<p style= text-align: justify; >On June 12, 2008, an Amended Complaint was filed against all against all defendants for violation of federal securities law and for breaches of fiduciary duties and contract. On July 16 and 17, 2008, the defendants filed motions to dismiss. The motions are currently pending before the Court.</p> <p style= text-align: justify; > </p>
<p style= text-align: justify; >The complaint alleges that this Action seeks to remedy the wrongdoing that was, and continues to be, inflicted upon the public shareholders of Inland Western Retail Real Estate Trust, Inc. (”Inland REIT” or the “REIT”), who have been asked to approve a proposed transaction whereby their fiduciaries will improperly receive excessive and unjustifiable consideration. The proposed transaction consists of Inland REIT’s acquisition of affiliated entities, which are wholly owned, directly or indirectly, by officers and directors of Inland REIT and their affiliates, in exchange for REIT stock valued at $375 million.</p>
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<p style= text-align: justify; >On August 17, 2007, Inland REIT informed its shareholders that it had entered into an agreement and plan of merger (the “Merger Agreement”) with the affiliated Advisor and Property Managers that would, if approved, result in the functions of the Advisor and Property Managers being merged with, and internalized into, Inland REIT (the “Internalization “). A Final Proxy (”Proxy”) seeking approval of the Internalization was filed with the SEC on September 10, 2007. The price-tag for this Internalization is $375 million, comprised entirely of 37,500,000 shares, representing 7.7% of the REIT’s total shares outstanding, of Inland REIT’s common stock (the “Internalization Consideration”).</p>
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<p style= text-align: justify; >By virtue of his current ownership of REIT stock and acquiring REIT stock in the Internalization, one individual defendant, will own over 30 million shares of Inland REIT’s stock valued at over $300 million (using the per share price of $10 used to calculate the Internalization Consideration) after the Internalization is consummated.</p>
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<p style= text-align: justify; >On September 10, 2007, Defendants filed and disseminated the Proxy pursuant to which Inland REIT’s shareholders are being asked to approve this improper, self-dealing Internalization. Defendants failed to disclose in the Proxy pertinent and material information about how the Internalization Consideration was determined. Moreover, the information that was disclosed - financial statements which purport to support the fees historically paid to the Advisor and Property Managers in 2005 and 2006 that form the basis for the entities’ valuations supporting the Internalization Consideration - is false and misleading.</p>
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<p style= text-align: justify; >First, the fees payable to the Advisor (the “Advisory Fees”) were not calculated in compliance with the terms of applicable contracts. This resulted in the Advisor receiving more than $60 million in overpayments from the REIT in 2005 and 2006 - in direct contravention of specific contractual provisions. In fact, under the contracts, the Advisor should have, but did not, reimburse Inland REIT over $20 million. These material departures from the contract terms governing fees, artificially distorted the Advisor’ s earnings and, therefore, its financial and operating results that were used to derive the price to be paid for the Advisor in the Internalization.</p>
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<p style= text-align: justify; >Second, the fees payable by Inland REIT to its Property Managers also were not calculated in compliance with the terms of governing contracts. The fees paid by Inland REIT to its Property Managers were significantly above-market and, thus, excessive fees. These excessive fees inflated the Property Managers’ earnings, and therefore, their value in the proposed Internalization.</p>
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<p style= text-align: justify; >The Internalization is also timed to circumvent certain provisions set out in the original Advisory and Property Management Agreements that were designed to protect Inland REIT and the shareholders from overreaching by their fiduciaries and to blunt the effect of the inherent conflicts of interest in the REIT being run and managed by the affiliated Advisor and Property Managers. Under the Agreements, in mid-2008, Inland REIT would obtain the right to purchase the Advisor and the Property Managers according to a set formula, which, if properly applied, will, in all likelihood, result in the Advisor and Property Managers receiving as little as zero cash consideration for the same transaction now costing them $375 million.</p>
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<p style= text-align: justify; >Consequently, distorted and inflated values have been attributed to the Advisor and the Property Managers, thereby, artificially and improperly inflating the amount of Internalization Consideration to be paid to acquire the Advisor and Property Managers.</p>
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<p style= text-align: justify; >None of these material facts were disclosed to the shareholders, in violation of the federal securities laws and state fiduciary duty laws.</p>
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<p style= text-align: justify; >Specifically, this Complaint charges Defendants with disseminating a materially false and misleading Proxy in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (”Exchange Act”), and breaching, or aiding and abetting breaches of, fiduciary duties and contract under state law. Plaintiff brings these claims directly on its own behalf and on behalf of all other public shareholders entitled to vote on the Proxy, and derivatively by Plaintiff on behalf of the Company.</p>
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<p style= text-align: justify; >This Complaint also seeks damages on behalf of the Class and injunctive relief to: (a) render null and void any approvals given by shareholders to Inland REIT and its management in response to the materially false and misleading Proxy; (b) rescind the Internalization and Merger, and all ancillary agreements, including employment agreements; and (c) disgorge the Advisor and Property Managers of excessive fees retained in contravention of the Advisory and Property Management Agreements.</p>