UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934For the Quarterly Period Ended March 31, 2001
or
[ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period fromto
Commission File 000-30413Inland Retail Real Estate Trust, Inc.
(Exact name of registrant as specified in its charter)

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

N/A
(Former name, former address and former fiscal
year, if changed since last report)

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

As of May 8, 2001, there were 17,663,285 Shares of Common Stock outstanding.



---

PART I - Financial Information

Item 1. Consolidated Financial Statements





INLAND RETAIL REAL ESTATE TRUST, INC.
(a Maryland corporation)Consolidated Balance SheetsMarch 31, 2001 and December 31, 2000 
(unaudited)Assets

|                                                                                                                                          |   | March 31,   |   | December 31,
|----------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | ------------
|                                                                                                                                          |   | 2001        |   | 2000        
|Investment Properties:                                                                                                                    |   |             |   |             
|Land                                                                                                                                      | $ | 55,573,880  | $ | 46,628,264  
|Land held for development                                                                                                                 |   | 959,257     |   | 957,802     
|Construction in progress                                                                                                                  |   | 78,964      |   | --          
|Building and site improvements                                                                                                            |   | 170,803,048 |   | 144,289,027 
|                                                                                                                                          |   | 227,415,149 |   | 191,875,093 
|Less accumulated depreciation                                                                                                             |   | (7,322,009) |   | (5,811,071) 
|Net investment in properties                                                                                                              |   | 220,093,140 |   | 186,064,022 
|                                                                                                                                          |   |             |   |             
|Mortgage receivable                                                                                                                       |   | 1,100,000   |   | 1,100,000   
|Cash and cash equivalents                                                                                                                 |   | 15,608,262  |   | 24,664,511  
|Restricted cash                                                                                                                           |   | 791,526     |   | 864,271     
|Investment in securities                                                                                                                  |   | 5,104,093   |   | 1,537,467   
|Accounts and rents receivable, (net of allowance of $329,210   and $273,581 as of March 31, 2001 and   December 31, 2000,   respectively) |   | 2,115,858   |   | 2,747,257   
|Real estate tax and insurance escrow deposits                                                                                             |   | 231,497     |   | 134,167     
|Loan fees (net of accumulated amortization of                                                                                             |   |             |   |             
|$178,239 and $177,194 as of March 31, 2001 and                                                                                            |   |             |   |             
|December 31, 2000, respectively)                                                                                                          |   | 872,493     |   | 518,930     
|Leasing fees (net of accumulated amortization of $16,868   and $17,246 as of March 31, 2001 and December 31, 2000,   respectively)        |   | 63,210      |   | 61,394      
|Deferred acquisition costs                                                                                                                |   | 162,671     |   | 330,876     
|Other assets                                                                                                                              |   | 97,801      |   | 165,018     
|Total assets                                                                                                                              | $ | 246,240,551 | $ | 218,187,913 
|                                                                                                                                          |   | =========   |   | ==========  











See accompanying notes to consolidated financial statements.

---

INLAND RETAIL REAL ESTATE TRUST, INC.

(continued)
March 31, 2001 and December 31, 2000
(unaudited)Liabilities and Stockholders' Equity

|                                                                                                                                                                                                 |   | March 31,   |   | December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ----------- | - | ------------
|                                                                                                                                                                                                 |   | 2001        |   | 2000        
|Liabilities:                                                                                                                                                                                     |   |             |   |             
|Accounts payable                                                                                                                                                                                 | $ | 312,817     | $ | 80,230      
|Accrued offering costs due to affiliates                                                                                                                                                         |   | 114,154     |   | 227,589     
|Accrued offering costs due to non-affiliates                                                                                                                                                     |   | 486,602     |   | 54,548      
|Accrued interest payable to non-affiliates                                                                                                                                                       |   | 616,343     |   | 629,208     
|Accrued real estate taxes payable                                                                                                                                                                |   | 640,288     |   | --          
|Distributions payable                                                                                                                                                                            |   | 1,006,493   |   | 848,217     
|Security deposits                                                                                                                                                                                |   | 374,223     |   | 313,925     
|Mortgages payable                                                                                                                                                                                |   | 113,737,513 |   | 108,399,911 
|Unearned income                                                                                                                                                                                  |   | 437,456     |   | 359,618     
|Other liabilities                                                                                                                                                                                |   | 2,832,739   |   | 1,323,098   
|Due to affiliates                                                                                                                                                                                |   | 229,523     |   | 169,933     
|                                                                                                                                                                                                 |   |             |   |             
|Total liabilities                                                                                                                                                                                |   | 120,788,151 |   | 112,406,277 
|                                                                                                                                                                                                 |   |             |   |             
|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, shares 100,000,000
    authorized, 15,278,945 and 12,895,770 issued and
    outstanding at March 31, 2001 and December 31,
    2000, respectively                  |   | 152,789     |   | 128,957     
|Additional paid-in capital (net of costs of                                                                                                                                                      |   |             |   |             
|Offering of $19,650,873 and $16,521,606 at March     31,2001 and December 31, 1999, respectively, of     which $13,781,672 and $11,694,232 was paid or     
accrued to affiliates, respectively) |   | 132,164,023 |   | 111,504,380 
|Accumulated distributions in excess of net income                                                                                                                                                |   | (7,312,847) |   | (5,783,805) 
|Accumulated other comprehensive income (loss)                                                                                                                                                    |   | 446,435     |   | (69,896)    
|                                                                                                                                                                                                 |   |             |   |             
|Total stockholders' equity                                                                                                                                                                       |   | 125,450,400 |   | 105,779,636 
|                                                                                                                                                                                                 |   |             |   |             
|Commitments and contingencies                                                                                                                                                                    |   |             |   |             
|                                                                                                                                                                                                 |   |             |   |             
|Total liabilities and stockholders' equity                                                                                                                                                       | $ | 246,240,551 | $ | 218,187,913 
|                                                                                                                                                                                                 |   | =========== |   | ==========  

See accompanying notes to consolidated financial statements.

