Document:

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                                                                  Exhibit 10.243

                                                         JHLICO Loan No. 6518403

               TRANSITIONAL SECURITY (PHASE II) RESERVE AGREEMENT

       THIS TRANSITIONAL SECURITY (PHASE II) RESERVE AGREEMENT (the "AGREEMENT")
is made as of the 28th day of June, 2004 by and between INLAND WESTERN DULUTH
JOHN'S CREEK SPE, L.L.C., a Delaware limited liability company ("BORROWER") and
JOHN HANCOCK LIFE INSURANCE COMPANY, a Massachusetts corporation ("LENDER").

                                   WITNESSETH

       WHEREAS, Borrower is the owner of certain property (the "MORTGAGED
PROPERTY") located at 11720 Medlock Bridge Road, Duluth, Georgia, more
particularly described in the Loan Documents (as hereinafter defined); and

       WHEREAS, the Mortgaged Property consists of an improved portion currently
owned by Borrower and legally described as "Phase I" on EXHIBIT A attached
hereto and made a part hereof, and the Mortgaged Property will further consist
of an adjacent portion of property ("Phase II") currently owned by Borrower and
to hereafter be improved and leased to third party tenants, as hereinafter
provided, which Phase II is shown and legally described as "Phase II" on EXHIBIT
A attached hereto and made a part hereof; and

       WHEREAS, pursuant to the terms of a certain application for First
Mortgage Loan dated December 9, 2003, as amended on May 19, 2004 (the
"APPLICATION"), Lender has loaned to Borrower the principal sum of Twenty-three
Million Three Hundred Thousand and No/100 Dollars ($23,300,000.00) (the "LOAN"),
which shall be initially secured by among other things Phase I, and later by
Phase II as hereinafter provided; and

       WHEREAS, the Loan is evidenced by a Note executed by Borrower as of even
date herewith in the principal amount of $23,300,000.00 payable to the order of
Lender (the "NOTE"); and

       WHEREAS, the Note is secured by a Deed to Secure Debt, Assignment of
Leases and Rents and Security Agreement dated as of even date herewith
("Mortgage"), which encumbers the Mortgaged Property, and by the other "LOAN
DOCUMENTS" (as such term is defined in the Note); and

       WHEREAS, Lender requires, as a condition precedent to Lender's acceptance
of the Note, that, until such time as Phase II is improved and leased as
hereinafter provided, Borrower will be required to make certain deposits with
Lender of certain funds, to be held, released and used as provided in this
Agreement.

       NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:

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                                                         JHLICO Loan No. 6518403

       1.     DEFINITIONS. Any capitalized term utilized herein shall have the
meaning as specified in the Mortgage, unless such term is otherwise specifically
defined herein. For the purposes of this Agreement, the following capitalized
terms shall have the meanings indicated:

              (a)    DEBT SERVICE COVERAGE RATIO shall mean the ratio of Gross
                     Income (as hereinafter defined) derived from operation of
                     the Mortgaged Property, less Expenses (hereinafter
                     defined), to Debt Service Payments.

              (b)    DEBT SERVICE PAYMENTS shall mean any and all monthly
                     installments due and owing from time to time under the Note
                     and the Mortgage and the other Loan Documents.

              (c)    EXPENSES shall mean, for any month or portion thereof, all
                     reasonable expenses actually incurred by the Borrower
                     within the categories set forth below in respect to the
                     ownership, operation, leasing and occupancy of the
                     Mortgaged Property, determined on the basis of sound cash
                     accounting practices consistently applied and in accordance
                     with generally accepted accounting practices, except that
                     those expenses described in subsections (a), (b), (c), (e)
                     and (g) below shall not be accounted for on a cash basis
                     but, rather, to the extent paid by Borrower [no more than
                     one (1) year in advance], shall be allocated to the
                     accounting period in which they accrue. Expenses are as
                     follows (but without duplication of any item): (a) general
                     real estate taxes paid to the appropriate taxing
                     authorities; (b) special assessments or similar charges
                     paid to the appropriate governmental authorities; (c)
                     personal property taxes; (d) sales and use taxes; (e) costs
                     of utilities, air conditioning and heating for the
                     Mortgaged Property; (f) maintenance and repair costs of a
                     non-capital nature; (g) premiums paid for insurance carried
                     on or with respect to the Mortgaged Property; (h) direct
                     labor costs, for positions at a level of building
                     superintendent or below, for labor used in the maintenance
                     and repair of the Mortgaged Property (but not to exceed
                     labor costs customarily charged in the Spartanburg, South
                     Carolina area for similar services on similar properties
                     and excluding any labor costs for tenant improvements); (i)
                     customary management fees; (j) principal and interest
                     payments on the Loan; and (k) leasing commissions at market
                     rates paid to BONA FIDE third party brokers.
                     Notwithstanding anything included within the above
                     definition of "Expenses", the following shall be excluded
                     from Expenses: (i) foreign, U.S., state and local income
                     taxes; and (ii) depreciation, amortization and other
                     non-cash deductions of the Borrower for income tax
                     purposes.

