----

----

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |
|                                                         | 2012 |   | 2011(unaudited) |
| Assets:                                                      |   |   |   |
| Investment properties:                                       |   |   |   |
| Land                                                         | $ | 87,569,737 |  |   | 88,013,295 |  |
| Building and improvements                                    | 233,636,111 |  |   | 231,797,202 |  |
|                                                         | 321,205,848 |  |   | 319,810,497 |  |
| Less accumulated depreciation                                | 64,177,199 |  |   | 55,368,495 |  |
| Net investment properties                                    | 257,028,649 |  |   | 264,442,002 |  |
| Cash and cash equivalents                                    | 6,963,756 |  |   | 8,309,489 |  |
| Restricted cash                                              | 1,005,438 |  |   | 1,431,162 |  |
| Accounts and rents receivable, net                           | 5,900,428 |  |   | 7,213,953 |  |
| Deferred rent                                                | 5,018,971 |  |   | 4,870,449 |  |
| Deposits and other assets                                    | 983,255 |  |   | 324,817 |  |
| Acquired lease intangibles, net                              | 7,359,446 |  |   | 11,095,171 |  |
| Deferred costs, net                                          | 1,358,452 |  |   | 958,041 |  |
| Deferred costs, net to related party                         | 2,791,118 |  |   | 2,356,196 |  |
| Total assets                                                 | $ | 288,409,513 |  |   | 301,001,280 |  |
|                                                         |   |   |   |
| Liabilities:                                                 |   |   |   |
| Accounts payable and accrued expenses                        | $ | 1,933,395 |  |   | 2,187,296 |  |
| Acquired below market lease intangibles, net                 | 3,468,051 |  |   | 4,138,116 |  |
| Accrued interest                                             | 760,622 |  |   | 752,883 |  |
| Accrued real estate taxes                                    | 11,080,031 |  |   | 11,338,338 |  |
| Security and other deposits                                  | 406,740 |  |   | 401,424 |  |
| Mortgages payable                                            | 173,571,683 |  |   | 180,933,750 |  |
| Prepaid rents and unearned income                            | 1,558,744 |  |   | 1,167,762 |  |
| Total liabilities                                            | 192,779,266 |  |   | 200,919,569 |  |
| Members’ equity:                                       |   |   |   |
| Equity:                                                      |   |   |   |
| Inland Real Estate Corporation                               | 47,599,628 |  |   | 49,825,360 |  |
| New York State Teachers' Retirement System                   | 48,030,619 |  |   | 50,256,351 |  |
| Total members' equity                                        | 95,630,247 |  |   | 100,081,711 |  |
| Total liabilities and members' equity                        | $ | 288,409,513 |  |   | 301,001,280 |  |
|                                                         |   |   |   |
| See accompanying notes to consolidated financial statements. |

----

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |  |  |  |
|                                                         | 2012 |   | 2011(unaudited) |   | 2010(unaudited) |
| Revenues:                                                    |   |   |   |   |   |
| Rental income                                                | $ | 30,142,710 |  |   | 30,199,150 |  |   | 33,433,406 |  |
| Tenant recoveries                                            | 12,966,827 |  |   | 13,876,591 |  |   | 14,160,953 |  |
| Other property income                                        | 522,919 |  |   | 282,328 |  |   | 305,651 |  |
| Termination fee income                                       | 2,554 |  |   | —     |  |   | 76,797 |  |
| Total revenues                                               | 43,635,010 |  |   | 44,358,069 |  |   | 47,976,807 |  |
| Expenses:                                                    |   |   |   |   |   |
| Property operating expenses                                  | 4,473,689 |  |   | 4,832,942 |  |   | 5,685,543 |  |
| Property operating expenses to related party                 | 1,746,227 |  |   | 1,803,326 |  |   | 1,918,347 |  |
| Bad debt expense                                             | 863,589 |  |   | 1,047,127 |  |   | 490,284 |  |
| Real estate tax expense                                      | 10,871,637 |  |   | 11,409,353 |  |   | 11,689,262 |  |
| Depreciation and amortization expense                        | 14,917,308 |  |   | 16,306,101 |  |   | 19,687,211 |  |
| General and administrative expenses                          | 118,590 |  |   | 107,975 |  |   | 113,489 |  |
| Total expenses                                               | 32,991,040 |  |   | 35,506,824 |  |   | 39,584,136 |  |
| Operating income                                             | 10,643,970 |  |   | 8,851,245 |  |   | 8,392,671 |  |
| Other income                                                 | 33,579 |  |   | 206,039 |  |   | 513,147 |  |
| Gain on land condemnation                                    | 791,781 |  |   | —     |  |   | —     |  |
| Interest expense                                             | (9,928,334 | ) |   | (10,229,042 | ) |   | (12,535,349 | ) |
| Net income (loss)                                            | $ | 1,540,996 |  |   | (1,171,758 | ) |   | (3,629,531 | ) |
|                                                         |
| See accompanying notes to consolidated financial statements. |

