stockholders to hold in 2001 and until his successor is elected and qualified. The Company has no reason to believe that any of the anticipated nominees will be unable of unwilling to serve if elected.

Item 11.  Executive Compensation

With the exception of Barry L. Lazarus, the Company's executive officers are all employees of Inland Real Estate Investment Corporation, the owner of Inland Retail Real Estate Advisory Services, Inc., the Company's Advisor, and/or its affiliates. The Company does not pay any of these individuals for serving in their respective positions. For a discussion of fees paid to the Advisor and other Inland Affiliated Companies, see "Certain Relationships and Related Transactions" below.

Mr. Lazarus was paid $35,000 and $26,250 in 2000 and 1999 respectively, and reimbursement for out-of-pocket expenses for his services as President, Chief Operating Officer, Treasurer and Chief Financial Officer of the Company. Beginning on March 1, 2001 Mr. Lazarus will receive an annual salary of $100,000. His "at will" employment is based on an oral agreement. Mr. Lazarus will devote most of his time to the Company's business; however, he will continue to devote some time to Intervest Midwest Real Estate Corporation, of which he is President.

The Company pays its Independent Directors an annual fee of $1,000. Messrs. Deighan, Rosenthal and Masick were each paid fees of $6,200, $5,700, and $6,200, respectively in 2000 and $3,000 each in 1999 for their services as Independent Directors. In addition, each Independent Director receives $250 for attending (in person or by telephone) each meeting of the Board of Directors or a committee thereof. Officers of the Company who are Directors (Messrs. Parks and Lazarus) are not paid fees for serving as directors.

Under the Company's Independent Director Stock Option Plan, each Independent Director is entitled to be granted an option to acquire 3,000 shares as of the date they become a Director and an additional 500 shares on the date of each annual stockholders' meeting commencing with the annual meeting in 2000 so long as the Independent Director remains a member of the Board on such date. The options for the initial 3,000 Shares will be exercisable as follows: 1,000 Shares on the date of grant and 1,000 Shares on each of the first and second anniversaries of the date of grant. The options to be granted as of each annual stockholders meeting will become fully exercisable on the second anniversary of the date of grant. Options granted during the pendency of the current initial public offering will be exercisable at $9.05 per share. As of December 31, 2000 options to acquire 10,500 Shares had been issued.

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Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of February 27, 2001 regarding the Number and percentage of Shares beneficially owned by: (I) each director; (ii) each executive officer; (iii) all directors and executive officers as a group; and (iv) as of March 1, 2001, any person known to us to be the beneficial owner of more than 5% of the Shares.

	Number of Shares Beneficially	Percent
Name of Beneficial Owner	Owned (1)	of Class
Robert D. Parks	23,105 (2)	*
Barry L. Lazarus	11,050	*
Daniel K. Deighan	1,000 (3)	*
Michael S. Rosenthal	1,891 (3)	*
Kenneth E. Masick	3,422 (3)	*
Roberta S. Matlin	-	-
Steven D. Sanders	-	-
Scott W. Wilton	-	-
All Directors and Executive Officers as a group (8   persons)	41,229 (2)	*
Macomb County Retirement System (4)	1,374,580	9.63%

*  Less than 1%

1. Beneficial ownership includes outstanding Shares and Shares that any person has the right to acquire within 60 days after the date of this table. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Shares beneficially owned by them.
2. Includes 20,000 Shares owned by the Advisor. The Advisor is a wholly owned subsidiary of IREIC, which is an affiliate of Inland. Mr. Parks is a control person of Inland and disclaims beneficial ownership of Shares owned by the Advisor.
3. Consists of Shares issuable upon exercise of options to which each Independent Director is entitled but which have not yet been issued, which options are anticipated to be issued soon so that they will become exercisable within 60 days after the date of this table.
4. The address of Macomb County Retirement System is 10 N. Main, 12th Floor, County Building, Mt. Clemens, MI 48043.