              (d)    LEASE shall mean a written lease for space in the Mortgaged
                     Property with a tenant that is not an affiliate of the
                     Borrower, the form of which lease has been approved by the
                     Lender. As used herein, the term "affiliate" shall mean any
                     person or entity (i) which owns beneficially, directly or
                     indirectly, any membership interests of the Borrower or any
                     constituent

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                                                         JHLICO Loan No. 6518403

                     entity of the Borrower, (ii) whose membership interests are
                     owned beneficially, directly or indirectly, by Borrower or
                     any constituent entity of the Borrower, (iii) which
                     controls or is under common control with the Borrower or
                     any constituent entity of the Borrower, or (iv) which is
                     controlled by Borrower or any constituent entity of the
                     Borrower. The term "control" means the possession, directly
                     or indirectly, of the power to direct or cause the
                     direction of the management and policies of a person or
                     entity, whether through ownership of voting securities, by
                     contract or otherwise.

              (e)    TRANSITION PERIOD shall mean a period of twenty-four (24)
                     months from the date of initial funding of the Loan.

              (f)    RENT shall mean all rentals actually received by or paid to
                     the Borrower, from tenants under the Leases.

       2.     THE DEPOSIT. Concurrently with its execution of this Agreement,
Borrower agrees to deposit with Lender a Letter of Credit ("LETTER OF CREDIT")
in the amount of Eleven Million Two Hundred Eighty-six Thousand Six Hundred
Fifty-and No/100 Dollars ($11,286,652.00) ("DEPOSIT"). The Letter of Credit
shall be an irrevocable, unconditional, transferable site draft evergreen Letter
of Credit, in form and substance reasonably satisfactory to Lender, issued by a
bank reasonably satisfactory to Lender, and which shall be drawn upon or reduced
or released in accordance with this Agreement. The initial Letter of Credit
shall expire no earlier than June 30, 2007, and shall be automatically renewed
for successive twelve-month periods thereafter. The Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (Publication
No. 500), shall specifically waive Article 17 of such Publication, and shall
permit partial draws and reductions. The Letter of Credit shall also provide
that a draw of the Letter of Credit shall be recognized by the issuer of the
Letter of Credit by 3:00 p.m. of the date the site draft is provided to issuer,
provided such site draft is delivered to the issuer, on or before 11:00 a.m. on
such date. It is further required that the bank issuing the Letter of Credit (or
any substituted letter of credit), be reasonably acceptable to Lender not only
at the time of the issuance of said Letter of Credit, but shall also continue to
be acceptable to Lender during the entire term of said Letter of Credit,
including all extension and/or renewal periods. In the event Lender, in its
reasonable discretion, shall determine that an issuing bank is or has become
unacceptable to Lender, or in the event Lender receives notice from the issuing
bank that it will not be renewing the term of the letter of credit for any
succeeding one-year period, the Borrower shall be obligated to provide Lender
within fifteen (15) business days after Borrower's receipt of written notice
from Lender that the bank is unacceptable or will not be renewing such letter of
credit with (i) a substitute letter of credit and agreement in form and
substance reasonably satisfactory to Lender and issued by a bank satisfactory to
Lender; or (ii) Eleven Million Two Hundred Eighty-six Thousand Six Hundred
Fifty-two and No/100 Dollars ($11,286,652.00) in cash to be held by Lender in
escrow pursuant to the terms of this Agreement and such cash escrow shall be
deemed the "Reserve" hereunder. In the event that Borrower does not provide such
substitute letter of credit and agreement or cash escrow to Lender within
fifteen (15) business days after Borrower's receipt of written notice from
Lender of the unacceptability of said bank or decision by such bank not to renew
such letter of credit, such

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                                                         JHLICO Loan No. 6518403

failure shall be a default under the Loan Documents and Lender shall be
authorized to draw on the Letter of Credit and to apply the proceeds as
described below and to exercise its other remedies under the Loan Documents. The
Deposit and all other funds deposited by Borrower pursuant to this Agreement
shall hereinafter be collectively referred to as the "Reserve". The Reserve
shall be held and released by Lender, and used by Borrower, in accordance with
the terms and conditions of this Agreement.

       3.     USE OF THE RESERVE. Lender shall have no obligation to return the
Letter of Credit unless Borrower has satisfied the requirements for release of
the Reserve to Borrower described below.

       4.     RELEASE OF RESERVE. The following conditions ("TRANSFER
CONDITIONS") shall apply to the return of the Letter of Credit and/or release of
the Reserve:

              (a)    Borrower shall not then be in breach of any provision of
this Agreement nor shall an Event of Default then exist under any of the Loan
Documents.

              (b)    Borrower then continues to be the owner in fee simple of
Phase I and Phase II

              (c)    Borrower shall provide evidence reasonably satisfactory to
Lender that (i) Rent in an amount not less than $326,370.00 per annum shall be
currently collectible from actual occupants of Phase II under written Leases
that are in form, for periods and at rentals satisfactory in all respects to
Lender, under which Leases there shall be no concessions, free rent or rebates,
and occupancy at Phase II under such Leases shall be no less than 92%.

              (d)    Borrower shall provide evidence reasonably satisfactory to
Lender that Rent in an amount of not less than $2,667,373.00 per annum shall be
currently collectible from actual occupants of the combined Phase I and Phase II
under written Leases that are in form, for periods and at rentals satisfactory
in all respects to Lender, under which Leases there shall be no concessions,
free rent or rebates, and occupancy at the combined Phase I and Phase II under
such Leases shall be no less than 92%.

