**SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

 

**FORM 10-K**

 

**ý****Annual Report Pursuant to Section 13or 15(d) of the Securities Exchange Act of 1934**

 

**For TheYear ended December 31, 2004**

 

**or**

 

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

 

**CommissionFile Number 333-103799**

 

**Inland Western Retail Real Estate Trust, Inc.**(Exact name of registrant as specified in its charter)
| **Maryland**                                                     |   | **42-1579325**                            |
|------------------------------------------------------------------|--------|-------------------------------------------|
| (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**

 

Securities registered pursuantto Section 12(b) of the Act:

 
| **Title of each class:** | ** ** | **Name of each exchange on which  registered:** |
|--------------------------|------------|-------------------------------------------------|
| **None**                 |       | **None**                                        |

 

Securities registered pursuantto Section 12(g) of the Act:

 
| **Title of each class:** | ** ** | ** ** |
|--------------------------|------------|------------|
| **None**                 |       |       |

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  Yes   ý   No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not be contained,to the best of registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  ý

 

The aggregate market value of the registrant’s common stock held bynon-affiliates of the registrant as of June 30, 2004 (the last businessday of the registrant’s most recently completed second fiscal quarter) was$848,794,990. Shares of the registrant’s common stock held by each executiveofficer and director and by each person who owns 10% or more of the outstandingcommon stock have been excluded in that such persons may be deemed to beaffiliates. This determination of affiliate status is not necessarily aconclusive determination for other purposes.

 

Indicate by a checkmark whether the registrant is an accelerated filer(as defined in Securities Exchange Act Rule of 1934 in12b-2)           ý   Yes          o  No

 

As of February 28, 2005, there were 260,058,421 shares of commonstock outstanding.

 

Documents Incorporated by Reference: Portions of the Registrant’s proxy statement for the annual shareholdersmeeting to be held in 2005 are incorporated by reference in Part III, Items 10,11, 12, 13 and 14.

 

 

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**INLAND WESTERN RETAIL REAL ESTATETRUST, INC.**

**(A Maryland Corporation)**

 

**TABLE OF CONTENTS**

 

 
| ** ** | ** **                                                                                  | **Page** |
|------------|---------------------------------------------------------------------------------------------|----------|
|       | Part I                                                                                      |     |
|       |                                                                                        |     |
| Item  1.   | Business                                                                                    | 3        |
|       |                                                                                        |     |
| Item  2.   | Properties                                                                                  | 8        |
|       |                                                                                        |     |
| Item 3.    | Legal Proceedings                                                                           | 18       |
|       |                                                                                        |     |
| Item  4.   | Submission  of Matters to a Vote of Security Holders                                        | 18       |
|       |                                                                                        |     |
|       | Part II                                                                                     |     |
|       |                                                                                        |     |
| Item  5.   | Market  for Registrant’s Common Equity and Related Stockholder Matters                 | 18       |
|       |                                                                                        |     |
| Item 6.    | Selected Financial Data                                                                     | 22       |
|       |                                                                                        |     |
| Item  7.   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 24       |
|       |                                                                                        |     |
| Item  7(a) | Quantitative  and Qualitative Disclosures About Market Risk                                 | 37       |
|       |                                                                                        |     |
| Item  8.   | Consolidated  Financial Statements and Supplementary Data                                   | 39       |
|       |                                                                                        |     |
| Item 9.    | Changes in  and Disagreements with Accountants on Accounting and Financial Disclosure       | 74       |
|       |                                                                                        |     |
| Item 9(a)  | Controls  and Procedures                                                                    | 74       |
|       |                                                                                        |     |
|       | Part  III                                                                                   |     |
|       |                                                                                        |     |
| Item 10.   | Directors  and Executive Officers of the Registrant                                         | 75       |
|       |                                                                                        |     |
| Item 11.   | Executive  Compensation                                                                     | 78       |
|       |                                                                                        |     |
| Item 12.   | Security  Ownership of Certain Beneficial Owners and Management                             | 79       |
|       |                                                                                        |     |
| Item 13.   | Certain  Relationships and Related Transactions                                             | 79       |
|       |                                                                                        |     |
| Item 14.   | Principal  Accountant Fees and Services                                                     | 79       |
|       |                                                                                        |     |
|       | Part IV                                                                                     |     |
|       |                                                                                        |     |
| Item 15.   | Exhibits,  Financial Statement Schedules, and Reports on Form 8-K                           | 79       |
|       |                                                                                        |     |
|       | SIGNATURES                                                                                  | 104      |

 

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PART I

 

**Item1.  Business**

 

General

 

Inland Western Retail Real Estate Trust, Inc. is a real estateinvestment trust or REIT which was formed in March of 2003 to acquire andmanage a diversified portfolio of real estate, primarily multi-tenant shoppingcenters and single-user net lease properties. As of December 31, 2004, weowned a portfolio of 111 properties located in 28 states.  At December 31, 2004, the portfolioconsisted of 87 multi-tenant shopping centers and 24 free-standing single-usernet lease properties containing an aggregate of approximately 20,231,000 squarefeet of gross leasable area or GLA, of which approximately 97% of GLA wasleased.  Our anchor tenants includenationally and regionally recognized financial companies, grocers, and tenantswho provide basic household goods and services. Of our total annualized portfolio revenue, approximately 48% isgenerated by anchor or credit tenants, including American Express, ZurichAmerican Insurance Company, Best Buy, Ross Dress for Less, Bed Bath and Beyond,GMAC, Wal-Mart, Publix Supermarkets, and several others.  The term “credit tenant” is subjective and weapply the term to tenants who we believe have a substantial net worth.

 

During2004, we invested approximately $3.2 billion for the acquisition of 82multi-tenant shopping centers and 21 single-user net lease properties containinga total gross leasable area of approximately 19,434,000 square feet. See Item 2for a more detailed description of these properties.  We also raised $2 billion in investorproceeds and obtained $1.7 billion in financing proceeds.

 

Inland Western Retail Real Estate Advisory Services, Inc., or thebusiness manager/advisor, an affiliate of ours, serves as our businessmanager/advisor.  On September 15,2003, we commenced an initial public offering or initial offering of up to250,000,000 shares of common stock or shares at $10 each and the issuance of20,000,000 shares at $9.50 each, which may be distributed pursuant to ourdistribution reinvestment program or DRP.

 

As of December 31, 2004, subscriptions for a total of 214,388,875shares had been received from the public, which includes 20,000 shares issuedto our business manager/advisor.  Inaddition, we sold 3,079,003 shares pursuant to the DRP and repurchased 10,350shares pursuant to the share repurchase program or SRP as of December 31,2004.  As a result of all sales, wereceived a total of $2,171,854,780 of gross offering proceeds, net of sharesrepurchased as of December 31, 2004. As of December 31, 2004, we haveincurred organizational and offering costs totaling $234,014,231 for the salesof these shares.

 

On December 28, 2004, our second offering or second offering wasdeclared effective by the Securities and Exchange Commission for the sale of upto 250,000,000 shares of common stock at $10 each and the issuance of up to20,000,000 shares at $9.50 each, which may be distributed pursuant to ourDRP.  We began sales of the secondoffering in January 2005.

 

AcquisitionStrategies

 

Weintend to continue to acquire and manage a diversified (by geographicallocation and by type and size of shopping centers) portfolio of real estateprimarily improved for use as retail establishments, principally multi-tenantshopping centers and single-user net lease properties.  The retail centers we have acquired arelocated in states both east and west of the Mississippi River in the UnitedStates.  Our portfolio will continue toconsist of predominantly grocery and discount anchored shopping centers andsingle-user net lease properties.  We willcontinue to acquire real estate improved with other commercial facilities whichprovide goods and services as well as double or triple net leased properties,which are either commercial or retail, including properties acquired in saleand leaseback transactions. A triple-net leased property is one which is leasedto a tenant who is responsible for the base rent and all costs and expensesassociated with their occupancy including property taxes, insurance and repairsand maintenance.

 

Our goal is to purchase propertiesprincipally west of the Mississippi River and evaluate potential acquisitionopportunities of properties east of the Mississippi River on a property byproperty basis taking into consideration investment objectives and availablefunds. During 2004, we purchased 103 properties, of which 48 were located westof the Mississippi River and 55 were located east of the MississippiRiver.  Our strategy in purchasing theproperties east of the Mississippi River was to deploy stockholders’ fundspromptly and generate income as early as possible. We are unable

 

3

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to determine the ultimate geographic locationof our portfolio of properties at this stage of our capital raise andacquisition of properties.

 

When acquiring a property, to ascertain the value of an investmentproperty, we take into consideration many factors which require difficult,subjective, or complex judgments to be made. These judgments require us to make assumptions when valuing eachinvestment property.  Such assumptionsinclude projecting vacancy rates, rental rates, property operating expenses,capital expenditures, and debt financing rates, among other assumptions.  The capitalization rate is also a significantdriving factor in determining the property valuation which requires judgment offactors such as market knowledge, historical experience, length of leases,tenant financial strength, economy, demographics, environment, propertylocation, visibility, age, and physical condition, and investor returnrequirements, among others.  Furthermore,at the acquisition date, we require that every property acquired is supportedby an independent appraisal.  All of theaforementioned factors are taken as a whole in determining the valuation.

 

Key elements of our acquisition strategy include:

 

•                  Selectivelyacquiring diversified and well-located properties of the type described above.

 

•                  Acquiringproperties, in most cases, on an all-cash basis to provide us with acompetitive advantage over potential purchasers who must secure financing. Wemay, however, acquire properties subject to existing indebtedness if we believethis is in our best interest.  We intendto obtain mortgage financing concurrently or subsequent to the purchase.

 

•                  Diversifyinggeographically within the principal geographical area of interest by acquiring propertiesprimarily located in major consolidated metropolitan statistical areas, inorder to minimize the potential adverse impact of economic downturns in certainmarkets.

 

Business and Operating Strategies

 

Because we continue to raise capital through public offerings,management continues to focus on acquiring properties that meet our investmentobjectives. However, because we have purchased 111 properties as of December 31,2004, we are also focusing towards enhancing the value of our properties.  We are now in the process of identifyingthose properties which will benefit from redevelopment, including additions toexisting space through planning techniques, working with tenants to extendleases while they improve their stores and developing available land which weown.

 

We seek toprovide an attractive return to our stockholders by taking advantage of ourstrong presence in many markets. We are able to accommodate the growth needs oftenants who are interested in working with one landlord in multiple locations.Because of our focused acquisition strategy, we possess large amounts of retailspace in certain markets, thus allowing us to lease and re-lease space atfavorable rental rates. Working with our property management companies, we

focus on theneeds and problems facing our tenants, so we can provide solutions wheneverpossible. Because of our size, we enjoy the benefits of purchasing goods andservices in large quantities, thus creating cost savings and improvingefficiency. The result of these activities, we believe, will lead toprofitability and growth as we go forward.

 

Because we ownover 20 million square feet of real estate property and continue to grow,day-to-day property management is a key element of our operating strategy. Ourasset management philosophy includes working closely with our property managersto achieve the following goals:

 

•                  Employexperienced, well trained property managers, leasing agents and collectionpersonnel;

 

•                  Actively managecosts and minimize operating expenses by centralizing management, leasing,marketing, financing, accounting, renovation and data processing activities;

 

•                  Improve rentalincome and cash flow by aggressively marketing rentable space;

 

•                  Emphasizeregular maintenance and periodic renovation to meet the needs of tenants and tomaximize long-term returns;

 

4

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•                  Maintain adiversified tenant base at our retail centers, consisting primarily of retailtenants providing basic consumer goods and services; and

 

•                  Identifyproperties that will benefit from asset enhancement including renovation anddevelopment of land that we own.

 

Financing Strategy

 

Generally, wehave and will continue to acquire properties free and clear of permanentmortgage indebtedness by paying the entire purchase price of each property incash. However, if it is determined to be in our best interest, we will, in mostinstances, incur indebtedness to acquire properties. With respect to propertiespurchased on an all-cash basis, we have and will continue to incur mortgageindebtedness by obtaining loans secured by selected properties if favorablefinancing terms are available.  Theproceeds from such loans would be used to acquire additional properties.  We may also incur indebtedness to financeimprovements to our properties. We anticipate that, in general, aggregatefinancings secured by all of our properties will not exceed 55% of theircombined fair market value.  Our articlesof incorporation provide that the aggregate amount of borrowing, in relation toour net assets, shall not, in the absence of a satisfactory showing that ahigher level of borrowing is appropriate, exceed 300% of net assets. We employfinancing strategies to take advantage of trends we anticipate with regard tointerest rates. One such strategy is to use variable rate financing with theoption to fix the rate at a later date. Our intention is to use variable ratefinancing on a small portion of our portfolio, resulting in a ratio of lessthan 20% of total debt.

 

During 2004,we worked with three financial institutions to obtain a $100 million unsecuredline of credit. This line of credit gives us great flexibility in fulfillingour acquisition strategy, funding our development activities and maintainingoverall liquidity to meet operating requirements, should the need arise.

 

Tax Status

 

Wequalified and have elected to be taxed as a real estate investment trust orREIT under Sections 856 through 860 of the Internal Revenue Code of 1986 or theCode for the tax year ending December 31, 2004.  Since we qualify for taxation as a REIT, wegenerally will not be subject to Federal income tax to the extent we distributeat least 90% of our REIT taxable income to shareholders.   If we fail to qualify as a REIT in anytaxable year, we will be subject to Federal income tax (including anyapplicable alternative minimum tax) on its taxable income at regular corporaterates.  Even if we qualify for taxationas a REIT, we may be subject to certain state and local taxes on its income andproperty and to Federal income and excise taxes on our undistributed income.

 

Competition

 

Wecontinue to see intense competition for the types of properties in which weinvest. In seeking new investment opportunities, we compete with other realestate investors, including pension funds, insurance companies, foreigninvestors, real estate partnerships, other real estate investment trusts,private individuals and other domestic real estate companies, some of whichhave greater financial resources than we do. With respect to properties presently owned or to be owned by us, wecompete with other owners of like properties for tenants.  There can be no assurance that we will beable to successfully compete with such entities in developing, acquiring, andleasing activities in the future.

 

Our businessis inherently competitive. Property owners, including us, compete on the basisof location, visibility, quality and aesthetic value of construction, volume oftraffic, strength and name recognition of tenants and other factors. Thesefactors combine to determine the level of occupancy and rental rates that weare able to achieve at our properties. Further, our tenants compete with otherforms of retailing, including e-commerce, catalog companies and direct consumersales.  We may, at times, compete withnewer properties or those in more desirable locations. To remain competitive,we evaluate all of the factors affecting our centers and position themaccordingly. For example, we may decide to focus on renting space to specificretailers who will complement our existing tenants and increase traffic. Webelieve we have achieved relatively high occupancy levels at our propertiesthrough our knowledge of the competitive factors in the

markets wherewe operate.

 

5

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Business Risks

 

The retail sector has remained relatively stable as a result ofsustained consumer spending, which has helped maintain retail sales growthdespite the national economic position, potential terrorist threats and theIraqi war.  A modest pace of new retailconstruction, and the expansion strategy of some retailers, who are rentingmore space to maintain market share and revenue growth and offset decliningsame store sales has also contributed to the stability.

 

While sustained consumer spending, spurred by low interest rates, hashelped to maintain retail sales growth, changing demographics and consumerpreferences have resulted in a fundamental shift in consumer spending patternsand the emergence of discount retail as a dominant category.  As a result of this trend, some conventionaldepartment stores are struggling and a number of local, regional and nationalretailers have been forced to voluntarily close their stores or file forbankruptcy protection. None of these conventional retailers are tenants inproperties we currently own. Some bankrupt retailers have reorganized theiroperations and/or sold stores to stronger operators.  In some instances, bankruptcies and storeclosings may create opportunities to lease space at higher rents to tenantswith better sales performance. Therefore, we do not expect store closings orbankruptcy reorganizations to have a material impact on our consolidatedfinancial position or the results of our operations.

 

We believe our risk exposure to potential future downturns in theeconomy is mitigated because the tenants at our current and targetedproperties, to a large extent, consist or will consist of: 1) retailers whoserve primary non-discretionary shopping needs, such as grocers and pharmacies;2) discount chains that can compete effectively during an economic downturn;and 3) national tenants with strong credit ratings who can withstand adownturn. We believe that the diversification of our current and targeted tenantbase and our focus on creditworthy tenants further reduces our risk exposure.

 

Revenuefrom the properties depends on the amount of the tenants’ retail revenue,making us vulnerable to general economic downturns and other conditionsaffecting the retail industry.  Some ofthe leases provide for base rent plus contractual base rent increases.  A number of the leases also include apercentage rent clause for additional rent above the base amount based upon aspecified percentage of the sales the tenant generates.  As of December 31, 2004, 19 tenantleases paid percentage rent.  Under thoseleases which contain percentage rent clauses, the revenue from tenants mayincrease as the sales of the tenant increases.

 

We continuallymonitor the financial condition of our tenants both at the corporate andproperty levels.  We currently ownproperties which have Toys R Us, Pier 1 Imports and Bally Total Fitness astenants. These tenants have experienced recent financial losses.  Our rental revenue from these tenants’ storesrepresented approximately 2.2% of the portfolio’s rental revenue in 2004 and 1.8%of the portfolio’s annualized base rental income as of February 28, 2005.

 

In some cases,if one of these tenants vacates their space due to the inability to meet its financialobligations, the opportunity exists for us to re-let the space at a significantlyhigher rent.

 

Allreal property investments are subject to some degree of risk.  We are subject to risks existing due to aconcentration of any single tenant within the portfolio.  Currently, the largest tenant is AmericanExpress, which has seven leases which represent approximately 2,201,000 squarefeet, or approximately 9.8% of the total gross leasable area owned by us as of February 28,2005.  The annualized base rental incomeof this lease is approximately $22,203,000, or approximately 8.1% of the totalannualized base rental income, based on our Company’s portfolio of propertiesas of February 28, 2005.

 

Theloss of an anchor tenant or a major tenant or their inability to pay rent couldhave an adverse effect on the performance of a property and our business.

 

Employees

 

Asof December 31, 2004, we did not have any direct employees.

 

Accessto Company Information

 

We will electronically file our annual report on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K and all amendments to thosereports with the Securities and Exchange Commission (SEC).  The public may read and copy any of thereports that are filed with the SEC at the SEC’s Public Reference Room at 450Fifth Street, NW, Washington,

 

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DC 20549.  The public may obtaininformation on the operation of the Public Reference Room by calling the SEC at(800)-SEC-0330.  The SEC maintains an Internetsite at www.sec.gov that contains reports, proxy and information statements andother information regarding issuers that file electronically.

 

We makeavailable, free of charge through our website, and by responding to requestsaddressed to our director of investor relations, the annual report on Form10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and allamendments to those reports. These reports are available as soon as reasonablypractical after such material is electronically filed or furnished to the SEC.Our website address is www.inlandgroup.com. The information contained on ourwebsite, or other websites linked to our website, is not part of this document.

 

Stockholderswishing to communicate with the Board or any Committee can do so by writing tothe attention of the Board or Committee in care of our Company at 2901Butterfield Road, Oak Brook, IL 60523.

 

7

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**Item 2.Properties**

 

Asof December 31, 2004, we, through separate limited partnerships, limitedliability companies, or joint venture agreements have acquired fee ownership of87 multi-tenant shopping centers and 24 single-user buildings containing anaggregate of approximately 20,231,000 gross leasable square feet located in 28states as follows:

 
| **Multi-Tenant**                | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***                  | ** **             |
|---------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------------------|
| 23rd Street Plaza               |       | 53,376                              |       | 12/04              |       | 2003                         |       | $                                              | —     |                                 | 2          |                                 | Bed, Bath & Beyond |   |
| Panama City, FL                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ross Dress for Less                  |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Alison’s Corner            |       | 55,066                              |       | 04/04              |       | 2003                         |       | 3,850,000                                      |       | 4                                    |       | Ross Dress for Less                  |                   |
| San Antonio, TX.                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Shoe Carnival                        |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Mattress Firm                        |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Arvada Connection               |       | 61,079                              |       | 04/04              |       | 1987-1990                    |       | 28,510,000                                     |       | 12                                   |       | Old Country Buffet                   |                   |
| and                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Pier 1 Imports                       |                   |
| Arvada Marketplace              |       | 313,559                             |       |               |       |                         |       |                                           |       | 26                                   |       | Sam’s Club                      |                   |
| Arvada, CO                      |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Gart Sports                          |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Azalea Square                   |       | 190,142                             |       | 10/04              |       | 2004                         |       | 16,535,000                                     |       | 21                                   |       | T.J. Maxx                            |                   |
| Summerville, SC                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Linens ‘N Things                |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ross Dress for Less                  |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Cost Plus World Market               |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | PETsMART                             |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Bed, Bath & Beyond Plaza    |       | 97,456                              |       | 10/04              |       | 2004                         |       | 11,192,500                                     |       | 15                                   |       | Bed, Bath & Beyond               |                   |
| Miami, FL                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Office Depot                         |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Pier 1 Imports                       |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Party City                           |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Best on the Boulevard           |       | 204,427                             |       | 04/04              |       | 1996-1999                    |       | 19,525,000                                     |       | 9                                    |       | Best Buy                             |                   |
| Las Vegas, NV                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Barnes & Noble Bookstore         |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Copeland Enterprises                 |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Bluebonnet Parc                 |       | 135,289                             |       | 04/04              |       | 2002                         |       | 12,100,000                                     |       | 7                                    |       | Best Buy                             |                   |
| Baton Rouge, LA                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Linens ‘N Things                |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Cost Plus World Market               |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Boulevard at the Capital Centre |       | 474,372                             |       | 09/04              |       | 2004                         |       | 71,500,000                                     |       | 61                                   |       | Lowe’s Theaters - Magic Johnson |                   |
| Largo, MD                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| The Columns                     |       | 173,427                             |       | 08/04              |       | 2004                         |       | 14,865,400                                     |       | 15                                   |       | Best Buy                             |                   |
| Jackson, TN                     |       |                                |       | 10/04              |       |                         |       |                                           |       |                                 |       | Ross Dress for Less                  |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Marshalls                            |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| Coram Plaza                     |       | 144,191                             |       | 12/04              |       | 2004                         |       | 20,760,000                                     |       | 20                                   |       | Stop & Shop                      |                   |
| Coram, NY                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                                 |                   |
| CorWest Plaza                   |       | 115,011                             |       | 01/04              |       | 1999 - 2003                  |       | 18,150,000                                     |       | 10                                   |       | Super Stop & Shop                |                   |
| New Britain, CT                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Liquor Depot                         |                   |
|                            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | CVS Pharmacy                         |                   |
|                                 |            |                                     |            |                    |            |                              |            |                                                |            |                                      |            |                                      |                        |  |

 

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| **Multi-Tenant (continued)**     | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***          |   |
|----------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|------------------------------|--------|
| Cranberry Square                 |       | 195,566                             |       | 07/04              |       | 1996-1997                    |       | 10,900,000                                     |       | 5                                    |       | Barnes & Noble           |   |
| Cranberry Township, PA           |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Dick’s Sporting Goods   |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                     |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Office Max                   |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Toys “R” Us        |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Darien Towne Center              |       | 223,844                             |       | 12/03              |       | 1994                         |       | 16,500,000                                     |       | 12                                   |       | Home Depot                   |   |
| Darien, IL                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Circuit City                 |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | PETsMART                     |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Davis Towne Crossing             |       | 34,091                              |       | 06/04              |       | 2003-2004                    |       | 5,365,200                                      |       | 12                                   |       | Lady USA Fitness             |   |
| North Richland Hills, TX         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Cotton Patch Café       |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Denton Crossing                  |       | 279,040                             |       | 10/04              |       | 2003-2004                    |       | 35,200,000                                     |       | 30                                   |       | Oshman’s Sporting Goods |   |
| Denton, TX                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                     |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | T.J. Maxx                    |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Dorman Center - Phase I & II |       | 388,067                             |       | 03/04              |       | 2003-2004                    |       | 27,610,000                                     |       | 27                                   |       | Wal-Mart Supercenter         |   |
| Spartanburg, SC                  |       |                                |       | 07/04              |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Eastwood Towne Center            |       | 332,131                             |       | 05/04              |       | 2002                         |       | 46,750,000                                     |       | 61                                   |       | Dick’s Sporting Goods   |   |
| Lansing, MI                      |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Edgemont Town Center             |       | 77,655                              |       | 11/04              |       | 2003                         |       | —                                         |       | 14                                   |       | Publix                       |   |
| Homewood, AL                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Evans Towne Centre               |       | 75,695                              |       | 12/04              |       | 1995                         |       | —                                         |       | 14                                   |       | Publix                       |   |
| Evans, GA                        |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Five Forks                       |       | 64,173                              |       | 12/04              |       | 1999                         |       | —                                         |       | 8                                    |       | Bi-Lo                        |   |
| Simpsonville, SC                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Forks Town Center                |       | 92,660                              |       | 07/04              |       | 2002                         |       | 10,395,000                                     |       | 16                                   |       | Giant Food Stores            |   |
| Easton, PA                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Fox Creek Village                |       | 114,401                             |       | 11/04              |       | 2003-2004                    |       | 11,485,000                                     |       | 14                                   |       | King Soopers                 |   |
| Longmont, CO                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       | King Soopers Fuel Site       |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Fullerton Metrocenter            |       | 253,296                             |       | 06/04              |       | 1988                         |       | 28,050,000                                     |       | 42                                   |       | SportMart                    |   |
| Fullerton, CA                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Henry’s Marketplace     |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Gateway Pavilions                |       | 301,233                             |       | 12/04              |       | 2003-2004                    |       | 35,842,000                                     |       | 34                                   |       | Circuit City                 |   |
| Avondale, AZ                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       | The Sports Authority         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Gateway Plaza                    |       | 358,091                             |       | 07/04              |       | 2000                         |       | 18,163,000                                     |       | 26                                   |       | Kohl’s                  |   |
| Southlake, TX                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Gateway Station                  |       | 19,537                              |       | 12/04              |       | 2003-2004                    |       | —                                         |       | 6                                    |       | Kirkland’s              |   |
| College Station, TX              |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Talbots                      |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Joseph A. Banks              |   |
|                             |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Chico’s                 |   |

 

9

----

 
| **Multi-Tenant (continued)** | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***          |   |
|------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|------------------------------|--------|
| Gateway Village              |       | 273,788                             |       | 07/04              |       | 1996                         |       | 31,458,000                                     |       | 14                                   |       | Safeway                      |   |
| Annapolis, MD                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Burlington Coat Factory      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                     |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Governor’s Marketplace  |       | 231,915                             |       | 08/04              |       | 2001                         |       | 20,625,000                                     |       | 20                                   |       | Bed, Bath & Beyond       |   |
| Tallahassee, FL              |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Sports Authority             |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Marshalls                    |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Green’s Corner          |       | 85,271                              |       | 12/04              |       | 1997                         |       | —                                         |       | 12                                   |       | Kroger                       |   |
| Cumming, GA                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Gurnee Town Center           |       | 179,602                             |       | 10/04              |       | 2000                         |       | 24,360,000                                     |       | 26                                   |       | Linens ‘N Things        |   |
| Gurnee, IL                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Old Navy                     |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Borders & Music          |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Cost Plus World Market       |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Harvest Towne Center         |       | 42,235                              |       | 09/04              |       | 1996-1999                    |       | 5,005,000                                      |       | 12                                   |       | CVS Pharmacy                 |   |
| Knoxville, TN                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Pet Supplies Plus            |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ruby Tuesday                 |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Henry Town Center            |       | 444,296                             |       | 12/04              |       | 2002                         |       | 35,814,616                                     |       | 44                                   |       | BJ’s Wholesale Club     |   |
| McDonough, GA                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Belk                         |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Heritage Towne Crossing      |       | 73,579                              |       | 03/04              |       | 2002                         |       | 8,950,000                                      |       | 29                                   |       | N/A                          |   |
| Euless, TX                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Hickory Ridge                |       | 380,487                             |       | 01/04              |       | 1999                         |       | 23,650,000                                     |       | 21                                   |       | Best Buy                     |   |
| Hickory, NC                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Kohl’s                  |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Linens ‘N Things        |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Huebner Oaks Center          |       | 286,684                             |       | 06/04              |       | 1997-1998                    |       | 48,000,000                                     |       | 56                                   |       | Bed, Bath & Beyond       |   |
| San Antonio, TX              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Irmo Station                 |       | 99,619                              |       | 12/04              |       | 1980 &1985               |       | —                                         |       | 17                                   |       | Kroger                       |   |
| Irmo, SC                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| John’s Creek Village    |       | 141,802                             |       | 06/04              |       | 2003-2004                    |       | 23,300,000                                     |       | 17                                   |       | LA Fitness                   |   |
| Duluth, GA                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ross Dress for Less          |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | T.J. Maxx                    |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| La Plaza Del Norte           |       | 320,345                             |       | 01/04              |       | 1996/1999                    |       | 32,528,000                                     |       | 16                                   |       | Oshman’s Sporting Goods |   |
| San Antonio, TX              |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                     |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Bealls                       |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Lake Mary Pointe             |       | 51,052                              |       | 10/04              |       | 1999                         |       | 3,657,500                                      |       | 9                                    |       | Publix                       |   |
| Orlando, FL                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Lakewood Towne Center        |       | 578,913                             |       | 06/04              |       | 1988/2002-  2003             |       | 51,260,000                                     |       | 27                                   |       | Gottschalk’s            |   |
| Lakewood, WA                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Burlington Coat Factory      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                         |   |
| Larkspur Landing             |       | 173,635                             |       | 01/04              |       | 1978/2001                    |       | 33,630,000                                     |       | 35                                   |       | Bed, Bath & Beyond       |   |
| Larkspur, CA                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | 24 Hour Fitness              |   |

 

10

----

 
| **Multi-Tenant (continued)** | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***       |   |
|------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|---------------------------|--------|
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Lincoln Park                 |       | 148,806                             |       | 09/04              |       | 1998                         |       | 26,153,000                                     |       | 14                                   |       | Tom Thumb                 |   |
| Dallas, TX                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Barnes & Noble        |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | The Container Store       |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Low Country Village          |       | 76,479                              |       | 06/04              |       | 2004                         |       | 5,370,000                                      |       | 7                                    |       | Ross Dress for Less       |   |
| Bluffton, SC                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Michaels                  |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | PETsMART                  |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| MacArthur Crossing           |       | 109,755                             |       | 02/04              |       | 1995-1996                    |       | 12,700,000                                     |       | 28                                   |       | Stein Mart                |   |
| Los Colinas, TX              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Manchester Meadows           |       | 454,172                             |       | 08/04              |       | 1994-1995                    |       | 31,064,550                                     |       | 21                                   |       | Wal-Mart                  |   |
| Town and Country, MO         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Home Depot                |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Mansfield Towne Crossing     |       | 95,277                              |       | 11/04              |       | 2003-2004                    |       | 10,982,300                                     |       | 18                                   |       | Ross Dress for Less       |   |
| Mansfield, TX                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Staples                   |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| McAllen Shopping Center      |       | 17,665                              |       | 12/04              |       | 2004                         |       | —                                         |       | 7                                    |       | Hollywood Video           |   |
| McAllen, TX                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Mesa Fiesta                  |       | 194,892                             |       | 12/04              |       | 2004                         |       | —                                         |       | 8                                    |       | Best Buy                  |   |
| Mesa, AZ                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Marshalls                 |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Borders Books & Music |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | CompUSA                   |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Oak Showcase              |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Mitchell Ranch Plaza         |       | 200,404                             |       | 08/04              |       | 2003                         |       | 18,700,000                                     |       | 36                                   |       | Publix                    |   |
| New Port Richey, FL          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Marshalls                 |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ross Dress for Less       |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Newnan Crossing I & II   |       | 392,050                             |       | 12/03              |       | 1999-2004                    |       | 23,766,191                                     |       | 29                                   |       | BJ’s Wholesale Club  |   |
| Newnan, GA                   |       |                                |       | 02/04              |       |                         |       |                                           |       |                                 |       |                      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Newton Crossroads            |       | 78,896                              |       | 12/04              |       | 1997                         |       | —                                         |       | 11                                   |       | Kroger                    |   |
| Covington, GA                |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| North Ranch Pavilions        |       | 62,812                              |       | 01/04              |       | 1992                         |       | 10,157,400                                     |       | 24                                   |       | Savvy Salon               |   |
| Thousand Oaks, CA            |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| North Rivers Town Center     |       | 141,204                             |       | 04/04              |       | 2003-2004                    |       | 11,050,000                                     |       | 16                                   |       | Ross Dress for Less       |   |
| Charleston, SC               |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Bed, Bath & Beyond    |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Office Depot              |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Northgate North              |       | 302,095                             |       | 06/04              |       | 1999-2003                    |       | 26,650,000                                     |       | 8                                    |       | Target                    |   |
| Seattle, WA                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                  |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Northpointe Plaza            |       | 377,949                             |       | 05/04              |       | 1991-1993                    |       | 30,850,000                                     |       | 31                                   |       | Safeway                   |   |
| Spokane, WA                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Gart Sports               |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                  |   |
|                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                      |   |
| Northwoods Center            |       | 74,647                              |       | 12/04              |       | 2002-2004                    |       | 11,192,500                                     |       | 16                                   |       | Marshalls                 |   |
| Wesley Chapel, FL            |       |                                |       |               |       |                         |       |                                           |       |                                 |       | PETCO                     |   |

 

11

----

 
| **Multi-Tenant (continued)**  | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***            |   |
|-------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|--------------------------------|--------|
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Oswego Commons                |       | 187,651                             |       | 11/04              |       | 2002-2004                    |       | 19,262,100                                     |       | 23                                   |       | Dominick’s                |   |
| Oswego, IL                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       | T.J. Maxx                      |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | OfficeMax                      |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Paradise Valley Marketplace   |       | 92,158                              |       | 04/04              |       | 2002                         |       | 15,680,500                                     |       | 17                                   |       | Whole Foods                    |   |
| Phoenix, AZ                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Pavilion at King’s Grant |       | 79,109                              |       | 12/03              |       | 2002-2003                    |       | 5,342,000                                      |       | 7                                    |       | Toys “R” Us          |   |
| Concord, NC                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Peoria Crossings              |       | 213,733                             |       | 03/04              |       | 2002-2003                    |       | 20,497,400                                     |       | 21                                   |       | Kohl’s                    |   |
| Peoria, AZ                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Ross Dress for Less            |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Michaels                       |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Phenix Crossing               |       | 56,563                              |       | 12/04              |       | 2004                         |       | —                                         |       | 9                                    |       | Publix                         |   |
| Phenix City, AL               |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Pine Ridge Plaza              |       | 230,510                             |       | 06/04              |       | 1998-2004                    |       | 14,700,000                                     |       | 14                                   |       | T.J. Maxx                      |   |
| Lawrence, KS                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Bed, Bath & Beyond         |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Kohl’s                    |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Placentia Town Center         |       | 110,962                             |       | 12/04              |       | 1973/2000                    |       | 13,695,000                                     |       | 20                                   |       | Ross Dress for Less            |   |
| Placentia, CA                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | OfficeMax                      |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Plaza at Marysville           |       | 115,656                             |       | 07/04              |       | 1995                         |       | 11,800,000                                     |       | 26                                   |       | Safeway                        |   |
| Marysville, WA                |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Plaza at Riverlakes           |       | 102,836                             |       | 10/04              |       | 2001                         |       | —                                         |       | 22                                   |       | Ralph’s Grocery Store     |   |
| Bakersfield, CA               |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Plaza Santa Fe II             |       | 222,389                             |       | 06/04              |       | 2000-2002                    |       | 17,393,732                                     |       | 21                                   |       | Linens ‘N Things          |   |
| Santa Fe, NM                  |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Best Buy                       |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | T.J. Maxx                      |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Pleasant Run Towne Center     |       | 201,587                             |       | 12/04              |       | 2004                         |       | 22,800,000                                     |       | 21                                   |       | Oshman’s Sporting Goods   |   |
| Cedar Hill, TX                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Circuit City                   |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Promenade at Red Cliff        |       | 94,445                              |       | 02/04              |       | 1997                         |       | 10,590,000                                     |       | 18                                   |       | Staples                        |   |
| St. George, UT                |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Old Navy                       |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Big 5 Sporting Goods           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Bank of America                |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Reisterstown Road Plaza       |       | 768,659                             |       | 08/04              |       | 1986/2004                    |       | 49,650,000                                     |       | 83                                   |       | Home Depot                     |   |
| Baltimore, MD                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Public Safety                  |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | National Wholesale Liquidators |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Saucon Valley Square          |       | 80,695                              |       | 09/04              |       | 1999                         |       | 8,850,900                                      |       | 14                                   |       | Super Fresh Food Market        |   |
| Bethlehem, PA                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                           |   |
| Shoppes at Lake Andrew        |       | 144,772                             |       | 12/04              |       | 2003                         |       | 15,656,511                                     |       | 18                                   |       | Ross Dress for Less            |   |
| Viera, FL                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Linens ‘N Things          |   |
|                          |       |                                |       |               |       |                         |       |                                           |       |                                 |       | Rag Shop                       |   |

 

12

----

 
| **Multi-Tenant (continued)**              | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** **    | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***          |   |
|-------------------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|---------------|--------------------------------------|------------|------------------------------|--------|
| The Shoppes at Park West  (Publix Center) |       | 64,832                              |       | 11/04              |       | 2004                         |       | 6,655,000                                      |          | 11                                   |       | Publix                       |   |
| Mt. Pleasant, SC                          |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Shoppes at Quarterfield                   |       | 61,817                              |       | 01/04              |       | 1999                         |       | 6,067,183                                      |          | 2                                    |       | Shoppers Food                |   |
| (Metro Square Center)                     |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Warehouse                    |   |
| Severn, MD                                |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Shoppes of Dallas                         |       | 70,610                              |       | 07/04              |       | 2004                         |       | 7,178,700                                      |          | 15                                   |       | Publix                       |   |
| Dallas, GA                                |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Shoppes of Prominence Point               |       | 78,058                              |       | 06/04              |       | 2004                         |       | 9,954,300                                      |          | 18                                   |       | Publix                       |   |
| Canton, GA                                |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| The Shops at Boardwalk                    |       | 122,916                             |       | 07/04              |       | 2003-2004                    |       | 20,150,000                                     |          | 24                                   |       | Borders Books                |   |
| Kansas City, MO                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Shops at Forest Commons                   |       | 34,756                              |       | 12/04              |       | 2002                         |       | 5,229,789                                      |          | 16                                   |       | Blockbuster Video            |   |
| Round Rock, TX                            |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Shops at Park Place                       |       | 116,300                             |       | 10/03              |       | 2001                         |       | 13,127,000                                     |          | 11                                   |       | Bed, Bath & Beyond       |   |
| Plano, TX                                 |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Michaels                     |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       | OfficeMax                    |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Southlake Town Square                     |       | 471,324                             |       | 12/04              |       | 1998-2004                    |       | —                                         |          | 152                                  |       |                         |   |
| Southlake, TX                             |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Stilesboro Oaks                           |       | 80,772                              |       | 12/04              |       | 1997                         |       | —                                         |          | 13                                   |       | Kroger                       |   |
| Acworth, GA                               |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Stony Creek Marketplace                   |       | 153,796                             |       | 12/03              |       | 2003                         |       | 14,162,000                                     |          | 20                                   |       | T.J. Maxx                    |   |
| Noblesville, IN                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Linens ‘N Things        |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Barnes & Noble           |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Tollgate Marketplace                      |       | 392,587                             |       | 07/04              |       | 1979/1994                    |       | 39,765,000                                     |          | 34                                   |       | Giant Food                   |   |
| Bel Air, MD                               |       |                                |       |               |       |                         |       |                                           |          |                                 |       | JoAnn Fabrics                |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Towson Circle                             |       | 116,012                             |       | 07/04              |       | 1998                         |       | 19,197,500                                     |          | 13                                   |       | Barnes & Noble           |   |
| Towson, MD                                |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Trader Joe’s East       |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Bally’s Total Fitness   |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| University Town Center                    |       | 57,250                              |       | 11/04              |       | 2002                         |       | —                                         |          | 15                                   |       | Publix                       |   |
| Tuscaloosa, AL                            |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Village Shoppes at Simonton               |       | 66,415                              |       | 08/04              |       | 2004                         |       | 7,561,700                                      |          | 10                                   |       | Publix                       |   |
| Lawrenceville, GA                         |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Watauga Pavilion                          |       | 205,195                             |       | 05/04              |       | 2003-2004                    |       | 17,100,000                                     |          | 17                                   |       | Oshman’s Sporting Goods |   |
| Watauga, TX                               |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Ross Dress for Less          |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       | Bed, Bath & Beyond       |   |
|                                      |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
| Winchester Commons                        |       | 93,024                              |       | 11/04              |       | 1999                         |       | 7,235,000                                      |          | 15                                   |       | Kroger                       |   |
| Memphis, TN                               |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                         |   |
|                                      |       | 15,804,590                          |       |               |       |                         |       | $                                              | 1,423,423,471 |                                 |       |                         |   |   |
|                                           |            |                                     |            |                    |            |                              |            |                                                |               |                                      |            |                              |        |  |

 

13

----

 
| **Single-User**                   | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** ** | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***      |           |
|-----------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|--------------------------|----------------|
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Academy Sports                    |       | 60,001                              |       | 07/04              |       | 2004                         |       | $                                              | 2,920,000  |                                 | 1          |                     | Academy Sports |   |
| Houma, LA                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Academy Sports                    |       | 61,150                              |       | 10/04              |       | 2004                         |       | 2,337,500                                      |       | 1                                    |       | Academy Sports           |           |
| Midland, TX                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Academy Sports                    |       | 61,001                              |       | 10/04              |       | 2004                         |       | 2,775,000                                      |       | 1                                    |       | Academy Sports           |           |
| Port Arthur, TX                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express                  |       | 132,336                             |       | 12/04              |       | 2000                         |       | 11,623,000                                     |       | 1                                    |       | American Express         |           |
| De Pere, WI                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express                  |       | 376,348                             |       | 12/04              |       | 1975                         |       | 37,170,000                                     |       | 1                                    |       | American Express         |           |
| Ft. Lauderdale, FL                |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express                  |       | 389,377                             |       | 12/04              |       | 1986                         |       | 33,040,000                                     |       | 1                                    |       | American Express         |           |
| Greensboro, NC                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express                  |       | 541,542                             |       | 12/04              |       | 1989                         |       | 56,050,000                                     |       | 1                                    |       | American Express         |           |
| Minneapolis, MN                   |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express - 19th Avenue    |       | 117,556                             |       | 12/04              |       | 1983                         |       | 8,260,000                                      |       | 1                                    |       | American Express         |           |
| Phoenix, AZ                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| American Express - 31st Avenue    |       | 337,439                             |       | 12/04              |       | 1985                         |       | 31,860,000                                     |       | 1                                    |       | American Express         |           |
| Phoenix, AZ                       |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| CVS Pharmacy (Eckerd Drug  Store) |       | 13,824                              |       | 12/03              |       | 2003                         |       | 1,850,000                                      |       | 1                                    |       | CVS Pharmacy             |           |
| Edmund, OK                        |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| CVS Pharmacy (Eckerd Drug  Store) |       | 13,824                              |       | 12/03              |       | 2003                         |       | 2,900,000                                      |       | 1                                    |       | CVS Pharmacy             |           |
| Norman, OK                        |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| CVS Pharmacy                      |       | 10,055                              |       | 10/04              |       | 2004                         |       | 1,685,000                                      |       | 1                                    |       | CVS Pharmacy             |           |
| Sylacauga, AL                     |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Eckerd Drug Store                 |       | 13,440                              |       | 06/04              |       | 2003-2004                    |       | 1,750,000                                      |       | 1                                    |       | Eckerd Drug Store        |           |
| Columbia, SC                      |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Eckerd Drug Store                 |       | 13,824                              |       | 06/04              |       | 2003-2004                    |       | 1,425,000                                      |       | 1                                    |       | Eckerd Drug Store        |           |
| Crossville, TN                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Eckerd Drug Store                 |       | 13,824                              |       | 06/04              |       | 2003-2004                    |       | 1,650,000                                      |       | 1                                    |       | Eckerd Drug Store        |           |
| Greer, SC                         |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Eckerd Drug Store                 |       | 13,824                              |       | 06/04              |       | 2003-2004                    |       | 1,975,000                                      |       | 1                                    |       | Eckerd Drug Store        |           |
| Kill Devil Hills, NC              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| GMAC                              |       | 501,064                             |       | 09/04              |       | 1980/1990                    |       | 33,000,000                                     |       | 1                                    |       | GMAC Insurance           |           |
| Winston-Salem, NC                 |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                              |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
| Harris Teeter                     |       | 57,230                              |       | 09/04              |       | 1977/1995                    |       | 3,960,000                                      |       | 1                                    |       | Harris Teeter Store #158 |           |
| Wilmington, NC                    |       |                                |       |               |       |                         |       |                                           |       |                                 |       |                     |           |
|                                   |            |                                     |            |                    |            |                              |            |                                                |            |                                      |            |                          |                |  |

 

14

----

 
| **Single-User (continued)**    | ** ** | **Gross  Leasable  Area (Sq. Ft.)** | ** ** | **Date  Acquired** | ** ** | **Year  Built /  Renovated** | ** ** | **Amount of  Mortgages  Payable at  12/31/04** | ** **    | **No. of  Tenants  as of  12/31/04** | ** ** | **Major  Tenants***       | ** ** |
|--------------------------------|------------|-------------------------------------|------------|--------------------|------------|------------------------------|------------|------------------------------------------------|---------------|--------------------------------------|------------|---------------------------|------------|
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Kohl’s/Wilshire Plaza III |       | 88,248                              |       | 07/04              |       | 2004                         |       | 5,417,500                                      |          | 1                                    |       | Kohl’s               |       |
| Kansas City, MO                |       |                                |       | 11/04              |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Shaw’s Supermarket        |       | 65,658                              |       | 12/03              |       | 1995                         |       | 6,450,000                                      |          | 1                                    |       | Shaw’s Supermarket   |       |
| New Britain, CT                |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Wal-Mart Supercenter           |       | 183,047                             |       | 07/04              |       | 1999                         |       | 7,100,000                                      |          | 1                                    |       | Wal-Mart Supercenter      |       |
| Blytheville, AR                |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Wal-Mart Supercenter           |       | 149,704                             |       | 08/04              |       | 1997                         |       | 6,088,500                                      |          | 1                                    |       | Wal-Mart Supercenter      |       |
| Jonesboro, AR                  |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Wrangler                       |       | 316,800                             |       | 07/04              |       | 1993                         |       | 11,300,000                                     |          | 1                                    |       | Wrangler                  |       |
| El Paso, TX                    |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| Zurich Towers                  |       | 895,418                             |       | 11/04              |       | 1988-1990                    |       | 81,420,000                                     |          | 1                                    |       | Zurich American Insurance |       |
| Schaumburg, IL                 |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
|                           |       | 4,426,534                           |       |               |       |                         |       | $                                              | 354,006,500   |                                 |       |                      |       |   |
|                           |       |                                |       |               |       |                         |       |                                           |          |                                 |       |                      |       |
| **Total acquisitions**         |       | 20,231,124                          |       |               |       |                         |       | $                                              | 1,777,429,971 |                                 |       |                      |       |   |

 

----

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

 

Noone single tenant exceeds 10% of the total gross leasable area.

