-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IYzPntCmy4UT5pbNZ2K4d49QuR2Wbbcaiz7Lel4YGG5UnzODtoSSrpVbwtbnZnnF riBeNuBJdtSinE1QI4J5ug== 0000798359-98-000027.txt : 19981208 0000798359-98-000027.hdr.sgml : 19981208 ACCESSION NUMBER: 0000798359-98-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS REAL ESTATE TRUST CENTRAL INDEX KEY: 0000798359 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 450311232 STATE OF INCORPORATION: ND FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14851 FILM NUMBER: 98764664 BUSINESS ADDRESS: STREET 1: 12 S MAIN CITY: MINOT STATE: ND ZIP: 58701 BUSINESS PHONE: 7018521756 MAIL ADDRESS: STREET 1: 12 S MAIN CITY: MINOT STATE: ND ZIP: 58701 10-Q 1 2ND QUARTER FISCAL 1999 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended October 31, 1998 Commission file number 0-14851 INVESTORS REAL ESTATE TRUST (Exact name of registrant as specified in its charter) North Dakota 45-0311232 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12 South Main, Minot, ND 58701 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (701) 852-1756 (Former name, former address and former fiscal year, if changed since last report.) No change Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ( X ) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Applicant is a North Dakota Real Estate Investment Trust. As of October 31, 1998, it had 17,409,955 Shares of Beneficial Interest outstanding. PART I ITEM 1. Financial Statements. The following financial statements have been prepared from the records of Investors Real Estate Trust and have not been audited or reviewed by the Trust's independent certified public accountants. Accordingly, these statements are subject to adjustments upon audit, which audit will be conducted for the Fiscal Year ending April 30, 1999. Reference is made to the footnotes to the Statements prepared by the Trust's auditors for the Fiscal Year ended April 30, 1998, contained in the Annual Report for Fiscal 1998. In the opinion of the Trust, there have been no developments requiring footnote disclosure for the periods covered by the Financial Statements set forth below that are not adequately disclosed in the footnotes to the April 30, 1998, statements. BALANCE SHEETS (unaudited)
ASSETS: 10-31-98 04-30-98 ------------ ------------ Cash $ 4,020,658 $ 2,132,220 Marketable Securities - GNMA's 3,330,197 3,536,538 - Other REIT's 764,631 720,688 Accounts Receivable 14,528 55,326 Tax & Insurance Escrow 1,915,782 1,254,068 Deferred Charges 1,309,582 1,088,016 Prepaid Insurance 335,865 219,871 Real Estate Deposits 1,987,786 2,493,713 General Partnerships 0 6,705 ------------ ------------ $ 13,679,028 $ 11,507,145 Real Estate Investments Real Estate Owned $262,685,216 $231,416,322 Less Accumulated Depreciation (23,202,559) (21,516,129) ------------ ------------ Net Real Estate Owned 239,482,657 209,900,193 ------------ ------------ Real Estate Mortgages (unrelated) 1,666,698 3,438,308 Less Unearned Discounts & Allowances (125,546) (127,132) ------------ ------------ Net Mortgages & Contracts 1,541,153 3,311,176 ------------ ------------ Total Real Estate Investments $241,023,809 $213,211,369 ------------ ------------ TOTAL ASSETS $254,702,837 $224,718,514 ============ ============ LIABILITIES: Accounts Payable & Other Liabilities $ 3,412,512 $ 2,847,080 Mortgages Payable 151,472,754 134,059,974 Investment Certificates Payable 12,289,732 10,369,561 Credit Line 0 1,000,000 ------------ ------------ TOTAL LIABILITIES $167,174,998 $148,276,615 ------------ ------------ Minority Interest in Operating Partnership $ 12,004,625 $ 8,289,273 SHAREHOLDERS' EQUITY Shares of Beneficial Interest Outstanding Shares of 10-31-98 04-30-98 ------------ ------------ 17,409,955 on 10/31/98 16,391,412 on 04/30/98 $ 81,608,143 $ 74,708,559 Undistributed Net Income (6,058,245) (6,666,555) Unrealized Gain (Loss) REIT Stock (26,685) 110,622 ------------ ------------ Total Shareholders' Equity $ 87,527,839 $ 68,152,626 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $254,702,837 $224,718,514 ============ ============
