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Inland Real Estate Corporation Announces Fourth Quarter and Year 2012 Results

  Inland Real Estate Corporation Announces Fourth Quarter and Year 2012
  Results

 - Reports 7.3 Percent Increase in FFO Adjusted to $0.88 Per Weighted Average
                                Common Share -

Business Wire

OAK BROOK, Ill. -- February 21, 2013

Inland Real Estate Corporation (NYSE: IRC), a publicly-traded real estate
investment trust that owns and operates high quality, necessity and value
based retail centers in select markets in the Midwest, today announced
financial and operational results for the three and twelve months ended
December 31, 2012.

Fourth Quarter and Full Year 2012 Highlights

  *Reported Funds from Operations (FFO) per common share of $0.27 and FFO
    adjusted for non-cash items net of taxes, per common share of $0.24 for
    the fourth quarter of 2012, representing increases of 28.6 percent and 9.1
    percent, respectively, over the fourth quarter of 2011.
  *Reported FFO per share of $0.96 and FFO adjusted per share of $0.88 for
    full year 2012, representing increases of 43.3 percent and 7.3 percent,
    respectively, over the prior year.
  *Consolidated same store net operating income (NOI) for the full year 2012
    rose by 3.2 percent over the prior year.
  *Total portfolio leased occupancy was 94.0 percent and financial occupancy
    was 91.6 percent at December 31, 2012, representing increases of 80 basis
    points and 70 basis points, respectively, over year end 2011.
  *Executed 105 leases for 561,051 square feet within the total portfolio in
    the fourth quarter of 2012, an increase in square feet leased of 17.2
    percent over the year ago quarter. For 2012, executed 393 leases for 1.7
    million square feet of retail space.
  *For the fourth quarter 2012, average base rent for new and renewal leases
    signed in the total portfolio increased by 11 percent and 2.7 percent,
    respectively, over expiring average rents for the quarter. For 2012,
    average base rent increased by 16.5 percent for new leases and 6.8 percent
    for renewal leases, over expiring rents.
  *Company acquired Valparaiso Walk, a 137,500-square-foot, fully leased
    power center in northwestern Indiana for $21.9 million, and sold three
    non-core consolidated assets for a total sales price of more than $12
    million during the quarter.

“The year 2012 was a strong one for our Company, marked by record leasing,
solid same store growth, increased occupancy and an enhanced balance sheet,”
said Mark Zalatoris, Inland Real Estate Corporation's president and chief
executive officer. "During the fourth quarter, we executed the largest number
of leases since the first quarter of 2011, and importantly, our average base
rent for new leases increased by 11 percent. We continued to benefit from our
joint venture relationships which allow us to leverage institutional capital
to pursue attractive acquisitions and generate recurring fee income. Finally,
we made significant steps to improve our capital position and increase
liquidity with a recast credit facility and strategic dispositions, recycling
capital out of slower growth assets and into high-quality retail centers such
as Valparaiso Walk.”

Financial Results for the Quarter

For the quarter ended December 31, 2012, FFO attributable to common
stockholders was $24.0 million, compared to $19.1 million for the fourth
quarter of 2011. On a per share basis, FFO was $0.27 (basic and diluted) for
the fourth quarter of 2012, compared to $0.21 for the fourth quarter of 2011.

For the fourth quarter of 2012, FFO adjusted for non-cash items, was $21.4
million, compared to $19.2 million in the prior year quarter. On a per share
basis, FFO adjusted for those items was $0.24 (basic and diluted) for the
quarter, compared to $0.22 for the fourth quarter of 2011. The variance
between FFO and FFO adjusted was due to a $2.7 million tax benefit related to
the change in control of a non-operating property that was recorded during the
quarter.

For the quarter, FFO adjusted increased primarily due to higher non-operating
income and equity in earnings from unconsolidated joint ventures, as well as
lower interest expense.

Net income attributable to common stockholders for the fourth quarter of 2012
was $8.2 million, compared to net income of $0.9 million for the fourth
quarter of 2011. On a per common share basis, net income attributable to
common stockholders was $0.09 (basic and diluted), compared to net income of
$0.01 for the prior year quarter. Net income for the quarter increased
primarily due to the same items that impacted FFO adjusted. In addition, net
income increased as a result of higher net gains from sales of operating
properties and the tax benefit recognized on the change in control
transaction.

Financial Results for the Twelve Months Ended December 31, 2012

For the twelve months ended December 31, 2012, FFO attributable to common
stockholders was $85.3 million, compared to $59.6 million for the same period
in 2011. On a per share basis, FFO for the twelve-month period was $0.96
(basic and diluted), compared to $0.67 for the twelve months ended December
31, 2011.

FFO adjusted for non-cash items was $78.2 million for the twelve months ended
December 31, 2012, compared to FFO adjusted of $72.2 million for the prior
year period. On a per share basis, FFO adjusted was $0.88 (basic and diluted),
compared to $0.82 for the same period of 2011.

For the year, FFO adjusted increased primarily due to lower interest expense,
increased consolidated same store NOI, and higher non-operating income. In
addition, FFO adjusted increased due to the impact in 2011 of non-cash asset
impairment charges on non-operating properties.

Net income attributable to common stockholders for the twelve months ended
December 31, 2012, was $9.8 million, compared to a net loss of $8.1 million
for the same period in 2011. On a per share basis, net income attributable to
common stockholders was $0.11 (basic and diluted), compared to a net loss of
$0.09 for the twelve months ended December 31, 2011. Net income for the
twelve-month period increased as a result of the same items that impacted FFO
adjusted. Net income also increased due to higher net gains from sales of
operating properties, non-cash tax related adjustments, and the impact in 2011
of the change in control of Orchard Crossing.

Reconciliations of FFO and FFO adjusted to net income (loss) attributable to
common stockholders, calculated in accordance with U.S. GAAP, as well as FFO
and FFO adjusted per share to net income (loss) attributable to common
stockholders per share, are provided at the end of this news release.

Portfolio Performance

Consolidated same store NOI was $23.1 million for the quarter and $91.2
million for the twelve months ended December 31, 2012, representing a decrease
of 0.9 percent and an increase of 3.2 percent, respectively, compared to the
prior year periods. The decline in same store NOI for the fourth quarter 2012
was due to lower real estate tax expenses recorded in the fourth quarter of
2011. The gain in consolidated same store NOI for the year 2012 was due to
increased rental income from new leases and the end of any associated rent
abatement periods.