 

Thetotal gross leasable area includes 717,123 square feet of space leased totenants under ground lease agreements.

 

Wehave a 95% ownership interest in the LLC’s which own Boulevard at the CapitalCentre, Gateway Village, Reisterstown Road Plaza, Tollgate Marketplace andTowson Circle.

 

Inaddition to the properties listed above, we consolidate one 124-unit apartmentproperty, Cardiff Hall East, in which we made an investment through a jointventure arrangement on October 15, 2004. This property, which is located in Towson, MD, had a mortgage payablewith a balance of $5,108,656 at December 31, 2004.

 

Themajority of the income from our properties consists of rent received underlong-term leases.  Most of the leasesprovide for the payment of fixed minimum rent paid monthly in advance, and forthe payment by tenants of a pro rata share of the real estate taxes, specialassessments, insurance, utilities, common area maintenance, management fees,and certain building repairs of the center. Certain of the major tenant leases provide that the landlord isobligated to pay certain of these expenses above or below specific levels.  Some of the leases also provide for thepayment of percentage rent, calculated as a percentage of a tenant’s grosssales above predetermined thresholds.

 

Thefollowing table lists the approximate physical occupancy levels and grossleasable area for our investment properties as of December 31, 2004 and December 31,2003.  The weighted average grossleasable area occupied at December 31, 2004 and December 31, 2003 was96% and 98%, respectively.  N/A indicatesthe property was not owned by us at the end of the period.

 

15

----

 
| ** **                                 | ** ** | ** **               | ** ** | **December 31,  2004** | ** ** | **December 31,  2003** | ** ** |
|--------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| **Properties:**                            | ** ** | **Location**             | ** ** | **GLA  Occupied**           | ** ** | **(%)**                     | ** ** | **GLA  Occupied** | ** ** | **(%)** | ** ** |
| ** **                                 | ** ** | ** **               | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| 23rd Street Plaza *                        |       | Panama City, FL          |       | 50,701                      |       | 95                          |       | N/A |   | N/A |   |
| Academy Sports                             |       | Houma, LA                |       | 60,001                      |       | 100                         |       | N/A |   | N/A |   |
| Academy Sports                             |       | Midland, TX              |       | 61,150                      |       | 100                         |       | N/A |   | N/A |   |
| Academy Sports                             |       | Port Arthur, TX          |       | 61,001                      |       | 100                         |       | N/A |   | N/A |   |
| Alison’s Corner                       |       | San Antonio, TX          |       | 55,066                      |       | 100                         |       | N/A |   | N/A |   |
| American Express                           |       | De Pere, WI              |       | 132,336                     |       | 100                         |       | N/A |   | N/A |   |
| American Express                           |       | Greensboro, NC           |       | 389,377                     |       | 100                         |       | N/A |   | N/A |   |
| American Express                           |       | Ft. Lauderdale, FL       |       | 376,348                     |       | 100                         |       | N/A |   | N/A |   |
| American Express                           |       | Minneapolis, MN          |       | 541,542                     |       | 100                         |       | N/A |   | N/A |   |
| American Express - 19th Avenue             |       | Phoenix, AZ              |       | 117,556                     |       | 100                         |       | N/A |   | N/A |   |
| American Express - 31st Avenue             |       | Phoenix, AZ              |       | 337,439                     |       | 100                         |       | N/A |   | N/A |   |
| Arvada Connection and Arvada Marketplace * |       | Arvada, CO               |       | 336,302                     |       | 90                          |       | N/A |   | N/A |   |
| Azalea Square *                            |       | Summerville, SC          |       | 185,242                     |       | 97                          |       | N/A |   | N/A |   |
| Bed, Bath & Beyond Plaza               |       | Miami, FL                |       | 96,056                      |       | 99                          |       | N/A |   | N/A |   |
| Best on the Boulevard *                    |       | Las Vegas, NV            |       | 161,809                     |       | 79                          |       | N/A |   | N/A |   |
| Bluebonnet Parc *                          |       | Baton Rouge, LA          |       | 128,289                     |       | 95                          |       | N/A |   | N/A |   |
| Boulevard at the Capital Centre*           |       | Largo, MD                |       | 434,917                     |       | 92                          |       | N/A |   | N/A |   |
| The Columns *                              |       | Jackson, TN              |       | 166,227                     |       | 96                          |       | N/A |   | N/A |   |
| Coram Plaza                                |       | Coram, NY                |       | 132,494                     |       | 92                          |       | N/A |   | N/A |   |
| CorWest Plaza *                            |       | New Britain, CT          |       | 114,023                     |       | 99                          |       | N/A |   | N/A |   |
| Cranberry Square                           |       | Cranberry Township, PA   |       | 180,585                     |       | 92                          |       | N/A |   | N/A |   |
| CVS Pharmacy (Eckerd Drug Store)           |       | Edmund, OK               |       | 13,824                      |       | 100                         |       | 13,824 |   | 100 |   |
| CVS Pharmacy (Eckerd Drug Store)           |       | Norman, OK               |       | 13,824                      |       | 100                         |       | 13,824 |   | 100 |   |
| CVS Pharmacy                               |       | Sylacauga, AL            |       | 10,055                      |       | 100                         |       | N/A |   | N/A |   |
| Darien Towne Center *                      |       | Darien, IL               |       | 210,010                     |       | 94                          |       | 212,682 |   | 95 |   |
| Davis Towne Crossing                       |       | North Richland Hills, TX |       | 31,091                      |       | 91                          |       | N/A |   | N/A |   |
| Denton Crossing *                          |       | Denton, TX               |       | 266,040                     |       | 95                          |       | N/A |   | N/A |   |
| Dorman Center - Phase I & II *         |       | Spartanburg, SC          |       | 381,467                     |       | 98                          |       | N/A |   | N/A |   |
| Eastwood Towne Center *                    |       | Lansing, MI              |       | 322,722                     |       | 97                          |       | N/A |   | N/A |   |
| Eckerd Drug Store                          |       | Columbia, SC             |       | 13,440                      |       | 100                         |       | N/A |   | N/A |   |
| Eckerd Drug Store                          |       | Crossville, TN           |       | 13,824                      |       | 100                         |       | N/A |   | N/A |   |
| Eckerd Drug Store                          |       | Greer, SC                |       | 13,824                      |       | 100                         |       | N/A |   | N/A |   |
| Eckerd Drug Store                          |       | Kill Devil Hills, NC     |       | 13,824                      |       | 100                         |       | N/A |   | N/A |   |
| Edgemont Town Center *                     |       | Homewood, AL             |       | 70,055                      |       | 90                          |       | N/A |   | N/A |   |
| Evans Towne Centre                         |       | Evans, GA                |       | 73,295                      |       | 97                          |       | N/A |   | N/A |   |
| Five Forks                                 |       | Simpsonville, SC         |       | 60,673                      |       | 95                          |       | N/A |   | N/A |   |
| Forks Town Center                          |       | Easton, PA               |       | 88,660                      |       | 96                          |       | N/A |   | N/A |   |
| Fox Creek Village *                        |       | Longmont, CO             |       | 94,833                      |       | 83                          |       | N/A |   | N/A |   |
| Fullerton Metrocenter *                    |       | Fullerton, CA            |       | 236,356                     |       | 93                          |       | N/A |   | N/A |   |
| Gateway Pavilions *                        |       | Avondale, AZ             |       | 244,020                     |       | 81                          |       | N/A |   | N/A |   |
| Gateway Plaza                              |       | Southlake, TX            |       | 334,030                     |       | 93                          |       | N/A |   | N/A |   |
| Gateway Station                            |       | College Station, TX      |       | 19,537                      |       | 100                         |       | N/A |   | N/A |   |
| Gateway Village                            |       | Annapolis, MD            |       | 261,807                     |       | 96                          |       | N/A |   | N/A |   |
| GMAC                                       |       | Winston-Salem, NC        |       | 501,064                     |       | 100                         |       | N/A |   | N/A |   |
| Governor’s Marketplace *              |       | Tallahassee, FL          |       | 218,437                     |       | 94                          |       | N/A |   | N/A |   |
| Green’s Corner                        |       | Cumming, GA              |       | 85,271                      |       | 100                         |       | N/A |   | N/A |   |
| Gurnee Town Center *                       |       | Gurnee, IL               |       | 172,188                     |       | 96                          |       | N/A |   | N/A |   |
| Harris Teeter                              |       | Wilmington, NC           |       | 57,230                      |       | 100                         |       | N/A |   | N/A |   |
| Harvest Towne Center *                     |       | Knoxville, TN            |       | 42,235                      |       | 100                         |       | N/A |   | N/A |   |
| Henry Town Center *                        |       | McDonough, GA            |       | 444,296                     |       | 100                         |       | N/A |   | N/A |   |
| Heritage Towne Crossing                    |       | Euless, TX               |       | 72,119                      |       | 98                          |       | N/A |   | N/A |   |
| Hickory Ridge                              |       | Hickory, NC              |       | 380,487                     |       | 100                         |       | N/A |   | N/A |   |

 

16

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| ** **                                     | ** ** | ** **           | ** ** | **December 31,  2004** | ** ** | **December 31,  2003** | ** ** |
|------------------------------------------------|------------|----------------------|------------|-----------------------------|------------|-----------------------------|------------|
| **Properties:**                                | ** ** | **Location**         | ** ** | **GLA  Occupied**           | ** ** | **(%)**                     | ** ** | **GLA  Occupied** | ** ** | **(%)** | ** ** |
| ** **                                     | ** ** | ** **           | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| Huebner Oaks Center                            |       | San Antonio, TX      |       | 282,286                     |       | 98                          |       | N/A |   | N/A |   |
| Irmo Station                                   |       | Irmo, SC             |       | 90,960                      |       | 91                          |       | N/A |   | N/A |   |
| John’s Creek Village                      |       | Duluth, GA           |       | 141,802                     |       | 100                         |       | N/A |   | N/A |   |
| Kohl’s/Wilshire Plaza III                 |       | Kansas City, MO      |       | 88,248                      |       | 100                         |       | N/A |   | N/A |   |
| La Plaza Del Norte *                           |       | San Antonio, TX      |       | 303,245                     |       | 95                          |       | N/A |   | N/A |   |
| Lake Mary Pointe                               |       | Orlando, FL          |       | 48,952                      |       | 96                          |       | N/A |   | N/A |   |
| Lakewood Towne Center *                        |       | Lakewood, WA         |       | 550,613                     |       | 95                          |       | N/A |   | N/A |   |
| Larkspur Landing                               |       | Larkspur, CA         |       | 156,313                     |       | 90                          |       | N/A |   | N/A |   |
| Lincoln Park                                   |       | Dallas, TX           |       | 148,806                     |       | 100                         |       | N/A |   | N/A |   |
| Low Country Village *                          |       | Bluffton, SC         |       | 75,241                      |       | 98                          |       | N/A |   | N/A |   |
| MacArthur Crossing                             |       | Los Colinas, TX      |       | 107,759                     |       | 98                          |       | N/A |   | N/A |   |
| Manchester Meadows                             |       | Town and Country, MO |       | 442,272                     |       | 97                          |       | N/A |   | N/A |   |
| Mansfield Towne Crossing                       |       | Mansfield, TX        |       | 95,277                      |       | 100                         |       | N/A |   | N/A |   |
| McAllen Shopping Center                        |       | McAllen, TX          |       | 17,665                      |       | 100                         |       | N/A |   | N/A |   |
| Mesa Fiesta                                    |       | Mesa, AZ             |       | 194,892                     |       | 100                         |       | N/A |   | N/A |   |
| Mitchell Ranch Plaza *                         |       | New Port Richey, FL  |       | 190,404                     |       | 95                          |       | N/A |   | N/A |   |
| Newnan Crossing I & II                     |       | Newnan, GA           |       | 392,050                     |       | 100                         |       | 127,260 |   | 97 |   |
| Newton Crossroads                              |       | Covington, GA        |       | 78,896                      |       | 100                         |       | N/A |   | N/A |   |
| North Ranch Pavilions                          |       | Thousand Oaks, CA    |       | 55,928                      |       | 89                          |       | N/A |   | N/A |   |
| North Rivers Town Center                       |       | Charleston, SC       |       | 141,204                     |       | 100                         |       | N/A |   | N/A |   |
| Northgate North                                |       | Seattle, WA          |       | 297,006                     |       | 98                          |       | N/A |   | N/A |   |
| Northpointe Plaza *                            |       | Spokane, WA          |       | 373,207                     |       | 99                          |       | N/A |   | N/A |   |
| Northwoods Center                              |       | Wesley Chapel, FL    |       | 74,647                      |       | 100                         |       | N/A |   | N/A |   |
| Oswego Commons                                 |       | Oswego, IL           |       | 186,451                     |       | 99                          |       | N/A |   | N/A |   |
| Paradise Valley Marketplace *                  |       | Phoenix, AZ          |       | 72,704                      |       | 79                          |       | N/A |   | N/A |   |
| Pavilion at King’s Grant                  |       | Concord, NC          |       | 79,109                      |       | 100                         |       | 79,009 |   | 100 |   |
| Peoria Crossings *                             |       | Peoria, AZ           |       | 209,211                     |       | 98                          |       | N/A |   | N/A |   |
| Phenix Crossing                                |       | Phenix City, AL      |       | 53,817                      |       | 95                          |       | N/A |   | N/A |   |
| Pine Ridge Plaza                               |       | Lawrence, KS         |       | 230,510                     |       | 100                         |       | N/A |   | N/A |   |
| Placentia Town Center                          |       | Placentia, CA        |       | 107,658                     |       | 97                          |       | N/A |   | N/A |   |
| Plaza at Marysville                            |       | Marysville, WA       |       | 111,656                     |       | 97                          |       | N/A |   | N/A |   |
| Plaza at Riverlakes *                          |       | Bakersfield, CA      |       | 102,836                     |       | 100                         |       | N/A |   | N/A |   |
| Plaza Santa Fe II *                            |       | Santa Fe, NM         |       | 218,589                     |       | 98                          |       | N/A |   | N/A |   |
| Pleasant Run Towne Center                      |       | Cedar Hill, TX       |       | 201,587                     |       | 100                         |       | N/A |   | N/A |   |
| Promenade at Red Cliff                         |       | St. George, UT       |       | 89,561                      |       | 95                          |       | N/A |   | N/A |   |
| Reisterstown Road Plaza *                      |       | Baltimore, MD        |       | 749,370                     |       | 97                          |       | N/A |   | N/A |   |
| Saucon Valley Square                           |       | Bethlehem, PA        |       | 80,695                      |       | 100                         |       | N/A |   | N/A |   |
| Shaw’s Supermarket                        |       | New Britain, CT      |       | 65,658                      |       | 100                         |       | 65,658 |   | 100 |   |
| Shoppes at Lake Andrew                         |       | Viera, FL            |       | 144,772                     |       | 100                         |       | N/A |   | N/A |   |
| The Shoppes at Park West  (Publix Center) *    |       | Mt. Pleasant, SC     |       | 61,426                      |       | 95                          |       | N/A |   | N/A |   |
| Shoppes at Quarterfield (Metro  Square Center) |       | Severn, MD           |       | 59,417                      |       | 96                          |       | N/A |   | N/A |   |
| Shoppes of Dallas *                            |       | Dallas, GA           |       | 64,310                      |       | 91                          |       | N/A |   | N/A |   |
| Shoppes of Prominence Point *                  |       | Canton, GA           |       | 76,658                      |       | 98                          |       | N/A |   | N/A |   |
| The Shops at Boardwalk *                       |       | Kansas City, MO      |       | 99,881                      |       | 81                          |       | N/A |   | N/A |   |
| Shops at Forest Commons                        |       | Round Rock, TX       |       | 34,756                      |       | 100                         |       | N/A |   | N/A |   |
| Shops at Park Place                            |       | Plano, TX            |       | 115,460                     |       | 99                          |       | 116,300 |   | 100 |   |
| Southlake Town Square *                        |       | Southlake, TX        |       | 450,595                     |       | 96                          |       | N/A |   | N/A |   |
| Stilesboro Oaks                                |       | Acworth, GA          |       | 80,772                      |       | 100                         |       | N/A |   | N/A |   |
| Stony Creek Marketplace                        |       | Noblesville, IN      |       | 153,796                     |       | 100                         |       | 150,727 |   | 98 |   |
| Tollgate Marketplace                           |       | Bel Air, MD          |       | 392,587                     |       | 100                         |       | N/A |   | N/A |   |
| Towson Circle *                                |       | Towson, MD           |       | 108,679                     |       | 94                          |       | N/A |   | N/A |   |
| University Town Center                         |       | Tuscaloosa, AL       |       | 57,250                      |       | 100                         |       | N/A |   | N/A |   |
| Village Shoppes at Simonton *                  |       | Lawrenceville, GA    |       | 58,015                      |       | 87                          |       | N/A |   | N/A |   |

 

17

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| ** **           | ** ** | ** **      | ** ** | **December 31,  2004** | ** ** | **December 31,  2003** | ** ** |
|----------------------|------------|-----------------|------------|-----------------------------|------------|-----------------------------|------------|
| **Properties:**      | ** ** | **Location**    | ** ** | **GLA  Occupied**           | ** ** | **(%)**                     | ** ** | **GLA  Occupied** | ** ** | **(%)** | ** ** |
| ** **           | ** ** | ** **      | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| Wal-Mart Supercenter |       | Blytheville, AR |       | 183,047                     |       | 100                         |       | N/A |   | N/A |   |
| Wal-Mart Supercenter |       | Jonesboro, AR   |       | 149,704                     |       | 100                         |       | N/A |   | N/A |   |
| Watauga Pavilion *   |       | Watauga, TX     |       | 199,767                     |       | 97                          |       | N/A |   | N/A |   |
| Winchester Commons * |       | Memphis, TN     |       | 91,424                      |       | 98                          |       | N/A |   | N/A |   |
| Wrangler             |       | El Paso, TX     |       | 316,800                     |       | 100                         |       | N/A |   | N/A |   |
| Zurich Towers        |       | Schaumburg, IL  |       | 895,418                     |       | 100                         |       | N/A |   | N/A |   |
|                 |       |            |       |                        |       |                        |       |   |   |   |   |
|                 |       |            |       | 19,580,618                  |       |                        |       | 779,284 |   |   |   |

 

----

*  As part of the purchase of these properties,we are entitled to receive payments in accordance with a master lease agreementfor space which was not producing revenue either at the time of or subsequent tothe purchase. The master lease agreement covers rental payments due for periodsranging between three months and three years from the purchase date or untilthe space is leased.  The percentage inthis table does not include non-revenue producing space covered by the masterlease agreement.  The master leaseagreements combined with the physical occupancy results in an economicoccupancy ranging between 79% and 100% at December 31, 2004.

 

Inaddition to the properties listed above, we consolidate one apartment property,Cardiff Hall East, in which we made an investment through a joint venturearrangement on October 15, 2004. This property, which is located in Towson, MD, has a total of 124 units,of which 122 (98%) were occupied at December 31, 2004.

 

**Item 3. Legal Proceedings**

 

Weare subject, from time to time, to various legal proceedings and claims thatarise in the ordinary course of business. While the resolution of these matters cannot be predicted withcertainty, management believes, based on currently available information, thatthe final outcome of such matters will not have a material adverse effect onour results of operations or financial condition.

 

**Item 4. Submission of Matters to a Vote ofSecurity Holders**

 

Therewere no matters submitted to a vote of security holders during the fourthquarter 2004.

 

PARTII

 

**Item 5. Market for Registrant’s Common Equity andRelated Stockholder Matters**

 

MarketInformation

 

Thereis no established public trading market for our shares of common stock. The pershare estimated value shall be deemed to be the offering price of the shares,which is currently $10.00 per share. This valuation is supported because we are currently selling shares tothe public at a price of $10.00 per share as of February 28, 2005.

 

Weprovide the following programs to facilitate investment in the initial offeringand second offering shares and to provide limited liquidity for stockholdersuntil such time as a market for the shares develops:

 

TheDRP, subject to certain share ownership restrictions, allows stockholders whopurchase shares in our offerings to automatically reinvest distributions bypurchasing additional shares from us. Such purchases under the DRP are not subject to selling commissions orthe marketing contribution and due diligence expense allowance, and are made ata price of $9.50 per share. That price will continue to be used until theoffering price per share in the offerings is increased from $10.00 per share(if ever) or until the termination of the offerings, whichever occurs first.Thereafter, participants may acquire shares under the DRP at a price equal to95% of the  “market price” of a share onthe date of purchase until such time (if ever) as the shares are listed on anational stock exchange or included for quotation on a national market

 

18

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system.  In the event of such listing or inclusion,shares purchased by us for the DRP will be purchased on such exchange or marketat the then prevailing market price, and will be sold to participants at thatprice.

 

TheSRP, subject to certain restrictions, may provide eligible stockholders withlimited, interim liquidity by enabling them to sell shares back to us. Theprices at which shares may be sold back to us are as follows:

 

Oneyear from the purchase date, at $9.25 per share;

Twoyears from the purchase date, at $9.50 per share;

Threeyears from the purchase date, at $9.75 per share; and

Fouryears from the purchase date, at the greater of $10.00 per share, or a priceequal to 10 times our “funds available for distribution” per weighted averageshares outstanding for the prior calendar year.

 

Wewill make repurchases under the SRP, if requested, at least once quarterly on afirst-come, first-served basis.  Subjectto funds being available, we will limit the number of shares repurchased duringany calendar year to five percent (5%) of the weighted average number of sharesoutstanding during the prior calendar year. Funding for the SRP will come exclusively from proceeds that we receivefrom the sale of shares under the DRP and such other operating funds, if any,as our board of directors, at its sole discretion, may reserve for thispurpose.

 

Ourboard of directors, at its sole discretion, may choose to terminate the SRPafter the end of the offering period, or reduce the number of shares purchasedunder the SRP, if it determines that the funds allocated to the SRP are neededfor other purposes, such as the acquisition, maintenance or repair ofproperties, or for use in making a declared distribution. A determination bythe board of directors to eliminate or reduce the SRP will require theunanimous affirmative vote of the independent directors.

 

Wecannot guarantee that the funds set aside for the SRP will be sufficient toaccommodate all requests made each year. If no funds are available for the SRP when repurchase is requested, thestockholder may: (i) withdraw the request; or (ii) ask that we honor therequest at such time, if any, when funds are available.  Such pending requests will be honored on afirst-come, first-served basis.

 

Thereis no requirement that stockholders sell their shares to us. The SRP is onlyintended to provide interim liquidity for stockholders until a liquidity eventoccurs, such as the listing of the shares on a national securities exchange,inclusion of the shares for quotation on a national market system, or a mergerwith a listed company.  No assurance canbe given that any such liquidity event will occur.

 

Sharespurchased by us under the SRP will be canceled and will have the status ofauthorized but un-issued shares.  Sharesacquired by us through the SRP will not be re-issued unless they are firstregistered with the Securities and Exchange Commission or the SEC under theSecurities Act of 1933, as amended or the Act, and under appropriate statesecurities laws, or otherwise issued in compliance with such laws.

 

Stockholders

 

Asof February 28, 2005, we had 71,511 stockholders of record.

 

Distributions

 

We have been paying monthly distributions since October 2003. Thetable below depicts the distribution levels from our inception.  The rate shown is the annual per shareamount.

 

| **Rate  (per share per annum)** | ** ** | **Date Effective**                              | ** **                             |
|---------------------------------|------------|-------------------------------------------------|----------------------------------------|
| $                               | .30        |                                            | October 1 - October 31, 2003 |   |
| .50                             |       | November 1 - November 30, 2003        |                                   |
| .70                             |       | December 1, 2003 - February 29,  2004 |                                   |
| .67                             |       | March 1 - March 31, 2004              |                                   |
| .675                            |       | April 1 - May 31, 2004                     |                                   |
| .65                             |       | June 1 - December 31, 2004            |                                   |
| .63                             |       | January 1 - January 31, 2005          |                                   |
|                                 |            |                                                 |                                        |  |

 

19

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Wedeclared distributions to our stockholders per weighted average number ofshares outstanding during the year ended December 31, 2004 and the periodfrom October 1, 2003 to December 31, 2003 totaling $.66 per share and$.15 per share, respectively. Of these amounts, $.36 and $0 qualify asdistributions taxable as ordinary income and $.30 and $.15 constitute a returnof capital for federal income tax purposes for the year ended December 31,2004 and the period from October 1, 2003 to December 31, 2003,respectively.

 

Optionsto purchase an aggregate of 17,500 shares at an exercise price of $8.95 pershare have been granted to the independent directors pursuant to theIndependent Directors Stock Option Plan (options to purchase 3,000 shares as toeach of the independent directors plus options for 500 shares each on the dateof the first annual meeting and 500 shares each on the date of each annualmeeting thereafter).  Such options weregranted, without registration under the Act, in reliance upon the exemptionfrom registration in Section 4(2) of the Act, as transactions notinvolving any public offering.  None ofsuch options have been exercised. Therefore, no shares have been issued in connection with such options.

 

Use of Proceeds from Registered Securities

 

We registered, pursuant to a registration statement under theSecurities Act of 1933 (SEC File Number 333-103799), the initial offering on abest efforts basis of 250,000,000 shares at $10.00 per share, subject todiscounts in certain cases; up to 20,000,000 shares at $9.50 per share pursuantto our DRP.

 

As of December 31, 2004, we have sold the following securities inthe initial offering for the following aggregate offering prices:

 
| * |   | 214,368,875 |   | shares on a best efforts basis for  $2,142,596,617; and                   |
|---|--------|-------------|--------|---------------------------------------------------------------------------|
| * |   | 3,079,003   |   | shares pursuant to the DRP for $29,250,830                                |
| * |   | (10,350     | )      | shares repurchased pursuant to the share  repurchase program for $192,667 |

 

The total of shares and gross offering proceeds, net of sharesrepurchased, from the initial offering as of December 31, 2004 is217,437,528 shares for $2,171,654,780. The above-stated number of shares soldand the gross offering proceeds received from such sales do not include the20,000 shares purchased by the business manager/advisor for $200,000 precedingthe commencement of the initial offering.

 

From September 17, 2003, which was the effective date of theinitial offering, through December 31, 2004, we have incurred thefollowing expenses in connection with the issuance and distribution of theregistered securities:

 
| **Type of Expense**                     | ** ** | **Amount** | ** **  | **E=Estimated  A=Actual** | ** ** |
|-----------------------------------------|------------|------------|-------------|---------------------------|------------|
| Underwriting  discounts and commissions |       | $          | 225,432,199 |                      | A          |   |
| Finders’  fees                     |       | —     |        | A                         |       |
| Expenses  paid to or for underwriters   |       | —     |        | A                         |       |
| Other  expenses to affiliates           |       | 1,273,839  |        | A                         |       |
| Other  expenses paid to non-affiliates  |       | 7,308,193  |        | A                         |       |
|                                    |       |       |        |                      |       |
| Total  expenses                         |       | $          | 234,014,231 |                      |       |   |

 

The net offering proceeds to us for the initial offering period, afterdeducting the total expenses paid and accrued described above, are$1,937,640,549.

 

The underwriting discounts and commissions were paid to InlandSecurities Corporation. Inland Securities Corporation reallowed all or aportion of the commissions to soliciting dealers.

 

20

----

 

Cumulatively, we have 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                        |       | 1,763,173,087 |       | A                         |       |
| Acquisition  of other businesses                |       | —        |       | A                         |       |
| Repayment of  indebtedness                      |       | 175,296       |       | A                         |       |
| Working  capital (currently)                    |       | 19,376,406    |       | E                         |       |
| Temporary  investments (currently)              |       | 154,915,760   |       | A                         |       |
| Other uses                                      |       | —        |       | A                         |       |
| Total uses                                      |       | 1,937,640,549 |       |                      |       |

 

Of the amount used for purchases of real estate, $24,000,000 was paidto affiliates of the advisor in connection with the acquisition of propertiesfrom such affiliates. For pending purchases of real estate, we temporarilyinvested net offering proceeds in short-term, interest-bearing securities.

 

We registered, pursuant to a registration statement under theSecurities Act of 1933 (SEC File Number 333-118860), the second offering on abest efforts basis of 250,000,000 shares at $10.00 per share, subject todiscounts in certain cases; up to 20,000,000 shares at $9.50 per share pursuantto our DRP.  No shares were sold fromthis offering as of December 31, 2004.

 

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**Item 6. Selected Financial Data**

 

**INLAND WESTERN RETAIL REAL ESTATETRUST, INC.**

(A Maryland Corporation)

 

For the year ended December 31,2004 and for the period from March 5, 2003 (inception) through December 31,2003

(Amounts in thousands,except per share amounts)

 

(not covered by Reportof Independent Registered Public Accounting Firm)

 
| ** **                                                               | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| Total assets                                                             |       | $        | 3,955,816  |     | 212,102    |   |
|                                                                     |       |     |       |     |       |
| Mortgages  and notes payable                                             |       | $        | 1,783,114  |     | 29,627     |   |
|                                                                     |       |     |       |     |       |
| Total income                                                             |       | $        | 134,086    |     | 782        |   |
|                                                                     |       |     |       |     |       |
| Net income  (loss)                                                       |       | $        | 11,701     |     | (173       | ) |
|                                                                     |       |     |       |     |       |
| Net income  (loss) per common share, basic and diluted (a)               |       | $        | .12        |     | (.07       | ) |
|                                                                     |       |     |       |     |       |
| Distributions  declared                                                  |       | $        | 64,992     |     | 1,286      |   |
|                                                                     |       |     |       |     |       |
| Distributions  per weighted average common share (a)                     |       | $        | .66        |     | .15        |   |
|                                                                     |       |     |       |     |       |
| Funds From  Operations (a)(b)                                            |       | $        | 57,709     |     | 19         |   |
|                                                                     |       |     |       |     |       |
| Cash flows  provided by operating activities                             |       | $        | 63,520     |     | 724        |   |
|                                                                     |       |     |       |     |       |
| Cash flows  used in investing activities                                 |       | $        | (3,243,055 | )        | (133,425   | ) |
|                                                                     |       |     |       |     |       |
| Cash flows  provided by financing activities                             |       | $        | 3,356,378  |     | 197,082    |   |
|                                                                     |       |     |       |     |       |
| Weighted  average number of common shares outstanding, basic and diluted |       | 98,563   |       | 2,521    |       |
|                                                                          |            |          |            |          |            |  |  |  |  |

 

Theabove selected financial data should be read in conjunction with theconsolidated financial statements and related notes appearing elsewhere in thisannual report.

 

(a)                             The netincome (loss) per share basic and diluted is based upon the weighted averagenumber of common shares outstanding for the year ended December 31, 2004and the period from March 5, 2003 (inception) to December 31, 2003,respectively. The distributions per common share are based upon the weightedaverage number of common shares outstanding for the year ended December 31,2004 and the period from October 2, 2003 (first day shares were sold tothe public) to December 31, 2003. See Footnote (b) below for information regarding our calculation ofFFO.  Our distributions of our currentand accumulated earnings and profits for Federal income tax purposes aretaxable to stockholders as ordinary income. Distributions in excess of theseearnings and profits generally are treated as a non-taxable reduction of thestockholder’s basis in the shares to the extent thereof, and thereafter astaxable gain (a return of capital). These distributions in excess of earnings and profits will have theeffect of deferring taxation of the amount of the distributions until the saleof the stockholders’ shares.  For theperiod from March 5, 2003 (inception) to December 31, 2003, $357,790(or 100% of the distributions paid for 2003) represented a return of capitaldue to the tax loss in 2003. For the year ended December 31, 2004, approximately$24,544,000 (or approximately 45% of the $54,542,000 distribution paid in 2004)represented a return of capital. The balance of the distribution constitutesordinary income. In order to maintain our qualification as a REIT, we must makeannual distributions to stockholders of at least 90% of our REIT taxableincome, or approximately $10,530,660 for

 

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2004. REIT taxableincome does not include net capital gains. Under certain circumstances, we may be required to make distributions inexcess of cash available for distribution in order to meet the REITdistribution requirements.  Distributionsare determined by our board of directors and are dependent on a number offactors, including the amount of funds available for distribution, ourfinancial condition, any decision by the board of directors to reinvest fundsrather than to distribute the funds, our capital expenditures, the annualdistribution required to maintain REIT status under the Code, and other factorsthe board of directors may deem relevant.

 

(b)                            One of ourobjectives is to provide cash distributions to our stockholders from cashgenerated by our operations. Cash generated from operations is not equivalentto our net income from continuing operations as determined under GenerallyAccepted Accounting Principles in the United States of America or GAAP. Due tocertain unique operating characteristics of real estate companies, the NationalAssociation of Real Estate Investment Trusts or NAREIT, an industry tradegroup, has promulgated a standard known as “Funds from Operations” or “FFO” forshort, which it believes more accurately reflects the operating performance ofa REIT such as us. As defined by NAREIT, FFO means net income computed inaccordance with GAAP, excluding gains (or losses) from sales of operatingproperties, plus depreciation on real property and amortization, and afteradjustments for unconsolidated partnerships and joint ventures in which theREIT holds an interest.  We have adoptedthe NAREIT definition for computing FFO because management believes that,subject to the following limitations, FFO provides a basis for comparing ourperformance and operations to those of other REITs.  The calculation of FFO may vary from entityto entity since capitalization and expense policies tend to vary from entity toentity.  Items which are capitalized donot impact FFO, whereas items that are expensed reduce FFO.  Consequently, our presentation of FFO may notbe comparable to other similarly titled measures presented by other REITs.  FFO is not intended to be an alternativeto  “Net Income” as an indicator of ourperformance nor to  “Cash Flows fromOperating Activities” as determined by GAAP as a measure of our capacity to paydistributions. We use FFO to compare our performance to that of other REITs inour peer group.  Additionally, we use FFOin conjunction with our acquisition policy to determine investmentcapitalization strategy.  FFO iscalculated as follows:

 
| ** **                                                                      | ** ** | **2004**   | ** ** | **2003** | ** ** |
|---------------------------------------------------------------------------------|------------|------------|------------|----------|------------|
| Net income  (loss)                                                              |       | $          | 11,700,733 |     | $          | (173,279 | ) |
| Add:  Depreciation  and amortization related to investment properties |       | 46,101,290 |       | 192,270  |       |
| Less:  Depreciation  related to consolidated joint ventures           |       | (92,725    | )          | —   |       |
|                                                                            |       |       |       |     |       |
| Funds from  operations                                                          |       | $          | 57,709,298 |     | $          | 18,991 |   |
|                                                                                 |            |            |            |          |            |  |  |  |

 

FFO does not represent cash generated from operatingactivities calculated in accordance with GAAP and is not necessarily indicativeof cash available to fund cash needs. FFO should not be considered as an alternative to net income as anindicator of our operating performance or as an alternative to cash flow as ameasure of liquidity.

 

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**Item 7. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

 

Weelectronically file our annual report on Form 10-K, quarterly reports on Form10-Q, current reports on Form 8-K and all amendments to those reports with theSecurities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with theSEC at the SEC’s Public Reference Room at 405 Fifth Street, NW, Washington, DC20549.  The public may obtain informationon the operation of the Public Reference room by calling the SEC at(800)-SEC-0330.  The SEC maintains an Internetsite at (www.sec.gov) that contains reports, proxy and information statementsand other information regarding issuers that file electronically.

 

*Certainstatements in this “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” and elsewhere in this Form 10-K constitute “forward-lookingstatements” within the meaning of the Federal Private Securities LitigationReform Act of 1995.  Theseforward-looking statements involve known and unknown risks, uncertainties andother factors which may cause our actual results, performance or achievementsto be materially different from any future results, performance or achievementsexpressed or implied by these forward-looking statements.*

 

The followingdiscussion and analysis relates to the year ended December 31, 2004 andfor the period from March 5, 2003 (inception) to December 31,2003.  You should read the followingdiscussion and analysis along with our consolidated financial statements andthe related notes included in this report.

 

Overview

 

We were formed to acquire and manage a diversified portfolio of realestate, principally multi-tenant shopping centers and single-userbuildings.  We operate as a real estateinvestment trust or REIT for Federal and state income tax purposes.  We have initially focused on acquiringproperties in the Western states.  Wehave begun to acquire and plan to continue acquiring properties in the Westernstates.  We may also acquire retail andsingle-user net lease properties in locations throughout the United States. Wehave also begun to acquire properties improved with commercial facilities whichprovide goods and services as well as double or triple net leased properties,which are either commercial or retail including properties acquired in sale andleaseback transactions.  A triple-netleased property is one which is leased to a tenant who is responsible for thebase rent and all costs and expenses associated with their occupancy includingproperty taxes, insurance and repairs and maintenance. Inland Western RetailReal Estate Advisory Services, Inc. or our business manager/advisor has beenretained to manage, for a fee, our day-to-day affairs, subject to thesupervision of our board of directors.

 

Our goal is to purchase propertiesprincipally west of the Mississippi River and evaluate potential acquisitionopportunities of properties east of the Mississippi River on a property byproperty basis, taking into consideration investment objectives and availablefunds.  As of  February 28, 2005 we have purchased 12additional properties located in the states of Florida, Iowa, Louisiana, NewYork, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Texas,Wisconsin, and Ontario, Canada.

 

For the year ended December 31, 2004, wepurchased 103 properties, of which 55 were not located in our primarygeographical area of interest.  Wepurchased these 55 properties because we had the unique opportunity of takingadvantage of our business manager/advisor’s acquisition pipeline of propertieslocated east of the Mississippi River which generally, continue to have ratesof return above those located in the Western United States. We expect thistrend to continue into the next year. Our strategy in purchasing theseproperties was to deploy stockholder funds promptly and generate income for usas early as possible, while investing in properties which met our acquisitioncriteria.

 

During the fourth quarter of 2004, theretail sector has remained relatively stable as a result of sustained consumerspending, which has helped maintain retail sales growth despite potentialterrorist threats and the Iraqi war. A modest pace of new retail construction,and the expansion strategy of some retailers, who are renting more space tomaintain market share and revenue growth and offset declining same store saleshave also contributed to the stability.

 

Our goal is tomaximize the possible return to our stockholders through the acquisition,development, re-development and management of our properties consisting ofneighborhood and community shopping centers and single-tenant buildings. Weactively manage our assets by leasing and releasing space at favorable rates,controlling costs, maintaining strong tenant relationships and creatingadditional value through redeveloping and repositioning our centers. Wedistribute funds generated from operations to our stockholders, and intend tocontinue distributions in order to maintain our REIT status.

 

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Overall, theretail segment of the real estate industry has undergone a fundamental shift inconsumer spending patterns while the grocery, drug and discount retail sectorshave remained relatively stable over the past few years. The majority ofconsumer purchases for general merchandise occur at discount stores orwarehouse club/supercenters following the lead of industry giants Wal-Mart andHome Depot. Strength in this segment has come at a detriment to older,established retailers, whose operating costs are relatively higher, and who donot offer bulk purchasing opportunities to consumers. In addition, relativelylow interest rates have resulted in the increased purchasing power of thegeneral public, further accelerating these retail trends.

 

Selectingproperties with high quality tenants and mitigating risk through diversifyingour tenant base is at the forefront of our acquisition strategy. We believe ourstrategy of purchasing properties, primarily in the fastest growing areas ofthe country and focusing on acquisitions with tenants who provide basic goodsand services will produce stable earnings and growth opportunities in futureyears.

 

Weare in the process of completing our initial offering of common stock and haveraised $2,172,047,447 as of December 31, 2004.  We raised on average approximately $237million per month during the fourth quarter of 2004.

 

On December 28,2004, our second offering was declared effective for up to 250,000,000 sharesof common stock at $10 each and the issuance of up to 20,000,000 shares at$9.50 each, which may be distributed pursuant to our DRP.  We began selling shares of the secondoffering in January 2005.

 

As of December 31, 2004, we owned through separate limitedpartnership, limited liability company, or joint venture agreements, aportfolio of 111 properties located in Alabama, Arizona, Arkansas, California,Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana,Maryland, Michigan, Minnesota,  Missouri,Nevada, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, SouthCarolina, Tennessee, Texas, Utah, Washington and Wisconsin containing anaggregate of approximately 20,231,000 square feet of gross leasable area.  As of December 31, 2004, approximately97% of gross leasable area in the properties was physically leased and 99% waseconomically leased.

 

Critical Accounting Policies and Estimates

 

*General*

 

The following disclosure pertains to critical accounting policies andestimates we believe are most “critical” to the portrayal of our  financial condition and results of operationswhich require our most difficult, subjective or complex judgments.  These judgments often result from the need tomake estimates about the effect of matters that are inherently uncertain.  Critical accounting policies discussed inthis section are not to be confused with accounting principles and methodsdisclosed in accordance with accounting principles generally accepted in theUnited States of America or GAAP.  GAAPrequires information in financial statements about accounting principles,methods used and disclosures pertaining to significant estimates.  This discussion addresses our judgmentpertaining to trends, events or uncertainties known which were taken intoconsideration upon the application of those policies and the likelihood thatmaterially different amounts would be reported upon taking into considerationdifferent conditions and assumptions.

 

*Acquisition of Investment Property*

 

We allocate the purchase price of each acquired investment propertybetween land, building and improvements, acquired above market and below marketleases, in-place lease value, and any assumed financing that is determined tobe above or below market terms. In addition, we allocate a portion of thepurchase price to the value of customer relationships. The allocation of thepurchase price is an area that requires judgment and significantestimates.  We use the informationcontained in the independent appraisal obtained at acquisition as the primarybasis for the allocation to land and building and improvements. We determinewhether any financing assumed is above or below market based upon comparison tosimilar financing terms for similar investment properties.  We also allocate a portion of the purchaseprice to the estimated acquired in-place lease costs based on estimated leaseexecution costs for similar leases as well as lost rent payments during assumedlease up period when calculating as if vacant fair values.  We consider various factors includinggeographic location and size of leased space. We also evaluate each acquired lease based upon current market rates atthe acquisition date and we consider various factors including geographicallocation, size and location of leased space within the investment property,tenant profile, and the credit risk of the tenant in determining whether theacquired lease is above or below market lease costs.  After an acquired lease is determined to beabove or below market lease costs, we allocate a portion of the purchase priceto such above or below acquired lease costs based upon the present value of thedifference

 

25

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between the contractual lease rate and the estimated market rate.However, for below market leases with fixed rate renewals, renewal periods areincluded in the calculation of below market in-place lease values. Thedetermination of the discount rate used in the present value calculation isbased upon the “risk free rate.”   Thisdiscount rate is a significant factor in determining the market valuation whichrequires our judgment of subjective factors such as market knowledge, economics,demographics, location, visibility, age and physical condition of the property.

 

*Impairment of Long-Lived Assets*

 

In accordance with Statement of Financial Accounting Standards or SFASNo. 144, we conduct an analysis on a quarterly basis to determine if indicatorsof impairment exist to ensure that the property’s carrying value does notexceed its fair value.  If this were tooccur, we are required to record an impairment loss.  The valuation and possible subsequentimpairment of investment properties is a significant estimate that can and doeschange based on our continuous process of analyzing each property and reviewingassumptions about uncertain inherent factors, as well as the economic conditionof the property at a particular point in time. No impairment losses have beentaken in 2003 or 2004.

 

*Cost Capitalization and Depreciation Policies*

 

Our policy is to review all expenses paid and capitalize any itemsexceeding $5,000 which are deemed to be an upgrade or a tenantimprovement.  These costs are capitalizedand are included in the investment properties classification as an addition tobuildings and improvements.

 

Buildings and improvements are depreciated on a straight-line basisbased upon estimated useful lives of 30 years for buildings and improvements,and 15 years for site improvements.  Theportion of the purchase price allocated to acquired above market costs andacquired below market costs are amortized on a straight-line basis over thelife of the related lease as an adjustment to net rental income.  Acquired in-place lease costs, customerrelationship value, other leasing costs, and tenant improvements are amortizedon a straight-line basis over the life of the related lease as a component ofamortization expense.

 

The application of SFAS No. 141 and SFAS No. 142 resulted in therecognition upon acquisition of additional intangible assets and liabilitiesrelating to our real estate acquisitions during the year ended December 31,2004.  The portion of the purchase priceallocated to acquired above market lease costs and acquired below market leasecosts are amortized on a straight-line basis over the life of the related leaseas an adjustment to rental income. Amortization pertaining to the above marketlease costs of $3,118,699 was applied as a reduction to rental income for theyear ended December 31, 2004 and $5,227 for the period from March 5,2003 (inception) to December 31, 2003. Amortization pertaining to the below market lease costs of $4,703,357was applied as an increase to rental income for the year ended December 31,2004 and $15,386 for the period from March 5, 2003 (inception) to December 31,2003.

