SecProbe.io

CORRESP
1
filename1.htm

Michael
J. Choate

Direct:  (312) 836-4066

Facsimile:  (312) 275-7554

E-mail:  mchoate@shefskylaw.com

026829-00001

June 17, 2005

Ms. Elaine Wolff

Legal Branch Chief

Division of Corporation Finance

United States Securities and Exchange
Commission

Mail Stop 0409

450 Fifth Street, N.W.

Washington, D.C.  20549

Re:                             Inland
American Real Estate Trust, Inc.

Registration Statement on Form S-11/A-1 Filed April 21, 2005

Registration No. 333-122743

Dear Ms. Wolff:

We are writing on behalf of our client, Inland American Real Estate
Trust, Inc. (the “Company”), in response to comments contained in the
Staff’s letter dated May 13, 2005.  The
headings and paragraph numbers below correspond to the headings and paragraph
numbers in your letter.  In addition, for
your convenience we have reproduced your comments in this letter and included
our responses directly below each comment.

General

1.             We
note your response to previous comment 1.
Please expand your disclosure in the prospectus beginning on page 175
(the Distribution Reinvestment Plan discussion) to clarify that those who have
received a copy of the prospectus and who participate in the current offering
can elect to participate in and purchase shares through the reinvestment plan
at any time and would not need to receive a separate prospectus relating solely
to the reinvestment plan.  Disclose also
the information relating to your Question 6 as described in your response and
the information contained in the second paragraph of your response.

RESPONSE:

The disclosure in the “Distribution Reinvestment Plan and Share
Repurchase Program – Distribution Reinvestment Plan” section has been
expanded to include the requested information.

2.             Clarify
in the first paragraph of the cover page that 40,000,000 of the shares
being registered are issuable pursuant to the distribution reinvestment plan.

RESPONSE:

The first paragraph of the cover page now states that 40,000,000
shares of the Company’s common stock also are being offered at a price of $9.50
per share to stockholders who elect to participate in the distribution
reinvestment plan.

3.             In
your response to previous comment 11, revise the sixth bullet point to quantify
the maximum borrowing amounts (300% of net assets).

RESPONSE:

The sixth bullet point has been revised to clarify that the Company may
borrow up to 300.0% of net assets.

4.             Please
note that your response to previous comments 2 and 3 remain under consideration
and will be addressed by separate letter.

RESPONSE:

We acknowledge your comment.

5.             Please
revise the table of contents so that it reflects the accurate page numbers
for each section of the prospectus.

RESPONSE:

The table of contents has been updated accordingly.

6.             Please
clarify in the first Q&A and throughout whether the “real estate operating
companies” in which you may invest are primarily other REITs or take some other
form, describing such form.

RESPONSE:

We have clarified in the first question and answer and throughout the Form S-11
that the Company may invest in REITs or other “real estate operating companies,”
such as real estate management companies and real estate development
companies.  Also included is a
cross-reference to the “Management – Property Acquisition Agreement” section for
a more complete definition of “real estate operating company.”  As stated in the “Business and Policies –
Investment Strategy” section, the Company does not have, and does not expect to
adopt, any policies limiting its acquisitions of REITs or other “real estate
operating companies” to those conducting a certain type of real estate business
or owning a specific property type or real estate asset.

7.             We
note from your response to comment 6 that you may invest in collateralized
mortgage-backed securities.  Please
revise the summary and throughout, including a risk factor, to discuss such
investments and the risks related to such investments.  Please disclose whether

there is a limitation on the
percentage of your portfolio that may be invested in such assets.  In this connection, please revise the
disclosure with respect to your discussion regarding hedging, including the
risk factor discussion, to include that you may use derivative financial
instruments to hedge these types of investments.  Currently, your disclosure discusses your use
of derivatives to hedge exposures to changes in interest rates on loans secured
by your assets.  Additionally, please
revise the discussion to include the types of derivative instruments that you
may use, including, for example, repurchase agreements.

