8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):

December 10, 2010

INVESTORS REAL ESTATE TRUST

(Exact name of registrant as specified in its charter)

North Dakota	0-14851	45-0311232
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3015 16th Street SW, Suite 100

Minot, ND 58701

(Address of principal executive offices, including zip code)

(701) 837-4738

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□ Written communications pursuant to Rule 425 under the Securities Act

□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

ITEM 8.01.                      Other Events.

Investors Real Estate Trust (the “Company”) is filing this Current Report on Form 8-K to update the Selected Financial Data, Management’s Discussion and Analysis and historical consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2010 (Part II, Items 6, 7 and 8, respectively).  Historical information was updated for discontinued operations.  No sections of the 2010 Form 10-K other than those identified above are being updated by this filing.  Information in the 2010 Form 10-K is generally stated as of April 30, 2010, and this filing does not reflect any subsequent information or events other than the updating of historical information for discontinued operations.  Without limiting the foregoing, this filing does not purport to update Manageme nt’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2010 Form 10-K for any other information, uncertainties, transactions, risks, events or trends occurring or known to management.  More current information is included in other Company filings with the Securities and Exchange Commission.  This Current report on Form 8-K should be read in conjunction with the 2010 Form 10-K, the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended July 31, 2010 and October 31, 2010 and other Company filings.   Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K contain the revised and updated financial information and are incorporated herein by reference; the Company has included the entire text of the affected sections.

Discontinued Operations

During the second quarter of fiscal year 2011 the Company sold three properties, a small retail property in Ladysmith, Wisconsin, a patio home property in Fargo, North Dakota, and its 504-unit Dakota Hill multi-family residential property in Irving, Texas.  During fiscal year 2010, the Company sold its former headquarters property in Minot, North Dakota, and disposed of a small apartment property in Grafton, North Dakota.  In fiscal year 2009, the Company sold a small residential property in Minot, North Dakota.

In accordance with generally accepted accounting principles, revenues and expenses associated with these operations have been classified as discontinued operations for all periods presented in our Quarterly Report on Form 10-Q for the period ended October 31, 2010, that was filed with the Securities and Exchange Commission on December 10, 2010.

Under SEC regulations, the same discontinued classification is also required for previously-issued financial statements for each of the years presented in our 2010 Form 10-K, even though the financial statements relate to periods prior to the discontinued classification.  This reclassification has no effect on our reported net income for any reporting period.

ITEM 9.01                      Financial Statements and Exhibits

(d)   Exhibits

Exhibit
Number	Description
23.1	Consent of Deloitte & Touche LLP
	Updated financial information for the fiscal year ended April 30, 2010 recast for discontinued operations for the fiscal years ended April 30, 2010, 2009 and 2008 (and 2007 and 2006 for Item 6 only):
99.1	Item 6:  Selected Financial Data
99.2	Item 7: Management’s Discussion and Analysis
99.3	Item 8: Financial Statements and Supplementary Data and Item 15: Financial Statements Schedules
99.4	Calculation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Share Distributions

SIGNATURE

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 hereunto duly authorized.

INVESTORS REAL ESTATE TRUST

By: /s/  Timothy P. Mihalick

Timothy P. Mihalick

President & Chief Executive Officer

Date: December 10, 2010

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-160948, 333-158001, 333-153715, 333-153714, 333-149081, 333-148529, 333-145714, 333-141341, 333-137699, 333-131894, 333-128745, 333-122289, 333-119547, 333-117121, 333-115082, 333-112465, 333-114162, 333-112272, 333-110003, 333-109387, 333-107729, 333-106748, 333-104267, 333-102610, 333-101782, 333-100272, 333-98575, 333-91788, 333-85930, 333-85352, 333-76034, 333-76266, 333-57676, 333-89761, 333-67317, 333-169205, and 333-169710 on Form S-3 and in Registration Statement Nos. 333-140176 and 333-155497 on Form S-8 of our report dated July 14, 2010 (December 10, 2010, as to the effects of discontinued operations as disclosed in Note 12) relating to the consolidated financial statements and financial statement schedules of Investors Real Estate Trust and subsidia ries, and the effectiveness of Investors Real Estate Trust and subsidiaries’ internal control over financial reporting appearing in this Current Report on Form 8-K of Investors Real Estate Trust.

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

December 10, 2010

EX-99.1

Exhibit 99.1

Item 6. Selected Financial Data

Set forth below is selected financial data on a historical basis for the Company for the five most recent fiscal years ended April 30. This information should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this Annual Report on Form 10-K.

	(in thousands, except per share data)
	2010			2009			2008			2007			2006
Consolidated Income Statement Data
Revenue	$	237,392		$	234,326		$	215,280		$	192,133		$	164,795
Gain on sale of real estate, land, and other investments	$	68		$	54		$	556		$	4,602		$	3,293
Income from continuing operations	$	5,684		$	10,985		$	14,948		$	14,622		$	11,609
(Loss) income from discontinued operations	$	(1,099	)	$	(272	)	$	681		$	3,761		$	3,147
Net income	$	4,585		$	10,713		$	15,629		$	18,383		$	14,756
Net income attributable to noncontrolling interests – Operating Partnership	$	(562	)	$	(2,227	)	$	(3,677	)	$	(4,299	)	$	(2,705	)
Net income attributable to Investors Real Estate Trust	$	4,001		$	8,526		$	12,088		$	14,110		$	11,567
Consolidated Balance Sheet Data
Total real estate investments	$	1,500,889		$	1,472,575		$	1,456,178		$	1,316,534		$	1,126,400
Total assets	$	1,660,930		$	1,605,091		$	1,618,026		$	1,435,389		$	1,207,315
Mortgages payable	$	1,057,619		$	1,070,158		$	1,063,858		$	951,139		$	765,890
Total Investors Real Estate Trust shareholders’ equity	$	409,523		$	333,009		$	344,074		$	284,810		$	289,422
Consolidated Per Common Share Data (basic and diluted)
Income from continuing operations - Investors Real Estate Trust	$	.04		$	.11		$	.17		$	.19		$	.15
(Loss) income from discontinued operations - Investors Real Estate Trust	$	(.01	)	$	.00		$	.01		$	.05		$	.05
Net income	$	.03		$	.11		$	.18		$	.24		$	.20
Distributions	$	.68		$	.68		$	.67		$	.66		$	.65

CALENDAR YEAR	2009	2008	2007	2006	2005
Tax status of distributions
Capital gain	0.09%	0.00%	1.49%	1.22%	16.05%
Ordinary income	39.17%	53.43%	51.69%	42.01%	41.48%
Return of capital	60.74%	46.57%	46.82%	56.77%	42.47%

2010 Annual Report 1

EX-99.2

Exhibit 99.2

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information is provided in connection with, and should be read in conjunction with, the consolidated financial statements included in this Annual Report on Form 10-K. We operate on a fiscal year ending on April 30. The following discussion and analysis is for the fiscal year ended April 30, 2010.

Overview

We are a self-advised equity real estate investment trust engaged in owning and operating income-producing real properties. Our investments include multi-family residential properties and commercial properties located primarily in the upper Midwest states of Minnesota and North Dakota. Our properties are diversified in property type and location. As of April 30, 2010, our real estate portfolio consisted of 78 multi-family residential properties containing 9,691 apartment units and having a total real estate investment amount net of accumulated depreciation of $426.9 million, and 173 commercial properties containing approximately 12.0 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $1.1 billion. Our commercial properties consist of:

• 67 commercial office properties containing approximately 5.0 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $494.3 million;

• 54 commercial medical properties (including senior housing) containing approximately 2.6 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $376.6 million;

• 19 commercial industrial properties containing approximately 3.0 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $97.8 million; and

• 33 commercial retail properties containing approximately 1.4 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $96.3 million.

Our primary source of income and cash is rents associated with multi-family residential and commercial leases.  Our business objective is to increase shareholder value by employing a disciplined investment strategy.  This strategy is focused on growing assets in desired geographical markets, achieving diversification by property type and location, and adhering to targeted returns in acquiring properties.

Total revenues of IRET Properties, our operating partnership, increased by $3.1 million to $237.4 million in fiscal year 2010, compared to $234.3 million in fiscal year 2009.  This increase was primarily attributable to the addition of new real estate properties.  We estimate that rent concessions offered to tenants during the twelve months ended April 30, 2010 lowered our operating revenues by approximately $3.0 million, compared to $3.1 million for fiscal year 2009.  Expenses increased during fiscal year 2010, with real estate taxes, insurance, maintenance and property management expense all increasing from year-earlier levels.

On an all-property basis, physical occupancy levels in our total commercial property segments decreased to 87.4% in fiscal year 2010 from 91.0% in fiscal year 2009.  Physical occupancy rates in our commercial medical segment increased; physical occupancy in our commercial office, commercial industrial and commercial retail segments decreased.  Physical occupancy in our multi-family residential segment decreased to 89.6% in fiscal year 2010 on an all-property basis, from 92.5% in fiscal year 2009.

During fiscal year 2010, we continued to pursue our announced goal of transferring the management of the majority of our commercial and multi-family residential properties from third-party property management companies to our own employees. As of April 30, 2010, the Company had under internal management a total of 120 properties in its commercial office, commercial medical, commercial industrial and commercial retail segments, totaling approximately 7.5 million square feet. Approximately 52.2% of the properties in the Company’s commercial office segment, 75.9% of the properties in its commercial medical segment, 73.7% of the properties in its commercial industrial segment, and 90.9% of the properties in its commercial retail segment, were internally managed by Company employees as of April 30, 2010.  IRET continues to evaluate its portfolio of commercial properties to determine additional suitable candidates for internal management, and to establish appropriate timelines to accomplish the transfers. 

2010 Annual Report 2

The transition to internal management in the Company’s multi-family residential segment was a significant focus of Company resources and management efforts during fiscal year 2010. As of April 30, 2010, approximately 39.7% of the properties in the Company’s multi-family residential segment were internally managed by Company employees, or approximately 3,963 units in 31 properties. During fiscal year 2010, the Company added a significant number of new employees, many of whom were hired to work in multi-family residential property management.  As of April 30, 2010, the Company had 218 employees, of which 191 were full-time and 27 part-time employees; of these 218 employees, 49 are corporate staff in our Minot, North Dakota and Eden Prairie, Minnesota offices, and 169 are property management employees based at our properties or in local property management offices. These additions to staff, and associated investments in equipment, accounting and other support systems, represent a significant expense to the Company, which is reflected in an increase in property management expense attributable to the Company’s internal property management initiative of approximately $1.4 million for the twelve months ended April 30, 2010, primarily in the multi-family residential segment. 

IRET's fiscal year 2010 results reflect the continuing challenges the real estate industry faced during the twelve months ended April 30, 2010, and worsening conditions in IRET's multi-family residential segment in particular.  During the year, factors adversely affecting demand for IRET’s commercial and multi-family properties continued to be pervasive across the United States and in IRET’s markets, with commercial tenants continuing to focus on reducing costs through space reductions and lower rents. Additionally, continued job losses pressured occupancy and revenue in the Company’s multi-family residential segment. We expect current credit market conditions and the continued high level of unemployment to maintain or increase credit stresses on Company tenants, and continue to expect this tenant stress to lea d to increases in past due accounts and vacancies.

Additional information and more detailed discussions of our fiscal year 2010 operating results are found in the following sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Critical Accounting Policies

Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements included in this Annual Report on Form 10-K.

Real Estate. Real estate is carried at cost, net of accumulated depreciation, less an adjustment for impairment, if any. Depreciation requires an estimate by management of the useful life of each property as well as an allocation of the costs associated with a property to its various components. As described further below, the process of allocating property costs to its components involves a considerable amount of subjective judgments to be made by Company management. If the Company does not allocate these costs appropriately or incorrectly estimates the useful lives of its real estate, depreciation expense may be misstated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The Company uses a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment. Maintenance and repairs are charged to operations as incurred. Renovations and improvements that improve and/or extend the useful life of the asset are capitalized over their estimated useful life, generally five to ten years.

Upon acquisitions of real estate, the Company assesses the fair value of acquired tangible assets (including land, buildings and personal property), which is determined by valuing the property as if it were vacant, and considers whether there were significant intangible assets acquired (for example, above-and below-market leases, the value of acquired in-place leases, and tenant relationships) and acquired liabilities, and allocates the purchase price based on these assessments. The as-if-vacant value is allocated to land, buildings, and personal property based on management’s determination of the relative fair value of these assets. The estimated fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to estimate fair value include discounted cash flow analysis and re ference to recent sales of comparable properties. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. Land value is assigned based on the purchase price if land is acquired separately, or based on estimated market value if acquired in a merger or in a portfolio acquisition.

Above-market and below-market in-place lease values for acquired properties are estimated based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company performs this analysis on a lease-by-lease basis. The capitalized above-market or below-market intangible is amortized to rental income over the remaining non

2010 Annual Report 3

cancelable terms of the respective leases.

Other intangible assets acquired include amounts for in-place lease values that are based upon the Company’s evaluation of the specific characteristics of the leases. Factors considered in these analyses include an estimate of carrying costs during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. The Company also considers information about each property obtained during its pre-acquisition due diligence and marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

Property sales or dispositions are recorded when title transfers and sufficient consideration is received by the Company and the Company has no significant continuing involvement with the property sold.

Impairment.  The Company’s long-lived assets are reviewed for impairment quarterly if events or changes in circumstances (such as adverse market conditions, including conditions resulting from an ongoing economic recession) indicate that a long-lived asset might be impaired. Judgments regarding existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and events that occur that affect the financial strength of significant tenants of the assets, including tenants who have filed for bankruptcy.  For long-lived assets in which an impairment indicator is present, the Company compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of the asset, including any associated intangibles, subject to evaluation. The evaluation of undiscounted cash flows is subjective and reflects assumptions regarding current market conditions relative to the long-lived asset being evaluated, such as future occupancy, rental rates and capital requirements.  A worsening real estate market may cause the Company to re-evaluate the assumptions used in our impairment analysis.  If there is an indication of impairment based on this evaluation, possible impairment is evaluated based on the estimated fair value (typically based on a current independent appraisal) of the long-lived asset in comparison to its carrying value.  The results of the Company’s evaluation of impairment analysis could be material to the Company’s financial statements.

Allowance for Doubtful Accounts. The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts (approximately $257,000 as of April 30, 2010) for estimated losses resulting from the inability of tenants to make required payments under their respective lease agreements. The Company also maintains an allowance for receivables arising from the straight-lining of rents (approximately $912,000 as of April 30, 2010) and from mortgage loans (approximately $3,000 as of April 30, 2010). The straight-lining of rents receivable arises from earnings recognized in excess of amounts currently due under lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. If estimates differ from actual results this would impact reported results.

Revenue Recognition - The Company has the following revenue sources and revenue recognition policies:

• Base Rents - income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis, which includes the effects of rent increases and abated rent under the leases.  Certain leases provide for tenant occupancy during periods for which no rent is due or where minimum rent payments increase during the term of the lease. Rental revenue is recorded for the full term of each lease on a straight-line basis. Accordingly, the Company records a receivable from tenants for rents that it expects to collect over the remaining lease term as deferred rents receivable. When the Company acquires a property, the term of the existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Revenue recognition is considered to be critical because the evaluation o f the reliability of such deferred rents receivable involves management's assumptions relating to such tenant's viability.

• Percentage Rents - income arising from retail tenant leases which are contingent upon the sales of the tenant exceeding a defined threshold. These rents are recognized only after the contingency has been removed (i.e., sales thresholds have been achieved).

• Expense Reimbursement Income – revenue arising from tenant leases, which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

Income Taxes. The Company operates in a manner intended to enable it to continue to qualify as a REIT under

2010 Annual Report 4

Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a distribution to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to distribute to its shareholders 100% of its taxable income. Therefore, no provision for Federal income taxes is required. If the Company fails to distribute the required amount of income to its shareholders, it would fail to qualify as a REIT and substantial adverse tax consequences may result.

The Company has one TRS, acquired during the fourth quarter of fiscal year 2010, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates.  For fiscal year 2010, the Company’s TRS had a small net operating loss.  There were no income tax provisions or material deferred income tax items for our TRS for the fiscal year ended April 30, 2010.  The Company’s TRS is the tenant in the Company’s Wyoming assisted living facilities.

The Company’s taxable income is affected by a number of factors, including, but not limited to, the following:  that the Company’s tenants perform their obligations under their leases with the Company; that the Company’s tax and accounting positions do not change; and that the number of issued and outstanding shares of the Company’s common stock remain relatively unchanged.  These factors, which impact the Company’s taxable income, are subject to change, and many are outside the control of the Company.  If actual results vary, the Company’s taxable income may change.

Recent Accounting Pronouncements

For disclosure regarding recent accounting pronouncements and the anticipated impact they will have on our operations, please refer to Note 2 to our Consolidated Financial Statements.

RESULTS OF OPERATIONS

Revenues

Total revenues for fiscal year 2010 were $237.4 million, compared to $234.3 million in fiscal year 2009 and $215.3 million in fiscal year 2008. Revenues during fiscal year 2010 were $3.1 million greater than revenues in fiscal year 2009 and revenues during fiscal year 2009 were $19.0 million greater than in fiscal year 2008.

For fiscal 2010, the increase in revenue of $3.1 million resulted from:

	(in thousands)
Rent in Fiscal 2010 from 9 properties acquired in fiscal year 2009 in excess of that received in 2009 from the same 9 properties	$	2,234
Rent from 10 properties acquired in fiscal year 2010		4,243
Decrease in rental income on stabilized properties due primarily to a decrease in occupancy in all segments		(3,411	)
	$	3,066

For fiscal 2009, the increase in revenue of $19.0 million resulted from:

	(in thousands)
Rent from 24 properties acquired in fiscal year 2008 in excess of that received in 2008 from the same 24 properties	$	15,431
Rent from 9 properties acquired in fiscal year 2009		2,093
Increase in rental income on stabilized  properties due primarily to increase in rents in our multi-family residential and commercial medical segments		1,522
	$	19,046

As illustrated above, the majority of the increase in our gross revenue for fiscal years 2010 and 2009 ($6.5 million and $17.5 million respectively) resulted from the addition of new real estate properties to the IRET Properties’ portfolio. Rental Revenue in fiscal year 2010 from stabilized properties decreased $3.4 million, while fiscal year 2009 resulted in an increase in these same stabilized properties of $1.5 million. For the next 12 months, we continue to look to acquisitions of new properties and recovery in our stabilized portfolio to be the most significant factors in any increases in our revenues and ultimately our net income.  However, we have not observed any marked and

2010 Annual Report 5

sustained decline in the prices at which investment properties are offered for sale, which, combined with the general lack of improvement in operating fundamentals, makes identifying attractive acquisition possibilities a continuing challenge.  Additionally, financial markets continue to experience volatility and uncertainty, with liquidity continuing to be constrained in the debt markets in particular.  Consequently, there is ongoing uncertainty regarding our ability to identify acquisition targets and to access the credit markets in order to attract financing on reasonable terms, and our ability to make acquisitions accordingly could be adversely affected.