 

The portion of the purchase price allocated to acquired in-place leasecosts are amortized on a straight line basis over the life of the relatedlease. We incurred amortization expense pertaining to acquired in-place leasecosts of $9,923,630 for the year ended December 31, 2004 and $51,773 forthe period from March 5, 2003 (inception) to December 31, 2003.

 

The portion of the purchase price allocated to customer relationshipvalue is amortized on a straight-line basis over the life of the related lease.

 

26

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The table below presents the amortization during the next five yearsrelated to the acquired in-place lease intangibles, customer relationshipvalue, acquired above market lease costs and the below market lease costs forproperties owned at December 31, 2004:

 
| **Amortization of:**                 | ** ** | **2005**  | ** **  | **2006**  | ** **  | **2007**  | ** **  | **2008**  | ** **  | **2009**  | ** **  | **Thereafter** | ** **   |
|--------------------------------------|------------|-----------|-------------|-----------|-------------|-----------|-------------|-----------|-------------|-----------|-------------|----------------|--------------|
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  above market lease costs   |       | $         | (5,576,668  | )         | (5,391,370  | )         | (4,558,366  | )         | (4,275,216  | )         | (3,783,749  | )              | (17,188,977  | ) |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  below market lease costs   |       | 9,930,801 |        | 9,166,611 |        | 8,238,008 |        | 7,337,557 |        | 6,580,442 |        | 44,732,278     |         |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Net rental  income increase          |       | $         | 4,354,133   |      | 3,775,241   |      | 3,679,642   |      | 3,062,341   |      | 2,796,693   |           | 27,543,301   |   |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  in-place lease intangibles |       | $         | (25,857,397 | )         | (25,857,397 | )         | (25,857,397 | )         | (25,803,230 | )         | (24,532,397 | )              | (110,207,994 | ) |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Customer  relationship value         |       | $         | (200,000    | )         | (200,000    | )         | (200,000    | )         | (200,000    | )         | (200,000    | )              | (1,000,000   | ) |
|                                      |            |           |             |           |             |           |             |           |             |           |             |                |              |  |  |

 

Cost capitalization and the estimate of useful lives requires ourjudgment and includes significant estimates that can and do change based on ourprocess which periodically analyzes each property and on our assumptions aboutuncertain inherent factors.

 

*Revenue Recognition*

 

We recognize rental income on a straight-line basis over the term ofeach lease. The difference between rental income earned on a straight-linebasis and the cash rent due under the provisions of the lease agreements isrecorded as deferred rent receivable and is included as a component of accountsand rents receivable in the accompanying consolidated balance sheets.  We anticipate collecting these amounts overthe terms of the leases as scheduled rent payments are made.

 

Reimbursements from tenants for recoverable real estate tax andoperating expenses are accrued as revenue in the period the applicableexpenditures are incurred.  We makecertain assumptions and judgments in estimating the reimbursements at the endof each reporting period. Should the actual results differ from our judgment,the estimated reimbursement could be negatively affected and would be adjustedappropriately.

 

In conjunction with certain acquisitions, we receive payments undermaster lease agreements pertaining to certain, non-revenue producing spaces eitherat the time of, or subsequent to, the purchase of some of our properties.  Upon receipt of the payments, the receiptsare recorded as a reduction in the purchase price of the related propertiesrather than as rental income.  Thesemaster leases were established at the time of purchase in order to mitigate thepotential negative effects of loss of rent and expense reimbursements.  Master lease payments are received through adraw of funds escrowed at the time of purchase and may cover a period from one tothree years.  These funds may be releasedto either us or the seller when certain leasing conditions are met.  Restricted cash includes funds received bythird party escrow agents, from sellers, pertaining to master leaseagreements.  We record such escrows asboth an asset and a corresponding liability, until certain leasing conditionsare met.

 

We record lease termination income if there is a signed terminationletter agreement, all of the conditions of the agreement have been met, and thetenant is no longer occupying the property.

 

*Interest Rate Futures Contracts*

 

We enter into interest rate futures contracts or treasury contracts asa means of reducing our exposure to rising interest rates.  At inception, contracts are evaluated inorder to determine if they will qualify for hedge accounting treatment and willbe accounted for either on a deferral, accrual or market value basis dependingon the nature of our hedge strategy and the method used to account for thehedged item.  Hedge criteria include demonstratingthe manner in which the hedge will reduce risk, identifying the specific asset,liability or firm commitment being hedged, and citing the time horizon beinghedged.

 

27

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For the year ended December 31, 2004, the Company entered intotreasury contracts with a futures commission merchant with yields ranging from3.27% to 3.85% for 5 year treasury contracts and 4.00% to 4.63% for 10 yeartreasury contracts. On December 31, 2004, the treasury contracts had aliquidation value of $46,005 resulting in a loss of $3,666,894 for the yearended December 31, 2004.  As thesetreasury contracts are not offsetting future commitments and therefore do notqualify as hedges, the net loss is recognized currently in earnings.

 

Liquidity and Capital Resources

 

*General*

 

Our principal demands for funds have been for property acquisitions,for the payment of operating expenses and distributions, and for the payment ofinterest on outstanding indebtedness. Generally, cash needs for items otherthan property acquisitions have been met from operations, and propertyacquisitions have been funded by a public offering of our shares of commonstock.  However, there may be a passageof time between the sale of the shares and our purchase of properties, whichmay result in a delay in the benefits to stockholders of returns generated fromproperty operations.  Our businessmanager/advisor evaluates potential additional property acquisitions and InlandReal Estate Acquisitions, Inc., one of the affiliates of our sponsor, engagesin negotiations with sellers on our behalf. After a purchase contract is executed which contains specific terms, theproperty will not be purchased until due diligence, which includes review ofthe title insurance commitment, an appraisal and an environmental analysis, issuccessfully completed. In some instances, the proposed acquisition stillrequires the negotiation of final binding agreements, which may includefinancing documents.  During this period,we may decide to temporarily invest any unused proceeds from the offering incertain investments that could yield lower returns than other investments, suchas the acquisition of properties. These lower returns may affect our ability tomake distributions.

 

Potential future sources of capital include proceeds from the public orprivate offering of our equity or debt securities, secured or unsecuredfinancings from banks or other lenders, proceeds from the sale of properties,as well as undistributed funds from operations. We anticipate that during the current year we will (i) acquireadditional existing shopping centers and net leased properties, (ii) begin todevelop additional shopping center sites and (iii) continue to paydistributions to stockholders, and each is expected to be funded mainly fromproceeds of our public offerings of shares, cash flows from operatingactivities, financings and other external capital resources available to us.

 

Our leases typically provide that the tenant bears responsibility forsubstantially all property costs and expenses associated with ongoingmaintenance and operation, including utilities, property taxes and insurance.In addition, in some instances our leases provide that the tenant isresponsible for roof and structural repairs. Certain of our properties are subject to leases under which we retainresponsibility for certain costs and expenses associated with theproperty.  We anticipate that capitaldemands to meet obligations related to capital improvements with respect toproperties will be minimal for the foreseeable future****andcan be met with funds from operations and working capital.  We believe that our current capital resources(including cash on hand) and anticipated financings are sufficient to meet ourliquidity needs for the foreseeable future.

 

*Liquidity*

 

*Offering*.  As of December 31, 2004, subscriptionsfor the initial public offering for a total of 217,467,878 shares had beenreceived from the public, which include the 20,000 shares issued to thebusiness manager/advisor and 3,079,003 shares sold pursuant to the DRP as of December 31,2004.  As a result of such sales, wereceived a total of $2,172,047,447 of gross offering proceeds for the initialpublic offering as of December 31, 2004.

 

On December 28,2004, our second offering was declared effective for up to 250,000,000 sharesof common stock at $10 each and the issuance of up to 20,000,000 shares at$9.50 each, which may be distributed pursuant to our DRP.  We began selling shares of the secondoffering in early January 2005.

 

*Mortgage Debt. *Mortgage loansoutstanding as of December 31, 2004 were $1,782,538,627 and had a weightedaverage interest rate of 4.58%.  Of thisamount, $1,635,745,627 had fixed rates ranging from 3.96% to 8.02% and aweighted average fixed rate of 4.67% at December 31, 2004. The rate of8.02% represented the interest rate on the mortgage for Cardiff Hall East(Cardiff), a joint venture entity which we consolidate.  Excluding the Cardiff mortgage, the highestfixed rate on our mortgage debt was 6.34%. The remaining $146,793,000 represented variable rate loans with aweighted

 

28

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average interest rate of 3.55% at December 31, 2004. As of December 31,2004, scheduled maturities for our outstanding mortgage indebtedness hadvarious due dates through August 2023.

 

During the period from January 1, 2005 through February 28,2005 we obtained mortgage financing on properties that we purchased during 2004and 2005 totaling approximately $276 million that require monthly payments ofinterest only and bear interest at a range of 4.30% to 5.69% per annum.

 

*Line of Credit. *On December 24,2003, we entered into a $150,000,000 unsecured line of credit arrangement abank for a period of one year.  The fundsfrom this line of credit were used to provide liquidity from the time aproperty was purchased until permanent debt was placed on the property.  We were required to pay interest only on theoutstanding balance from time to time under the line at the rate equal to LIBORplus 175 basis points.  We were alsorequired to pay, on a quarterly basis, an amount ranging from .15% to .30%, perannum, on the average daily undrawn funds remaining under this line.  The line of credit required compliance with certaincovenants, such as debt service ratios, minimum net worth requirements,distribution limitations and investment restrictions.  As of December 31, 2003, we were incompliance with such covenants.  Inconnection with obtaining this line of credit, we paid fees in an amounttotaling approximately $1,044,000 (which included a .65% commitment fee).  The outstanding balance on the line of creditwas $5,000,000 as of December 31, 2003 with an effective interest rate of2.9375% per annum.

 

On December 16, 2004, we terminated the existing line of creditagreement and executed a new unsecured line of credit facility with a bank forup to $100,000,000 with an optional unsecured borrowing capacity of$150,000,000 for a total unsecured borrowing capacity of $250,000,000.  The facility has an initial term of one yearwith two one-year extension options, with an annual variable interestrate.  The funds from this line of creditmay be used to provide liquidity from the time a property is purchased untilpermanent debt is placed on that property. The line of credit requires interest only payments monthly at the rateequal to the London InterBank Offered Rate or LIBOR plus 175 basis points whichranged from 2.34% to 2.42% during the quarter ended December 31,2004.  We are also required to pay, on aquarterly basis, an amount ranging from .15% to .25%, per annum, on the averagedaily undrawn funds under this line.  Theline of credit requires compliance with certain covenants, such as debt serviceratios, minimum net worth requirements, distribution limitations and investmentrestrictions. As of December 31, 2004, we were in compliance with suchcovenants. There was no outstanding balance on the line as of December 31,2004.

 

*Stockholder Liquidity. *We provide thefollowing programs to facilitate investment in the shares and to providelimited, interim liquidity for stockholders until such time as a market for theshares develops:

 

The DRP allows stockholders who purchase shares pursuant to theofferings to automatically reinvest distributions by purchasing additionalshares from us.  Such purchases will notbe subject to selling commissions or the marketing contribution and duediligence expense allowance and will be sold at a price of $9.50 pershare.  As of December 31, 2004, weissued 3,079,003 shares pursuant to the DRP for an aggregate amount of$29,250,830.

 

Subject to certain restrictions, the SRP provides existing stockholderswith limited, interim liquidity by enabling them to sell shares back to us atthe following prices:

 

Oneyear from the purchase date, at $9.25 per share;

Twoyears from the purchase date, at $9.50 per share;

Threeyears from the purchase date, at $9.75 per share; and

Fouryears from the purchase date, at the greater of $10.00 per share, or a priceequal to 10 times our “funds available for distribution” per weighted averageshares outstanding for the prior calendar year.

 

Shares purchasedby us will not be available for resale. As of December 31, 2004, 10,350 shares have been repurchased for atotal of $192,667.

 

*Capital Resources*

 

We expect to meet our short-term operating liquidity requirementsgenerally through our net cash provided by property operations.  We also expect that our properties willgenerate sufficient cash flow to cover our operating expenses plus pay amonthly distribution on our weighted average shares.  Operating cash flows are expected to increaseas additional properties are added to our portfolio.

 

29

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We believe that we should put mortgage debt on or leverage ourproperties at approximately 50% of their value. We also believe that we can borrow at the lowest overall cost of fundsor interest rate by placing individual financing on each of ourproperties.  Accordingly, mortgage loanswill generally have been placed on each property at the time that the propertyis purchased, or shortly thereafter, with the property solely securing thefinancing.

 

During the year ended December 31, 2004, we closed on mortgagedebt with a principal amount of $1,753,086,923. Of this amount, $1,606,293,923represented fixed rate loans which bear interest rates between 3.96% and 8.02%.The rate of 8.02% represented the interest rate on the mortgage for CardiffHall East (Cardiff), a joint venture entity which we consolidate.  Excluding the Cardiff mortgage, the highestfixed rate on our mortgage debt was 6.34%. The remaining $146,793,000 represented variable rate loans with aweighted average interest rate of 3.55% at December 31, 2004.

 

With the exception of the mortgage loans on Plaza Santa Fe II, Shops atForest Commons and Henry Town Center, all of the loans that closed during theyear ended December 31, 2004 may be prepaid with a penalty after specificlockout periods.  The mortgage loans onPlaza Santa Fe II, Shops at Forest Commons and Henry Town Center, have noprepayment privileges.

 

We have entered into interest rate lock agreements with various lendersto secure interest rates on mortgage debt on properties we currently own orwill purchase in the future.  We haveoutstanding rate lock deposits in the amount of $2,826,055 as of December 31,2004 which are applied as credits to the mortgage fundings as they occur.  These agreements lock interest rates from4.45% to 5.12% for periods from 60 days to 90 days on approximately $240million in principal.

 

During the period from January 1, 2005 to February 28, 2005,we entered into rate lock agreements which lock interest rates from 4.47% to4.69% for periods from 30 days to 90 days on approximately $300 million inprincipal.

 

Although the loans we closed are generally non-recourse, occasionally,when it is deemed to be advantageous, we may guarantee all or a portion of thedebt on a full-recourse basis. Individual decisions regarding interest rates, loan-to-value, fixedversus variable-rate financing, maturity dates and related matters are oftenbased on the condition of the financial markets at the time the debt isincurred, which conditions may vary from time to time.

 

Distributions are determined by our board of directors with the adviceof our business manager/advisor and are dependent on a number of factors,including the amount of funds available for distribution, flow of funds, ourfinancial condition, any decision by our board of directors to reinvest fundsrather than to distribute the funds, our capital expenditures, the annualdistribution required to maintain REIT status under the Internal Revenue Codeand other factors the board of directors may deem relevant.

 

*Cash Flows From Operating Activities*

 

Net cashgenerated from operating activities was approximately $63,520,000 for the yearended December 31, 2004 and $724,000 for, the period from March 5,2003 (inception) to December 31, 2003. The increase in net cash provided by operating activities for the yearended December 31, 2004 compared to prior year is due primarily to theadditional rental revenues and income generated from the operations of 103additional properties purchased during the year ended December 31, 2004,compared to eight properties purchased for the period from March 5, 2003(inception) to December 31, 2003.

 

*Cash Flows From Investing Activities*

 

Cash flowsused in investing activities were approximately $3,243,055,000 for the yearended December 31, 2004 and $133,425,000 for the period from March 5,2003 (inception) to December 31, 2003. The cash flows used in investing activities were primarily due to theacquisition of 103 and eight properties for approximately $3,201,247,000 and$127,196,000 during the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003, respectively.

 

As of February 28, 2005, we had approximately $550 millionavailable for investment in additional properties.  As of February 28, 2005, we areconsidering the acquisition of approximately $226 million in properties.  We are currently in the process of obtainingfinancings on properties which have been purchased, as well as certain of theproperties which we

 

30

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anticipate purchasing.  It is ourintention to finance each of our acquisitions either at closing or subsequentto closing.  As a result of the intendedfinancings and based on our current experience in raising funds in ourofferings, we believe that we will have sufficient resources to acquire theseproperties.

 

*Cash Flows From Financing Activities*

 

Cash flows provided by financing activities were approximately$3,356,378,000 for the year ended December 31, 2004 and $197,082,000 forthe period from March 5, 2003 (inception) to December 31, 2003.  We generated proceeds from the sale ofshares, net of offering costs paid and shares repurchased, of approximately$1,774,231,000 and $166,552,000, respectively. We generated approximately$1,653,523,000 and $29,627,000 from the issuance of new mortgages secured by 97and two of our properties. We generated $165,000,000 and $5,000,000 fromfunding on the line of credit.  We paidapproximately $16,613,000 and $4,023,000 for loan fees and approximately$54,542,000 and $358,000 in distributions to our stockholders. The sponsor hasagreed to advance us amounts to pay a portion of these distributions untilfunds available for distribution are sufficient to cover distributions. Inaddition, $170,000,000 and $0 was paid off on the line of credit for the yearended December 31, 2004 and the period from March 5, 2003 (inception)to December 31, 2003, respectively.

 

Given the current size of our offerings, as of February 28, 2005,we could raise approximately $2.4 billion of additional capital.  However, there can be no assurance that wewill raise this amount of money or that we will be able to acquire additionalattractive properties.

 

We are exposed tointerest rate changes primarily as a result of our long-term debt used to maintainliquidity and fund capital expenditures and expansion of our real estateinvestment portfolio and operations.  Ourinterest rate risk management objectives are to limit the impact of interestrate changes on earnings and cash flows and to lower our overall borrowingcosts.  To achieve our objectives weborrow primarily at fixed rates or variable rates with the lowest marginsavailable and, in some cases, with the ability to convert variable rates tocurrent market fixed rates at the time of conversion.

 

Effects of Transactions with Related and Certain Other Parties

 

*Services Provided by Affiliates of theBusiness Manager/Advisor* As of December 31, 2004and December 31, 2003, we had incurred $234,014,231 and $22,144,814,respectively of offering costs, of which $175,508,624 and $16,854,779,respectively were paid or accrued to affiliates. In accordance with the termsof our offerings, our business manager/advisor has guaranteed payment of allpublic offering expenses (excluding sales commissions and the marketingcontribution and the due diligence expense allowance) in excess of 5.5% of thegross proceeds of the offerings or gross offering proceeds or all organizationand offering expenses (including selling commissions) which together exceed 15%of gross offering proceeds.  As of December 31,2004 and December 31, 2003, offering costs did not exceed the 5.5% and 15%limitations. We anticipate that these costs will not exceed these limitationsupon completion of the offerings. Any excess amounts at the completion of theofferings will be reimbursed by our business manager/advisor.

 

Ourbusiness manager/advisor and its affiliates are entitled to reimbursement forsalaries and expenses of employees of our business manager/advisor and itsaffiliates relating to the offerings.  Inaddition, an affiliate of our business manager/advisor is entitled to receiveselling commissions, and the marketing contribution and due diligence expenseallowance from us in connection with the offerings.  Such costs are offset against thestockholders’ equity accounts. Such costs totaled $175,508,624 and $16,859,779,of which $2,879,894 and $1,061,791 were unpaid at December 31, 2004 and December 31,2003, respectively.

 

Ourbusiness manager/advisor and its affiliates are entitled to reimbursement forgeneral and administrative expenses relating to our administration.  Such costs are included in general andadministrative expenses to affiliates, in addition to costs that werecapitalized pertaining to property acquisitions.  During the year ended December 31, 2004and the period from March 5, 2003 (inception) to December 31, 2003,we incurred $1,542,986 and $194,017 of these costs, respectively, of which$957,471 and $40,703 remained unpaid as of December 31, 2004 and December 31,2003, respectively, and are included in Due to affiliates on the ConsolidatedBalance Sheets.

 

Anaffiliate of our business manager/advisor provides loan servicing to us for anannual fee.  Such costs are included inproperty operating expenses to affiliates. The agreement allows for annual fees totaling .03% of the first $1billion in

 

31

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mortgagebalance outstanding and .01% of the remaining mortgage balance, payablemonthly.  Such fees totaled $140,859 forthe year ended December 31, 2004 and $328 for the period from March 5,2003 (inception) to December 31, 2003.

 

Weuse the services of an affiliate of our business manager/advisor to facilitatethe mortgage financing that we obtained on some of the properties purchased. Wepay the affiliate .02% of the principal balance of mortgage loansobtained.  Such costs are capitalized asloan fees and amortized over the respective loan term.  During the year ended December 31, 2004and for the period from March 5, 2003 (inception) to December 31,2003, we paid loan fees totaling $3,475,472 and $59,523, respectively, to thisaffiliate.

 

Wemay pay an advisor asset management fee of not more than 1% of our averageassets. Our average asset value is defined as the average of the total bookvalue, including acquired intangibles, of our real estate assets invested inequity interests plus our loans receivable secured by real estate, beforereserves for depreciation, reserves for bad debt or other similar non-cashreserves. We compute our average assets by taking the average of these valuesat the end of each month for which we are calculating the fee.  The fee would be payable quarterly in anamount equal to 1/4 of 1% of average assets as of the last day of theimmediately preceding quarter.  For anyyear in which we qualify as a REIT, our advisor must reimburse us for thefollowing amounts if any: (1) the amounts by which our total operatingexpenses, the sum of the advisor asset management fee plus other operatingexpenses, paid during the previous fiscal year exceed the greater of: (i) 2% ofour average assets for that fiscal year, or (ii) 25% of our net income for thatfiscal year; plus (2) an amount, which will not exceed the advisor assetmanagement fee for that year, equal to any difference between the total amountof distributions to stockholders for that year and the 6% minimum annual returnon the net investment of stockholders. For the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003, we neither paid nor accrued suchfees because our business manager/advisor agreed to forego such fees for thoseperiods.

 

Theproperty managers, entities owned principally by individuals who are affiliatesof our business manager/advisor, are entitled to receive property managementfees totaling 4.5% of gross operating income, for management and leasingservices.  We incurred propertymanagement fees of $5,381,721 and $16,627 for the year ended December 31,2004 and the period from March 5, 2003 (inception) to December 31,2003, respectively.  None remained unpaidas of December 31, 2004 or December 31, 2003.

 

Weestablished a discount stock purchase policy for our affiliates and affiliatesof our business manager/advisor that enables the affiliates to purchase sharesof common stock at either $8.95 or $9.50 a share depending on when the sharesare purchased.  We sold 605,060 and59,497 shares of common stock to affiliates and recognized an expense relatedto these discounts of $427,122 and $62,472 for the year ended December 31,2004 and the period from March 5, 2003 (inception) to December 31,2003, respectively.

 

Asof December 31, 2004 and December 31, 2003, we were due funds fromour affiliates in the amount of $654,004 and $918,750, respectively, which iscomprised of $654,004 and $845,000, respectively, which is due from our sponsorfor reimbursement of a portion of distributions paid. The remaining $73,750 asof December 31, 2003 is due from an affiliate for costs paid on theirbehalf by us.  Our sponsor has agreed toadvance to us amounts to pay a portion of distributions to our stockholdersuntil funds available for distribution are sufficient to cover thedistributions.  Our sponsor forgave$2,369,139 of these amounts during the second quarter of 2004 and these fundsare no longer due. As of December 31, 2004 and December 31, 2003, weowe funds to our sponsor in the amount of $3,522,670 and $1,202,519,respectively, for repayment of the funds advanced for payment of distributions.

 

32

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Off-Balance Sheet Arrangements, Contractual Obligations, Liabilitiesand Contracts and Commitments

 

Thetable below presents our obligations and commitments to make future paymentsunder debt obligations and lease agreements as of December 31, 2004.

 
| **Contractual Obligations** | ** ** | **Payments due by period** | ** **    |
|-----------------------------|------------|----------------------------|---------------|
| ** **                  | ** ** | **Total**                  | ** **    | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **More than  5 years** | ** ** |
| Long-Term  Debt:            |       |                       |          |   |   |   |   |   |   |   |   |
| Fixed rate                  |       | $                          | 2,065,626,447 |   | 77,170,997 |   | 210,970,182 |   | 1,136,399,595 |   | 641,085,673 |   |
| Variable  rate              |       | 168,873,039                |          | 20,552,746 |   | 10,900,759 |   | 119,705,631 |   | 17,713,903 |   |
|                        |       |                       |          |   |   |   |   |   |   |   |   |
| Ground lease  payments      |       | $                          | 358,535,876   |   | 3,186,464 |   | 6,426,415 |   | 6,642,246 |   | 342,280,751 |   |

 

Thetable includes interest payments to which we are contractually obligated underlong term debt agreements.

 

Welease land under non-cancelable leases at certain of the properties expiring invarious years from 2028 to 2096.  Theproperty attached to the land will revert back to the lessor at the end of thelease.

 

Contractsand Commitments

 

Wehave closed on several properties which have earnout components, meaning thatwe did not pay for portions of these properties that were not rentproducing.  We are obligated, undercertain agreements, to pay for those portions when the tenant moves into itsspace and begins to pay rent.  Theearnout payments are based on a predetermined formula. Each earnout agreementhas a time limit regarding the obligation to pay any additional monies.  If at the end of the time period allowedcertain space has not been leased and occupied, we will own that space withoutany further obligation. Based on pro forma leasing rates, we may pay as much as$189,042,868 in the future, as retail space covered by earnout agreements isoccupied and becomes rent producing.

 

During2004, we entered into two installment note agreements in which we are obligatedto fund up to a total of $33,398,314. The notes maintain stated interest rates of 6.993% and 7.5572% per annumand mature in July 2005 and August 2005, respectively.  Each note requires monthly interest paymentswith the entire principal balance due at maturity.  The combined receivable balance at December 31,2004 was $31,771,731.  Therefore, we maybe required to fund up to an additional $1,626,583 on these notes.

 

Wehave obtained three irrevocable letters of credit related to loan fundingsagainst earnout spaces at certain properties. Once we purchase the remaining portion of these properties and meetcertain occupancy requirements, the letters of credit will be released. Thebalance of outstanding letters of credit at December 31, 2004 is$11,573,100.

 

Inconnection with the purchase of one of our properties, we received a priceadjustment in the amount of $763,072 related to spaces that were vacant at thetime of closing. If at any time during the next two years the seller is able tolease that space under conditions satisfactory to us, we are obligated to paythe seller a pro-rata share of the purchase price reduction.

 

We have entered into interest rate lock agreements with various lendersto secure interest rates on mortgage debt on properties we currently own orwill purchase in the future.  We haveoutstanding rate lock deposits in the amount of $2,826,055 as of December 31,2004 which are applied as credits to the mortgage fundings as they occur.  These agreements lock interest rates from4.45% to 5.12% for periods from 60 days to 90 days on approximately $240million in principal.

 

Subsequentto December 31, 2004, we purchased 12 properties for a purchase price ofapproximately $260 million.  In addition,we are currently considering acquiring nine properties for an estimatedpurchase price of $226 million.  Ourdecision to acquire each property generally depends upon no material adversechange occurring relating to the property, the tenants or in the local economicconditions, and our receipt of satisfactory due diligence information includingappraisals, environmental reports and lease information prior to purchasing theproperty.

 

33

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Resultsof Operations

 

*General*

 

The following discussion is based primarily on our consolidatedfinancial statements as of December 31, 2004 and for the period from March 5,2003 (inception) to December 31, 2003.

 

| **Quarter Ended**        | ** ** | **Properties  Purchased  per Quarter** | ** ** | **Square  Feet  Acquired** | ** ** | **Purchase Price** | ** **    |
|--------------------------|------------|----------------------------------------|------------|----------------------------|------------|--------------------|---------------|
| March 31,  2003     |       | None                                   |       | N/A                        |       | N/A                |          |
| June 30,  2003      |       | None                                   |       | N/A                        |       | N/A                |          |
| September 30,  2003 |       | None                                   |       | N/A                        |       | N/A                |          |
| December 31,  2003  |       | 8                                      |       | 797,551                    |       | $                  | 127,195,000   |   |
| March 31,  2004     |       | 11                                     |       | 2,115,280                  |       | $                  | 384,053,000   |   |
| June 30,  2004      |       | 23                                     |       | 4,177,286                  |       | $                  | 713,925,000   |   |
| September 30,  2004 |       | 26                                     |       | 5,705,453                  |       | $                  | 869,128,000   |   |
| December 31,  2004  |       | 43                                     |       | 7,435,554                  |       | $                  | 1,241,693,000 |   |
|                     |       |                                   |       |                       |       |               |          |
| Total                    |       | 111                                    |       | 20,231,124                 |       | $                  | 3,335,994,000 |   |

 

*Rental Income, Tenant Recoveries and OtherProperty Income*. Rental income consists of basic monthly rent and percentage rentalincome due pursuant to tenant leases. Tenant recovery and other property income consist of property operatingexpenses recovered from the tenants including real estate taxes, propertymanagement fees and insurance.  Rentalincome was $106,424,663 and $606,646 and all additional property income was$23,979,918 and $137,988 for the year ended December 31, 2004 and for theperiod from March 5, 2003 (inception) to December 31, 2003,respectively.

 

*Other Income.*Otherincome consists of interest income earned primarily on short term investmentsthat are held by us and other non-operating income earned by us.  Other income was $3,681,067 and $37,648,respectively, for the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003.

 

*General and Administrative Expenses.*General and administrative expenses consist of salaries and computerizedinformation services costs reimbursed to affiliates for maintaining ouraccounting and investor records, affiliates common share purchase discounts,insurance, postage, printer costs and fees paid to accountants and lawyers.  These expenses were $4,857,101 for the yearended December 31, 2004 and $459,476 for the period from March 5,2003 (inception) to December 31, 2003 and resulted from increased servicesrequired as we acquire properties and grow our portfolio of investmentproperties and our investor base.

 

*Property Operating Expenses.*  Property operating expenses consist ofproperty management fees and property operating expenses, including real estatetaxes, costs of owning and maintaining shopping centers, insurance, andmaintenance to the exterior of the buildings and the parking lots.  These expenses were $32,521,195 for the yearended December 31, 2004 and $143,244 for the period from March 5,2003 (inception) to December 31, 2003.

 

*Depreciation and Amortization.*  Depreciation expense was $36,113,611 and$140,497 and is due to depreciation on the properties owned during the yearended December 31, 2004 and the period from March 5, 2003 (inception)to December 31, 2003, respectively.**Amortizationexpense was $11,859,597 and $76,608, respectively, and is due to theapplication of SFAS 141 and SFAS 142 resulting from the amortization ofintangible assets of approximately $250 million and loan and leasing fees of$12 million during the year ended December 31, 2004 and intangible assets ofapproximately $9 million and loan and leasing fees of $1 million during theperiod from March 5, 2003 (inception) to December 31, 2003.

 

*Interest.*  Interest was $33,174,623 for the year ended December 31,2004 and is due to the financing on 97 properties as of December 31, 2004and funds drawn during the first quarter of 2004 on the line of credit.  Interest was $135,735 for the period from March 5,2003 (inception) to December 31, 2003 and is due to the financing on twoproperties as of December 31, 2003.

 

34

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Subsequent Events

 

We issued 42,629,352 shares of common stock and repurchased 28,459shares of common stock from January 1, 2005 through February 28,2005, resulting in a total of 260,058,421 shares of common stock outstanding.As of February 28, 2005, subscriptions for a total of 255,692,354 shareswere received resulting in total gross offering proceeds of $2,555,826,905. Anadditional 4,404,876 shares were issued pursuant to the DRP for $41,846,623 ofadditional gross proceeds and 38,809 were repurchased in connection with theSRP for $455,916.

 

We paid distributions of $11,377,712 and $12,232,404 to itsstockholders in January and February 2005, respectively.

 

We have acquired the following properties during the period January 1to February 28, 2005.  Therespective acquisitions are detailed in the table below.

 
| **Date   Acquired** | ** ** | **Property**                                     | ** ** | **Year   Built** | ** ** | **Approximate  Purchase Price   ($)** | ** ** | **Gross Leasable  Area   (Sq. Ft.)** | ** ** | **Major Tenants**                                   |
|---------------------|------------|--------------------------------------------------|------------|------------------|------------|---------------------------------------|------------|--------------------------------------|------------|-----------------------------------------------------|
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/05/05            |       | Fairgrounds  Plaza  Middletown, NY               |       | 2002-  2004      |       | 21,994,125                            |       | 59,970                               |       | Super Stop N’ Shop                             |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/06/05            |       | Maytag  Distribution Center  Iowa City, IA       |       | 2004             |       | 23,159,499                            |       | 750,000                              |       | Maytag                                              |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/10/05            |       | Midtown  Center  Milwaukee, WI                   |       | 1986-  1987      |       | 53,000,000                            |       | 319,108                              |       | Wal-Mart  Pick ‘N Save                         |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/10/05            |       | Hobby Lobby  Concord, NC                         |       | 2004             |       | 5,500,000                             |       | 60,000                               |       | Hobby Lobby                                         |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/19/05            |       | Stanley  Works/Mac Tools  Westerville, OH        |       | 2004             |       | 10,000,000                            |       | 72,500                               |       | Mac Tools                                           |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/25/05            |       | American Express  Markham, Ontario, Canada       |       | 1983 &  1987 |       | 42,000,000                            |       | 306,710                              |       | American Express                                    |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 01/28/05            |       | Academy  Sports  San Antonio, TX                 |       | 2004             |       | 7,150,000                             |       | 70,910                               |       | Academy Sports                                      |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 02/01/05            |       | Magnolia  Square  Houma, LA                      |       | 2004             |       | 19,113,739                            |       | 116,079                              |       | Ross Dress for Less  PETsMART  Circuit City         |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 02/02/05            |       | Cottage  Plaza  Pawtucket, RI                    |       | 2004-2005        |       | 23,439,950                            |       | 75,543                               |       | Stop ‘N Shop                                   |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 02/09/05            |       | The Village  at Quail Springs  Oklahoma City, OK |       | 2003-2004        |       | 10,428,978                            |       | 101,128                              |       | Gordmans 

Best Buy                                 |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 02/11/05            |       | Holliday  Towne Center  Duncansville, PA         |       | 2003             |       | 14,827,645                            |       | 83,122                               |       | Martin’s                                       |
|                |       |                                             |       |             |       |                                  |       |                                 |       |                                                |
| 02/18/05            |       | Trenton  Crossing  McAllen, TX                   |       | 2003             |       | 29,212,209                            |       | 221,019                              |       | Hobby Lobby  Ross Dress for Less  Marshalls  Bealls |

 

The mortgage debt and financings obtained during the period January 1to February 28, 2005, are detailed in the table below.

 
| **Date  Funded** | ** ** | **Mortgage Payable**               | ** ** | **Annual Interest Rate** | ** ** | **Maturity  Date** | ** ** | **Principal Borrowed  ($)** | ** ** |
|------------------|------------|------------------------------------|------------|--------------------------|------------|--------------------|------------|-----------------------------|------------|
| 01/05/05         |       | Fairgrounds  Plaza  Middletown, NY |       | 5.690                    | %          | 02/01/33           |       | 15,982,376                  |       |
|             |       |                               |       |                     |       |               |       |                        |       |
| 01/24/05         |       | Hobby Lobby  Concord, NC           |       | 5.115                    | %          | 02/01/10           |       | 3,025,000                   |       |

 

35

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| **Date  Funded** | ** ** | **Mortgage Payable**                             | ** ** | **Annual Interest Rate** | ** ** | **Maturity  Date** | ** ** | **Principal Borrowed  ($)** | ** ** |
|------------------|------------|--------------------------------------------------|------------|--------------------------|------------|--------------------|------------|-----------------------------|------------|
|             |       |                                             |       |                     |       |               |       |                        |       |
| 01/25/05         |       | American  Express  Markham, Ontario, Canada      |       | 4.2975                   | %          | 02/01/15           |       | 25,380,000                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 01/28/05         |       | Coram Plaza  Coram, NY                           |       | 4.550                    | %          | 02/01/10           |       | 20,755,300                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 01/31/05         |       | Low Country  Village II  Bluffton, SC            |       | 5.130                    | %          | 05/01/09           |       | 5,440,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 01/31/05         |       | Irmo Station  Irmo, SC                           |       | 5.1236                   | %          | 02/01/10           |       | 7,085,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/01/05         |       | Evans Towne  Centre  Evans, GA                   |       | 4.670                    | %          | 02/01/10           |       | 5,005,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/03/05         |       | Magnolia  Square  Houma, LA                      |       | 5.115                    | %          | 03/01/10           |       | 10,265,000                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Green’s  Corner  Cumming, GA                |       | 4.500                    | %          | 02/11/10           |       | 7,022,366                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Newton  Crossroads  Covington, GA                |       | 4.500                    | %          | 02/11/10           |       | 5,547,622                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Stilesboro  Oaks  Acworth, GA                    |       | 4.500                    | %          | 02/11/10           |       | 6,951,971                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/09/05         |       | Five Forks  Simpsonville, NC                     |       | 4.815                    | %          | 02/11/10           |       | 4,482,500                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/14/05         |       | University  Town Center  Tuscaloosa, AL          |       | 4.430                    | %          | 03/01/10           |       | 5,810,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/14/05         |       | Edgemont  Town Center  Homewood, AL              |       | 4.430                    | %          | 03/01/10           |       | 8,600,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/15/05         |       | Southlake  Town Square  Southlake, TX            |       | 4.550                    | %          | 03/11/10           |       | 70,570,880                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/17/05         |       | Midtown  Center  Milwaukee, WI                   |       | 4.460                    | %          | 03/11/10           |       | 28,227,617                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/17/05         |       | McAllen  Shopping Center  McAllen, TX            |       | 5.060                    | %          | 03/01/10           |       | 2,455,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/18/05         |       | Southlake  Town Square II  Southlake, TX         |       | 4.550                    | %          | 03/11/10           |       | 10,429,120                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/18/05         |       | Mesa Fiesta  Mesa, AZ                            |       | 5.300                    | %          | 02/01/10           |       | 23,500,000                  |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/24/05         |       | Academy Sports  San Antonio, TX                  |       | 5.060                    | %          | 03/01/10           |       | 3,933,000                   |       |
|             |       |                                             |       |                     |       |               |       |                        |       |
| 02/25/05         |       | The Village  at Quail Springs  Oklahoma City, OK |       | 5.060                    | %          | 03/01/10           |       | 5,740,000                   |       |

 

Weare obligated under earnout agreements to pay for certain tenant space in ourexisting properties after the tenant moves into its space and begins payingrent.  During the period from January 1to February 28, 2005, we funded earnouts totaling $20,552,372 at seven ofour existing properties.

 

Weare currently considering acquiring nine properties for an estimated purchaseprice of $226 million.  Our decision toacquire each property will generally depend upon no material adverse changeoccurring relating to the property, the tenants or in the local economic conditions,and our receipt of satisfactory due diligence information including appraisals,environmental reports and lease information prior to purchasing the property.

 

36

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During the period from January 1, 2005 to February 28, 2005,we entered into rate lock agreements which lock interest rates from 4.47% to4.69% for periods from 30 days to 90 days on approximately $300 million inprincipal.

 

Inflation

 

Forour multi-tenant shopping centers, inflation is likely to increase rentalincome from leases to new tenants and lease renewals, subject to marketconditions.  Our rental income andoperating expenses for those properties owned, or to be owned and operatedunder net leases, are not likely to be directly affected by future inflation,since rents are or will be fixed under the leases and property expenses are theresponsibility of the tenants.  Thecapital appreciation of net leased properties is likely to be influenced byinterest rate fluctuations.  To the extentthat inflation determines interest rates, future inflation may have an effecton the capital appreciation of net leased properties.  As of December 31, 2004, we owned 24single-user net leased properties.

 

**Item 7 (a). Quantitative and Qualitative DisclosuresAbout Market Risk**

 

We may be exposed to interest rate changes primarily as a result oflong-term debt used to maintain liquidity and fund capital expenditures andexpansion of our real estate investment portfolio and operations.  Our interest rate risk management objectiveswill be to limit the impact of interest rate changes on earnings and cash flowsand to lower its overall borrowing costs. To achieve our objectives we will borrow primarily at fixed rates or variablerates with the lowest margins available and in some cases, with the ability toconvert variable rates to fixed rates.

 

We may use derivative financial instruments to hedge exposures tochanges in interest rates on loans secured by our properties.  To the extent we do, we are exposed to creditrisk and market risk.  Credit risk is thefailure of the counterparty to perform under the terms of the derivativecontract.  When the fair value of aderivative contract is positive, the counterparty owes us, which creates creditrisk for us.  When the fair value of aderivative contract is negative, we owe the counterparty and, therefore, itdoes not possess credit risk.  It is ourpolicy to enter into these transactions with the same party providing the financing,with the right of offset.  In thealternative, we will minimize the credit risk in derivative instruments byentering into transactions with high-quality counterparties.  Market risk is the adverse effect on thevalue of a financial instrument that results from a change in interest rates.  The market risk associated with interest-ratecontracts is managed by establishing and monitoring parameters that limit thetypes and degree of market risk that may be undertaken.

 

For the year ended December 31, 2004, we entered into treasurycontracts with a futures commission merchant with yields ranging from 3.27% to3.85% for 5 year treasury contracts and 4.00% to 4.63% for 10 year treasurycontracts. On December 31, 2004, the treasury contracts had a liquidationvalue of $46,005 resulting in a loss of $3,666,894 for the year ended December 31,2004.  As these treasury contracts arenot offsetting future commitments and therefore do not qualify as hedges, thenet loss is recognized currently in earnings. To offset the net loss recognizedon the treasury contracts, we took advantage of the lower treasury yields whichcaused the loss on the treasury contracts and secured permanent financing inthe amount of approximately $835,000,000 for pending acquisitions.

 

With regard to variable rate financing, we assess interest rate cashflow risk by continually identifying and monitoring changes in interest rateexposures that may adversely impact expected future cash flows and byevaluating hedging opportunities.  Wemaintain risk management control systems to monitor interest rate cash flowrisk attributable to both of our outstanding or forecasted debt obligations aswell as our potential offsetting hedge positions.  The risk management control systems involvethe use of analytical techniques, including cash flow sensitivity analysis, toestimate the expected impact of changes in interest rates on our future cashflows.

 

While this hedging strategy is intended to reduce our exposure tointerest rate fluctuations, the result may be a reduction in overall returns onyour investment.

 

The fair value of our debt approximates its carrying amount as of December 31,2004.

 

37

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Ourinterest rate risk is monitored using a variety of techniques. The table belowpresents the principal amounts and weighted average interest rates by year andexpected maturity to evaluate the expected cash flows and sensitivity tointerest rate changes.

 
| ** **                                   | ** ** | **2005**   | ** ** | **2006**  | ** ** | **2007**   | ** ** | **2008**   | ** ** | **2009**    | ** ** | **Thereafter** | ** ** |
|----------------------------------------------|------------|------------|------------|-----------|------------|------------|------------|------------|------------|-------------|------------|----------------|------------|
| Maturing  debt                               |       |       |       |      |       |       |       |       |       |        |       |           |       |
| Fixed rate  debt (mortgage loans)            |       | 920,574    |       | 981,221   |       | 57,906,321 |       | 47,322,706 |       | 960,152,489 |       | 568,462,316    |       |
| Variable  rate debt (including note payable) |       | 15,672,533 |       | 1,212,575 |       | 637,533    |       | 637,533    |       | 111,635,533 |       | 17,572,335     |       |
|                                         |       |       |       |      |       |       |       |       |       |        |       |           |       |
| Average  interest rate on debt:              |       |       |       |      |       |       |       |       |       |        |       |           |       |
| Fixed rate  debt                             |       | 5.91       | %          | 5.92      | %          | 4.50       | %          | 4.67       | %          | 4.70        | %          | 4.63           | %          |
| Variable  rate debt                          |       | 4.23       | %          | 3.56      | %          | 4.75       | %          | 4.75       | %          | 3.25        | %          | 4.75           | %          |

 

We have $147,368,042 of debt (including note payable) bearing variablerate interest averaging 3.55% as of December 31, 2004.  An increase in the variable interest rate onthis debt constitutes a market risk.  Ifinterest rates increase by 1%, based on debt outstanding as of December 31,2004, interest expense increases by $1,473,680 on an annual basis.

 

Thetable incorporates only those exposures that exist as of December 31,2004.  It does not consider thoseexposures or positions that could arise after that date. The informationpresented herein is merely an estimate and has limited predictive value. As a result,the ultimate realized gain or loss with respect to interest rate fluctuationswill depend on the exposures that arise during the period, our hedgingstrategies at that time, and future changes in the level of interest rates.

 

38

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**Item 8. Consolidated Financial Statements and Supplementary Data**

 

**INLAND WESTERN RETAIL REAL ESTATETRUST, INC.**(AMaryland Corporation)

 

Index
| ** **                                                                                                                                                                         | **Page** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                               |     |
| Reports  of Independent Registered Public Accounting Firm                                                                                                                          | 40       |
|                                                                                                                                                                               |     |
| Financial  Statements:                                                                                                                                                             |     |
|                                                                                                                                                                               |     |
| Consolidated Balance Sheets  at December 31, 2004 and 2003                                                                                                                    | 42       |
|                                                                                                                                                                               |     |
| Consolidated  Statements of Operations for the year ended December 31, 2004 and the  period from March 5, 2003 (inception) to December 31, 2003                     | 44       |
|                                                                                                                                                                               |     |
| Consolidated  Statements of Stockholders’ Equity for the year ended December 31, 2004  and for the period from March 5, 2003 (inception) to December 31,  2003 | 45       |
|                                                                                                                                                                               |     |
| Consolidated  Statements of Cash Flows for the year ended December 31, 2004 and for  the period from March 5, 2003 (inception) to December 31, 2003                 | 46       |
|                                                                                                                                                                               |     |
| Notes to  Consolidated Financial Statements                                                                                                                                        | 48       |
|                                                                                                                                                                               |     |
| Real  Estate and Accumulated Depreciation (Schedule III)                                                                                                                      | 67       |

 

Schedulesnot filed:

 

Allschedules other than the one listed in the Index have been omitted as therequired information is inapplicable or the information is presented in thefinancial statements or related notes.