STATEMENT OF OPERATIONS For the Three- and Six-Month Periods Ended October 31, 1998 & 1997 (unaudited)
3 Months Ended 6 Months Ended October 31 October 31 ---------- ---------- OPERATING INCOME: 1998 1997 1998 1997 ---- ---- ---- ---- Real Estate Rentals $ 9,562,306 $ 7,827,686 $18,428,714 $14,834,983 Interest Income 236,198 147,614 448,348 448,396 Mortgage Discount & Fees 37,866 20,962 61,586 34,721 ----------- ----------- ----------- ----------- $ 9,836,370 $ 7,996,262 $18,938,648 $15,180,023 ----------- ----------- ----------- ----------- OPERATING EXPENSE: Interest $ 2,935,609 $ 2,530,549 $ 5,751,717 $ 4,972,337 Utilities & Maintenance 1,460,368 1,242,214 2,965,514 2,360,965 Property Management 773,999 669,818 1,553,824 1,294,965 Taxes & Insurance 1,111,174 868,863 2,116,744 1,669,749 Advisory & Trustees Fees 247,087 162,729 442,265 313,377 Operating Expenses 66,412 61,705 129,770 115,171 ----------- ----------- ----------- ----------- $ 6,594,648 $ 5,535,878 $12,959,834 $10,726,564 ----------- ----------- ----------- ----------- OPERATING INCOME: (before reserves) $ 3,241,722 $ 2,460,384 $ 5,978,814 $ 4,453,459 DEPRECIATION/AMORTIZATION (1,481,655) (1,227,058) (2,890,896) (2,326,089) OPERATING INCOME (after reserves) $ 1,760,067 $ 1,233,326 $ 3,087,918 $ 2,127,370 GAIN ON SALE OF INVESTMENTS 1,341,899 83,579 1,707,917 122,648 MINORITY INTEREST PORTION OF OPERATING PARTNERSHIP NET INCOME (287,579) (13,140) (421,442) (13,140) ----------- ----------- ----------- ----------- NET TAXABLE INCOME $ 2,814,387 $ 1,303,765 $ 4,374,393 $ 2,236,878 =========== =========== =========== =========== FUNDS FROM OPERATIONS: * Operating Income $ 1,760,067 $ 1,233,326 $ 3,087,918 $ 2,127,370 Plus Depreciation and Amortization 1,481,655 1,127,058 2,890,896 2,326,089 Minus Minority Interest - Operating Partnership (287,579) (13,140) (421,442) (13,140) ----------- ----------- ----------- ----------- FUNDS FROM OPERATIONS $ 2,954,143 $ 2,347,244 $ 5,557,372 $ 4,440,319 ----------- ----------- ----------- ----------- PER SHARE: Operating Income (after reserves and minority interest portion) .09 .08 .16 .14 Gain on Sale of Investments .08 .00 .10 .01 ----------- ----------- ----------- ----------- Total Taxable Income/Share .17 .08 .26 .15 ----------- ----------- ----------- ----------- FUNDS FROM OPERATIONS * .17 .15 .33 .28 ----------- ----------- ----------- ----------- DIVIDENDS PAID PER SHARE .115 .103 .225 .208 ----------- ----------- ----------- ----------- Average Number of Shares Outstanding 17,029,159 15,551,732 16,782,964 15,373,372
* Funds from Operations is defined as income before gains (losses) on sales of investments, minority interests of unitholders in operating partnership and extraordinary items, plus depreciation and amortization. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED OCTOBER 31, 1998 AND 1997 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997 ---- ---- Net Income $ 4,374,393 $ 2,236,871 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,890,896 2,326,089 Minority interest portion of operating partnership income 421,442 13,147 Accretion of discount on contracts (1,586) (2,853) Gain on Sale of Properties (1,707,917) (122,648) Interest reinvested in investment certificates 120,780 105,312 Changes in other assets and liabilities: (Increase) decrease in real estate deposits (138,514) 512,800 (Increase) decrease in other assets (75,195) (281,291) (Increase) decrease in tax and insurance escrow (661,714) 79,710 (Increase) decrease in deferred charges (232,922) (109,348) Increase (decrease) in accounts payable & accrued expenses 854,993 408,304 ------------ ------------ NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 5,844,656 $ 5,166,093 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity of marketable securities held to maturity $ 206,341 $ 192,502 Principle payments on mortgage loans receivable 70,301 512,439 Proceeds from sale of property 2,569,292 580,000 Payments for acquisition and improvements of properties (25,517,947) (19,382,971) Purchase of marketable securities available for sale (181,250) (13,105) Investment in mortgage loans receivable 0 (206,834) ------------ ------------ NET CASH USED FOR INVESTING ACTIVITIES $(22,853,264) $(18,317,969) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of shares $ 6,668,436 $ 4,861,457 Proceeds from investment certificates issued 2,591,892 2,026,839 Proceeds from mortgages payable 13,336,754 8,387,469 Proceeds from short-term lines of credit 8,250,000 4,491,392 Proceeds from sale of minority interest 3,747,132 122,050 Repurchase of shares/minority interest (2,433,847) (1,193,635) Dividends/Distributions Paid (1,587,364) (1,076,596) Redemption of investment certificates (828,846) (740,553) Principal payments on mortgage loans (1,597,112) (1,369,407) Payments on short-term lines of credit (9,250,000) (1,650,000) ------------ ------------ NET CASH PROVIDED FROM FINANCING ACTIVITIES $ 18,897,045 $ 13,859,016 ------------ ------------ NET INCREASE (DECREASE) IN CASH $ 1,888,437 $ 707,140 CASH AT APRIL 30 $ 2,132,220 $ 1,718,257 ------------ ------------ CASH AT OCTOBER 31 $ 4,020,657 $ 2,425,397 ------------ ------------ SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES 1998 1997 ---- ---- Dividends reinvested $ 2,533,230 $ 2,058,893 Real estate investment and mortgage loans receivable acquired through assumption of mortgage loans payable and accrual of costs 5,366,292 3,691,585 Mortgage loan receivable transferred to property owned 1,701,308 1,161,878 Proceeds from sale of properties deposited directly with escrow agent 2,568,593 0 Properties acquired through the issuance of minority interest units in the operating partnership 1,055,525 874,526 Interest reinvested directly in investment certificates 120,780 105,312 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest paid on mortgages $ 5,133,481 $ 4,598,216 Interest paid on margin account and other 41,452 16,121 Interest paid on investment certificates 171,587 123,290 ------------ ------------ $ 5,346,520 $ 4,737,627 ------------ ------------ ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATION. We are pleased to report that IRET's second quarter continued to show very strong results. Highlights include record levels of Funds from Operations and Net Income (caused by continued high occupancy rates in our apartment communities, continuation of our program of rental increases and a substantial gain from the sale of older properties) and the successful negotiation of a lease on the Smith Home Furnishings Building in Boise, Idaho. FUNDS FROM OPERATIONS. Funds from Operations for the second quarter of Fiscal 1999 increased to $2,954,143, from the year earlier figure of $2,347,244, an increase of $606,899 or 26%. On a per share basis, Funds from Operations for the second quarter were $.17 compared to the $.15 per share earned in the same period of Fiscal 1998, an increase of 13%. For the first six months of Fiscal 1999, Funds from Operations increased to $5,557,372 from the year earlier figure of $4,440,319 or $.33 per share, versus the year earlier result of $.28 per share, an increase of 18%. This very satisfactory increase in Funds from Operations resulted from increased rental income ($18,428,714 versus $14,834,983) caused by above normal occupany rates, increased rental rates and the addition of new rental properties to our portfolio. NET TAXABLE INCOME. Net taxable income for the second quarter more than doubled due to the recognition of a substantial gain on the sale of the 90 unit Bison apartment community in Jamestown, ND. For the second quarter, net taxable income was $2,814,387 compared to $1,303,765 in the prior year, an improvement of $1,510,622. Of this increase, most was attributable to the increase in the gain on sale of investment, which was $1,341,899 in the second quarter, compared to $83,579 in the prior year. For the six month period, net taxable income was $4,374,393, compared to $2,236,878 in the prior year. SMITH BUILDING. We are very pleased to report that at long last we have