Gain on Sale of Real Estate

The Company realized a gain on sale of real estate, land and other investments for fiscal year 2010 of approximately $68,000. This compares to approximately $54,000 of gain on sale of real estate recognized in fiscal 2009 and approximately $556,000 recognized in fiscal 2008.

Net Operating Income

The following tables report segment financial information.  We measure the performance of our segments based on net operating income (“NOI”), which we define as total real estate revenues less real estate expenses and real estate taxes (excluding depreciation and amortization related to real estate investments and impairment of real estate investments).  We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense.  NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common s hareholders or cash flow from operating activities as a measure of financial performance.

The following tables show real estate revenues, real estate operating expenses and NOI by reportable operating segment for fiscal years 2010, 2009 and 2008.  For a reconciliation of net operating income of reportable segments to operating income as reported, see Note 11 of the Notes to Consolidated Financial Statements in this report.

The tables also show net operating income by reportable operating segment on a stabilized property and non-stabilized property basis.  Stabilized properties are properties owned and in operation for the entirety of the periods being compared (including properties that were redeveloped or expanded during the periods being compared, with properties purchased or sold during the periods being compared excluded from the stabilized property category).  This comparison allows the Company to evaluate the performance of existing properties and their contribution to net income.  Management believes that measuring performance on a stabilized property basis is useful to investors because it enables evaluation of how the Company’s properties are performing year over year.  Management uses this measure to a ssess whether or not it has been successful in increasing net operating income, renewing the leases of existing tenants, controlling operating costs and appropriately handling capital improvements.

	(in thousands)
Year Ended April 30, 2010	Multi-Family  Residential		Commercial Office			Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	71,150	$	82,079		$	57,439	$	13,304	$	13,420	$	237,392
Real estate expenses
Utilities		6,777		7,188			2,937		185		488		17,575
Maintenance		10,163		11,127			4,210		758		1,348		27,606
Real estate taxes		6,565		14,150			5,046		2,593		2,148		30,502
Insurance		1,800		1,051			479		228		197		3,755
Property management		9,579		3,317			5,232		435		637		19,200
Total real estate expenses	$	34,884	$	36,833		$	17,904	$	4,199	$	4,818	$	98,638
Gain on involuntary conversion		1,660		0			0		0		0		1,660
Net operating income	$	37,926	$	45,246		$	39,535	$	9,105	$	8,602	$	140,414
Stabilized net operating income	$	34,377	$	45,301		$	37,196	$	8,486	$	8,602	$	133,962
Non-stabilized net operating income		3,549		(55	)		2,339		619		0		6,452
Total net operating income	$	37,926	$	45,246		$	39,535	$	9,105	$	8,602	$	140,414

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	(in thousands)
Year Ended April 30, 2009	Multi-Family  Residential		Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	71,219	$	83,446	$	52,547	$	12,711	$	14,403	$	234,326
Real estate expenses
Utilities		7,311		7,851		2,859		93		448		18,562
Maintenance		9,670		11,287		4,046		582		1,448		27,033
Real estate taxes		6,909		13,850		4,515		1,926		2,180		29,380
Insurance		1,178		1,003		419		175		182		2,957
Property management		8,355		3,653		4,207		446		807		17,468
Total real estate expenses	$	33,423	$	37,644	$	16,046	$	3,222	$	5,065	$	95,400
Net operating income	$	37,796	$	45,802	$	36,501	$	9,489	$	9,338	$	138,926
Stabilized net operating income	$	36,835	$	45,713	$	35,929	$	9,371	$	9,338	$	137,186
Non-stabilized net operating income		961		89		572		118		0		1,740
Total net operating income	$	37,796	$	45,802	$	36,501	$	9,489	$	9,338	$	138,926

	(in thousands)
Year Ended April 30, 2008	Multi-Family  Residential		Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		All Segments
Real estate revenue	$	67,105	$	84,042	$	38,409	$	11,691	$	14,033	$	215,280
Real estate expenses
Utilities		6,997		7,743		2,111		131		420		17,402
Maintenance		9,105		10,522		2,757		558		1,108		24,050
Real estate taxes		6,494		13,140		2,977		1,346		2,142		26,099
Insurance		1,070		901		257		135		169		2,532
Property management		8,161		3,900		1,654		359		427		14,501
Total real estate expenses	$	31,827	$	36,206	$	9,756	$	2,529	$	4,266	$	84,584
Net operating income	$	35,278	$	47,836	$	28,653	$	9,162	$	9,767	$	130,696
Stabilized net operating income	$	34,420	$	47,536	$	26,906	$	7,576	$	9,767	$	126,205
Non-stabilized net operating income		858		300		1,747		1,586		0		4,491
Total net operating income	$	35,278	$	47,836	$	28,653	$	9,162	$	9,767	$	130,696

Changes in Expenses and Net Income

Net income available to common shareholders for fiscal year 2010 was $1.6 million, compared to $6.2 million in fiscal year 2009 and $9.7 million in fiscal year 2008. On a per common share basis, net income was $.03 per common share in fiscal year 2010, compared to $.11 per common share in fiscal year 2009 and $.18 in fiscal year 2008.  On a per common share basis from continuing operations – Investors Real Estate Trust, earnings per share basis was $.04 per common share in fiscal year 2010, compared to $.11 per common share in fiscal year 2009 and $.17 per common share in fiscal year 2008. On a per common share basis from discontinued operations – Investors Real Estate Trust, (losses) earnings per share basis was ($.01) per common share in fiscal year 2010, compared to $.00 per common share in fiscal year 2009 and $. 01 per common share in fiscal year 2008.

These changes in net income result from the changes in revenues and expenses detailed below:

2010 Annual Report 7

Changes in net income available to common shareholders for fiscal year 2010 resulted from:

	(in thousands)
A decrease in net income attributable to noncontrolling interests - Operating Partnership	$	1,665
An increase in gain on involuntary conversion		1,660
An increase in other income		41
These increases were offset by:
An increase in depreciation/amortization expense related to real estate investments		(2,742	)
An increase in other expenses, administrative, advisory and trustee services		(2,409	)
An increase in loss from discontinued operations		(827	)
An increase in impairment of real estate investment		(708	)
An increase in interest expense primarily due to debt placed on new acquisitions		(609	)
An increase in amortization related to non-real estate investments		(302	)
A decrease in net operating income primarily due to vacancy on stabilized properties		(172	)
A decrease in interest income		(60	)
A decrease in net loss attributable to noncontrolling interests - consolidated real estate entities		(62	)
Total decrease in fiscal 2010 net income available to common shareholders	$	(4,525	)

Changes in net income available to common shareholders for fiscal year 2009 resulted from:

	(in thousands)
An increase in net operating income primarily due to new acquisitions	$	8,230
A decrease in net income attributable to noncontrolling interests - Operating Partnership		1,450
A decrease in other expenses, administrative, advisory and trustee services		225
These increases were offset by:
An increase in interest expense primarily due to debt placed on new acquisitions		(5,338	)
An increase in depreciation/amortization expense related to real estate investments		(4,609	)
A decrease in interest income		(1,486	)
A decrease in income from discontinued operations		(953	)
An increase in amortization related to non-real estate investments		(592	)
A decrease in other income		(351	)
A decrease in net loss attributable to noncontrolling interests - consolidated real estate entities		(96	)
A decrease in gain on sale of other investments		(42	)
Total decrease in fiscal 2009 net income available to common shareholders	$	(3,562	)

Factors Impacting Net Income During Fiscal Year 2010 as Compared to Fiscal Year 2009

Physical occupancy rates in four of our five segments, on an all properties basis, decreased compared to the year-earlier period, and real estate revenue decreased in three of our five segments in fiscal year 2010 compared to fiscal year 2009.  Net income available to common shareholders decreased to $1.6 million in fiscal year 2010, compared to $6.2 million in fiscal year 2009.  Revenue increases during fiscal year 2010 were offset by increases in maintenance, real estate taxes, property management and insurance expense.

• Physical Occupancy.  During fiscal year 2010, physical occupancy levels at our properties on an all properties basis decreased over year-earlier levels in four of our five reportable segments (multi-family, commercial office, commercial industrial and commercial retail), and increased slightly in our commercial medical segment.  Physical occupancy rates on a stabilized property basis for the fiscal year ended April 30, 2010 decreased in all of our reportable segments compared to the fiscal year ended April 30, 2009, and are shown below:

2010 Annual Report 8

	Stabilized Properties						All Properties
	Fiscal Year Ended April 30,						Fiscal Year Ended April 30,
Segments	2010			2009			2010			2009
Multi-Family Residential		89.6	%		92.8	%		89.6	%		92.5	%
Commercial Office		84.2	%		87.4	%		83.4	%		87.3	%
Commercial Medical		94.5	%		95.6	%		95.1	%		95.0	%
Commercial Industrial		90.4	%		96.9	%		90.8	%		97.0	%
Commercial Retail		79.9	%		84.7	%		79.9	%		84.7	%

• Concessions.  Our overall level of tenant concessions decreased for the fiscal year ended April 30, 2010 compared to the year-earlier period. To maintain or increase physical occupancy levels at our properties, we may offer tenant incentives, generally in the form of lower or abated rents, which results in decreased revenues and income from operations at our properties.  Rent concessions offered during the fiscal year ended April 30, 2010 lowered our operating revenues by approximately $3.0 million, as compared to an approximately $3.1 million reduction in operating revenues attributable to rent concessions offered in fiscal year 2009.

The following table shows the approximate reduction in our operating revenues due to rent concessions, by segment, for the fiscal years ended April 30, 2010 and 2009:

	(in thousands)
	Fiscal Year Ended April 30,
	2010		2009		Change
Multi-Family Residential	$	1,776	$	1,784	$	(8	)
Commercial Office		747		1,036		(289	)
Commercial Medical		381		34		347
Commercial Industrial		99		220		(121	)
Commercial Retail		27		44		(17	)
Total	$	3,030	$	3,118	$	(88	)

• Increased Maintenance Expense.  Maintenance expenses totaled $27.6 million in fiscal year 2010, compared to $27.0 million in fiscal year 2009.  Maintenance expenses at properties newly acquired in fiscal years 2010 and 2009 added approximately $421,000 to the maintenance expense category during fiscal year 2010, while maintenance expenses at existing properties increased by approximately $152,000, primarily for payroll and taxes and vehicle expenses at our multi-family residential segment resulting in a net increase of approximately $573,000 million or 2.1% in maintenance expenses in fiscal year 2010 compared to fiscal year 2009.  Under the terms of most of our commercial leases, the full cost of maintenance is paid by the tenant as additional rent. For our noncommercial real estate properties, any increase in our maintenance cos ts must be collected from tenants in the form of general rent increases.

Maintenance expenses by reportable segment for the fiscal years ended April 30, 2010 and 2009 are as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	10,163		$	11,127		$	4,210		$	758		$	1,348		$	27,606
2009	$	9,670		$	11,287		$	4,046		$	582		$	1,448		$	27,033
Change	$	493		$	(160	)	$	164		$	176		$	(100	)	$	573
% change (2010 vs. 2009)		5.1	%		(1.4	%)		4.1	%		30.2	%		(6.9	%)		2.1	%
Stabilized	$	352		$	(186	)	$	(90	)	$	176		$	(100	)	$	152
Non-stabilized	$	141		$	26		$	254		$	0		$	0		$	421
Change	$	493		$	(160	)	$	164		$	176		$	(100	)	$	573

• Decreased Utility Expense.  Utility expense totaled $17.6 million in fiscal year 2010, compared to $18.6

2010 Annual Report 9

million in fiscal year 2009.  Utility expenses at properties newly acquired in fiscal years 2010 and 2009 added $313,000 to the utility expense category during fiscal year 2010 (with our commercial medical segment accounting for $311,000), while utility expenses at existing properties decreased by $1.3 million, primarily due in part to decreased heating costs compared to last year’s unseasonably cold temperatures and, to a lesser degree, decreased rates in fiscal year 2010 compared to fiscal year 2009’s higher fuel costs (notably in our commercial office segment with a decrease of $682,000), for a total decrease of $987,000 or 5.3% in utility expenses in fiscal year 2010 compared to fiscal year 2009.

Utility expenses by reportable segment for the fiscal years ended April 30, 2010 and 2009 are as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	6,777		$	7,188		$	2,937		$	185		$	488		$	17,575
2009	$	7,311		$	7,851		$	2,859		$	93		$	448		$	18,562
Change	$	(534	)	$	(663	)	$	78		$	92		$	40		$	(987	)
% change (2010 vs. 2009)		(7.3	%)		(8.4	%)		2.7	%		98.9	%		8.9	%		(5.3	%)
Stabilized	$	(518	)	$	(682	)	$	(233	)	$	93		$	40		$	(1,300	)
Non-stabilized	$	(16	)	$	19		$	311		$	(1	)	$	0		$	313
Change	$	(534	)	$	(663	)	$	78		$	92		$	40		$	(987	)

• Decreased Mortgage Interest Expense.  Our mortgage interest expense decreased approximately $641,000, or 1.0%, to approximately $65.4 million during fiscal year 2010, compared to $66.0 million in fiscal year 2009. Mortgage interest expense for properties newly acquired in fiscal years 2010 and 2009 added $887,000 to our total mortgage interest expense in fiscal year 2010, while mortgage interest expense on existing properties decreased $1.5 million.  Our overall weighted average interest rate on all outstanding mortgage debt was 6.17% as of April 30, 2010, compared to 6.30% as of April 30, 2009.  Our mortgage debt decreased approximately $12.5 million, or 1.2%, to approximately $1.1 billion as of April 30, 2010, compared to April 30, 2009.

Mortgage interest expense by reportable segment for the fiscal years ended April 30, 2010 and 2009 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	18,233		$	22,864		$	17,023		$	3,937		$	3,392		$	65,449
2009	$	17,890		$	23,658		$	16,870		$	3,803		$	3,869		$	66,090
Change	$	343		$	(794	)	$	153		$	134		$	(477	)	$	(641	)
% change (2010 vs. 2009)		1.9	%		(3.4	%)		0.9	%		3.5	%		(12.3	%)		(1.0	%)
Stabilized	$	287		$	(794	)	$	(457	)	$	(87	)	$	(477	)	$	(1,528	)
Non-stabilized	$	56		$	0		$	610		$	221		$	0		$	887
Change	$	343		$	(794	)	$	153		$	134		$	(477	)	$	(641	)

• Decreased Amortization Expense. The Company allocates a portion of the purchase price paid for properties to in-place lease intangible assets.  The amortization period of these intangible assets is the term of the lease, rather than the estimated life of the buildings and improvements.  The Company accordingly initially records additional amortization expense due to this shorter amortization period, which has the effect in the short term of decreasing the Company’s net income available to common shareholders, as computed in accordance with GAAP.  Amortization expense related to in-places leases totaled $8.6 million in fiscal year 2010, compared to $10.2 million in fiscal year 2009. The decrease in amortization expense in fiscal year 2010 compared to fiscal year 2009 was primarily due to prior years’ acquisitions becom ing completely amortized.

• Increased Real Estate Tax Expense.  Real estate taxes on properties newly acquired in fiscal years 2010 and 2009 added $192,000 to real estate tax expense (with our commercial industrial segment accounting for $161,000), while real estate taxes on existing properties increased by approximately $930,000, for a total

2010 Annual Report 10

increase of $1.1 million or 3.8% in real estate tax expense in fiscal year 2010 compared to fiscal year 2009, from $29.4 million to $30.5 million.  The increase in real estate taxes was primarily due to higher value assessments or increased tax levies on our stabilized properties.

Real estate tax expense by reportable segment for the fiscal years ended April 30, 2010 and 2009 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	6,565		$	14,150		$	5,046		$	2,593		$	2,148		$	30,502
2009	$	6,909		$	13,850		$	4,515		$	1,926		$	2,180		$	29,380
Change	$	(344	)	$	300		$	531		$	667		$	(32	)	$	1,122
% change (2010 vs. 2009)		(5.0	%)		2.2	%		11.8	%		34.6	%		(1.5	%)		3.8	%
Stabilized	$	(218	)	$	262		$	412		$	506		$	(32	)	$	930
Non-stabilized	$	(126	)	$	38		$	119		$	161		$	0		$	192
Change	$	(344	)	$	300		$	531		$	667		$	(32	)	$	1,122

• Increased Insurance Expense.  Insurance expense increased in fiscal year 2010 compared to fiscal year 2009, from $3.0 million to $3.8 million, an increase of approximately 27.0%.  Insurance expense at properties newly-acquired in fiscal years 2010 and 2009 added approximately $99,000 to insurance expense, while insurance expense at existing properties increased by approximately $699,000, for an increase of approximately $798,000 in insurance expense in fiscal year 2010 compared to fiscal year 2009.  The increase in insurance expense at stabilized properties is due to an increase in premiums, most notably in our multi-family residential segment of $578,000.

Insurance expense by reportable segment for the fiscal years ended April 30, 2010 and 2009 is as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	1,800		$	1,051		$	479		$	228		$	197		$	3,755
2009	$	1,178		$	1,003		$	419		$	175		$	182		$	2,957
Change	$	622		$	48		$	60		$	53		$	15		$	798
% change (2010 vs. 2009)		52.8	%		4.8	%		14.3	%		30.3	%		8.2	%		27.0	%
Stabilized	$	578		$	39		$	20		$	47		$	15		$	699
Non-stabilized	$	44		$	9		$	40		$	6		$	0		$	99
Change	$	622		$	48		$	60		$	53		$	15		$	798

• Increased Property Management Expense.  Property management expense increased in fiscal year 2010 compared to fiscal year 2009, from $17.5 million to $19.2 million, an increase of $1.7 million or approximately 9.9%.  Property management expenses at properties newly acquired in fiscal years 2010 and 2009 added $2.4 million to the property management category during fiscal year 2010 (with our commercial medical segment accounting for $2.2 million) while property management expenses at existing properties decreased by $667,000 primarily as a result of a reduction in bad debt expense.