----

|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |  |
|                                                         |   | Inland Real Estate Corp. |   | New York State Teachers' Retirement System |   | Total |
|                                                         |   |   |   |   |   |   |
| Balance at December 31, 2009 (unaudited)                     |   | 82,172,616 |  |   | 82,603,609 |  |   | 164,776,225 |  |
|                                                         |   |   |   |   |   |   |
| Distributions                                                |   | (4,064,836 | ) |   | (4,064,837 | ) |   | (8,129,673 | ) |
| Property Distribution                                        |   | (16,226,971 | ) |   | (16,226,971 | ) |   | (32,453,942 | ) |
| Net loss                                                     |   | (1,814,765 | ) |   | (1,814,766 | ) |   | (3,629,531 | ) |
| Balance at December 31, 2010 (unaudited)                     |   | 60,066,044 |  |   | 60,497,035 |  |   | 120,563,079 |  |
|                                                         |   |   |   |   |   |   |
| Contributions                                                |   | 275,088 |  |   | 275,088 |  |   | 550,176 |  |
| Distributions                                                |   | (9,929,893 | ) |   | (9,929,893 | ) |   | (19,859,786 | ) |
| Net loss                                                     |   | (585,879 | ) |   | (585,879 | ) |   | (1,171,758 | ) |
| Balance at December 31, 2011 (unaudited)                     |   | 49,825,360 |  |   | 50,256,351 |  |   | 100,081,711 |  |
|                                                         |   |   |   |   |   |   |
| Contributions                                                |   | 4,225,000 |  |   | 4,225,000 |  |   | 8,450,000 |  |
| Distributions                                                |   | (7,221,230 | ) |   | (7,221,230 | ) |   | (14,442,460 | ) |
| Net income                                                   |   | 770,498 |  |   | 770,498 |  |   | 1,540,996 |  |
| Balance at December 31, 2012                                 |   | 47,599,628 |  |   | 48,030,619 |  |   | 95,630,247 |  |
|                                                         |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements. |