---

INLAND RETAIL REAL ESTATE TRUST, INC.



|                                                                          |   | March 31,    |   | March 31, 
|------------------------------------------------------------------------- | - | ------------ | - | ----------
|                                                                          |   | 2001         |   | 2000      
|                                                                          |   |              |   |           
|Income:                                                                   |   |              |   |           
|Rental income                                                             | $ | 5,146,701    | $ | 3,475,191 
|Additional rental income                                                  |   | 1,404,921    |   | 1,335,078 
|Interest and dividend income                                              |   | 373,426      |   | 200,950   
|Other income                                                              |   | 3,187        |   | 3,599     
|Gain on sale of investment securities                                     |   | 13,911       |   | --        
|                                                                          |   |              |   |           
|                                                                          |   | 6,942,146    |   | 5,014,818 
|Expenses:                                                                 |   |              |   |           
|Professional services to non-affiliates                                   |   | 52,811       |   | 80,725    
|General and administrative expenses to affiliates                         |   | 99,425       |   | 60,483    
|General and administrative expenses to non-affiliates                     |   | 63,514       |   | 47,176    
|Property operating expenses to affiliates                                 |   | 330,074      |   | 199,455   
|Property operating expenses to non-affiliates                             |   | 1,415,458    |   | 1,462,511 
|Mortgage interest to non-affiliates                                       |   | 2,126,819    |   | 1,766,153 
|Acquisition costs expense to affiliates                                   |   | 22,989       |   | --        
|Acquisition costs expense to non-affiliates                               |   | 14,591       |   | 3,877     
|Depreciation                                                              |   | 1,510,938    |   | 906,081   
|Amortization                                                              |   | 63,308       |   | 20,024    
|                                                                          |   |              |   |           
|                                                                          |   | 5,699,927    |   | 4,546,485 
|Net income                                                                | $ | 1,242,219    | $ | 468,333   
|                                                                          |   |              |   |           
|Other comprehensive income:
Unrealized gain on investment securities      |   | 516,331      |   | --        
|                                                                          |   |              |   |           
|Comprehensive income                                                      | $ | 1,758,550    |   | 468,333   
|                                                                          |   | ============ |   | ==========
|Net income per weighted average common share, basic and   diluted         | $ | .09          | $ | .08       
|                                                                          |   | ============ |   | ==========
|                                                                          |   |              |   |           
|Weighted average number of common shares outstanding,   basic and diluted |   | 14,047,894   |   | 6,174,848 
|                                                                          |   | ============ |   | ==========
|                                                                          |   |              |   |           



See accompanying notes to consolidated financial statements.

---

INLAND RETAIL REAL ESTATE TRUST, INC.(a Maryland corporation)Consolidated Statement of Stockholders' Equity
For the three months ended March 31, 2001



|                                                                                           | Number of Shares | Common
Stock | Additional Paid-in
Capital | Accumulated
Distributions in excess of  Net Income | Accumulated Other Comprehensive Gain (Loss) | Total            
|------------------------------------------------------------------------------------------ | ---------------- | ------------ | -------------------------- | -------------------------------------------------- | ------------------------------------------- | -----------------
|Balance at December 31, 2000                                                               | 12,895,770       | $ 128,957    | $ 111,504,380              | $    (5,783,805)                                   | $             (69,896)                      | $     105,779,636
|                                                                                           |                  |              |                            |                                                    |                                             |                  
|Net income                                                                                 | --               | --           | --                         | 1,242,219                                          | --                                          | 1,242,219        
|Unrealized gain on investment securities                                                   |                  |              |                            |                                                    | 516,331                                     | 516,331          
|Distributions declared ($.20 per   weighted average number of common   shares outstanding) | --               | --           | --                         | (2,771,261)                                        | --                                          | (2,771,261)      
|Proceeds from Offering including DRP   (net of Offering costs of $3,129,267)               | 2,412,803        | 24,128       | 20,928,430                 | --                                                 | --                                          | 20,952,558       
|Retired stock                                                                              | (29,628)         | (296)        | (268,787)                  | --                                                 | --                                          | (269,083)        
|Balance at March 31, 2001                                                                  | 15,278,945       | $    152,789 | $   132,164,023            | $      (7,312,847)                                 | $              446,435                      | $  125,450,400   
|                                                                                           | =========        | =========    | =========                  | ============                                       | ============                                | ===========      







See accompanying notes to consolidated financial statements.

---

INLAND RETAIL REAL ESTATE TRUST, INC.(a Maryland corporation)Consolidated Statements of Cash Flows
For the three months ended March 31,  2001 and 2000
(unaudited)