negotiated a lease of the former Smith Home Furnishings store in Boise, ID, to America's Best Furniture Warehouse, Inc., which occupied the store in November. We will receive our first rental check by December 10 of this year. OPERATIONS. We continue to be very pleased with the performance of our investment portfolio. Occupancy rates continue to be very strong, the new properties that we are acquiring are performing very well and we have experienced good acceptance of the new apartment communities we are building in Grand Forks, Bismarck and Billings. We continue to build in those three communities and are also building a 27 unit complex in Jamestown, ND. SALE OF PROPERTIES. As mentioned above, during the second quarter IRET sold the 90-unit Bison apartment community in Jamestown, ND, realizing a gain of $1,341,899. We continue to negotiate for the sale of our older and smaller apartment and commercial properties and hope to report additional capital gains in the coming months. ACQUISITIONS. We were also successful during the second quarter in acquiring a number of attractive properties to add to our investment portfolio. The following properties were purchased or completed and added to our portfolio during the second quarter and are producing income: Cost ---- - 182-unit Heritage Manor apartment complex, Rochester, MN $ 7,250,000 - 67-unit Westwood Park apartment complex, Bismarck, ND $ 2,025,000 - 100-unit Van Mall Woods apartment complex, Vancouver, WA $ 5,840,000 - 60-unit Clearwater apartment complex, Boise, ID $ 3,525,000 - 67-unit Cottonwood Apartments, Phase I Bismarck, ND $ 4,500,000 The following properties are under construction: - Great Plains Software home office complex, Fargo, ND $15,000,000 - 67-unit apartment building (Cottonwood Apartments), Bismarck, ND $ 4,000,000 - 67-unit apartment complex with underground parking in Grand Forks, ND $ 4,750,000 - 27-unit complex in Jamestown, ND $ 2,000,000 IRET has entered into purchase agreements for the following properties: - 165-unit Castle Rock Apartment Complex, Billings, MT $ 5,600,000 - 48,700 sq. ft. Class A office & medical testing building occupied by Viromed, Inc. under a 15-year triple net leaseback. This building is located in the Opus #2 Industrial Park in Eden Prairie, MN $ 4,800,000 - 204-unit Ivy Club Apartments, Vancouver, WA $11,542,000 FINANCIAL CONDITION. IRET continues to maintain a very strong balance sheet. On October 31, 1998, cash and marketable securities totalled $8,115,486, compared to the $6,389,446 on hand at the beginning of the current fiscal year. Total assets were $254,702,837, compared to $224,718,514 at the beginning of the fiscal year. During the six month period, liabilities have increased to $167,174,998, from the beginning figure of $148,276,615. INCREASED DIVIDENDS. IRET paid a regular dividend of 11.5 cents per share on October 1, 1998, to shareholders of record at the close of business on September 14, 1998. This was an increase from the 11 cents per share dividend paid on July 1, 1998, and was the 110th consecutive quarterly dividend paid by IRET. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. None ITEM 2. Changes in Securities. None ITEM 3. Defaults Upon Senior Securities. None ITEM 4. Submission of Matters to a Vote of Security Holders. None ITEM 5. Other Information. None ITEM 6. Exhibits and Reports on Form 8-K. Form 8-K filed October 13, 1998 to report sales of Shares of Beneficial Interest and use of proceeds under Registration then in effect. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INVESTORS REAL ESTATE TRUST (Registrant) /s/ THOMAS A. WENTZ Date: December 7, 1998 By________________________________ Thomas A. Wentz, Sr.,Vice-President EX-27 2
5 6-MOS APR-30-1999 OCT-31-1998 4,020,658 4,094,828 7,230,240 (125,546) 0 15,220,180 262,685,216 (23,202,559) 254,702,837 15,417,137 163,762,486 0 0 81,608,143 (6,084,929) 254,702,837 0 18,938,648 0 10,484,865 421,442 0 5,365,865 2,666,476 0 2,666,476 1,707,917 0 0 4,374,393 .17 0
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