Same store financial occupancy for the consolidated portfolio was 89.4 percent
as of December 31, 2012, unchanged from year end 2011.

The Company evaluates its overall portfolio by analyzing the operating
performance of properties that have been owned and operated for the same three
and twelve-month periods during each year. A total of 94 of the Company's
investment properties within the consolidated portfolio satisfied this
criterion during these periods and are referred to as "same store" properties.
Same store NOI is a supplemental non-GAAP measure used to monitor the
performance of the Company's investment properties.

A reconciliation of consolidated same store NOI to net income (loss)
attributable to common stockholders, calculated in accordance with U.S. GAAP,
is provided at the end of this news release.

Leasing

For the quarter ended December 31, 2012, the Company executed 105 leases
within the total portfolio aggregating 561,051 square feet of gross leasable
area (GLA), an increase of 17.2 percent over the year ago quarter. Total
leases executed included:

  *Sixty-four renewal leases comprising 374,197 square feet of GLA, with an
    average rental rate of $14.35 per square foot, representing an increase of
    2.7 percent over the average expiring rent;
  *Nineteen new leases comprising 104,900 square feet of GLA, with an average
    rental rate of $12.84 per square foot, representing an increase of 11
    percent over the expiring rent.
  *Twenty-two non-comparable leases, comprising 81,954 square feet of GLA,
    with an average rental rate of $14.42 per square foot. The company defines
    non-comparable leases as leases signed for expansion square footage or for
    space in which there was no former tenant in place for a period of twelve
    months or more.

On a blended basis, the 83 new and renewal leases signed during the quarter
had an average rental rate of $14.02 per square foot, representing an increase
of 4.3percent over the average expiring rent. The calculations of former and
new average base rents are adjusted for rent abatements on the included
leases.

Leased occupancy for the total portfolio was 94 percent as of December 31,
2012, representing increases of 90 basis points and 80 basis points,
respectively, over the prior quarter and the fourth quarter of 2011. Financial
occupancy for the total portfolio was 91.6 percent as of December 31, 2012,
representing gains of 100 basis points and 70 basis points, respectively, over
the prior quarter and the year ago quarter. The gains in total portfolio
financial occupancy were due to new tenants exiting abatement periods and
beginning to pay rent. Financial occupancy is defined as the percentage of
total gross leasable area for which a tenant is obligated to pay rent under
the terms of the lease agreement, regardless of the actual use or occupation
by that tenant of the area being leased, and excludes tenants in abatement
periods.

EBITDA, Balance Sheet, Liquidity and Market Value

The Company reported earnings before interest, taxes, depreciation and
amortization (EBITDA), adjusted for non-cash items, of $35.8 million for the
quarter, compared to $32.4 million for the fourth quarter of 2011. For the
twelve months ended December 31, 2012, adjusted EBITDA was $134.6 million,
compared to $121.8 million for the prior year period. Definitions and
reconciliations of EBITDA and adjusted EBITDA to net income (loss)
attributable to Inland Real Estate Corporation are provided at the end of this
news release.

EBITDA coverage of interest expense, adjusted, was 3.1 times for the quarter
ended December 31, 2012, compared to 2.8 times for the fourth quarter of 2011.
The Company has provided EBITDA and related non-GAAP coverage ratios because
it believes EBITDA and the related ratios provide useful supplemental measures
in evaluating the Company's operating performance since expenses that may not
be indicative of operating performance are excluded.

On November 16, 2012, the Company entered into a sales agency agreement with
BMO Capital Markets, Jefferies & Company, Inc., and KeyBanc Capital Markets
Inc. The agreement provides that the Company may offer and sell shares of its
common stock, having an aggregate offering price of up to $150 million, from
time to time through BMO, Jefferies and/or KeyBanc acting as sales agents.
Offers and sales of the shares may be made via private placements or by any
other method deemed to be an “at the market” (ATM) offering as defined in Rule
415 under the Securities Act of 1933, as amended, including sales made
directly on the New York Stock Exchange or to or through a market maker. The
Company intends to use proceeds from the sales, if any, for general corporate
purposes, which may include acquisitions through wholly owned subsidiaries or
joint venture entities, repayment of secured mortgage debt or amounts
outstanding on its credit facilities, or repurchase of its convertible senior
notes.

As of December 31, 2012, the Company had an equity market capitalization
(common shares) of $748.9 million, outstanding preferred stock of $110.0
million (at face value), and total debt outstanding of $982.5 million
(including the pro-rata share of debt in unconsolidated joint ventures and
full face value of outstanding 5.0% convertible senior notes, due 2029) for a
total market capitalization of approximately $1.8 billion. The Company's
debt-to-total market capitalization was 53.4 percent as of December 31, 2012,
an improvement of 250 basis points from year end 2011. Approximately 63
percent of total debt bears interest at fixed rates. As of December 31, 2012,
the weighted average interest rate on the fixed rate debt was 5.2 percent and
the overall weighted average interest rate, including variable rate debt, was
4.16 percent.

Acquisitions and Dispositions

As previously announced, in December, the Company acquired Valparaiso Walk, a
137,500-square-foot shopping center located in northwestern Indiana and within
the Chicago Metropolitan Statistical Area (MSA), for $21.9 million. The
100-percent-leased power center draws from a regional population base of over
100,000 consumers and is anchored by Bed Bath and Beyond, Marshalls, Michaels
and Best Buy, and shadow-anchored by Aldi and Menards. Valparaiso Walk meets
the Company's acquisition criteria in that it is a Class A asset located in a
target market, enjoys a prime location within a major trade area supported by
strong demographics, and is anchored by best-in-class national retailers.
Proceeds from the sale of assets described below, as well as the sale of the
Westgate shopping center to the PGGM joint venture,providedthe funds used to
acquire the center.

In October, the Company purchased 4.2 acres of vacant land in Lincolnshire,
Illinois and executed a lease with The Fresh Market for a reverse
build-to-suit that is expected to be completed during 2013. The Company
expects to invest a total of $3.1 million, including the cost of the land, to
complete the project utilizing proceeds from the sale of consolidated assets.