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Item 13.  Certain Relationships and Related Transactions

For the year ended December 31, 2000, the Company incurred a total of $16,521,606 of organizational and offering costs, of which $11,694,232 was paid or accrued to affiliates.

The Advisor and its affiliates are entitled to reimbursement for salaries and expenses of employees of the Advisor and its affiliates relating to the offering and the administration of the Company. During the year ended December 31, 2000, the Company incurred $257,840 of these costs, of which $169,933 remained unpaid at December 31, 2000. In addition, an affiliate of the Advisor served as dealer manager of an offering of securities by the Company and earned fees of $6,907,685, of which $227,589 was unpaid as of December 31, 2000. Approximately all of these commissions have been passed through from the Affiliate to unaffiliated soliciting broker/dealers.

The Advisor may receive an annual Advisor asset management fee of not more than 1% of the average invested assets, paid quarterly. For any year in which the Company qualifies as a REIT, the Advisor must reimburse the Company: (i) to the extent that the Advisor asset management fee plus other operating expenses paid during the previous calendar year exceed 2% of the Company's average invested assets for the calendar year or 25% of the Company's net income for that calendar year; and (ii) to the extent that stockholders have not received an annual distribution equal to or greater than the 7.0% current return. The advisor asset management fee plus other operating expenses paid during the previous calendar year did not exceed 2% of the Company's Average Invested Assets for the calendar year or 25% of the Company's Net Income for that calendar year and Stockholders received an annual Distribution greater than a 7% return. For the year ended December 31, 2000, the Company has incurred $120,000 of asset management fees, of which $30,000 remains unpaid as of December 31, 2000. In 1999 the Company neither paid nor accrued such fees because the Advisor indicated that it would forego such fees

An Affiliate of the Advisor, Inland Southeast Property Management Corp. ("ISPM"), is entitled to receive property management fees for management and leasing services. Such fees may not exceed 4.5% of the gross income earned by the Company on properties managed. The Company incurred and paid property management fees of $926,978 for the year ended December 31, 2000, all of which have been paid.

The Advisor and its affiliates are entitled to reimbursement for salaries and expenses of employees of the Advisor and its affiliates relating to selecting, evaluating and acquiring of properties. Such amounts are included in building and improvements for those costs relating to properties purchased. Such amounts are included in acquisition cost expenses to Affiliates for costs relating to properties not acquired.

Loan servicing fees in the amount of $48,322 were paid to Inland Mortgage Servicing Corporation, an affiliate of the Advisor.

The Company used the services of an affiliate of the Advisor to facilitate the mortgage financing that the Company obtained on some of the properties purchased. During the year ended December 31, 2000 the Company paid loan fees totaling $23,438 to this affiliate.

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PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  List of documents filed:

1. The consolidated financial statements of the Company included in this report are set forth in Item 8.
2. Financial Statement Schedules:

The following financial statement schedule for the year ended December 31, 2000 is submitted herewith:

	Page
Real Estate and Accumulated Depreciation (Schedule III)	42

Schedules not filed:

All schedules other than the one listed above have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