Property management expense by reportable segment for the fiscal years ended April 30, 2010 and 2009 is as follows:

2010 Annual Report 11

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2010	$	9,579		$	3,317		$	5,232		$	435		$	637		$	19,200
2009	$	8,355		$	3,653		$	4,207		$	446		$	807		$	17,468
Change	$	1,224		$	(336	)	$	1,025		$	(11	)	$	(170	)	$	1,732
% change (2010 vs. 2009)		14.6	%		(9.2	%)		24.4	%		(2.5	%)		(21.1	%)		9.9	%
Stabilized	$	1,104		$	(362	)	$	(1,213	)	$	(26	)	$	(170	)	$	(667	)
Non-stabilized	$	120		$	26		$	2,238		$	15		$	0		$	2,399
Change	$	1,224		$	(336	)	$	1,025		$	(11	)	$	(170	)	$	1,732

Factors Impacting Net Income During Fiscal Year 2009 as Compared to Fiscal Year 2008

Physical occupancy rates in three of our five segments, on an all properties basis, decreased slightly compared to the year-earlier period, and real estate revenue increased in four of our five segments in fiscal year 2009 compared to fiscal year 2008.  Net income available to common shareholders decreased to $6.2 million in fiscal year 2009, compared to $9.7 million in fiscal year 2008.  Revenue increases during fiscal year 2009 were offset by increases in maintenance, utilities, mortgage interest due to increased borrowing, real estate taxes, property management, insurance and amortization expense.

• Physical Occupancy.  During fiscal year 2009, physical occupancy levels at our properties, on an all properties basis, decreased slightly over year-earlier levels in three of our five reportable segments (commercial office, commercial medical and commercial retail), and increased in our multi-family and commercial industrial segments.  Physical occupancy rates on a stabilized property basis for the fiscal year ended April 30, 2009 compared to the fiscal year ended April 30, 2008 are shown below:

	Stabilized Properties						All Properties
	Fiscal Year Ended April 30,						Fiscal Year Ended April 30,
Segments	2009			2008			2009			2008
Multi-Family Residential		92.5	%		92.7	%		92.4	%		91.7	%
Commercial Office		87.0	%		89.3	%		87.3	%		89.4	%
Commercial Medical		95.8	%		96.2	%		95.0	%		97.0	%
Commercial Industrial		96.0	%		95.2	%		97.0	%		96.6	%
Commercial Retail		84.7	%		86.4	%		84.7	%		86.4	%

• Concessions.  Our overall level of tenant concessions increased for the fiscal year ended April 30, 2009 compared to the year-earlier period. To maintain or increase physical occupancy levels at our properties, we may offer tenant incentives, generally in the form of lower or abated rents, which results in decreased revenues and income from operations at our properties.  Rent concessions offered during the fiscal year ended April 30, 2009 lowered our operating revenues by approximately $3.1 million, as compared to an approximately $2.6 million reduction in operating revenues attributable to rent concessions offered in fiscal year 2008.

The following table shows the approximate reduction in our operating revenues due to rent concessions, by segment, for the fiscal years ended April 30, 2009 and 2008:

	(in thousands)
	Fiscal Year Ended April 30,
	2009		2008		Change
Multi-Family Residential	$	1,784	$	1,855	$	(71	)
Commercial Office		1,036		692		344
Commercial Medical		34		34		0
Commercial Industrial		220		0		220
Commercial Retail		44		31		13
Total	$	3,118	$	2,612	$	506

2010 Annual Report 12

• Increased Maintenance Expense.  Maintenance expenses totaled $27.0 million in fiscal year 2009, compared to $24.1 million in fiscal year 2008.  Maintenance expenses at properties newly acquired in fiscal years 2009 and 2008 added $1.4 million to the maintenance expense category during fiscal year 2009 (with our commercial medical segment accounting for $1.2 million), while maintenance expenses at existing properties increased by approximately $1.5 million, primarily for snow removal at our multi-family residential and commercial retail segments and building maintenance costs at our commercial office, commercial medical and commercial industrial segments, resulting in a net increase of $3.0 million or 12.4% in maintenance expenses in fiscal year 2009 compared to fiscal year 2008.  Under the terms of most of our commercial leases, the full cost of maintenance is paid by the tenant as additional rent. For our noncommercial real estate properties, any increase in our maintenance costs must be collected from tenants in the form of general rent increases.

Maintenance expenses by reportable segment for the fiscal years ended April 30, 2009 and 2008 were as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	9,670		$	11,287		$	4,046		$	582		$	1,448		$	27,033
2008	$	9,105		$	10,522		$	2,757		$	558		$	1,108		$	24,050
Change	$	565		$	765		$	1,289		$	24		$	340		$	2,983
% change (2009 vs. 2008)		6.2	%		7.3	%		46.8	%		4.3	%		30.7	%		12.4	%
Stabilized	$	470		$	572		$	129		$	29		$	340		$	1,540
Non-stabilized	$	95		$	193		$	1,160		$	(5	)	$	0		$	1,443
Change	$	565		$	765		$	1,289		$	24		$	340		$	2,983

• Increased Utility Expense.  Utility expense totaled $18.6 million in fiscal year 2009, compared to $17.4 million in fiscal year 2008.  Utility expenses at properties newly acquired in fiscal years 2009 and 2008 added $787,000 to the utility expense category during fiscal year 2009 (with our commercial medical segment accounting for $646,000), while utility expenses at existing properties increased by $373,000, primarily due to increased heating costs due to unseasonably cold temperatures and, to a lesser degree, increased rates from higher fuel costs, (notably in our multi-family residential segment with an increase of $202,000), for a total increase of $1.2 million or 6.7% in utility expenses in fiscal year 2009 compared to fiscal year 2008.

Utility expenses by reportable segment for the fiscal years ended April 30, 2009 and 2008 were as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	7,311		$	7,851		$	2,859		$	93		$	448		$	18,562
2008	$	6,997		$	7,743		$	2,111		$	131		$	420		$	17,402
Change	$	314		$	108		$	748		$	(38	)	$	28		$	1,160
% change (2009 vs. 2008)		4.5	%		1.4	%		35.4	%		(29.0	%)		6.7	%		6.7	%
Stabilized	$	202		$	29		$	102		$	12		$	28		$	373
Non-stabilized	$	112		$	79		$	646		$	(50	)	$	0		$	787
Change	$	314		$	108		$	748		$	(38	)	$	28		$	1,160

• Increased Mortgage Interest Expense.  Our mortgage interest expense increased approximately $5.3 million, or 8.7%, to approximately $66.0 million during fiscal year 2009, compared to $60.8 million in fiscal year 2008. Mortgage interest expense for properties newly acquired in fiscal years 2009 and 2008 added $5.2 million to our total mortgage interest expense in fiscal year 2009, while mortgage interest expense on existing properties increased $142,000.  Our overall weighted average interest rate on all outstanding mortgage debt was 6.30% as of April 30, 2009, compared to 6.37% as of April 30, 2008.  Our mortgage debt increased approximately $6.3 million, or 0.6%, to approximately $1.1 billion as of April 30, 2009, compared to April 30, 2008.

2010 Annual Report 13

Mortgage interest expense by reportable segment for the fiscal years ended April 30, 2009 and 2008 was as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	17,890		$	23,658		$	16,870		$	3,803		$	3,869		$	66,090
2008	$	17,764		$	23,131		$	12,351		$	3,481		$	4,065		$	60,792
Change	$	126		$	527		$	4,519		$	322		$	(196	)	$	5,298
% change (2009 vs. 2008)		0.7	%		2.3	%		36.6	%		9.3	%		(4.8	%)		8.7	%
Stabilized	$	(313	)	$	(169	)	$	941		$	(121	)	$	(196	)	$	142
Non-stabilized	$	439		$	696		$	3,578		$	443		$	0		$	5,156
Change	$	126		$	527		$	4,519		$	322		$	(196	)	$	5,298

• Increased Amortization Expense. The Company allocates a portion of the purchase price paid for properties to in-place lease intangible assets.  The amortization period of these intangible assets is the term of the lease, rather than the estimated life of the buildings and improvements.  The Company accordingly initially records additional amortization expense due to this shorter amortization period, which has the effect in the short term of decreasing the Company’s net income available to common shareholders, as computed in accordance with GAAP.  Amortization expense related to in-places leases totaled $10.2 million in fiscal year 2009, compared to $10.0 million in fiscal year 2008. The increase in amortization expense in fiscal year 2009 compared to fiscal year 2008 was primarily due to property acquisitions completed by t he Company in fiscal year 2009.

• Increased Real Estate Tax Expense.  Real estate taxes on properties newly acquired in fiscal years 2009 and 2008 added $2.3 million to real estate tax expense (with our commercial medical segment accounting for $1.3 million), while real estate taxes on existing properties increased by approximately $977,000, for a total increase of $3.3 million or 12.6% in real estate tax expense in fiscal year 2009 compared to fiscal year 2008, from $26.1 million to $29.4 million.  The increase in real estate taxes was primarily due to higher value assessments or increased tax levies on our stabilized properties.

Real estate tax expense by reportable segment for the fiscal years ended April 30, 2009 and 2008 was as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	6,909		$	13,850		$	4,515		$	1,926		$	2,180		$	29,380
2008	$	6,494		$	13,140		$	2,977		$	1,346		$	2,142		$	26,099
Change	$	415		$	710		$	1,538		$	580		$	38		$	3,281
% change (2009 vs. 2008)		6.4	%		5.4	%		51.7	%		43.1	%		1.8	%		12.6	%
Stabilized	$	75		$	465		$	199		$	200		$	38		$	977
Non-stabilized	$	340		$	245		$	1,339		$	380		$	0		$	2,304
Change	$	415		$	710		$	1,538		$	580		$	38		$	3,281

• Increased Insurance Expense.  Insurance expense increased in fiscal year 2009 compared to fiscal year 2008, from $2.5 million to $3.0 million, an increase of approximately 16.8%.  Insurance expense at properties newly-acquired in fiscal years 2009 and 2008 added approximately $180,000 to insurance expense, while insurance expense at existing properties increased by approximately $245,000, for an increase of approximately $425,000 in insurance expense in fiscal year 2009 compared to fiscal year 2008.  The increase in insurance expense at stabilized properties was due to an increase in premiums.

2010 Annual Report 14

Insurance expense by reportable segment for the fiscal years ended April 30, 2009 and 2008 was as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	1,128		$	1,003		$	419		$	175		$	182		$	2,957
2008	$	1,070		$	901		$	257		$	135		$	169		$	2,532
Change	$	108		$	102		$	162		$	40		$	13		$	425
% change (2009 vs. 2008)		10.1	%		11.3	%		63.0	%		29.6	%		7.7	%		16.8	%
Stabilized	$	73		$	76		$	74		$	9		$	13		$	245
Non-stabilized	$	35		$	26		$	88		$	31		$	0		$	180
Change	$	108		$	102		$	162		$	40		$	13		$	425

• Increased Property Management Expense.  Property management expense increased in fiscal year 2009 compared to fiscal year 2008, from $14.5 million to $17.5 million, an increase of $3.0 million or approximately 20.5%.  Of this increase, approximately $1.8 million is attributable to existing properties, while $1.2 million is due to properties acquired in fiscal years 2009 and 2008 (with our commercial medical segment accounting for $826,000).  The increase at existing properties is primarily due to the increase in bad debt write-offs at our Fox River and Stevens Point projects in our commercial medical segment of $1.4 million and in our commercial retail segment of $279,000, offset by recoveries and decreased write-offs in our multi-family residential and commercial office segments compared to fiscal year 2008.

Property management expense by reportable segment for the fiscal years ended April 30, 2009 and 2008 was as follows:

	(in thousands)
	Multi-Family  Residential			Commercial  Office			Commercial  Medical			Commercial  Industrial			Commercial  Retail			All Segments
2009	$	8,355		$	3,653		$	4,207		$	446		$	807		$	17,468
2008	$	8,161		$	3,900		$	1,654		$	359		$	427		$	14,501
Change	$	194		$	(247	)	$	2,553		$	87		$	380		$	2,967
% change (2009 vs. 2008)		2.4	%		(6.3	%)		154.4	%		24.2	%		89.0	%		20.5	%
Stabilized	$	(17	)	$	(300	)	$	1,727		$	12		$	380		$	1,802
Non-stabilized	$	211		$	53		$	826		$	75		$	0		$	1,165
Change	$	194		$	(247	)	$	2,553		$	87		$	380		$	2,967

2010 Annual Report 15

Comparison of Results from Commercial and Residential Properties

The following table presents an analysis of the relative investment in (corresponding to “Property owned” on the balance sheet, i.e., cost), and net operating income of, our commercial and multi-family residential properties over the past three fiscal years:

	(in thousands)
Fiscal Years Ended April 30	2010		%			2009		%			2008		%
Real Estate Investments – (cost)
Multi-Family Residential	$	556,867		30.9	%	$	542,547		31.4	%	$	510,697		31.0	%
Commercial Office		582,943		32.4	%		571,565		33.0	%		556,712		33.8	%
Commercial Medical		430,229		23.9	%		388,219		22.4	%		359,986		21.8	%
Commercial Industrial		113,249		6.3	%		108,103		6.3	%		104,060		6.3	%
Commercial Retail		117,231		6.5	%		119,151		6.9	%		116,804		7.1	%
Total	$	1,800,519		100	%	$	1,729,585		100	%	$	1,648,259		100	%
Net Operating Income
Multi-Family Residential	$	37,926		27.0	%	$	37,796		27.2	%	$	35,278		27.0	%
Commercial Office		45,246		32.2	%		45,802		33.0	%		47,836		36.6	%
Commercial Medical		39,535		28.2	%		36,501		26.3	%		28,653		21.9	%
Commercial Industrial		9,105		6.5	%		9,489		6.8	%		9,162		7.0	%
Commercial Retail		8,602		6.1	%		9,338		6.7	%		9,767		7.5	%
Total	$	140,414		100.0	%	$	138,926		100.0	%	$	130,696		100.0	%

Analysis of Lease Expirations and Credit Risk

The following table shows the annual lease expiration percentages and base rent of expiring leases for the total commercial segments properties owned by us as of April 30, 2010, for fiscal years 2011 through 2020, and the leases that will expire during fiscal year 2021 and beyond. Our multi-family residential properties are excluded from this table, since residential leases are generally for a one-year term.

Fiscal Year of Lease Expiration	Square Footage of  Expiring Leases		Percentage of Total  Commercial Segments Leased Square Footage			Annualized Base Rent of Expiring Leases at Expiration		Percentage of Total  Commercial Segments Annualized Base Rent
2011		1,935,029		19.5	%	$	14,141,211		12.8	%
2012		1,511,063		15.2	%		14,464,586		13.0	%
2013		875,328		8.8	%		10,234,475		9.2	%
2014		968,127		9.7	%		12,251,369		11.1	%
2015		654,077		6.6	%		6,377,097		5.8	%
2016		860,698		8.7	%		8,285,183		7.5	%
2017		727,390		7.3	%		10,556,046		9.5	%
2018		283,074		2.8	%		4,642,426		4.2	%
2019		520,518		5.2	%		6,762,778		6.1	%
2020		308,474		3.1	%		3,012,911		2.7	%
Thereafter		1,300,897		13.1	%		20,095,598		18.1	%
Totals		9,944,675		100.0	%	$	110,823,680		100.0	%

The following table lists our top ten commercial tenants on April 30, 2010, for the total commercial segments properties owned by us as of April 30, 2010, based upon minimum rents in place as of April 30, 2010:

2010 Annual Report 16

	(in thousands)
Lessee	% of Total Commercial  Segments Minimum Rents as of April 30, 2010
Affiliates of Edgewood Vista	9.9%
St. Lukes Hospital of Duluth, Inc.	3.5%
Fairview Health	2.5%
Applied Underwriters	2.2%
Best Buy Co., Inc. (NYSE: BBY)	1.9%
HealthEast Care System	1.7%
USG Corp.	1.6%
Smurfit - Stone Container (Nasdaq: SSCC)	1.5%
Microsoft (Nasdaq: MSFT)	1.4%
Nebraska Orthopaedic Hospital	1.3%
All Others	72.5%
Total Monthly Rent as of April 30, 2010	100.0%

Property Acquisitions

IRET Properties paid approximately $55.4 million for real estate properties addedto its portfolio during fiscal year 2010, compared to $33.8 million in fiscal year 2009. The fiscal year 2010 and 2009 additions are detailed below.