During the quarter, the Company executed on its plan to continue to enhance
the quality of its portfolio by selling properties management believes have
limited growth potential and reinvesting the sales proceeds into higher
quality retail centers. To that end, the Company sold three consolidated
properties: Hartford Plaza, a 43,762-square-foot shopping center in
Naperville, Illinois, for $4.5 million; Butera Market, a 67,632-square-foot
shopping center also in Naperville, for $5.7 million, and; a vacant property
formerly leased to Cub Foods, a subsidiary of Supervalu, for $1.8 million in
Indianapolis, Indiana. The Company negotiated an early lease termination for
the dark Cub Foods store in 2011 to reduce its exposure to Supervalu and
facilitate a sale of the property. For properties sold during the quarter, the
Company recorded a total gain of $3.0 million on the two Naperville properties
and an impairment of $0.2 million on the Indianapolis property.

Joint Venture Activity

As previously announced, during the quarter the Company and PGGM entered into
an amendment to their joint venture agreement to increase the size of the fund
at full investment from approximately $500 million to a potential maximum of
$900 million in total investment. The fund will continue to focus on the
acquisition of shopping centers in select Midwestern markets. The amendment
increases the Company's maximum total contribution from approximately $160
million to $280 million, and PGGM's maximum total equity contribution from
approximately $130 million to $230 million. In December, the Company sold to
its venture with PGGM, the Westgate shopping center in Fairview Park, Ohio.
The Company acquired the property in March of 2012 with the intention of
selling the property to the venture before year end. Subsequent to the
amendment and the sale, the Company's remaining maximum equity commitment is
approximately $107million and PGGM's remaining maximum equity commitment is
approximately $89 million. The Company believes the primary benefits of the
PGGM joint venture include utilizing its partner's equity to grow assets under
management, and achieving a higher yield on investment for assets acquired by
the venture as a result of the fee income it receives from PGGM for leasing
and managing the properties.

During the quarter, the Company invested equity in the venture with IPCC to
acquire the following free-standing retail assets for an aggregate purchase
price of $43.6 million: two properties leased to Family Dollar and located in
Cisco, Texas and Lorain, Ohio; one property leased to BJ's Wholesale Club in
Gainesville, Virginia; one property leased to Dick's Sporting Goods in
Cranberry Township, Pennsylvania; and six properties leased to Dollar General
in Wisconsin markets. The Company has established an acquisitions target of
$100 million in asset value per year for the venture with IPCC. The purchases
completed during the quarter fulfill the Company's acquisitions target for
2012, and pre-fund approximately 28 percent of the acquisitions goal for 2013.
The Company's ownership in the properties acquired by the venture is reduced
to zero as interests in the assets are completely sold to investors. The
Company believes the benefits of the IRC-IPCC joint venture include the
potential to reinvest equity allocated to the venture multiple times per year,
which provides an attractive return on invested capital. In addition, the
recurring fee income earned for managing the properties within the venture
provides a stable revenue stream that is complementary to the Company's core
business.

Total fee income from unconsolidated joint ventures was $2.2 million for the
quarter and $5.8 million for the full year 2012. Fee income from
unconsolidated joint ventures for the quarter increased 23.3 percent over the
prior year period, primarily due to higher management and transaction fee
income from the joint ventures with PGGM and IPCC. For the full year 2012, fee
income from unconsolidated joint ventures decreased 4.5 percent due to lower
transaction fee income related to the timing of sales of interests in
properties through the IRC-IPCC venture. The decrease was partially offset by
increased management fees from additional assets under management through the
joint ventures with PGGM and IPCC.

Distributions

In November and December of 2012, and January and February of 2013, the
Company paid a monthly cash dividend to Preferred Stockholders of $0.169271
per share on the outstanding shares of its 8.125% Series A Cumulative
Redeemable Preferred Stock. In addition, the Company has declared a cash
dividend of $0.169271 per share on the outstanding shares of its Preferred
Stock, payable on March 15, 2013, to Preferred Stockholders of record as of
March 1, 2013.

In November and December of 2012, and January and February of 2013, the
Company paid monthly cash distributions to Common Stockholders of $0.0475 per
common share. The Company also declared a cash distribution of $0.0475 per
common share, payable on March 18, 2013, to common stockholders of record as
of February 28, 2013.

Guidance

For fiscal year 2013, the Company expects FFO per common share (basic and
diluted) to range from $0.88 to $0.92 and does not include any assumptions for
impairments or other non-cash adjustments in 2013. This compares to adjusted
FFO per weighted average common share of $0.88 reported for 2012. The
Company's guidance incorporates assumptions for an increase in consolidated
same store NOI to range from 1 percent to 2 percent, and consolidated same
store financial occupancy at year-end 2013 to range from 89 percent to 90
percent.

Conference Call/Webcast

Management will host a conference call to discuss the Company's financial and
operational results for fourth quarter and year 2012 on Thursday, February 21,
2013, at 1:00 p.m. CT (2:00 p.m. ET). Hosting the conference call will be Mark
Zalatoris, President and Chief Executive Officer; Brett Brown, Chief Financial
Officer; and Scott Carr, President of Property Management. The live conference
call can be accessed by dialing 1-888-317-6016 for callers within the United
States, 1-855-669-9657 for callers dialing from Canada, or 1-412-317-6016 for
other international callers. A live webcast also will be available on the
Company's website at www.inlandrealestate.com. The conference call will be
recorded and available for replay one hour after the end of the live event
through 8:00 a.m. CT (9:00 a.m. ET) on March 8, 2013. Interested parties can
access the replay of the conference call by dialing 1-877-344-7529 or
1-412-317-0088 for international callers, and entering the conference number
10023678. An online playback of the webcast will be archived for approximately
one year within the investor relations section of the Company's website.

About Inland Real Estate Corporation

Inland Real Estate Corporation is a self-administered and self-managed
publicly traded real estate investment trust (REIT) that owns and operates
open-air neighborhood, community, power and lifestyle retail centers and
single-tenant properties located primarily in the Midwestern United States. As
of December 31, 2012, the Company owned interests in 157 investment
properties, including 44 owned through its unconsolidated joint ventures, with
aggregate leasable space of approximately 15 million square feet. Additional
information on Inland Real Estate Corporation, including a copy of the
Company's supplemental financial information for the three and twelve months
ended December 31, 2012, is available at www.inlandrealestate.com.