RESPONSE:

We have revised the “Questions and Answers about the Offering” and “Business
and Policies” sections of the Form S-11 to describe in more detail the
Company’s investments in collateralized mortgage-backed securities and the risks
related to such investments.  We also
have added risk factor disclosure to this effect in the “Risks Related to Our
Business” section.  The “Prospectus
Summary” and first paragraph of the “Business and Policies” sections state that
the Company does not have, and does not expect to adopt, any policies as to the
amount or percentage of assets that will be invested in commercial real estate,
entities owning commercial real estate or other real estate assets such as
collateralized mortgage-backed securities.
As requested, we have revised the discussion regarding hedging in the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –
Quantitative and Qualitative Disclosures about Market Risk” section, and the
corresponding risk factor disclosure, to include that the Company may use
derivative financial instruments to hedge interest rate risks associated with
these investments.    Also included is a brief description of the
types of derivative financial instruments that may be used by the Company in
its hedging activities.

8.             We
note from your response to comment 11 that you have included a bullet point
disclosing that your manager could recommend investments in an attempt to
increase fees because the fees paid to it are based upon your investments.  Please revise to clarify that fees are not
based on the performance of your investments but rather on a percentage of
invested assets and the purchase price of such assets.

RESPONSE:

The disclosure in this bullet point and throughout the Form S-11
was changed to clarify that the Company’s business manager could recommend
investments in an attempt to increase its fees because the fees paid to it are
based upon a percentage of the Company’s invested assets and, in certain cases,
the purchase price for these assets.

9.             We
note your response to comment 17 that your dealer manager, which is your
affiliate, and any soliciting dealer may purchase shares to reach the
minimum.  Please revise the cover page,
summary and throughout to clarify that your affiliated dealer manager and
soliciting dealers, who will receive compensation depending on the success of
the offering, may purchase shares in order to reach the required minimum.  Please clarify that investors should not
expect that the sale of shares to reach the minimum, indicates that such sales
have been made to investors who have no financial or other interest in the
offering, or who otherwise are exercising independent investment discretion.

RESPONSE:

Although the Company’s dealer manager and any soliciting dealer may, to
the extent permitted under NASD regulations, purchase shares of common stock in
the offering, those purchases will not be counted toward satisfying the minimum
offering threshold.  The same is true for
purchases by the Company’s officers, directors and affiliates.  We have further clarified the “How does a ‘best
efforts’ offering work?” and “After I subscribe for shares, can I change my
mind and withdraw my money?” questions accordingly.  This same disclosure also has been added to
the first full paragraph in the “Plan of Distribution – General” section.

10.          As a related matter, please disclose whether the dealer
manager and soliciting dealer will purchase their shares under the same terms
and conditions as other participants in the offering.  State also whether the dealer manager and
soliciting dealer will be purchasing shares for investment purposes or with a
view toward distribution.

RESPONSE:

 The “Plan of Distribution –
Compensation We Will Pay for the Sale of Our Shares” section explains that
the Company will not pay selling commissions, marketing contributions or due
diligence expense allowances in connection with the initial sale of common
stock to the Company’s dealer manager or any of its directors, officers,
employees or affiliates; however, the discount on any subsequent sales of
common stock to these entities or individuals may not exceed five percent.  This section of the Form S-11 also
explains that the seven percent reallowable selling commission will not be paid
in connection with the initial sale of common stock to soliciting dealers and
any of their respective directors, officers, employees and affiliates; however,
the discount on any subsequent sales of common stock to these entities or
individuals may not exceed five percent.
In either case, the Company expects that any purchases of common stock
by the Company’s dealer manager or any soliciting dealer will be made for
investment purposes only.

11.          Supplementally, tell us what plans the dealer manager and
soliciting dealer have regarding the resale of the shares acquired to meet the
minimum threshold in the offering.  We
note that the resale of any shares received by them other than as compensation
for the services may require registration under the securities laws.

RESPONSE:

Shares purchased by the Company’s dealer manager and any soliciting
dealer will not be counted toward satisfying the minimum offering
threshold.  Please see our responses to
Comments 9 and 10.

12.          We note your response to comment 19 that you have deleted
the question in the Q&A section related to risks and have included
this disclosure in the Summary.  Please
note that since we view the Q&A section and the Summary section to
be one section, the summary risk factor disclosure should appear no later than
the second page of the summary.
Please revise.

RESPONSE:

The summary risk factor disclosure now begins on the first page of
the Prospectus Summary.