 

39

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Report of Independent Registered Public Accounting Firm

 

The Board of Directors and Stockholders

Inland Western Retail Real Estate Trust, Inc.:

 

We have audited the accompanying consolidated balance sheets of InlandWestern Retail Real Estate Trust, Inc. as of December 31, 2004 and 2003,and the related consolidated statements of operations, stockholders’ equity,and cash flows for the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003. In connection with our audit of theconsolidated financial statements, we also have audited the financial statementschedule III.  These consolidatedfinancial statements and financial statement schedule are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these consolidated financial statements and financial statement schedule basedon our audits.

 

We conducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States).  Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that our auditsprovide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to abovepresent fairly, in all material respects, the financial position of InlandWestern Retail Real Estate Trust, Inc. as of December 31, 2004 and 2003,and the results of**their operations and their cashflows for the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003, in conformity with U.S. generallyaccepted accounting principles.  Also inour opinion, the related financial statement schedule, when considered inrelation to the basic consolidated financial statements taken as a whole,presents fairly, in all material respects, the information set forth therein.

 

We also have audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States), the effectiveness of InlandWestern Retail Real Estate Trust, Inc.’s internal control over financialreporting as of December 31, 2004, based on**criteriaestablished in Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO), and our reportdated**March 3, 2005 expressed anunqualified opinion on management’s assessment of, and the effective operationof, internal control over financial reporting.

 

KPMG LLP

 

 

Chicago, Illinois

March 3, 2005

 

40

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Report ofIndependent Registered Public Accounting Firm

 

The Board of Directors and Stockholders

Inland Western Retail Real Estate Trust, Inc.:

 

We have audited management’s assessment, included in the accompanyingManagement’s Report on Internal Control Over Financial Reporting, that InlandWestern Retail Real Estate Trust, Inc. maintained effective internal controlover financial reporting as of December 31, 2004, based on criteriaestablished in Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). The Company’smanagement is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting. Our responsibility is to express an opinionon management’s assessment and an opinion on the effectiveness of the Company’sinternal control over financial reporting based on our audit.

 

We conducted our audit in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internalcontrol over financial reporting, evaluating management’s assessment, testingand evaluating the design and operating effectiveness of internal control, andperforming such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for ouropinion.

 

A company’s internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles.  A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financialstatements.

 

Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements.  Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

 

In our opinion, management’s assessment that Inland Western Retail RealEstate Trust, Inc. maintained effective internal control over financialreporting as of December 31, 2004, is fairly stated, in all materialrespects, based on criteria established in Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). Also, in our opinion, Inland Western Retail Real Estate Inc.maintained, in all material respects, effective internal control over financialreporting as of December 31, 2004, based on criteria established inInternal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).

 

We also have audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States), the consolidated balancesheets of Inland Western Retail Real Estate Trust, Inc. as of December 31,2004 and 2003, and the related consolidated statements of operations,stockholders’ equity, and cash flows for the year ended December 31, 2004and the period from March 3, 2003 (inception) to December 31, 2003,and our report dated March 3, 2005 expressed an unqualified opinion onthose consolidated financial statements. In connection with our audit of the consolidated financial statements,we also have audited the financial statement schedule III.

 

KPMG LLP

 

 

Chicago, Illinois

March 3, 2005

 

41

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**ConsolidatedBalance Sheets****** (Amounts in thousands)

 

Assets

 
| ** **                                                                                                                                                                     | ** ** | **December 31,  2004** | ** ** | **December 31,  2003** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Investment  properties:                                                                                                                                                        |       |                        |       |                        |       |
| Land                                                                                                                                                                           |       | $                           | 575,032    |                        | $          | 36,280 |   |
| Building and  other improvements                                                                                                                                               |       | 2,654,585                   |       | 86,440                      |       |
|                                                                                                                                                                           |       |                        |       |                        |       |
|                                                                                                                                                                           |       | 3,229,617                   |       | 122,720                     |       |
| Less  accumulated depreciation                                                                                                                                                 |       | (36,290                     | )          | (141                        | )          |
|                                                                                                                                                                           |       |                        |       |                        |       |
| Net  investment properties                                                                                                                                                     |       | 3,193,327                   |       | 122,579                     |       |
|                                                                                                                                                                           |       |                        |       |                        |       |
| Cash and  cash equivalents (including cash held by management company of $8,574 and  $239 as of December 31, 2004 and 2003, respectively)                            |       | 241,224                     |       | 64,381                      |       |
| Restricted  cash (Note 2)                                                                                                                                                      |       | 65,923                      |       | —                      |       |
| Restricted  escrows (Note 2)                                                                                                                                                   |       | 17,105                      |       | —                      |       |
| Investment  in marketable securities and treasury contracts                                                                                                                    |       | 1,287                       |       | —                      |       |
| Investment  in unconsolidated joint ventures (Note 9)                                                                                                                          |       | 75,261                      |       | —                      |       |
| Accounts and  rents receivable (net of allowance of $346 and $0 as of December 31,  2004 and 2003, respectively)                                                          |       | 19,962                      |       | 1,148                       |       |
| Due from  affiliates (Note 3)                                                                                                                                                  |       | 654                         |       | 919                         |       |
| Note  receivable (Note 6)                                                                                                                                                      |       | 31,772                      |       | 7,552                       |       |
| Acquired  in-place lease intangibles and customer relationship value (net of  accumulated amortization of $9,976 and $52 as of December 31, 2004 and  2003, respectively) |       | 240,116                     |       | 8,754                       |       |
| Acquired  above market lease intangibles (net of accumulated amortization of $3,124 and  $5 as of December 31, 2004 and 2003, respectively)                               |       | 40,774                      |       | 1,590                       |       |
| Loan fees,  leasing fees and loan fee deposits (net of accumulated amortization of $755  and $25 as of December 31, 2004 and 2003, respectively)                          |       | 19,472                      |       | 3,998                       |       |
| Other assets                                                                                                                                                                   |       | 8,939                       |       | 1,181                       |       |
|                                                                                                                                                                           |       |                        |       |                        |       |
| Total assets                                                                                                                                                                   |       | $                           | 3,955,816  |                        | $          | 212,102 |   |
|                                                                                                                                                                                |            |                             |            |                             |            |  |  |  |  |

 

See accompanying notes toconsolidated financial statements

 

42

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**ConsolidatedBalance Sheets**(continued)(Amounts in thousands)

 

Liabilitiesand Stockholder’s Equity

 
| ** **                                                                                                                                                                                                                                             | ** ** | **December 31,  2004** | ** ** | **December 31,  2003** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Liabilities:                                                                                                                                                                                                                                           |       |                        |       |                        |       |
| Mortgages  and notes payable (Note 7)                                                                                                                                                                                                                  |       | $                           | 1,783,114  |                        | $          | 29,627 |   |
| Accounts  payable                                                                                                                                                                                                                                      |       | 1,692                       |       | 150                         |       |
| Accrued  offering costs due to affiliates                                                                                                                                                                                                              |       | 2,880                       |       | 1,369                       |       |
| Accrued  interest payable                                                                                                                                                                                                                              |       | 4,306                       |       | —                      |       |
| Tenants  improvements payable                                                                                                                                                                                                                          |       | 5,096                       |       | 5                           |       |
| Accrued real  estate taxes                                                                                                                                                                                                                             |       | 4,254                       |       | 1,392                       |       |
| Distributions  payable                                                                                                                                                                                                                                 |       | 11,378                      |       | 928                         |       |
| Security  deposits                                                                                                                                                                                                                                     |       | 3,679                       |       | 108                         |       |
| Line of  credit (Note 8)                                                                                                                                                                                                                               |       | —                      |       | 5,000                       |       |
| Prepaid  rental income and other liabilities                                                                                                                                                                                                           |       | 7,765                       |       | 179                         |       |
| Advances  from sponsor (Note 3)                                                                                                                                                                                                                        |       | 3,523                       |       | 1,203                       |       |
| Acquired  below market lease intangibles (net of accumulated amortization of $4,718 and  $15 as of December 31, 2004 and 2003, respectively)                                                                                                      |       | 85,986                      |       | 5,910                       |       |
| Restricted  cash liability (Note 2)                                                                                                                                                                                                                    |       | 65,923                      |       | —                      |       |
| Due to  affiliates                                                                                                                                                                                                                                     |       | 957                         |       | 2,502                       |       |
|                                                                                                                                                                                                                                                   |       |                        |       |                        |       |
| Total  liabilities                                                                                                                                                                                                                                     |       | 1,980,553                   |       | 48,373                      |       |
|                                                                                                                                                                                                                                                   |       |                        |       |                        |       |
| Minority  interests                                                                                                                                                                                                                                    |       | 89,537                      |       | —                      |       |
|                                                                                                                                                                                                                                                   |       |                        |       |                        |       |
| Stockholders’  equity:                                                                                                                                                                                                                            |       |                        |       |                        |       |
| Preferred  stock, $.001 par value, 10,000 shares authorized, none outstanding                                                                                                                                                                          |       | —                      |       | —                      |       |
| Common  stock, $.001 par value, 250,000 shares authorized, 217,458 and 18,737 shares  issued and outstanding as of December 31, 2004 and 2003, respectively                                                                                       |       | 217                         |       | 19                          |       |
| Additional  paid in capital (net of offering costs of $234,014 and $22,145 as of December 31,  2004 and 2003, respectively, of which $175,509 and $16,860 was paid or  accrued to affiliates as of December 31, 2004 and 2003, respectively) |       | 1,940,018                   |       | 165,169                     |       |
| Accumulated  distributions in excess of net income (loss)                                                                                                                                                                                              |       | (54,750                     | )          | (1,459                      | )          |
| Accumulated  other comprehensive income                                                                                                                                                                                                                |       | 241                         |       | —                      |       |
|                                                                                                                                                                                                                                                   |       |                        |       |                        |       |
| Total  stockholders’ equity                                                                                                                                                                                                                       |       | 1,885,726                   |       | 163,729                     |       |
|                                                                                                                                                                                                                                                   |       |                        |       |                        |       |
| Commitments  and contingencies (Note 12)                                                                                                                                                                                                               |       |                        |       |                        |       |
| Total  liabilities and stockholders’ equity                                                                                                                                                                                                       |       | $                           | 3,955,816  |                        | $          | 212,102 |   |

 

See accompanying notes toconsolidated financial statements

 

43

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Consolidated Statements of Operations******(Amounts in thousands, except per share amounts)

 
| ** **                                                                    | ** ** | **Year Ended  December 31, 2004** | ** ** | **Period from March 5,  2003 (inception)  through  December 31, 2003** | ** ** |
|-------------------------------------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| Income:                                                                       |       |                                   |       |                                                                             |       |
| Rental  income                                                                |       | $                                      | 106,425    |                                                                             | $          | 607 |   |
| Tenant  recovery income                                                       |       | 23,155                                 |       | 138                                                                              |       |
| Other  property income                                                        |       | 825                                    |       | —                                                                           |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Total income                                                                  |       | 130,405                                |       | 745                                                                              |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Expenses:                                                                     |       |                                   |       |                                                                             |       |
| General and  administrative expenses to affiliates                            |       | 1,852                                  |       | 177                                                                              |       |
| General and  administrative expenses to non-affiliates                        |       | 3,005                                  |       | 283                                                                              |       |
| Property  operating expenses to affiliates                                    |       | 5,382                                  |       | 16                                                                               |       |
| Property  operating expenses to non-affiliates                                |       | 14,064                                 |       | 31                                                                               |       |
| Real estate  taxes                                                            |       | 13,076                                 |       | 96                                                                               |       |
| Depreciation  and amortization                                                |       | 47,973                                 |       | 217                                                                              |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Total  expenses                                                               |       | 85,352                                 |       | 820                                                                              |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Operating  income (loss)                                                      |       | $                                      | 45,053     |                                                                             | (75        | ) |
|                                                                          |       |                                   |       |                                                                             |       |
| Other income                                                                  |       | 3,681                                  |       | 38                                                                               |       |
| Interest  expense                                                             |       | (33,175                                | )          | (136                                                                             | )          |
| Realized loss  on sale of treasury contracts                                  |       | (3,667                                 | )          | —                                                                           |       |
| Minority  interests                                                           |       | 398                                    |       | —                                                                           |       |
| Equity in  earnings (losses) of unconsolidated entities                       |       | (589                                   | )          | —                                                                           |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Net income  (loss)                                                            |       | $                                      | 11,701     |                                                                             | (173       | ) |
|                                                                          |       |                                   |       |                                                                             |       |
| Other  comprehensive income:                                                  |       |                                   |       |                                                                             |       |
| Unrealized  gain on investment securities                                     |       | 241                                    |       | —                                                                           |       |
|                                                                          |       |                                   |       |                                                                             |       |
| Comprehensive  income (loss)                                                  |       | $                                      | 11,942     |                                                                             | $          | (173 | ) |
|                                                                          |       |                                   |       |                                                                             |       |
| Net  income(loss) per common share, basic and diluted                         |       | $                                      | .12        |                                                                             | $          | (.07 | ) |
|                                                                          |       |                                   |       |                                                                             |       |
| Weighted  average number of common shares outstanding, basic and diluted |       | 98,563                                 |       | 2,521                                                                            |       |

 

See accompanying notes toconsolidated financial statements

 

44

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**INLAND WESTERN RETAIL REAL ESTATETRUST, INC.**(AMaryland Corporation)

 

**ConsolidatedStatements of Stockholders’ Equity**

 

For the year ended December 31,2004 and for the period from March 5, 2003 (inception) to December 31,2003

(Amounts in thousands)

 
| ** **                                                                             | ** ** | **Number of  Shares** | ** ** | **Common  Stock** | ** ** | **Additional  Paid-in  Capital** | ** ** | **Accumulated  Distributions in  excess of Net  Income  (Loss)** | ** ** | **Accumulated  Other  Comprehensive  Income** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------|------------|----------------------------------|------------|------------------------------------------------------------------|------------|-----------------------------------------------|------------|-----------|------------|
| Balance at March 5, 2003 (inception)                                              |       | —                |       | $                 | —     |                             | $          | —                                                           |       | $                                             | —     |      | $          | — |   | $ | — |   |
|                                                                                   |       |                  |       |              |       |                             |       |                                                             |       |                                          |       |      |       |
| Net loss                                                                               |       | —                |       | —            |       | —                           |       | (173                                                             | )          | —                                        |       | (173      | )          |
| Distributions declared (.15 per weighted average  number of common shares outstanding) |       | —                |       | —            |       | —                           |       | (1,286                                                           | )          | —                                        |       | (1,286    | )          |
| Proceeds from offering                                                                 |       | 18,718                |       | 19                |       | 187,066                          |       | —                                                           |       | —                                        |       | 187,085   |       |
| Offering costs                                                                         |       | —                |       | —            |       | (22,145                          | )          | —                                                           |       | —                                        |       | (22,145   | )          |
| Proceeds from dividend reinvestment program                                            |       | 19                    |       | —            |       | 181                              |       | —                                                           |       | —                                        |       | 181       |       |
| Issuance of stock options and discounts on shares  issued to affiliates                |       | —                |       | —            |       | 67                               |       | —                                                           |       | —                                        |       | 67        |       |
|                                                                                   |       |                  |       |              |       |                             |       |                                                             |       |                                          |       |      |       |
| Balance at December 31, 2003                                                      |       | 18,737                |       | $                 | 19         |                             | $          | 165,169                                                          |       | $                                             | (1,459     | )         | $          | — |   | $ | 163,729 |   |
|                                                                                   |       |                  |       |              |       |                             |       |                                                             |       |                                          |       |      |       |
| Net income                                                                             |       | —                |       | —            |       | —                           |       | 11,701                                                           |       | —                                        |       | 11,701    |       |
| Unrealized gain on investment securities                                               |       | —                |       | —            |       | —                           |       | —                                                           |       | 241                                           |       | 241       |       |
| Distributions declared (.66 per weighted number of  common shares outstanding)         |       | —                |       | —            |       | —                           |       | (64,992                                                          | )          | —                                        |       | (64,992   | )          |
| Proceeds from offering                                                                 |       | 195,671               |       | 195               |       | 1,955,517                        |       | —                                                           |       | —                                        |       | 1,955,712 |       |
| Offering costs                                                                         |       | —                |       | —            |       | (211,869                         | )          | —                                                           |       | —                                        |       | (211,869  | )          |
| Proceeds from dividend reinvestment program                                            |       | 3,060                 |       | 3                 |       | 29,067                           |       | —                                                           |       | —                                        |       | 29,070    |       |
| Shares repurchased                                                                     |       | (10                   | )          | —            |       | (193                             | )          | —                                                           |       | —                                        |       | (193      | )          |
| Shares obligated to be repurchased as of December 31,  2004                       |       | —                |       | —            |       | (472                             | )          | —                                                           |       | —                                        |       | (472      | )          |
| Contribution from sponsor advances                                                     |       | —                |       | —            |       | 2,369                            |       | —                                                           |       | —                                        |       | 2,369     |       |
| Issuance of stock options and discounts on shares  issued to affiliates                |       | —                |       | —            |       | 430                              |       | —                                                           |       | —                                        |       | 430       |       |
|                                                                                   |       |                  |       |              |       |                             |       |                                                             |       |                                          |       |      |       |
| Balance at December 31, 2004                                                      |       | 217,458               |       | $                 | 217        |                             | $          | 1,940,018                                                        |       | (54,750                                       | )          | $         | 241        |   | $ | 1,885,726 |   |
|                                                                                        |            |                       |            |                   |            |                                  |            |                                                                  |            |                                               |            |           |            |  |  |  |  |  |  |  |

 

See accompanying notesto consolidated financial statements

 

45

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Consolidated Statements of Cash Flows**

(Amounts in thousands)

 
| ** **                                                                                                                   | ** ** | **Year Ended  December 31, 2004** | ** ** | **Period from March 5, 2003  (inception) through  December 31, 2003** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| Cash flows  from operations:                                                                                                 |       |                                   |       |                                                                            |       |
| Net income  (loss)                                                                                                           |       | $                                      | 11,701     |                                                                            | $          | (173 | ) |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities:                                    |       |                                   |       |                                                                            |       |
| Depreciation                                                                                                                 |       | 36,149                                 |       | 140                                                                             |       |
| Amortization                                                                                                                 |       | 11,824                                 |       | 77                                                                              |       |
| Amortization  of acquired above market leases                                                                                |       | 3,119                                  |       | 5                                                                               |       |
| Amortization  of acquired below market leases                                                                                |       | (4,703                                 | )          | (15                                                                             | )          |
| Rental  income under master leases                                                                                           |       | 3,025                                  |       | —                                                                          |       |
| Straight  line rental income                                                                                                 |       | (3,886                                 | )          | —                                                                          |       |
| Straight  line lease expense                                                                                                 |       | 919                                    |       | —                                                                          |       |
| Minority  interests                                                                                                          |       | (398                                   | )          | —                                                                          |       |
| Loss from  investments in unconsolidated entities                                                                            |       | 589                                    |       | —                                                                          |       |
| Issuance of  stock options and discount on shares issued to affiliates                                                       |       | 430                                    |       | 5                                                                               |       |
| Realized  loss on sale of treasury contracts                                                                                 |       | 3,667                                  |       | —                                                                          |       |
| Changes in  assets and liabilities:                                                                                          |       |                                   |       |                                                                            |       |
| Accounts and  rents receivable net of change in allowance of $346 and $0 for December 31,  2004 and 2003, respectively. |       | (14,928                                | )          | (1,148                                                                          | )          |
| Other assets                                                                                                                 |       | (3,276                                 | )          | —                                                                          |       |
| Accounts  payable                                                                                                            |       | 1,542                                  |       | 307                                                                             |       |
| Accrued  interest payable                                                                                                    |       | 4,306                                  |       | —                                                                          |       |
| Accrued real  estate taxes                                                                                                   |       | 3,674                                  |       | 1,241                                                                           |       |
| Security  deposits                                                                                                           |       | 3,571                                  |       | 108                                                                             |       |
| Prepaid  rental income and other liabilities                                                                                 |       | 6,195                                  |       | 177                                                                             |       |
| Net cash  flows provided by operating activities                                                                             |       | 63,520                                 |       | 724                                                                             |       |
| Cash flows  from investing activities:                                                                                       |       |                                   |       |                                                                            |       |
| Purchase of  investment securities and treasury contracts                                                                    |       | (4,713                                 | )          | —                                                                          |       |
| Restricted  escrows                                                                                                          |       | (17,105                                | )          | —                                                                          |       |
| Purchase of  investment properties                                                                                           |       | (3,002,437                             | )          | (122,720                                                                        | )          |
| Acquired  in-place lease intangibles and customer relationship value                                                         |       | (241,286                               | )          | (8,806                                                                          | )          |
| Acquired  above market leases                                                                                                |       | (42,303                                | )          | (1,596                                                                          | )          |
| Acquired  below market leases                                                                                                |       | 84,779                                 |       | 5,926                                                                           |       |
| Contributions  from minority interests - joint ventures                                                                      |       | 95,568                                 |       | —                                                                          |       |
| Distributions  to minority interests - joint ventures                                                                        |       | (5,251                                 | )          | —                                                                          |       |
| Purchase of  unconsolidated joint ventures                                                                                   |       | (76,232                                | )          | —                                                                          |       |
| Interest  capitalized for real estate under development                                                                      |       | (85                                    | )          | —                                                                          |       |
| Payment of  leasing fees                                                                                                     |       | (761                                   | )          | —                                                                          |       |
| Tenant  improvements payable                                                                                                 |       | 4,570                                  |       | —                                                                          |       |
| Other assets                                                                                                                 |       | (4,482                                 | )          | (831                                                                            | )          |
| Funding of  notes receivable                                                                                                 |       | (31,772                                | )          | (7,552                                                                          | )          |
| Due to  affiliates                                                                                                           |       | (1,545                                 | )          | 2,154                                                                           |       |
|                                                                                                                         |       |                                   |       |                                                                            |       |
| Net cash  flows used in investing activities                                                                                 |       | (3,243,055                             | )          | (133,425                                                                        | )          |
|                                                                                                                              |            |                                        |            |                                                                                 |            |  |  |

 

See accompanying notes toconsolidated financial statements

 

46

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**ConsolidatedStatements of Cash Flows**

(continued)

(Amounts in thousands)

 
| ** **                                                                | ** ** | **Year Ended  December 31, 2004** | ** ** | **Period from March 5, 2003  (inception) through  December 31, 2003** | ** ** |
|---------------------------------------------------------------------------|------------|----------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| Cash flows  from financing activities:                                    |       |                                   |       |                                                                            |       |
| Proceeds  from offering                                                   |       | 1,955,712                              |       | 187,146                                                                         |       |
| Proceeds  from the dividend reinvestment program                          |       | 29,070                                 |       | 181                                                                             |       |
| Shares repurchased                                                        |       | (193                                   | )          | —                                                                          |       |
| Payment of  offering costs                                                |       | (210,358                               | )          | (20,775                                                                         | )          |
| Proceeds  from mortgage debt and notes payable                            |       | 1,653,523                              |       | 29,627                                                                          |       |
| Principal  payments on mortgage debt                                      |       | (175                                   | )          | —                                                                          |       |
| Proceeds  from unsecured line of credit                                   |       | 165,000                                |       | 5,000                                                                           |       |
| Payoff of  unsecured line of credit                                       |       | (170,000                               | )          | —                                                                          |       |
| Payment of  loan fees and deposits                                        |       | (16,613                                | )          | (4,023                                                                          | )          |
| Distributions  paid                                                       |       | (54,542                                | )          | (358                                                                            | )          |
| Due from  affiliates                                                      |       | 2,585                                  |       | (919                                                                            | )          |
| Advances  from advisor                                                    |       | —                                 |       | 1,203                                                                           |       |
| Contribution  from sponsor advances                                       |       | 2,369                                  |       | —                                                                          |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Net cash  flows provided by financing activities                          |       | 3,356,378                              |       | 197,082                                                                         |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Net increase  in cash and cash equivalents                                |       | 176,843                                |       | 64,381                                                                          |       |
| Cash and  cash equivalents, at beginning of period                        |       | 64,381                                 |       | —                                                                          |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Cash and  cash equivalents, at end of period                              |       | $                                      | 241,224    |                                                                            | $          | 64,381 |   |
|                                                                      |       |                                   |       |                                                                            |       |
| Cash paid  for interest, net of interest capitalized of $85               |       | $                                      | 28,869     |                                                                            | 136        |   |
|                                                                      |       |                                   |       |                                                                            |       |
| Restricted  cash                                                          |       | $                                      | (65,923    | )                                                                               | —     |   |
| Restricted  cash liability                                                |       | 65,923                                 |       | —                                                                          |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Due from  sponsor                                                         |       | $                                      | (654       | )                                                                               |       |   |
| Due to  sponsor                                                           |       | 654                                    |       |                                                                            |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Share  repurchase program                                                 |       | $                                      | (472       | )                                                                               |       |   |
| Share  repurchase program liability                                       |       | 472                                    |       |                                                                            |       |
|                                                                      |       |                                   |       |                                                                            |       |
| Supplement schedule of  non-cash investing and financing activities: |       |                                   |       |                                                                            |       |
| Purchase of  investment properties                                        |       | $                                      | (3,113,038 | )                                                                               | (121,868   | ) |
| Assumption  of mortgage debt                                              |       | 100,139                                |       | —                                                                          |       |
| Write-off of  acquisition reserve                                         |       | 521                                    |       | —                                                                          |       |
| Purchase  price adjustments                                               |       | 2,389                                  |       | (852                                                                            | )          |
| Conversion  of mortgage receivable to investment property                 |       | 7,552                                  |       | —                                                                          |       |
|                                                                      |       |                                   |       |                                                                            |       |
|                                                                      |       | $                                      | (3,002,437 | )                                                                               | (122,720   | ) |
|                                                                      |       |                                   |       |                                                                            |       |
| Distributions  payable                                                    |       | $                                      | 11,378     |                                                                            | 928        |   |
|                                                                      |       |                                   |       |                                                                            |       |
| Accrued  offering costs payable                                           |       | $                                      | 2,880      |                                                                            | 1,369      |   |
|                                                                      |       |                                   |       |                                                                            |       |
| Write-off of  fully amortized loan fees                                   |       | $                                      | 1,170      |                                                                            | —     |   |
|                                                                           |            |                                        |            |                                                                                 |            |  |  |

 

See accompanying notes tofinancial statements

 

47

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31,2004 and 2003

 

(1)  Organization and Basis of Accounting

 

Inland Western Retail Real Estate Trust, Inc. (the “Company”) wasformed on March 5, 2003 to acquire and manage a diversified portfolio ofreal estate, primarily multi-tenant shopping centers. The Advisory Agreementprovides for Inland Western Retail Real Estate Advisory Services, Inc. (the “BusinessManager” or “Advisor”), an Affiliate of the Company, to be the Business Manageror Advisor to the Company.  On September 15,2003, the Company commenced an initial public offering (the initial publicoffering) of up to 250,000,000 shares of common stock at $10 each and theissuance of 20,000,000 shares at $9.50 each which may be distributed pursuantto the Company’s distribution reinvestment program. The Company registered asecond offering (the second offering) that became effective on December 28,2004 with the Securities and Exchange Commission for up to 250,000,000 sharesof common stock at $10 each and up to 20,000,000 shares at $9.50 each pursuantto the distribution reinvestment program. Sales of shares in the secondoffering began in early January 2005.

 

The Company is qualified and has elected to be taxed as a real estateinvestment trust (“REIT”) under the Internal Revenue Code of 1986, as amended,for federal income tax purposes commencing with the tax year ending December 31,2003.  Since the Company qualifies fortaxation as a REIT, the Company generally will not be subject to federal incometax to the extent it distributes at least 90% of its REIT taxable income to itsstockholders.  If the Company fails toqualify as a REIT in any taxable year, the Company will be subject to federalincome tax on its taxable income at regular corporate tax rates.  Even if the Company qualifies for taxation asa REIT, the Company may be subject to certain state and local taxes on its incomeand property and federal income and excise taxes on its undistributed income.

 

The Company provides the following programs to facilitate investment inthe Company’s shares and to provide limited liquidity for stockholders.

 

The Company allows stockholders who purchase shares in the initialpublic offering and second offering to purchase additional shares from theCompany by automatically reinvesting distributions through the distributionreinvestment program (“DRP”), subject to certain share ownership restrictions.Such purchases under the DRP are not subject to selling commissions or themarketing contribution and due diligence expense allowance, and are made at aprice of $9.50 per share.

 

The Company will repurchase shares under the share repurchase program (“SRP”),if requested, at least once quarterly on a first-come, first-served basis,subject to certain restrictions. Subject to funds being available, the Companywill limit the number of shares repurchased during any calendar year to 5% ofthe weighted average number of shares outstanding during the prior calendaryear. Funding for the SRP will come exclusively from proceeds that the Companyreceives from the sale of shares under the DRP and such other operating funds,if any, as the Company’s board of directors, at its sole discretion, mayreserve for this purpose.  The board, atits sole discretion, may choose to terminate the share repurchase program afterthe end of the offering period, or reduce the number of shares purchased underthe program, if it determines that the funds allocated to the SRP are neededfor other purposes, such as the acquisition, maintenance or repair ofproperties, or for use in making a declared distribution.  A determination by the board to eliminate orreduce the share repurchase program will require the unanimous affirmative voteof the independent directors.  As of December 31,2004, the Company had repurchased 10,350 shares for $192,667.

 

The accompanying Consolidated Financial Statements include the accountsof the Company, as well as all wholly owned subsidiaries and consolidated jointventure investments.  Wholly ownedsubsidiaries generally consist of limited liability companies (LLC’s) andlimited partnerships (LP’s).  The effectsof all significant intercompany transactions have been eliminated.

 

48

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 

The Company would consolidate certain property holding entities andother subsidiaries that it owns less than a 100% equity interest if the entityis a variable interest entity (“VIE”) and it is the primary beneficiary (asdefined in FASB Interpretation 46(R) *Consolidation of VariableInterest Entities,*an Interpretation of ARB No. 51, as revised(“FIN 46(R)”)). For joint ventures that are not VIE’s of which the Companyowns less than 100% of the equity interest, the Company consolidates theproperty if it receives substantially all of the economics or has the direct orindirect ability to make major decisions. Major decisions are defined in therespective joint venture agreements and generally include participating andprotective rights such as decisions regarding major leases, encumbering theentities with debt and whether to dispose of the entities.

 

The Company has a 95% ownership interest in the LLC’s which own GatewayVillage, Boulevard at the Capital Centre, Towson Circle, Reisterstown RoadPlaza and Tollgate Marketplace, however, the Company shares equally in majordecisions. These entities are considered VIE’s as defined in FIN 46(R) and theCompany is considered the primary beneficiary. Therefore these entities areconsolidated by the Company and the 5% outside ownership interest is reflectedas minority interest in the accompanying Consolidated Financial Statements.

 

The Company has a 60.9% ownership interest in, and is the controllingmember of the LLC which owns Cardiff Hall East Apartments.  The other members’ interests in the propertyare reflected as minority interest in the accompanying Consolidated FinancialStatements.

 

(2)  Summary of Significant Accounting Policies

 

The accompanying Consolidated Financial Statements have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America (“GAAP”) and require management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of revenues and expenses duringthe reporting periods. Actual results could differ from those estimates.

 

Certain reclassifications have been made to the 2003 financialstatements to conform to the 2004 presentations.

 

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

 

The Company records lease termination income if there is a signedtermination agreement, all of the conditions of the agreement have been met, andthe tenant is no longer occupying the property.

 

Staff Accounting Bulletin (“SAB”) 101, *RevenueRecognition in Financial Statements*, determined that a lessor shoulddefer recognition of contingent rental income (i.e. percentage/excess rent)until the specified target (i.e. breakpoint) that triggers the contingentrental income is achieved.  The Companyrecords percentage rental revenue in accordance with the SAB 101.

 

The Company considers all demand deposits, money market accounts andinvestments in certificates of deposit and repurchase agreements purchased witha maturity of three months or less, at the date of purchase, to be cashequivalents.  The Company maintains itscash and cash equivalents at financial institutions.  The combined account balances at one or moreinstitutions periodically exceed the Federal Depository Insurance Corporation (“FDIC”)insurance coverage and, as a result, there is a concentration of credit riskrelated to amounts on deposit in excess of FDIC insurance coverage.  The Company believes that the risk is notsignificant, as the Company does not anticipate the financial institutions’non-performance.

 

49

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 

The Company classifies its investment in securities in one of threecategories: trading, available-for-sale, or held-to-maturity. Tradingsecurities are bought and held principally for the purpose of selling them inthe near term. Held-to-maturity securities are those securities in which theCompany has the ability and intent to hold the security until maturity.  All securities not included in trading orheld-to-maturity are classified as available-for-sale. Investment in securitiesat December 31, 2004 consists of common stock investments and isclassified as available-for-sale securities and is recorded at fair value.Unrealized holding gains and losses on available-for-sale securities areexcluded from earnings and reported as a separate component of othercomprehensive income until realized. Realized gains and losses from the sale ofavailable-for-sale securities are determined on a specific identificationbasis. A decline in the market value of any available-for-sale security belowcost that is deemed to be other than temporary, results in a reduction in thecarrying amount to fair value. The impairment is charged to earnings and a newcosts basis for the security is established. To determine whether an impairmentis other than temporary, the Company considers whether it has the ability andintent to hold the investment until a market price recovery and considerswhether evidence indicating the cost of the investment is recoverable outweighsevidence to the contrary. Evidence considered in this assessment includes thereasons for the impairment, the severity and duration of the impairment,changes in value subsequent to year end and forecasted performance of theinvestee. Of the investment securities held on December 31, 2004, theCompany has accumulated other comprehensive income of $241,015.

 

Costs associated with the offerings are deferred and charged againstthe gross proceeds of the offerings upon closing.  Formation and organizational costs areexpensed as incurred. For the period from March 5, 2003 (inception)through December 31, 2003, $7,500 of organizational costs was expensed. Noorganizational costs were expensed in the year ended December 31, 2004.

 

The Company applies the fair value method of accounting as prescribedby Statement of Financial Accounting Standards (“SFAS”) No. 123, *Accounting for Stock-Based Compensation*for its stockoptions granted.  Under this method, theCompany will report the value of granted options as a charge against earningsratably over the vesting period.

 

The Company enters into interest rate futures contracts or treasurycontracts as a means of reducing exposure to rising interest rates. Atinception, contracts are evaluated in order to determine if they will qualifyfor hedge accounting treatment and will be accounted for either on a deferral,accrual or market value basis depending on the nature of the hedge strategy andthe method used to account for the hedged item. Hedge criteria includedemonstrating the manner in which the hedge will reduce risk, identifying thespecific asset, liability or firm commitment being hedged, and citing the timehorizon being hedged.

 

For the year ended December 31, 2004, the Company entered intotreasury contracts with a futures commission merchant with yields ranging from3.27% to 3.85% for 5 year treasury contracts and 4.00% to 4.63% for 10 yeartreasury contracts. On December 31, 2004, the treasury contracts had aliquidation value of $46,005 resulting in a loss of $3,666,894 for the yearended December 31, 2004.  As thesetreasury contracts are not offsetting future commitments and therefore do notqualify as hedges, the net loss is recognized currently in earnings.

 

Differences between the carrying amount of the investment inunconsolidated joint ventures and the Company’s equity in the underlying assetsare depreciated over 30 years.

 

Real estate acquisitions are recorded at costs less accumulateddepreciation.  Ordinary repairs andmaintenance are expensed as incurred.

 

Depreciation expense is computed using the straight line method.  Building and improvements are depreciatedbased upon estimated useful lives of 30 years for building and improvements and15 years for site improvements.

 

50

----

 

**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**December 31, 2004 and 2003 (continued)

 

In accordance with SFAS No. 144, the Company performs an analysis toidentify impairment indicators to ensure that the investment property’scarrying value does not exceed its fair value. The valuation analysis performed by the Company is based upon manyfactors which require difficult, complex or subjective judgments to bemade.  Such assumptions includeprojecting vacancy rates, rental rates, operating expenses, lease terms, tenantfinancial strength, economy, demographics, property location, capitalexpenditures and sales value among other assumptions to be made upon valuingeach property.  This valuation issensitive to the actual results of any of these uncertain factors, eitherindividually or taken as a whole.  Basedupon the Company’s judgment, no impairment was warranted as of December 31,2004 or December 31, 2003.

 

Tenant improvements are amortized on a straight line basis over thelife of the related lease as a component of amortization expense.

 

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

 

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

 

The Company allocates the purchase price of each acquired investmentproperty between land, building and improvements, acquired above market andbelow market leases, in-place lease value, and any assumed financing that isdetermined to be above or below market terms. In addition, we allocate aportion of the purchase price to the value of the customer relationships. Theallocation of the purchase price is an area that requires judgment and significantestimates.  The Company uses theinformation contained in the independent appraisal obtained at acquisition asthe primary basis for the allocation to land and building and improvements. TheCompany determines whether any financing assumed is above or below market basedupon comparison to similar financing terms for similar investmentproperties.  The Company also allocates aportion of the purchase price to the estimated acquired in-place lease costsbased on estimated lease execution costs for similar leases as well as lostrent payments during assumed lease-up period when calculating as if vacant fairvalues.  The Company considers variousfactors including geographic location and size of leased space.  The Company also evaluates each acquiredlease based upon current market rates at the acquisition date and considersvarious factors including geographical location, size and location of leasedspace within the investment property, tenant profile, and the credit risk ofthe tenant in determining whether the acquired lease is above or below marketlease costs.  After an acquired lease isdetermined to be above or below market lease costs, the Company allocates aportion of the purchase price to such above or below acquired lease costs basedupon the present value of the difference between the contractual lease rate andthe estimated market rate. However, for below market leases with fixed raterenewals, renewal periods are included in the calculation of below marketin-place lease values. The determination of the discount rate used in thepresent value calculation is based upon the “risk free rate.” This discountrate is a significant factor in determining the market valuation which requiresthe Company’s judgment of subjective factors such as market knowledge,economics, demographics, location, visibility, age and physical condition ofthe property.

 

The application of the SFAS Nos. 141 and 142 resulted in therecognition upon acquisition of additional intangible assets and liabilitiesrelating to real estate acquisitions during the years ended December 31,2004 and December 31, 2003. The portion of the purchase price allocated toacquired above market lease costs and acquired below market lease costs areamortized on a straight line basis over the life of the related lease as anadjustment to rental income and over the respective renewal period for belowmarket lease costs with fixed rate renewals. Amortization pertaining to theabove market lease costs of $3,118,699 was applied as a reduction to rental incomefor the year ended December 31, 2004 and $5,227 for the period from March 5,2003 (inception) through December 31, 2003.  Amortization pertaining to the below marketlease costs of $4,703,357 was applied as an increase to rental income for theyear ended December 31, 2004 and $15,386 for the period from March 5,2003 (inception) through December 31, 2003.

 

51

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**December 31, 2004 and 2003 (continued)

 

The portion of the purchase price allocated to acquired in-place leaseintangibles is amortized on a straight line basis over the life of the relatedlease. The Company incurred amortization expense pertaining to acquiredin-place lease intangibles of $9,923,630 for the year ended December 31,2004 and $51,773 for the period from March 5, 2003 (inception) through December 31,2003.

 

The portion of the purchase price allocated to customer relationshipvalue is amortized on a straight line basis over the life of the related lease.

 

The following table presents the amortization during the next fiveyears related to the acquired in-place lease intangibles, customer relationshipvalue, acquired above market lease costs and the below market lease costs forproperties owned at December 31, 2004.

 
| **Amortization of:**                 | ** ** | **2005**  | ** **  | **2006**  | ** **  | **2007**  | ** **  | **2008**  | ** **  | **2009**  | ** **  | **Thereafter** | ** **   |
|--------------------------------------|------------|-----------|-------------|-----------|-------------|-----------|-------------|-----------|-------------|-----------|-------------|----------------|--------------|
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  above market lease costs   |       | $         | (5,576,668  | )         | (5,391,370  | )         | (4,558,366  | )         | (4,275,216  | )         | (3,783,749  | )              | (17,188,977  | ) |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  below market lease costs   |       | 9,930,801 |        | 9,166,611 |        | 8,238,008 |        | 7,337,557 |        | 6,580,442 |        | 44,732,278     |         |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Net rental  income increase          |       | $         | 4,354,133   |      | 3,775,241   |      | 3,679,642   |      | 3,062,341   |      | 2,796,693   |           | 27,543,301   |   |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Acquired  in-place lease intangibles |       | $         | (25,857,397 | )         | (25,857,397 | )         | (25,857,397 | )         | (25,803,230 | )         | (24,532,397 | )              | (110,207,994 | ) |
|                                 |       |      |        |      |        |      |        |      |        |      |        |           |         |
| Customer  relationship value         |       | $         | (200,000    | )         | (200,000    | )         | (200,000    | )         | (200,000    | )         | (200,000    | )              | (1,000,000   | ) |
|                                      |            |           |             |           |             |           |             |           |             |           |             |                |              |  |  |

 

In conjunction with certain acquisitions, the Company receives paymentsunder master lease agreements pertaining to certain, non-revenue producingspaces either at the time of, or subsequent to, the purchase of some of theCompany’s properties.  Upon receipt ofthe payments, the receipts are recorded as a reduction in the purchase price ofthe related properties rather than as rental income.  These master leases were established at thetime of purchase in order to mitigate the potential negative effects of loss ofrent and expense reimbursements.  Masterlease payments are received through a draw of funds escrowed at the time ofpurchase and may cover a period from three months to three years.  These funds may be released to either theCompany or the seller when certain leasing conditions are met.  Restricted cash includes funds received bythird party escrow agents from sellers pertaining to master lease agreements.  The Company records the third party escrowfunds as both an asset and a corresponding liability, until certain leasingconditions are met.

 

Restricted escrows primarily consist of lenders’ restricted escrows andearnout escrows.  Earnout escrows areestablished upon the acquisition of certain investment properties for which thefunds may be released to the seller when certain leasing conditions have beenmet.

 

Notes receivable relate to real estate financing arrangements and bearinterest at a market rate based on the borrower’s credit quality and are recordedat face value.  Interest is recognizedover the life of the note.  The Companyrequires collateral for the notes.

 

52

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**

December 31, 2004 and 2003

 (continued)

 

A note is considered impaired pursuant to SFAS No. 114, *Accounting by Creditors for Impairment of a Loan*.  Pursuant to SFAS No. 114, a note is impairedif it is probable that the Company will not collect all principal and interestcontractually due.  The impairment ismeasured based on the present value of expected future cash flows discounted atthe note’s effective interest rate.  TheCompany does not accrue interest when a note is considered impaired.  When ultimate collectibility of the principalbalance of the impaired note is in doubt, all cash receipts on impaired notesare applied to reduce the principal amount of such notes until the principalhas been recovered and are recognized as interest income, thereafter.

 

The carrying amount of the Company’s debt approximates fair value. TheCompany estimates the fair value of its mortgages payable by discounting thefuture cash flows of each instrument at rates currently offered to the Companyfor similar debt instruments of comparable maturities by the Company’s lenders.The carrying amount of the Company’s other financial instruments approximatefair value because of the relatively short maturity of these instruments.

 

New Accounting Pronouncements

 

In December 2004, the FASB issued SFAS No. 153, *Exchange of Nonmonetary Assets, an amendment of APB Opinion No. 29*,(“SFAS 153”). The amendments made by SFAS 153 are based on the principle thatexchanges of nonmonetary assets should be measured on the fair value of assetsexchanged. It eliminates the exceptions for nonmonetary exchanges of similarproductive assets and replaces it with a broader exception for exchanges ofnonmonetary assets that do not have commercial substance. The statement iseffective for nonmonetary exchanges occurring in fiscal periods beginning afterJune 15, 2005. The Company does not believe that the adoption of SFAS 153will have a material impact on its Consolidated Financial Statements.

 

(3)  Transactions with Affiliates

 

The Business Manager or Advisor contributed $200,000 to the capital ofthe Company for which it received 20,000 shares of common stock.

 

Certain compensation and fees payable to the Business Manager orAdvisor for services to be provided to the Company are limited to maximumamounts.