Certain statements in this news release constitute "forward-looking
statements" within the meaning of the Federal Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that do not
reflect historical facts and instead reflect our management's intentions,
beliefs, expectations, plans or predictions of the future. Forward-looking
statements can often be identified by words such as "believe," "expect,"
"anticipate," "intend," "estimate," "may," "will," "should" and "could."
Examples of forward-looking statements include, but are not limited to,
statements that describe or contain information related to matters such as
management's intent, belief or expectation with respect to our financial
performance, investment strategy or our portfolio, our ability to address debt
maturities, our cash flows, our growth prospects, the value of our assets, our
joint venture commitments and the amount and timing of anticipated future cash
distributions. Forward-looking statements reflect the intent, belief or
expectations of our management based on their knowledge and understanding of
the business and industry and their assumptions, beliefs and expectations with
respect to the market for commercial real estate, the U.S. economy and other
future conditions. These statements are not guarantees of future performance,
and investors should not place undue reliance on forward-looking statements.
Actual results may differ materially from those expressed or forecasted in
forward-looking statements due to a variety of risks, uncertainties and other
factors, including but not limited to the factors listed and described under
Item 1A"Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2011, as filed with the Securities and Exchange Commission (the
"SEC") on February 27, 2012 as they may be revised or supplemented by us in
subsequent Reports on Form 10-Q and other filings with the SEC. Among such
risks, uncertainties and other factors are market and economic challenges
experienced by the U.S. economy or real estate industry as a whole, including
dislocations and liquidity disruptions in the credit markets; the inability of
tenants to continue paying their rent obligations due to bankruptcy,
insolvency or a general downturn in their business; competition for real
estate assets and tenants; impairment charges; the availability of cash flow
from operating activities for distributions and capital expenditures; our
ability to refinance maturing debt or to obtain new financing on attractive
terms; future increases in interest rates; actions or failures by our joint
venture partners, including development partners; and factors that could
affect our ability to qualify as a real estate investment trust. The Company
undertakes no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
to future operating results.


INLAND REAL ESTATE CORPORATION
Consolidated Balance Sheets
December 31, 2012 and 2011
(In thousands except per share data)
                                                         
                                       December 31, 2012     December 31, 2011
Assets:
Investment properties:
Land                                   $   313,261           314,384
Construction in progress               20,837                1,669
Building and improvements              957,794              950,421      
                                       1,291,892             1,266,474
Less accumulated depreciation          329,997              323,839      
Net investment properties              961,895               942,635
Cash and cash equivalents              18,505                7,751
Investment in securities               8,711                 12,075
Accounts receivable, net               25,076                29,582
Mortgages receivable                   12,955                515
Investment in and advances to          129,196               101,670
unconsolidated joint ventures
Acquired lease intangibles, net        41,692                31,948
Deferred costs, net                    19,436                18,760
Other assets                           25,939               14,970       
Total assets                           $   1,243,405        1,159,906    
Liabilities:
Accounts payable and accrued           $   36,918            33,165
expenses
Acquired below market lease            12,976                11,147
intangibles, net
Distributions payable                  4,606                 4,397
Mortgages payable                      412,361               391,202
Unsecured credit facilities            305,000               280,000
Convertible notes                      28,327                27,863
Other liabilities                      33,014               21,719       
Total liabilities                      833,202              769,493      
Stockholders’ Equity:
Preferred stock, $0.01 par value,
12,000 Shares authorized; 4,400 and
2,000 8.125% Series A Cumulative
Redeemable shares, with a $25.00 per   110,000               50,000
share Liquidation Preference, issued
and outstanding at December 31, 2012
and 2011, respectively.
Common stock, $0.01 par value,
500,000 Shares authorized; 89,366
and 88,992 Shares issued and           894                   890
outstanding at December 31, 2012 and
2011, respectively
Additional paid-in capital (net of
offering costs of $70,238 and          784,139               783,211
$67,753 at December 31, 2012 and
2011, respectively)
Accumulated distributions in excess    (476,185       )      (435,201     )
of net income
Accumulated comprehensive loss         (9,269         )      (7,400       )
Total stockholders’ equity             409,579               391,500
Noncontrolling interest                624                  (1,087       )
Total equity                           410,203              390,413      
Total liabilities and equity           $   1,243,405        1,159,906    
                                                                          
                                                                          

                        INLAND REAL ESTATE CORPORATION
                   Consolidated Balance Sheets (continued)
                          December31, 2012 and 2011
                     (In thousands except per share data)

The following table presents certain assets and liabilities of consolidated
variable interest entities (VIEs), which are included in the Consolidated
Balance Sheet above as of December31, 2012. There were no consolidated VIE
assets and liabilities as of December31, 2011. The assets in the table below
include only those assets that can be used to settle obligations of
consolidated VIEs. The liabilities in the table below include third-party
liabilities of consolidated VIEs only, and exclude intercompany balances that
are eliminated in consolidation.

                                                           
                                                             December 31, 2012
Assets of consolidated VIEs that can only be used to
settle obligations of consolidated VIEs:
Investment properties:
Land                                                         $      15,577
Building and improvements                                    40,390
                                                             55,967
Less accumulated depreciation                                144
Net investment properties                                    55,823
Acquired lease intangibles, net                              8,089
Other assets                                                 500
Total assets of consolidated VIEs that can only be used to   $      64,412
settle obligations of consolidated VIEs
                                                             
Liabilities of consolidated VIE’s for which creditors or
beneficial interest holders do not have recourse to the
general credit of the Company:
                                                             
Accounts payable and accrued expenses                        $      82
Acquired below market lease intangibles, net                 806
Mortgages payable                                            33,085
Other liabilities                                            750
Total liabilities of consolidated VIEs for which creditors
or beneficial interest holders do not have recourse to the   $      34,723
general credit of the Company
                                                                    


INLAND REAL ESTATE CORPORATION
Consolidated Statements of Operations
For the three and twelve months ended December 31, 2012 and 2011 (unaudited)
(In thousands except per share data)
                                                              