|                                                                                      |   | March 31,    |   | March 31,  
|------------------------------------------------------------------------------------- | - | ------------ | - | -----------
|                                                                                      |   | 2001         |   | 2000       
|Cash flows from operating activities:                                                 |   |              |   |            
|Net income                                                                            | $ | 1,242,219    | $ | 468,333    
|Adjustments to reconcile net income to net
    cash provided by operating activities: |   |              |   |            
|Depreciation                                                                          |   | 1,510,938    |   | 906,081    
|Amortization                                                                          |   | 63,308       |   | 20,024     
|Principal escrow                                                                      |   | --           |   | 31,632     
|Gain on sale of investment stock                                                      |   | (13,911)     |   | --         
|Rental income under master lease                                                      |   | 90,861       |   | 99,658     
|Straight line rental income                                                           |   | (135,528)    |   | (81,292)   
|Changes in assets and liabilities:                                                    |   |              |   |            
|Accounts and rents receivable                                                         |   | 766,926      |   | (315,510)  
|Other assets                                                                          |   | 67,217       |   | (274,719)  
|Real estate tax and insurance escrows                                                 |   | (97,330)     |   | (59,747)   
|Deferred acquisition costs                                                            |   | 168,205      |   | --         
|Accrued interest payable to non-affiliates                                            |   | (12,865)     |   | 71,440     
|Real estate tax payable                                                               |   | 640,288      |   | 381,539    
|Accounts payable                                                                      |   | 232,587      |   | 232,608    
|Unearned income                                                                       |   | 77,838       |   | 150,886    
|Other liabilities                                                                     |   | (118,365)    |   | (120,790)  
|Security deposits                                                                     |   | 60,298       |   | 52,571     
|Due to affiliates                                                                     |   | 59,590       |   | 666,985    
|Net cash provided by operating activities                                             |   | 4,602,276    |   | 2,229,699  
|                                                                                      |   |              |   |            
|Cash flows from investing activities:                                                 |   |              |   |            
|Restricted cash                                                                       |   | 72,745       |   | 192,308    
|Purchase of investment securities, net of margin
    account of $1,628,015            |   | (1,544,596)  |   | --         
|Proceeds from sale of investment securities                                           |   | 136,219      |   | --         
|Purchase of investment properties                                                     |   | (35,441,667) |   | (8,540,755)
|Additions to investment properties                                                    |   | (189,250)    |   | (30,622)   
|Leasing fees                                                                          |   | (7,000)      |   | 4,500      
|Net cash used in investing activities                                                 |   | (36,973,549) |   | (8,374,569)



See accompanying notes to consolidated financial statements.

---

INLAND RETAIL REAL ESTATE TRUST, INC.



|                                                     |   | March 31,   |   | March 31,  
|---------------------------------------------------- | - | ----------- | - | -----------
|                                                     |   | 2001        |   | 2000       
|Cash flows from financing activities:                |   |             |   |            
|Proceeds from offering                               | $ | 24,081,825  | $ | 13,826,235 
|Repurchase of Shares                                 |   | (269,083)   |   | --         
|Payment of offering costs                            |   | (2,810,648) |   | (3,062,439)
|Proceeds from issuance of debt                       |   | 5,400,000   |   | --         
|Principal payments of debt                           |   | (62,398)    |   | (3,317,713)
|Loan fees                                            |   | (411,687)   |   | (10,002)   
|Distributions paid                                   |   | (2,612,985) |   | (1,064,064)
|Net cash provided by financing activities            |   | 23,315,024  |   | 6,372,017  
|                                                     |   |             |   |            
|Net increase (decrease) in cash and cash equivalents |   | (9,056,249) |   | 227,147    
|                                                     |   |             |   |            
|Cash and cash equivalents at January 1,              |   | 24,664,511  |   | 14,869,164 
|                                                     |   |             |   |            
|Cash and cash equivalents at March 31,               | $ | 15,608,262  | $ | 15,096,311 
|                                                     |   | =========   |   | =========  





Supplemental schedule of noncash investing and financing activities:

|                       |   |           |   |          
|---------------------- | - | --------- | - | ---------
|                       |   |           |   |          
|Distributions payable  | $ | 1,006,423 | $ | 418,582  
|                       |   | ========= |   | =========
|                       |   |           |   |          
|Cash paid for interest | $ | 2,139,684 | $ | 1,694,713
|                       |   | ========= |   | =========
|                       |   |           |   |          
|                       |   |           |   |          



See accompanying notes to consolidated financial statements.

---

Notes to Consolidated Financial Statements



March 31, 2001

(unaudited)

The accompanying consolidated financial statements have been prepared in accordance with accounting principals generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  Readers of this Quarterly Report should refer to the audited financial statements of Inland Retail Real Estate
Trust, Inc. (the "Company") for the fiscal year ended December 31, 2000, which are included in the Company's 2000 Annual Report, as certain footnote disclosures contained in such audited financial statements have been omitted from this Report.

(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 (the "Initial 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 January 31, 2001, the Company had received subscriptions for a total of 13,707,349 Shares. The Company began an additional offering on February 1, 2001 (the "Subsequent Offering").  As of March 31, 2001, the Company has received
subscriptions for a total of 1,318,162 Shares in the Subsequent Offering. In addition, the Company has issued 340,280 Shares pursuant to the Company's DRP.  As of March 31, 2001, the Company has repurchased a total of 86,846 Shares through the Company's
Share Repurchase Program for $785,952.



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%(90% for taxable years beginning after December 31, 2000) 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 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.



---



Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

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 held for investment whenever its
carrying value cannot be fully recovered through estimated undiscounted future cash flows from operations and sale of the property. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the
property's estimated fair value. As of March 31, 2001, 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 for buildings and 15 years for the site improvements.  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, deposits, other assets, accounts payable and other liabilities,
accrued offering costs to affiliates and non-affiliates, accrued interest payable to non-affiliates, accrued real estate taxes payable, distributions payable, other liabilities and due to affiliates approximate fair value because of the relatively short
maturity of these instruments.

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



---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

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 March 31,
200l and 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.  Additionally, the Company has purchased its securities through a margin account.  As of March 31, 2001 and December 31, 2000, the Company has recorded a payable of $1,980,382 and
$352,376, respectively for securities purchased on margin.

The Company adopted FASB Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which established 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 does not have any material hedging instruments.

(2)  Basis of Presentation

The accompanying Consolidated Balance Sheets includes 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. 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.