Fiscal 2010 (May 1, 2009 to April 30, 2010)

	(in thousands)
Acquisitions	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
16-unit Northern Valley Apartments - Rochester, MN	$	110	$	610	$	0	$	720
48-unit Crown Apartments - Rochester, MN		261		3,289		0		3,550
		371		3,899		0		4,270
Commercial Office
15,000 sq. ft. Minot 2505 16th Street SW - Minot, ND		372		1,724		304		2,400
		372		1,724		304		2,400
Commercial Medical
65,160 sq. ft. Casper 1930 E. 12th Street (Park Place) - Casper, WY		439		5,780		1,120		7,339
35,629 sq. ft. Casper 3955 E. 12th Street (Meadow Wind) - Casper, WY		338		5,881		1,120		7,339
47,509 sq. ft. Cheyenne 4010 N. College Drive (Aspen Wind) - Cheyenne, WY		628		9,869		1,960		12,457
54,072 sq. ft. Cheyenne 4606 N. College Drive (Sierra Hills) - Cheyenne, WY		695		7,455		1,410		9,560
35,629 sq. ft. Laramie 1072 N. 22nd Street (Spring Wind) - Laramie, WY		406		6,634		1,265		8,305
		2,506		35,619		6,875		45,000
Commercial Industrial
42,180 sq. ft. Clive 2075 NW 94th Street - Clive, IA		408		2,610		332		3,350
		408		2,610		332		3,350
Unimproved Land
Fargo 1320 45th Street N. - Fargo, ND		395		0		0		395
		395		0		0		395
Total Property Acquisitions	$	4,052	$	43,852	$	7,511	$	55,415

2010 Annual Report 17

Fiscal 2009 (May 1, 2008 to April 30, 2009)

	(in thousands)
Acquisitions and Development Projects Placed in Service	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
33-unit Minot Westridge Apartments – Minot, ND	$	67	$	1,887	$	0	$	1,954
12-unit Minot Fairmont Apartments – Minot, ND		28		337		0		365
4-unit Minot 4th Street Apartments – Minot, ND		15		74		0		89
3-unit Minot 11th Street Apartments – Minot, ND		11		53		0		64
36-unit Evergreen Apartments – Isanti, MN		380		2,720		0		3,100
10-unit 401 S. Main Apartments – Minot, ND1		0		905		0		905
71-unit IRET Corporate Plaza Apartments – Minot, ND2		0		10,824		0		10,824
		501		16,800		0		17,301
Commercial Office
22,500 sq. ft. Bismarck 715 E. Bdwy – Bismarck, ND		389		1,267		255		1,911
50,360 sq. ft. IRET Corporate Plaza – Minot, ND2		0		3,896		0		3,896
		389		5,163		255		5,807
Commercial Medical
56,239 sq. ft. 2828 Chicago Avenue – Minneapolis, MN3		0		5,052		0		5,052
31,643 sq. ft. Southdale Medical Expansion (6545 France) –  Edina, MN4		0		779		0		779
		0		5,831		0		5,831
Commercial Industrial
69,984 sq. ft. Minnetonka 13600 Cty Rd 62 – Minnetonka, MN		809		2,881		310		4,000
		809		2,881		310		4,000
Unimproved Land
Bismarck 2130 S. 12th Street – Bismarck, ND		576		0		0		576
Bismarck 700 E. Main – Bismarck, ND		314		0		0		314
		890		0		0		890
Total Property Acquisitions	$	2,589	$	30,675	$	565	$	33,829

(1)   Development property placed in service November 10, 2008. Approximately $145,000 of this cost was incurred in the three months ended April 30, 2009.  Additional costs incurred in fiscal year 2008 totaled approximately $14,000 for a total project cost at April 30, 2009 of approximately $919,000.

(2)   Development property placed in service January 19, 2009.  Approximately $1.8 million of the residential cost and $563,000 of the commercial office 2 project cost at April 30, 2009 of $23.3 million.

(3)   Development property placed in service September 16, 2008. Approximately $800,000 of this cost was incurred in the three months ended January 31, 2009. Additional costs incurred in fiscal years 2008 and 2007 totaled $7.8 million for a total project cost at April 30, 2009 of $12.9 million.

(4)   Development property placed in service September 17, 2008. Approximately $364,000 of this cost was incurred in the three months ended January 31, 2009. Additional costs incurred in fiscal year 2008 totaled $5.4 million for a total project cost at April 30, 2009 of $6.2 million.

Property Dispositions

During fiscal year 2010, the Company disposed of two small properties for an aggregate sale price of approximately $560,000, compared to one small property sold for approximately $70,000 during fiscal year 2009.  The fiscal year 2010 and 2009 dispositions are detailed below.

2010 Annual Report 18

Fiscal 2010 (May 1, 2009 to April 30, 2010)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
42 – unit Sweetwater Properties – Grafton, ND	$	450	$	382	$	68
Commercial Office
10,126 sq ft. 12 South Main – Minot, ND		110		110		0
Total Property Dispositions	$	560	$	492	$	68

Fiscal 2009 (May 1, 2008 to April 30, 2009)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
1 - unit 408 1st Street SE – Minot, ND	$	70	$	16	$	54
Total Property Dispositions	$	70	$	16	$	54

Funds From Operations

IRET considers Funds from Operations (“FFO”) a useful measure of performance for an equity REIT. IRET uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) in 1991, as clarified in 1995, 1999 and 2002. NAREIT defines FFO to mean “net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.”  Because of limitations of the FFO definition adopted by NAREIT, IRET has made certain interpretations in applying the definition.  ; IRET believes all such interpretations not specifically provided for in the NAREIT definition are consistent with the definition.

IRET management considers that FFO, by excluding depreciation costs, the gains or losses from the sale of operating real estate properties and extraordinary items as defined by GAAP, is useful to investors in providing an additional perspective on IRET’s operating results. Historical cost accounting for real estate assets in accordance with GAAP assumes, through depreciation, that the value of real estate assets decreases predictably over time.  However, real estate asset values have historically risen or fallen with market conditions.  NAREIT’s definition of FFO, by excluding depreciation costs, reflects the fact that depreciation charges required by GAAP may not reflect underlying economic realities.  Additionally, the exclusion, in NAREIT’s definition of FFO, of gains and losses from the sales of previously depreciated operating real estate assets, allows IRET management and investors to better identify the operating results of the long-term assets that form the core of IRET’s investments, and assists in comparing those operating results between periods.  FFO is used by IRET’s management and investors to identify trends in occupancy rates, rental rates and operating costs.

While FFO is widely used by REITs as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies.

FFO should not be considered as an alternative to net income as determined in accordance with GAAP as a measure of IRET’s performance, but rather should be considered as an additional, supplemental measure, and should be

2010 Annual Report 19

viewed in conjunction with net income as presented in the consolidated financial statements included in this report. FFO does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of sufficient cash flow to fund all of IRET’s needs or its ability to service indebtedness or make distributions.

FFO applicable to common shares and limited partnership units for the fiscal year ended April 30, 2010 decreased to $61.5 million, compared to $64.6 million and $64.2 million for the fiscal years ended April 30, 2009 and 2008, respectively. The decrease in FFO was due to those factors discussed above in the sections titled “Changes in Expenses and Net Income” and “Factors Impacting Net Income During Fiscal Year 2010 as Compared to Fiscal Year 2009.”

Reconciliation of Net Income Attributable to Investors Real Estate Trust to Funds From Operations

For the years ended April 30, 2010, 2009 and 2008:

	(in thousands, except per share and unit amounts)
Fiscal Years Ended April 30,	2010							2009							2008
	Amount			Weighted Avg  Shares and  Units(2)		Per  Share  and  Unit(3)		Amount			Weighted Avg  Shares and  Units(2)		Per  Share  and  Unit(3)		Amount			Weighted Avg  Shares and  Units(2)		Per Share and Unit(3)
Net income attributable to Investors Real Estate Trust	$	4,001				$		$	8,526				$		$	12,088				$
Less dividends to preferred shareholders		(2,372	)						(2,372	)						(2,372	)
Net income available to common shareholders		1,629			69,093		0.03		6,154			58,603		0.11		9,716			53,060		0.18
Adjustments:
Noncontrolling interests – Operating Partnership		562			20,825				2,227			21,217				3,677			20,417
Depreciation and amortization(1)		59,383							56,295							51,303
Gains on depreciable property sales		(68	)						(54	)						(514	)
Funds from operations applicable to common shares and Units	$	61,506			89,918	$	0.69	$	64,622			79,820	$	0.81	$	64,182			73,477	$	0.87

(1) Real estate depreciation and amortization consists of the sum of depreciation/amortization related to real estate investments and amortization related to non-real estate investments from the Consolidated Statements of Operations, totaling $59,763, $56,714 and $51,518 and depreciation/amortization from Discontinued Operations of $0, $0 and $47, less corporate-related depreciation and amortization on office equipment and other assets of $380, $419 and $262 for the fiscal year ended April 30, 2010, 2009 and 2008.

(2) UPREIT Units of the Operating Partnership are exchangeable for common shares of beneficial interest on a one-for-one basis.

(3) Net income is calculated on a per share basis. FFO is calculated on a per share and unit basis.

2010 Annual Report 20

Cash Distributions

The following cash distributions were paid to our common shareholders and UPREIT unitholders during fiscal years 2010, 2009 and 2008:

	Fiscal Years
Quarters	2010		2009		2008
First	$	.1705	$	.1685	$	.1665
Second		.1710		.1690		.1670
Third		.1715		.1695		.1675
Fourth		.1715		.1700		.1680
	$	.6845	$	.6770	$	.6690

The fiscal year 2010 cash distributions increased 1.1% over the cash distributions paid during fiscal year 2009, and fiscal year 2009 cash distributions increased 1.2% over the cash distributions paid during fiscal year 2008.

Liquidity and Capital Resources

Overview

The Company’s principal liquidity demands are maintaining distributions to the holders of the Company’s common and preferred shares of beneficial interest and UPREIT Units, capital improvements and repairs and maintenance to the Company’s properties, acquisition of additional properties, property development, tenant improvements and debt service and repayments.

The Company has historically met its short-term liquidity requirements through net cash flows provided by its operating activities, and, from time to time, through draws on its unsecured lines of credit. Management considers the Company’s ability to generate cash from property operating activities, cash-out refinancing of existing properties and, from time to time, draws on its line of credit to be adequate to meet all operating requirements and to make distributions to its shareholders in accordance with the REIT provisions of the Internal Revenue Code. Budgeted expenditures for ongoing maintenance and capital improvements and renovations to our real estate portfolio are also generally expected to be funded from existing cash on hand, cash flow generated from property operations, cash-out refinancing of existing properties, and/or new borrowings. However, the commercial and residential real estate markets continue to experience significant challenges including reduced occupancies and rental rates as well as severe restrictions on the availability of financing.  In the event of further deterioration in property operating results, or absent the Company’s ability to successfully continue cash-out refinancing of existing properties and/or new borrowings, the Company may need to consider additional cash preservation alternatives, including scaling back development activities, capital improvements and renovations and reducing the level of distributions to shareholders. At its regularly-scheduled meeting in the fourth quarter of fiscal year 2010, the Company’s Board of Trustees thought it prudent, given the current economic environment and the challenges facing the real estate industry in particular, to maintain the Company’s common share/unit distribution at its current level ($0.1715 per share/unit), rather than continue the small quarterly increases in the distribution that had previously been the Company’s practice.  Company management and the Board continue to monitor closely the Company’s operating results, in particular cash flows from operations, which are an important factor in the Company’s ability to sustain its distribution at its current rate.  For the fiscal year ended April 30, 2010, we paid distributions of $50.8 million in cash and $10.5 million in common shares pursuant to our DRIP to common shareholders and unitholders of the Operating Partnership, as compared to net cash provided by operating activities of $61.4 million and funds from operations of $61.5 million.  The Company cannot rule out the need in future for a reduction in the current amount of the distribution paid on the Company’s common shares and units.

To the extent the Company does not satisfy its long-term liquidity requirements, which consist primarily of maturities under the Company’s long-term debt, construction and development activities and potential acquisition opportunities, through net cash flows provided by operating activities and its credit facilities, the Company intends to satisfy such requirements through a combination of funding sources which the Company believes will be available to it, including the issuance of UPREIT Units, additional common or preferred equity, proceeds from the sale of properties, and additional long-term secured or unsecured indebtedness.  However, our ability to raise funds through the sale of equity securities, the sale of properties, and additional long-term secured or unsecured borrowings is dependent on, among other things, ge neral economic conditions, general market conditions for REITs,

2010 Annual Report 21

our operating performance, and the current trading price of our common shares, and the capital and debt markets may not consistently be available at all or on terms that we consider attractive. In particular, as a result of the continuing economic downturn and turmoil in the capital markets, the availability of secured and unsecured loans has been sharply curtailed. We cannot predict how long these conditions will continue. As a result of general economic conditions in our markets, economic downturns affecting the ability to attract and retain tenants, unfavorable fluctuations in interest rates or our share price, unfavorable changes in the supply of competing properties, or our properties not performing as expected, we may not generate sufficient cash flow from operations or otherwise have access to capital on favorable terms, or at all. If we are unable to obtain capital from other sources, we may not be able to pay the distribution required to maintain our status as a REIT, make required principal and interest payments, make strategic acquisitions or make necessary routine capital improvements or undertake re-development opportunities with respect to our existing portfolio of operating assets. In addition, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the holder of the mortgage could foreclose on the property, resulting in loss of income and asset values.

Sources and Uses of Cash

As of April 30, 2010, the Company had three unsecured lines of credit, in the amounts of $1.1 million, $12.0 million and $14.0 million, respectively, from (1) United Community Bank, Minot, ND; (2) First Western Bank and Trust, Minot, ND; and (3) First International Bank and Trust, Watford City, ND. As of April 30, 2010, the Company had outstanding balances of $1.0 million at United Community Bank and $4.0 million at First International Bank and Trust. Borrowings under the lines of credit bear interest based on the following, respectively: (1) 5.75%, (2) 175 basis points below the Wall Street Journal Prime Rate with a floor of 5.25% and a ceiling of 8.25%, and (3) 50 basis points above the Wall Street Journal Prime Rate with a floor of 6.20%. Increases in interest rates will increase the Company’s interest expense on any borrowings u nder its lines of credit, and as a result will affect the Company’s results of operations and cash flows. The Company’s lines of credit with United Community Bank, First Western Bank and First International Bank and Trust expire in August 2010, December 2011 and December 2010, respectively.  The Company expects to renew these lines of credit prior to their expiration.  In addition to these three lines of credit, the Company also has a $5.0 million line of credit maturing in November 2010 with Dacotah Bank in Minot, North Dakota. Of the $4.9 million drawn on this line, the Company includes $3.4 million in mortgages payable on the Company’s balance sheet, as secured by six small apartment properties owned by the Company, with the remaining $1.5 million included in revolving lines of credit. The Company also maintains compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/ or to ensure future credit availability, as follows: Dacotah Bank, Minot, North Dakota, a deposit of $100,000; United Community Bank, Minot, North Dakota, deposit of $370,000; Commerce Bank, A Minnesota Banking Corporation, deposit of $250,000, and First International Bank, Watford City, North Dakota, deposit of $3.2 million.  The approximately $45.0 million purchase price paid by the Company for its acquisition in the third quarter of fiscal year 2010 of five Wyoming assisted living facilities was funded with cash in the amount of approximately $8.5 million, and with the proceeds of a $36.5 million loan from First International Bank and Trust, Watford City, North Dakota. The Company repaid the First International loan in the fourth quarter of fiscal year 2010.

In September 2008, the Company filed a shelf registration statement on Form S-3 to offer for sale from time to time common shares and preferred shares.  This registration statement was declared effective in October 2008.  We may sell any combination of common shares and preferred shares up to an aggregate initial offering price of $150.0 million during the period that the registration statement remains effective.  During fiscal year 2010, the Company issued 12.2 million common shares under this registration statement, for net proceeds of approximately $96.9 million, before offering expenses.  These shares were issued in two public offerings in June 2009 and October 2009, respectively.  Additionally, in fiscal year 2010 the Company sold 1.2 million common shares under this registration s tatement, under its continuous offering program with Robert W. Baird & Co. Incorporated as sales agent, for net proceeds of approximately $10.2 million, before offering expenses but after underwriting discounts and commissions.  As of April 30, 2010, the Company had available securities under this registration statement in the aggregate amount of approximately $33.4 million.  This amount is reserved for issuance under the Company’s continuous offering program with Robert W. Baird & Co. Incorporated.

In April 2010, the Company filed a shelf registration statement on Form S-3 to register any combination of common shares and preferred shares up to an aggregate initial offering price of $150.0 million during the period that the

2010 Annual Report 22

registration statement remains effective.  To date the Company has not issued any common or preferred shares under this registration statement.

Continued stresses in the United States economy and ongoing tightening in the credit markets continue to result in uncertainty regarding the availability of financing to the commercial real estate sector.  In IRET’s recent experience, while loan terms, underwriting standards and interest rate spreads have changed significantly compared to the last five years, they are still within or close to historical norms.  However, while to date there has been no material negative impact on our ability to borrow in our multi-family segment, the events involving both the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), resulting in the U.S. government’s decision to place them into indefinite conservatorship, do present an environment of heightened risk for us . IRET obtains a majority of its multi-family debt from primarily Freddie Mac. Our current plan is to refinance a majority of our maturing multi-family debt with these two entities, so any change in their ability to lend going forward will most likely result in higher loan costs for us; accordingly, we are closely monitoring ongoing announcements surrounding both firms. As of April 30, 2010, approximately 33.5%, or $27.1 million of our mortgage debt maturing in the next twelve months is placed on multi-family residential assets, and approximately 66.5%, or $53.7 million, is placed on properties in our four commercial segments. Mortgage debt maturing in the first two quarters of fiscal year 2011 consists of approximately $1.8 million on multi-family residential assets, and approximately $8.0 million on properties in our four commercial segments. Of this $9.8 million, we have to-date refinanced approximately $612,000 in commercial debt, and are working to either renew, payoff with cash or apply  cred it line facilities to the remainder of the maturing debt.

Uncertainty regarding the pricing of commercial real estate and the curtailment of available financing to facilitate transactions has reduced IRET’s ability to rely on cash-out refinancings and proceeds from the sale of real estate to provide funds for investment opportunities.  Additionally, in IRET’s view, current market conditions are not yet favorable for acquisitions and development, and consequently the potential for growth in net income from acquisitions and development is anticipated to be limited in fiscal year 2011.

Despite these market uncertainties, and a continued tightening in credit standards by lenders, IRET during fiscal year 2010 acquired properties with an investment cost totaling $55.4 million. The Company had no material dispositions during fiscal year 2010.

The Company has a Distribution Reinvestment and Share Purchase Plan (“DRIP”). The DRIP provides shareholders of the Company an opportunity to invest their cash distributions in common shares of the Company at a discount (currently 5%) from the market price, and to purchase additional common shares of the Company with voluntary cash contributions, also at a discount to the market price. During fiscal year 2010, approximately 1.4 million common shares were issued under this plan, with an additional 1.3 million common shares issued during fiscal year 2009, and 1.2 million common shares issued during fiscal year 2008.

The issuance of UPREIT Units for property acquisitions continues to be a source of capital for the Company.  Approximately 390,000 units were issued in connection with property acquisitions during fiscal year 2010, and approximately 362,000 units and 2.3 million units, respectively, were issued in connection with property acquisitions during fiscal years 2009 and 2008.