                      Three months   Three months   Twelve         Twelve
                                                    months         months
                      ended          ended          ended          ended
                      December 31,   December 31,   December 31,   December
                                                                   31,
                      2012           2011           2012           2011
Revenues
Rental income         $  28,539      28,135         114,657        116,909
Tenant recoveries     8,934          6,084          37,021         38,965
Other property        533            539            2,409          1,940
income
Fee income from
unconsolidated        2,203         1,787         5,757         6,027    
joint ventures
Total revenues        40,209        36,545        159,844       163,841  
Expenses:
Property operating    5,029          5,118          22,615         27,339
expenses
Real estate tax       7,031          3,356          29,272         27,969
expense
Depreciation and      12,479         11,889         55,036         49,477
amortization
Provision for asset   —              —              —              5,223
impairment
General and
administrative        4,284         3,846         17,552        14,656   
expenses
Total expenses        28,823        24,209        124,475       124,664  
Operating income      11,386         12,336         35,369         39,177
Other income          779            257            3,633          2,438
Loss on sale of
investment            —              —              (23       )    —
properties
Gain (loss) from
change in control     64             —              1,108          (1,400   )
of investment
properties
Gain on sale of
joint venture         591            453            766            1,366
interest
Interest expense      (8,487     )   (9,133   )     (35,680   )    (41,579  )
Income before
income tax benefit
(expense) of
taxable REIT
subsidiaries,
equity in earnings    4,333          3,913          5,173          2
(loss) of
unconsolidated
joint ventures and
discontinued
operations
Income tax benefit
(expense) of          1,999          (522     )     6,346          632
taxable REIT
subsidiaries
Equity in earnings
(loss) of             1,244         196           2,875         (8,124   )
unconsolidated
joint ventures
Income (loss) from
continuing            7,576          3,587          14,394         (7,490   )
operations
Income (loss) from
discontinued          2,895         (1,716   )     3,298         436      
operations
Net income (loss)     10,471         1,871          17,692         (7,054   )
Less: Net (income)
loss attributable
to the                (36        )   (19      )     67            (130     )
noncontrolling
interest
Net income (loss)
attributable to       10,435         1,852          17,759         (7,184   )
Inland Real Estate
Corporation
Dividends on          (2,247     )   (948     )     (7,910    )    (948     )
preferred shares
Net income (loss)
attributable to       $  8,188      904           9,849         (8,132   )
common stockholders
Basic and diluted
earnings
attributable to
common shares per
weighted average
common share:
Income (loss) from
continuing            $  0.06        0.03           0.07           (0.09    )
operations
Income (loss) from
discontinued          0.03          (0.02    )     0.04          —        
operations
Net income (loss)
attributable to
common stockholders
per weighted          $  0.09       0.01          0.11          (0.09    )
average common
share — basic and
diluted
Weighted average
number of common      89,105        88,838        89,006        88,530   
shares outstanding
— basic
Weighted average
number of common      89,316        88,954        89,161        88,530   
shares outstanding
— diluted
Comprehensive
income:
Net income (loss)
attributable to       $  8,188       904            9,849          (8,132   )
common stockholders
Unrealized gain
(loss) on             (90        )   779            804            (1,053   )
investment
securities
Reversal of
unrealized gain to
realized gain on      (6         )   —              (1,038    )    (1,191   )
investment
securities
Unrealized gain
(loss) on             234           (328     )     (1,635    )    (6,304   )
derivative
instruments
Comprehensive         $  8,326      1,355         7,980         (16,680  )
income (loss)
                                                                            

Non-GAAP Financial Measures

We consider FFO a widely accepted and appropriate measure of performance for a
REIT. FFO provides a supplemental measure to compare our performance and
operations to other REITs. Due to certain unique operating characteristics of
real estate companies, NAREIT has promulgated a standard known as FFO, which
it believes more accurately reflects the operating performance of a REIT such
as ours. As defined by NAREIT, FFO means net income computed in accordance
with U.S. GAAP, excluding gains (or losses) from sales of operating property,
plus depreciation and amortization and after adjustments for unconsolidated
entities in which the REIT holds an interest. In addition, NAREIT has further
clarified the FFO definition to add-back impairment write-downs of depreciable
real estate or of investments in unconsolidated entities that are driven by
measurable decreases in the fair value of depreciable real estate. We have
adopted the NAREIT definition for computing FFO. We adjust FFO for the impact
of non-cash impairment charges of non-depreciable real estate, net of taxes
recorded in comparable periods, in order to present the performance of our
core portfolio operations. Management uses the calculation of FFO and FFO
adjusted for several reasons. FFO is used in certain employment agreements to
determine incentives payable by us to certain executives, based on our
performance. Additionally, we use FFO and FFO adjusted to compare our
performance to that of other REITs in our peer group. The calculation of FFO
may, however, vary from entity to entity because capitalization and expense
policies tend to vary from entity to entity. Items that are capitalized do not
impact FFO whereas items that are expensed reduce FFO. Consequently, our
presentation of FFO may not be comparable to other similarly titled measures
presented by other REITs. FFO does not represent cash flows from operations as
defined by U.S. GAAP, it is not indicative of cash available to fund all cash
flow needs and liquidity, including our ability to pay distributions and
should not be considered as an alternative to net income, as determined in
accordance with U.S. GAAP, for purposes of evaluating our operating
performance. The following table reflects our FFO and FFO adjusted for the
periods presented, reconciled to net income (loss) attributable to common
stockholders for these periods.