---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

(3)  Transactions with Affiliates

As of March 31, 2001 and December 31, 2000, the Company had incurred $19,650,872 and $16,521,606 of offering costs, respectively, of which $13,781,672 and $11,694,232 was paid to affiliates. Pursuant to the terms of the offerings, 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 March 31, 2001 and December 31, 2000 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 $13,781,673 and $6,907,685 as of March 31, 2001 and
December 31, 2000 respectively, of which $114,154 and $227,589 was unpaid at March 31, 2001 and December 31, 2000, 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 and acquisition costs. During the periods ended March 31, 2001 and 2000 the Company incurred $122,414 and $60,483, respectively of these costs, of which $229,523 and $169,933 remained unpaid as March 31,
2001 and December 31, 2000, respectively

An affiliate of the Advisor provides loan servicing to the Company for a monthly fee.  Such fees totaled $8,700 and $11,055 in the periods ended March 31, 2001 and 2000, respectively.  An agreement with the Company allows for annual fees totaling .05%
of the first $100,000,000 mortgage balance outstanding and .03% of the remaining mortgage balance, payable monthly.

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

The Company uses 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 quarter March 31, 2001 and 2000, no such fees were incurred.

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% Current Return.  For the three months ended March 31, 2001 and 2000, no such fees were accrued or paid.

---



Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

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 $330,074 and $199,455 for the three months ended March 31, 2001 and 2000, respectively.



(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 granted for the initial 3,000
Shares are 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 March 31, 2001 and December 31, 2000, options to acquire 10,500 Shares had been issued.

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 dealer 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 March 31, 2001, soliciting dealer warrants to acquire 599,811 Shares have been issued.  These warrants have nominal value and none had been exercised at March 31, 2001 and December 31, 2000.



Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

(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 of those properties from this affiliate at their costs upon receipt of proceeds from the Offering.

|                                       |             |                   |              |                                                 |           |              |            |              |           
|-------------------------------------- | ----------- | ----------------- | ------------ | ----------------------------------------------- | --------- | ------------ | ---------- | ------------ | ----------
|                                       |             | Initial Costs (A) |              | Gross amount at which Carried at March 31, 2001 |           |              |           
|                                       |             |                   |              |                                                 |           |              |            |              | Date      
|                                       |             |                   | Buildings    | Adjustments                                     |           | Buildings    |            |              | Con-      
|                                       |             |                   | And          | to                                              |           | And          |            | Accumulated  | Stru-     
|                                       | Encumbrance | Land              | Improvements | Basis (B)                                       | Land      | Improvements | Total      | Depreciation | cted      
|Multi-Tenant Retail                    |             |                   |              |                                                 |           |              |            |              |           
|Lake Walden Square
Plant City, FL      | 9,913,653   | 3,006,662         | 11,549,586   | 41,421                                          | 3,006,662 | 11,591,007   | 14,597,669 | 897,856      | 1992      
|Merchants Square
Zephyrhills, FL       | 3,167,437   | 992,225           | 4,749,818    | 12,812                                          | 992,225   | 4,762,630    | 5,754,855  | 351,986      | 1993      
|Town Center Commons
Kennesaw, GA       | 4,750,000   | 3,293,792         | 6,350,835    | (80,159)                                        | 3,293,792 | 6,270,676    | 9,564,468  | 429,064      | 1998      
|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 | 1,317,259    | 1998      
|Lake Olympia Square (C)
Ocoee, FL      | 5,738,423   | 2,567,471         | 7,306,483    | (20,238)                                        | 2,562,471 | 7,291,245    | 9,853,716  | 433,814      | 1995      
|Bridgewater Marketplace
Orlando, FL    | 2,987,500   | 783,492           | 5,221,618    | (62,781)                                        | 783,492   | 5,158,837    | 5,942,329  | 291,805      | 1998      
|Bartow Marketplace
Cartersville, GA    | 13,475,000  | 6,098,178         | 18,308,271   | 4,071                                           | 6,098,178 | 18,312,342   | 24,410,520 | 976,553      | 1995      
|Countryside
Naples, FL                 | 6,720,000   | 1,117,428         | 7,478,173    | 9,570                                           | 1,117,428 | 7,487,743    | 8,605,171  | 402,248      | 1997      
|Casselberry Commons
Naples, FL         | 8,703,000   | 6,702,658         | 11,191,912   | (87,277)                                        | 6,702,658 | 11,104,635   | 17,807,293 | 583,175      | 1973/
1998
|Conway Plaza
Orlando, FL               | 5,000,000   | 2,215,325         | 6,332,434    | 148,574                                         | 2,215,325 | 6,481,008    | 8,696,333  | 303,959      | 1985/
1999
|Pleasant Hill
Duluth, GA               | 17,120,000  | 4,805,830         | 29,526,305   | (120,630)                                       | 4,805,830 | 29,405,675   | 34,211,505 | 840,340      | 1997/
2000
|Gateway Marketplace
St. Petersburg, FL | 15,637,500  | 6,351,848         | 14,576,808   | 19,531                                          | 6,351,848 | 14,596,339   | 20,948,187 | 345,093      | 1997/
2000
|Columbia Promenade
Kissimmee, FL       | 5,400,000   | 1,483,736         | 5,929,323    | (700)                                           | 1,483,736 | 5,928,623    | 7,412,359  | 40,719       | 2000      
|Kmart
Macon, GA                        | --          | 1,173,426         | 7,860,904    | --                                              | 1,173,426 | 7,860,904    | 9,034,330  | 55,194       | 2000      