              (e)    The loan to value ratio for the combined Phase I and
Phase II shall not be greater than fifty-five percent (55%) and the Debt Service
Coverage Ratio for the Loan shall not be less than 2.40:1 as calculated by
Lender.

              (f)    Borrower shall provide Lender with a certified rent roll
and operating statements and calculations evidencing satisfaction of the
requirements of Paragraph 4(c) and 4(d) above and the Debt Service Coverage
Ratio as set forth in Paragraph 4(e) above.

              (g)    Borrower shall provide Lender with such additional
documents, certificates and affidavits as Lender may reasonably request.

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                                                         JHLICO Loan No. 6518403

       If Borrower shall not then be in breach of any provision of this
Agreement nor shall an Event of Default then exist under any of the Loan
Documents, then Lender, within ten (10) business days after receipt of a
disbursement request ("Disbursement Request") in the form attached hereto as
EXHIBIT B shall, subject to the terms and conditions set forth below, return to
Borrower the Reserve and/or the original Letter of Credit then in the possession
of Lender.

       Borrower agrees to use diligent efforts to satisfy the Transition
Conditions on or before expiration of the Transition Period. In the event that
the Borrower fails to satisfy the Transition Conditions on or before expiration
of the Transition Period, then Lender, in its sole discretion, may elect either
(a) to continue to hold the Letter of Credit and/or Reserve for an additional
period of time which Lender shall determine in its sole discretion, or (b) to
apply the Letter of Credit and/or Reserve as provided in Section 5 below.

       5.     REMEDIES.

              (a)    In order to secure Borrower's repayment of the Note and
performance of all other covenants and conditions required on the part of
Borrower to be observed or performed hereunder and under the Loan Documents,
Borrower, to the extent Borrower possesses any interest in the Reserve, hereby
pledges, assigns and grants to Lender a continuing first lien security interest
in the Reserve, and Lender is hereby given a lien upon, security title to, and a
security interest in the Reserve. Borrower hereby acknowledges that Lender has
complete dominion and control over the Reserve, and Borrower shall not, without
the express written consent of Lender, have any access to or right to draw
against any of the Reserve.

              (b)    Upon the occurrence of an Event of Default or in the event
of Borrower's breach of any provision of this Agreement, which breach is not
cured within five (5) business days after Borrower's receipt of written notice,
or in the event Lender receives notice of the non-renewal of the Letter of
Credit and does not receive from the issuer of the Letter of Credit, at least
thirty (30) days prior to the date upon which such renewal will take place, a
replacement Letter of Credit in form and substance reasonably satisfactory to
Lender in its sole discretion from an issuer reasonably satisfactory to Lender
as described herein, Lender shall have all remedies available under Article 9 of
the Uniform Commercial Code, under common law, and under any other applicable
laws and, at its sole option, may terminate this Agreement, and may draw upon
the Letter of Credit and/or retain any funds constituting the Reserve then being
held pursuant to this Agreement and apply such Reserve in such order and in such
amounts as Lender shall elect, in its sole and absolute discretion: (i) in whole
or in part, in such amount as Lender in its sole discretion may elect toward
repayment of the indebtedness evidenced by the Note and the Loan Documents;
and/or (ii) toward reimbursement of Lender for any losses or expenses
(including, without limitation, legal fees) suffered or incurred by Lender as a
result of such default.

       6.     INDEMNIFICATION. Borrower shall hold harmless, indemnify and
defend Lender from and against any and all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and expenses
(including without limitation reasonable attorneys' fees and expenses) imposed
upon or incurred by Lender arising from, or in connection with, directly or
indirectly, this Agreement, except if caused by Lender's gross negligence or
willful misconduct.

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                                                         JHLICO Loan No. 6518403

This indemnity is in addition to any other indemnity agreements made by Borrower
to Lender in the Mortgage, the Note or in any of the other Loan Documents.
Borrower covenants and agrees that, in performing any of its duties under this
Agreement, neither Lender nor any of its successors or assigns shall be liable
for any losses, costs or damages which may be incurred by any of them as a
result thereof, except for any losses, costs or damages arising out of the
willful misconduct or gross negligence of such party.

       7.     FEES AND COSTS. Borrower shall reimburse Lender within ten (10)
business days after demand all reasonable fees, charges, costs and expenses
incurred by Lender in connection with all inspections made by Lender or Lender's
representatives in carrying out Lender's responsibility to make certain
determinations under this Agreement.

       8.     MISCELLANEOUS.

              (a)    Except as otherwise expressly provided herein, in any
instance where the consent or approval of Lender is required or may be given or
where any determination, judgment or decision is to be rendered by Lender under
this Agreement, such approval and consent shall be given or withheld in Lender's
reasonable discretion, and such approval and consent shall not be unreasonably
delayed or conditioned.

              (b)    All notices hereunder shall be given in accordance with the
provisions of the Mortgage, except all notices hereunder to Lender shall be
given to the following address: John Hancock Life Insurance Company, John
Hancock Place, 200 Clarendon Street, Boston, Massachusetts 02116, Attn: Arthur
Francis, Loan Number 6518403.