 

Nonsubordinated payments:

 
| Offering stage:    |                                                  |     |
|--------------------|-------------------------------------------------------|----------|
| * *           | * *                                              | * * | * * |
|               | Selling commissions                                   | * * | 7.5% of the sale price for each share |
| * *           | * *                                              | * * | * * |
|               | Marketing contribution and due diligence  allowance   |     | 3.0% of the gross offering proceeds |
|               |                                                  |     |   |
|               | Reimbursable expenses and other expenses of  issuance |     | We will reimburse our sponsor for actual  costs incurred, on our behalf, in connection with the offerings |
|               |                                                  |     |   |
| Acquisition stage: |                                                  |     |
|               |                                                  |     |   |
|               | Acquisition expenses                                  |     | We will reimburse an affiliate of our business  manager or advisor for costs incurred, on our behalf, in connection with the  acquisition of properties |

 

53

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**INLANDWESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes toConsolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 
| Operational stage: |                                                                                                            |     |
|--------------------|-----------------------------------------------------------------------------------------------------------------|----------|
| * *           | * *                                                                                                        | * * | * * |
|               | Property management fee*This fee terminates upon a business combination  with the property management company.* |     | 4.5% of the gross income from the  properties. (cannot exceed 90% of the fee which would be payable to an  unrelated third party) |
| * *           | * *                                                                                                        | * * | * * |
| * *           | Loan servicing fee                                                                                              |     | .03% per year on the first billion dollars  of mortgages serviced and .01% thereafter |
| * *           | * *                                                                                                        | * * | * * |
| * *           | Other property level services                                                                                   |     | Compensation for these services will not  exceed 90% of that which would be paid to any third party for such services |
|               |                                                                                                            |     |   |
|               | Reimbursable expenses relating to  administrative services                                                      |     | The compensation and reimbursements to our  business manager or advisor and its affiliates will be approved by a majority  of our directors |
|               |                                                                                                            |     |   |
| Liquidation stage: |                                                                                                            |     |
|               |                                                                                                            |     |   |
|               | Property disposition fee*This fee terminates upon a business combination  with the Advisor*                     |     | Lesser of 3% of sales price or 50% of the  customary commission which would be paid to a third party |

 

Subordinated payments:

 
| Operational stage: |                                                                                            |   |
|--------------------|-------------------------------------------------------------------------------------------------|--------|
|               |                                                                                            |   |   |
|               | Advisor asset management fee*This fee terminates upon a business combination  with the Advisor* |   | Not more than 1% per annum of our average  assets; Subordinated to a non-cumulative, non-compounded return, equal to 6%  per annum |
|               |                                                                                            |   |   |
| Liquidation stage: |                                                                                            |   |
|               |                                                                                            |   |   |
|               | Incentive advisory fee*This fee terminates upon a business combination  with the Advisor*       |   | After the stockholders have first received  a 10% cumulative, non-compounded return per year and a return of their net  investment, an incentive advisory fee equal to 15% on net proceeds from the  sale of a property will be paid to the business manager or advisor |

 

54

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 

On October 31, 2003, theCompany acquired an existing shopping center known as The Shops at Park Placethrough the purchase of all of the membership interests of the general partnerand the membership interests of the limited partner of the limited partnershipholding title to this property.  Thecenter contains approximately 116,300 gross leasable square feet and is locatedin Plano, Texas. An affiliate of our Advisor, Inland Park Place LimitedPartnership, acquired this property on September 30, 2003 from CDG Park PlaceLLC, an unaffiliated third party for $23,868,000.  Inland Park Place Limited Partnership agreedto sell this property to the Company when sufficient funds from the sale ofshares to acquire this property were raised. Inland Park Place LimitedPartnership agreed to sell this property to the Company for the price theaffiliate paid to the unaffiliated third party, plus any actual costs incurred.The Company’s board of directors unanimously approved acquiring this property,including a unanimous vote of the independent directors. The total acquisitioncost to the Company was $24,000,000, which included $132,000 of costs incurredby the affiliate.

 

As of December 31, 2004 andDecember 31, 2003, the Company had incurred $234,014,231 and $22,144,814 ofoffering costs, of which $175,508,624 and $16,859,779, respectively, were paidor accrued to affiliates. Pursuant to the terms of the offerings, the BusinessManager or Advisor has guaranteed payment of all public offering expenses(excluding sales commissions and the marketing contribution and the duediligence expense allowance) in excess of 5.5% of the gross proceeds of theofferings or all organization and offering expenses (including sellingcommissions) which together exceed 15% of gross proceeds. As of December 31,2004 and December 31, 2003, offering costs did not exceed the 5.5% and 15% limitations.The Company anticipates that these costs will not exceed these limitations uponcompletion of the offerings.

 

The Business Manager orAdvisor and its affiliates are entitled to reimbursement for salaries andexpenses of employees of the Business Manager or Advisor and its affiliatesrelating to the offerings.  In addition,an affiliate of the Business Manager or Advisor is entitled to receive sellingcommissions, and the marketing contribution and due diligence expense allowancefrom the Company in connection with the offerings.  Such costs are offset against thestockholders’ equity accounts. Such costs totaled $175,508,624 and $16,859,779,of which $2,879,894 and $1,061,791 were unpaid at December 31, 2004 andDecember 31, 2003, respectively.

 

The Business Manager orAdvisor and its affiliates are entitled to reimbursement for general andadministrative costs relating to the Company’s administration.  Such costs are included in general andadministrative expenses to affiliates, in addition to costs that werecapitalized pertaining to property acquisitions.  For the year ended December 31, 2004 and theperiod from March 5, 2003 (inception) through December 31, 2003, the Companyincurred $1,542,986 and $194,017 of these costs, respectively, of which $957,471and $40,703 remained unpaid as of December 31, 2004 and 2003, respectively, andare included in due to affiliates on the Consolidated Balance Sheets.

 

An affiliate of theBusiness Manager or Advisor provides loan servicing to the Company for an annualfee.  The agreement allows for annualfees totaling .03% of the first $1 billion in mortgage balance outstanding and..01% of the remaining mortgage balances, payable monthly.  Such fees totaled $140,859 for the year endedDecember 31, 2004 and $328 for the period from March 5, 2003 (inception)through December 31, 2003.

 

The Company used theservices of an affiliate of the Business Manager or Advisor to facilitate themortgage financing that the Company obtained on some of the propertiespurchased. The Company pays the affiliate .02% of the principal amount of eachloan obtained on the Company’s behalf. Such costs are capitalized as loan fees and amortized over therespective loan term.  For the year endedDecember 31, 2004 and for the period from March 5, 2003 (inception) throughDecember 31, 2003, the Company paid loan fees totaling $3,475,472 and $59,523to this affiliate, respectively.

 

55

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

 (continued)

 

The Company may pay anadvisor asset management fee of not more than 1% of the average assets. Averageasset value is defined as the average of the total book value, includingacquired intangibles, of the Company’s real estate assets plus the Company’sloans receivable secured by real estate, before reserves for depreciation,reserves for bad debt or other similar non-cash reserves. The Company computesthe average assets by taking the average of these values at the end of eachmonth for which the fee is being calculated. The fee would be payable quarterly in an amount equal to 1/4 of 1% ofaverage assets as of the last day of the immediately preceding quarter.  For any year in which the Company qualifies asa REIT, the advisor must reimburse the Company for the following amounts ifany: (1) the amounts by which total operating expenses, the sum of the advisorasset management fee plus other operating expenses, paid during the previousfiscal year exceed the greater of: (i) 2% of average assets for that fiscalyear, or (ii) 25% of net income for that fiscal year; plus (2) an amount, whichwill not exceed the advisor asset management fee for that year, equal to anydifference between the total amount of distributions to stockholders for thatyear and the 6% minimum annual return on the net investment ofstockholders.  The Company neither paidnor accrued such fees because the Business Manager or Advisor agreed to foregosuch fees for the year ended December 31, 2004 and for the period from March 5,2003 (inception) to December 31, 2003.

 

The property managers,entities owned principally by individuals who are affiliates of the BusinessManager or Advisor, are entitled to receive property management fees totaling4.5% of gross operating income, for management and leasing services.  The Company incurred property management feesof $5,381,721 and $16,627 for the year ended December 31, 2004 and the periodfrom March 5, 2003 (inception) through December 31, 2003, respectively. Noneremained unpaid as of December 31, 2004 or December 31, 2003.

 

The Company establisheda discount stock purchase policy for affiliates of the Company and the BusinessManager or Advisor that enables the affiliates to purchase shares of commonstock at a discount at either $8.95 or $9.50 per share depending on when theshares are purchased. The Company sold 605,060 and 59,497 shares of commonstock to affiliates and recognized an expense related to these discounts of$427,122 and $62,472 for the year ended December 31, 2004 and the period fromMarch 5, 2003 (inception) to December 31, 2003, respectively.

 

As of December 31, 2004 and2003, the Company was due funds from affiliates in the amount of $654,004 and$918,750, respectively which is comprised of $654,004 and $845,000,respectively, which is due from the sponsor for reimbursement of a portion ofdistributions paid.  The remaining$73,750 as of December 31, 2003 is due from an affiliate for costs paid ontheir behalf by the Company.  The sponsorhas agreed to advance funds to the Company for a portion of distributions paidto the Company’s shareholders until funds available for distributions aresufficient to cover the distributions. The sponsor forgave $2,369,139 of these amounts during the secondquarter of 2004 and these funds are no longer due and are recorded as acontribution to capital in the accompanying Consolidated Financial Statements.As of December 31, 2004 and December 31, 2003, the Company owed funds to thesponsor in the amount of $3,522,670 and $1,202,519, respectively, for repaymentof the funds advanced for payment of distributions.

 

As of December 31, 2003 theCompany owed funds to an affiliate in the amount of $2,154,158 for thereimbursement of costs paid by the affiliate on behalf of the Company.  The amount due at December 31, 2003 wasrepaid during 2004.

 

56

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

(continued)

(4)  Stock OptionPlan

 

The Company has adopted anIndependent Director Stock Option Plan which, subject to certain conditions,provides for the grant to each independent director of an option to acquire3,000 shares following their becoming a director and for the grant ofadditional options to acquire 500 shares on the date of each annualstockholders’ meeting. The options for the initial 3,000 shares are exercisableas follows: 1,000 shares on the date of grant and 1,000 shares on each of thefirst and second anniversaries of the date of grant. The subsequent optionswill be exercisable on the second anniversary of the date of grant. The initialoptions will be exercisable at $8.95 per share. The subsequent options will beexercisable at the fair market value of a share on the last business daypreceding the annual meeting of stockholders. As of December 31, 2004 and 2003,we have issued 3,500 and 3,000 options, respectively, to acquire shares to eachof our independent directors, for a total of 17,500 and 15,000 options,respectively, of which none have been exercised or expired.

 

The per share weighted averagefair value of options granted was $0.60 on the date of the grant using theBlack Scholes option-pricing model with the following assumptions: expecteddividend yield of 8%, risk free interest rate of 2.0%, expected life of fiveyears and expected volatility rate of 18.0%. The Company had recorded $3,000 asexpense for the 5,000 options (1,000 options per director) vesting upon thedate of grant as of December 31, 2003 and is recording the remaining $6,000 inexpense related to 2003 grants ratably over the remaining two-year vestingperiod. During the year ended December 31, 2004, the Company issued anadditional 2,500 options with a weighted average fair value at the date ofgrant of $1,500 and recorded $3,375 of expense related to stock options.

 

(5) Leases

 

Master Lease Agreements

 

In conjunction with certainacquisitions, the Company received payments under master lease agreementspertaining to certain non-revenue producing spaces at the time of purchase, forperiods ranging from three months to three years after the date of purchase oruntil the spaces are leased.  As thesepayments are received, they are recorded as a reduction in the purchase priceof the respective property rather than as rental income.  The cumulative amount of such payments was$3,024,547 as of December 31, 2004. No such payments were received in 2003.

 

Operating Leases

 

Minimum lease paymentsto be received under operating leases, excluding rental income under masterlease agreements and assuming no expiring leases are renewed, are as follows:

 

| ** ** | ** ** | **Minimum Lease  Payments** | ** **    |
|------------|------------|-----------------------------|---------------|
| 2005       |       | $                           | 227,000,049   |   |
| 2006       |       | 221,072,711                 |          |
| 2007       |       | 212,006,042                 |          |
| 2008       |       | 201,306,939                 |          |
| 2009       |       | 184,145,285                 |          |
| Thereafter |       | 1,106,350,470               |          |
|       |       |                        |          |
| Total      |       | $                           | 2,151,881,496 |   |

 

The remaining leaseterms range from one year to 55 years. Pursuant to the lease agreements, tenants of the property are requiredto reimburse the Company for some or their entire pro rata share of the realestate taxes, operating expenses and management fees of the properties.  Such amounts are included in tenant recoveryincome.

 

57

----

 

**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

 (continued)

 

Ground Leases

 

The Company leases land undernoncancelable operating leases at certain of the properties expiring in variousyears from 2028 to 2096.  For the yearended December 31, 2004, ground lease rent was $2,187,286. No ground leasepayments were made in 2003.  Minimumfuture rental payments to be paid under the ground leases are as follows:

 

| ** ** | ** ** | **Minimum Lease  Payments** | ** **  |
|------------|------------|-----------------------------|-------------|
| 2005       |       | $                           | 3,186,464   |   |
| 2006       |       | 3,187,605                   |        |
| 2007       |       | 3,238,811                   |        |
| 2008       |       | 3,240,086                   |        |
| 209        |       | 3,402,159                   |        |
| Thereafter |       | 342,280,751                 |        |
|       |       |                        |        |
| Total      |       | $                           | 358,535,876 |   |

 

(6) NotesReceivable

 

The notes receivablebalance of $31,771,731 as of December 31, 2004 consisted of two installmentnotes, one from Newman Development Group of Gilroy, LLC (Gilroy) and one fromNewman Development Group of Richland, LLC (Richland) that mature on July 15,2005 and August 15, 2005, respectively. These notes are secured by firstmortgages on Pacheco Pass Shopping Center and Quakertown Shopping Center,respectively and are guaranteed personally by the owners of Gilroy andRichland.  Interest only is due in advanceon the first of each month at a rate of 6.993% per annum for Gilroy and 7.5572%per annum for Richland.  Upon closing, aninterest reserve escrow totaling three months of interest payments wasestablished for both notes.

 

The notes receivable balance of$7,552,155 as of December 31 2003 consisted of an installment note from FourthQuarter Properties XIV, LLC (Fourth) that matured on January 15, 2004.  This installment note was secured by a 49%interest in Fourth, which owned the remaining portion of the Newnan Crossingshopping center and was also guaranteed personally by the owner of Fourth.  Interest only at a rate of 7.6192% per annumwas due on the note. The installment note was advanced to Fourth incontemplation of the Company purchasing the remaining portions of NewnanCrossing.  The Company did not call thenote on January 15, 2004 and subsequently purchased the property on February13, 2004 at which time the note was paid in full by Fourth as a credit to thepurchase price of the property.

 

(7) Mortgages andNote Payable

 

Mortgage loans outstanding asof December 31, 2004 were $1,782,538,627 and had a weighted average interestrate of 4.58%.  Of this amount,$1,635,745,627 had fixed rates ranging from 3.96% to 8.02% and a weightedaverage fixed rate of 4.67% at December 31, 2004. The rate of 8.02% representedthe interest rate on the mortgage for Cardiff Hall East (Cardiff), a jointventure entity which the Company consolidates. Excluding the Cardiff mortgage,the highest fixed rate on our mortgage debt was 6.34%.  The remaining $146,793,000 representedvariable rate loans with a weighted average interest rate of 3.55% at December31, 2004. Properties with a net carrying value of $2,906,338,366 at December31, 2004 and related tenant leases are pledged as collateral. As of December31, 2004, scheduled maturities for the Company’s outstanding mortgageindebtedness had various due dates through August 2023.

 

58

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

 (continued)

 

The following table shows themortgage debt maturing during the next five years:

 
| ** **         | ** ** | **2005**   | ** ** | **2006** | ** ** | **2007**   | ** ** | **2008**   | ** ** | **2009**    | ** ** | **Thereafter** | ** ** |
|--------------------|------------|------------|------------|----------|------------|------------|------------|------------|------------|-------------|------------|----------------|------------|
| Maturing debt      |       |       |       |     |       |       |       |       |       |        |       |           |       |
| Fixed rate debt    |       | 920,574    |       | 981,221  |       | 57,906,321 |       | 47,322,706 |       | 960,152,489 |       | 568,462,316    |       |
| Variable rate debt |       | 15,672,533 |       | 637,533  |       | 637,533    |       | 637,533    |       | 111,635,533 |       | 17,572,335     |       |

 

The debt iscross-collateralized among the properties in connection with the financing ofHeritage Towne Crossing and Eckerd Drug Stores in Norman and Edmond, OK.

 

As part of the Plaza Santa FeII loan assumption, a promissory note approximating $414,000 was executedbetween the Company and the seller for the total amount that the seller hadpaid into escrows under the loan agreement as of the acquisition date. The notebears interest at the rate of prime less 3.00%, payable to the seller uponmaturity of the note in 2006. The seller also agreed to fund the Company’smonthly required payments into this escrow for a period of two years. Eachmonthly payment funded by the seller increases the principal balance of thenote payable. The outstanding note payable balance at December 31, 2004 isapproximately $575,000.

 

(8)  Line of Credit

 

On December 24, 2003, theCompany entered into a $150,000,000 unsecured line of credit arrangement a bankfor a period of one year.  The funds fromthis line of credit were used to provide liquidity from the time a property waspurchased until permanent debt was placed on the property.  The Company was required to pay interest onlyon the outstanding balance from time to time under the line at the rate equalto LIBOR plus 175 basis points.  The Companywas also required to pay, on a quarterly basis, an amount ranging from .15% to..30%, per annum, on the average daily undrawn funds remaining under thisline.  The line of credit requiredcompliance with certain covenants, such as debt service ratios, minimum networth requirements, distribution limitations and investment restrictions.  As of December 31, 2003, the Company was incompliance with such covenants.  Inconnection with obtaining this line of credit, the Company paid fees in anamount totaling approximately $1,044,000 (which included a .65% commitmentfee).  The outstanding balance on theline of credit was $5,000,000 as of December 31, 2003 with an effectiveinterest rate of 2.9375% per annum.

 

On December 16, 2004, theCompany terminated the existing line of credit agreement and executed a newunsecured line of credit facility with a bank for up to $100,000,000 with anoptional unsecured borrowing capacity of $150,000,000 for a total unsecuredborrowing capacity of $250,000,000.  Thefacility has an initial term of one year with two one-year extension options,with an annual variable interest rate. The funds from this line of credit may be used to provide liquidity fromthe time a property is purchased until permanent debt is placed on thatproperty.  The line of credit requiresinterest only payments monthly at the rate equal to the London InterBankOffered Rate or LIBOR plus 175 basis points which ranged from 2.34% to 2.42%during the quarter ended December 31, 2004. The Company is also required to pay, on a quarterly basis, an amountranging from .15% to .25%, per annum, on the average daily undrawn funds underthis line.  The line of credit requirescompliance with certain covenants, such as debt service ratios, minimum networth requirements, distribution limitations and investment restrictions. As ofDecember 31, 2004, the Company was in compliance with such covenants. There wasno outstanding balance on the line as of December 31, 2004.

 

(9)  Investmentsin Unconsolidated Joint Ventures

 

On August 11, 2004, CRInvestors, LLC, an entity wholly owned by Reisterstown Plaza Holdings, LLC (ajoint venture entity consolidated by the Company), invested $5,781,600 topurchase a 36.5% tenancy in common interest in an apartment complex known asCourthouse Square located in Towson, MD.

 

59

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 

On November 5, 2004, CRP PowerPlant Investors, LLC, an entity wholly owned by Reisterstown Plaza Holdings,LLC (a joint venture entity consolidated by the Company), invested $15,000,000to purchase a 37.5% interest in a retail/office complex known as The PowerPlant located in Baltimore, MD. On the same day, CGW Power Plant Investors, LLC,an entity wholly owned by Gateway Village Holding, LLC (a joint venture entityconsolidated by the Company), invested $5,000,000 to purchase a 12.5% interestin The Power Plant.

 

On November 5, 2004, CTC PierIV Investors, LLC, an entity wholly owned by Towson Circle Holding, LLC (ajoint venture entity consolidated by the Company), invested $5,000,000 topurchase a 16.67% interest in a retail/office complex known as Pier IV locatedin Baltimore, MD. On the same day, CTOLL Pier IV Investors, LLC, an entity whollyowned by Tollgate Marketplace Holding Company, LLC (a joint venture entityconsolidated by the Company), invested $15,000,000 to purchase a 50.0% interestin Pier IV.

 

On December 23, 2004, NPAcquisitions, LLC, an entity wholly owned by CR Investors, LLC an entity whollyowned by Reisterstown Plaza Holdings, LLC (a joint venture entity consolidatedby the Company), invested $2,250,000 to purchase a 25% tenancy in commoninterest in a retail complex known as North Plaza Shopping Center located in Parkville,MD.

 

On December 29, 2004, CGWLouisville Investors, LLC, an entity wholly owned by Gateway Village Holding,LLC (a joint venture entity consolidated by the Company), invested $1,900,000to  purchase a 3.3% interest in a retail/officecomplex known as Louisville Galleria located in Louisville, KY. On the sameday, CTOLL Louisville Investors, LLC, an entity wholly owned by TollgateMarketplace Holding Company, LLC (a joint venture entity consolidated by theCompany), invested $7,200,000 to purchase a 12.0% interest in LouisvilleGalleria. Also, on the same day, CCC Louisville Investors, LLC an entity whollyowned by Capital Centre Holdings, LLC (a joint venture entity consolidated bythe Company), invested $19,100,000 to purchase a 31.8% member interest inLouisville Galleria.

 

These investments are accountedfor utilizing the equity method of accounting. Under the equity method of accounting, the net equity investment of theCompany is reflected on the Consolidated Balance Sheets and the ConsolidatedStatements of Operations includes the Company’s share of net income or lossfrom the unconsolidated entity. For the year ended December 31, 2004, allequity in earnings of unconsolidated entities was allocated to the Company’sjoint venture partners in accordance with the entities’ operating agreements.

 

(10)  SegmentReporting

 

The Company owns andseeks to acquire single-user net lease properties and multi-tenant shoppingcenters principally in the western United States. The Company’s shoppingcenters are typically anchored by discount retailers, home improvementretailers, grocery and drugstores complemented with additional stores providinga wide range of other goods and services to shoppers.

 

The Company assesses andmeasures operating results on an individual property basis for each of itsproperties based on net property operations. Since all of the Company’s properties exhibit highly similar economiccharacteristics, cater to the day-to-day living needs of their respectivesurrounding communities, and offer similar degrees of risk and opportunitiesfor growth, the properties have been aggregated and reported as one operatingsegment.

 

60

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

 (continued)

 

Net property operationsare summarized in the following table for the year ended December 31, 2004 andfor the period from March 5, 2003 through December 31, 2003, along with areconciliation to net income.

 
| ** **                                              | ** ** | **2004**    | ** **  | **2003** | ** ** |
|---------------------------------------------------------|------------|-------------|-------------|----------|------------|
| Property rental income and additional  property income  |       | $           | 130,404,581 |     | $          | 744,633 |   |
| Total property operating expenses                       |       | (32,521,195 | )           | (143,244 | )          |
| Interest expense                                        |       | (33,174,623 | )           | (135,735 | )          |
| Net property operations                                 |       | 64,708,763  |        | 465,654  |       |
| Other income                                            |       | 3,681,067   |        | 37,648   |       |
| Less non-property expenses:                             |       |        |        |     |       |
| General and administrative expenses                     |       | (4,857,101  | )           | (459,476 | )          |
| Depreciation and amortization                           |       | (47,973,208 | )           | (217,105 | )          |
| Realized loss on sale of treasury contracts             |       | (3,666,894  | )           | —   |       |
| Minority interests                                      |       | 397,357     |        | —   |       |
| Equity in earnings (losses) of  unconsolidated entities |       | (589,251    | )           | —   |       |
|                                                    |       |        |        |     |       |
| Net income (loss)                                       |       | $           | 11,700,733  |     | $          | (173,279 | ) |

 

The following table summarizesproperty asset information as of December 31, 2004 and December 31, 2003.

 
| ** **         | ** ** | **December 31, 2004** | ** **    | **December 31, 2003** | ** ** |
|--------------------|------------|-----------------------|---------------|-----------------------|------------|
| Total assets:      |       |                  |          |                  |       |
| Rental real estate |       | $                     | 3,601,512,810 |                  | $          | 142,804,128 |   |
| Non-segment assets |       | 354,302,750           |          | 69,298,035            |       |
|               |       |                  |          |                  |       |
|               |       | $                     | 3,955,815,560 |                  | $          | 212,102,163 |   |

 

The Company does notderive any of its consolidated revenue from foreign countries and does not haveany major customers that individually account for 10% or more of the Company’sconsolidated revenues.

 

(11)  Earnings(loss) per Share

 

Basic earnings (loss)per share (“EPS”) are computed by dividing income by the weighted averagenumber of common shares outstanding for the period (the “common shares”).  Diluted EPS is computed by dividing netincome (loss) by the common shares plus shares issuable upon exercising optionsor other contracts. As a result of the net loss incurred in 2003, dilutedweighted average shares outstanding do not give effect to common stockequivalents as to do so would be anti-dilutive. As of December 31, 2004, options to purchase 17,500 shares of commonstock at an exercise price of $8.95 per share were outstanding.  These options were not included in thecomputation of basic or diluted EPS as the effect would be immaterial.

 

The basic and dilutedweighted average number of common shares outstanding was 98,562,885 and2,520,986 for the year ended December 31, 2004 and the period from March 5,2003 (inception) to December 31, 2003, respectively.

 

61

----

 

**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**

(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**

December 31, 2004 and 2003

(continued)

 

(12)  Commitmentsand Contingencies

 

The Company has closedon several properties which have earnout components, meaning the Company didnot pay for portions of these properties that were not rent producing.  The Company is obligated, under certainagreements, to pay for those portions when the tenant moves into its space andbegins to pay rent.  The earnout paymentsare based on a predetermined formula. Each earnout agreement has a time limitregarding the obligation to pay any additional monies.  If at the end of the time period allowedcertain space has not been leased and occupied, the Company will own that spacewithout any further obligation. Based on pro forma leasing rates, the Companymay pay as much as $189,042,868 in the future, as retail space covered byearnout agreements is occupied and becomes rent producing.

 

During 2004, the Companyentered into two installment note agreements in which the Company is obligatedto fund up to a total of $33,398,314. The notes maintain stated interest rates of 6.993% and 7.5572% per annumand mature in July 2005 and August 2005. Each note requires monthly interest payments with the entire principalbalance due at maturity.  The combinedreceivable balance at December 31, 2004 was $31,771,731.  Therefore, the Company may be required tofund up to an additional $1,626,583 on these notes.

 

The Company has obtainedthree irrevocable letters of credit related to loan fundings against earnoutspaces at certain properties.  Once theCompany purchases the remaining portion of these properties and meet certainoccupancy requirements, the letters of credit will be released. The balance ofoutstanding letters of credit at December 31, 2004 is $11,573,100.

 

In connection with thepurchase of one of our properties, the Company received a price adjustment inthe amount of $763,072 related to spaces that were vacant at the time ofclosing. If at any time during the next two years the seller is able to leasethat space under conditions satisfactory to the Company, the Company isobligated to pay the seller a pro-rata share of the purchase price reduction.

 

The Company has entered intointerest rate lock agreements with various lenders to secure interest rates onmortgage debt on properties the Company currently owns or will purchase in thefuture. The Company has outstanding rate lock deposits in the amount of$2,826,055 as of December 31, 2004 which are applied as credits to the mortgagefundings as they occur.  These agreementslock interest rates from 4.45% to 5.12% for periods from 60 days to 90 days onapproximately $240 million in principal.

 

The Company is currentlyconsidering acquiring nine properties for an estimated purchase price of $226million. The Company’s decision to acquire each property will generally dependupon no material adverse change occurring relating to the property, the tenantsor in the local economic conditions and the Company’s receipt of satisfactorydue diligence information including appraisals, environmental reports and leaseinformation prior to purchasing the property.

 

(13)  SubsequentEvents

 

The Company issued 42,629,352shares of common stock and repurchased 28,459 shares of common stock fromJanuary 1, 2005 through February 28, 2005 in connection with the initial publicoffering and second offering, resulting in gross proceeds of approximately $425million.

 

The Company paid distributionsof $11,377,712 and $12,232,404 to its stockholders in January and February2005, respectively.

 

62

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

(continued)

 

The Company has acquired thefollowing properties or joint venture interests in properties during the periodJanuary 1 to February 28, 2005.  Therespective acquisitions are detailed in the table below.

 

| **Date  Acquired** | ** ** | **Property**                                     | ** ** | **Year  Built**   | ** ** | **Approximate  Purchase Price  ($)** | ** ** | **Gross Leasable  Area  (Sq. Ft.)** | ** ** | **Major Tenants**                                   | ** ** |
|--------------------|------------|--------------------------------------------------|------------|-------------------|------------|--------------------------------------|------------|-------------------------------------|------------|-----------------------------------------------------|------------|
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/05/05           |       | Fairgrounds  Plaza  Middletown, NY               |       | 2002-  2004       |       | 21,994,125                           |       | 59,970                              |       | Super Stop N’ Shop                             |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/06/05           |       | Maytag  Distribution Center  Iowa City, IA       |       | 2004              |       | 23,159,499                           |       | 750,000                             |       | Maytag                                              |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/10/05           |       | Midtown  Center  Milwaukee, WI                   |       | 1986-  1987       |       | 53,000,000                           |       | 319,108                             |       | Wal-Mart  Pick ‘N Save                         |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/10/05           |       | Hobby  Lobby  Concord, NC                        |       | 2004              |       | 5,500,000                            |       | 60,000                              |       | Hobby Lobby                                         |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/19/05           |       | Stanley  Works/Mac Tools  Westerville, OH        |       | 2004              |       | 10,000,000                           |       | 72,500                              |       | Mac Tools                                           |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/25/05           |       | American  Express  Markham, Ontario, Canada      |       | 1983  &  1987 |       | 42,000,000                           |       | 306,710                             |       | American Express                                    |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 01/28/05           |       | Academy  Sports  San Antonio, TX                 |       | 2004              |       | 7,150,000                            |       | 70,910                              |       | Academy Sports                                      |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 02/01/05           |       | Magnolia  Square  Houma, LA                      |       | 2004              |       | 19,113,739                           |       | 116,079                             |       | Ross Dress for Less  PETsMART  Circuit City         |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 02/02/05           |       | Cottage  Plaza  Pawtucket, RI                    |       | 2004-2005         |       | 23,439,950                           |       | 75,543                              |       | Stop ‘N Shop                                   |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 02/09/05           |       | The  Village at Quail Springs  Oklahoma City, OK |       | 2003-2004         |       | 10,428,978                           |       | 101,128                             |       | Gordmans  Best Buy                                  |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 02/11/05           |       | Holliday  Towne Center  Duncansville, PA         |       | 2003              |       | 14,827,645                           |       | 83,122                              |       | Martin’s                                       |       |
|               |       |                                             |       |              |       |                                 |       |                                |       |                                                |       |
| 02/18/05           |       | Trenton  Crossing  McAllen, TX                   |       | 2003              |       | 29,212,209                           |       | 221,019                             |       | Hobby Lobby  Ross Dress for Less  Marshalls  Bealls |       |

 

63

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

(continued)

 

The mortgage debt andfinancings obtained during the period January 1 to February 28, 2005, aredetailed in the table below.

 

| **Date  Funded** | ** ** | **Mortgage Payable**                        | ** ** | **Annual Interest Rate** | ** ** | **Maturity  Date** | ** ** | **Principal Borrowed  ($)** | ** ** |
|------------------|------------|---------------------------------------------|------------|--------------------------|------------|--------------------|------------|-----------------------------|------------|
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/05/05         |       | Fairgrounds  Plaza  Middletown, NY          |       | 5.690%                   |       | 02/01/33           |       | 15,982,376                  |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/24/05         |       | Hobby  Lobby  Concord, NC                   |       | 5.115%                   |       | 02/01/10           |       | 3,025,000                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/25/05         |       | American  Express  Markham, Ontario, Canada |       | 4.2975%                  |       | 02/01/15           |       | 25,380,000                  |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/28/05         |       | Coram  Plaza  Coram, NY                     |       | 4.550%                   |       | 02/01/10           |       | 20,755,300                  |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/31/05         |       | Low  Country Village II  Bluffton, SC       |       | 5.130%                   |       | 05/01/09           |       | 5,440,000                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 01/31/05         |       | Irmo  Station  Irmo, SC                     |       | 5.1236%                  |       | 02/01/10           |       | 7,085,000                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/01/05         |       | Evans  Towne Centre  Evans, GA              |       | 4.670%                   |       | 02/01/10           |       | 5,005,000                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/03/05         |       | Magnolia  Square  Houma, LA                 |       | 5.115%                   |       | 03/01/10           |       | 10,265,000                  |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Green’s  Corner  Cumming, GA           |       | 4.500%                   |       | 02/11/10           |       | 7,022,366                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Newton  Crossroads  Covington, GA           |       | 4.500%                   |       | 02/11/10           |       | 5,547,622                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/04/05         |       | Stilesboro  Oaks  Acworth, GA               |       | 4.500%                   |       | 02/11/10           |       | 6,951,971                   |       |
|             |       |                                        |       |                     |       |               |       |                        |       |
| 02/09/05         |       | Five  Forks  Simpsonville, NC               |       | 4.815%                   |       | 02/11/10           |       | 4,482,500                   |       |

 

64

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

(continued)

 

| **Date  Funded** | ** ** | **Mortgage Payable**                             | ** ** | **Annual Interest Rate** | ** ** | **Maturity  Date** | ** ** | **Principal Borrowed ($)** | ** ** |
|------------------|------------|--------------------------------------------------|------------|--------------------------|------------|--------------------|------------|----------------------------|------------|
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/14/05         |       | University  Town Center  Tuscaloosa, AL          |       | 4.430%                   |       | 03/01/10           |       | 5,810,000                  |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/14/05         |       | Edgemont  Town Center  Homewood, AL              |       | 4.430%                   |       | 03/01/10           |       | 8,600,000                  |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/16/05         |       | Southlake  Town Square  Southlake, TX            |       | 4.550%                   |       | 03/11/10           |       | 70,570,880                 |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/16/05         |       | Midtown  Center  Milwaukee, WI                   |       | 4.460%                   |       | 03/11/10           |       | 28,227,617                 |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/17/05         |       | McAllen  Shopping Center  McAllen, TX            |       | 5.060%                   |       | 03/01/10           |       | 2,455,000                  |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/18/05         |       | Southlake  Town Square II  Southlake, TX         |       | 4.550%                   |       | 03/11/10           |       | 10,429,120                 |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/18/05         |       | Mesa  Fiesta  Mesa, AZ                           |       | 5.300%                   |       | 02/01/10           |       | 23,500,000                 |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/24/05         |       | Academy  Sports  San Antonio, TX                 |       | 5.060%                   |       | 03/01/10           |       | 3,933,000                  |       |
|             |       |                                             |       |                     |       |               |       |                       |       |
| 02/25/05         |       | The  Village at Quail Springs  Oklahoma City, OK |       | 5.060%                   |       | 03/01/10           |       | 5,740,000                  |       |

 

The Company is obligatedunder earnout agreements to pay for certain tenant space in our existingproperties after the tenant moves into its space and begins paying rent.  During the period from January 1 to February28, 2005, the Company funded earnouts totaling $20,552,372 at 7 of its existingproperties.

 

During the period from January1, 2005 to February 28, 2005, the Company entered into rate lock agreementswhich lock interest rates from 4.47% to 4.69% for periods from 30 days to 90days on approximately $300 million in principal.

 

65

----

 

**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(A Maryland Corporation)

 

**Notes to Consolidated Financial Statements**December 31, 2004 and 2003

(continued)

 

(14) SupplementalFinancial Information (unaudited)

 

The following representsthe results of operations, for the each quarterly period, during 2004 and 2003.

 
| ** **                                                               | ** ** | **2004**    | ** ** |
|--------------------------------------------------------------------------|------------|-------------|------------|
| ** **                                                               | ** ** | **Dec. 31** | ** ** | **Sept. 30** | ** ** | **June 30** | ** ** | **March 31** | ** ** |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Total income                                                             |       | $           | 62,433,343 |   | 42,199,376 |   | 19,935,978 |   | 9,516,950 |   |
| Net income (loss)                                                        |       | 7,286,936   |       | 2,266,656 |   | 2,111,373 |   | 35,768 |   |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Net income (loss), per common share, basic  and  diluted:                |       | .04         |       | .02 |   | .04 |   | — |   |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Weighted average number of common shares  outstanding, basic and diluted |       | 182,739,194 |       | 112,887,491 |   | 59,688,094 |   | 32,314,792 |   |
|                                                                          |            |             |            |  |  |  |  |  |  |  |

 
| ** **                                                               | ** ** | **2003**    | ** ** |
|--------------------------------------------------------------------------|------------|-------------|------------|
| ** **                                                               | ** ** | **Dec. 31** | ** ** | **Sept. 30** | ** ** | **June 30** | ** ** | **March 31** | ** ** |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Total income                                                             |       | $           | 782,281    |   | — |   | — |   | — |   |
| Net income (loss)                                                        |       | (132,535    | )          | (32,794 | ) | (450 | ) | (7,500 | ) |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Net income (loss), per common share, basic  and  diluted:                |       | (.02        | )          | (1.64 | ) | (.02 | ) | (.38 | ) |
|                                                                     |       |        |       |   |   |   |   |   |   |
| Weighted average number of common shares  outstanding, basic and diluted |       | 8,319,975   |       | 20,000 |   | 20,000 |   | 20,000 |   |
|                                                                          |            |             |            |  |  |  |  |  |  |  |

 

66

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**Inland Western Retail Real Estate Trust, Inc.(A Maryland Corporation)**

 

**ScheduleIII**

**Real Estate and Accumulated Depreciation**

 

**December 31, 2004**

** **
| ** **                                             | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **        | ** ** |
|--------------------------------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|------------|------------|---------------------------------|------------|-------------------|------------|
| **Multi-Tenant**                                       | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**   | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** | ** ** |
| 23rd  Street Plaza  Panama City, FL                    |       | —           |       | 1,300,000            |       | 5,318,806                       |       |                                      |       | 1,300,000  |       | 5,318,806                       |       | 6,618,806         |       | — |   | 2003 |   | 12/04 |   |
| Alison’s  Corner  San Antonio, TX.                |       | 3,850,000        |       | 1,045,000            |       | 5,700,345                       |       |                                      |       | 1,045,000  |       | 5,700,345                       |       | 6,745,345         |       | 139,668 |   | 2003 |   | 04/04 |   |
| Arvada  Connection and Arvada  Marketplace  Arvada, CO |       | 28,510,000       |       | 8,125,000            |       | 39,383,116                      |       | 17,682                                    |       | 8,125,000  |       | 39,400,798                      |       | 47,525,798        |       | 974,072 |   | 1987-1990 |   | 04/04 |   |
| Azalea  Square  Summerville, SC                        |       | 16,535,000       |       | 6,375,000            |       | 21,303,772                      |       | (14,793                                   | )          | 6,375,000  |       | 21,288,979                      |       | 27,663,979        |       | 130,069 |   | 2004 |   | 10/04 |   |
| Bed,  Bath & Beyond Plaza  Miami, FL               |       | 11,192,500       |       | —               |       | 18,367,361                      |       |                                      |       | —     |       | 18,367,361                      |       | 18,367,361        |       | 168,316 |   | 2004 |   | 10/04 |   |
| Best  on the Boulevard  Las Vegas, NV                  |       | 19,525,000       |       | 7,460,000            |       | 25,583,195                      |       | (84,486                                   | )          | 7,460,000  |       | 25,498,709                      |       | 32,958,709        |       | 702,197 |   | 1996-1999 |   | 04/04 |   |
| Bluebonnet  Parc  Baton Rouge, LA                      |       | 12,100,000       |       | 4,450,000            |       | 16,407,032                      |       | (101,955                                  | )          | 4,450,000  |       | 16,305,078                      |       | 20,755,078        |       | 419,934 |   | 2002 |   | 04/04 |   |
| Boulevard  at the Capital Centre  Largo, MD            |       | 71,500,000       |       | —               |       | 114,702,961                     |       | (418,558                                  | )          | —     |       | 114,284,403                     |       | 114,284,403       |       | 1,383,741 |   | 2004 |   | 09/04 |   |
| The  Columns  Jackson, TN                              |       | 14,865,400       |       | 5,830,000            |       | 19,438,839                      |       | (22,200                                   | )          | 5,830,000  |       | 19,416,639                      |       | 25,246,639        |       | 224,291 |   | 2004 |   | 8/04  & 10/04 |   |
| Coram  Plaza  Coram, NY                                |       | 20,760,000       |       | 10,200,000           |       | 26,177,515                      |       |                                      |       | 10,200,000 |       | 26,177,515                      |       | 36,377,515        |       | — |   | 2004 |   | 12/04 |   |
| CorWest  Plaza  New Britain, CT                        |       | 18,150,000       |       | 6,900,000            |       | 23,850,938                      |       | (13,950                                   | )          | 6,900,000  |       | 23,836,988                      |       | 30,736,988        |       | 875,539 |   | 1999  - 2003 |   | 01/04 |   |
| Cranberry  Square  Cranberry Township, PA              |       | 10,900,000       |       | 3,000,000            |       | 18,736,381                      |       |                                      |       | 3,000,000  |       | 18,736,381                      |       | 21,736,381        |       | 343,369 |   | 1996-1997 |   | 07/04 |   |
| Darien  Towne Center  Darien, IL                       |       | 16,500,000       |       | 7,000,000            |       | 22,468,408                      |       | 213,305                                   |       | 7,000,000  |       | 22,681,714                      |       | 29,681,714        |       | 847,581 |   | 1994 |   | 12/03 |   |
| Davis  Towne Crossing  North Richland Hills, TX.       |       | 5,365,200        |       | 1,850,000            |       | 5,681,061                       |       |                                      |       | 1,850,000  |       | 5,681,061                       |       | 7,531,061         |       | 103,773 |   | 2003-2004 |   | 06/04 |   |
| Denton  Crossing  Denton, TX                           |       | 35,200,000       |       | 6,000,000            |       | 43,433,763                      |       |                                      |       | 6,000,000  |       | 43,433,763                      |       | 49,433,763        |       | 258,849 |   | 2003-2004 |   | 10/04 |   |
| Dorman  Center - Phase 1 & II  Spartanburg, SC     |       | 27,610,000       |       | 17,025,000           |       | 29,478,484                      |       | (103,087                                  | )          | 17,025,000 |       | 29,375,397                      |       | 46,400,397        |       | 909,740 |   | 2003-2004 |   | 3/04  & 7/04 |   |
| Eastwood  Towne Center  Lansing, MI                    |       | 46,750,000       |       | 12,000,000           |       | 65,066,567                      |       |                                      |       | 12,000,000 |       | 65,066,567                      |       | 77,066,567        |       | 1,590,128 |   | 2002 |   | 05/04 |   |
| Edgemont  Town Center  Homewood, AL                    |       | —           |       | 3,500,000            |       | 10,956,495                      |       |                                      |       | 3,500,000  |       | 10,956,495                      |       | 14,456,495        |       | 33,474 |   | 2003 |   | 11/04 |   |
| Evans  Towne Centre  Evans, GA                         |       | —           |       | 1,700,000            |       | 6,424,805                       |       |                                      |       | 1,700,000  |       | 6,424,805                       |       | 8,124,805         |       | — |   | 1995 |   | 12/04 |   |

 

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| ** **                                    | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **        |       |
|-----------------------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|------------|------------|---------------------------------|------------|-------------------|------------|
| **Multi-Tenant**                              | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**   | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** |   |
| Five  Forks  Simpsonville, SC                 |       | —           |       | 2,100,000            |       | 5,374,421                       |       |                                      |       | 2,100,000  |       | 5,374,421                       |       | 7,474,421         |       | 16,400 |   | 1999 |   | 12/04 |   |
| Forks  Town Center  Easton, PA                |       | 10,395,000       |       | 2,430,000            |       | 14,835,863                      |       |                                      |       | 2,430,000  |       | 14,835,863                      |       | 17,265,863        |       | 226,641 |   | 2002 |   | 07/04 |   |
| Fox  Creek Village  Longmont, CO              |       | 11,485,000       |       | 3,755,000            |       | 15,563,434                      |       | (33,181                                   | )          | 3,755,000  |       | 15,530,253                      |       | 19,285,253        |       | 47,426 |   | 2003-2004 |   | 11/04 |   |
| Fullerton  Metrocenter  Fullerton, CA         |       | 28,050,000       |       | —               |       | 47,403,451                      |       | (199,396                                  | )          | —     |       | 47,204,055                      |       | 47,204,055        |       | 864,861 |   | 1998 |   | 06/04 |   |
| Gateway  Pavilions  Avondale, AZ              |       | 35,842,000       |       | 9,880,000            |       | 55,194,702                      |       |                                      |       | 9,880,000  |       | 55,194,702                      |       | 65,074,702        |       | 168,492 |   | 2003-2004 |   | 12/04 |   |
| Gateway  Plaza  Southlake, TX                 |       | 18,163,000       |       | —               |       | 26,370,511                      |       |                                      |       | —     |       | 26,370,511                      |       | 26,370,511        |       | 403,357 |   | 2000 |   | 07/04 |   |
| Gateway  Station  College Station, TX         |       | —           |       | 1,050,000            |       | 3,910,500                       |       |                                      |       | 1,050,000  |       | 3,910,500                       |       | 4,960,500         |       | 11,932 |   | 2003-2004 |   | 12/04 |   |
| Gateway  Village  Annapolis, MD               |       | 31,458,000       |       | 8,550,000            |       | 39,298,239                      |       |                                      |       | 8,550,000  |       | 39,298,239                      |       | 47,848,239        |       | 597,527 |   | 1996 |   | 07/04 |   |
| Governor’s  Marketplace  Tallahassee, FL |       | 20,625,000       |       | —               |       | 30,377,452                      |       | (56,281                                   | )          | —     |       | 30,321,171                      |       | 30,321,171        |       | 370,888 |   | 2001 |   | 08/04 |   |
| Green’s  Corner  Cumming, GA             |       | —           |       | 3,200,000            |       | 8,663,397                       |       |                                      |       | 3,200,000  |       | 8,663,397                       |       | 11,863,397        |       | — |   | 1997 |   | 12/04 |   |
| Gurnee  Town Center  Gurnee, IL               |       | 24,360,000       |       | 7,000,000            |       | 35,146,950                      |       | (22,965                                   | )          | 7,000,000  |       | 35,123,985                      |       | 42,123,985        |       | 214,573 |   | 2000 |   | 10/04 |   |
| Harvest  Towne Center  Knoxville, TN          |       | 5,005,000        |       | 3,155,000            |       | 5,085,037                       |       |                                      |       | 3,155,000  |       | 5,085,037                       |       | 8,240,037         |       | 62,188 |   | 1996-1999 |   | 09/04 |   |
| Henry  Town Center  McDonough, GA             |       | 35,814,616       |       | 10,650,000           |       | 46,813,649                      |       |                                      |       | 10,650,000 |       | 46,813,649                      |       | 57,463,649        |       | — |   | 2002 |   | 12/04 |   |
| Heritage  Towne Crossing  Euless, TX          |       | 8,950,000        |       | 3,065,000            |       | 10,729,077                      |       |                                      |       | 3,065,000  |       | 10,729,077                      |       | 13,794,077        |       | 327,196 |   | 2002 |   | 03/04 |   |
| Hickory  Ridge  Hickory, NC                   |       | 23,650,000       |       | 6,860,000            |       | 30,517,166                      |       |                                      |       | 6,860,000  |       | 30,517,166                      |       | 37,377,166        |       | 1,088,098 |   | 1999 |   | 01/04 |   |
| Huebner  Oaks Center  San Antonio, TX         |       | 48,000,000       |       | 14,080,000           |       | 59,825,626                      |       | 88,560                                    |       | 14,080,000 |       | 59,914,186                      |       | 73,994,186        |       | 1,283,898 |   | 1997-1998 |   | 06/04 |   |
| Irmo  Station  Irmo, SC                       |       | —           |       | 2,600,000            |       | 9,247,308                       |       |                                      |       | 2,600,000  |       | 9,247,308                       |       | 11,847,308        |       | — |   | 1980  &1985 |   | 12/04 |   |
| John’s  Creek Village  Duluth, GA        |       | 23,300,000       |       | 5,750,000            |       | 21,269,874                      |       |                                      |       | 5,750,000  |       | 21,269,874                      |       | 27,019,874        |       | 392,876 |   | 2003-2004 |   | 06/04 |   |
| La  Plaza Del Norte  San Antonio, TX          |       | 32,528,000       |       | 16,005,000           |       | 37,744,002                      |       | (288,670                                  | )          | 16,005,000 |       | 37,455,332                      |       | 53,460,332        |       | 1,276,221 |   | 1996/1999 |   | 01/04 |   |
| Lake  Mary Pointe  Orlando, FL                |       | 3,657,500        |       | 2,075,000            |       | 4,009,147                       |       |                                      |       | 2,075,000  |       | 4,009,147                       |       | 6,084,147         |       | 24,484 |   | 1999 |   | 10/04 |   |
| Lakewood  Towne Center  Lakewood, WA          |       | 51,260,000       |       | 11,200,000           |       | 70,796,423                      |       | (360,223                                  | )          | 11,200,000 |       | 70,436,200                      |       | 81,636,200        |       | 1,294,701 |   | 1988/2002-2003 |   | 06/04 |   |
| Larkspur  Landing  Larkspur, CA               |       | 33,630,000       |       | 20,800,000           |       | 32,820,864                      |       | 480,656                                   |       | 20,800,000 |       | 33,301,520                      |       | 54,101,520        |       | 1,211,593 |   | 1978/2001 |   | 01/04 |   |
| Lincoln  Park  Dallas, TX                     |       | 26,153,000       |       | 9,360,000            |       | 34,717,980                      |       |                                      |       | 9,360,000  |       | 34,717,980                      |       | 44,077,980        |       | 424,282 |   | 1998 |   | 09/04 |   |
| Low  Country Village  Bluffton, SC            |       | 5,370,000        |       | 1,550,000            |       | 8,778,906                       |       | (4,871                                    | )          | 1,550,000  |       | 8,774,035                       |       | 10,324,035        |       | 160,970 |   | 2004 |   | 06/04 |   |