---



Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

(5) Investment Properties (continued)

|                                                   |             |                   |              |                                                 |            |              |             |              |      
|-------------------------------------------------- | ----------- | ----------------- | ------------ | ----------------------------------------------- | ---------- | ------------ | ----------- | ------------ | -----
|                                                   |             | Initial Costs (A) |              | Gross amount at which Carried at March 31, 2001 |            |             
|                                                   |             |                   |              |                                                 |            |              |             |              | Date 
|                                                   |             |                   | Buildings    | Adjustments                                     |            | Buildings    |             |              | Con- 
|                                                   |             |                   | And          | to                                              |            | And          |             | Accumulated  | Stru-
|                                                   | Encumbrance | Land              | Improvements | Basis (B)                                       | Land       | Improvements | Total       | Depreciation | cted 
|                                                   |             |                   |              |                                                 |            |              |             |              |      
|Lowes
Warner Robbins, GA                           | --          | 2,450,999         | 6,983,898    | --                                              | 2,450,999  | 6,983,898    | 9,434,897   | 48,705       | 2000 
|West Oaks
Ocoee, FL                                | --          | 3,837,455         | 5,756,151    | --                                              | 3,837,455  | 5,756,151    | 9,593,606   | --           | 2000 
|DEVELOPMENT PARCELS                                |             |                   |              |                                                 |            |              |             |              |      
|Acworth Avenue Retail Shopping Center
Acworth, GA. | --          | 959,257           | --           | 78,964                                          | 959,257    | 78,964       | 1,038,221   | --           |      
|                                                   |             |                   |              |                                                 |            |              |             |              |      
|Subtotals                                          | 113,737,513 | 56,538,137        | 170,925,889  | (61,882)                                        | 56,533,137 | 170,869,007  | 227,402,144 | 7,317,770    |      
|                                                   | =========   | =========         | =========    | =========                                       | =========  | =========    |             |              |      
|Furniture and Equipment                            |             |                   |              |                                                 |            |              | 13,005      | 4,239        |      
|Total                                              |             |                   |              |                                                 |            |              | 227,415,149 | 7,322,009    |      
|                                                   |             |                   |              |                                                 |            |              | =========   | =========    |      







---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)



(A) The initial cost to the Company represents the original purchase price of the property from an affiliate of the Advisor, or an unaffiliated third party, including amounts incurred subsequent to acquisition, most of which were contemplated at the
time the property was acquired.

(B) Adjustments to basis includes additions to investment properties net of payments received under master lease agreements.  (Note 6)

(C) When Lake Olympia Square was purchased by an affiliate of our Advisor, $234,145 was escrowed at the closing. At the time of purchase by the Company, $89,400 of these funds remained available to be used on a monthly basis to pay the principal
portion of the debt service through July 2000.  Accordingly, the net effect of this structure is that the Company had paid only the interest portion of the debt service through July 2000. The cumulative amount received by the Company was $89,400 as of
September 30, 2000, which is reflected as an adjustment to the basis of the property.



(6) Leases

Master Leases

In connection 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 basis of the property.  The cumulative amount of such payments was $628,522 as of March 31, 2001 and $537,661 as of December 31, 2000.

Operating Leases

Certain tenant leases contain provisions providing for stepped rent increases and rent abatements.  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 an increase of $135,528 and 81,292 for the three months ended March 31, 2001 and 2000, respectively, of rental income for the period of
occupancy for which stepped rent increases apply and $763,825 and $628,286 in the related accounts and rents receivable as of March 31, 2001 and December 31, 2000, respectively. The Company anticipates collecting these amounts over the terms of the
related leases as scheduled rent payments are made.

---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)





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       | $ | 21,856,637   
|2002       |   | 21,753,045   
|2003       |   | 20,924,410   
|2004       |   | 19,418,373   
|2005       |   | 18,129,179   
|Thereafter |   | 147,174,564  
|           |   |              
|Total      | $ | 249,256,208  
|           |   | ==========   

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.

(7) Mortgages Payable

Mortgages payable consist of the following at March 31, 2001:

|Property as Collateral      | Current Interest
Rate | Maturity
Date | Monthly
Payments | Balance at
March
31, 2001 | Balance at December 31,       2000
|--------------------------- | --------------------- | ------------- | ---------------- | ------------------------- | ----------------------------------
|Lake Walden Square          | 7.63%                 | 11/2007       | $  72,584 (a)    | $    9,913,653            | $   9,941,942                     
|Merchants Square            | 7.25%                 | 11/2008       | (b)              | 3,167,437                 | 3,167,437                         
|Town Center Commons         | 7.00%                 | 04/2006       | (b)              | 4,750,000                 | 4,750,000                         
|Boynton Commons             | 7.21%                 | 03/2006       | (b)              | 15,125,000                | 15,125,000                        
|Lake Olympia Square         | 8.25%                 | 04/2007       | 50,978 (a)       | 5,738,423                 | 5,772,532                         
|Bridgewater Marketplace     | 7.01%                 | 09/2006       | (c)              | 2,987,500                 | 2,987,500                         
|Bartow Marketplace          | 7.75%                 | 09/2004       | (b)              | 13,475,000                | 13,475,000                        
|Countryside Shopping Center | 7.01%                 | 05/2001       | (c)              | 6,720,000                 | 6,720,000                         
|Casselberry Commons         | 7.64%                 | 04/2006       | (b)              | 8,703,000                 | 8,703,000                         
|Conway Plaza*               | 6.93%                 | 06/2005       | (c)              | 5,000,000                 | 5,000,000                         
|Pleasant Hill Square        | 7.35%                 | 06/2005       | (b)              | 17,120,000                | 17,120,000                        
|Gateway Marketplace*        | 7.18%                 | 08/2001       | (c)              | 5,212,500                 | 5,212,500                         
|Gateway Marketplace         | 7.94%                 | 08/2005       | (b)              | 10,425,000                | 10,425,000                        
|Columbia Promenade*         | 7.18%                 | 02/2002       | (c)              | 1,800,000                 | --                                
|Columbia Promenade          | 7.61%                 | 02/2006       | (b)              | 3,600,000                 | --                                
|                            |                       |               |                  |                           |                                   
|                            |                       |               |                  | $ 113,737,513             | $  108,399,911                    
|                            |                       |               |                  | ==========                | ===========                       
|                            |                       |               |                  |                           |                                   

---



Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)

(a) Payments include principal and interest at a fixed rate.

(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 all or a portion of the payment on these notes to the lender.

In addition, the Company has secured an acquisition line of credit in the amount of $14,000,000.  Funds are available to be drawn through the maturity date of March 27, 2002 and will carry interest at the rate of 1.75% over LIBOR.  As of March 31,
2001 the Company had received no advances on the line.