              (c)    This Agreement shall be binding upon Borrower and its
heirs, devisees, representatives, successors and assigns, including successors
in interest of Borrower in and to all or any part of the Mortgaged Property, and
shall inure to the benefit of and may be enforced by Lender and its heirs,
successors, legal representatives, substitutes and assigns. Borrower shall not
assign any of its rights or obligations under this Agreement.

              (d)    This Agreement is intended solely for the benefit of
Borrower and Lender, and no third party shall have any right or interest in this
Agreement, nor any right to enforce this Agreement against any party hereto.

              (e)    This Agreement contains the complete and entire
understanding of the parties with respect to the matters covered and may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower and Lender, but only by an
agreement in writing signed by the party against whom the enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.

              (f)    Each and every provision for the consent, approval,
inspection, review or verification by Lender hereunder is for Lender's own
purpose and benefit only, and no other party may require that the same be given
or be entitled to assume that Lender shall refuse to make or give the same.

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                                                         JHLICO Loan No. 6518403

              (g)    Borrower hereby covenants that Borrower shall not further
pledge, assign or grant a security interest or any other interest in or to, the
Reserve, or any proceeds, replacement or substitutes thereto.

              (h)    No right or remedy conferred upon or reserved to Lender
under this Agreement is intended to be exclusive of any other right or remedy,
and each and every such right and remedy shall be cumulative and concurrent and
may be enforced separately, successively or together, and may be exercised from
time to time as often as may be deemed necessary by Lender.

              (i)    Nothing herein or in the Loan Documents is intended to
create, nor creates, nor shall be deemed to create, a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender, nor to grant Lender any interest in the Mortgaged Property other
than that of creditor or mortgagee.

              (j)    If any provisions of this Agreement shall conflict with any
provisions of the other Loan Documents regarding the Reserve, the provisions
contained in this Agreement shall control.

              (k)    If any term, covenant or condition of this Agreement is
held to be invalid, illegal or unenforceable in any respect, this Agreement
shall be construed without such provision.

              (l)    For purposes of Article 9 of the Uniform Commercial Code,
the laws of the State of Georgia shall govern the perfection, the effect of
perfection or non-perfection, and the priority of any security interests in a
deposit account with a bank created by this Agreement. In all other respects,
this Agreement shall be governed and construed in accordance with the laws of
the Commonwealth of Massachusetts and the applicable laws of the United States
of America.

              (m)    This Agreement may be executed in multiple counterparts,
each of which when taken together shall constitute one and the same original.

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                                                         JHLICO Loan No. 6518403

       IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as
of the date first above written.

                         BORROWER:

                           INLAND WESTERN DULUTH JOHN'S
                           CREEK SPE, L.L.C., a Delaware limited liability
                           company

                           By:  Inland Western Duluth John's Creek, L.L.C.,
                                a Delaware limited liability company, its Sole
                                Member

                                By:  Inland Western Retail Real Estate
                                     Trust, Inc., a Maryland corporation,
                                     its Sole Member

                                     By:  /s/ Debra A Palmer
                                        ---------------------------
                                     Name:   Debra A Palmer
                                          -------------------------
                                     Title: asst secretary
                                           ------------------------

                           Borrower's Social Security or Taxpayer Identification
                           Number:_____________________

                       LENDER:

                       JOHN HANCOCK LIFE INSURANCE COMPANY,
                       a Massachusetts corporation

                       By:
                          --------------------------------------------
                       Name:
                            ------------------------------------------
                       Title:
                             -----------------------------------------

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                                                         JHLICO Loan No. 6518403

                                LIST OF EXHIBITS

Exhibit "A" - Legal Description
Exhibit "B" - Disbursement Request

<Page>

                                                         JHLICO Loan No. 6518403

                                   EXHIBIT "A"

                                LEGAL DESCRIPTION

<Page>

                                                         JHLICO Loan No. 6518291

                                  EXHIBIT "B"

                              DISBURSEMENT REQUEST

                             JHLICO LOAN NO. 6518403

TO:           JOHN HANCOCK LIFE INSURANCE COMPANY ("LENDER")

FROM:         INLAND WESTERN DULUTH JOHN'S CREEK SPE, L.L.C. ("BORROWER")

       This Disbursement Request is submitted by Borrower in accordance with the
Transitional Security (Phase II) Reserve Agreement dated as of June 28, 2004
between Borrower and Lender (the "AGREEMENT"). Terms used with initial capital
letters and not defined in this Disbursement Request have the meanings given
them in the Agreement.

       1.     Borrower hereby requests return of the Letter of Credit and/or
disbursement of the entire Reserve.

       2.     Borrower certifies, represents and warrants to Lender that (a) the
Mortgaged Property satisfies the Debt Service Coverage Ratio and minimum
loan-to-value requirements set forth in Paragraph 4(e) of the Agreement, (b) all
rent and other sums due by tenants under Leases through the date of this
Disbursement Request have been paid in full, (c) the Leases are in full
force and effect and no default or any event which with the giving of notice or
the lapse of time, or both, would become a default under the Lease by Borrower,
or to Borrower's actual knowledge, by Tenant, has occurred, (d) Borrower is
entitled to a disbursement of the Letter of Credit and/or Reserve pursuant to
the Agreement; (e) Borrower's representations and warranties made in the Loan
Documents and the Agreement are true and correct on and as of this date; and (f)
no Event of Default has occurred.