 

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| ** **                                  | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **        |       |
|---------------------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|------------|------------|---------------------------------|------------|-------------------|------------|
| **Multi-Tenant**                            | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**   | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** |   |
| MacArthur  Crossing  Los Colinas, TX        |       | 12,700,000       |       | 4,710,000            |       | 16,264,562                      |       |                                      |       | 4,710,000  |       | 16,264,562                      |       | 20,974,562        |       | 546,335 |   | 1995-1996 |   | 02/04 |   |
| Manchester  Meadows  Town and Country, MO   |       | 31,064,550       |       | 14,700,000           |       | 39,737,846                      |       | (84,875                                   | )          | 14,700,000 |       | 39,652,971                      |       | 54,352,971        |       | 608,067 |   | 1994-1995 |   | 08/04 |   |
| Mansfield  Towne Crossing  Mansfield, TX    |       | 10,982,300       |       | 3,300,000            |       | 12,194,571                      |       |                                      |       | 3,300,000  |       | 12,194,571                      |       | 15,494,571        |       | 74,502 |   | 2003-2004 |   | 11/04 |   |
| McAllen  Shopping Center  McAllen, TX       |       | —           |       | 850,000              |       | 2,958,498                       |       |                                      |       | 850,000    |       | 2,958,498                       |       | 3,808,498         |       | — |   | 2004 |   | 12/04 |   |
| Mesa  Fiesta  Mesa, AZ                      |       | —           |       | 7,372,000            |       | 26,730,387                      |       |                                      |       | 7,372,000  |       | 26,730,387                      |       | 34,102,387        |       | — |   | 2004 |   | 12/04 |   |
| Mitchell  Ranch Plaza  New Port Richey, FL  |       | 18,700,000       |       | 5,550,000            |       | 26,212,826                      |       | (65,767                                   | )          | 5,550,000  |       | 26,147,060                      |       | 31,697,060        |       | 319,699 |   | 2003 |   | 08/04 |   |
| Newnan  Crossing I  Newnan, GA              |       | 21,543,091       |       | 4,542,244            |       | 12,188,579                      |       | (832,534                                  | )          | 4,542,244  |       | 11,356,045                      |       | 15,898,289        |       | 414,663 |   | 1999 |   | 12/03 |   |
| Newnan  Crossing II  Newnan, GA             |       | 2,223,100        |       | 10,557,591           |       | 21,798,114                      |       |                                      |       | 10,557,591 |       | 21,798,114                      |       | 32,355,705        |       | 449,285 |   | 2004 |   | 02/04 |   |
| Newton  Crossroads  Covington, GA           |       | —           |       | 3,350,000            |       | 6,926,760                       |       |                                      |       | 3,350,000  |       | 6,926,760                       |       | 10,276,760        |       | — |   | 1997 |   | 12/04 |   |
| North  Ranch Pavilions  Thousand Oaks, CA   |       | 10,157,400       |       | 9,705,000            |       | 8,295,988                       |       | 43,735                                    |       | 9,705,000  |       | 8,339,723                       |       | 18,044,723        |       | 306,554 |   | 1992 |   | 01/04 |   |
| North  Rivers Town Center  Charleston, SC   |       | 11,050,000       |       | 3,350,000            |       | 15,720,415                      |       |                                      |       | 3,350,000  |       | 15,720,415                      |       | 19,070,415        |       | 384,070 |   | 2003-2004 |   | 04/04 |   |
| Northgate  North  Seattle, WA               |       | 26,650,000       |       | 7,540,000            |       | 49,077,929                      |       |                                      |       | 7,540,000  |       | 49,077,929                      |       | 56,617,929        |       | 899,882 |   | 1999-2003 |   | 06/04 |   |
| Northpointe  Plaza  Spokane, WA             |       | 30,850,000       |       | 13,800,000           |       | 37,706,966                      |       | (48,029                                   | )          | 13,800,000 |       | 37,658,937                      |       | 51,458,937        |       | 807,530 |   | 1991-1993 |   | 05/04 |   |
| Northwoods  Center  Wesley Chapel, FL       |       | 11,192,500       |       | 3,415,000            |       | 9,474,629                       |       |                                      |       | 3,415,000  |       | 9,474,629                       |       | 12,889,629        |       | 28,945 |   | 2002-2004 |   | 12/04 |   |
| Oswego  Commons  Oswego, IL                 |       | 19,262,100       |       | 6,250,000            |       | 26,629,204                      |       |                                      |       | 6,250,000  |       | 26,629,204                      |       | 32,879,204        |       | 81,370 |   | 2002-2004 |   | 11/04 |   |
| Paradise  Valley Marketplace  Phoenix, AZ   |       | 15,680,500       |       | 6,590,000            |       | 20,425,319                      |       | (147,469                                  | )          | 6,590,000  |       | 20,277,850                      |       | 26,867,850        |       | 521,508 |   | 2002 |   | 04/04 |   |
| Pavilion  at King’s Grant  Concord, NC |       | 5,342,000        |       | 4,300,000            |       | 2,741,212                       |       | 15,748                                    |       | 4,300,000  |       | 2,756,960                       |       | 7,056,960         |       | 107,010 |   | 2002-2003 |   | 12/03 |   |
| Peoria  Crossings  Peoria, AZ               |       | 20,497,400       |       | 6,240,000            |       | 29,190,441                      |       | (68,395                                   | )          | 6,240,000  |       | 29,122,046                      |       | 35,362,046        |       | 964,437 |   | 2002-2003 |   | 03/04 |   |
| Phenix  Crossing  Phenix City, AL           |       | —           |       | 2,600,000            |       | 6,776,273                       |       |                                      |       | 2,600,000  |       | 6,776,273                       |       | 9,376,273         |       | — |   | 2004 |   | 12/04 |   |
| Pine  Ridge Plaza  Lawrence, KS             |       | 14,700,000       |       | 5,000,000            |       | 19,802,170                      |       |                                      |       | 5,000,000  |       | 19,802,170                      |       | 24,802,170        |       | 421,316 |   | 1998-2004 |   | 06/04 |   |
| Placentia  Town Center  Placentia, CA       |       | 13,695,000       |       | 11,200,000           |       | 11,750,963                      |       |                                      |       | 11,200,000 |       | 11,750,963                      |       | 22,950,963        |       | 35,898 |   | 1973/2000 |   | 12/04 |   |
| Plaza  at Marysville  Marysville, WA        |       | 11,800,000       |       | 6,600,000            |       | 13,727,658                      |       |                                      |       | 6,600,000  |       | 13,727,658                      |       | 20,327,658        |       | 207,702 |   | 1995 |   | 07/04 |   |
| Plaza  at Riverlakes  Bakersfield, CA       |       | —           |       | 5,100,000            |       | 10,824,341                      |       |                                      |       | 5,100,000  |       | 10,824,341                      |       | 15,924,341        |       | 66,115 |   | 2001 |   | 10/04 |   |

 

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| ** **                                                  | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** **  | ** ** | ** **                      | ** ** | ** **        |       |
|-------------------------------------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|-------------|------------|---------------------------------|------------|-------------------|------------|
| **Multi-Tenant**                                            | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**    | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** |   |
| Plaza  Santa Fe II  Santa Fe, NM                            |       | 17,393,732       |       | —               |       | 28,587,813                      |       | (59,393                                   | )          | —      |       | 28,528,421                      |       | 28,528,421        |       | 610,545 |   | 2000-2002 |   | 06/04 |   |
| Pleasant  Run Towne Center  Cedar Hill, TX                  |       | 22,800,000       |       | 4,200,000            |       | 29,084,836                      |       |                                      |       | 4,200,000   |       | 29,084,836                      |       | 33,284,836        |       | — |   | 2004 |   | 12/04 |   |
| Promenade  at Red Cliff  St. George, UT                     |       | 10,590,000       |       | 5,340,000            |       | 12,664,907                      |       |                                      |       | 5,340,000   |       | 12,664,907                      |       | 18,004,907        |       | 425,495 |   | 1997 |   | 02/04 |   |
| Reisterstown  Road Plaza  Baltimore, MD                     |       | 49,650,000       |       | 15,800,000           |       | 70,371,762                      |       | (260,184                                  | )          | 15,800,000  |       | 70,111,578                      |       | 85,911,578        |       | 1,034,081 |   | 1986/2004 |   | 08/04 |   |
| Saucon  Valley Square  Bethlehem, PA                        |       | 8,850,900        |       | 3,200,000            |       | 12,641,881                      |       |                                      |       | 3,200,000   |       | 12,641,881                      |       | 15,841,881        |       | 154,414 |   | 1999 |   | 09/04 |   |
| Shoppes  at Lake Andrew  Viera, FL                          |       | 15,656,511       |       | 4,000,000            |       | 22,996,002                      |       |                                      |       | 4,000,000   |       | 22,996,002                      |       | 26,996,002        |       | — |   | 2003 |   | 12/04 |   |
| The  Shoppes at Park West (Publix Center)  Mt. Pleasant, SC |       | 6,655,000        |       | 2,240,000            |       | 9,356,781                       |       | 210                                       |       | 2,240,000   |       | 9,356,991                       |       | 11,596,991        |       | 57,018 |   | 2004 |   | 11/04 |   |
| Shoppes  at Quarterfield(Metro  Square Center)  Severn, MD  |       | 6,067,183        |       | 2,190,000            |       | 8,839,520                       |       |                                      |       | 2,190,000   |       | 8,839,520                       |       | 11,029,520        |       | 296,973 |   | 1999 |   | 01/04 |   |
| Shoppes  of Dallas  Dallas, GA                              |       | 7,178,700        |       | 1,350,000            |       | 11,045,345                      |       | 84,202                                    |       | 1,350,000   |       | 11,129,547                      |       | 12,479,547        |       | 204,210 |   | 2004 |   | 07/04 |   |
| Shoppes  of Prominence Point  Canton, GA                    |       | 9,954,300        |       | 2,850,000            |       | 11,148,965                      |       | (7,331                                    | )          | 2,850,000   |       | 11,141,635                      |       | 13,991,635        |       | 204,307 |   | 2004 |   | 06/04 |   |
| The  Shops at Boardwalk  Kansas City, MO                    |       | 20,150,000       |       | 5,000,000            |       | 30,540,431                      |       | (203,838                                  | )          | 5,000,000   |       | 30,336,593                      |       | 35,336,593        |       | 558,200 |   | 2003-2004 |   | 07/04 |   |
| Shops  at Forest Commons  Round Rock, TX                    |       | 5,229,789        |       | 1,050,000            |       | 6,132,547                       |       |                                      |       | 1,050,000   |       | 6,132,547                       |       | 7,182,547         |       | 18,664 |   | 2002 |   | 12/04 |   |
| Shops  at Park Place  Plano, TX                             |       | 13,127,000       |       | 9,096,000            |       | 13,174,867                      |       | 256,937                                   |       | 9,096,000   |       | 13,431,805                      |       | 22,527,805        |       | 593,842 |   | 2001 |   | 10/03 |   |
| Southlake  Town Square  Southlake, TX                       |       | —           |       | 16,350,000           |       | 110,778,125                     |       |                                      |       | 16,350,000  |       | 110,778,125                     |       | 127,128,125       |       | — |   | 1998-2004 |   | 12/04 |   |
| Stilesboro  Oaks  Acworth, GA                               |       | —           |       | 2,200,000            |       | 9,426,287                       |       |                                      |       | 2,200,000   |       | 9,426,287                       |       | 11,626,287        |       | — |   | 1997 |   | 12/04 |   |
| Stony  Creek Marketplace  Noblesville, IN                   |       | 14,162,000       |       | 6,735,000            |       | 17,564,434                      |       | 20,945                                    |       | 6,735,000   |       | 17,585,379                      |       | 24,320,379        |       | 733,916 |   | 2003 |   | 12/03 |   |
| Tollgate  Marketplace  Bel Air, MD                          |       | 39,765,000       |       | 8,700,000            |       | 61,247,363                      |       |                                      |       | 8,700,000   |       | 61,247,363                      |       | 69,947,363        |       | 932,050 |   | 1979/1994 |   | 07/04 |   |
| Towson  Circle  Towson, MD                                  |       | 19,197,500       |       | 9,050,000            |       | 17,840,034                      |       | (36,654                                   | )          | 9,050,000   |       | 17,803,379                      |       | 26,853,379        |       | 272,109 |   | 1998 |   | 07/04 |   |
| University  Town Center  Tuscaloosa, AL                     |       | —           |       | —               |       | 9,556,971                       |       |                                      |       | —      |       | 9,556,971                       |       | 9,556,971         |       | 29,195 |   | 2002 |   | 11/04 |   |
| Village  Shoppes at Simonton  Lawrenceville, GA             |       | 7,561,700        |       | 2,200,000            |       | 10,873,898                      |       | (86,687                                   | )          | 2,200,000   |       | 10,787,211                      |       | 12,987,211        |       | 165,348 |   | 2004 |   | 08/04 |   |
| Watauga  Pavilion  Watauga, TX                              |       | 17,100,000       |       | 5,185,000            |       | 27,503,862                      |       |                                      |       | 5,185,000   |       | 27,503,862                      |       | 32,688,862        |       | 588,588 |   | 2003-2004 |   | 05/04 |   |
| Winchester  Commons  Memphis, TN                            |       | 7,235,000        |       | 4,400,000            |       | 7,471,467                       |       | (2,918                                    | )          | 4,400,000   |       | 7,468,549                       |       | 11,868,549        |       | 45,641 |   | 1999 |   | 11/04 |   |
|                                                        |       |             |       |                 |       |                            |       |                                      |       |        |       |                            |       |              |       |   |   |   |   |   |   |
| **Subtotal Multi-Tenant**                                   |       | 1,423,423,471    |       | 506,632,835          |       | 2,138,977,574                   |       | (2,406,708                                | )          | 506,632,835 |       | 2,136,570,866                   |       | 2,643,203,701     |       | 33,742,830 |   |   |   |   |   |

 

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| ** **                                       | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **        | ** ** |
|--------------------------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|------------|------------|---------------------------------|------------|-------------------|------------|
| **Single-User**                                  | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**   | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** | ** ** |
| Academy  Sports  Houma, LA                       |       | 2,920,000        |       | 1,230,000            |       | 3,751,721                       |       |                                      |       | 1,230,000  |       | 3,751,721                       |       | 4,981,721         |       | 57,225 |   | 2004 |   | 07/04 |   |
| Academy  Sports  Midland, TX                     |       | 2,337,500        |       | 1,340,000            |       | 2,942,634                       |       |                                      |       | 1,340,000  |       | 2,942,634                       |       | 4,282,634         |       | 17,969 |   | 2004 |   | 10/04 |   |
| Academy  Sports  Port Arthur, TX                 |       | 2,775,000        |       | 1,050,000            |       | 3,954,157                       |       |                                      |       | 1,050,000  |       | 3,954,157                       |       | 5,004,157         |       | 24,164 |   | 2004 |   | 10/04 |   |
| American  Express  De Pere, WI                   |       | 11,623,000       |       | 1,400,000            |       | 15,370,089                      |       |                                      |       | 1,400,000  |       | 15,370,089                      |       | 16,770,089        |       | — |   | 2000 |   | 12/04 |   |
| American  Express  Fort Lauderdale, FL           |       | 37,170,000       |       | 2,900,000            |       | 55,966,421                      |       |                                      |       | 2,900,000  |       | 55,966,421                      |       | 58,866,421        |       | — |   | 1975 |   | 12/04 |   |
| American  Express  Greensboro, NC                |       | 33,040,000       |       | 2,800,000            |       | 49,470,089                      |       |                                      |       | 2,800,000  |       | 49,470,089                      |       | 52,270,089        |       | — |   | 1986 |   | 12/04 |   |
| American  Express  Minneapolis, MN               |       | 56,050,000       |       | 14,200,000           |       | 74,607,812                      |       |                                      |       | 14,200,000 |       | 74,607,812                      |       | 88,807,812        |       | — |   | 1989 |   | 12/04 |   |
| American  Express - 19th Ave.  Phoenix, AZ       |       | 8,260,000        |       | 2,900,000            |       | 10,170,089                      |       |                                      |       | 2,900,000  |       | 10,170,089                      |       | 13,070,089        |       | — |   | 1983 |   | 12/04 |   |
| American  Express - 31st Ave.  Phoenix, AZ       |       | 31,860,000       |       | 5,100,000            |       | 45,270,089                      |       |                                      |       | 5,100,000  |       | 45,270,089                      |       | 50,370,089        |       | — |   | 1985 |   | 12/04 |   |
| CVS  Pharmacy (Eckerd Drug Store)  Edmund, OK    |       | 1,850,000        |       | 975,000              |       | 2,400,249                       |       | 1,336                                     |       | 975,000    |       | 2,401,585                       |       | 3,376,585         |       | 89,028 |   | 2003 |   | 12/03 |   |
| CVS  Pharmacy (Eckerd Drug Store)  Norman, OK    |       | 2,900,000        |       | 932,000              |       | 4,369,730                       |       |                                      |       | 932,000    |       | 4,369,730                       |       | 5,301,730         |       | 163,287 |   | 2003 |   | 12/03 |   |
| CVS  Pharmacy  Sylacauga, AL                     |       | 1,685,000        |       | 600,000              |       | 2,469,216                       |       |                                      |       | 600,000    |       | 2,469,216                       |       | 3,069,216         |       | 15,090 |   | 2004 |   | 10/04 |   |
| Eckerd  Drug Store  Columbia, SC                 |       | 1,750,000        |       | 900,000              |       | 2,376,504                       |       |                                      |       | 900,000    |       | 2,376,504                       |       | 3,276,504         |       | 52,171 |   | 2003-2004 |   | 06/04 |   |
| Eckerd  Drug Store  Crossville, TN               |       | 1,425,000        |       | 600,000              |       | 2,033,000                       |       |                                      |       | 600,000    |       | 2,033,000                       |       | 2,633,000         |       | 43,468 |   | 2003-2004 |   | 06/04 |   |
| Eckerd  Drug Store  Greer, SC                    |       | 1,650,000        |       | 1,050,000            |       | 2,047,200                       |       |                                      |       | 1,050,000  |       | 2,047,200                       |       | 3,097,200         |       | 43,688 |   | 2003-2004 |   | 06/04 |   |
| Eckerd  Drug Store  Kill Devil Hills, NC         |       | 1,975,000        |       | 700,000              |       | 2,960,139                       |       |                                      |       | 700,000    |       | 2,960,139                       |       | 3,660,139         |       | 63,299 |   | 2003-2004 |   | 06/04 |   |
| GMAC  Winston-Salem, NC                          |       | 33,000,000       |       | 8,250,000            |       | 50,287,192                      |       |                                      |       | 8,250,000  |       | 50,287,192                      |       | 58,537,192        |       | 460,933 |   | 1980/1990 |   | 09/04 |   |
| Harris  Teeter  Wilmington, NC                   |       | 3,960,000        |       | 1,810,000            |       | 5,152,401                       |       |                                      |       | 1,810,000  |       | 5,152,401                       |       | 6,962,401         |       | 62,960 |   | 1977/1995 |   | 09/04 |   |
| Kohl’s/Wilshire  Plaza III  Kansas City, MO |       | 5,417,500        |       | 2,600,000            |       | 6,848,649                       |       |                                      |       | 2,600,000  |       | 6,848,649                       |       | 9,448,649         |       | 20,926 |   | 2004 |   | 07/04 |   |
| Shaw’s  Supermarket  New Britain, CT        |       | 6,450,000        |       | 2,700,000            |       | 11,532,191                      |       | (139,774                                  | )          | 2,700,000  |       | 11,392,417                      |       | 14,092,417        |       | 431,997 |   | 1995 |   | 12/03 |   |
| Wal-Mart  Supercenter  Blytheville, AR           |       | 7,100,000        |       | 1,756,000            |       | 10,913,942                      |       |                                      |       | 1,756,000  |       | 10,913,942                      |       | 12,669,942        |       | 166,680 |   | 1999 |   | 07/04 |   |
| Wal-Mart  Supercenter  Jonesboro, AR             |       | 6,088,500        |       | 2,397,000            |       | 8,089,320                       |       |                                      |       | 2,397,000  |       | 8,089,320                       |       | 10,486,320        |       | 123,525 |   | 1997 |   | 08/04 |   |
| Wrangler  El Paso, TX                            |       | 11,300,000       |       | 1,218,669            |       | 16,249,921                      |       |                                      |       | 1,218,669  |       | 16,249,921                      |       | 17,468,590        |       | 248,226 |   | 1993 |   | 07/04 |   |

 

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| ** **                      | ** ** | ** **       | ** ** | **Initial Cost (A)** | ** ** | ** **                      | ** ** | **Gross amount carried at end of period** | ** ** | ** **  | ** ** | ** **                      | ** ** | ** **        | ** ** |
|---------------------------------|------------|------------------|------------|----------------------|------------|---------------------------------|------------|-------------------------------------------|------------|-------------|------------|---------------------------------|------------|-------------------|------------|
| **Single-User**                 | ** ** | **Encumbrances** | ** ** | **Land**             | ** ** | **Buildings and  Improvements** | ** ** | **Adjustments  to Basis (C)**             | ** ** | **Land**    | ** ** | **Buildings and  Improvements** | ** ** | **Total (B) (D)** | ** ** | **Accumulated  Depreciation (E)** | ** ** | **Date  Constructed** | ** ** | **Date  Acquired** | ** ** |
| Zurich  Towers  Schaumburg, IL  |       | 81,420,000       |       | 7,900,000            |       | 121,312,096                     |       |                                      |       | 7,900,000   |       | 121,312,096                     |       | 129,212,096       |       | 369,841 |   | 1988-1990 |   | 11/04 |   |
| **Subtotal Single-User**        |       | 354,006,500      |       | 67,308,669           |       | 510,544,848                     |       | (138,437                                  | )          | 67,308,669  |       | 510,406,411                     |       | 577,715,080       |       | 2,454,475 |   |   |   |   |   |
|                            |       |             |       |                 |       |                            |       |                                      |       |        |       |                            |       |              |       |   |   |   |   |   |   |
| **Consolidated Joint Ventures** |       |             |       |                 |       |                            |       |                                      |       |        |       |                            |       |              |       |   |   |   |   |   |   |
|                            |       |             |       |                 |       |                            |       |                                      |       |        |       |                            |       |              |       |   |   |   |   |   |   |
| Cardiff  Hall East  Towson, MD  |       | 5,108,656        |       | 1,090,000            |       | 7,607,874                       |       | —                                    |       | 1,090,000   |       | 7,607,874                       |       | 8,697,873         |       | 92,725 |   | 1990 |   | 10/04 |   |
|                            |       |             |       |                 |       |                            |       |                                      |       |        |       |                            |       |              |       |   |   |   |   |   |   |
| **Total Investment Properties** |       | 1,782,538,627    |       | 575,031,504          |       | 2,657,130,296                   |       | (2,545,145                                | )          | 575,031,504 |       | 2,654,585,151                   |       | 3,229,616,655     |       | 36,290,031 |   |   |   |   |   |

 

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**INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.**(AMaryland Corporation)

 

**Schedule III (continued)Real Estate and Accumulated Depreciation**

 

December31, 2004 and 2003

 

Notes:

 

(A)                     The initialcost to the Company represents the original purchase price of the property,including amounts incurred subsequent to acquisition which were contemplated atthe time the property was acquired.

 

(B)                       Theaggregate cost of real estate owned at December 31, 2004 for Federal income taxpurposes was approximately $3,029,000,000 (unaudited).

 

(C)                       Reconciliationof real estate owned:

 
| ** **                                                           | ** ** | **2004**      | ** **    | **2003**    | ** **  |
|----------------------------------------------------------------------|------------|---------------|---------------|-------------|-------------|
|                                                                 |       |          |          |        |        |
| Balance at  beginning of period                                      |       | $             | 122,719,914   |        | —      |   |
| Purchases of  property                                               |       | 3,308,730,780 |          | 127,195,469 |        |
| Payments  received under master leases and principal escrow          |       | (3,024,547    | )             | —      |        |
| Acquired  in-place lease intangibles and customer relationship value |       | (241,285,534  | )             | (8,805,681  | )           |
| Acquired above  market lease intangibles                             |       | (42,302,599   | )             | (1,595,673  | )           |
| Acquired below  market lease intangibles                             |       | 84,778,641    |          | 5,925,799   |        |
|                                                                 |       |          |          |        |        |
| Balance at end  of period                                            |       | $             | 3,229,616,655 |        | 122,719,914 |   |

 

(D)                      Reconciliationof accumulated depreciation:

 
| Balance at  beginning of period |   | $          | 140,497    |    | —  |   |
|---------------------------------|--------|------------|------------|---------|---------|--------|
| Depreciation  expense           |   | 36,149,534 |       | 140,497 |    |
|                            |   |       |       |    |    |
| Balance at end  of period       |   | $          | 36,290,031 |    | 140,497 |   |
|                                 |        |            |            |         |         |        |  |

 

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

 

There were nodisagreements on accounting or financial disclosure during 2004.

 

**Item 9(a)**  **Controls and Procedures**

 

*Evaluation of Disclosure Controls and Procedures*

 

We have established disclosure controls and procedures to ensure thatmaterial information relating us, including our consolidated subsidiaries, ismade known to the officers who certify our financial reports and to the membersof senior management and the Board of Directors.

 

Based on management’s evaluation as of December 31, 2004, our chiefexecutive officer, principal financial officer and principal accounting officerhave concluded that our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) areeffective to ensure that the information required to be disclosed by us in ourreports that we file or submit under the Securities Exchange Act of 1934 isrecorded, processed, summarized and reported within the time periods specifiedin the Securities and Exchange Commission’s rules and forms.

 

*Management’s Report on Internal Control OverFinancial Reporting*

 

Our management is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in ExchangeAct Rules 13a-15(f). Under the supervision and with the participation of ourmanagement, including our chief executive officer, principal financial officerand principal accounting officer, we conducted an evaluation of theeffectiveness of our internal control over financial reporting based on theframework in *Internal Control* – *Integrated Framework* issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on our evaluation under theframework in *Internal Control – Integrated Framework*,our management concluded that our internal control over financial reporting waseffective as of December 31, 2004. Management’s assessment of the effectivenessof our internal control over financial reporting as of December 31, 2004 hasbeen audited by KPMG LLP, an independent registered public accounting firm, asstated in their report which is included herein.

 

*Changes in Internal Controls*

 

There were no changes to our internal controls over financial reportingduring the fourth quarter ended December 31, 2004 that has materially affected,or is reasonably likely to materially affect, our internal controls over financialreporting.

 

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PART III

 

**Item 10****.  Directors andExecutive Officers of the Registrant**

 

Our Directors andExecutive Officers

 

The following table sets forth information with respect to ourdirectors and executive officers:

 
| **Name**               | ** ** | **Age** | ** ** | **Position and office with us**                            |
|------------------------|------------|---------|------------|------------------------------------------------------------|
|                   |       |    |       |                                                       |
| Robert D. Parks        |       | 61      |       | Chairman, chief executive officer and affiliated  director |
| Roberta S. Matlin      |       | 60      |       | Vice president - administration                            |
| Scott W. Wilton        |       | 44      |       | Secretary                                                  |
| Steven P. Grimes       |       | 38      |       | Principal financial officer                                |
| Lori J. Foust          |       | 40      |       | Principal accounting officer                               |
| Brenda G. Gujral       |       | 62      |       | Affiliated director                                        |
| Frank A. Catalano, Jr. |       | 43      |       | Independent director                                       |
| Kenneth H. Beard       |       | 65      |       | Independent director                                       |
| Paul R. Gauvreau       |       | 65      |       | Independent director                                       |
| Gerald M. Gorski       |       | 62      |       | Independent director                                       |
| Barbara A. Murphy      |       | 67      |       | Independent director                                       |

 

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*As of January 1, 2005

 

The Inland Group, Inc.or Inland, together with its subsidiaries and its and their affiliates(collectively, the “Inland Affiliated Companies” or the “Inland Organization”),is a fully integrated real estate company providing property management,leasing, marketing, acquisition, disposition, development, redevelopment,syndication, renovation, construction, finance and other related services.Inland Real Estate Investment Corporation or IREIC, a subsidiary of Inland, andone of the Inland Affiliated Companies, is the sponsor and organizer of theCompany. Inland Western Retail Real Estate Advisory Services, Inc., or theAdvisor, is a wholly owned subsidiary of IREIC. Inland Securities Corporationor ISC, another of the Inland Affiliated Companies, is the Dealer Manager ofour offerings. ISC was formed in 1984 and is qualified to do business as asecurities broker-dealer throughout the United States. Since its formation, ISChas provided the marketing function for distribution of the investment productssponsored by IREIC. ISC does not render such services to anyone other than theInland Affiliated Companies.  Our seniormanagement includes executives of the Inland Affiliated Companies named above.

 

**Robert D. Parks** is a Director ofThe Inland Group, Inc. and one of its four original principals; Chairman ofInland Real Estate Investment Corporation, Director of Inland SecuritiesCorporation, and a Director of Inland Investment Advisors, Inc.  Mr. Parks is Chairman, Chief ExecutiveOfficer, and Affiliated Director of Inland American Real Estate Trust, Inc. andPresident, Chief Executive Officer and a Director of Inland Real EstateCorporation.  He is Chairman, ChiefExecutive Officer and Affiliated Director of Inland Retail Real Estate Trust,Inc., and Mr. Parks is Chairman, Chief Executive Officer, and AffiliatedDirector of Inland Western Retail Real Estate Trust, Inc. and AffiliatedDirector of Inland Real Estate Exchange Corporation.

 

Mr. Parks is responsible for the ongoingadministration of existing investment programs, corporate budgeting andadministration for Inland Real Estate Investment Corporation. He oversees andcoordinates the marketing of all investments and investor relations.

 

Prior to joining Inland, Mr. Parks taught in Chicago’spublic schools. He received his B.A. Degree from Northeastern IllinoisUniversity and his M.A. Degree from the University of Chicago.  He is a registered Direct ParticipationProgram Limited Principal with the National Association of SecuritiesDealers.  He is a member of the RealEstate Investment Association, the Financial Planning Association, theFoundation for Financial Planning as well as a member of the NationalAssociation of Real Estate Investment Trusts (NAREIT).

 

**Roberta S. Matlin**joinedInland Real Estate Investment Corporation (IREIC) in 1984 as Director ofInvestor Administration and currently serves as Senior Vice President of IREIC,directing the day-to-day internal operations. Ms. Matlin is a Director of IREIC and president of Inland InvestmentAdvisors, Inc., and Intervest Southern Real Estate

 

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Corporation, and a director and vice president ofInland Securities Corporation. She is the president of Inland American AdvisoryServices, Inc. Since 2003, she has been Vice President of Administration ofInland Western Retail Real Estate Trust, Inc., and since 2004, vice presidentof administration of Inland American Real Estate Trust, Inc.  She was Vice President of Administration ofInland Real Corporation from 1995 until 2000 and of Inland Retail Real EstateTrust, Inc from 1998 until 2004. From June 2001 until April 2004, she was atrustee and executive vice president of Inland Mutual Fund Trust. Prior tojoining Inland, she worked for the Chicago Region of the Social SecurityAdministration of the Untied States Department of Health and HumanServices.  Ms. Matlin is a graduate ofthe University of Illinois. She holds Series 7, 22, 24, 39, 63 and 65 licensesfrom the National Association of Securities Dealers.

 

**Scott W. Wilton** has been oursecretary since our formation.  Mr.Wilton joined The Inland Group in January 1995. He is assistant vice president of The Inland Real Estate Group, Inc. andassistant counsel with The Inland Real Estate Group law department. From 1998through 2004, Mr. Wilton was secretary of Inland Retail Real Estate Trust, Inc.and Inland Retail Real Estate Advisory Services, Inc.  In 2001, he became the Secretary of InlandReal Estate Exchange Corporation. In 2003, he became secretary of InlandWestern Retail Real Estate Trust, Inc. Mr. Wilton is involved in all aspects ofThe Inland Group’s business, including real estate acquisitions and financing,securities law and corporate governance matters, leasing and tenant matters,and litigation management.  He receivedB.S. degrees in economics and history from the University of Illinois atChampaign 1982 and his law degree from Loyola University of Chicago, Illinois1985.  Prior to joining The Inland Group,Mr. Wilton worked for the Chicago law firm of Williams, Rutstein, Goldfarb,Sibrava and Midura, Ltd., specializing in real estate and corporatetransactions and litigation.

 

**Steven P. Grimes** joined ouradvisor as its Chief Financial Officer and became our treasurer and principalfinancial officer in 2004.  He isresponsible for our finances and borrowings. Prior to joining our advisor, Mr.Grimes was a director with Cohen Financial and was a senior manager withDeloitte and Touche. Mr. Grimes received his B.S. Degree in Accounting fromIndiana University and is a Certified Public Accountant. Mr. Grimes is a memberof the AICPA and the Illinois CPA Society.

 

**Lori J. Foust** joined the Inlandorganization as Vice President of Inland Western Retail Real Estate AdvisoryServices, Inc. in 2003. Ms. Foust is also our principal accountingofficer.  She is responsible for ourfinancial and SEC reporting.  Prior tojoining the Inland organization, Ms. Foust worked in the field of publicaccounting and was a senior manager in the real estate division for Ernst andYoung, LLP. She received her B.S. Degree in Accounting and her M.B.A. Degreefrom the University of Central Florida. Ms. Foust is a certified public accountant and a member of the AmericanInstitute of Certified Public Accountants.

 

**Brenda G. Gujral** is President,Chief Operating Officer and a director of Inland Real Estate InvestmentCorporation (IREIC) and President, Chief Operating Officer and a director ofInland Securities Corporation (ISC) - a member firm of the National Associationof Securities Dealers (NASD). Mrs. Gujral is also an affiliated director ofInland Western Retail Real Estate Trust, Inc.; a director of Inland InvestmentAdvisors, Inc.; Chairman of the Board of Inland Real Estate ExchangeCorporation; and Affiliated Director of Inland American Real Estate Trust, Inc.

 

Mrs. Gujral has overall responsibility for the operations of IREIC,including the distribution of checks to over 50,000 investors, review ofperiodic communications to those investors, the filing of quarterly and annualreports for Inland’s publicly registered investment programs with theSecurities and Exchange Commission, compliance with other SEC and NASDsecurities regulations both for IREIC and ISC, review of asset managementactivities, and marketing and communications with the independent broker/dealerfirms selling Inland’s current and prior programs.  Mrs. Gujral works with internal and outside legalcounsel in structuring IREIC’s investment programs and in connection with thepreparation of its offering documents and registering the related securitieswith the Securities and Exchange Commission and state securities commissions.

 

Mrs. Gujral has been with the Inland organization for 22 years,becoming an officer in 1982.  Prior tojoining Inland, she worked for the Land Use Planning Commission establishing anoffice in Portland, Oregon, to implement land use legislation for that state.

 

She is a graduate of California State University.  She holds Series 7, 22, 39 and 63 licensesfrom the NASD.  Mrs. Gujral is a memberof the National Association of Real Estate Investment Trusts (NAREIT), theFinancial Planning Association (FPA), the Foundation for Financial Planning(FFP) and the National Association for Female Executives.

 

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**Frank A. Catalano, Jr.** hasserved as president of Catalano & Associates since 1999.  Catalano & Associates is a real estate companythat includes brokerage, property management and rehabilitation and leasing ofoffice buildings.  Mr. Catalano’sexperience also includes mortgage banking. Since 2002, he has been a vice president of First Home MortgageCompany.  Prior to that, Mr. Catalano wasa regional manager at Flagstar Bank.  Healso was president and chief executive officer of CCS Mortgage, Inc. from 1995through 2000, when Flagstar Bank acquired it.

 

Mr. Catalano is a member of the Elmhurst, IL Chamber of Commerce and aspast chairman of the board, he is also a member of the Elmhurst Jaycees,Elmhurst Hospital Board of Governors, Elmhurst Kiwanis and is currently thePresident of Elmhurst Historical Museum Commission.  Mr. Catalano holds a mortgage broker’slicense.

 

**Kenneth H. Beard** is presidentand chief executive officer of Midwest Mechanical Group, a mechanicalconstruction and service company.   From1999-2002 he was president and chief executive officer of Exelon Services, asubsidiary of Exelon Corporation, where he had responsibility for financialperformance including being accountable for creating business strategy, growingthe business through acquisition, integrating acquired companies and developinginfrastructure for the combined acquired businesses.  Prior to that position, from 1974 to 1999,Mr. Beard was the founder, president and chief executive officer of MidwestMechanical, Inc., a heating, ventilation and air conditioning company providinginnovative and cost effective construction services and solutions for commercial,industrial, and institutional facilities. From 1964 to 1974, Mr. Beard was employed by The Trane Company, amanufacturer of heating, ventilating and air conditioning equipment havingpositions in sales, sales management and general management.

 

Mr. Beard holds a MBA and BSCE from the University of Kentucky and is alicensed mechanical engineer.  He is onthe board of directors of the Wellness House in Hinsdale, Illinois, a cancersupport organization and serves on the Dean’s Advisory Council of theUniversity of Kentucky, School of Engineering. Mr. Beard is a past member of the Oak Brook, Illinois Plan Commission(1981-1991) and a past board member of Harris Bank, Hinsdale (1985-2004).

 

**Paul R. Gauvreau** is the retiredchief financial officer, financial vice president and treasurer of PittwayCorporation, New York Stock exchange listed manufacturer and distributor ofprofessional burglar and fire alarm systems and equipment from 1966 until itssale to Honeywell, Inc. in 2001.  He waspresident of Pittway’s non-operating real estate and leasing subsidiariesthrough 2001.  He was a financialconsultant to Honeywell, Inc.; Genesis Cable, L.L.C.; ADUSA, Inc.  He was a director and audit committee memberof Cylink Corporation, a NASDAQ Stock Market listed manufacturer of voice anddata security products from 1998 until its merger with Safenet, Inc. inFebruary 2003.

 

Mr. Gauvreau holds a MBA from the University of Chicago and a BSC fromLoyola University of Chicago.  He is onthe Board of Trustees, Chairman of the Advancement Committee, and Vice Chairmanof the Finance Committee of Benedictine University, Lisle, Illinois; a memberof the Board of Trustees of the Chaddick Institute of DePaul University,Chicago, Illinois; and a member of the board of directors and vice president ofthe Children’s Brittle Bone Foundation, Pleasant Prairie, Wisconsin.

 

**Gerald M. Gorski** is a partner inthe law firm of Gorski and Good, Wheaton Illinois.  Mr. Gorski’s practice is limited togovernmental law.  His firm representsnumerous units of local government in Illinois and Mr. Gorski has served as aSpecial Assistant State’s Attorney and Special Assistant Attorney General inIllinois.  He received a Bachelor of Artsdegree from North Central College with majors in Political Science andEconomics and a Juris Doctor degree from DePaul University Law School where hewas placed on the Deans Honor List.  Mr.Gorski serves as the Vice-Chairman of the Board of Commissioners for the DuPageAirport Authority.  He has writtennumerous articles on various legal issues facing Illinois municipalities; hasbeen a speaker at a number of municipal law conferences and is a member of theIllinois Bar Association, the Institute for Local Government Law and theInternational Municipal Lawyers Association.

 

**Barbara A. Murphy** is theChairwoman of the DuPage Republican Party. Ms. Murphy is also a member of Illinois Motor Vehicle Review Board and amember of Matrimonial Fee Arbitration Board. Ms. Murphy is a Milton TownshipTrustee and a committeeman for Milton Township Republican CentralCommittee.  Ms. Murphy previously servedas State Central Committeewoman for the Sixth Congressional District and hasalso served on the DuPage Civic Center Authority Board, the DuPage CountyDomestic Violence Task Force, and the Illinois Toll Highway AdvisoryCommittee.  Ms. Murphy is a foundingmember of the Family Shelter Service Board. As an active volunteer for Central DuPage Hospital, she acted as the “surgeryhostess” (cared for families while a family member was undergoingsurgery).  Ms. Murphy was a departmentmanager and buyer for J.W. Robinson’s and Bloomingdale’s and the co-owner ofDaffy Down Dilly Gift Shop.

 

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The information whichappears under the captions “Proposal No. 1 - Election of Directors andExecutive Officers” in the Company’s definitive proxy statement for its 2004Annual Meeting of Stockholders is incorporated by reference into this Item 10.

 

**Item 11****.  ExecutiveCompensation**

 

The information whichappears under the caption “Executive Compensation” in the Company’s definitiveproxy statement for its 2004 Annual Meeting of Stockholders is incorporated byreference into this Item 11, provided, however, that the Report of theCompensation Committee of the board of directors on Executive Compensation setforth there in shall not be incorporated by reference herein, in any of theCompany’s previous filings under the Securities Action of 1933, as amended, orthe Securities Exchange Act of 1934, as amended, or in any of the Company’sfuture filings.

 

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**Item 12****.  Security Ownershipof Certain Beneficial Owners and Management and Related Statements**

 

The information whichappears under the captions “Certain Relationships and Related Transactions” and“Common Stock Ownership of Management” in the Company’s definitive proxystatement for its 2004 Annual Meeting of Stockholders is incorporated byreference into this Item 12.

 

**Item 13****   CertainRelationships and Related Transactions**

 

The information whichappears under the caption “Certain Relationships and Related Transactions” inthe Company’s definitive proxy statement for its 2004 Annual Meeting ofStockholders is incorporated by reference into this Item 13.

 

**Item 14****   Principal AccountantFees and Services**

 

The information whichappears under the caption “Principal Accounting Fees and Services” in theCompany’s definitive Proxy Statement for its 2004 Annual Meeting ofShareholders is incorporated by reference into this Item 14.

 

PART IV

 

**Item 15****.  Exhibits, FinancialStatement Schedules, and Reports on Form 8-K**

 

(a)  List ofdocuments filed:

 

(1) Reports of Independent Registered Public Accounting Firm

 

(2) Theconsolidated financial statements of the Company are set forth in the report inItem 8.

 

(3) FinancialStatement Schedules:

 

Financial statementschedule for the year ended December 31, 2004 is submitted herewith.

 
| Real  Estate and Accumulated Depreciation (Schedule III) | 67 |
|----------------------------------------------------------|----|

 

Schedules not filed:

 

All schedules other than those indicated in the indexhave been omitted as the required information is inapplicable or theinformation is presented in the consolidated financial statements or relatednotes.