All of 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.





(8)  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.

(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 located within Florida and Georgia.  The
Company's shopping centers are typically anchored by grocery and drug stores 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.

The property revenues and net property operations of the reportable segments are summarized in the following tables for the three month periods ended March 31, 2001 and 2000, along with a reconciliation to net income.   Property asset information is
as of March 31, 2001 and December 31, 2000.

---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)



|                                      |   | 2001        |   | 2000       
|------------------------------------- | - | ----------- | - | -----------
|                                      |   |             |   |            
|Total property revenues               | $ | 6,551,622   | $ | 4,810,269  
|Total property operating expenses     |   | 1,745,532   |   | 1,661,966  
|Mortgage interest                     |   | 2,126,819   |   | 1,766,153  
|                                      |   |             |   |            
|Net property operations               |   | 2,679,271   |   | 1,382,150  
|                                      |   |             |   |            
|Interest and dividend income          |   | 373,426     |   | 200,950    
|Other income                          |   | 3,187       |   | 3,599      
|Gain on sale of investment securities |   | 13,911      |   | --         
|Less non property expenses:           |   |             |   |            
|Professional services                 |   | 52,811      |   | 80,725     
|General and administrative            |   | 162,939     |   | 107,659    
|Acquisition costs expensed            |   | 37,580      |   | 3,877      
|Depreciation and amortization         |   | 1,574,247   |   | 926,105    
|                                      |   |             |   |            
|Net income                            | $ | 1,242,219   | $ | 468,333    
|                                      |   |             |   |            
|Total Assets                          |   |             |   |            
|Investment properties                 | $ | 220,093,140 | $ | 186,064,022
|Non-segment assets                    |   | 26,147,411  |   | 32,123,891 
|                                      | $ | 246,240,551 | $ | 218,187,913
|                                      |   | ==========  |   | ========== 



(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 March 31, 2001, warrants to purchase 599,811 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 exercise price of such warrants was greater than the average
market price of common shares.  The weighted average number of common shares outstanding were 14,047,894 and 6,174,848 for the periods ended March 31, 2001 and 2000, respectively.

---

Notes to Consolidated Financial Statements

(Continued)



March 31, 2001

(unaudited)



(11) Commitment and Contingencies

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

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



(12)  Subsequent Events

The Company paid distributions of $1,006,493 and $1,105,186 to its stockholders in April and May, 2001, respectively.

On April 27, 2001, the Company purchased three existing retail properties from an unaffiliated party for approximately $9,742,000, by paying the entire purchase price in cash.  The properties are expected to be financed in the future. The entire fee
simple interest in each property is owned by a separate, wholly owned Delaware limited liability company. The properties are located in Chattanooga, Tennessee, Daytona Beach, Florida and Fredericksburg, Virginia and contain approximately 26,040, 26,194
and 26,067 gross leasable square feet, respectively. PETsMART occupies 100% of the gross leasable area of  each of the properties.

The Company issued 2,384,340 Shares of Common Stock from March 31, 2001 through May 8, 2001, resulting in a total of 17,663,285 Shares of Common Stock outstanding.



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis compares the three month period ended March 31, 2001 to the corresponding period ended March 31, 2001 for the Company.  You should read the following discussion and analysis along with the Company's consolidated
financial statements and the related notes included in this quarterly report.  Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q
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
geographical 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 failure to qualify as a REIT; and potential
conflicts of interest between the Company and its affiliates including the Advisor.  The abbreviations defined in the Notes to Consolidated Financial Statements are used in this Item 2.



Liquidity and Capital Resources

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, some of which may be sale and leaseback transactions, net leased to creditworthy
tenants. On February 11, 1999, the Company commenced the Initial Offering of 50,000,000 Shares at a price of $10 per Share and of 4,000,000 Shares at a price of $9.50 per Share which may be distributed pursuant to the Company's distribution reinvestment
program ("DRP").  Inland Retail Real Estate Advisory Services, Inc. is the Advisor to the Company.  As of March 31, 2001 and December 31, 2000, subscriptions for a total of 15,025,511 and 12,680,875 Shares, respectively, had been received from the public,
which include 20,000 Shares issued to the Advisor.  In addition, the Company has distributed 340,280 and 253,680 Shares, respectively, pursuant to the Company's DRP as of March 31, 2001 and December 31, 2000.  As of March 31, 2001 the Company has
repurchased 86,846 common Shares and has sold soliciting dealers warrants to acquire 599,811 Shares.  As a result of such sales repurchases, the Company has received a net total of 151,967,685 of Gross Offering Proceeds as of March 31, 2001.  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 exceeds 15% of the Gross Offering Proceeds.  As of March 31, 2001 and December 31, 2000, organizational and offering costs totaling $19,650,873 and $16,521,606, respectively, did not exceed these
limitations, and the Company anticipates that these costs will not exceed these limitations upon completion of the Subsequent Offering.  Any excess amounts at the completion of the Subsequent Offering will be reimbursed by the Advisor.

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 DRP will allow Stockholders who purchase Shares pursuant to the Offering to automatically reinvest distributions by purchasing additional Shares from the Company.  Such purchases will not be subject to selling commissions or the marketing
contribution and due diligence expense allowance and will be sold at a price of $9.50 per Share.

The share repurchase program will, subject to certain restrictions, provide existing Stockholders with limited, interim liquidity by enabling them to sell Shares back to the Company at the following prices:

$9.05 per Share during the Offering period;

$9.25 per Share during the 12 months following the end of the Offering period;

$9.50 per Share during the next 12 months;

$9.75 per Share during the next 12 months; and

Thereafter, at the greater of: (i) $10 per Share; or (ii) a price equal to 10 times our "funds available for

distribution" per weighted average Share outstanding for the prior calendar year.