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                                                         JHLICO Loan No. 6518291

Date:_______________, 20__.

                           BORROWER:

                             INLAND WESTERN DULUTH JOHN'S
                             CREEK SPE, L.L.C., a Delaware limited liability
                             company

                             By:  Inland Western Duluth John' s Creek, L.L.C.,
                                  a Delaware limited liability company, its Sole
                                  Member

                                  By:  Inland Western Retail Real Estate
                                       Trust, Inc., a Maryland corporation,
                                       its Sole Member

                                       By:
                                          -------------------------------
                                       Name:
                                            -----------------------------
                                       Title:
                                             ----------------------------

Initial Approval -- Name:_____________________               Date:______________
Disbursement Approval -- Name:________________               Date:______________<Page>

                                                                  Exhibit 10.244

                                                                Loan No. 6518403

                                  MORTGAGE NOTE

$23,300,000.00                                                   Duluth, Georgia

                                                                   June 28, 2004

          FOR VALUE RECEIVED, INLAND WESTERN DULUTH JOHN'S CREEK SPE, L.L.C., a
Delaware limited liability company, having its principal place of business at
2901 Butterfield Road, Oak Brook, Illinois 60523 (hereinafter referred to as
"MAKER"), promises to pay to the order of JOHN HANCOCK LIFE INSURANCE COMPANY
("John Hancock"), a Massachusetts corporation, its successors and assigns, at
its principal place of business at John Hancock Tower, T-56, 200 Clarendon
Street, Boston, Massachusetts 02116 (John Hancock and each successor or assign
being hereinafter referred to as "PAYEE"), or at such place as the holder hereof
may from time to time designate in writing, the principal sum of Twenty-three
Million Three Hundred Thousand and No/100 Dollars ($23,300,000,00) in lawful
money of the United States of America with interest thereon to be computed from
the date of disbursement of the loan proceeds at the Applicable Interest Rate
(hereinafter defined).

          1.     PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall
be paid as follows:

                 a.   If the loan proceeds are not disbursed on the first day of
                      a month, then interest only at the Applicable Interest
                      Rate from and including the date of disbursement of the
                      loan proceeds to the first day of the month following such
                      disbursement shall be due and payable in advance on the
                      date of such disbursement;

                 b.   interest only is to be paid in installments as follows:
                      $99,025.00 on the 1st day of August, 2004, and on the
                      first day of each calendar month thereafter up to and
                      including the 1st day of June, 2009; and

                 c.   The outstanding principal balance and all accrued and
                      unpaid interest thereon and all other sums and fees due
                      under this Note shall be due and payable on the 1st day of
                      July, 2009 (the "MATURITY DATE").

          Interest on the principal balance of this Note shall be calculated on
a monthly basis using, as the agreed method of calculation, a three hundred
sixty (360) day year consisting of twelve (12) months of thirty (30) days each;
PROVIDED, HOWEVER, that interest for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed during such partial
month by a daily rate based upon a three hundred sixty-five (365) day year and
the interest rate then due under this Note.

          The term "APPLICABLE INTEREST RATE" as used in this Note shall mean
from the date of disbursement of the loan proceeds through and including the
Maturity Date, a rate of five and one tenth percent (5.10%) per annum.

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                                                                Loan No. 6518403

          If at any time Payee receives, from Maker or otherwise, any amount
applicable to the Debt (hereinafter defined) which is less than all amounts due
and payable at such time, Payee may apply that payment to amounts then due and
payable in any manner and in any order determined by Payee, in Payee's sole
discretion. Payee shall, however, be under no obligation to accept any amount
less than all amounts then due and payable. Maker agrees that neither Payee's
acceptance of a payment from Maker in an amount that is less than all amounts
then due and payable nor Payee's application of such payment shall constitute or
be deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. This provision shall control notwithstanding any inconsistent
direction by Maker or any other obligor hereunder.

          The whole of the principal sum of this Note, together with all
interest accrued and unpaid thereon and all other sums due under this Note and
any other instrument now or hereafter evidencing, securing, guaranteeing or
executed in connection with the indebtedness evidenced hereby (the "LOAN
DOCUMENTS") (all such sums hereinafter collectively referred to as the "DEBT")
shall without notice become immediately due and payable at the option of Payee
upon an "EVENT OF DEFAULT" as the same is defined in the Mortgage (hereinafter
defined). All of the terms, covenants and conditions contained in the Mortgage
and the other Loan Documents are hereby made part of this Note to the same
extent and with the same force as if they were fully set forth herein.

          2.     PREPAYMENT. Except as provided below, Maker may not prepay the
loan in whole or in part.

          On or after the end of the 2nd Loan Year (as hereinafter defined), on
any scheduled payment date and subject to giving Payee not less than thirty (30)
nor more than ninety (90) days' prior written notice specifying the scheduled
payment date on which prepayment is to be made (the "PREPAYMENT DATE"), Maker
may prepay the entire principal amount together with any and all accrued
interest and other sums due under the Loan Documents, and subject to payment of
a prepayment premium equal to the greater of:

                 (a)  the positive amount, if any, equal to (i) the sum of the
                      present values of all scheduled payments due under this
                      Note from the Prepayment Date to and including the
                      Maturity Date, minus (ii) the principal balance of this
                      Note immediately prior to such prepayment; or

                 (b)  one percent (1.00%) of the principal balance of this Note
                      immediately prior to such prepayment.