                                                               
                       Three months     Three months   Twelve       Twelve
                                                       months       months
                       ended December   ended          ended        ended
                                        December       December     December
                       31, 2012         31, 2011       31, 2012     31, 2011
Net income (loss)
attributable to        $    8,188       904            9,849        (8,132  )
common stockholders
Gain on sale of
investment             (3,142       )   (955     )     (3,864  )    (1,510  )
properties
Gain (loss) from
change in control of   (64          )   —              (1,108  )    1,400
investment
properties
Impairment of
depreciable            243              2,841          722          2,841
operating property
Equity in
depreciation and
amortization of        6,243            4,260          24,266       14,653
unconsolidated joint
ventures
Amortization on
in-place lease         1,851            1,293          8,777        6,540
intangibles
Amortization on        389              372            1,747        1,423
leasing commissions
Depreciation, net of
noncontrolling         10,252          10,399        44,935      42,415  
interest
Funds From
Operations             $    23,960      19,114         85,324       59,630
attributable to
common stockholders
                                                                    
Impairment loss, net
of taxes:
Provision for asset    —                —              —            5,223
impairment
Provision for asset
impairment included
in equity in           —                —              —            7,824
earnings (loss) of
unconsolidated joint
ventures
Other non-cash         52               98             348          940
adjustments
Provision for income
taxes:
Income tax             (2,657       )   —             (7,468  )    (1,368  )
adjustments
Funds From
Operations
attributable to        $    21,355     19,212        78,204      72,249  
common stockholders,
adjusted
Net income (loss)
attributable to
common stockholders    $    0.09       0.01          0.11        (0.09   )
per weighted average
common share - basic
and diluted
Funds From
Operations
attributable to
common stockholders,   $    0.27       0.21          0.96        0.67    
per weighted average
commons share -
basic and diluted
Funds From
Operations
attributable to
common stockholders,   $    0.24       0.22          0.88        0.82    
adjusted, per
weighted average
commons share -
basic and diluted
Weighted average
number of common       89,105          88,838        89,006      88,530  
shares outstanding,
basic
Weighted average
number of common       89,316          88,954        89,161      88,633  
shares outstanding,
diluted
                                                                            

EBITDA is defined as earnings (losses) from operations excluding: (1) interest
expense; (2) income tax benefit or expenses; (3) depreciation and amortization
expense; and (4) gains (loss) on non-operating property. We believe EBITDA is
useful to us and to an investor as a supplemental measure in evaluating our
financial performance because it excludes expenses that we believe may not be
indicative of our operating performance. By excluding interest expense, EBITDA
measures our financial performance regardless of how we finance our operations
and capital structure. By excluding depreciation and amortization expense, we
believe we can more accurately assess the performance of our portfolio.
Because EBITDA is calculated before recurring cash charges such as interest
expense and taxes and is not adjusted for capital expenditures or other
recurring cash requirements, it does not reflect the amount of capital needed
to maintain our properties nor does it reflect trends in interest costs due to
changes in interest rates or increases in borrowing. EBITDA should be
considered only as a supplement to net earnings and may be calculated
differently by other equity REITs.

We believe EBITDA is an important non-GAAP measure. We utilize EBITDA to
calculate our interest expense coverage ratio, which equals EBITDA divided by
total interest expense. We believe that using EBITDA, which excludes the
effect of non-operating expenses and non-cash charges, all of which are based
on historical cost and may be of limited significance in evaluating current
performance, facilitates comparison of core operating profitability between
periods and between REITs, particularly in light of the use of EBITDA by a
seemingly large number of REITs in their reports on Forms 10-Q and 10-K. We
believe that investors should consider EBITDA in conjunction with net income
and the other required U.S. GAAP measures of our performance to improve their
understanding of our operating results. We adjust EBITDA for the impact of
non-cash impairment charges in comparable periods, in order to present the
performance of our core portfolio operations.

                                                              
                       Three months     Three        Twelve        Twelve
                                        months       months        months
                       ended December   ended        ended         ended
                                        December     December      December
                       31, 2012         31, 2011     31, 2012      31, 2011
Net income (loss)
attributable to        $    10,435      1,852        17,759        (7,184   )
Inland Real Estate
Corporation
Gain on sale of
investment             (3,142       )   (955    )    (3,864   )    (1,510   )
properties
(Gain) loss from
change in control of   (64          )   —            (1,108   )    1,400
investment
properties
Income tax (benefit)
expense of taxable     (1,999       )   522          (6,346   )    (632     )
REIT subsidiaries
Interest expense       8,488            9,133        35,680        41,579
Interest expense
associated with        —                —            —             89
discontinued
operations
Interest expense
associated with        3,024            2,511        11,596        8,865
unconsolidated joint
ventures
Depreciation and       12,479           11,889       55,036        49,477
amortization
Depreciation and
amortization
associated with        29               210          483           1,083
discontinued
operations
Depreciation and
amortization
associated with        6,243           4,260       24,266       14,653   
unconsolidated joint
ventures
EBITDA                 35,493           29,422       133,502       107,820
Provision for asset    243              2,841        722           5,223
impairment
Provision for asset
impairment included
in equity in           —                —            —             7,824
earnings (loss) of
unconsolidated joint
ventures
Other non-cash         52              98          348          940      
adjustments
EBITDA, adjusted       $    35,788     32,361      134,572      121,807  
Total Interest         $    11,512     11,644      47,276       50,533   
Expense
EBITDA: Interest
Expense Coverage       3.1             2.5         2.8          2.1      
Ratio
EBITDA: Interest
Expense Coverage       3.1             2.8         2.8          2.4      
Ratio, adjusted
                                                                            

Same Store Net Operating Income Analysis

The following schedule presents same store net operating income, for our
consolidated portfolio, which is the net operating income of properties owned
in both the three and twelve months ended December31, 2012 and 2011, along
with other investment properties' net operating income. Same store net
operating income is considered a non-GAAP financial measure because it does
not include straight-line rental income, amortization of lease intangibles,
interest, depreciation, amortization and bad debt expense. We provide same
store net operating income as another metric to compare the results of
property operations for the three and twelve months ended December31, 2012
and 2011. We also provide a reconciliation of these amounts to the most
comparable GAAP measure, net income (loss) attributable to common
stockholders.