3. Exhibits. The following exhibits are filed as part of this document:

Item No.	Description
3.1	Second Articles of Amendment and Restated Charter of Inland Retail Real Estate Trust, Inc. (Included as Exhibit 3.1 to Amendment No. 3 to the Company's Registration Statement on Form S-11 filed on February 9, 1999 (File No. 333-64391) and incorporated herein by reference.)
3.2	Amended and Restated Bylaws of Inland Retail Real Estate Trust, Inc. (Included as Exhibit 3.2 to Amendment No. 2 to the Company's Registration Statement on Form S-11 filed on January 28, 1999 (File No. 333-64391) and incorporated herein by reference.)
4.1	Form of Agreement of Limited Partnership of Inland Retail Real Limited Partnership. (Included as Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement on Form S-11 filed on January 7, 1999 (File No. 333-64391) and incorporated herein by reference.)
4.2	Specimen Certificate for the Shares. (Included as Exhibit 4.2 to the Company's Registration Statement on Form S-11 filed on September 28, 1998 (File 333-64391) and incorporated herein by reference.)
10.1	Form of Escrow Agreement by and among Inland Retail Real Estate Trust, Inc., Inland Securities Corporation and LaSalle National Bank, N.A. (Included as Exhibit 10.1 to Amendment No. 3 to the Company's Registration Statement on Form S-11 filed on February 9, 1999 (File No. 333-64391) and incorporated herein by reference.)
10.2	Form of Advisory Agreement by and between Inland Retail Real Estate Trust, Inc., and Inland Retail Real Estate Advisory Services, Inc. (Included as Exhibit 10.2 to the Company's Registration Statement on Form S-11 filed on September 28, 1998 (File No. 333-64391) and incorporated herein by reference.)

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10.3	Form of Master Management Agreement, including the form of Management Agreement for each Property by and between Inland Retail Real Estate Trust, Inc. and Inland Southeast Property Management Corp. (Included as Exhibit 10.3 to the Company's Registration Statement on Form S-11 filed on September 28, 1998 (File No. 333-64391) and incorporated herein by reference.)
10.4	Form of Property Acquisition Service Agreement by and among Inland Retail Real Estate Trust, Inc., Inland Retail Real Estate Advisory Services, Inc., Inland Real Estate Corporation, Inland Real Estate Advisory Services, Inc., and Inland Real Estate Acquisitions, Inc. (Included as Exhibit 10.4 to the Company's Registration Statement on Form S-11 filed on September 28, 1998 (File No. 333-64391) and incorporated herein by reference.)
10.5	Form of the Company's Independent Director Stock Option Plan. (Included as Exhibit 10.5 to Amendment No. 1 to the Company's Registration Statement on Form S-11 filed on January 7, 1999 (File No. 333-64391) and incorporated herein by reference.)
10.6	Form of Indemnification Agreement by and between Inland Retail Real Estate Trust, Inc., and its directors and executive officers. (Included as Exhibit 10.6 to Amendment No. 3 to the Company's Registration Statement on Form S-11 filed February 9, 1999 (File No. 333-64391) and incorporated herein by reference.)
10.7	Form of Agreement dated March, 1999 between Inland Retail Real Estate Trust, Inc. and Inland Real Estate Investment Corporation relating to payment of the reasonably estimated cost to prepare and mail a notice to stockholders of any special meeting of stockholders requested by the stockholders. (Included as Exhibit 10.7 to Amendment No. 4 to the Company's Registration Statement on Form S-11 filed on February 10, 1999 (File No. 333-64391) and incorporated herein by reference.)

27.1 Financial Data Schedule

(b)  Reports on Form 8-K:

The following reports on Form 8-K were filed during the last quarter of the period covered by this annual report.

Report on Form 8-K dated December 7, 2000
Item 2.	Acquisition or Disposition of Assets

(c)  See exhibit index included above.

(d)  None

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INLAND RETAIL REAL ESTATE TRUST, INC.
	/s/ Robert D. Parks
By:	Robert D. Parks
	Chairman and Chief Executive Officer and Affiliated Director
Date:	March 12, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

	/s/ Robert D. Parks
By:	Robert D. Parks
	Chairman and Chief Executive Officer and Affiliated Director
Date:	March 12, 2001
	/s/ Barry L. Lazarus
By:	Barry L. Lazarus
	President, Chief Operating Officer, Treasurer, Chief Financial Officer and Affiliated Director
Date:	March 12, 2001
	/s/ Daniel K. Deighan
By:	Daniel K. Deighan
	Independent Director
Date:	March 12, 2001
	/s/ Kenneth E. Masick
By:	Kenneth E. Masick
	Independent Director
Date:	March 12, 2001
	/s/ Michael S. Rosenthal
By:	Michael S. Rosenthal
	Independent Director
Date:	March 12, 2001

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