          All present values shall be calculated as of the Prepayment Date,
using a discount rate, compounded monthly, equal to the yield rate, converted to
its monthly equivalent, of the United States Treasury Security having the
closest maturity date to the Maturity Date of this Note as established in the
Wall Street Journal or other business publication of general circulation five
(5) business days before the Prepayment Date.

          In the event that the yield rate on publicly traded United States
Treasury Securities is not obtainable, then the nearest equivalent issue or
index shall be selected, at Payee's reasonable determination, and used to
calculate the prepayment premium.

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                                                                Loan No. 6518403

          The loan will be open to prepayment without premium on any scheduled
payment date during the last ninety (90) days of the term of the loan.

          If any notice of prepayment is given, the principal balance of the
loan and the other sums required pursuant to this Section 2 shall be due and
payable on the Prepayment Date, unless Maker provides written notice to Payee
that it is revoking said prepayment notice no later than five (5) business days
prior to the Prepayment Date.

          The above premium shall not be applicable to a prepayment resulting
from Payee's election to require insurance loss proceeds or condemnation awards
or the proceeds from any letter of credit held by Payee as additional security
for the Loan to be applied to a payment of principal.

          No partial prepayment shall be allowed except in the case of the
application by Payee of any insurance or condemnation proceeds as expressly
provided for in the Loan Documents.

          The Loan Year is defined as any twelve month period commencing with
the date on which the first monthly installment is due or any anniversary
thereof.

          3.     ACCELERATION/DEFAULT. Maker acknowledges that the loan was made
on the basis and assumption that Payee would receive the payments of interest
set forth herein for the full term of this loan. Therefore, whenever the
Maturity Date of the loan has been accelerated by reason of an Event of Default
under the Loan Documents, which Event of Default occurs prior to the time
period, if any, in which prepayment is allowed and prior to the date on which
the full amount of the balance of principal and interest then remaining unpaid
shall be due, including an acceleration by reason of sale, conveyance, further
encumbrance or other Event of Default (which acceleration shall be at Payee's
sole option), there shall be due, in addition to the outstanding principal
balance, accrued interest and other sums due under the Loan Documents, a
prepayment premium equal to (i) the interest which would have accrued on the
principal balance of this Note at the Applicable Interest Rate from the date of
such acceleration to the expiration of the 2nd Loan Year PLUS (ii) an amount
equal to the prepayment premium that would have been due and payable pursuant to
Section 2 hereof had such prepayment occurred on the first (1 st) day of the 3rd
Loan Year. In addition, in the event of any prepayment made on or prior to the
first (1st) day of the 2nd Loan Year, there shall also then be immediately due
and payable in addition to the prepayment premium set forth in the preceding
sentence an additional sum equal to two percent (2.00%) of the then outstanding
principal balance of this Note.

          If an Event of Default occurs on or after the date on which prepayment
is permitted, then in lieu of the above premium set forth in this Section 3,
payment of a premium calculated in the manner set forth in Section 2 hereof
shall be required.

          A tender of the amount necessary to satisfy the entire indebtedness,
paid at any time following such Event of Default or acceleration, including at a
foreclosure sale or during any subsequent redemption period, if any, shall be
deemed a voluntary prepayment, and, at Payee's option, such payment shall
include a premium as described in this Section 3.

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                                                                Loan No. 6518403

          4.     DEFAULT RATE. Maker does hereby agree that upon the occurrence
of an Event of Default (beyond any applicable grace or cure period) and while
any Event of Default exists, including, without limitation, the failure of Maker
to pay the Debt in full on the Maturity Date, Payee shall be entitled to receive
and Maker shall pay interest on the entire unpaid principal sum, effective from
the date of Maker's initial default with respect to such Event of Default
without allowance for any applicable notice and/or grace period, at a rate (the
"DEFAULT RATE") equal to five percent (5%) above the Applicable Interest Rate,
but in no event to exceed the highest rate permitted under the laws of the
jurisdiction where the property secured by the Mortgage is situated. This charge
shall be added to the Debt, and shall be deemed secured by the Mortgage. This
clause, however, shall not be construed as an agreement or privilege to extend
the date of the payment of the Debt, nor as a waiver of any other right or
remedy available to Payee by reason of the occurrence of any Event of Default.

          5.     LATE CHARGE. If any monthly interest payment payable under this
Note (except for the final payment) is not paid in full within five (5) days of
the date on which it is due, Maker shall pay to Payee an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law to defray the expenses incurred by Payee in handling and
processing such delinquent payment and to compensate Payee for the loss of the
use of such delinquent payment and such amount shall be secured by the Loan
Documents.

