Inland Western Real Estate Trust may have misled investors regarding a merger of affiliated entities, which overvalued the affiliated business to the benefit of certain executives.

This is a securities derivative action and a securities fraud class action Inland Western Retail Real Estate Trust, Inc. ("Inland REIT" or the "REIT"), KPMG International (its auditor) and William Blair & Company ( the underwriter).

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"). 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.

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. 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. 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. 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. 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. None of these material facts were disclosed to the shareholders, in violation of the federal securities laws and state fiduciary duty laws.