 

(4) Exhibits:  See Item (c) below

 

(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 September 29, 2004                                                            |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                                        |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits                        |
|                                                                                                   |
| Report on Form 8-K dated October 5, 2004                                                               |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                                        |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits                        |
|                                                                                                   |
| Report on Form 8-K dated October 18, 2004                                                              |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                                        |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits                        |
|                                                                                                   |
| Report on Form 8-K dated October 25, 2004                                                              |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                                        |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits                        |
|                                                                                                   |
| Report on Form 8-K dated October 29, 2004                                                              |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                                        |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits                        |

 

79

----

 
| Report on Form 8-K dated November 3, 2004                                       |
|---------------------------------------------------------------------------------|
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated November 9, 2004                                       |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated November 17, 2004                                      |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated November 23, 2004                                      |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated November 23, 2004                                      |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 3, 2004                                       |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 7, 2004                                       |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 16, 2004                                      |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 17, 2004                                      |
| Item 7.01 - Regulation FD Disclosure                                            |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 22, 2004                                      |
| Item 2.01 - Completion of Acquisition or Disposition  of Assets                 |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 28, 2004                                      |
| Item 1.01 - Entry into a Material Definitive  Agreement                         |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K dated December 30, 2004                                      |
| Item 7.01 - Regulation FD Disclosure                                            |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K/A dated October 18, 2004                                     |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K/A dated October 25, 2004                                     |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K/A dated November 3, 2004                                     |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K/A dated November 17, 2004                                    |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |
|                                                                            |
| Report on Form 8-K/A dated November 23, 2004                                    |
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |

 

80

----

 
| Report on Form 8-K/A dated December 7, 2004                                     |
|---------------------------------------------------------------------------------|
| Item 9.01 - Financial Statements, Pro Forma  Financial Information and Exhibits |

 

(c)  Exhibits:

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                                                                                                                                                        |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                                                                                                   |
| 1.1*             |       | Form of Dealer Manager Agreement by and between  Inland Western Retail Real Estate Trust, Inc. and Inland Securities  Corporation.                                                                                                                                                     |
|             |       |                                                                                                                                                                                                                                                                                   |
| 1.2*             |       | Form of Soliciting Dealers Agreement by and between  Inland Securities Corporation and the Soliciting Dealers.                                                                                                                                                                         |
|             |       |                                                                                                                                                                                                                                                                                   |
| 3.1*             |       | First Amended and Restated Articles of Incorporation  of Inland Western Retail Real Estate Trust, Inc.                                                                                                                                                                                 |
|             |       |                                                                                                                                                                                                                                                                                   |
| 3.2*             |       | Bylaws of Inland Western Retail Real Estate Trust,  Inc.                                                                                                                                                                                                                               |
|             |       |                                                                                                                                                                                                                                                                                   |
| 3.2.1            |       | Second Amended and Restated Bylaws of Inland Western  Retail Real Estate Trust, Inc. as of February 11, 2005                                                                                                                                                                           |
|             |       |                                                                                                                                                                                                                                                                                   |
| 4.1*             |       | Specimen Certificate for the Shares.                                                                                                                                                                                                                                                   |
|             |       |                                                                                                                                                                                                                                                                                   |
| 5*               |       | Opinion of Duane Morris LLP as to the legality of  the Shares being registered.                                                                                                                                                                                                        |
|             |       |                                                                                                                                                                                                                                                                                   |
| 8*               |       | Opinion of Duane Morris LLP as to tax matters.                                                                                                                                                                                                                                         |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.1*            |       | Form of Escrow Agreement by and among Inland Western  Retail Real Estate Trust, Inc., Inland Securities Corporation and LaSalle  Bank National Association.                                                                                                                            |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.2*            |       | Form of Advisory Agreement by and between Inland  Western Retail Real Estate Trust, Inc. and Inland Western Retail Real Estate  Advisory Services, Inc.                                                                                                                                |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.2.1           |       | Amended and Restated Advisory Agreement dated  December 28, 2004                                                                                                                                                                                                                       |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.2.2           |       | Second Amended and Restated Advisory Agreement dated  December 28, 2004                                                                                                                                                                                                                |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.3*            |       | Form of Master Management Agreement, including the  form of Management Agreement for each Property by and between Inland Western  Retail Real Estate Trust, Inc. and Inland Western Property Management Corp.                                                                          |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.4*            |       | Property Acquisition Service Agreement by and among  Inland Western Retail Real Estate Trust, Inc., Inland Western Retail Real  Estate Advisory Services, Inc., Inland Real Estate Corporation, Inland Real  Estate Advisory Services, Inc., and Inland Real Estate Acquisitions, Inc. |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.4.1           |       | Property Acquisition Agreement dated February 10,  2005 by and between Inland Real Estate Acquisitions, Inc, Inland Western  Retail Real Estate Trust, Inc., and Inland Western Retail Real Estate  Advisory Services, Inc.                                                            |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.5*            |       | Independent Director Stock Option Plan.                                                                                                                                                                                                                                                |
|             |       |                                                                                                                                                                                                                                                                                   |
| 10.6*            |       | Indemnification Agreement by and between Inland  Western Retail Real Estate Trust, Inc. and its directors and executive  officers.                                                                                                                                                     |

 

81

----

 
| **EXHIBIT  NO.** |   | **DESCRIPTION**                                                                                                                                 |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                            |
| 10.7*            |   | Purchase and Sale Agreement (Re: Peoria Station)  dated January 31, 2003.                                                                       |
|             |   |                                                                                                                                            |
| 10.8*            |   | Assignment of Purchase and Sale Agreement (Re:  Peoria Station) dated June 3, 2003.                                                             |
|             |   |                                                                                                                                            |
| 10.9*            |   | Share Repurchase Plan.                                                                                                                          |
|             |   |                                                                                                                                            |
| 10.10*           |   | Agreement for Purchase and Sale (Re: Stony Creek)  dated November 11, 2003.                                                                     |
|             |   |                                                                                                                                            |
| 10.11*           |   | Real Property Purchase Agreement (Re: Plaza 205 and  Mall 205) dated December 3, 2003.                                                          |
|             |   |                                                                                                                                            |
| 10.12*           |   | Amended Real Estate Purchase Contract (Re: Edmond  Oklahoma Eckerd Drug Store) dated November 11, 2003.                                         |
|             |   |                                                                                                                                            |
| 10.13*           |   | Amended Real Estate Purchase Contract (Re: Norman  Oklahoma Eckerd Drug Store) dated November 11, 2003.                                         |
|             |   |                                                                                                                                            |
| 10.14*           |   | Sale-Purchase Agreement Contract (Re: Shops at Park  Place) dated September 5, 2003.                                                            |
|             |   |                                                                                                                                            |
| 10.15*           |   | Assignment of Contract (Re: Shops at Park Place)  dated September 23, 2003.                                                                     |
|             |   |                                                                                                                                            |
| 10.16*           |   | Assignment of Membership Interests (Re: Shops at  Park Place) dated October 31, 2003.                                                           |
|             |   |                                                                                                                                            |
| 10.17*           |   | Promissory Note (Re: Shops at Park Place) dated  October 31, 2003.                                                                              |
|             |   |                                                                                                                                            |
| 10.18*           |   | Loan Agreement (Re: Shops at Park Place) dated  October 31, 2003.                                                                               |
|             |   |                                                                                                                                            |
| 10.19*           |   | Post Closing Agreement (Re: Shops at Park Place)  dated October 31, 2003.                                                                       |
|             |   |                                                                                                                                            |
| 10.20*           |   | Purchase and Sale Agreement (Re: Darien Towne  Center) dated November 12, 2003.                                                                 |
|             |   |                                                                                                                                            |
| 10.21*           |   | Purchase and Sale Agreement (Re: Shaws Supermarkets  – New Britain) dated November 20, 2003.                                               |
|             |   |                                                                                                                                            |
| 10.22*           |   | Agreement Relating to PetsMart Claims (Re: Darien  Towne Center) dated December 18, 2003.                                                       |
|             |   |                                                                                                                                            |
| 10.23*           |   | Agreement Relating to Irv’s Lease (Re: Darien Towne  Center) dated December 18, 2003.                                                      |
|             |   |                                                                                                                                            |
| 10.24*           |   | Amended Purchase Agreement (Re: Newnan Crossing)  dated December 18, 2003.                                                                      |
|             |   |                                                                                                                                            |
| 10.25*           |   | Mortgage Note $10M (Re: Darien Towne Center) dated  December 19, 2003.                                                                          |
|             |   |                                                                                                                                            |
| 10.26*           |   | Mortgage Note $6.5M (Re: Darien Towne Center) dated  December 19, 2003.                                                                         |
|             |   |                                                                                                                                            |
| 10.27*           |   | Mortgage, Assignment of Leases, Rents and Contracts,  Security Agreement and Fixture Filing (Re: Darien Towne Center) dated  December 19, 2003. |
|             |   |                                                                                                                                            |
| 10.28*           |   | Related Agreement (Re: Darien Towne Center) dated  December 19, 2003.                                                                           |
|             |   |                                                                                                                                            |
| 10.29*           |   | Assignment (Re: Darien Towne Center) dated December  19, 2003.                                                                                  |
|             |   |                                                                                                                                            |
| 10.30*           |   | Partial Assignment and Assumption of Purchase and  Sale Agreement (Re: Shaws Supermarket – New Britain) dated December 30, 2003.           |
|             |   |                                                                                                                                            |
| 10.31*           |   | Amended Purchase Agreement (Re: Pavilion at Kings  Grant) dated December 31, 2003.                                                              |

 

82

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                  |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                             |
| 10.32*           |       | Post Closing and Indemnity Agreement (Re: Pavilion  at Kings Grant) dated December 31, 2003.                                     |
|             |       |                                                                                                                             |
| 10.33*           |       | Mortgage Note (Re: CorWest Plaza) dated January 1,  2004.                                                                        |
|             |       |                                                                                                                             |
| 10.34*           |       | Mortgage, Assignment of Leases and Rents and  Security Agreement (Re: CorWest Plaza) dated January 1, 2004.                      |
|             |       |                                                                                                                             |
| 10.35*           |       | Guaranty Agreement (Re: CorWest Plaza) dated January  1, 2004.                                                                   |
|             |       |                                                                                                                             |
| 10.36*           |       | Letter Agreement (Re: Stoney Creek Marketplace)  dated January 5, 2004.                                                          |
|             |       |                                                                                                                             |
| 10.37*           |       | Mortgage Note (Re: Stoney Creek Marketplace) dated  January 5, 2004.                                                             |
|             |       |                                                                                                                             |
| 10.38*           |       | Mortgage, Assignment of Leases and Rents and  Security Agreement (Re: Stoney Creek Marketplace) dated January 5, 2004.           |
|             |       |                                                                                                                             |
| 10.39*           |       | Amended Contract of Sale (Re: La Plaza Del Norte)  dated January 16, 2004.                                                       |
|             |       |                                                                                                                             |
| 10.40*           |       | Promissory Note (Re: Hickory Ridge) dated January  23, 2004.                                                                     |
|             |       |                                                                                                                             |
| 10.41*           |       | Post Closing Agreement (Re: Hickory Ridge) dated  January 2004.                                                                  |
|             |       |                                                                                                                             |
| 10.42*           |       | Loan Agreement (Re: Hickory Ridge) dated January 23,  2004.                                                                      |
|             |       |                                                                                                                             |
| 10.43*           |       | Amended and Restated Promissory Noted (Re: Shops at  Park Place and Shaws Supermarket – New Britain) dated January 2004.    |
|             |       |                                                                                                                             |
| 10.44*           |       | Promissory Note (Re: Shops at Park Place and Shaws  Supermarket – New Britain) dated January 2004.                          |
|             |       |                                                                                                                             |
| 10.45*           |       | Open-End Mortgage and Security Agreement (Re: Shops  at Park Place and Shaws Supermarket – New Britain) dated January 2004. |
|             |       |                                                                                                                             |
| 10.46*           |       | Loan Agreement (Re: Shops at Park Place and Shaws  Supermarket – New Britain) dated January 2004.                           |
|             |       |                                                                                                                             |
| 10.47*           |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Shops at Park Place) dated January 2004.                              |
|             |       |                                                                                                                             |
| 10.48*           |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Shaws Supermarket – New Britain) dated January 2004.             |
|             |       |                                                                                                                             |
| 10.49*           |       | Notice of Final Agreement (Re: La Plaza Del Norte)  dated February 2004.                                                         |
|             |       |                                                                                                                             |
| 10.50*           |       | Secured Promissory Note Loan No. 753821 (Re: La  Plaza Del Norte) dated February 2004.                                           |
|             |       |                                                                                                                             |
| 10.51*           |       | Deed of Trust, Security Agreement and Assignment of  Rents Loan No. 753821 (Re: La Plaza Del Norte) dated February 2004.         |
|             |       |                                                                                                                             |
| 10.52*           |       | Guaranty Loan No, 753821 (Re: La Plaza Del Norte)  dated February 2004.                                                          |
|             |       |                                                                                                                             |
| 10.53*           |       | Amended Purchase and Sale  Agreement (Re: CorWest Plaza) dated October 8, 2003.                                                  |

 

83

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                      |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                 |
| 10.54*           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: CorWest Plaza) dated January 5, 2004.                                 |
|             |       |                                                                                                                                 |
| 10.55*           |       | Amended Purchase and Sale  Agreement (Re: Metro Square Center) dated January 16, 2004.                                               |
|             |       |                                                                                                                                 |
| 10.56*           |       | Assignment and Assumption of  Letter Agreement (Re: Metro Square Center) dated January 20, 2004.                                     |
|             |       |                                                                                                                                 |
| 10.57*           |       | Reinstatement of and Amendment  to Purchase and Sale Agreement (Re: North Ranch Pavilions) dated January 14,  2004.                  |
|             |       |                                                                                                                                 |
| 10.58*           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: North Ranch Pavilions) dated January 15,  2004.                       |
|             |       |                                                                                                                                 |
| 10.59*           |       | Letter Agreement (Re:  MacArthur Crossing) dated November 20, 2003.                                                                  |
|             |       |                                                                                                                                 |
| 10.60*           |       | Assignment of Contract (Re:  MacArthur Crossing) dated February 2004.                                                                |
|             |       |                                                                                                                                 |
| 10.61*           |       | Secured Promissory Note Loan  No. 753820 (Re: Larkspur Landing) dated January 30, 2004.                                              |
|             |       |                                                                                                                                 |
| 10.62*           |       | Deed of Trust, Security  Agreement and Assignment of Rents (Re: Larkspur Landing) dated January 30,  2004.                           |
|             |       |                                                                                                                                 |
| 10.63*           |       | Guaranty Loan No. 753820 (Re:  Larkspur Landing) dated January 30, 2004.                                                             |
|             |       |                                                                                                                                 |
| 10.64*           |       | Amended Option to Purchase  Partnership Interests (Re: Hickory Ridge) dated December 23, 2003.                                       |
|             |       |                                                                                                                                 |
| 10.65*           |       | Assignment (Re: La Plaza Del  Norte) dated January 21, 2004.                                                                         |
|             |       |                                                                                                                                 |
| 10.66*           |       | Purchase and Sale Agreement  (Re: Larkspur Landing) dated December 12, 2003.                                                         |
|             |       |                                                                                                                                 |
| 10.67*           |       | Assignment (Re: Larkspur  Landing) dated January 14, 2004.                                                                           |
|             |       |                                                                                                                                 |
| 10.68*           |       | Amended Letter Agreement Offer  to Purchase (Re: The Promenade at Red Cliff) dated February 13, 2004.                                |
|             |       |                                                                                                                                 |
| 10.69            |       | Agreement of Sale (Re: Peoria  Crossng) dated January, 2004                                                                          |
|             |       |                                                                                                                                 |
| 10.70            |       | Letter Agreement to Purchase  (Re: Heritage Towne Crossing) dated January 8, 2004.                                                   |
|             |       |                                                                                                                                 |
| 10.71*           |       | Secured Promissory Note Loan  No. 753865 (Re: Pavilion at King’s Grant) dated April 6, 2004.                                    |
|             |       |                                                                                                                                 |
| 10.72*           |       | Deed of Trust, Security Agreement  and Assignment of Rents Loan No. 753865 (Re: Pavilion at King’s Grant) dated  April 6, 2004. |
|             |       |                                                                                                                                 |
| 10.73*           |       | Guaranty Loan No. 753865 (Re:  Pavilion at King’s Grant) dated April 6, 2004.                                                   |
|             |       |                                                                                                                                 |
| 10.74*           |       | Guaranty - II Loan No. 753865  (Re: Pavilion at King’s Grant) dated April 6, 2004.                                              |
|             |       |                                                                                                                                 |
| 10.75*           |       | Assignment of Contract (Re:  Hickory Ridge) dated January 9, 2004.                                                                   |
|             |       |                                                                                                                                 |
| 10.76*           |       | Promissory Note Loan No.  6518303 (Re: Metro Square Center) dated March 26, 2004.                                                    |

 

84

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                         |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                    |
| 10.77*           |       | Deed of Trust, Assignment of  Leases and Rents, Security Agreement and Fixture Filing Loan No. 6518303 (Re:  Metro Square Center) dated March 26, 2004. |
|             |       |                                                                                                                                                    |
| 10.78*           |       | Non-Recourse Guaranty  Agreement Loan No. 6518303 (Re: Metro Square Center) dated March 26, 2004.                                                       |
|             |       |                                                                                                                                                    |
| 10.79*           |       | Payment Guaranty Agreement  Loan No. 6518303 (Re: Metro Square Center) dated March 26, 2004.                                                            |
|             |       |                                                                                                                                                    |
| 10.80*           |       | Secured Promissory Note Loan  No. 753864 (Re: MacArthur Crossing) dated March 26, 2004.                                                                 |
|             |       |                                                                                                                                                    |
| 10.81*           |       | Deed of Trust, Security  Agreement and Assignment of Rents Loan No. 753864 (Re: MacArthur Crossing)  dated March 26, 2004.                              |
|             |       |                                                                                                                                                    |
| 10.82*           |       | Guaranty Loan No. 753864 (Re:  MacArthur Crossing) dated March 26, 2004.                                                                                |
|             |       |                                                                                                                                                    |
| 10.83*           |       | Promissory Note Loan No. 57968  (Re: Promenade at Red Cliff) dated April 8, 2004.                                                                       |
|             |       |                                                                                                                                                    |
| 10.84*           |       | Exceptions to Non-Recourse  Guaranty Agreement Loan No. 57968 (Re: Promenade at Red Cliff) dated April 8,  2004.                                        |
|             |       |                                                                                                                                                    |
| 10.85*           |       | Loan Agreement No. 57968 (Re:  Promenade at Red Cliff) dated April 8, 2004.                                                                             |
|             |       |                                                                                                                                                    |
| 10.86*           |       | Post Closing and Indemnity  Agreement (Re: Heritage Towne Crossing) dated March 5, 2004.                                                                |
|             |       |                                                                                                                                                    |
| 10.87*           |       | Vacancy Escrow Agreement (Re:  Heritage Towne Crossing) dated March 5, 2004.                                                                            |
|             |       |                                                                                                                                                    |
| 10.88*           |       | General Assignment (Re:  Heritage Towne Crossing) dated March 5, 2004.                                                                                  |
|             |       |                                                                                                                                                    |
| 10.89*           |       | Assignment of Contract (Re:  Heritage Towne Crossing) dated March 5, 2004.                                                                              |
|             |       |                                                                                                                                                    |
| 10.90*           |       | Assignment of Contract (Re:  Dorman Center) dated December 29, 2003.                                                                                    |
|             |       |                                                                                                                                                    |
| 10.91*           |       | Amended Purchase Agreement  (Re: Dorman Center) dated December 10, 2003.                                                                                |
|             |       |                                                                                                                                                    |
| 10.92*           |       | Dorman Center Pier 1 Escrow  (Re: Dorman Center) dated March 4, 2004.                                                                                   |
|             |       |                                                                                                                                                    |
| 10.93*           |       | Dorman Center Escrow (Re:  Dorman Center) dated March 4, 2004.                                                                                          |
|             |       |                                                                                                                                                    |
| 10.94*           |       | Mortgage Note Loan No. 6518291  (Re: Dorman Center) dated April 9, 2004.                                                                                |
|             |       |                                                                                                                                                    |
| 10.95*           |       | Mortgage, Assignment of Leases  and Rents and Security Agreement (Re: Dorman Center) dated April 9, 2004.                                               |
|             |       |                                                                                                                                                    |
| 10.96*           |       | Transitional Security (Phase  II) Reserve Agreement (Re: Dorman Center) dated April 9, 2004,                                                            |
|             |       |                                                                                                                                                    |
| 10.97*           |       | Guaranty Agreement Loan No.  6518291 (Re: Dorman Center) dated April 9, 2004.                                                                           |
|             |       |                                                                                                                                                    |
| 10.98*           |       | Promissory Note: (Re: Heritage  Towne Crossing) dated April 26, 2004.                                                                                   |
|             |       |                                                                                                                                                    |
| 10.99*           |       | Promissory Note: (Re: Eckerds  - Edmond, OK.) dated April 26, 2004.                                                                                     |
|             |       |                                                                                                                                                    |
| 10.100*          |       | Promissory Note: (Re: Eckerds  - Norman, OK.) dated April 26, 2004.                                                                                     |

 

85

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                               |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                          |
| 10.101*          |       | Loan Agreement (Re: Heritage  Towne Crossing, Eckerds - Edmond, OK. And Eckerds - Norman, OK.) dated April  26, 2004.         |
|             |       |                                                                                                                          |
| 10.102*          |       | Post-Closing Agreement (Re:  Heritage Towne Crossing, Eckerds - Edmond, OK. And Eckerds - Norman, OK.)  dated April 26, 2004. |
|             |       |                                                                                                                          |
| 10.103*          |       | Guaranty Agreement Regarding  Cross-Collateralization (Re: Heritage Towne Crossing) dated April 26, 2004.                     |
|             |       |                                                                                                                          |
| 10.104*          |       | Guaranty Agreement Regarding  Cross-Collateralization (Re: Eckerds - Edmond, OK.) dated April 26, 2004.                       |
|             |       |                                                                                                                          |
| 10.105*          |       | Guaranty Agreement Regarding  Cross-Collateralization (Re: Eckerds - Norman, OK.) dated April 26, 2004.                       |
|             |       |                                                                                                                          |
| 10.106*          |       | Assignment of Contract (Re:  Promenade at Red Cliff) dated February 13, 2004.                                                 |
|             |       |                                                                                                                          |
| 10.107*          |       | Assignment of Contract (Re:  Peoria Crossings) dated March 3, 2004.                                                           |
|             |       |                                                                                                                          |
| 10.108*          |       | Post Closing Agreement (Re:  Peoria Crossings) dated March 3, 2004.                                                           |
|             |       |                                                                                                                          |
| 10.109*          |       | Master Lease Escrow Agreement  (Re: Peoria Crossings) dated February 4, 2004.                                                 |
|             |       |                                                                                                                          |
| 10.110*          |       | Tax Proration Agreement (Re:  Peoria Crossings) dated March 3, 2004.                                                          |
|             |       |                                                                                                                          |
| 10.111*          |       | Promissory Note Loan No.  10023006 (Re: Peoria Crossings) dated March 5, 2004.                                                |
|             |       |                                                                                                                          |
| 10.112*          |       | Loan Agreement -Loan No.  10023006 (Re: Peoria Crossings) dated March 5, 2004.                                                |
|             |       |                                                                                                                          |
| 10.113*          |       | Assignment of Contract (Re:  Paradise Valley Marketplace) dated April 8, 2004.                                                |
|             |       |                                                                                                                          |
| 10.114*          |       | Revised Letter Agreement to  Purchase (Re: Paradise Valley Marketplace) dated January 21, 2004.                               |
|             |       |                                                                                                                          |
| 10.115*          |       | Escrow Agreement (Re: Paradise  Valley Marketplace) dated April 8, 2004.                                                      |
|             |       |                                                                                                                          |
| 10.116*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Best on the Boulevard) dated April 4, 2004.                    |
|             |       |                                                                                                                          |
| 10.117*          |       | Post-Closing Agreement (Re:  Best on the Boulevard) dated April 14, 2004.                                                     |
|             |       |                                                                                                                          |
| 10.118*          |       | Amended Purchase and Sale  Agreement (Re: Best on the Boulevard) dated March 29, 2004.                                        |
|             |       |                                                                                                                          |
| 10.119*          |       | Assignment and Assumption of  Purchase and Sales Agreement (Re: Bluebonnet Parc) dated April 21, 2004.                        |
|             |       |                                                                                                                          |
| 10.120*          |       | Escrow Agreement (Re:  Bluebonnet Parc) dated April 22, 2004.                                                                 |
|             |       |                                                                                                                          |
| 10.121*          |       | Letter Agreement to Purchase  (Re: Bluebonnet Parc) dated February 4, 2004.                                                   |
|             |       |                                                                                                                          |
| 10.122*          |       | Loan Agreement (Re: Bluebonnet  Parc) dated May 7, 2004.                                                                      |
|             |       |                                                                                                                          |
| 10.123*          |       | Assignment and Assumption of  Agreement for Purchase and Sale (Re: Alison’s Corner) dated April 20, 2004.                |

 

86

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                  |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                             |
| 10.124*          |       | Post Closing Agreement (Re:  Alison’s Corner) dated April 28, 2004.                                                         |
|             |       |                                                                                                                             |
| 10.125*          |       | Amended Purchase and Sale  Agreement (Re: Alison’s Corner) dated April 23, 2004.                                            |
|             |       |                                                                                                                             |
| 10.126*          |       | Promissory Note (Re: Alison’s  Corner) dated May 10, 2004.                                                                  |
|             |       |                                                                                                                             |
| 10.127*          |       | Loan Agreement (Re: Alison’s  Corner) dated May 10, 2004.                                                                   |
|             |       |                                                                                                                             |
| 10.128*          |       | Letter Agreement Regarding  Escrow (Re: Alison’s Corner) dated May 10, 2004.                                                |
|             |       |                                                                                                                             |
| 10.129*          |       | Post-Closing Agreement (Re:  Alison’s Corner) dated May 10, 2004.                                                           |
|             |       |                                                                                                                             |
| 10.130*          |       | Assignment and Assumption of  Purchase and Sales Agreement (Re: North Rivers Town Center) dated April 27,  2004.                 |
|             |       |                                                                                                                             |
| 10.131*          |       | Post-Closing Agreement (Re:  North Rivers Town Center) dated April 2004.                                                         |
|             |       |                                                                                                                             |
| 10.132*          |       | Amended Agreement for Purchase  and Sale (Re: North Rivers Town Center) dated April 26, 2004.                                    |
|             |       |                                                                                                                             |
| 10.133*          |       | Assignment and Assumption of  Purchase and Sales Agreement (Re: Eastwood Towne Center) dated May 12, 2004.                       |
|             |       |                                                                                                                             |
| 10.134*          |       | Revised Letter Agreement (Re:  Eastwood Towne Center) dated March 29, 2004.                                                      |
|             |       |                                                                                                                             |
| 10.135*          |       | Master Fund Escrow Agreement  (Eastwood Towne Center) dated May 13, 2004.                                                        |
|             |       |                                                                                                                             |
| 10.136*          |       | Holdback Agreement (Re:  Eastwood Towne Center) dated May 13, 2004.                                                              |
|             |       |                                                                                                                             |
| 10.137*          |       | Bill of Sale, Assignment and  Assumption of Contracts (Re: Eastwood Towne Center) dated May 13, 2004.                            |
|             |       |                                                                                                                             |
| 10.138*          |       | Assignment and Assumption of  Purchase and Sales Agreement (Re: Arvada Connection and Arvada Marketplace)  dated April 28, 2004. |
|             |       |                                                                                                                             |
| 10.139*          |       | Bill of Sale, Assignment and  Assumption of Contracts (Re: Arvada Connection and Arvada Marketplace) dated  April 29, 2004.      |
|             |       |                                                                                                                             |
| 10.140*          |       | Purchase and Sale Agreement  (Re: Arvada Connection and Arvada Marketplace) dated March 31, 2004.                                |
|             |       |                                                                                                                             |
| 10.141*          |       | Escrow Agreement (Re: Arvada  Connection and Arvada Marketplace) dated April 29, 2004.                                           |
|             |       |                                                                                                                             |
| 10.142*          |       | Redevelopment Agreement (Re:  Arvada Connection and Arvada Marketplace) dated April 28, 2004.                                    |
|             |       |                                                                                                                             |
| 10.143*          |       | Easements With Covenants and  Restrictions Affecting Land (Re: Arvada Marketplace) dated April 29, 2004.                         |
|             |       |                                                                                                                             |
| 10.144*          |       | Assignment of Contract (Re:  Watauga Pavilion) dated May 20, 2004.                                                               |
|             |       |                                                                                                                             |
| 10.145*          |       | Amended Purchase and Sale  Agreement (Re: Watauga Pavilion) dated May 11, 2004.                                                  |
|             |       |                                                                                                                             |
| 10.146*          |       | Post-Closing Escrow and Master  Lease Agreement (Re: Watauga Pavilion) dated May 21, 2004.                                       |

 

87

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                 |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                            |
| 10.147*          |       | CAM Reconciliation Escrow Agreement (Re: Northpointe  Plaza) dated May 2004.                                                                    |
|             |       |                                                                                                                                            |
| 10.148*          |       | Reinstatement of and First Amendment to Agreement of  Purchase and Sale (Re: Northpointe Plaza) dated April 2004.                               |
|             |       |                                                                                                                                            |
| 10.149*          |       | Vacancy Escrow Agreement (Re: Northpointe Plaza)  dated May 2004.                                                                               |
|             |       |                                                                                                                                            |
| 10.150*          |       | Promissory Note - Loan No. 58108 (Re: Paradise  Valley Marketplace) dated June 3, 2004.                                                         |
|             |       |                                                                                                                                            |
| 10.151*          |       | Loan Agreement - Loan No. 58108 (Re: Paradise Valley  Marketplace) dated June 3, 2004.                                                          |
|             |       |                                                                                                                                            |
| 10.152*          |       | Promissory Note (Re: North Rivers Town Center) dated  June 3, 2004.                                                                             |
|             |       |                                                                                                                                            |
| 10.153*          |       | Mortgage and Security Agreement (Re: North Rivers  Town Center) dated June 3, 2004.                                                             |
|             |       |                                                                                                                                            |
| 10.154*          |       | Post-Closing Agreement (Re: North Rivers Town  Center) dated June 3, 2004.                                                                      |
|             |       |                                                                                                                                            |
| 10.155*          |       | Real Estate Purchase and Leaseback Agreement (Re:  Eckerds - Kill Devil Hills, NC) dated March 18, 2004.                                        |
|             |       |                                                                                                                                            |
| 10.156*          |       | Real Estate Purchase and Leaseback Agreement (Re:  Eckerds - Greer, SC) dated April 1, 2004.                                                    |
|             |       |                                                                                                                                            |
| 10.157*          |       | Real Estate Purchase and Leaseback Agreement (Re:  Eckerds - Columbia, SC) dated March 18, 2004.                                                |
|             |       |                                                                                                                                            |
| 10.158*          |       | Real Estate Purchase and Leaseback Agreement (Re:  Eckerds - Crossville, TN) dated March 18, 2004.                                              |
|             |       |                                                                                                                                            |
| 10.159*          |       | Deed of Trust, Assignment of  Leases and Rents, Security Agreement and Fixture Filing Loan No. 58108 (Re:  Peoria Crossing) dated June 3, 2004. |
|             |       |                                                                                                                                            |
| 10.160*          |       | Loan Agreement (Re: North  Rivers Town) dated June 3, 2004.                                                                                     |
|             |       |                                                                                                                                            |
| 10.161*          |       | Secured Promissory Note Loan  No. 753946 (Re: Arvada Marketplace) dated June 17, 2004.                                                          |
|             |       |                                                                                                                                            |
| 10.162*          |       | Deed of Trust, Security  Agreement and Assignment of Rents Loan No. 753946 (Re: Arvada Marketplace)  dated June 17, 2004.                       |
|             |       |                                                                                                                                            |
| 10.163*          |       | Guaranty Loan No. 753946 (Re:  Arvada Marketplace) dated June 17, 2004.                                                                         |
|             |       |                                                                                                                                            |
| 10.164*          |       | Mortgage Note Loan No. 6518370  (Re: Eastwood Town Center) dated June 15, 2004.                                                                 |
|             |       |                                                                                                                                            |
| 10.165*          |       | Mortgage - Loan No. 6518370  (Re: Eastwood Town Center) dated June 15, 2004.                                                                    |
|             |       |                                                                                                                                            |
| 10.166*          |       | Guaranty Agreement Loan No.  6518370 (Re: Eastwood Town Center) dated June 15, 2004.                                                            |
|             |       |                                                                                                                                            |
| 10.167*          |       | Secured Promissory Note Loan  No. 753943 (Re: Watauga Pavilion) dated June 7, 2004.                                                             |
|             |       |                                                                                                                                            |
| 10.168*          |       | Deed of Trust, Security  Agreement and Assignment of Rents Loan No. 753943 (Re: Watauga Pavilion)  dated June 7, 2004.                          |
|             |       |                                                                                                                                            |
| 10.169*          |       | Notice of Final Agreement Loan  No. 753943 (Re: Watauga Pavilion) dated June 7, 2004.                                                           |
|             |       |                                                                                                                                            |
| 10.170*          |       | Guaranty Loan No. 753943 (Re:  Watauga Pavilion) dated June 7, 2004.                                                                            |

 

88

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                                                 |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.171*          |       | General Assignment (Re: Northpointe  Plaza) dated May 25, 2004.                                                                                                                 |
|             |       |                                                                                                                                                                            |
| 10.172*          |       | Post Closing and Indemnity  Agreement (Re: Northpointe Plaza) dated May, 2004.                                                                                                  |
|             |       |                                                                                                                                                                            |
| 10.173*          |       | Promissory Note (Re:  Northpointe Plaza) dated June 4, 2004.                                                                                                                    |
|             |       |                                                                                                                                                                            |
| 10.174*          |       | Loan Agreement (Re:  Northpointe Plaza) dated June 4, 2004.                                                                                                                     |
|             |       |                                                                                                                                                                            |
| 10.175*          |       | Deed of Trust, Security  Agreement and Fixture Filing (Re: Northpointe Plaza) dated June 4, 2004.                                                                               |
|             |       |                                                                                                                                                                            |
| 10.176*          |       | Revised Letter Agreement to  Purchase (Re: Plaza Santa Fe) dated December 4, 2004.                                                                                              |
|             |       |                                                                                                                                                                            |
| 10.177*          |       | Promissory Note Secured By  Leasehold Deed of Trust (Re: Plaza Santa Fe) dated November 22, 2002.                                                                               |
|             |       |                                                                                                                                                                            |
| 10.178*          |       | Leasehold Deed of Trust and  Absolute Assignment of Rents and Leases and Security Agreement and Fixture  Filing Loan No. 31-0900141A (Re: Plaza Santa Fe) dated November, 2002. |
|             |       |                                                                                                                                                                            |
| 10.179*          |       | Assignment of Purchase and  Sale Agreement (Re: Pine Ridge Plaza) dated June 4, 2004.                                                                                           |
|             |       |                                                                                                                                                                            |
| 10.180*          |       | Assignment and Assumption  Agreement Purchase and Sale Agreement (Re: Pine Ridge Plaza) dated May 26,  2004.                                                                    |
|             |       |                                                                                                                                                                            |
| 10.181*          |       | Amended Purchase and Sale  Agreement (Re: Pine Ridge Plaza) dated March 30, 2004.                                                                                               |
|             |       |                                                                                                                                                                            |
| 10.182*          |       | Assignment of Contract (Re:  Huebner Oaks Center) dated June 8, 2004.                                                                                                           |
|             |       |                                                                                                                                                                            |
| 10.183*          |       | Agreement of Purchase and Sale  (Re: Huebner Oaks Center).                                                                                                                      |
|             |       |                                                                                                                                                                            |
| 10.184*          |       | Secured Promissory Note 1 Loan  No. 753971 (Re: Huebner Oaks Center) dated June 22, 2004.                                                                                       |
|             |       |                                                                                                                                                                            |
| 10.185*          |       | Secured Promissory Note 2 Loan  No. 753972 (Re: Huebner Oaks Center) dated June 22, 2004.                                                                                       |
|             |       |                                                                                                                                                                            |
| 10.186*          |       | Deed of Trust, Security  Agreement and Assignment of Rents Loan Nos. 753971 and 753972 (Re: Huebner  Oaks Center) dated June 22, 2004.                                          |
|             |       |                                                                                                                                                                            |
| 10.187*          |       | Guaranty Loan Nos. 753971 and  753972 (Re: Huebner Oaks Center) dated June 22, 2004.                                                                                            |
|             |       |                                                                                                                                                                            |
| 10.188*          |       | Notice of Final Agreement Loan  Nos. 753971 and 753972 (Huebner Oaks Center) dated June 22, 2004.                                                                               |
|             |       |                                                                                                                                                                            |
| 10.189*          |       | Amended Letter Purchase  Agreement (Re: John’s Creek Village) dated June 18, 2004.                                                                                         |
|             |       |                                                                                                                                                                            |
| 10.190*          |       | Earn-out Agreement (Re: John’s  Creek Village) dated June 23, 2004.                                                                                                        |
|             |       |                                                                                                                                                                            |
| 10.191*          |       | Assignment of Contract (Re:  Lakewood Towne Center) dated June, 2004.                                                                                                           |
|             |       |                                                                                                                                                                            |
| 10.192*          |       | Agreement for Purchase and  Sale of Real Property and Escrow Instructions (Re: Lakewood Towne Center)  dated May 6, 2004.                                                       |
|             |       |                                                                                                                                                                            |
| 10.193*          |       | Escrow and Leasing Agreement  (Re: Lakewood Towne Center) dated June, 2004.                                                                                                     |
|             |       |                                                                                                                                                                            |
| 10.194*          |       | Commitment Letter Loan Nos.  122498 and 122499 (Re: Lakewood Towne Center) dated June 28, 2004.                                                                                 |

 

89

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                    |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                               |
| 10.195*          |       | Deed of Trust Note A Loan No.  122498 (Re: Lakewood Towne Center) dated June 28, 2004.                                                             |
|             |       |                                                                                                                                               |
| 10.196*          |       | Deed of Trust Note B Loan No.  122499 (Re: Lakewood Towne Center) dated June 28, 2004.                                                             |
|             |       |                                                                                                                                               |
| 10.197*          |       | Deed of Trust, Assignment of  Leases, Rents and Contracts, Security Agreement and Fixture Filing (Re:  Lakewood Towne Center) dated June 28, 2004. |
|             |       |                                                                                                                                               |
| 10.198*          |       | First Amendment to Escrow and  Leasing Agreement Loan Nos. 122498 and 122499 (Re: Lakewood Towne Center)  dated June 28, 2004.                     |
|             |       |                                                                                                                                               |
| 10.199*          |       | Master Lease Escrow Agreement  (Re: Paradise Shoppes at Prominence Point) dated June 30, 2004.                                                     |
|             |       |                                                                                                                                               |
| 10.200*          |       | Assignment of Purchase and  Sale Agreement (Re: Northgate North) dated June 24, 2004.                                                              |
|             |       |                                                                                                                                               |
| 10.201*          |       | Amended Agreement to Purchase  and Sale Agreement (Re: Northgate North) dated June 23, 2004.                                                       |
|             |       |                                                                                                                                               |
| 10.202*          |       | Escrow Agreement Regarding  July Rents (Re: Northgate North) dated June 30, 2004.                                                                  |
|             |       |                                                                                                                                               |
| 10.203*          |       | Escrow Agreement Regarding  Bassett TI Work/Leasing Commission (Re: Northgate North) dated June, 2004.                                             |
|             |       |                                                                                                                                               |
| 10.204*          |       | Access Agreement (Re:  Northgate North) dated June 30, 2004.                                                                                       |
|             |       |                                                                                                                                               |
| 10.205*          |       | Post Closing and Indemnity  Agreement (Re: Davis Towne Crossing) dated June 30, 2004.                                                              |
|             |       |                                                                                                                                               |
| 10.206*          |       | Letter Agreement to Purchase  (Re: Davis Towne Crossing) dated April 21, 2004.                                                                     |
|             |       |                                                                                                                                               |
| 10.207*          |       | ** NOT USED                                                                                                                                        |
|             |       |                                                                                                                                               |
| 10.208*          |       | Assignment of Purchase and  Sale Agreement (Re: Fullerton Metrocenter) dated June 24, 2004.                                                        |
|             |       |                                                                                                                                               |
| 10.209*          |       | Post Closing and Indemnity  Agreement (Re: Fullerton Metrocenter) dated June, 2004.                                                                |
|             |       |                                                                                                                                               |
| 10.210*          |       | Amended Purchase and Sale  Agreement and Joint Escrow Instructions (Re: Fullerton Metrocenter) dated  June 30, 2004.                               |
|             |       |                                                                                                                                               |
| 10.211*          |       | Assignment and Assumption of  Agreement for Purchase and Sale (Re: Low Country Village) datd June 30, 2004.                                        |
|             |       |                                                                                                                                               |
| 10.212*          |       | Post Closing Agreement (Re:  Low Country Village) dated June 30, 2004.                                                                             |
|             |       |                                                                                                                                               |
| 10.213*          |       | Agreement of Purchase and Sale  (Re: Low Country Village) dated May 20, 2004.                                                                      |
|             |       |                                                                                                                                               |
| 10.214*          |       | Installment Note (Re: Pacheco  Pass) dated June 30, 2004.                                                                                          |
|             |       |                                                                                                                                               |
| 10.215*          |       | Loan Proceeds Holdback  Agreement (Re: Pacheco Pass) dated June 30, 2004.                                                                          |
|             |       |                                                                                                                                               |
| 10.216*          |       | Interest Reserve Holdback  Agreement (Re: Pacheco Pass) dated June 30, 2004.                                                                       |
|             |       |                                                                                                                                               |
| 10.217*          |       | Loan Guaranty Agreement  (Secured Note) (Re: Pacheco Pass) dated June 30, 2004.                                                                    |
|             |       |                                                                                                                                               |
| 10.218*          |       | Escrow Agreement (Re: Shoppes  at Boardwalk) dated July 1, 2004.                                                                                   |

 

90

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                            |
|------------------|------------|------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                       |
| 10.219*          |       | Secured Promissory Note Loan  No. 753948 (Re: Shoppes at Boardwalk) dated July 2, 2004.                    |
|             |       |                                                                                                       |
| 10.220*          |       | Deed of Trust, Security  Agreement and Assignment of Rents (Re: Shoppes at Boardwalk) dated July 2,  2004. |
|             |       |                                                                                                       |
| 10.221*          |       | Guaranty Loan No. 75348 (Re:  Shoppes at Boardwalk) dated July 2, 2004.                                    |
|             |       |                                                                                                       |
| 10.222*          |       | Property Reserves Agreement  Loan No. 753948 (Re: Shoppes at Boardwalk) dated July 2, 2004.                |
|             |       |                                                                                                       |
| 10.223*          |       | Master Lease Escrow Agreement  (Re: Paradise Shoppes at Dallas) dated July 1, 2004.                        |
|             |       |                                                                                                       |
| 10.224*          |       | Assignment of Purchase Agreement (Re: Plaza Santa Fe  II) dated May 25, 2004                               |
|             |       |                                                                                                       |
| 10.225*          |       | Assignment of Contract (Re: Eckerds - Greer) dated  May 2004                                               |
|             |       |                                                                                                       |
| 10.226*          |       | Assignment of Contract (Re: Eckerds – Kill Devil  Hills) dated May 2004                               |
|             |       |                                                                                                       |
| 10.227*          |       | Assignment of Contract (Re: Eckerds - Crossville)  dated May 2004                                          |
|             |       |                                                                                                       |
| 10.228*          |       | Assignment of Contract (Re: Eckerds - Colimbia)  dated May 2004                                            |
|             |       |                                                                                                       |
| 10.229*          |       | Promissory Note (Re: Eckerds – Crossville) dated  July 21, 2004                                       |
|             |       |                                                                                                       |
| 10.230*          |       | Post-Closing Agreement (Re: Eckerds – Crossville)  dated July 21, 2004                                |
|             |       |                                                                                                       |
| 10.231*          |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Eckerds- Crossville) dated July 21, 2004        |
|             |       |                                                                                                       |
| 10.232*          |       | Promissory Note (Re: Eckerds – Columbia) dated July  21, 2004                                         |
|             |       |                                                                                                       |
| 10.233*          |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Eckerds- Columbia) dated July 21, 2004          |
|             |       |                                                                                                       |
| 10.234*          |       | Promissory Note (Re: Eckerds – Kill Devil Hills)  dated July 21, 2004                                 |
|             |       |                                                                                                       |
| 10.235*          |       | Post-Closing Agreement (Re: Eckerds – Kill Devil  Hills) dated July 21, 2004                          |
|             |       |                                                                                                       |
| 10.236*          |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Eckerds - Kill Devil Hills) dated July 21, 2004 |
|             |       |                                                                                                       |
| 10.237*          |       | Promissory Note (Re: Eckerds – Greer) dated July 21,  2004                                            |
|             |       |                                                                                                       |
| 10.238*          |       | Guaranty Agreement Regarding Cross-Collateralization  (Re: Eckerds - Greer) dated July 21, 2004            |
|             |       |                                                                                                       |
| 10.239*          |       | Loan Agreement (Re: Eckerds – Crossville, Columbia,  Greer and Kill Devil Hills) dated July 21, 2003  |
|             |       |                                                                                                       |
| 10.240*          |       | Promissory Note (Re: Pine Ridge Plaza) dated July  27, 2004                                                |
|             |       |                                                                                                       |
| 10.241*          |       | Loan Agreement (Re: Pine Ridge Plaza) dated July 27,  2004                                                 |
|             |       |                                                                                                       |
| 10.242*          |       | Earn-Out Agreement (Re: Johns Creek Village) dated  June 23, 2004                                          |

 