          6.     SECURITY FOR LOAN. This Note is secured by the Mortgage and
certain other Loan Documents. The term "MORTGAGE" as used in this Note shall
mean that certain Mortgage, Assignment of Leases and Rents and Security
Agreement dated the date hereof securing the principal sum of $23,300,000.00
made by Maker in favor of Payee covering certain premises located at 11720
Medlock Bridge Road, City of Duluth, in the County of Fulton, State of Georgia,
as more particularly described therein. The Mortgage contains provisions
providing for acceleration of the sums secured thereby in the event of certain
transfers of or encumbrances upon the real estate or interests therein or
interests in Maker, which provisions are incorporated herein by this reference.

          7.     COMPLIANCE WITH LAW. It is expressly stipulated and agreed to
be the intent of Maker and Payee at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Payee
to contract for, charge, take, reserve or receive a greater amount of interest
than under state law) and that this paragraph shall control every other covenant
and agreement in this Note and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under this Note or any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect to the Debt,
or if Payee's exercise of the option to accelerate the Maturity Date, or if any
prepayment by Maker results in Maker's having paid any interest in excess of
that permitted by applicable law, then it is Payee's express intent that all
excess amounts theretofore collected by Payee shall be (a) credited on the
principal balance of this Note and all other Debt and the provisions of this
Note, and the other Loan Documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new documents, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder or (b) if required by law, refunded to Maker.
All sums paid or agreed to be paid to Payee for the use or forbearance of the
Debt shall, to the extent permitted by

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                                                                Loan No. 6518403

applicable law, be amortized, prorated, allocated and spread throughout the full
stated term of the Debt until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein, in the
Mortgage or in any of the other Loan Documents, it is not the intention of Payee
to accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.

          8.     AMENDMENTS. This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Maker or Payee, but only by an agreement in writing signed by
the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.

          9.     JOINT AND SEVERAL LIABILITY. If Maker consists of more than one
person or party, the obligations and liabilities of each such person or party
shall be joint and several.

          10.    CONSTRUCTION. Whenever used, the singular number shall include
the plural, the plural the singular, and the words "PAYEE" and "MAKER" shall
include their respective successors, assigns, heirs, executors and
administrators.

          11.    WAIVERS. Maker and all others who may become liable for the
payment of all or any part of the Debt do hereby severally waive presentment and
demand for payment, notice of dishonor, protest, notice of protest and
non-payment and notice of intent to accelerate the maturity hereof (and of such
acceleration). No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof and no alteration, amendment or
waiver of any provision of this Note, the Mortgage or any other Loan Documents
made by agreement between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Maker and any other who may become liable for the payment of all or
any part of the Debt, under this Note, the Mortgage or any other Loan Documents.

          12.    AUTHORITY. Maker (and the other undersigned representative of
Maker, if any) represents that Maker has full power, authority and legal right
to execute, deliver and perform its obligations pursuant to this Note, the
Mortgage and the other Loan Documents and that this Note, the Mortgage and the
other Loan Documents constitute valid and binding obligations of Maker.

          13.    TIME. Time is of the essence of this Note.

          14.    REPLACEMENT NOTE. In the event of the loss, theft or
destruction of this Note, upon Maker's receipt of a reasonably satisfactory
indemnification agreement executed in favor of Maker by Payee or in the event of
the mutilation of this Note, upon the surrender of the mutilated Note by Payee
to Maker, Maker shall execute and deliver to Payee a new mortgage note in form
and content identical to this Note in lieu of the lost, stolen, destroyed or
mutilated Note.

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                                                                Loan No. 6518403

          15.    NOTICE. All notices required to be given pursuant hereto shall
be given in the manner specified in the Mortgage directed to the parties at
their respective addresses as provided therein.

          16.    COSTS AND EXPENSES. Maker shall pay all expenses and costs,
including reasonable fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation incurred by Payee as a result of any Event
of Default or in connection with efforts to collect any amount due under this
Note or to enforce the provisions of any of the Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial foreclosure proceeding.

          17.    FORBEARANCE. Any forbearance by Payee in exercising any right
or remedy under this Note, the Mortgage or any other Loan Document or otherwise
afforded by applicable law shall not be a waiver of or preclude the exercise of
that or any other right or remedy. The acceptance by Payee of any payment after
the due date of such payment or in an amount which is less than the required
payment shall not be a waiver of Payee's right to require prompt payment when
due of all other payments or to exercise any right or remedy with respect to any
failure to make prompt payment. Enforcement by Payee of any security for Maker's
obligations under this Note shall not constitute an election by Payee of
remedies so as to preclude the exercise of any other right or remedy available
to Payee.

          18.    SECTION HEADINGS. The Section headings inserted in this Note
have been included for convenience only and are not intended and shall not be
construed to limit or define in any way the substance of any section contained
herein.