                                                           
                 Three        Three                 Twelve      Twelve
                 months       months                months      months
                 ended        ended                 ended       ended
Consolidated     December     December              December    December
                 31, 2012     31, 2011              31, 2012    31, 2011
Rental income
and tenant
recoveries:
"Same store"
investment
properties, 94
properties
Rental income    $ 25,436     24,715      2.9   %   99,988      97,544    2.5   %
Tenant
recovery         8,109        5,427       49.4  %   33,991      32,437    4.8   %
income
Other property   482          515         -6.4  %   2,228       1,857     20.0  %
income
"Other
investment
properties”
Rental income    2,817        3,126                 13,291      17,489
Tenant
recovery         825          657                   3,030       6,528
income
Other property   51          24                   181        83      
income
Total rental
and additional   $ 37,720    34,464               152,709    155,938 
rental income
Property
operating
expenses:
"Same store"
investment
properties, 94
properties
Property
operating        $ 4,203      4,177       0.6   %   17,783      20,283    -12.3 %
expenses
Real estate      6,693        3,146       112.7 %   27,187      23,157    17.4  %
tax expense
"Other
investment
properties"
Property
operating        380          400                   1,873       3,081
expenses
Real estate      338         210                  2,085      4,812   
tax expense
Total property
operating        $ 11,614    7,933                48,928     51,333  
expenses
Property net
operating
income
"Same store"
investment       23,131       23,334      -0.9  %   91,237      88,398    3.2   %
properties
"Other
investment       2,975       3,197                12,544     16,207  
properties"
Total property
net operating    $ 26,106    26,531               103,781    104,605 
income
Other income:
Straight-line    $ 290        253                   839         1,526
rents
Amortization
of lease         (4       )   41                    539         350
intangibles
Other income     779          257                   3,633       2,438
Fee income
from             2,203        1,787                 5,757       6,027
unconsolidated
joint ventures
Gain (loss)
from change in
control of       64           —                     1,108       (1,400  )
investment
properties
Loss on sale
of investment    —            —                     (23     )   —
properties
Gain on sale
of joint         591          453                   766         1,366
venture
interest
Other
expenses:
Income tax
benefit
(expense) of     1,999        (522      )           6,346       632
taxable REIT
subsidiaries
Bad debt         (446     )   (541      )           (2,959  )   (3,975  )
expense
Depreciation
and              (12,479  )   (11,889   )           (55,036 )   (49,477 )
amortization
General and
administrative   (4,284   )   (3,846    )           (17,552 )   (14,656 )
expenses
Interest         (8,487   )   (9,133    )           (35,680 )   (41,579 )
expense
Provision for
asset            —            —                     —           (5,223  )
impairment
Equity in
earnings
(loss) of        1,244       196                  2,875      (8,124  )
unconsolidated
joint ventures
Income (loss)
from             7,576        3,587                 14,394      (7,490  )
continuing
operations
Income (loss)
from             2,895       (1,716    )           3,298      436     
discontinued
operations
Net income       10,471       1,871,000             17,692      (7,054  )
(loss)
Less: Net
(income) loss
attributable     (36      )   (19       )           67         (130    )
to the
noncontrolling
interest
Net income
(loss)
attributable     10,435       1,852                 17,759      (7,184  )
to Inland Real
Estate
Corporation
Dividends on
preferred        (2,247   )   (948      )           (7,910  )   (948    )
shares
Net income
(loss)
attributable     $ 8,188     904                  9,849      (8,132  )
to common
stockholders
                                                                                
                                                                                

                        Inland Real Estate Corporation
                      Supplemental Financial Information
                     As of December31, 2012 (unaudited)
           (In thousands except per share and square footage data)

The following schedules present our pro-rata consolidated financial statements
as of and for the three months and year ended December 31, 2012, reconciled to
our U.S. GAAP financial statements. These financial statements are considered
non-GAAP because they include financial information related to unconsolidated
joint ventures accounted for under the equity method of accounting. We provide
these statements to include the pro rata amounts of all properties under
management in order to better compare our overall performance and operating
metrics to those of other REITs in our peer group.

Balance Sheets (unaudited) - Pro-rata Consolidation

                                                                                                 
                                                                                        IPCC             Pro-rata
                 Consolidated    Noncontrolling   IN Retail   INP         Development   Unconsolidated   Consolidated
                                                  Fund LLC    Retail LP
                 Balance         Interest         (NYSTRS)    (PGGM)      Properties    properties       Balance
                 Sheets                                                                                  Sheets
Assets:
Investment
properties:
Land             $ 313,261       (535      )      43,785      75,413      1,602         2,520            436,046
Construction     20,837          (2        )      —           2,119       16,052        —                39,006
in progress
Building and     957,794        (1,508    )      116,818    183,575    5,271        7,875           1,269,825  
improvements
                 1,291,892       (2,045    )      160,603     261,107     22,925        10,395           1,744,877
Less
accumulated      329,997        (747      )      32,089     7,717      358          224             369,638    
depreciation
Net investment   961,895         (1,298    )      128,514     253,390     22,567        10,171           1,375,239
properties
Cash and cash    18,505          (2,119    )      3,482       6,776       3             22               26,669
equivalents
Investment in    8,711           —                —           —           —             —                8,711
securities
Accounts
receivable,      25,076          (46       )      5,460       4,190       52            21               34,753
net
Mortgages        12,955          —                —           —           —             —                12,955
receivable
Investment in
and advances
to               129,196         —                (18,007 )   (91,438 )   (13,595  )    (4,662    )      1,494
unconsolidated
joint ventures
Acquired lease
intangibles,     41,692          —                3,680       43,352      —             1,607            90,331
net
Deferred         19,436          (23       )      2,075       2,029       30            88               23,635
costs, net
Other assets     25,939         (3        )      1,866      1,511      92           826             30,231     
Total assets     $ 1,243,405    (3,489    )      127,070    219,810    9,149        8,073           1,604,018  
Liabilities:
Accounts
payable and      $ 36,918        (35       )      6,887       6,227       1,832         68               51,897
accrued
expenses
Acquired below
market lease     12,976          —                1,734       15,988      —             786              31,484
intangibles,
net
Distributions    4,606           —                —           —           —             —                4,606
payable
Mortgages        412,361         (739      )      86,786      135,328     7,433         6,394            647,563
payable
Unsecured
credit           305,000         —                —           —           —             —                305,000
facilities
Convertible      28,327          —                —           —           —             —                28,327
notes
Other            33,014         (16       )      1,930      3,262      1,668        226             40,084     
liabilities
Total            833,202        (790      )      97,337     160,805    10,933       7,474           1,108,961  
liabilities
Stockholders’
Equity:
Preferred        110,000         —                —           —           —             —                110,000
stock
Common stock     894             —                —           —           —             —                894
Additional
paid-in          784,139         —                —           119         —             —                784,258
capital
Accumulated
distributions    (476,185    )   (4,368    )      29,733      58,886      (1,784   )    599              (393,119   )
in excess of
net income
Accumulated
comprehensive    (9,269      )   —               —          —          —            —               (9,269     )
loss
Total
stockholders’    409,579         (4,368    )      29,733      59,005      (1,784   )    599              492,764
equity
Noncontrolling   624            1,669           —          —          —            —               2,293      
interest
Total equity     410,203        (2,699    )      29,733     59,005     (1,784   )    599             495,057    
Total
liabilities      $ 1,243,405    (3,489    )      127,070    219,810    9,149        8,073           1,604,018  
and equity
                                                                                                                    