Shares purchased by the Company will not be available for resale.  As of March 31, 2001, 86,846 Shares had been repurchased at the cost of $785,952.

Cash Flows From Operating Activities

Net cash generated by operating activities of $4,602,267 for the three months ended March 31, 2001 is due primarily to the operations of twelve properties owned at the beginning of the quarter plus three properties purchased during the quarter.  The
Company also purchased one additional property late in the quarter, but this property had no effect on operating activities in 2001.  The operations of seven properties owned for the quarter ended March 31, 2000 plus one property purchased during the
quarter resulted in $2,229,699 of net cash provided by operating activities.

Cash Flows From Investing Activities

Cash flows used in investing activities were utilized primarily for the purchase of four properties in the three month period ended March 31, 2001 and one property purchased in the three months ended March 31, 2000.  The company also spent $189,250
for additions to investment properties, which includes approximately $79,000 for the development of the Acworth parcel and approximately $75,000 for roof replacement on Conway Plaza property.  The Company incurred costs of $30,622 for additions to
investment properties in the three months ended March 2000.

The Company's investment in securities at March 31, 2001 and December 31, 2001 consists 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.  The Company purchased investment securities in the first quarter of 2001 in the amount of $3,172,603 using its margin account of $1,628,015.

Cash Flows From Financing Activities

For the three months ended March 31, 2001 and 2000, the Company generated $23,315,024 and $6,372,017, respectively, of cash flows from financing activities.  This was due primarily to proceeds of $25,918,694 and $13,826,235 raised from the sale of
Shares for the three months ended March 31, 2001 and 2000, 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 three months ended March 31, 2001 and
2000, the Company paid offering costs totaling $4,130,648 and $3,062,439, respectively.  The Company obtained debt totaling $5,400,000 in the three months ended March 31, 2001.  In addition, for the three months ended March 31, 2001 and 2000, the Company
paid dividends of $2,612,985 and $1,064,064, respectively



Results of Operations

Since inception, the Company has incurred a total costs of $19,650,873 and $16,521,606 incurred to the offerings, of which $600,756 and $1,282,137 remained unpaid through March 31, 2001 and December 31, 2000, respectively.

Rental income, additional rental income, property operating expenses, mortgage interest and depreciation are all a result of the operations from the nine properties acquired during 1999 and three additional properties acquired in 2000.

Sports Authority, a tenant in one of the Company's properties has also undergone a restructuring and has closed 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 our property.  Store closings do not relieve tenants of their obligations under existing leases.

In 2000 two other tenants, Service Merchandise and Carmike Cinema each occupy one space in Company properties, 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.  The tenant has been paying
rent on a
consistent 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 reject the lease and close their operations at that
property.

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.

In the three months ended March 31, 2001 two tenants occupying 10,725 and 4,800 square feet in different properties of the Company 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.

In 2000, the Company purchased two properties in Florida with environmental concerns.  Based on research conducted by the Company, the potential availability of state funds for cleanup purposes and private insurance coverage purchased by the Company,
the Company believes it is adequately protected against losses related to these matters.

Funds from Operations

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.  As defined by NAREIT, FFO means net income computed in accordance with GAAP excluding gains (or losses) from debt restructuring and sales of properties 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 because capitalization and expense policies tend to vary from entity to entity.  Items that are capitalized do not impact FFO, whereas items that are expensed
reduce FFO.  Consequently, the Company's presentation of FFO 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:

| |                                     | Three months ended March 31,
| | ----------------------------------- | ----------------------------
| |                                     | 2001                        
| |                                     |                             
| | Net income                          | $  1,242,219                
| | Depreciation                        | 1,510,938                   
| |                                     |                             
| | Funds from operations (1)           | 2,753,157                   
| |                                     |                             
| | Principal amortization of debt      | (62,398)                    
| | Straight-line rent receivable (2)   | (135,528)                   
| | Income received under master lease  |                             
| | agreements and principal escrow (4) | 90,861                      
| | Acquisition costs expenses (3)      | 37,580                      
| |                                     |                             
| | Funds available for distribution    | $ 2,683,672                 
| |                                     | =========                   



(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 costs expensed include certain costs and expenses relating to the acquisition of properties. These costs are estimated to be up to .5% of the Gross Offering Proceeds and are 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
 .

The following table lists the approximate physical occupancy levels for the Company's properties as of the end of each quarter during 2001 and 2000.  N/A indicates the property was not owned by the Company at the end of the quarter.





|                                                     | 2001        | 2000       
|---------------------------------------------------- | ----------- | -----------
|Properties:                                          | at
03/31(%) | at
06/30(%)
|                                                     |             |            
|Lake Walden Square 
  Plant City, FL                 | 95          |            
|Merchants Square   Zephyrhills, FL                   | 100         |            
|Town Center Commons   Kennesaw, GA                   | 93          |            
|Boynton Commons
  Boynton Beach, FL                  | 96          |            
|Lake Olympia Square 
  Ocoee, FL                     | 96          |            
|Bridgewater Marketplace   Orlando, FL                | 98          |            
|Bartow Marketplace   Cartersville, GA                | 100         |            
|Countryside
  Naples, Fl                             | 97          |            
|Casselberry Commons   Casselberry, FL                | 95          |            
|Conway Plaza
   Orlando, Fl                          | 97          |            
|Pleasant Hill
  Duluth, GA                           | 96          |            
|Gateway Marketplace
  St. Petersburg, Fl             | 98          |            
|Columbia Promenade
  Kissimmee, FL                   | 99          |            
|K-Mart
  Macon, GA                                   | 100         |            
|Lowe's Home Improvement   Center
  Warner Robins, GA | 100         |            
|West Oaks Town Center
  Ocee, FL                     | 91          |            

* As part of the purchase of some of the properties, the Company received payments under master lease agreements on some of the space which was vacant at the time of purchase, which results in economic occupancy ranging from 99% to 100% at March 31,
2001 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.





