Inland Group Inc. has been a real estate mogul in the Chicagoland area for some time -- 33 years to be exact, since the company was founded by four former school teachers. But the Oak Brook, Illinois-based company is heading south and east to uncover new retail opportunities and capitalize on the high growth market.

Inland Retail Real Estate Trust, Inc. is sponsored by Inland Real Estate Investment Corporation, which is part of The Inland Real Estate Group of Companies. The Inland Real Estate Group of Companies is made up of independent real estate and financial companies with 35 years experience specializing in brokerage, syndication, development, acquisition and financing.

The Inland Group is the largest apartment owner and second largest condominium developer in the Chicagoland area. The company is also the largest owner of retail centers in the area with 175 centers as well as the largest private landlord for Wal-Mart nationwide. In fact, Inland' Midwest REIT has been so successful, the company established a sister division in the Southeast 2 years ago.

"We bought, built and sold properties in the Southeast in the '80s and '90s, so we knew the market well," says Joe Cosenza, chairman of Inland Real Estate Acquisitions, Inc. "But we did not want to start up the Southeast REIT until we had our Midwest REIT just about completed, because otherwise the two would be competing with one another."

Inland' Midwest retail division was established in 1995 for the purpose of purchasing shopping centers. It currently has over 120 shopping centers worth over $1 billion. The company' decision to focus its energy on the Southeast was based partly on the rising populations in areas like Atlanta and Florida, which grew 24 percent between 1990 to 2000, according to the U.S. Census Bureau. (Illinoi' population increased less than 9 percent.) Aging baby boomers may be one reason why warmer climates are seeing a rise in population growth. The Southeast also appears to resist slowdowns in the economy -- holiday sales figures show the Southeast as the strongest region, according to Inland Retail. There are also many retailers entering the market, including Kohl', Target and Costco, to name a few.

Inland' new regional direction has already proven lucrative for the company, with almost $700 million in assets and shopping centers in Atlanta, the Carolinas and Florida.

"With what we have on our plate, our Southeast REIT will actually exceed our Midwest REIT," says Cosenza. "We will have reached a little over $1 billion in less than 2 years; it took us 5 years to get to that amount in the Midwest."

According to Cosenza, the Southeast had the best retail sales and lowest unemployment rates of any of the U.S. regions last quarter. "It' another reason why we' there and why we think we' right," he says. "We' right about the areas where we' purchasing, and we' right in the type of product we' purchasing."

That type of product is mostly shopping centers anchored by major discount and/or grocery stores. Why grocery anchors? "If you look at shopping centers during a recessionary period, you' find that grocery-anchored centers have the least amount of problems. This is also true for discount retail centers," says Cosenza. "Of course, the same thing happens in good times. But if you' doing okay in a poor economic time, it' pretty much guaranteed that you' be okay during a good time."

Cosenza also says he has never been enthralled with enclosed malls. "I1ve always felt that it' one thing to operate and maintain a community strip shopping center, but it' a whole different thing to have a company in one location operating in an enclosed mall. You must have staff in the enclosed mall, and it is a completely separate business. You' there to help tenants get customers into that mall."

Inland Retail Real Estate Trust' most recent acquisition took place this past December with an agreement to purchase $316 million in retail properties with Smyrna, Georgia-based Thomas Enterprises, Inc. The portfolio consists of eight properties in Georgia, Florida, North Carolina, Tennessee and Alabama.

"This is Inland Retail' largest acquisition to date, but more than that, when it is complete, we will have added eight prime retail properties to our expanding portfolio in the Southeast," notes Cosenza.

So far, the company has closed on seven properties, which range in size from 271,000 square feet to 523,000 square feet, for a total of close to 3 million square feet. The closed deals include Douglas Pavilion Shopping Center in Douglasville, Georgia; Venture Point Shopping Center in Duluth, Georgia; Southlake Pavilion in Morrow, Georgia; Fayetteville Pavilion in Fayetteville, North Carolina; Newnan Pavilion in Newnan, Georgia; Sarasota Pavilion in Sarasota, Florida; and The Pavilion at Turkey Creek in Knoxville, Tennessee. Westside Center in Huntsville, Alabama, is scheduled to close this year.

"These centers typify what we look for in a property: they are all anchored by major discount and/or grocery stores; they are located in high-traffic areas and in the southeastern United States, which is predicted to be one of the highest growth areas for the next 15 to 20 years; and their tenant rolls read like a who' who in retail," notes Cosenza.

Major anchors for the centers include The Home Depot, Kohl', Publix, Food Lion, Target, SuperTarget and Wal-Mart Supercenter.

"Inland was not the only REIT interested in purchasing these properties, but our ability to close on four properties only 2 weeks after we reached an agreement made us more attractive to do business with," says Cosenza.

Inland Retail has more than 7 million square feet of retail space in 48 properties, and acquired more than 4 million of its total square feet in 2001. The non-publicly traded real estate investment trust acquired 28 prime retail properties last year. Most of those properties are in keeping with the company' portfolio of neighborhood and community shopping centers, anchored by discount and grocery stores, and most are located in Florida and Georgia. For example, the company recently acquired two small grocery-anchored centers in Florida for $14.6 million from the German-owned U.S. Retail Income Fund. It also purchased over 300,000 square feet of the newly constructed Eisenhower Crossing Shopping Center in Macon, Georgia, which will hold a 55,000-square-foot Kroger. Inland also recently purchased the 223,000-square-foot Anderson Central Shopping Center in Anderson, South Carolina, which is 100 percent occupied and anchored by a 183,000-square-foot Wal-Mart Supercenter.

"We1ve been saying it all along: discount and grocery-anchored shopping centers are more resistant to recession, and the holiday sales numbers back it up," added Cosenza.

Cosenza also notes that the recent state of the economy has allowed Inland to view and purchase more properties, and, fortunately, the company has the capital to buy the assets.

"There are more and more people who are investing larger dollars today in our private REIT than ever before," he says. "We are collecting about $2 million to $3 million a day, so our stockholders must know something. I think one of the things they know is that they' getting a very good return with a monthly check as opposed to being in the stock market where dividends are the last thing you get. It' usually when you buy into the larger capitalized stocks, the dividends you receive are very miniscule compared to what your investment is. Whereas in our REIT, you' be getting about an eight percent return -- and a check every month."

For the remainder of 2002, the company is set to acquire at least $600 million in properties. They will be located in North Carolina, South Carolina, Georgia and Florida. Overall in 2002, Inland plans to acquire at least $600 million in properties.

Though the Southeast is the primary target for now, Inland is not ruling out any other areas of development. "If we' going to go out and build something that requires a lot of intensity, it' usually in our backyard," says Cosenza. "The Southeast REIT is just starting to develop some centers on its own, but we also have to keep in mind that we won1t get a return on our money for at least 2 years from the day we start buying the land because of all the zoning, building, leasing and stabilizing of tenants."

The company' preference is to buy existing properties, do joint ventures with builders, or actually fund the money to build the centers, then pay the builders the profits at the end. "That way we end up owning the property 100 percent," adds Cosenza. "If we can find good builders with good reputations, we' do that all day long."

©2002 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.