----

|                                                                                          |
|------------------------------------------------------------------------------------------|
|                                                                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                     |   |   |   |   |   |   |   | 2012 |   | 2011(unaudited) |   | 2010(unaudited) |
| Cash flows from operating activities:                                                    |   |   |   |   |   |   |
| Net income (loss)                                                                        |   | $ | 1,540,996 |  |   | (1,171,758 | ) |   | (3,629,531 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |   |   |   |   |
| Depreciation and amortization                                                            |   | 14,917,308 |  |   | 16,306,101 |  |   | 19,687,211 |  |
| Amortization of acquired above market lease intangibles                                  |   | 94,961 |  |   | 413,126 |  |   | 236,790 |  |
| Amortization of acquired below market lease intangibles                                  |   | (670,065 | ) |   | (733,987 | ) |   | (785,375 | ) |
| Gain on land condemnation                                                                |   | (791,781 | ) |   | —     |  |   | —     |  |
| Straight line rental income                                                              |   | (148,522 | ) |   | (298,664 | ) |   | (397,878 | ) |
| Bad debt expense                                                                         |   | 863,589 |  |   | 1,047,127 |  |   | 490,284 |  |
| Amortization of loan fees                                                                |   | 232,306 |  |   | 180,344 |  |   | 202,039 |  |
| Changes in assets and liabilities:                                                       |   |   |   |   |   |   |
| Restricted cash                                                                          |   | (54,566 | ) |   | 1,402,513 |  |   | (976,478 | ) |
| Accounts and rents receivable                                                            |   | 449,936 |  |   | 599,609 |  |   | 744,231 |  |
| Deposits and other assets                                                                |   | (658,438 | ) |   | (25,000 | ) |   | 13,569 |  |
| Accounts payable and accrued expenses                                                    |   | (43,372 | ) |   | (168,470 | ) |   | (17,633 | ) |
| Accrued interest                                                                         |   | 7,739 |  |   | (67,214 | ) |   | (10,567 | ) |
| Accrued real estate taxes                                                                |   | (258,307 | ) |   | 25,281 |  |   | (329,224 | ) |
| Security and other deposits                                                              |   | 5,316 |  |   | (19,454 | ) |   | 11,864 |  |
| Prepaid rents and unearned income                                                        |   | 390,982 |  |   | 73,248 |  |   | 43,067 |  |
| Net cash provided by operating activities                                                |   | 15,878,082 |  |   | 17,562,802 |  |   | 15,282,369 |  |
|                                                                                     |   |   |   |   |   |   |
| Cash flows from investing activities:                                                    |   |   |   |   |   |   |
| Restricted cash                                                                          |   | 480,290 |  |   | 811,203 |  |   | —     |  |
| Additions to investment properties                                                       |   | (3,940,128 | ) |   | (4,339,463 | ) |   | (4,869,608 | ) |
| Proceeds from land condemnation                                                          |   | 394,450 |  |   | —     |  |   | —     |  |
| Distribution for change in control of property                                           |   | —     |  |   | —     |  |   | (807,075 | ) |
| Leasing fees                                                                             |   | (1,029,333 | ) |   | (698,689 | ) |   | (952,593 | ) |
| Net cash used in investing activities                                                    |   | (4,094,721 | ) |   | (4,226,949 | ) |   | (6,629,276 | ) |
|                                                                                     |   |   |   |   |   |   |
| Cash flows from financing activities:                                                    |   |   |   |   |   |   |
| Contributions from members                                                               |   | 8,450,000 |  |   | 550,176 |  |   | —     |  |
| Distributions to members                                                                 |   | (14,442,460 | ) |   | (19,859,786 | ) |   | (8,129,673 | ) |
| Mortgages payable proceeds                                                               |   | 41,850,000 |  |   | 66,780,000 |  |   | —     |  |
| Loan fees                                                                                |   | (615,457 | ) |   | (665,088 | ) |   | (52 | ) |
| Payoff of mortgages payable                                                              |   | (47,300,000 | ) |   | (55,051,252 | ) |   | —     |  |
| Principal payments of mortgages payable                                                  |   | (1,071,177 | ) |   | (1,196,267 | ) |   | (2,495,885 | ) |
| Net cash used in financing activities                                                    |   | (13,129,094 | ) |   | (9,442,217 | ) |   | (10,625,610 | ) |
| Net (decrease) increase in cash and cash equivalents                                     |   | (1,345,733 | ) |   | 3,893,636 |  |   | (1,972,517 | ) |
| Cash and cash equivalents at beginning of year                                           |   | 8,309,489 |  |   | 4,415,853 |  |   | 6,388,370 |  |
| Cash and cash equivalents at end of year                                                 |   | $ | 6,963,756 |  |   | 8,309,489 |  |   | 4,415,853 |  |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental cash flow information                                                       |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                                   |   | $ | 9,688,289 |  |   | 10,115,912 |  |   | 12,343,877 |  |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Non - cash accrued additions to investment properties                                    |   | —     |  |   | 817,540 |  |   | 411,116 |  |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off of fully depreciated building and improvements                                 |   | (1,897,670 | ) |   | (207,145 | ) |   | (251,800 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off of fully amortized acquired lease intangibles                                  |   | (2,594,216 | ) |   | (7,836,354 | ) |   | (1,912,600 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off of fully amortized deferred costs                                              |   | (582,120 | ) |   | (575,192 | ) |   | (215,457 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off of fully amortized acquired below market lease intangibles                     |   | 257,681 |  |   | 396,947 |  |   | 539,114 |  |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                             |