Subsequent Events

The Company paid distributions of $1,006,493 and $1,105,186 to its stockholders in April and May, 2001, respectively.

Item 3. 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 at floating rates
with the option to fix the rate at a later date and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on related financial instruments.  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.

The following table shows the debt maturing during the next five years and the weighted average interest rate as of March 31, 2001 related to that debt.

|                                           | 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  | 1,800,000 | --       | --          | 5,000,000 
|                                           |             |           |          |             |           
|Average interest rate on outstanding debt: |             |           |          |             |           
|Fixed rate debt                            | 7.84%       | 7.84%     | 7.84%    | 7.78%       | 7.47%     
|Variable rate debt                         | 6.96%       | 7.18%     | --       | --          | 6.93%     

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



Approximately $21,720,000 or 19% of the Company's mortgages payable at March 31, 2001, have variable interest rates averaging 7.0%.  An increase in the variable interest rate on certain mortgages payable constitutes a market risk.

Investment in securities at March 31, 200l and 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.

PART II - Other Information

Item 2. Changes in Securities and Use of Proceeds

The Company 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 Warrants; and 2,000,000 Shares issuable upon exercise of the Soliciting Dealer Warrants at an exercise price of $12.00
per Share. The Initial Offering commenced on February 11, 1999 and terminated on January 31, 2001.  On February 1, 2001 the Company began a Subsequent  Offering (SEC File Number 333-64391) with the under substantially similar conditions as the Initial
Offering

As of January 31, 2001, the Company has sold the following securities for the following aggregate offering prices:

|*                                                                  | 13,687,349 | Shares on a best efforts basis for $136,454,948;                                                        
|------------------------------------------------------------------ | ---------- | --------------------------------------------------------------------------------------------------------
|*                                                                  | 281,825    | Shares pursuant to the DRP for $2,677,338                                                               
|*                                                                  | 546,972    | Soliciting Dealer Warrants for $438and                                                                  
|*                                                                  | 0          | Shares pursuant to the exercise of Soliciting Dealer Warrants,                                          
|                                                                  
|and repurchased the following securities for the following amount:
|                                                                   |            |                                                                                                         
|*                                                                  | (60,475)   | Shares repurchased pursuant to the Share Repurchase Program for $547,301,                               
|*                                                                  |            | for a net total of 13,908,699 Shares for $138,584,985 of gross offering proceeds as of January 31, 2001.

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.  As of January 31, 2001, 546,972
Soliciting Dealer Warrants had been earned, all of which have been issued; and the $436 of gross proceeds received for their issuance is not included in the above $138,584,985 of gross offering proceeds.

From the February 11, 1999 effective date of the Initial Offering through January 31, 2001 (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:



|Type of Expense                        | Amount       | E=Estimated
A=Actual
|-------------------------------------- | ------------ | --------------------
|Underwriting discounts and commissions | $ 11,588,024 | A                   
|Finders' fees                          | --           | A                   
|Expenses paid to or for underwriters   | --           | A                   
|Other expenses to affiliates           | 880,476      | A                   
|Other expenses paid to non-affiliates  | 5,078,269    | A                   
|Total expenses                         | $17,546,769  |                     

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 $17,546,769 all of which were paid at March 31, 2001. The net offering proceeds to the Company for the Cumulative Period, after deducting the total expenses paid described in the above table, are $121,038,216.

Cumulatively, the Company used the net offering proceeds as follows:

|Use of Proceeds                                | Amount       | E=Estimated
A=Actual
|---------------------------------------------- | ------------ | --------------------
|Construction of plant, building and facilities | --           | A                   
|Purchase of real estate                        | $ 89,954,569 | A                   
|Acquisition of other businesses                | --           | A                   
|Repayment of indebtedness                      | 27,729,755   | A                   
|Working capital (currently)                    | 3,353,892    | E                   
|Temporary investments (currently)              | --           | A                   
|Other uses                                     | --           | A                   

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.





Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits required by the Securities and Exchange Commission Regulations S-K. Item 601.

None

(b) Reports on Form 8-K:

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

Report on Form 8-K dated February 28, 2001

Item 2. Acquisition or Disposition of Assets

Item 5. Other Events

Item 7. Financial Statements and Exhibits

Report on From 8-K/A dated April 30, 2001

Item 7. Financial Statements and Exhibit.  The following statements were filed pursuant to this report:

Inland Retail Real Estate Trust, Inc:

Independent Auditor's Report

Consolidated Financial Statements at and for the years ended December 31m 2000 and 1999

Pro Forma Consolidated Balance Sheet (unaudited) at December 31, 2000

Notes to Pro Forma Consolidated Balance Sheet (unaudited) for the year ended December 31, 2000

Pro Forma Consolidated Statement of Operations (unaudited) for the year ended December 31, 2000

Notes for Pro Forma Consolidated Statement of Operations (unaudited) for the year ended

December 31, 2000

Columbia Promenade:

Independent Auditor's Report

Historical Summary of Gross Income and Direct Operating Expenses for the period from

October 5, 2000 (commence of operations) to December 31, 2000

Notes to Historical Summary of Gross Income and Direct Operating Expenses for the period from

October 5, 2000 (commence of operations) to December 31, 2000

West Oaks Town Center:

Independent Auditor's Report

Historical Summary of Gross Income and Direct Operating Expenses for the period from

October 1, 2000 (commence of operations) to December 31, 2000

Notes to Historical Summary of Gross Income and Direct Operating Expenses for the period from

October 1, 2000 (commence of operations) to December 31, 2000





---



SIGNATURES





Pursuant to the requirements 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

Date: May 14, 2001





/S/ BARRY L. LAZARUS

By: Barry L. Lazarus

President and Chief Operating Officer

Treasurer and Chief Financial Officer

Date: May 14, 2001