          19.    LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained herein, but subject to the obligations of PARAGRAPH 45 of the
Mortgage, any claim based on or in respect of any liability of Maker under this
Note, the Mortgage or any other Loan Document shall be enforced only against the
Mortgaged Property (as such term is defined in the Mortgage) and any other
collateral now or hereafter given to secure this Note and not against any other
assets, properties or funds of Maker; PROVIDED, HOWEVER, that the liability of
Maker for loss, costs or damage arising out of the matters described in the
subsections below (collectively, "NON-RECOURSE CARVEOUT OBLIGATIONS") shall not
be limited solely to the Mortgaged Property and other collateral now or
hereafter given to secure this Note but shall include all of the assets,
properties and funds of Maker: (i) fraud, misrepresentation and waste, (ii) any
rents, issues or profits collected more than one (1) month in advance of their
due dates to the extent such sums remain collected more than one month in
advance of their due dates following an Event of Default, (iii) any
misapplication of rents, issues or profits, security deposits and any other
payments from tenants or occupants (including, without limitation, lease
termination fees), insurance proceeds, condemnation awards or other sums of a
similar nature to the extent such misapplication continues following an Event of
Default, (iv) liability under environmental covenants, conditions and
indemnities contained in the Mortgage and in any separate environmental
indemnity agreements, (v) personalty or fixtures removed or allowed to be
removed by or on behalf of Maker and not replaced by items of equal or greater
value or functionality than the personalty or fixtures so removed, (vi) failure
to pay taxes, assessments or ground rents prior to delinquency, or to pay
charges for labor, materials or other charges which

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                                                                Loan No. 6518403

can create liens on any portion of the Mortgaged Property and any sums expended
by Payee in the performance of or compliance with the obligations of Maker under
the Loan Documents, including, without limitation, sums expended to pay taxes or
assessments or hazard insurance premiums or bills for utilities or other
services or products for the benefit of the Mortgaged Property, (vii) the
unauthorized sale, conveyance or transfer of title to the Mortgaged Property or
encumbrance of the Mortgaged Property, (viii) the failure of Maker to maintain
its status as a single purpose, bankruptcy-remote entity pursuant to its
organizational documents and the Loan Documents, and (ix) reasonable attorney's
fees, court costs and other expenses incurred by Payee in connection with
enforcement of Maker's personal liability as set forth herein. Nothing herein
shall be deemed (w) to be a waiver of any right which Payee may have under any
bankruptcy law of the United States or the state where the Mortgaged Property is
located including, but not limited to, Section 506(a), 506(b), 1111(b) or any
other provisions of the U.S. Bankruptcy Code to file a claim for the full amount
of the indebtedness secured by the Mortgage or to require that all collateral
securing the indebtedness secured hereby shall continue to secure all of the
indebtedness owing to Payee in accordance with this Note, the Mortgage and the
other Loan Documents; (x) to impair the validity of the indebtedness secured by
the Mortgage; (y) to impair the right of Payee as mortgagee or secured party to
commence an action to foreclose any lien or security interest; or (z) to modify,
diminish or discharge the liability of any guarantor under any guaranty or of
any indemnitor under any indemnity agreement.

          20.    STATE SPECIFIC PROVISIONS. The provisions of this Section 20
are an integral part of this Note. In the event of any inconsistencies between
the other terms and provisions of this Note and the terms and provisions of this
Section 20, the terms and provisions of this Section 20 shall be controlling.

     (a)  DEED TO SECURE DEBT; TRUST PROPERTY. Section 6 of this Note captioned
"Security for Loan" is amended by changing the title of the real estate security
instrument from "Mortgage, Assignment of Leases and Rents and Security
Agreement" to "Deed to Secure Debt, Assignment of Leases and Rents and Security
Agreement" and the defined term "Mortgage" shall be deemed to refer to such
instrument. In addition, any reference herein to "Mortgaged Property" shall be
deemed to be a reference to "Trust Property".

     (b)  INTEREST BEFORE AND AFTER JUDGMENT. The Default Rate of interest
shall apply to the Debt both before and after any judgment on the indebtedness
evidenced by this Note.

     (c)  ATTORNEYS' FEES. In case this Note or the Mortgage or any other Loan
Document should be placed in the hands of an attorney at law for collection or
enforcement, Maker agrees to pay all costs of collection or enforcement
including reasonable attorneys' fees.

     (d)  EXECUTION UNDER SEAL. THE MAKER IS EXECUTING THIS NOTE UNDER SEAL
WITH THE EXPRESS INTENTION THAT THIS NOTE BE CONSTRUED AS AN INSTRUMENT EXECUTED
UNDER SEAL AND THE PHRASE "UNDER SEAL" IS HEREBY INSERTED AFTER THE PHRASE "THIS
NOTE" IN THE LAST SENTENCE OF THIS NOTE APPEARING BELOW.

          This Note shall be governed and construed in accordance with the laws
of the State of Georgia and the applicable laws of the United States of America.

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                                                                Loan No. 6518403

          IN WITNESS WHEREOF, Maker has duly executed and delivered this Note
the day and year first above written.

                             INLAND WESTERN DULUTH JOHN'S
                             CREEK SPE, L.L.C., a Delaware limited liability
                             company

                             By:  Inland Western Duluth John's Creek, L.L.C.,
                                  a Delaware limited liability company, its Sole
                                  Member

                                  By:  Inland Western Retail Real Estate
                                       Trust, Inc., a Maryland corporation,
                                       its Sole Member

                                       By: /s/ Debra A Palmer
                                          -----------------------------
                                       Name:  Debra A Palmer
                                            ---------------------------
                                       Title: Asst Secretary
                                             --------------------------

Attest:

/s/ Valerie Medina
-------------------------------
Asst. Secretary

[Affix Corporate Seal]

                                        8

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