----

|     |                                      |
|-----|--------------------------------------|
| (1) | Organization and Basis of Accounting |

----

|            |
|------------|
|            |  |  |  |  |  |  |  |  |  |  |
| Year       |   | Amortization of Above Market Lease Intangibles |   | Amortization of Below Market Lease Intangibles |   | Amortization of In Place Lease Intangibles |   | Total |
| 2013       |   | $ | 86,009 |  |   | (627,023) |   | 2,899,494 |   | 2,358,480 |
| 2014       |   | 64,438 |  |   | (523,075) |   | 797,606 |   | 338,969 |
| 2015       |   | 38,475 |  |   | (401,888) |   | 797,606 |   | 434,193 |
| 2016       |   | 25,644 |  |   | (307,240) |   | 797,606 |   | 516,010 |
| 2017       |   | 25,644 |  |   | (239,635) |   | 797,606 |   | 583,615 |
| Thereafter |   | 51,288 |  |   | (1,369,190) |   | 978,030 |   | (339,872) |
| Total      |   | $ | 291,498 |  |   | (3,468,051) |   | 7,067,948 |   | 3,891,395 |

----

|     |                                            |
|-----|--------------------------------------------|
| (2) | Change in Control of Ownership (unaudited) |

|                           |
|---------------------------|
|                           |  |  |
| Investment Properties     | $ | 116,440,520 |
| Cash and cash equivalents |   | 807,075 |
| Other assets              |   | 9,185,266 |
| Total assets transferred  |   | 126,432,861 |
| Mortgages payable         |   | 91,035,468 |
| Other liabilities         |   | 2,943,451 |
| Net assets distributed    | $ | 32,453,942 |

|     |                   |
|-----|-------------------|
| (3) | Land Condemnation |

|     |                        |
|-----|------------------------|
| (4) | Fair Value Disclosures |

|         |                                                                                      |
|---------|--------------------------------------------------------------------------------------|
| • | Level 1 – quoted prices in active markets for identical assets or liabilities. |

|         |                                                                                                                                                                                            |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Level 2 – quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations whose inputs are observable. |

|         |                                                                                                                      |
|---------|----------------------------------------------------------------------------------------------------------------------|
| • | Level 3 – model-derived valuations with unobservable inputs that are supported by little or no market activity |

----

|     |                                   |
|-----|-----------------------------------|
| (5) | Transactions with Related Parties |

|     |                  |
|-----|------------------|
| (6) | Operating Leases |

|            |
|------------|
|            |  |  |  |  |
| 2013       |   | $ | 29,048,660 |  |
| 2014       |   | 25,951,396 |  |
| 2015       |   | 22,929,746 |  |
| 2016       |   | 19,608,810 |  |
| 2017       |   | 17,859,340 |  |
| Thereafter |   | 56,041,746 |  |
| Total      |   | $ | 171,439,698 |  |