91

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                           |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                      |
| 10.243*          |       | Transitional Security (Phase II) Reserve Agreement  (Re: Johns Creek Village) dated June 28, 2004                         |
|             |       |                                                                                                                      |
| 10.244*          |       | Mortgage Note (Re: Johns Creek Village) dated June  28, 2004                                                              |
|             |       |                                                                                                                      |
| 10.245*          |       | Deed to Secure Debt, Assignment of Leases and Rents  and Security Agreement (Re: Johns Creek Village) dated June 28, 2004 |
|             |       |                                                                                                                      |
| 10.246*          |       | Guaranty Agreement (Re: Johns Creek Village) dated  June 28, 2004                                                         |
|             |       |                                                                                                                      |
| 10.247*          |       | Post-Closing Agreement (Re: Fullerton Metrocenter)  dated July 9, 2004                                                    |
|             |       |                                                                                                                      |
| 10.248*          |       | Promissory Note (Re: Fullerton Metrocenter) dated  July 9, 2004                                                           |
|             |       |                                                                                                                      |
| 10.249*          |       | Loan Agreement (Re: Fullerton Metrocenter) dated  July 9, 2004                                                            |
|             |       |                                                                                                                      |
| 10.250*          |       | Deed of Trust Note (Re: Northgate North) dated July  2004                                                                 |
|             |       |                                                                                                                      |
| 10.251*          |       | Letter Agreement (Re: Northgate North) dated July  14, 2004                                                               |
|             |       |                                                                                                                      |
| 10.252*          |       | Closing Certificate (Re: Northgate North) dated July  2004                                                                |
|             |       |                                                                                                                      |
| 10.253*          |       | Limited Payment Guaranty (Re: Northgate North) dated  July 2004                                                           |
|             |       |                                                                                                                      |
| 10.254*          |       | Post-Closing Agreement (Re: Cranberry Square) dated  July 2004                                                            |
|             |       |                                                                                                                      |
| 10.255*          |       | Loan Agreement (Re: Cranberry Square) dated July  2004                                                                    |
|             |       |                                                                                                                      |
| 10.256*          |       | Letter Agreement (Re: Tollgate Marketplace) dated  July 21, 2004                                                          |
|             |       |                                                                                                                      |
| 10.257*          |       | Closing Certificate (Re: Tollgate Marketplace) dated  July 21, 2004                                                       |
|             |       |                                                                                                                      |
| 10.258*          |       | Mortgage Note (Re: Tollgate Marketplace) dated July  21, 2004                                                             |
|             |       |                                                                                                                      |
| 10.259*          |       | Post Closing Delivery Covenant (Re: Tollgate  Marketplace) dated July 21, 2004                                            |
|             |       |                                                                                                                      |
| 10.260*          |       | Indemnity Guaranty (Re: Tollgate Marketplace) dated  July 21, 2004                                                        |
|             |       |                                                                                                                      |
| 10.261*          |       | Real Estate Purchase Contract (Re: Wal-Mart  Supercenter – Blytheville) dated May 28, 2004                           |
|             |       |                                                                                                                      |
| 10.262*          |       | Letter Agreement (Re: Gateway Village) dated July  21, 2004                                                               |
|             |       |                                                                                                                      |
| 10.263*          |       | Closing Certificate (Re: Gateway Village) dated July  21, 2004                                                            |
|             |       |                                                                                                                      |
| 10.264*          |       | Mortgage Note A (Re: Gateway Village) dated July 21,  2004                                                                |
|             |       |                                                                                                                      |
| 10.265*          |       | Mortgage Note B (Re: Gateway Village) dated July 21,  2004                                                                |
|             |       |                                                                                                                      |
| 10.266*          |       | Indemnity Guaranty (Re: Gateway Village) dated July  21, 2004                                                             |
|             |       |                                                                                                                      |
| 10.267*          |       | Post Closing Delivery Covenant (Re: Gateway Village,  Towson Circle, and Tollgate Marketplace) dated July 21, 2004        |

 

92

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                            |
|------------------|------------|------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                       |
| 10.268*          |       | Letter Agreement (Re: Towson Circle) dated July 21,  2004                                                  |
|             |       |                                                                                                       |
| 10.269*          |       | Closing Certificate (Re: Towson Circle) dated July  21, 2004                                               |
|             |       |                                                                                                       |
| 10.270*          |       | Mortgage Note A (Re: Towson Circle) dated July 21,  2004                                                   |
|             |       |                                                                                                       |
| 10.271*          |       | Mortgage Note B (Re: Towson Circle) dated July 21,  2004                                                   |
|             |       |                                                                                                       |
| 10.272*          |       | Indemnity Guaranty (Re: Towson Circle) dated July  21, 2004                                                |
|             |       |                                                                                                       |
| 10.273*          |       | Letter Agreement (Re: Gateway Plaza Shopping Center)  dated May 20, 2004                                   |
|             |       |                                                                                                       |
| 10.274*          |       | Promissory Note (Re: Wrangler Company Western  Headquarters and Distribution Facility) dated July 26, 2004 |
|             |       |                                                                                                       |
| 10.275*          |       | Loan Agreement (Re: Wrangler Company Western  Headquarters and Distribution Facility) Dated July 26, 2004  |
|             |       |                                                                                                       |
| 10.276*          |       | Promissory Note (Re: Plaza at Marysville) dated July  30, 2004                                             |
|             |       |                                                                                                       |
| 10.277*          |       | Loan Agreement (Re: Plaza at Marysville) dated July  30, 2004                                              |
|             |       |                                                                                                       |
| 10.278*          |       | Forks Town Center China Moon Escrow (Re: Forks Town  Center) dated July 27, 2004                           |
|             |       |                                                                                                       |
| 10.279*          |       | Earn Out Agreement (Re: Forks Town Center) dated  July 27, 2004                                            |
|             |       |                                                                                                       |
| 10.280*          |       | Promissory Note (Re: Academy Sports and Outdoors –  Houma) dated August 4, 2004                       |
|             |       |                                                                                                       |
| 10.281*          |       | Loan Agreement (Re: Academy Sports and Outdoors -  Houma) dated August 4, 2004                             |
|             |       |                                                                                                       |
| 10.282*          |       | Promissory Note (Re: Reisterstown Plaza) dated  August 4, 2004                                             |
|             |       |                                                                                                       |
| 10.283*          |       | Letter Agreement (Re: Reisterstown Plaza) dated July  30, 2004                                             |
|             |       |                                                                                                       |
| 10.284*          |       | Loan Agreement (Re: Reisterstown Plaza) dated August  4, 2004                                              |
|             |       |                                                                                                       |
| 10.285*          |       | Guaranty Agreement (Re: Reisterstown Plaza) dated  August 4, 2004                                          |
|             |       |                                                                                                       |
| 10.286*          |       | Limited Guaranty Agreement (Re: Reisterstown Plaza)  dated August 4, 2004                                  |
|             |       |                                                                                                       |
| 10.287*          |       | Post-Closing Agreement (Re: Reisterstown Plaza)  dated August 4, 2004                                      |
|             |       |                                                                                                       |
| 10.288*          |       | Letter Agreement (Re: Wal-Mart Supercenter –  Jonesboro) dated June 4, 2004                           |
|             |       |                                                                                                       |
| 10.289*          |       | Promissory Note (Re: Wal-Mart Supercenter –  Jonesboro) dated August 6, 2004                          |
|             |       |                                                                                                       |
| 10.290*          |       | Loan Agreement (Re: Wal-Mart Supercenter –  Jonesboro) dated August 6, 2004                           |
|             |       |                                                                                                       |
| 10.291*          |       | Promissory Note Loan No.  10024997 (Re: Davis Towne Crossing) dated August 9, 2004.                        |
|             |       |                                                                                                       |
| 10.292*          |       | Loan Agreement No. 10024997  (Re: Davis Towne Crossing) dated August 9, 2004.                              |
|             |       |                                                                                                       |
| 10.293*          |       | Promissory Note Loan No.  10024995 (Re: Shoppes of Prominence Point) dated August 2004.                    |

 

93

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                 |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                            |
| 10.294*          |       | Loan Agreement No. 10024995  (Re: Shoppes of Prominence Point) dated August 2004.                               |
|             |       |                                                                                                            |
| 10.295*          |       | Assignment of Contract (Re:  Shops at Boardwalk) dated July 1, 2004.                                            |
|             |       |                                                                                                            |
| 10.296*          |       | Letter Agreement to Purchase  (Re: Shops at Boardwalk) dated March 2004.                                        |
|             |       |                                                                                                            |
| 10.297*          |       | Amended Agreement of Sale (Re:  Shops at Boardwalk) dated April 15, 2004.                                       |
|             |       |                                                                                                            |
| 10.298*          |       | Assignment of Contract (Re:  Cranberry Square) dated June 23, 2004.                                             |
|             |       |                                                                                                            |
| 10.299*          |       | Letter Agreement to Purchase  (Re: Cranberry Square) dated April 27, 2004.                                      |
|             |       |                                                                                                            |
| 10.300*          |       | Construction Agreement (Re:  Dorman Center Phase II) dated July 15, 2004.                                       |
|             |       |                                                                                                            |
| 10.301*          |       | Escrow Agreement (Re: Dorman  Center Phase II) dated July 14, 2004.                                             |
|             |       |                                                                                                            |
| 10.302*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Gateway Plaza) dated July 21, 2004.              |
|             |       |                                                                                                            |
| 10.303*          |       | Amended Purchase and Sale  Agreement (Re: Gateway Plaza) dated July 15, 2004.                                   |
|             |       |                                                                                                            |
| 10.304*          |       | Letter Agreement to Purchase  (Re: Gateway Plaza) dated May 20, 2004.                                           |
|             |       |                                                                                                            |
| 10.305*          |       | Assignment of Contract (Re:  Plaza at Marysville) dated July 26, 2004.                                          |
|             |       |                                                                                                            |
| 10.306*          |       | Reinstated and Amended  Purchase and Sale Agreement (Re: Plaza at Marysville) dated July 23, 2004.              |
|             |       |                                                                                                            |
| 10.307*          |       | Purchase and Sale Agreement  (Re: Plaza at Marysville) dated May 6, 2004.                                       |
|             |       |                                                                                                            |
| 10.308*          |       | Letter Agreement to Purchase  (Re: Forks Town Center) dated August 10, 2004.                                    |
|             |       |                                                                                                            |
| 10.309*          |       | Mortgage Note Loan No. 122483  (Re: Forks Town Center) dated August 10, 2004.                                   |
|             |       |                                                                                                            |
| 10.310*          |       | Limited Payment Guarantee  Agreement Loan No. 122483 (Re: Forks Town Center) dated August 10, 2004.             |
|             |       |                                                                                                            |
| 10.311*          |       | Post-Closing Agreement (Re:  Village Shoppes at Simonton) dated August 9, 2004.                                 |
|             |       |                                                                                                            |
| 10.312*          |       | Escrow and Guarantee Agreement  (Re: Village Shoppes at Simonton) dated August 2004.                            |
|             |       |                                                                                                            |
| 10.313*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Village Shoppes at Simonton) dated August  2004. |
|             |       |                                                                                                            |
| 10.314*          |       | Letter Agreement to Purchase  (Re: Village Shoppes at Simonton) dated April 30, 2004.                           |
|             |       |                                                                                                            |
| 10.315*          |       | Secured Promissory Note Loan  No. 754044 (Re: Manchester Meadows) dated August 24, 2004.                        |
|             |       |                                                                                                            |
| 10.316*          |       | Deed of Trust, Security  Agreement and Assignment of Rents (Re: Manchester Meadows) dated August 24,  2004.     |
|             |       |                                                                                                            |
| 10.317*          |       | Guaranty Agreement Loan No.  754044 (Re: Manchester Meadows) dated August 24, 2004.                             |

 

94

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                    |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                               |
| 10.318*          |       | Escrow and Guarantee Agreement  (Re: Manchester Meadows) dated August 2004.                                        |
|             |       |                                                                                                               |
| 10.319*          |       | St. Louis Playscapes Escrow  and Guarantee Agreement (Re: Manchester Meadows) dated August 2004.                   |
|             |       |                                                                                                               |
| 10.320*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Manchester Meadows) dated August 2004.              |
|             |       |                                                                                                               |
| 10.321*          |       | Purchase and Sale Agreement  (Re: Manchester Meadows) dated July 13, 2004.                                         |
|             |       |                                                                                                               |
| 10.322*          |       | Amended and Restated  Promissory Note Loan No. 10024998 (Re: Governor’s Marketplace) dated August  17, 2004.  |
|             |       |                                                                                                               |
| 10.323*          |       | Post-Closing Agreement (Re:  Governor’s Marketplace) dated August 2004.                                       |
|             |       |                                                                                                               |
| 10.324*          |       | Loan Agreement No. 10024998  (Re: Governor’s Marketplace) dated August 17, 2004.                              |
|             |       |                                                                                                               |
| 10.325*          |       | Master Lease Escrow Agreement  (Re: Mitchell Ranch Plaza) dated August 23, 2004.                                   |
|             |       |                                                                                                               |
| 10.326*          |       | Agreement of Purchase and Sale  (Re: Mitchell Ranch Plaza) dated July 20, 2004.                                    |
|             |       |                                                                                                               |
| 10.327*          |       | Master Lease Escrow Agreement  (Re: The Columns) dated August 24, 2004.                                            |
|             |       |                                                                                                               |
| 10.328*          |       | Escrow Agreement (Re: The  Columns) dated August 24, 2004.                                                         |
|             |       |                                                                                                               |
| 10.329*          |       | Assignment (Re: John’s Creek  Village) dated June 23, 2004.                                                   |
|             |       |                                                                                                               |
| 10.330*          |       | Assignment (Re: Shoppes at  Prominence Point) dated June 30, 2004.                                                 |
|             |       |                                                                                                               |
| 10.331*          |       | Amended Agreement of Purchase  and Sale of Shopping Center (Re: Shoppes at Prominence Point) dated June 18,  2004. |
|             |       |                                                                                                               |
| 10.332*          |       | Assignment (Re: Shoppes of  Dallas) dated July, 2 2004.                                                            |
|             |       |                                                                                                               |
| 10.333*          |       | Amended Agreement of Purchase  and Sale of Shopping Center (Re: Shoppes of Dallas) dated June 29, 2004.            |
|             |       |                                                                                                               |
| 10.334*          |       | Letter Agreement (Re: Shoppes  of Dallas) dated September 27, 2004.                                                |
|             |       |                                                                                                               |
| 10.335*          |       | Mortgage Note A Loan No.  122533 (Re: Shoppes of Dallas) dated September 27, 2004.                                 |
|             |       |                                                                                                               |
| 10.336*          |       | Mortgage Note B Loan No.  122533 (Re: Shoppes of Dallas) dated September 27, 2004.                                 |
|             |       |                                                                                                               |
| 10.337*          |       | Deed to Secure Debt and  Security Agreement (Re: Shoppes of Dallas) dated September 27, 2004.                      |
|             |       |                                                                                                               |
| 10.338*          |       | NOT USED                                                                                                           |
|             |       |                                                                                                               |
| 10.339*          |       | Contribution Agreement (Re:  Tollgate Marketplace) dated July 19, 2004.                                            |
|             |       |                                                                                                               |
| 10.340*          |       | Contribution Agreement (Re:  Gateway Village) dated July 21, 2004.                                                 |
|             |       |                                                                                                               |
| 10.341*          |       | Promissory Note (Re: Plaza at  Marysville) dated July 30, 2004.                                                    |

 

95

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                       |
|------------------|------------|-------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                  |
| 10.342*          |       | Loan Agreement (Re: Plaza at  Marysville) dated July 30, 2004.                                        |
|             |       |                                                                                                  |
| 10.343*          |       | Assignment of Contract (Re:  Forks Town Center) dated June 18, 2004.                                  |
|             |       |                                                                                                  |
| 10.344*          |       | Reinstated and Amended  Contract (Re: Forks Town Center) dated July 2, 2004.                          |
|             |       |                                                                                                  |
| 10.345*          |       | NOT USED                                                                                              |
|             |       |                                                                                                  |
| 10.346*          |       | Contribution Agreement (Re:  Towson Circle) dated July 2004.                                          |
|             |       |                                                                                                  |
| 10.347*          |       | Letter Agreement (Re: Gateway  Plaza) dated August 19, 2004.                                          |
|             |       |                                                                                                  |
| 10.348*          |       | Deed of Trust Note Loan No.  122520 (Re: Gateway Plaza) dated August 19, 2004.                        |
|             |       |                                                                                                  |
| 10.349*          |       | Limited Payment Guaranty (Re:  Gateway Plaza) dated August 19, 2004.                                  |
|             |       |                                                                                                  |
| 10.350*          |       | Contribution Agreement (Re:  Reisterstown Road Plaza) dated July 2004.                                |
|             |       |                                                                                                  |
| 10.351*          |       | Letter Agreement (Re: Village  Shops at Simonton) dated September 27, 2004.                           |
|             |       |                                                                                                  |
| 10.352*          |       | Mortgage Note A Loan No.  122532 (Re: Village Shops at Simonton) dated September 27, 2004.            |
|             |       |                                                                                                  |
| 10.353*          |       | Mortgage Note A Loan No.  122532 (Re: Village Shops at Simonton) dated September 27, 2004.            |
|             |       |                                                                                                  |
| 10.354*          |       | Deed to Secure Debt and  Security Agreement (Re: Village Shops at Simonton) dated September 27, 2004. |
|             |       |                                                                                                  |
| 10.355*          |       | Amendment Agreement (Re:  Governor’s Marketplace) dated August 12, 2004.                         |
|             |       |                                                                                                  |
| 10.356*          |       | Master Lease Escrow Agreement  (Re: Governor’s Marketplace) dated August 17, 2004.               |
|             |       |                                                                                                  |
| 10.357*          |       | Secured Promissory Note Loan  No. 754065 (Re: Mitchell Ranch Plaza) dated September 2, 2004.          |
|             |       |                                                                                                  |
| 10.358*          |       | Mortgage and Security Agreement  (Re: Mitchell Ranch Plaza) dated September 2, 2004.                  |
|             |       |                                                                                                  |
| 10.359*          |       | Guaranty (Re: Mitchell Ranch  Plaza) dated September 2, 2004.                                         |
|             |       |                                                                                                  |
| 10.360*          |       | Assignment (Re: The Columns)  dated August 24, 2004.                                                  |
|             |       |                                                                                                  |
| 10.361*          |       | Amendment Agreement (Re: The  Columns) dated August 2, 2004.                                          |
|             |       |                                                                                                  |
| 10.362*          |       | Letter Agreement (Re: The  Columns) dated October 1, 2004.                                            |
|             |       |                                                                                                  |
| 10.363*          |       | Mortgage Note A Loan No.  122534 (Re: The Columns) dated September 27, 2004.                          |
|             |       |                                                                                                  |
| 10.364*          |       | Mortgage Note B Loan No.  122534 (Re: The Columns) dated September 27, 2004.                          |
|             |       |                                                                                                  |
| 10.365*          |       | Installment Note (Re:  Quakertown) dated August 25, 2004.                                             |

 

96

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                  |
|------------------|------------|------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                             |
| 10.366*          |       | Loan Guaranty Agreement (Re:  Quakertown) dated August 25, 2004.                                                 |
|             |       |                                                                                                             |
| 10.367*          |       | Amended Agreement (Re: Saucon  Valley Square) dated September 7, 2004.                                           |
|             |       |                                                                                                             |
| 10.368*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Lincoln Park) dated September 1, 2004.            |
|             |       |                                                                                                             |
| 10.369*          |       | Amended and Restated Purchase  and Sale Agreement (Re: Lincoln Park) dated August 6, 2004.                       |
|             |       |                                                                                                             |
| 10.370*          |       | Promissory Note (Re: Lincoln  Park) dated October 8, 2004.                                                       |
|             |       |                                                                                                             |
| 10.371*          |       | Loan Agreement (Re: Lincoln  Park) dated October 8, 2004.                                                        |
|             |       |                                                                                                             |
| 10.372*          |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Harvest Towne Center) dated September 2004.       |
|             |       |                                                                                                             |
| 10.373*          |       | Amended Purchase Agreement  (Re: Harvest Towne Center) dated August 2004.                                        |
|             |       |                                                                                                             |
| 10.374*          |       | Easement Indemnity Escrow  Agreement (Re: Harvest Towne Center) dated September 8, 2004.                         |
|             |       |                                                                                                             |
| 10.375*          |       | Master Lease Agreement (Re:  Harvest Towne Center) dated September 8, 2004.                                      |
|             |       |                                                                                                             |
| 10.376*          |       | Amended and Restated  Promissory Note (Re: Boulevard at the Capital Centre) dated September 8,  2004.            |
|             |       |                                                                                                             |
| 10.377*          |       | Loan Agreement (Re: Boulevard  at the Capital Centre) dated September 8, 2004.                                   |
|             |       |                                                                                                             |
| 10.378*          |       | Amended and Restated Limited  Guaranty Agreement (Re: Boulevard at the Capital Centre) dated September 8,  2004. |
|             |       |                                                                                                             |
| 10.379*          |       | Post Closing Agreement (Re:  Boulevard at the Capital Centre) dated September 8, 2004.                           |
|             |       |                                                                                                             |
| 10.380*          |       | Agreement of Sale (Re: GMAC  Insurance Building) dated August 2004.                                              |
|             |       |                                                                                                             |
| 10.381*          |       | Escrow Agreement (Re: GMAC  Insurance Building) dated September 2004.                                            |
|             |       |                                                                                                             |
| 10.382*          |       | Guaranty (Re: GMAC Insurance  Building) dated September 2004.                                                    |
|             |       |                                                                                                             |
| 10.383*          |       | Promissory Note (Re: GMAC  Insurance Building) dated September 29, 2004.                                         |
|             |       |                                                                                                             |
| 10.384*          |       | Loan Agreement (Re: GMAC  Insurance Building) dated September 29, 2004.                                          |
|             |       |                                                                                                             |
| 10.385*          |       | Promissory Note (Re: Saucon  Valley Square) dated September 7, 2004.                                             |
|             |       |                                                                                                             |
| 10.386(          |       | Loan Agreement (Re: Saucon Valley  Square) dated September 7, 2004.                                              |
|             |       |                                                                                                             |
| 10.387*          |       | Amended Agreement to Option to Purchase Real  Property (Re: Azalea Square) dated September 29, 2004.             |
|             |       |                                                                                                             |
| 10.388*          |       | Amended Agreement to Contract for Sale and Purchase  (Re: Edgemont Town Center) dated November 23, 2004.         |
|             |       |                                                                                                             |
| 10.389*          |       | Assignment (Re: University Town Center) dated  November 23, 2004.                                                |

 

97

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                          |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                     |
| 10.390*          |       | Amended Agreement to Contract for Sale and Purchase  (Re: University Town Center) dated November 19, 2004.               |
|             |       |                                                                                                                     |
| 10.391*          |       | Promissory Note (Re: Azalea Square) dated November  11, 2004.                                                            |
|             |       |                                                                                                                     |
| 10.392*          |       | Loan Agreement (Re: Azalea Square) dated November  11, 2004.                                                             |
|             |       |                                                                                                                     |
| 10.394*          |       | Loan Agreement (Re: Manfield Towne Crossing) dated  November 12, 2004.                                                   |
|             |       |                                                                                                                     |
| 10.395*          |       | Amendment to Loan Documents (Re: The Columns) dated  November 2, 2004.                                                   |
|             |       |                                                                                                                     |
| 10.396*          |       | Mortgage Note A Loan No. 122541 (Re: The Columns)  dated November 2, 2004.                                               |
|             |       |                                                                                                                     |
| 10.397*          |       | Mortgage Note B Loan No. 122541 (Re: The Columns)  dated November 2, 2004.                                               |
|             |       |                                                                                                                     |
| 10.398*          |       | Promissory Note (Re: Bed Bath & Beyond Plaza)  dated November 12, 2004.                                              |
|             |       |                                                                                                                     |
| 10.399*          |       | Loan Agreement (Re: Bed Bath & Beyond Plaza)  dated November 12, 2004.                                               |
|             |       |                                                                                                                     |
| 10.400*          |       | Promissory Note (Re:Oswego Commons) dated November  23, 2004.                                                            |
|             |       |                                                                                                                     |
| 10.401*          |       | Loan Agreement (Re: Oswego Commons) dated November  23, 2004.                                                            |
|             |       |                                                                                                                     |
| 10.402*          |       | Promissory Note (Re:Zurich Towers) dated November  23, 2004.                                                             |
|             |       |                                                                                                                     |
| 10.403*          |       | Loan Agreement (Re: Zurich Towers) dated November  23, 2004.                                                             |
|             |       |                                                                                                                     |
| 10.404*          |       | Assignment and Assumption of Purchase and Sale  Agreement (Bed, Bath & Beyond Plaza) dated September 2004.           |
|             |       |                                                                                                                     |
| 10.405*          |       | Agreement to Purchase (Re: Bed, Bath & Beyond  Plaza) dated March 24, 2004.                                          |
|             |       |                                                                                                                     |
| 10.406*          |       | Amended Ground Lease Agreement (Re: Bed, Bath &  Beyond Plaza) dated May 28, 2004.                                   |
|             |       |                                                                                                                     |
| 10.407*          |       | Letter Agreement to Purchase (Re: Publix - Mt.  Pleasant) dated August 27, 2004.                                         |
|             |       |                                                                                                                     |
| 10.408*          |       | Agreement of Purchase and Sale (Re: Denton Crossing)  dated August 20, 2004.                                             |
|             |       |                                                                                                                     |
| 10.409*          |       | Escrow Agreement (Re: Denton Crossing) dated October  18, 2004.                                                          |
|             |       |                                                                                                                     |
| 10.410*          |       | Letter Agreement to Purchase (Re: Oswego Commons)  dated July 21, 2004.                                                  |
|             |       |                                                                                                                     |
| 10.411*          |       | Agreement of Purchase and Sale (Re: Gurnee Town  Centre) dated October 5, 2004.                                          |
|             |       |                                                                                                                     |
| 10.412*          |       | Vacancy Escrow Agreement (Re: Gurnee Town Centre)  dated October 29, 2004.                                               |
|             |       |                                                                                                                     |
| 10.413*          |       | Assignment of Contract (Re: Mansfield Town Crossing)  dated November 3, 2004.                                            |
|             |       |                                                                                                                     |
| 10.414*          |       | Amended Letter Agreement to Purchase (Re: Mansfield  Town Crossing) dated October 29, 2004.                              |
|             |       |                                                                                                                     |
| 10.415*          |       | Amended Purchase and Sale Agreement and Joint Escrow  Instructions (Re: Mansfield Town Crossing) dated October 20, 2004. |

 

98

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                        |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                   |
| 10.416*          |       | Assignment of Contract (Re: Fox Creek Village) dated  November 21, 2004.                                                               |
|             |       |                                                                                                                                   |
| 10.417*          |       | Amended Letter Agreement (Re: Fox Creek Village)  dated November 15, 2004.                                                             |
|             |       |                                                                                                                                   |
| 10.418*          |       | Escrow Agreement (Re: Fox Creek Village) dated  November 22, 2004.                                                                     |
|             |       |                                                                                                                                   |
| 10.419*          |       | Letter Agreement to Purchase (Re: Winchester  Commons) dated September 8, 2004.                                                        |
|             |       |                                                                                                                                   |
| 10.420*          |       | Escrow Agreement (Re: Winchester Commons) dated  November 5, 2004.                                                                     |
|             |       |                                                                                                                                   |
| 10.421*          |       | Assignment of Contract (Re: Zurich Towers) dated  November 2, 2004.                                                                    |
|             |       |                                                                                                                                   |
| 10.422*          |       | Purchase and Sale Agreement (Re: Zurich Towers)  dated November 2, 2004.                                                               |
|             |       |                                                                                                                                   |
| 10.423           |       | Assignment of Contract (Re:  Denton Crossing) dated October 12, 2004.                                                                  |
|             |       |                                                                                                                                   |
| 10.424           |       | Promissory Note (Re: Denton  Crossing) dated December 7, 2004.                                                                         |
|             |       |                                                                                                                                   |
| 10.425           |       | Promissory Note (Re: Denton  Crossing) dated December 7, 2004.                                                                         |
|             |       |                                                                                                                                   |
| 10.426           |       | Guaranty Agreement (Re: Denton  Crossing) dated December 7, 2004.                                                                      |
|             |       |                                                                                                                                   |
| 10.427           |       | Assignment of Purchase  Agreement (Re: Plaza at Riverlakes) dated October 21, 2004.                                                    |
|             |       |                                                                                                                                   |
| 10.428           |       | Amended Purchase and Sale  Agreement and Joint Escrow Instructions (Re: Plaza at Riverlakes) dated  October 20, 2004.                  |
|             |       |                                                                                                                                   |
| 10.429           |       | Assignment of Contract (Re:  Gurnee Town Center) dated October 26, 2004.                                                               |
|             |       |                                                                                                                                   |
| 10.430           |       | Promissory Note (Re: Gurnee  Town Center) dated December 20, 2004.                                                                     |
|             |       |                                                                                                                                   |
| 10.431           |       | Loan Agreement (Re: Gurnee  Town Center) dated December 20, 2004.                                                                      |
|             |       |                                                                                                                                   |
| 10.432           |       | Mortgage Note (Re: Fox Creek  Village) dated December 23, 2004.                                                                        |
|             |       |                                                                                                                                   |
| 10.433           |       | Loan Letter Agreement (Re: Fox  Creek Village) dated December 23, 2004.                                                                |
|             |       |                                                                                                                                   |
| 10.434           |       | Assignment of Contract (Re:  Five Forks) dated December 6, 2004.                                                                       |
|             |       |                                                                                                                                   |
| 10.435           |       | Agreement of Purchase and Sale  (Re: Five Forks) dated September 10, 2004.                                                             |
|             |       |                                                                                                                                   |
| 10.436           |       | Assignment of Real Estate  Purchase Contract (Re: Placentia Town Center) dated November 29, 2004.                                      |
|             |       |                                                                                                                                   |
| 10.437           |       | Reinstated and Amended  Purchase and Sale Agreement and Joint Escrow Instructions (Re: Placentia Town  Center) dated November 4, 2004. |
|             |       |                                                                                                                                   |
| 10.438           |       | Promissory Note (Re: Placentia  Town Center) dated December 21, 2004.                                                                  |
|             |       |                                                                                                                                   |
| 10.439           |       | Loan Agreement (Re: Placentia  Town Center) dated December 21, 2004.                                                                   |
|             |       |                                                                                                                                   |
| 10.440           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Gateway Station) dated December 2004.                                   |

 

99

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| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                                                                          |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                                                                     |
| 10.441           |       | Letter Agreement to Purchase  (Re: Gateway Station) dated October 22, 2004.                                                                                                                              |
|             |       |                                                                                                                                                                                                     |
| 10.442           |       | Assignment (Re: Northwoods)  dated November 7, 2004.                                                                                                                                                     |
|             |       |                                                                                                                                                                                                     |
| 10.443           |       | Amended Agreement to Sale (Re:  Northwoods) dated November 8, 2004.                                                                                                                                      |
|             |       |                                                                                                                                                                                                     |
| 10.444           |       | Promissory Note (Re:  Northwoods) dated December 29, 2004.                                                                                                                                               |
|             |       |                                                                                                                                                                                                     |
| 10.445           |       | Loan Agreement (Re:  Northwoods) dated December 29, 2004.                                                                                                                                                |
|             |       |                                                                                                                                                                                                     |
| 10.446           |       | Assignment of Contract (Re:  Gateway Pavilions) dated December, 2004.                                                                                                                                    |
|             |       |                                                                                                                                                                                                     |
| 10.447           |       | Purchase and Sale Agreement  and Escrow Instructions (Re: Gateway Pavilions) dated August 9, 2004.                                                                                                       |
|             |       |                                                                                                                                                                                                     |
| 10.448           |       | Promissory Note (Re: Gateway  Pavilions) dated December 30, 2004.                                                                                                                                        |
|             |       |                                                                                                                                                                                                     |
| 10.449           |       | Loan Agreement (Re: Gateway  Pavilions) dated December 30, 2004.                                                                                                                                         |
|             |       |                                                                                                                                                                                                     |
| 10.450           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - 31st Avenue, Phoenix, AZ)  dated December 16, 2004.                                                                    |
|             |       |                                                                                                                                                                                                     |
| 10.451           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - 19th Avenue, Phoenix, AZ)  dated December 16, 2004.                                                                    |
|             |       |                                                                                                                                                                                                     |
| 10.452           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - Minneapolis, MN) dated  December 16, 2004.                                                                             |
|             |       |                                                                                                                                                                                                     |
| 10.453           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - Depere, WI) dated  December 16, 2004.                                                                                  |
|             |       |                                                                                                                                                                                                     |
| 10.454           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - Greensboro, NC) dated  December 16, 2004.                                                                              |
|             |       |                                                                                                                                                                                                     |
| 10.455           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - Fort Lauderdale, FL)  dated December 16, 2004.                                                                         |
|             |       |                                                                                                                                                                                                     |
| 10.456           |       | Purchase and Sale Agreement  (Re: American Express - 31st Avenue, Phoenix, AZ, 19th Avenue, Phoenix, AZ,  Minneapolis, MN, Depere, WI, Greensboro, NC and Fort Lauderdale, FL) dated  December 16, 2004. |
|             |       |                                                                                                                                                                                                     |
| 10.457           |       | Promissory Note (Re: American  Express - 31st Avenue, Phoenix, AZ) dated December 16, 2004.                                                                                                              |
|             |       |                                                                                                                                                                                                     |
| 10.458           |       | Loan Agreement (Re: American  Express - 31st Avenue, Phoenix, AZ) dated December 16, 2004.                                                                                                               |
|             |       |                                                                                                                                                                                                     |
| 10.459           |       | Promissory Note (Re: American  Express - 19th Avenue, Phoenix, AZ) dated December 16, 2004.                                                                                                              |
|             |       |                                                                                                                                                                                                     |
| 10.460           |       | Loan Agreement (Re: American  Express - 19th Avenue, Phoenix, AZ) dated December 16, 2004.                                                                                                               |

 

100

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| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                 |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                            |
| 10.461           |       | Promissory Note (Re: American  Express - Minneapolis, MN) dated December 16, 2004.                              |
|             |       |                                                                                                            |
| 10.462           |       | Loan Agreement (Re: American  Express - Minneapolis, MN) dated December 16, 2004.                               |
|             |       |                                                                                                            |
| 10.463           |       | Promissory Note (Re: American  Express - Depere, WI) dated December 16, 2004.                                   |
|             |       |                                                                                                            |
| 10.464           |       | Loan Agreement (Re: American  Express - Depere, WI) dated December 16, 2004.                                    |
|             |       |                                                                                                            |
| 10.465           |       | Promissory Note (Re: American  Express - Greensboro, NC) dated December 16, 2004.                               |
|             |       |                                                                                                            |
| 10.466           |       | Loan Agreement (Re: American  Express - Greensboro, NC) dated December 16, 2004.                                |
|             |       |                                                                                                            |
| 10.467           |       | Promissory Note (Re: American  Express - Fort Lauderdale, FL) dated December 16, 2004.                          |
|             |       |                                                                                                            |
| 10.468           |       | Loan Agreement (Re: American  Express - Fort Lauderdale, FL) dated December 16, 2004.                           |
|             |       |                                                                                                            |
| 10.469           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Southlake Town Square) dated December 22,  2004. |
|             |       |                                                                                                            |
| 10.470           |       | Amended and Restated Purchase  and Sale Agreement (Re: Southlake Town Square) dated November 5, 2004.           |
|             |       |                                                                                                            |
| 10.471           |       | Assignment and Assumption of  Agreement to Admit Partners (Re: Southlake Town Square) dated December 22,  2004. |
|             |       |                                                                                                            |
| 10.472           |       | Agreement to Admit Partner  (Re: Southlake Town Square) dated November 5, 2004.                                 |
|             |       |                                                                                                            |
| 10.473           |       | Assignment (Re: Henry Town  Center) dated December 23, 2004.                                                    |
|             |       |                                                                                                            |
| 10.474           |       | Amended Agreement of Purchase  and Sale (Re: Henry Town Center) dated December 1, 2004.                         |
|             |       |                                                                                                            |
| 10.475           |       | Promissory Note (Re: Henry  Town Center) dated January 8, 2003.                                                 |
|             |       |                                                                                                            |
| 10.476           |       | Deed to Secure Debt and  Security Agreement (Re: Henry Town Center) dated January 8, 2003.                      |
|             |       |                                                                                                            |
| 10.477           |       | Assignment (Re: 23rd Street  Plaza) dated December 23, 2004.                                                    |
|             |       |                                                                                                            |
| 10.478           |       | Agreement of Sale (Re: 23rd  Street Plaza) dated November 19, 2004.                                             |
|             |       |                                                                                                            |
| 10.479           |       | Assignment (Re: Coram Plaza)  dated December 23, 2004.                                                          |
|             |       |                                                                                                            |
| 10.480           |       | Amended Agreement of Purchase  and Sale (Re: Coram Plaza) dated October 21, 2004.                               |
|             |       |                                                                                                            |
| 10.481           |       | Assignment (Re: Phenix  Crossing) dated December 28, 2004.                                                      |
|             |       |                                                                                                            |
| 10.482           |       | Amended Real Estate Sale  Agreement (Re: Phenix Crossing) dated December 20, 2004.                              |
|             |       |                                                                                                            |
| 10.483           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Mesa Fiesta) dated December 2004.                |
|             |       |                                                                                                            |
| 10.484           |       | Agreement of Purchase and Sale  (Re: Mesa Fiesta) dated December 7, 2004.                                       |
|             |       |                                                                                                            |
| 10.485           |       | Assignment (Re: Green’s  Corner, Newton Crossroads and Stilesboro Oaks) dated December 29, 2004.           |

 

101

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                                                  |
|------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                             |
| 10.486           |       | Amended Purchase and Sale  Agreement (Re: Green’s Corner, Newton Crossroads and Stilesboro Oaks) dated  December 20, 2004.                                  |
|             |       |                                                                                                                                                             |
| 10.487           |       | Assignment of Contract (Re:  Shoppes at Lake Andrew) dated December 30, 2004.                                                                                    |
|             |       |                                                                                                                                                             |
| 10.488           |       | Letter Agreement to Purchase  (Re: Shoppes at Lake Andrew) dated November 8, 2004.                                                                               |
|             |       |                                                                                                                                                             |
| 10.489           |       | Promissory Note (Re: Shoppes  at Lake Andrew) dated October 30, 2002.                                                                                            |
|             |       |                                                                                                                                                             |
| 10.490           |       | Future Advance and Renewal  Note (Re: Shoppes at Lake Andrew) dated February 26, 2004.                                                                           |
|             |       |                                                                                                                                                             |
| 10.491           |       | Notice of Future Advance,  Mortgage Modification and Amended and Restated Mortgage and Security  Agreement (Re: Shoppes at Lake Andrew) dated February 26, 2004. |
|             |       |                                                                                                                                                             |
| 10.492           |       | Renewal Note (Re: Shoppes at  Lake Andrew) dated December 2004.                                                                                                  |
|             |       |                                                                                                                                                             |
| 10.493           |       | Mortgage Modification and  Amended and Restated Mortgage and Security Agreement (Re: Shoppes at Lake  Andrew) dated December 30, 2004.                           |
|             |       |                                                                                                                                                             |
| 10.494           |       | Assignment of Contract (Re:  Pleasant Run Towne Crossing) dated December 29, 2004.                                                                               |
|             |       |                                                                                                                                                             |
| 10.495           |       | Promissory Note (Re: Pleasant  Run Towne Crossing) dated December 30, 2004.                                                                                      |
|             |       |                                                                                                                                                             |
| 10.496           |       | Loan Agreement (Re: Pleasant  Run Towne Crossing) dated December 30, 2004.                                                                                       |
|             |       |                                                                                                                                                             |
| 10.497           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Evans Town Center) dated December 2004.                                                           |
|             |       |                                                                                                                                                             |
| 10.498           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: Irmo Station) dated December 2004.                                                                |
|             |       |                                                                                                                                                             |
| 10.499           |       | Amended Agreement of Purchase  and Sale (Re: Evans Town Center and Irmo Station) dated December 29, 2004.                                                        |
|             |       |                                                                                                                                                             |
| 10.500           |       | Assignment and Assumption of  Purchase and Sale Agreement (Re: American Express - Markham, Ontario, Canada)  dated January 25, 2005.                             |
|             |       |                                                                                                                                                             |
| 10.501           |       | Purchase and Sale Agreement  (Re: American Express - Markham, Ontario, Canada) dated January 25, 2005.                                                           |
|             |       |                                                                                                                                                             |
| 10.502           |       | Purchase Agreement (Re:  American Express - Markham, Ontario, Canada) dated January 25, 2005.                                                                    |
|             |       |                                                                                                                                                             |
| 10.503           |       | Promissory Note (Re: American  Express - Markham, Ontario, Canada) dated January 26, 2005.                                                                       |
|             |       |                                                                                                                                                             |
| 10.504           |       | Loan Agreement (Re: American  Express - Markham, Ontario, Canada) dated January 26, 2005.                                                                        |
|             |       |                                                                                                                                                             |
| 10.505           |       | Amended and Restated Project  Promissory Note (Re: Coram Plaza) dated December 7, 2004.                                                                          |
|             |       |                                                                                                                                                             |
| 10.506           |       | Amended and Restated  Acquisition Promissory Note (Re: Coram Plaza) dated December 7, 2004.                                                                      |
|             |       |                                                                                                                                                             |
| 10.507           |       | Amended and Restated Building  Loan Promissory Note (Re: Coram Plaza) dated December 7, 2004.                                                                    |

 

102

----

 
| **EXHIBIT  NO.** | ** ** | **DESCRIPTION**                                                                                                                       |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                  |
| 10.508           |       | Assignment, Assumption,  Modification and Release Agreement (Re: Coram Plaza) dated December 7, 2004.                                 |
|             |       |                                                                                                                                  |
| 10.509           |       | Interim Secured Promissory  Note Loan No. 754183 (Re: Coram Plaza) dated January 26, 2005.                                            |
|             |       |                                                                                                                                  |
| 10.510           |       | Consolidated, Amended and  Restated Secured Promissory Note Loan No. 754183 (Re: Coram Plaza) dated  January 26, 2005.                |
|             |       |                                                                                                                                  |
| 10.511           |       | Loan Agreement Loan No. 754183  (Re: Coram Plaza) dated January 26, 2005.                                                             |
|             |       |                                                                                                                                  |
| 10.512           |       | Guaranty Loan No. 754183 (Re:  Coram Plaza) dated January 26, 2005.                                                                   |
|             |       |                                                                                                                                  |
| 23.2*            |       | Consent of Duane Morris LLP (included in Exhibit 5).                                                                                  |
|             |       |                                                                                                                                  |
| 23.3*            |       | Consent of Duane Morris LLP (included in Exhibit 8).                                                                                  |
|             |       |                                                                                                                                  |
| 31.1             |       | Rule 13a-15(e)/15d-15(e) Certification by Chief  Executive Officer.                                                                   |
|             |       |                                                                                                                                  |
| 31.2             |       | Rule 13a-15(e)/15d-15(e) Certification by Principal  Financial Officer.                                                               |
|             |       |                                                                                                                                  |
| 31.3             |       | Rule 13a-15(e)/15d-15(e) Certification by Principal  Accounting Officer.                                                              |
|             |       |                                                                                                                                  |
| 32.1             |       | Section 1350 Certification by Chief Executive  Officer and Principal Accounting Officer and Principal   Financial  Officer. |
|             |       |                                                                                                                                  |
| 99.1*            |       | Code of Business Conduct and Ethics                                                                                                   |
|             |       |                                                                                                                                  |
| 99.2*            |       | Nonretaliation Policy                                                                                                                 |

 

----

* Previously filed.

 

103

----

 

**SIGNATURES**

 

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

 

INLAND WESTERN RETAILREAL ESTATE TRUST, INC.

 
|   | /s/ Robert D. Parks                                           |   |
|--------|---------------------------------------------------------------|--------|
|   |                                                          |
| By:    | Robert D. Parks                                               |
|   | Chairman and Chief  Executive Officer and Affiliated Director |
| Date:  | March 7, 2005                                                 |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated:

 
|   | /s/ Robert D. Parks                                            |   |                  |                 |
|--------|----------------------------------------------------------------|--------|-----------------------|----------------------|
|   |                                                           |   |                  | /s/ Kenneth H. Beard |   |
| By:    | Robert D. Parks                                                | By:    | Kenneth H. Beard      |
|   | Chairman and Chief  Executive  Officer and Affiliated Director |   | Independent Director  |
| Date:  | March 7, 2005                                                  | Date:  | March 7, 2005         |
|   |                                                           |   |                  |
|   | /s/ Steven P. Grimes                                           |   |                  |                 |
|   |                                                           |   | /s/ Paul R. Gauvreau  |                 |
| By:    | Steven P. Grimes                                               | By:    | Paul R. Gauvreau      |
|   | Principal Financial  Officer                                   |   | Independent Director  |
| Date:  | March 7, 2005                                                  | Date:  | March 7, 2005         |
|   |                                                           |   |                  |
|   | /s/ Lori J. Foust                                              |   |                  |                 |
|   |                                                           |   | /s/ Gerald M. Gorski  |                 |
| By:    | Lori J. Foust                                                  | By:    | Gerald M. Gorski      |
|   | Principal Accounting  Officer                                  |   | Independent Director  |
| Date:  | March 7, 2005                                                  | Date:  | March 7, 2005         |
|   |                                                           |   |                  |
|   | /s/ Brenda G. Gujral                                           |   |                  |                 |
|   |                                                           |   | /s/ Barbara A. Murphy |                 |
| By:    | Brenda G. Gujral                                               | By:    | Barbara A. Murphy     |
|   | Affiliated Director                                            |   | Independent Director  |
| Date:  | March 7, 2005                                                  | Date:  | March 7, 2005         |
|   |                                                           |   |                  |
|   |                                                           |   |                  |
|   | /s/ Frank A. Catalano,  Jr.                                    |   |                  |                 |
| By:    | Frank A. Catalano, Jr.                                         |   |                  |
|   | Independent Director                                           |   |                  |
| Date:  | March 7, 2005                                                  |   |                  |

 

104

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