                                                                                                                    

                        Inland Real Estate Corporation
                      Supplemental Financial Information
                 For the three months ended December 31, 2012
           (In thousands except per share and square footage data)

Statements of Operations (unaudited) - Pro-rata Consolidation

                                                                              
                                                                                     Pro-rata
                 Consolidated                                       IPCC             Consolidated
                                IN         INP
                 Statement of   Retail     Retail     Development   Unconsolidated   Statement of
                                Fund LLC   LP
                 Operations     (NYSTRS)   (PGGM)     Properties    properties       Operations
Revenues
Rental income    $  28,539      3,730      5,977      21            648              38,915
Tenant           8,934          1,636      2,793      8             13               13,384
recoveries
Other property   533            12         35         1             —                581
income
Fee income
from             2,203         —         —         —            —               2,203     
unconsolidated
joint ventures
Total revenues   40,209         5,378      8,805      30            661              55,083
Expenses:
Property
operating        5,029          654        1,186      40            27               6,936
expenses
Real estate      7,031          1,437      1,854      33            11               10,366
tax expense
Depreciation
and              12,479         2,113      3,872      9             249              18,722
amortization
General and
administrative   4,284         15        216       —            —               4,515     
expenses
Total expenses   28,823        4,219     7,128     82           287             40,539    
Operating        11,386         1,159      1,677      (52     )     374              14,544
income
Other income     779            7          2          61            —                849
Gain on sale
of investment    64             —          —          —             —                64
properties
Gain on sale
of joint         591            —          —          —             —                591
venture
interest
Interest         (8,487     )   (1,217 )   (1,447 )   (112    )     (248     )       (11,511   )
expense
Income (loss)
before income
tax benefit of
taxable REIT
subsidiaries,
equity in
earnings         4,333          (51    )   232        (103    )     126              4,537
(loss) of
unconsolidated
joint ventures
and
discontinued
operations
Income tax
expense of       1,999          —          —          —                              1,999
taxable REIT
subsidiaries
Equity in
earnings
(loss) of        1,244         51        (232   )   103          (126     )       1,040     
unconsolidated
joint ventures
Income from
continuing       7,576          —          —          —             —                7,576
operations
Income from
discontinued     2,895         —         —         —            —               2,895     
operations
Net income       10,471         —          —          —             —                10,471
Less: Net
income
attributable     (36        )   —         —         —            —               (36       )
to the
noncontrolling
interest
Net income
attributable
to Inland Real   10,435         —          —          —             —                10,435
Estate
Corporation
Dividends on
preferred        (2,247     )   —         —         —            —               (2,247    )
shares
Net income
attributable     $  8,188      —         —         —            —               8,188     
to common
stockholders
                                                                                               
                                                                                               

                        Inland Real Estate Corporation
                      Supplemental Financial Information
                For the twelve months ended December 31, 2012
           (In thousands except per share and square footage data)

Statements of Operations (unaudited) - Pro-rata Consolidation

                                                                              
                                                                                     Pro-rata
                 Consolidated                                       IPCC             Consolidated
                                IN         INP
                 Statement of   Retail     Retail     Development   Unconsolidated   Statement of
                                Fund LLC   LP
                 Operations     (NYSTRS)   (PGGM)     Properties    properties       Operations
Revenues
Rental income    $  114,657     15,071     21,797     120           1,139            152,784
Tenant           37,021         6,483      9,459      40            16               53,019
recoveries
Other property   2,409          263        104        6             —                2,782
income
Fee income
from             5,757         —         —         —            —               5,757     
unconsolidated
joint ventures
Total revenues   159,844        21,817     31,360     166           1,155            214,342
Expenses:
Property
operating        22,615         2,668      3,980      184           45               29,492
expenses
Real estate      29,272         5,436      6,543      4             13               41,268
tax expense
Depreciation
and              55,036         7,459      16,282     86            439              79,302
amortization
General and
administrative   17,552        59        518       6            —               18,135    
expenses
Total expenses   124,475       15,622    27,323    280          497             168,197   
Operating        35,369         6,195      4,037      (114     )    658              46,145
income
Other income     3,633          413        10         (236     )    —                3,820
(expense)
Loss on sale
of investment    (23        )   —          —          —             —                (23       )
properties
Gain from
change in
control of       1,108          —          —          —             —                1,108
investment
properties
Gain on sale
of joint         766            —          —          —             —                766
venture
interest
Interest         (35,680    )   (4,964 )   (5,340 )   (859     )    (433      )      (47,276   )
expense
Income (loss)
before income
tax benefit of
taxable REIT
subsidiaries,
equity in
earnings         5,173          1,644      (1,293 )   (1,209   )    225              4,540
(loss) of
unconsolidated
joint ventures
and
discontinued
operations
Income tax
benefit of       6,346          —          —          —                              6,346
taxable REIT
subsidiaries
Equity in
earnings
(loss) of        2,875         (1,644 )   1,293     1,209        (225      )      3,508     
unconsolidated
joint ventures
Income from
continuing       14,394         —          —          —             —                14,394
operations
Income from
discontinued     3,298         —         —         —            —               3,298     
operations
Net income       17,692         —          —          —             —                17,692
Less: Net loss
attributable
to the           67            —         —         —            —               67        
noncontrolling
interest
Net income
attributable
to Inland Real   17,759         —          —          —             —                17,759
Estate
Corporation
Dividends on
preferred        (7,910     )   —         —         —            —               (7,910    )
shares
Net income
attributable     $  9,849      —         —         —            —               9,849     
to common
stockholders

Contact:

Inland Real Estate Corporation
Dawn Benchelt, Investor Relations Director
(630) 218-7364
benchelt@inlandrealestate.com
or
Joel Cunningham, Media Relations
(630) 586-4897
joel.cunningham@inlandrealestate.com
 
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