As a result of the issuance of common shares pursuant to our shelf registration statement and distribution reinvestment plan, net of fractional shares repurchased, the Company’s equity capital increased during fiscal 2010 by $118.9 million. Additionally, the equity capital of the Company increased by $3.9 million as a result of contributions of real estate in exchange for UPREIT units, as summarized above, resulting in a total increase in equity capital of $122.8 million from these sources during fiscal year 2010. The Company’s equity capital increased by $21.1 million and $100.9 million in fiscal years 2009 and 2008, respectively, as a result of the issuance of common shares pursuant to our shelf registration statement and distribution reinvestment plan, net of fractional shares repurchased, and contributions of real estate i n exchange for UPREIT units.

Cash and cash equivalents on April 30, 2010 totaled $54.8 million, compared to $33.2 million and $53.5 million on the same date in 2009 and 2008, respectively. Despite a decrease in net income, net cash provided by operating activities increased slightly to $61.4 million in fiscal year 2010 from $60.1 million in fiscal year 2009, due to multiple factors including changes in accounts receivable, accounts payable and other non-cash items. Net cash provided by operating activities decreased to $60.1 million in fiscal year 2009 from $61.9 million in fiscal year

2010 Annual Report 23

2008, due primarily to decreased net income as a result of higher maintenance costs.

Net cash used by investing activities increased to $79.0 million in fiscal year 2010, from $54.4 million in fiscal year 2009. Net cash used by investing activities was $145.3 million in fiscal year 2008. The increase in net cash used in investing activities in fiscal year 2010 compared to fiscal year 2009 was primarily a result of greater expenditures for acquisitions and improvements of real estate investments. Net cash provided by financing activities during fiscal year 2010 was $39.1 million, compared to $26.0 million used by financing activities during fiscal year 2009. The difference was due primarily to an increase in proceeds from the sale of common shares and an increase in proceeds from mortgage borrowings and refinancings, net of principal payments on mortgages. Net cash used by financing activities during fiscal year 2009 was $ 26.0 million, compared to $92.3 million provided by financing activities during fiscal year 2008, due primarily to a decrease in proceeds received from mortgage borrowings and refinancings.

Financial Condition

Mortgage Loan Indebtedness. Mortgage loan indebtedness was $1.1 billion on April 30, 2010 and 2009. Approximately 97.3% of such mortgage debt is at fixed rates of interest, with staggered maturities. This limits the Company’s exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on the Company’s results of operations and cash flows. As of April 30, 2010, the weighted average rate of interest on the Company’s mortgage debt was 6.17%, compared to 6.30% on April 30, 2009.

Revolving lines of credit. As of April 30, 2010, the Company had outstanding balances of $4.0 million under its unsecured credit line with First International Bank and Trust, $1.0 million under its unsecured credit line with United Community Bank, and no amount outstanding under its unsecured credit line with First Western Bank and Trust. In addition to these three lines of credit, the Company also has a $5.0 million line of credit with Dacotah Bank. Of the $4.9 million drawn on this line, the Company includes $3.4 million in mortgages payable on the Company’s balance sheet, as secured by six small apartment properties owned by the Company, with the remaining $1.5 million included in revolving lines of credit. As of April 30, 2009, the Company had $4.0 million and $5.0 million drawn on its credit lines with First International Bank and Trust and Dacotah Bank, respectively, and had no outstanding amounts under its credit lines with Bremer Bank and First Western Bank and Trust. Of the $5.0 million drawn on the Dacotah Bank line at April 30, 2009, the Company included $3.5 million in mortgages payable on the Company’s balance sheet, as secured by six small apartment properties owned by the Company, with the remaining $1.5 million included in revolving lines of credit.

Mortgage Loans Receivable. Mortgage loans receivable net of allowance decreased to approximately $158,000 at April 30, 2010, from approximately $160,000 at April 30, 2009.

Property Owned. Property owned increased to $1.8 billion at April 30, 2010, from $1.7 billion at April 30, 2009. The increase resulted primarily from the acquisition of the additional investment properties as described in the “Property Acquisitions” subsection of this Management’s Discussion and Analysis of Financial Condition and Results of Operations and improvements at existing properties.

Cash and Cash Equivalents. Cash and cash equivalents on April 30, 2010, totaled $54.8 million, compared to $33.2 million on April 30, 2009. The increase in cash on hand on April 30, 2010, as compared to April 30, 2009, was due primarily to an increase in proceeds from the sale of common shares.

Marketable Securities. IRET’s investment in marketable securities classified as available-for-sale was approximately $420,000 on April 30, 2010 and 2009. Marketable securities are held available for sale and, from time to time, the Company invests excess funds in such securities or uses the funds so invested for operational purposes.

Operating Partnership Units. Outstanding limited partnership units in the Operating Partnership decreased to 20.5 million units on April 30, 2010, compared to 20.8 million units on April 30, 2009. The decrease in units outstanding at April 30, 2010 as compared to April 30, 2009, resulted primarily from the conversion of units to shares, net of units issued in exchange for property.

Common and Preferred Shares of Beneficial Interest. Common shares of beneficial interest outstanding on April 30, 2010 totaled 75.8 million compared to 60.3 million common shares outstanding on April 30, 2009. This increase in common shares outstanding from April 30, 2009 to April 30, 2010 was due to the issuance of common shares

2010 Annual Report 24

pursuant to our shelf registration statement and distribution reinvestment plan. During the fourth quarter of fiscal year 2010, the Company sold 1.2 million common shares under its continuous offering program with Robert W. Baird & Co. Incorporated as sales agent.  The net proceeds (before offering expenses but after underwriting discounts and commissions) from the offering of $10.2 million through April 30, 2010 will be used for general corporate purposes.  During the second quarter of fiscal year 2010, IRET completed a public offering of 9.2 million common shares of beneficial interest at $8.25 per share (before underwriting discounts and commissions). Proceeds of the offering included in equity totaled $72.1 million after deducting underwriting discounts and commissions but before deducting offering expenses. Du ring the first quarter of fiscal year 2010, IRET completed a public offering of 3.0 million common shares of beneficial interest at $8.70 per share (before underwriting discounts and commissions). Proceeds of the offering included in IRET shareholder’s equity totaled $24.8 million after deducting underwriting discounts and commissions but before deducting offering expenses. The Company issued common shares pursuant to our Distribution Reinvestment and Share Purchase Plan, consisting of approximately 1.4 million common shares issued during fiscal year 2010, for a total value of approximately $11.9 million. Conversions of approximately 707,000 UPREIT Units to common shares during fiscal year 2010, for a total of approximately $3.8 million in IRET shareholders’ equity, also increased the Company’s common shares of beneficial interest outstanding during the twelve months ended April 30, 2010 compared to the twelve months ended April 30, 2009. Preferred shares of beneficial interest outstanding on April 30, 2010 and 2009 totaled 1.2 million.

Contractual Obligations and Other Commitments

The primary contractual obligations of the Company relate to its borrowings under its four lines of credit and mortgage notes payable. The Company had $6.5 million outstanding under its lines of credit at April 30, 2010. The principal and interest payments on the mortgage notes payable for the years subsequent to April 30, 2010, are included in the table below as “Long-term debt.” Interest due on variable rate mortgage notes is calculated using rates in effect on April 30, 2010. The “Other Debt” category consists of an unsecured promissory note issued by the Company to the sellers of an office/warehouse property located in Minnesota.  The Company acquired this property in fiscal year 2009 for a purchase price of $4.0 million, consisting of $3.0 million in cash and the $1.0 million balance payable under a promissory note with a ten-year term.  If the tenant defaults in the initial term of the lease, the then-current balance of the promissory note is forfeited to the Company.

As of April 30, 2010, the Company was a tenant under operating ground or air rights leases on eleven of its properties. The Company pays a total of approximately $501,000 per year in rent under these leases, which have remaining terms ranging from 3 to 91 years, and expiration dates ranging from July 2012 to October 2100.

Purchase obligations of the Company represent those costs that the Company is contractually obligated to pay in the future. The Company’s significant purchase obligations as of April 30, 2010, which the Company expects to finance through debt and operating cash, are summarized in the following table. The significant components in the purchase obligation category are costs for construction and expansion projects and capital improvements at the Company’s properties. Purchase obligations that are contingent upon the achievement of certain milestones are not included in the table below, nor are service orders or contracts for the provision of routine maintenance services at our properties, such as landscaping and grounds maintenance, since these arrangements are generally based on current needs, are filled by our service providers within short time horizons, and may be cancelled without penalty. The expected timing of payment of the obligations discussed below is estimated based on current information.

	(in thousands)
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long-term debt (principal and interest)	$	1,423,621	$	171,188	$	270,035	$	240,316	$	742,082
Other Debt (principal and interest)	$	1,456	$	60	$	217	$	205	$	974
Operating Lease Obligations	$	25,461	$	501	$	1,000	$	1,001	$	22,959
Purchase Obligations	$	5,297	$	5,297	$	0	$	0	$	0

Off-Balance-Sheet Arrangements

As of April 30, 2010, the Company had no significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

2010 Annual Report 25

Recent Developments

Common and Preferred Share Distributions. On June 30, 2010, the Company paid a distribution of 51.56 cents per share on the Company’s Series A Cumulative Redeemable Preferred Shares, to preferred shareholders of record on June 15, 2010. On July 1, 2010, the Company paid a distribution of 17.15 cents per share on the Company’s common shares of beneficial interest, to common shareholders and UPREIT unitholders of record on June 15, 2010.

Pending Acquisitions and Dispositions.  The Company has signed an agreement for the purchase of two medical office buildings: a one-story, approximately 14,705 square foot medical building located in Billings, Montana, and a one-story, approximately 14,640 square foot medical building located in Missoula, Montana, for a purchase price totaling approximately $5.2 million, of which approximately $4.3 million would consist of the assumption of existing debt, with the remaining approximately $957,000 paid in cash. This proposed acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the transaction will be completed.  The Company has also signed an agreement for the purchase of a two-building senior housing complex located in Minot, North Dakota, consisting of two single-story facilities with a combined total of approximately 169 units/beds, for a purchase price of approximately $15.2 million, of which approximately $5.7 million would consist of the assumption of existing debt, with the remaining approximately $9.5 million to be paid in cash. This pending acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the acquisition will be completed.

The Company is marketing for sale its 504-unit Dakota Hill multi-family residential property in Irving, Texas. A sales agreement for the property was terminated by a prospective buyer during the third quarter of fiscal year 2010; during the fourth quarter the Company signed a sales agreement for the property with a different prospective purchaser. During the fourth quarter of fiscal year 2010, the Company refinanced the Dakota Hill property, replacing existing mortgage debt of approximately $22.4 million with new debt totaling approximately $23.5 million, with a maturity date of February 1, 2017. The Company has also signed agreements for the sale of three multi-family residential properties in Colorado: the Company’s 210-unit Miramont and 195-unit Pinecone Apartments in Ft. Collins, Colorado and its 192-unit Neighborhood Apartments in Colorado Springs, Colorado.  These proposed dispositions are subject to various closing conditions and contingencies, and no assurances can be given that these transactions will be completed.

Development Projects.  During the third quarter of fiscal year 2010, the Company acquired an approximately 6.8 acre parcel of vacant land located in Fargo, North Dakota for a purchase price of approximately $395,000. The Company has constructed an office/warehouse facility on this property occupied by a single tenant, with the lease for this property commencing on July 1, 2010.  The Company estimates that its final cost to construct the facility will be approximately $4.1 million, including the cost of the land plus imputed construction interest.

Subsequent to the fourth quarter of fiscal year 2010, on July 3, 2010, the Company signed an agreement for the construction of an addition to its existing Edgewood Vista assisted living facility in Spearfish, South Dakota.  This development project will add dining and garage facilities and approximately 23 senior housing apartments to the existing facility for an estimated total cost of $2.6 million.  Completion of the addition is expected in January 2011.

Fox River and Stevens Point Tenant Bankruptcy. The tenants in IRET’s Fox River senior housing project in Grand Chute, Wisconsin, and Stevens Point senior housing project in Stevens Point, Wisconsin, affiliates of Sunwest Management, Inc., declared bankruptcy in December 2008. IRET’s investment in the Fox River and Stevens Point properties leased to these Sunwest affiliates is approximately $3.8 million and $14.8 million, respectively.  Subsequent to the end of fiscal year 2010, IRET negotiated a Settlement and Lease Modification Agreement with the parent company of its tenants in these projects and with the court-appointed receiver; under the terms of this agreement, the effectiveness of which is subject to confirmation of the debtors’ Plan of Reorganization b y the bankruptcy court, IRET would receive a cash payment of $2.2 million to settle its claims in bankruptcy against its tenants, and the Stevens Point lease would be modified to reduce the Annual Rent due under the lease to $1.0 million (or approximately $85,000 per month), compared to $1.4 million (or approximately $113,000 per month) under the lease as originally written.  The Stevens Point lease would be assigned to an acquiring entity formed by Blackstone Ventures.  The Fox River lease is not being assumed or assigned, and IRET is continuing to evaluate its options in regard to this project; at this time IRET considers that, subject to its analysis of market conditions, it will proceed to market the Fox River property in an attempt to recover its investment and provide some return on investment.

2010 Annual Report 26

Related Party Transaction.  Subsequent to the end of fiscal year 2010, on May 21, 2010, the Company closed on a mortgage loan from First International Bank and Trust, of which Stephen L. Stenehjem, a member of the Company’s Board of Trustees, is the President and Chief Executive Officer.  The loan, in the amount of $3.2 million, is secured by a first mortgage on the Company’s MedPark Mall property in Grand Forks, North Dakota, and has a 5-year term, a 20-year amortization, and an interest rate of 6.25% per annum. 

2010 Annual Report 27

EX-99.3

Exhibit 99.3

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of

Investors Real Estate Trust

Minot, North Dakota

We have audited the accompanying consolidated balance sheets of Investors Real Estate Trust and subsidiaries (the "Company") as of April 30, 2010 and 2009, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended April 30, 2010. Our audits also included the consolidated financial statement schedules listed in the Index at Item 15. We also have audited the Company's internal control over financial reporting as of April 30, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting (not presented herein). Our responsibility is to express an opinion on these financial statements and financial statement schedules and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk th at a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the

2010 Annual Report F-1

financial position of Investors Real Estate Trust and subsidiaries as of April 30, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ DELOITTE & TOUCHE LLP

Minneapolis, Minnesota

July 14, 2010 (December 10, 2010, as to the effects of discontinued operations as disclosed in Note 12)

2010 Annual Report F-2

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

April 30, 2010 and 2009

	(in thousands)
	April 30, 2010			April 30, 2009
ASSETS
Real estate investments
Property owned	$	1,800,519		$	1,729,585
Less accumulated depreciation		(308,626	)		(262,871	)
		1,491,893			1,466,714
Development in progress		2,831			0
Unimproved land		6,007			5,701
Mortgage loans receivable, net of allowance of $3 and $3, respectively		158			160
Total real estate investments		1,500,889			1,472,575
Other assets
Cash and cash equivalents		54,791			33,244
Marketable securities – available-for-sale		420			420
Receivable arising from straight-lining of rents, net of allowance of $912 and $842, respectively		17,320			16,012
Accounts receivable, net of allowance of $257 and $286, respectively		4,916			2,738
Real estate deposits		516			88
Prepaid and other assets		1,189			1,051
Intangible assets, net of accumulated amortization of $39,571 and $44,887, respectively		50,700			52,173
Tax, insurance, and other escrow		9,301			7,261
Property and equipment, net of accumulated depreciation of $924 and $957, respectively		1,392			1,015
Goodwill		1,388			1,392
Deferred charges and leasing costs, net of accumulated amortization of $13,131 and $11,010, respectively		18,108			17,122
TOTAL ASSETS	$	1,660,930		$	1,605,091
LIABILITIES AND EQUITY
LIABILITIES
Accounts payable and accrued expenses	$	38,514		$	32,773
Revolving lines of credit		6,550			5,500
Mortgages payable		1,057,619			1,070,158
Other		1,320			1,516
TOTAL LIABILITIES		1,104,003			1,109,947
COMMITMENTS AND CONTINGENCIES (NOTE 15)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		1,812			1,737
EQUITY
Investors Real Estate Trust shareholder’s equity
Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at April 30, 2010 and April 30, 2009, aggregate liquidation preference of $28,750,000)		27,317			27,317
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 75,805,159 shares issued and outstanding at April 30, 2010, and 60,304,154 shares issued and outstanding at April 30, 2009)		583,618			461,648
Accumulated distributions in excess of net income		(201,412	)		(155,956	)
Total Investors Real Estate Trust shareholders’ equity		409,523			333,009
Noncontrolling interests – Operating Partnership (20,521,365 units at April 30, 2010 and 20,838,197 units at April 30, 2009)		134,970			148,199
Noncontrolling interests – consolidated real estate entities		10,622			12,199
Total equity		555,115			493,407
TOTAL LIABILITIES AND EQUITY	$	1,660,930		$	1,605,091

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2010 Annual Report F-3

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended April 30, 2010, 2009, and 2008

	(in thousands, except per share data)
	2010			2009			2008
REVENUE
Real estate rentals	$	192,331		$	189,079		$	174,075
Tenant reimbursement		45,061			45,247			41,205
TOTAL REVENUE		237,392			234,326			215,280
EXPENSES
Depreciation/amortization related to real estate investments		56,361			53,619			49,010
Utilities		17,575			18,562			17,402
Maintenance		27,606			27,033			24,050
Real estate taxes		30,502			29,380			26,099
Insurance		3,755			2,957			2,532
Property management expenses		19,200			17,468			14,501
Administrative expenses		5,716			4,430			4,745
Advisory and trustee services		502			452			458
Other expenses		2,513			1,440			1,344
Amortization related to non-real estate investments		2,370			2,068			1,476
Impairment of real estate investments		708			0			0
TOTAL EXPENSES		166,808			157,409			141,617
Gain on involuntary conversion		1,660			0			0
Interest expense		(67,454	)		(66,845	)		(61,507	)
Interest income		539			599			2,085
Other income		355			314			665
Income from continuing operations before gain on sale of other investments		5,684			10,985			14,906
Gain on sale of other investments		0			0			42
Income from continuing operations		5,684			10,985			14,948
(Loss) income from discontinued operations		(1,099	)		(272	)		681
NET INCOME		4,585			10,713			15,629
Net income attributable to noncontrolling interests – Operating Partnership		(562	)		(2,227	)		(3,677	)
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities		(22	)		40			136
Net income attributable to Investors Real Estate Trust		4,001			8,526			12,088
Dividends to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,629		$	6,154		$	9,716
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.04		$	.11		$	.17
(Losses) earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		(.01	)		.00			.01
NET INCOME PER COMMON SHARE – BASIC & DILUTED	$	.03		$	.11		$	.18