----

|     |                   |
|-----|-------------------|
| (7) | Mortgages Payable |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Mortgagee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Interest  rate at December 31, 2012 (a) |   | Interest  rate at December 31, 2011 (unaudited) |   | Maturity Date |   | Current Monthly Payment |   | Balance at December 31, 2012 |   | Balance at December 31, 2011 (unaudited) |
| Midland                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | - |   | 4.94% |   | - |   | - |   | $ | — |  |   | 17,500,000 |  |
| Midland                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | - |   | 4.94% |   | - |   | - |   | — |  |   | 15,000,000 |  |
| Allstate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | - |   | 5.21% |   | - |   | - |   | — |  |   | 8,200,000 |  |
| Principal Life                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | - |   | 5.29% |   | - |   | - |   | — |  |   | 6,600,000 |  |
| Wachovia Securities (b)(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 5.58% |   | 5.58% |   | 04/2013 |   | 83,402 |   | 11,448,500 |  |   | 12,593,048 |  |
| Wachovia Securities (b)(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 5.66% |   | 5.66% |   | 04/2013 |   | 16,267 |   | 2,429,687 |  |   | 2,483,387 |  |
| Wachovia Securities (b)(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 5.93% |   | 5.93% |   | 04/2013 |   | 48,735 |   | 6,989,044 |  |   | 7,147,287 |  |
| Principal Life (b)(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 6.08% |   | 6.08% |   | 10/2013 |   | 73,453 |   | 10,731,958 |  |   | 10,942,876 |  |
| TCF National Bank (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 6.50% |   | 6.50% |   | 09/2014 |   | 76,590 |   | 11,538,086 |  |   | 11,687,152 |  |
| John Hancock Life                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 5.83% |   | 5.83% |   | 02/2015 |   | 65,588 |   | 13,500,000 |  |   | 13,500,000 |  |
| Allstate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 5.86% |   | 5.86% |   | 03/2015 |   | 41,508 |   | 8,500,000 |  |   | 8,500,000 |  |
| Principal Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 5.00% |   | 5.00% |   | 05/2016 |   | 33,333 |   | 8,000,000 |  |   | 8,000,000 |  |
| Prudential                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 4.00% |   | 4.00% |   | 01/2019 |   | 55,000 |   | 16,500,000 |  |   | 16,500,000 |  |
| Midland National Life Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 4.75% |   | - |   | 06/2019 |   | 69,271 |   | 17,500,000 |  |   | — |  |
| North American Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 4.60% |   | - |   | 07/2019 |   | 24,342 |   | 6,350,000 |  |   | — |  |
| JP Morgan Chase Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 5.55% |   | 5.55% |   | 09/2021 |   | 202,063 |   | 42,280,000 |  |   | 42,280,000 |  |
| ING Life Insurance and Annuity (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 4.40% |   | - |   | 04/2022 |   | 90,137 |   | 17,804,408 |  |   | — |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Mortgages Payable |   |   |   |   |   | $ | 173,571,683 |  |   | 180,933,750 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| (a)  The weighted average interest rate at December 31, 2012 was 5.30%.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (b) $31,599,189 of the Company’s mortgages payable mature during 2013.  The Company repaid the loans maturing in April 2013 on March 11, 2013. The Company expects to either repay or replace the loan maturing in October 2013 with new debt for a term of five years or longer at the market interest rate at the time the existing debt matures, although there is no assurance that the Company will be able to replace the debt on terms and conditions the Company finds acceptable, if at all. |
| (c) These loans require payments of principal and interest monthly, all other loans listed are interest only.                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |

----

|            |
|------------|
|            |  |  |  |  |
| 2013       |   | $ | 32,067,133 |  |
| 2014       |   | 11,692,483 |  |
| 2015       |   | 22,321,686 |  |
| 2016       |   | 8,334,209 |  |
| 2017       |   | 351,551 |  |
| Thereafter |   | 98,804,621 |  |
| Total      |   | $ | 173,571,683 |  |

|     |                               |
|-----|-------------------------------|
| (8) | Commitments and Contingencies |

|     |                   |
|-----|-------------------|
| (9) | Subsequent Events |