13.          We note from your response to comment 22 that you have
added disclosure that distributions will commence no later than 45 days after
the sale of the minimum offering.  Please
revise to disclose, if true, that such distributions may be a return of capital
since, as you disclose in the risk factors, delays could occur in locating
suitable investments or if you acquire property prior to the start of
construction, or at early stages of construction, it will typically take
several months to complete constructions and rent available space.

RESPONSE:

We have expanded the “If I buy shares, will I receive distributions
and, if so, how often?” question to clarify that distributions will be deemed a
return of capital to the extent that the aggregate amount of cash distributed
in any given year exceeds the amount of the Company’s “REIT taxable income”
generated during the year.

Prior Performance of IREIC Affiliates – Page 57

14.          We note your response to previous comment 54.  Please expand your disclosure on page 57
to briefly describe how compensation paid to your sponsor, business manger and
their affiliates in prior programs differs from compensation paid pursuant to
the Inland American Real Estate Trust compensation agreement.

RESPONSE:

The disclosure in the “Prior Performance of IREIC Affiliates – Prior
Investment Programs” section has been expanded to include the requested
information.

15.          In your response to previous comment 53, please tell us how
you determined that the net loss suffered in fiscal 2004 by Inland Retail Real
Estate Trusts, Inc. is not a major adverse business development that
should be disclosed to investors.  We
note the significant increase in interest expense that resulted in a net loss
for the program in its Form 10-K for the year ended December 31, 2004
and that 34 of your properties were damaged by hurricanes during the year.

RESPONSE:

The Company’s business manager does not consider either of these events
to be a materially adverse business development given the size of Inland Retail’s
asset portfolio.  According to Inland
Retail’s Form 10-K, interest expense increased because the company began
paying interest on funds borrowed to acquire properties in 2003 and 2004.  These activities are consistent with Inland
Retail’s business plan as described in its Form 10-K.  The net loss recognized by Inland Retail is primarily
attributable to one-time non-cash expenses incurred by the company as a result
of the merger with its advisor and property managers on December 29, 2004.  Specifically, Inland Retail recorded
approximately $144 million in “terminated contract costs” in connection with
the merger.  The “Prior Performance of
IREIC Affiliates” section of

the Form S-11
includes a discussion of merger between Inland Retail and its advisor and
property managers.

With respect to hurricane damage, Inland Retail estimated total repair
and clean-up costs to be approximately $780,000, of which approximately
$250,000 will be reimbursed by insurance coverage.  The Company does not consider these amounts
to be material and, therefore, has not discussed hurricane damage incurred by
Inland Retail in the Form S-11.

Appendix A

16.          We note the factors mentioned in response to previous
comment 62 in determining which prior programs had investment objectives
similar to yours.  Confirm our
understanding that the stated investment objectives are exclusive to the
programs disclosed in the tables.  It is
not clear that these objectives do not apply to all prior programs.

RESPONSE:

The stated investment objectives are exclusive to the programs
disclosed in the prior performance tables.

17.          We note your disclosure that the tables provide information
concerning real estate programs sponsored by IREIC which have investment
objectives similar to yours.  We further
note from your response to comment 61 that you have provided information for a sponsor
with no public track record.  Tables I
and II seek information on your prior performance in the most recent three
years.  Since you have not sponsored more
than five programs with similar investment objectives in the last three years,
you should include information for each prior program, whether public or
non-public, even if the investment objectives for those programs are
dissimilar.  Include similar information
for Tables III and IV which require prior performance disclosure for the most
recent five years.  Please note that as
to the programs with dissimilar investment objectives those programs may be
grouped together in tables I-IV.  Please
revise or advise.

RESPONSE:

Per our telephone conversations, we have included appropriate prior
performance disclosure for each prior program, whether public or non-public,
sponsored by IREIC over the last three to five year period.  Prior performance data for the 1031 programs has
been grouped together in Tables I through IV.

18.          Please supplementally tell us the nature of the items that
make up each of operating expenses and program expenses in Table III.  In this connection, please confirm whether
management fees and other fees paid to affiliates have been included in either
of these expense items.

RESPONSE:

Operating expenses include property operating expenses such as real
estate tax expense, insurance expense, property management fees, utilities,
repairs, maintenance and any p