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2010 Annual Report F-4

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

for the years ended April 30, 2010, 2009, and 2008

(in thousands)
	NUMBER OF PREFERRED SHARES		PREFERRED SHARES		NUMBER OF COMMON SHARES			COMMON SHARES			ACCUMULATED DISTRIBUTIONS  IN EXCESS OF  NET INCOME			ACCUMULATED OTHER  COMPREHENSIVE  (LOSS)			NONCONTROLLING  INTERESTS			TOTAL EQUITY
BALANCE APRIL 30, 2007		1,150	$	27,317		48,570		$	354,336		$	(96,827	)	$	(16	)	$	168,554		$	453,364
Comprehensive Income
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests												12,088						3,506			15,594
Unrealized gain for the period on securities available-for-sale															16						16
Total comprehensive income																					15,610
Distributions - common shares												(35,387	)					(13,503	)		(48,890	)
Distributions - preferred shares												(2,372	)								(2,372	)
Distribution reinvestment plan						1,177			11,274												11,274
Shares issued						6,934			66,679												66,679
Partnership units issued																		22,931			22,931
Redemption of units for common shares						1,052			7,753									(7,753	)		0
Adjustments to redeemable noncontrolling interests									(773	)											(773	)
Fractional shares repurchased						(1	)		(14	)											(14	)
Other																		(178	)		(178	)
BALANCE APRIL 30, 2008		1,150	$	27,317		57,732		$	439,255		$	(122,498	)	$	0		$	173,557		$	517,631
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests												8,526						2,134			10,660
Distributions - common shares												(39,612	)					(14,383	)		(53,995	)
Distributions - preferred shares												(2,372	)								(2,372	)
Distribution reinvestment plan						1,186			11,385												11,385
Shares issued						641			5,978												5,978
Partnership units issued																		3,730			3,730
Redemption of units for common shares						746			5,034									(5,034	)		0
Adjustments to redeemable noncontrolling interests									6												6
Fractional shares repurchased						(1	)		(10	)											(10	)
Other																		394			394
BALANCE APRIL 30, 2009		1,150	$	27,317		60,304		$	461,648		$	(155,956	)	$	0		$	160,398		$	493,407
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests												4,001						524			4,525
Distributions - common shares												(47,085	)					(14,261	)		(61,346	)
Distributions - preferred shares												(2,372	)								(2,372	)
Distribution reinvestment plan						1,240			10,534												10,534
Shares issued						13,555			108,421												108,421
Partnership units issued																		3,897			3,897
Redemption of units for common shares						707			3,755									(3,755	)		0
Adjustments to redeemable noncontrolling interests									(192	)											(192	)
Fractional shares repurchased						(1	)		(11	)											(11	)
Other									(537	)								(1,211	)		(1,748	)
BALANCE APRIL 30, 2010		1,150	$	27,317		75,805		$	583,618		$	(201,412	)	$	0		$	145,592		$	555,115

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2010 Annual Report F-5

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended April 30, 2010, 2009, and 2008

	(in thousands)
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	4,585		$	10,713		$	15,629
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		61,184			57,832			52,423
Gain on sale of real estate, land and other investments		(68	)		(54	)		(556	)
Gain on involuntary conversion		(1,660	)		0			0
Impairment of real estate investments		1,678			338			0
Donation of real estate investments		450			0			0
Bad debt expense		1,399			2,472			1,060
Changes in other assets and liabilities:
Increase in receivable arising from straight-lining of rents		(1,443	)		(2,403	)		(1,921	)
Increase in accounts receivable		(3,371	)		(603	)		(1,754	)
(Increase) decrease in prepaid and other assets		(138	)		(702	)		219
(Increase) decrease in tax, insurance and other escrow		(2,040	)		1,381			(1,420	)
Increase in deferred charges and leasing costs		(4,731	)		(5,686	)		(5,468	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		5,567			(3,153	)		3,667
Net cash provided by operating activities		61,412			60,135			61,879
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of marketable securities - available-for-sale		0			0			1,740
Net (payments) proceeds of real estate deposits		(428	)		1,291			(644	)
Principal proceeds on mortgage loans receivable		2			389			25
Investment in mortgage loans receivable		0			0			(167	)
Purchase of marketable securities - available-for-sale		0			0			(54	)
Proceeds from sale of real estate - discontined operations		103			68			1,361
Proceeds from sale of real estate and other investments		40			0			13
Insurance proceeds received		1,395			2,962			837
Payments for acquisitions and improvements of real estate investments		(80,069	)		(59,077	)		(148,364	)
Net cash used by investing activities		(78,957	)		(54,367	)		(145,253	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable		166,490			73,530			111,684
Principal payments on mortgages payable		(180,482	)		(67,230	)		(45,759	)
Principal payments on revolving lines of credit and other debt		(15,567	)		(14,073	)		(73	)
Proceeds from revolving lines of credit and other debt		15,500			20,500			0
Proceeds from sale of common shares, net of issue costs		108,271			5,978			66,679
Net (payments) proceeds from noncontrolling partner – consolidated real estate entities		(475	)		717			0
Repurchase of fractional shares and partnership units		(11	)		(10	)		(14	)
Distributions paid to common shareholders, net of reinvestment of $9,762, $10,603 and $10,518, respectively		(37,323	)		(29,009	)		(24,869	)
Distributions paid to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership, net reinvestment of $772, $782 and $756, respectively		(13,489	)		(13,601	)		(12,747	)
Distributions paid to noncontrolling interests – consolidated real estate entities		(1,273	)		(165	)		(179	)
Distributions paid to redeemable noncontrolling interests-consolidated real estate entities		(177	)		(112	)		0
Redemption of partnership units and investment certificates		0			(158	)		(11	)
Net cash provided (used) by financing activities		39,092			(26,005	)		92,339
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		21,547			(20,237	)		8,965
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		33,244			53,481			44,516
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	54,791		$	33,244		$	53,481

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2010 Annual Report F-6

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

for the years ended April 30, 2010, 2009, and 2008

	(in thousands)
	2010			2009			2008
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distribution reinvestment plan	$	9,762		$	10,603		$	10,518
Operating partnership distribution reinvestment plan		772			782			756
Real estate investment acquired through assumption of indebtedness and accrued costs		2,569			0			46,794
Assets acquired through the issuance of operating partnership units		3,897			3,730			22,931
Operating partnership units converted to shares		3,755			5,034			7,753
Adjustments to accounts payable included within real estate investments		324			(90	)		1,051
Adjustments to redeemable noncontrolling interests		(192	)		6			(773	)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest on mortgages	$	67,234		$	67,947		$	62,110
Interest other		682			421			100
	$	67,916		$	68,368		$	62,210

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

2010 Annual Report F-7

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2010, 2009, and 2008

NOTE 1 • ORGANIZATION

Investors Real Estate Trust (“IRET” or the “Company”) is a self-advised real estate investment trust engaged in acquiring, owning and leasing multi-family and commercial real estate. IRET has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. REITs are subject to a number of organizational and operational requirements, including a requirement to distribute 90% of ordinary taxable income to shareholders, and, generally, are not subject to federal income tax on net income. IRET’s multi-family residential properties and commercial properties are located mainly in the states of North Dakota and Minnesota, but also in the states of Colorado, Idaho, Iowa, Kansas, Montana, Missouri, Nebraska, South Dakota, Texas, Michiga n, Wisconsin and Wyoming. As of April 30, 2010, IRET owned 78 multi-family residential properties with approximately 9,691 apartment units and 173 commercial properties, consisting of commercial office, commercial medical, commercial industrial and commercial retail properties, totaling approximately 12.0 million net rentable square feet. IRET conducts a majority of its business activities through its consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other subsidiary entities.

All references to IRET or the Company refer to Investors Real Estate Trust and its consolidated subsidiaries.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of IRET and all subsidiaries in which it maintains a controlling interest. All intercompany balances and transactions are eliminated in consolidation. The Company’s fiscal year ends April 30th.

The accompanying consolidated financial statements include the accounts of IRET and its general partnership interest in the Operating Partnership. The Company’s interest in the Operating Partnership was 78.7% and 74.3% as of April 30, 2010 and 2009, which includes 100% of the general partnership interest. The limited partners have a redemption option that they may exercise. Upon exercise of the redemption option by the limited partners, IRET has the option of redeeming the limited partners’ interests (“Units”) for IRET common shares of beneficial interest, on a one-for-one basis, or for cash payment to the unitholder. The redemption generally may be exercised by the limited partners at any time after the first anniversary of the date of the acquisition of the Units (provided, however, that not more than two redempt ions by a limited partner may occur during each calendar year, and each limited partner may not exercise the redemption for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for all of the Units held by such limited partner). Some limited partners have contractually agreed to a holding period of greater than one year.

The consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into IRET’s other operations with noncontrolling interests reflecting the noncontrolling partners’ share of ownership and income and expenses.

RECENT ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2009, the Financial Accounting Standards Board (“FASB”) established the Accounting Standards Codification (“ASC”) as the primary source of authoritative generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied to nongovernmental entities. Although the establishment of the ASC did not change current GAAP, it did change the way we refer to GAAP throughout this document to reflect the updated referencing convention; we have omitted all references to the prior detailed numerical referencing system previously used by the FASB to identify FASB statements, staff positions, abstracts and accounting statements of position.

Effective May 1, 2009, the Company adopted FASB amended guidance that characterized ownership interests in a subsidiary that are held by owners other than the parent as noncontrolling interests (previously reported on the

2010 Annual Report F-8

NOTE 2 • continued

consolidated balance sheet as “minority interest”).  Under the amended guidance, noncontrolling interest represents the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent.  Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company’s equity.  Revenues, expenses and net income or loss attributable to both the Company and noncontrolling interests are reported on the consolidated statements of operations.  The Company will classify any securities that are redeemable for cash or other assets at the option of the holder, or not solely within the control of the Company, outside of permanent equity in the consolidated balance sheet.  The Company will make this determination based o n terms in the applicable agreements, specifically in relation to redemption provisions.  With respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company evaluates whether it controls the actions or events necessary to issue the maximum number of common shares that could be required to be delivered at the time of settlement of the contract to determine whether the noncontrolling interests are permanent equity.

The Company has concluded that for its noncontrolling interests that allow for redemption in either cash or Company shares (i.e., the limited partnership units of the Operating Partnership), all such provisions are solely within its control.  As a result of its evaluation, the Company has determined that all of these noncontrolling interests qualify as permanent equity.  As of April 30, 2010, the Operating Partnership’s noncontrolling interests have a redemption value of approximately $179.2 million (based on the Company’s closing common share price on the NASDAQ Global Select Market on that date of $8.73), which represents the amount that would be paid to the Operating Partnership’s outside noncontrolling limited partners.  The Company has one joint venture which allows the Company’s unaffiliated partner, at its election, to require the Company to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price.  The Company is not aware of any intent of the joint venture partner to exercise this option.  However, because the redemption of this interest is not solely within the control of the Company, the related noncontrolling interest is presented as “redeemable noncontrolling interest” in the mezzanine section of the Company’s consolidated balance sheets as of April 30, 2010 and 2009.

In December 2007, the FASB issued an update to its guidance on accounting for business combinations.  The amended guidance significantly changes the accounting for and reporting of business combination transactions in consolidated financial statements.  The amended guidance requires an acquiring entity to recognize acquired assets and liabilities assumed in a transaction at fair value as of the acquisition date, changes the disclosure requirements for business combination transactions and changes the accounting treatment for certain items, including contingent consideration agreements which are required to be recorded at acquisition date fair value and acquisition costs which are required to be expensed as incurred. The Company adopted this guidance on May 1, 2009.  The Company believes that such adoption cou ld materially impact its future financial results to the extent that it acquires significant amounts of real estate, as related acquisition costs will be expensed as incurred compared to the Company’s former practice of capitalizing such costs and amortizing them over the estimated useful life of the assets acquired.

In June 2008, the FASB issued guidance that states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share (“EPS”) pursuant to the two-class method. The amended guidance is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented shall be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of the amended guidance. Early application is not permitted. The Company currently has no unvested share-based payment awards outstanding, but it is possible th at in the future some may be granted under its 2008 Incentive Award Plan approved by shareholders in September 2008.  The Company’s adoption of this guidance on May 1, 2009 did not impact the Company’s EPS calculations.

In June 2009, the FASB issued new guidance that amends the existing guidance as follows: a) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity, identifying the primary beneficiary of a variable interest entity, b) to require ongoing reassessment of whether an enterprise is the primary beneficiary of a variable interest entity, rather than only when specific events occur, c) to eliminate the quantitative approach previously required for

2010 Annual Report F-9

NOTE 2 • continued

determining the primary beneficiary of a variable interest, d) to amend certain guidance for determining whether an entity is a variable interest entity, e) to add an additional reconsideration event when changes in facts and circumstances pertinent to a variable interest entity occur, f) to eliminate the exception for troubled debt restructuring regarding variable interest entity reconsideration, and g) to require advanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. The new guidance is effective for the first annual reporting period beginning after November 15, 2009. The Company does not expect the adoption of this guidance to have a material effect on the Company’s consolidated financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

REAL ESTATE INVESTMENTS

Real estate investments are recorded at cost less accumulated depreciation and an adjustment for impairment, if any. Acquisitions of real estate investments are recorded based upon preliminary allocations of the purchase price which are subject to adjustment as additional information is obtained, but in no case more than one year after the date of acquisition. The Company allocates the purchase price based on the relative fair values of the tangible and intangible assets of an acquired property (which includes the land, building, and personal property) which are determined by valuing the property as if it were vacant and to fair value of the intangible assets (which include in-place leases.) The as-if-vacant value is allocated to land, buildings, and personal property based on management’s determination of the relative fair values o f these assets. The estimated fair value of the property is the amount that would be recoverable upon the disposition of the property. Techniques used to estimate fair value include discounted cash flow analysis and reference to recent sales of comparables. A land value is assigned based on the purchase price if land is acquired separately or based on estimated fair value if acquired in a merger or in a single or portfolio acquisition.

Above-market and below-market in-place lease intangibles for acquired properties are fair-valued based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.

Other intangible assets acquired include amounts for in-place lease values that are based upon the Company’s evaluation of the specific characteristics of the leases. Factors considered in the fair value analysis include an estimate of carrying costs and foregone rental income during hypothetical expected lease-up periods, considering current market conditions, and costs to execute similar leases. The Company also considers information about each property obtained during its pre-acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible and intangible assets acquired.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The Company uses a 20-40 year estimated life for buildings and improvements and a 5-12 year estimated life for furniture, fixtures and equipment.

Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Renovations and improvements that improve and/or extend the useful life of the asset are capitalized and depreciated over their estimated useful life, generally five to ten years. Property sales or dispositions are recorded when title transfers and sufficient consideration has been received by the Company and the Company has no significant involvement with the property sold.

The Company periodically evaluates its long-lived assets, including its investments in real estate, for impairment indicators. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns. If

2010 Annual Report F-10

NOTE 2 • continued

indicators exist, the Company compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially fr om actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. During fiscal year 2010, the Company incurred a loss of $1.7 million due to impairment of three properties. The Company recorded a charge for impairment of approximately $818,000 on a commercial retail property in Ladysmith, Wisconsin, based upon receipt of a market offer to purchase and the Company’s probable intention to dispose of the property. The Company recorded a charge for impairment of approximately $152,000 on its former headquarters building in Minot, North Dakota, based upon receipt and acceptance of a market offer to purchase.  These two properties were subsequently sold and the related impairment charges for fiscal year 2010 are reported in discontinued operations.  See Note 12 for additional information. The Company also recorded an impairment charge of approximately $708,000 on a commercial retail property located in Kentwood, Michigan.  This p roperty’s tenant has vacated the premises but continues to pay rent under a lease agreement that will expire on October 29, 2010.  Broker representations and market data for this commercial retail property provided the basis for the impairment charge. During fiscal year 2009,  the Company incurred a loss of approximately $338,000 due to impairment of the property formerly used as IRET’s Minot headquarters. This property was subsequently sold and the related impairment charge for fiscal year 2009 is reported in discontinued operations.  See Note 12 for additional information. No impairment losses were recorded in fiscal year 2008.

REAL ESTATE HELD FOR SALE

Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale.

The application of current accounting principles that govern the classification of any of our properties as held-for-sale on the balance sheet requires management to make certain significant judgments. The Company makes a determination as to the point in time that it is probable that a sale will be consummated. It is not unusual for real estate sales contracts to allow potential buyers a period of time to evaluate the property prior to formal acceptance of the contract. In addition, certain other matters critical to the final sale, such as financing arrangements, often remain pending even upon contract acceptance. As a result, properties under contract may not close within the expected time period, or may not close at all. Due to these uncertainties, it is not likely that the Company can meet the criteria of the current accounting princip les governing the classification of properties as held-for-sale prior to a sale formally closing. Therefore, any properties categorized as held-for-sale represent only those properties that management has determined are probable to close within the requirements set forth in current accounting principles.

The Company reports, in discontinued operations, the results of operations of a property that has either been disposed of or is classified as held for sale and the related gains or losses.

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

Upon acquisition of real estate, the Company records the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill.  The Company amortizes identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease).  In the twelve months ended April 30, 2010 and 2009, respectively, the Company added approximately $7.5 million and $618,000 of new intangible assets and $20,000 and $54,000 of new intangible li abilities. The weighted average lives of the intangible assets and intangible liabilities acquired in the twelve months ended April 30, 2010 and 2009 are 17.4 years and 1.8 years, respectively.  Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the consolidated statements of operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate

2010 Annual Report F-11

NOTE 2 • continued

investments in the consolidated statements of operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value.

The Company’s identified intangible assets and intangible liabilities at April 30, 2010 and 2009 were as follows:

	(in thousands)
	April 30, 2010			April 30, 2009
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	90,271		$	97,060
Accumulated amortization		(39,571	)		(44,887	)
Net carrying amount	$	50,700		$	52,173
Indentified intangible liabilities (included in other liabilities):
Gross carrying amount	$	1,260		$	2,638
Accumulated amortization		(940	)		(2,122	)
Net carrying amount	$	320		$	516

The effect of amortization of acquired below-market leases and acquired above-market leases on rental income was approximately $(45,000) and $170,000 for the twelve months ended April 30, 2010 and 2009, respectively. The estimated annual amortization of acquired below-market leases, net of acquired above-market leases for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2011	$	59
2012		46
2013		28
2014		29
2015		12

Amortization of all other identified intangible assets (a component of depreciation/amortization related to real estate investments) was $8.7 million and $10.2 million for the twelve months ended April 30, 2010 and 2009, respectively. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2011	$	6,737
2012		4,731
2013		3,756
2014		3,351
2015		2,993

The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill.  The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill as of April 30, 2010 and 2009 was $1.4 million. The annual reviews of goodwill compared the fair value of the business units that have been assigned goodwill to their carrying value (investment cost less accumulated depreciation), with the results for these periods indicating no impairment. In fiscal year 2010 the Company disposed of two buildings of an apartment community that had goodwill assigned, and as result, approximately $4,000 of goodwill was derecognized.

2010 Annual Report F-12

NOTE 2 • continued

PROPERTY AND EQUIPMENT

Property and equipment consists of the equipment contained at IRET’s headquarters in Minot, North Dakota, a corporate office in Minneapolis, Minnesota, and seven additional property management offices in Minnesota, North Dakota, Nebraska, Kansas and Missouri. The balance sheet reflects these assets at cost, net of accumulated depreciation. As of April 30, 2010 and 2009, the cost was $2.3 million and $2.0 million, respectively. Accumulated depreciation was approximately $924,000 and $957,000 as of April 30, 2010 and 2009, respectively.

MORTGAGE LOANS RECEIVABLE

Mortgage loans receivable (which include contracts for deed) are stated at the outstanding principal balance, net of an allowance for uncollectibility. Interest income is accrued and reflected in the balance sheet. Non-performing loans are recognized as impaired. The Company evaluates the collectibility of both interest and principal of each of its loans, if circumstances warrant, to determine whether the loan is impaired. A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. An allowance is recorded to reduce impaired loans to their estimated fair value. Interest on impaired loans is recognized on a cash basis.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all cash and highly liquid investments purchased with maturities of three months or less. Cash and cash equivalents consist of the Company’s bank deposits and short-term investment certificates acquired subject to repurchase agreements, and the Company’s deposits in a money market mutual fund.

COMPENSATING BALANCES

The Company maintains compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability, as follows: Dacotah Bank, Minot, North Dakota, a deposit of $100,000; United Community Bank, Minot, North Dakota, deposit of $370,000; Commerce Bank, A Minnesota Banking Corporation, deposit of $250,000, and First International Bank, Watford City, North Dakota, deposit of $3.2 million.

MARKETABLE SECURITIES

IRET’s investments in marketable securities are classified as “available-for-sale.” The securities classified as “available-for-sale” represent investments in debt and equity securities which the Company intends to hold for an indefinite period of time. These securities are valued at current fair value with the resulting unrealized gains and losses excluded from earnings and reported as a separate component of equity until realized. GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs tha t are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.  At April 30, 2010, our marketable securities are carried at fair value measured on a recurring basis. Fair values are determined through the use of unadjusted quoted prices in active markets, which are inputs that are classified as Level 1 in the valuation hierarchy. Gains or losses on these securities are computed based on the amortized cost of the specific securities when sold.

All securities with unrealized losses are subjected to the Company’s process for identifying other-than-temporary impairments. The Company records a charge to earnings to write down to fair value securities that it deems to be other-than-temporarily impaired in the period the securities are deemed to be other-than-temporarily impaired. The assessment of whether such impairment has occurred is based on management’s case-by-case evaluation of theunderlying reasons for the decline in fair value. Management considers a wide range of factors in making this assessment. Those factors include, but are not limited to, the length and severity of the decline in value and changes in the credit quality of the issuer or underlying assets. The Company does not engage in trading ac tivities.

2010 Annual Report F-13

NOTE 2 • continued

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Management evaluates the appropriate amount of the allowance for doubtful accounts by assessing the recoverability of individual real estate mortgage loans and rent receivables, through a comparison of their carrying amount with their estimated realizable value. Management considers tenant financial condition, credit history and current economic conditions in establishing these allowances. Receivable balances are written off when deemed uncollectible. Recoveries of receivables previously written off, if any, are recorded when received. A summary of the changes in the allowance for doubtful accounts for fiscal years ended April 30, 2010, 2009 and 2008 is as follows:

	(in thousands)
	2010			2009			2008
Balance at beginning of year	$	1,131		$	1,264		$	910
Provision		1,399			2,472			1,060
Write-off		(1,358	)		(2,605	)		(706	)
Balance at close of year	$	1,172		$	1,131		$	1,264

TAX, INSURANCE, AND OTHER ESCROW

Tax, insurance, and other escrow includes funds deposited with a lender for payment of real estate tax and insurance, and reserves for funds to be used for replacement of structural elements and mechanical equipment of certain projects. The funds are under the control of the lender. Disbursements are made after supplying written documentation to the lender.

REAL ESTATE DEPOSITS

Real estate deposits include funds held by escrow agents to be applied toward the purchase of real estate or the payment of loan costs associated with loan placement or refinancing.

DEFERRED LEASING AND LOAN ACQUISITION COSTS

Costs and commissions incurred in obtaining tenant leases are amortized on the straight-line method over the terms of the related leases. Costs incurred in obtaining long-term financing are amortized to interest expense over the life of the loan using the straight-line method, which approximates the effective interest method.

NONCONTROLLING INTERESTS

Interests in the Operating Partnership held by limited partners are represented by Units. The Operating Partnership’s income is allocated to holders of Units based upon the ratio of their holdings to the total Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the Operating Partnership agreement.

IRET reflects noncontrolling interests in Mendota Properties LLC, IRET–BD LLC, IRET-Candlelight LLC, IRET-Golden Jack LLC, and IRET-1715 YDR LLC on the balance sheet for the portion of properties consolidated by IRET that are not wholly owned by IRET. The earnings or losses from these properties attributable to the noncontrolling interests are reflected as net income attributable to noncontrolling interests–consolidated real estate entities in the consolidated statements of operations.

Noncontrolling interests are reported as a separate component of equity. Amounts attributable to the parent for income from continuing operations and discontinued operations are as follows:

2010 Annual Report F-14

NOTE 2 • continued

	For Years Ended April 30,
	(in thousands)
Amounts Attributable to Investors Real Estate Trust	2010				2009				2008
Income from continuing operations – Investors Real Estate Trust		$	4,854			$	8,728			$	11,591
(Loss) income from discontinued operations – Investors Real Estate Trust			(853	)			(202	)			497
Net income attributable to Investors Real Estate Trust		$	4,001			$	8,526			$	12,088

INCOME TAXES

IRET operates in a manner intended to enable it to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended.  Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to shareholders. For the fiscal years ended April 30, 2010, 2009 and 2008, the Company distributed in excess of 90% of its taxable income and realized capital gains from property dispositions within the prescribed time limits; accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subjec t to federal income tax on its taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years.  Even as a REIT, the Company may be subject to certain state and local income and property taxes, and to federal income and excise taxes on undistributed taxable income.  In general, however, if the Company qualifies as a REIT, no provisions for federal income taxes are necessary except for taxes on undistributed REIT taxable income and taxes on the income generated by a taxable REIT subsidiary (TRS).

The Company has one TRS, acquired during the fourth quarter of fiscal year 2010, which is subject to corporate federal and state income taxes on its taxable income at regular statutory rates.  For fiscal year 2010, the Company’s TRS had a small net operating loss.  There were no income tax provisions or material deferred income tax items for our TRS for the fiscal year ended April 30, 2010.  The Company’s TRS is the tenant in the Company’s Wyoming assisted living facilities.

The Company adopted the provisions of the authoritative guidance for accounting for uncertainty in income taxes on May 1, 2007.  This guidance addresses the recognition and measurement of assets and liabilities associated with tax positions taken or expected to be taken in a tax return.  As a result of the adoption of the authoritative guidance, the Company reviewed its potential uncertain tax positions and made no adjustments to its existing financial and tax accounting treatment.

IRET conducts its business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through its Operating Partnership. UPREIT status allows IRET to accept the contribution of real estate in exchange for Units. Generally, such a contribution to a limited partnership allows for the deferral of gain by an owner of appreciated real estate.

REVENUE RECOGNITION

Residential rental properties are leased under operating leases with terms generally of one year or less. Commercial properties are leased under operating leases to tenants for various terms generally exceeding one year. Lease terms often include renewal options. Rental revenue is recognized on the straight-line basis, which averages minimum required rents over the terms of the leases. Rents recognized in advance of collection are reflected as receivable arising from straight-lining of rents, net of allowance for doubtful accounts.  Rent concessions, including free rent, are amortized on a straight-line basis over the terms of the related leases.

Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenditures are incurred. IRET receives payments for these reimbursements from substantially all of its multi-tenant commercial tenants throughout the year.

2010 Annual Report F-15

NOTE 2 • continued

A number of the commercial leases provide for a base rent plus a percentage rent based on gross sales in excess of a stipulated amount. These percentage rents are recorded once the required sales level is achieved.

Interest on mortgage loans receivable is recognized in income as it accrues during the period the loan is outstanding. In the case of non-performing loans, income is recognized as discussed above in the Mortgage Loans Receivable section of this Note 2.

NET INCOME PER SHARE

Basic net income per share is computed as net income available to common shareholders for continuing and discontinued operations divided by the weighted average number of common shares outstanding for the period. The Company has no potentially dilutive financial interests; the potential exchange of Units for common shares will have no effect on net income per share because Unitholders and common shareholders effectively share equally in the net income of the Operating Partnership.

NOTE 3 • CREDIT RISK

The Company is potentially exposed to credit risk for cash deposited with FDIC-insured financial institutions in accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

IRET has entered into a cash management arrangement with First Western Bank, the “Bank” with respect to deposit accounts that exceed FDIC Insurance coverage. On a daily basis, account balances are swept into a repurchase account.  The Bank pledges fractional interests in US Government Securities owned by the Bank at an amount equal to the excess over the uncollected balance in the repurchase account. The amounts deposited by IRET pursuant to the repurchase agreement are not insured by FDIC. At April 30, 2010 and 2009, these amounts totaled $25.2 million and $19.1 million, respectively.

NOTE 4 • PROPERTY OWNED

Property, consisting principally of real estate, is stated at cost less accumulated depreciation and totaled $1.5 billion as of April 30, 2010, and April 30, 2009.

Construction period interest of approximately $19,000, $912,0000, and $505,000 has been capitalized for the years ended April 30, 2010, 2009, and 2008, respectively.

The future minimum lease receipts to be received under non-cancellable leases for commercial properties as of April 30, 2010, assuming that no options to renew or buy out the lease are exercised, are as follows:

Year Ended April 30,	(in thousands)
2011	$	115,837
2012		103,527
2013		91,464
2014		79,490
2015		64,830
Thereafter		270,014
	$	725,162

During fiscal year 2010, the Company incurred a loss of $1.7 million due to impairment of three properties. Two of these properties were subsequently sold and the related impairment charges of $970,000 are reported in discontinued operations for fiscal year 2010.  See Note 12 for additional information. For the year ended April 30, 2009, the Company incurred a loss of approximately $338,000 due to impairment of the property formerly used as IRET’s Minot headquarters. This property was subsequently sold and the related impairment charge for fiscal year 2009 is reported in discontinued operations.  See Note 12 for additional information. During fiscal year 2008, the Company incurred no losses due to impairment.

During fiscal year 2010, the Company reached an agreement for final settlement of insurance claims related to a fiscal year 2009 fire loss and realized a $1.7 million gain from involuntary conversion, as the total proceeds of $2.4 million exceeded our estimated basis in the assets requiring replacement.

2010 Annual Report F-16

NOTE 5 • MORTGAGE LOANS RECEIVABLE - NET

The mortgage loans receivable consists of one contract for deed that is collateralized by real estate. The interest rate on this loan is 7.0% and it matures in fiscal 2013. Future principal payments due under this mortgage loan as of April 30, 2010, are as follows:

Year Ended April 30,	(in thousands)
2011	$	2
2012		2
2013		157
		161
Less allowance for doubtful accounts		(3	)
	$	158

There were no non-performing mortgage loans receivable as of April 30, 2010 and 2009.

NOTE 6 • MARKETABLE SECURITIES

The amortized cost and fair value of marketable securities available-for-sale at April 30, 2010 and 2009 are as follows.

	(in thousands)
	Amortized Cost			Gross Unrealized  Gains			Gross Unrealized  Losses			Fair Value
Bank certificates of deposit		$	420		$	0		$	0		$	420
		$	420		$	0		$	0		$	420

As of April 30, 2010, $370,000 of the investment in bank certificates of deposit will mature in less than one year, while the remaining $50,000 will mature in May 2012.

There were no realized gains or losses on sales of securities available-for-sale for the fiscal years ended April 30, 2010 and 2009. There was a realized gain on sale of securities available-for-sale of $42,000 for the fiscal year ended April 30, 2008. There were no other-than-temporary impairment losses incurred on the securities available-for-sale for the fiscal years ended April 30, 2010, 2009 and 2008.

NOTE 7 • REVOLVING LINES OF CREDIT

IRET has lines of credit with four financial institutions as of April 30, 2010. Interest payments on outstanding borrowings are due monthly. These credit facilities are summarized in the following table:

	(in thousands)
Financial Institution	Amount  Available		Amount  Outstanding as of April 30,  2010			Amount  Outstanding as of April  30, 2009			Applicable  Interest Rate as of April 30, 2010			Maturity  Date	Weighted  Average Int. Rate on Borrowings during fiscal year 2010
Lines of Credit
(1) United Community Bank	$	1,117		$	1,050		$	0		5.75	%	08/31/10		5.75	%
(2) First Western Bank & Trust		12,000			0			0		5.25	%	12/10/11		5.25	%
(3) First International Bank & Trust		14,000			4,000			4,000		6.20	%	12/21/10		6.20	%
(4) Dacotah Bank		1,500			1,500			1,500		4.50	%	11/1/10		4.06	%
Total	$	28,617		$	6,550		$	5,500

Borrowings under the lines of credit bear interest based on the following: (1) 5.75%, (2) 175 basis points below the Wall Street Journal Prime Rate with a floor of 5.25% and a ceiling of 8.25% and (3) 50 basis points above the Wall Street Journal Prime Rate with a floor of 6.20%.  In addition to these three lines of credit, the Company also has a $5.0 million line of credit maturing in November 2010 with Dacotah Bank in Minot, North Dakota. Of the $4.9

2010 Annual Report F-17

NOTE 7 • continued

million drawn on this line, the Company includes $3.4 million in mortgages payable on the Company’s balance sheet, as secured by six small apartment properties owned by the Company, with the remaining $1.5 million included in revolving lines of credit. Borrowings under the Dacotah Bank line of credit bear interest at 125 basis points above the Wall Street Journal Prime Rate. The Company is required to maintain an outstanding balance of $4.0 million under the First International Bank line of credit.  There are no non-usage charges under the Company’s other lines of credit.

NOTE 8 • MORTGAGES PAYABLE

The Company’s mortgages payable are collateralized by substantially all of its properties owned. The majority of the Company’s mortgages payable are secured by individual properties or groups of properties, and are non-recourse to the Company, other than for standard carve-out obligations such as fraud, waste, failure to insure, environmental conditions and failure to pay real estate taxes. Interest rates on mortgages payable range from 3.04% to 9.75%, and the mortgages have varying maturity dates from August 1, 2010, through May 31, 2035.

Of the mortgages payable, the balance of fixed rate mortgages totaled $1.0 billion at April 30, 2010 and $1.1 billion at April 30, 2009, and the balances of variable rate mortgages totaled $29.0 million and $9.6 million as of April 30, 2010, and 2009, respectively. The Company does not utilize derivative financial instruments to mitigate its exposure to changes in market interest rates. Most of the fixed rate mortgages have substantial pre-payment penalties. As of April 30, 2010, the weighted average rate of interest on the Company’s mortgage debt was 6.17%, compared to 6.30% on April 30, 2009. The aggregate amount of required future principal payments on mortgages payable as of April 30, 2010, is as follows:

Year Ended April 30,	(in thousands)
2011	$	107,314
2012		117,615
2013		48,109
2014		61,752
2015		91,955
Thereafter		630,874
Total payments	$	1,057,619

NOTE 9 • TRANSACTIONS WITH RELATED PARTIES

PROPERTY ACQUISITION

During fiscal year 2008, the Company acquired a two-story commercial office building consisting of approximately 65,000 rentable square feet, located in Fenton, Missouri, for a purchase price of $7.0 million.  The Company purchased the property from entities controlled by W. David Scott, a trustee of the Company.  In accordance with the requirements of the Company’s Declaration of Trust, the transaction was approved by a majority of the trustees and by a majority of the independent trustees not otherwise interested in the transaction.

BANKING SERVICES

The Company maintains an unsecured line of credit with First International Bank and Trust, Watford City, North Dakota (First International). Stephen L. Stenehjem, a member of the Company’s Board of Trustees and Audit Committee, is the President and Chief Executive Officer of First International, and the bank is owned by Mr. Stenehjem and members of his family. During fiscal year 2010, the Company paid a $10,000 renewal fee in connection with the First International line of credit. During fiscal years 2010, 2009 and 2008, respectively, the Company’s interest charges were approximately $238,000, $91,000, and $0, for borrowings under the First International line of credit.  During fiscal year 20 07, the Company entered into two mortgage loans with First International in the amounts of $450,000 and $2.4 million. The Company paid interest on the loans of approximately $32,000 and $168,000, respectively, during fiscal year 2010, and interest of approximately $33,000 and $171,000, respectively, during fiscal year 2009, and interest of approximately $34,000 and $174,000, respectively, during fiscal year 2008.  During fiscal year 2010, the Company entered into a mortgage loan with First International in the amount of $36.5 million, paying a total of approximately $37,000 in origination fees and loan closing costs, and

2010 Annual Report F-18

NOTE 9 • continued

paying interest on the loan of approximately $552,000 in fiscal year 2010. This loan was repaid in the fourth quarter of fiscal year 2010.  The Company also maintains a number of checking accounts with First International.  In each of fiscal years 2010, 2009 and 2008, respectively, IRET paid less than $500 in total in various wire transfer and other fees charged on these checking accounts.

NOTE 10 • ACQUISITIONS AND DISPOSITIONS IN FISCAL YEARS 2010 AND 2009

PROPERTY ACQUISITIONS

IRET Properties paid approximately $55.4 million for real estate properties added to its portfolio during fiscal year 2010, compared to $33.8 million in fiscal year 2009. Of the $55.4 million paid for real estate properties added to the Company’s portfolio in fiscal year 2010, approximately $3.9 million consisted of the value of limited partnership units of the Operating Partnership and approximately $2.6 million consisted of the assumption of mortgage debt, with the remainder paid in cash. The Company expensed approximately $230,000 of transaction costs related to the acquisitions in fiscal year 2010. Of the $33.8 million paid in fiscal year 2009, approximately $3.7 million was paid in the form of limited partnership units of the Operating Partnership, with the remainder paid in cash.  No transaction costs were expensed i n fiscal year 2009. The fiscal year 2010 and 2009 additions are detailed below.

Fiscal 2010 (May 1, 2009 to April 30, 2010)

	(in thousands)
Acquisitions	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
16-unit Northern Valley Apartments - Rochester, MN	$	110	$	610	$	0	$	720
48-unit Crown Apartments - Rochester, MN		261		3,289		0		3,550
		371		3,899		0		4,270
Commercial Office
15,000 sq. ft. Minot 2505 16th Street SW - Minot, ND		372		1,724		304		2,400
		372		1,724		304		2,400
Commercial Medical
65,160 sq. ft. Casper 1930 E. 12th Street (Park Place) - Casper, WY		439		5,780		1,120		7,339
35,629 sq. ft. Casper 3955 E. 12th Street (Meadow Wind) - Casper, WY		338		5,881		1,120		7,339
47,509 sq. ft. Cheyenne 4010 N. College Drive (Aspen Wind) - Cheyenne, WY		628		9,869		1,960		12,457
54,072 sq. ft. Cheyenne 4606 N. College Drive (Sierra Hills) - Cheyenne, WY		695		7,455		1,410		9,560
35,629 sq. ft. Laramie 1072 N. 22nd Street (Spring Wind) - Laramie, WY		406		6,634		1,265		8,305
		2,506		35,619		6,875		45,000
Commercial Industrial
42,180 sq. ft. Clive 2075 NW 94th Street - Clive, IA		408		2,610		332		3,350
		408		2,610		332		3,350
Unimproved Land
Fargo 1320 45th Street N. - Fargo, ND		395		0		0		395
		395		0		0		395
Total Property Acquisitions	$	4,052	$	43,852	$	7,511	$	55,415

2010 Annual Report F-19

NOTE 10 • continued

Fiscal 2009 (May 1, 2008 to April 30, 2009)

	(in thousands)
Acquisitions and Development Projects Placed in Service	Land		Building		Intangible Assets		Acquisition Cost
Multi-Family Residential
33-unit Minot Westridge Apartments – Minot, ND	$	67	$	1,887	$	0	$	1,954
12-unit Minot Fairmont Apartments – Minot, ND		28		337		0		365
4-unit Minot 4th Street Apartments – Minot, ND		15		74		0		89
3-unit Minot 11th Street Apartments – Minot, ND		11		53		0		64
36-unit Evergreen Apartments – Isanti, MN		380		2,720		0		3,100
10-unit 401 S. Main Apartments – Minot, ND1		0		905		0		905
71-unit IRET Corporate Plaza Apartments – Minot, ND2		0		10,824		0		10,824
		501		16,800		0		17,301
Commercial Office
22,500 sq. ft. Bismarck 715 E. Bdwy – Bismarck, ND		389		1,267		255		1,911
50,360 sq. ft. IRET Corporate Plaza – Minot, ND2		0		3,896		0		3,896
		389		5,163		255		5,807
Commercial Medical
56,239 sq. ft. 2828 Chicago Avenue – Minneapolis, MN3		0		5,052		0		5,052
31,643 sq. ft. Southdale Medical Expansion (6545 France) –  Edina, MN4		0		779		0		779
		0		5,831		0		5,831
Commercial Industrial
69,984 sq. ft. Minnetonka 13600 Cty Rd 62 – Minnetonka, MN		809		2,881		310		4,000
		809		2,881		310		4,000
Unimproved Land
Bismarck 2130 S. 12th Street – Bismarck, ND		576		0		0		576
Bismarck 700 E. Main – Bismarck, ND		314		0		0		314
		890		0		0		890
Total Property Acquisitions	$	2,589	$	30,675	$	565	$	33,829

(1)   Development property placed in service November 10, 2008. Approximately $145,000 of this cost was incurred in the three months ended April 30, 2009.  Additional costs incurred in fiscal year 2008 totaled approximately $14,000 for a total project cost at April 30, 2009 of approximately $919,000.

(2)   Development property placed in service January 19, 2009.  Approximately $1.8 million of the residential cost and $563,000 of the commercial office cost was incurred in the three months ended April 30, 2009. Additional costs incurred in fiscal years 2008 and 2007 totaled $8.6 million for a total project cost at April 30, 2009 of $23.3 million.

(3)   Development property placed in service September 16, 2008. Approximately $800,000 of this cost was incurred in the three months ended January 31, 2009. Additional costs incurred in fiscal years 2008 and 2007 totaled $7.8 million for a total project cost at April 30, 2009 of $12.9 million.

(4)   Development property placed in service September 17, 2008. Approximately $364,000 of this cost was incurred in the three months ended January 31, 2009. Additional costs incurred in fiscal year 2008 totaled $5.4 million for a total project cost at April 30, 2009 of $6.2 million.

PROPERTY DISPOSITIONS

During fiscal year 2010, the Company disposed of two small properties for an aggregate sale price of approximately $560,000, compared to one small property sold for approximately $70,000 during fiscal year 2009.  The fiscal year 2010 and 2009 dispositions are detailed below.

2010 Annual Report F-20

NOTE 10 • continued

Fiscal 2010 (May 1, 2009 to April 30, 2010)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
42 - unit Sweetwater Properties – Grafton, ND	$	450	$	382	$	68
Commercial Office
10,126 sq ft. 12 South Main – Minot, ND		110		110		0
Total Property Dispositions	$	560	$	492	$	68

Fiscal 2009 (May 1, 2008 to April 30, 2009)

	(in thousands)
Dispositions	Sales Price		Book Value and Sales Cost		Gain/(Loss)
Multi-Family Residential
1 - unit 408 1st Street SE – Minot, ND	$	70	$	16	$	54
Total Property Dispositions	$	70	$	16	$	54

NOTE 11 • OPERATING SEGMENTS

IRET reports its results in five reportable segments: multi-family residential, commercial office, commercial medical (including senior housing), commercial industrial and commercial retail properties.  The Company’s reportable segments are aggregations of similar properties.  The accounting policies of each of these segments are the same as those described in Note 2.

Segment information in this report is presented based on net operating income, which we define as total real estate revenues less real estate expenses and real estate taxes (excluding depreciation and amortization related to real estate investments and impairment of real estate investments).  The following tables present real estate revenues and net operating income for the fiscal years ended April 30, 2010, 2009 and 2008 from our five reportable segments, and reconcile net operating income of reportable segments to income from continuing operations before gain on sale of other investments as reported. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements.

	(in thousands)
Year Ended April 30, 2010	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	71,150	$	82,079	$	57,439	$	13,304	$	13,420	$	237,392
Real estate expenses			34,884		36,833		17,904		4,199		4,818		98,638
Gain on involuntary conversion			1,660		0		0		0		0		1,660
Net operating income		$	37,926	$	45,246	$	39,535	$	9,105	$	8,602		140,414
Depreciation/amortization													(58,731	)
Administrative, advisory and trustee fees													(6,218	)
Other expenses													(2,513	)
Impairment of real estate investment													(708	)
Interest													(67,454	)
Interest and other income													894
Income from continuing operations before gain on sale of other investments												$	5,684

2010 Annual Report F-21

NOTE 11 • continued

	(in thousands)
Year Ended April 30, 2009	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	71,219	$	83,446	$	52,547	$	12,711	$	14,403	$	234,326
Real estate expenses			33,423		37,644		16,046		3,222		5,065		95,400
Net operating income		$	37,796	$	45,802	$	36,501	$	9,489	$	9,338		138,926
Depreciation/amortization													(55,687	)
Administrative, advisory and trustee fees													(4,882	)
Other expenses													(1,440	)
Interest													(66,845	)
Interest and other income													913
Income from continuing operations before gain on sale of other investments												$	10,985

	(in thousands)
Year Ended April 30, 2008	Multi-Family  Residential			Commercial Office		Commercial Medical		Commercial Industrial		Commercial Retail		Total
Real estate revenue		$	67,105	$	84,042	$	38,409	$	11,691	$	14,033	$	215,280
Real estate expenses			31,827		36,206		9,756		2,529		4,266		84,584
Net operating income		$	35,278	$	47,836	$	28,653	$	9,162	$	9,767		130,696
Depreciation/amortization													(50,486	)
Administrative, advisory and trustee fees													(5,203	)
Other expenses													(1,344	)
Interest													(61,507	)
Interest and other income													2,750
Income from continuing operations before gain on sale of other investments												$	14,906

Segment Assets and Accumulated Depreciation

	(in thousands)
As of April 30, 2010	Multi-Family  Residential				Commercial Office			Commercial Medical			Commercial Industrial			Commercial Retail			Total
Segment assets
Property owned		$	556,867		$	582,943		$	430,229		$	113,249		$	117,231		$	1,800,519
Less accumulated depreciation			(129,922	)		(88,656	)		(53,641	)		(15,481	)		(20,926	)		(308,626	)
Total property owned		$	426,945		$	494,287		$	376,588		$	97,768		$	96,305		$	1,491,893
Cash and cash equivalents																		54,791
Marketable securities – available-for-sale																		420
Receivables and other assets																		104,830
Development in progress																		2,831
Unimproved land																		6,007
Mortgage loans receivable, net of allowance																		158
Total Assets																	$	1,660,930

2010 Annual Report F-22

NOTE 11 • continued

	(in thousands)
As of April 30, 2009	Multi-Family  Residential				Commercial Office			Commercial Medical			Commercial Industrial			Commercial Retail			Total
Segment assets
Property owned		$	542,547		$	571,565		$	388,219		$	108,103		$	119,151		$	1,729,585
Less accumulated depreciation			(115,729	)		(72,960	)		(42,345	)		(12,847	)		(18,990	)		(262,871	)
Total property owned		$	426,818		$	498,605		$	345,874		$	95,256		$	100,161		$	1,466,714
Cash and cash equivalents																		33,244
Marketable securities – available-for-sale																		420
Receivables and other assets																		98,852
Unimproved land																		5,701
Mortgage loans receivable, net of allowance																		160
Total Assets																	$	1,605,091

NOTE 12 • DISCONTINUED OPERATIONS

The Company reports in discontinued operations the results of operations of a property that has either been disposed of or is classified as held for sale. The Company also reports any gains or losses from the sale of a property in discontinued operations. There were no properties classified as held for sale as of April 30, 2010, 2009 and 2008. The following information shows the effect on net income and the gains or losses from the sale of properties classified as discontinued operations for the fiscal years ended April 30, 2010, 2009 and 2008. The financial statements have been restated to reflect properties sold during the six months ended October 31, 2010 and the twelve months ended April 30, 2009 and 2008. During the second quarter of fiscal year 2011 the Company sold three properties, a small retail property in Ladysmith, Wisconsin, a patio home property in Fargo, North Dakota, and its 504-unit Dakota Hill multi-family residential property in Irving, Texas.  During fiscal year 2010, the Company sold its former headquarters property in Minot, North Dakota, and disposed of a small apartment property in Grafton, North Dakota.  In fiscal year 2009, the Company sold a small residential property in Minot, North Dakota.

	(in thousands)
	2010			2009			2008
REVENUE
Real estate rentals	$	5,383		$	5,679		$	6,098
Tenant reimbursement		0			0			2
TOTAL REVENUE		5,383			5,679			6,100
EXPENSES
Depreciation/amortization related to real estate investments		1,032			1,027			1,079
Utilities		483			413			426
Maintenance		602			570			554
Real estate taxes		1,027			1,063			1,062
Insurance		150			94			96
Property management expenses		641			611			794
Impairment of real estate investments		970			338			0
TOTAL EXPENSES		4,905			4,116			4,011
Interest expense		(1,652	)		(1,898	)		(1,932	)
Interest income		7			9			10
Income from discontinued operations before gain on sale		(1,167	)		(326	)		167
Gain on sale of discontinued operations		68			54			514
(LOSS) INCOME FROM DISCONTINUED OPERATIONS	$	(1,099	)	$	(272	)	$	681
Segment Data
Multi-Family Residential	$	(55	)	$	10		$	635
Commercial Office		(169	)		(338	)		0
Commercial Medical		14			11			2
Commercial Retail		(889	)		45			44
Total	$	(1,099	)	$	(272	)	$	681

2010 Annual Report F-23

NOTE 12 • continued

	(in thousands)
	2010			2009			2008
Property Sale Data
Sales price	$	560		$	70		$	1,435
Net book value and sales costs		(492	)		(16	)		(921	)
Gain on sale of discontinued operations	$	68		$	54		$	514

NOTE 13 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. The Company has no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional common shares that would result in a dilution of earnings. While Units can be exchanged for shares on a one-for-one basis after a minimum holding period of one year, the exchange of Units for common shares has no effect on diluted earnings per share, as Unitholders and common shareholders effectively share equally in the net income of the Operating Partnership. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the consolidated financial stateme nts for the fiscal years ended April 30, 2010, 2009 and 2008:

	For Years Ended April 30,
	(in thousands, except per share data)
	2010			2009			2008
NUMERATOR
Income from continuing operations – Investors Real Estate Trust	$	4,854		$	8,728		$	11,591
(Loss) income from discontinued operations – Investors Real Estate Trust		(853	)		(202	)		497
Net income attributable to Investors Real Estate Trust		4,001			8,526			12,088
Dividends to preferred shareholders		(2,372	)		(2,372	)		(2,372	)
Numerator for basic earnings per share – net income available to common shareholders		1,629			6,154			9,716
Noncontrolling interests – Operating Partnership		562			2,227			3,677
Numerator for diluted earnings per share	$	2,191		$	8,381		$	13,393
DENOMINATOR
Denominator for basic earnings per share weighted average shares		69,093			58,603			53,060
Effect of convertible operating partnership units		20,825			21,217			20,417
Denominator for diluted earnings per share		89,918			79,820			73,477
Earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	.04		$	.11		$	.17
(Losses) earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		(.01	)		.00			.01
NET INCOME PER COMMON SHARE – BASIC & DILUTED	$	.03		$	.11		$	.18

NOTE 14 • RETIREMENT PLANS

IRET sponsors a defined contribution profit sharing retirement plan and a defined contribution 401(k) plan.  IRET’s defined contribution profit sharing retirement plan is available to employees over the age of 21 who have completed one year of service.  Participation in IRET’s defined contribution 401(k) plan is available to employees over the age of 21 who have completed one year of service and who work at least 1,000 hours per calendar year, and employees participating in the 401(k) plan may contribute up to maximum levels established by the IRS.  Employer contributions to the profit sharing and 401(k) plans are at the discretion of the Company’s management.  IRET expects to contribute not more than 3.5% of the salary of each employee participating in the profit sharing plan, and currently matches, dollar for dollar, employee contributions to the 401(k) plan in an amount equal to up to 4.0% of the salary of each employee participating in the 401(k) plan, for a total expected contribution of not more than 7.5% of the salary of each of the employees participating in both plans. Contributions by IRET to the profit sharing plan are subject to a vesting schedule; contributions by IRET under the 401(k) plan are fully vested when made.  IRET’s contributions to these plans on behalf of employees totaled approximately $400,000 in fiscal year 2010, $356,000 in fiscal year 2009 and $305,000 in fiscal year 2008.

2010 Annual Report F-24

NOTE 15 • COMMITMENTS AND CONTINGENCIES

Ground Leases. As of April 30, 2010, the Company is a tenant under operating ground or air rights leases on eleven of its properties. The Company pays a total of approximately $501,000 per year in rent under these ground leases, which have remaining terms ranging from 3 to 91 years, and expiration dates ranging from July 2012 to October 2100. The Company has renewal options for five of the eleven ground leases, and rights of first offer or first refusal for the remainder.

The expected timing of ground and air rights lease payments as of April 30, 2010 is as follows:

	(in thousands)
Year Ended April 30,	Lease Payments
2011		$	501
2012			501
2013			499
2014			500
2015			501
Thereafter			22,959
Total		$	25,461

Legal Proceedings. IRET is involved in various lawsuits arising in the normal course of business. Management believes that such matters will not have a material effect on the Company’s financial statements.

Environmental Matters. It is generally IRET’s policy to obtain a Phase I environmental assessment of each property that the Company seeks to acquire.  Such assessments have not revealed, nor is the Company aware of, any environmental liabilities that IRET believes would have a material adverse effect on IRET’s financial position or results of operations. IRET owns properties that contain or potentially contain (based on the age of the property) asbestos or lead, or have underground fuel storage tanks. For certain of these properties, the Company estimated the fair value of the conditional asset retirement obligation and chose not to book a liability, because the amounts involved were immaterial. With respect to certain other properties, the Company has not reco rded any related asset retirement obligation, as the fair value of the liability cannot be reasonably estimated, due to insufficient information. IRET believes it does not have sufficient information to estimate the fair value of the asset retirement obligations for these properties because a settlement date or range of potential settlement dates has not been specified by others, and, additionally, there are currently no plans or expectation of plans to sell or to demolish these properties, or to undertake major renovations that would require removal of the asbestos, lead and/or underground storage tanks.  These properties are expected to be maintained by repairs and maintenance activities that would not involve the removal of the asbestos, lead and/or underground storage tanks.  Also, a need for renovations caused by tenant changes, technology changes or other factors has not been identified.

Tenant Improvements.  In entering into leases with tenants, IRET may commit itself to fund improvements or build-outs of the rented space to suit tenant requirements.  These tenant improvements are typically funded at the beginning of the lease term, and IRET is accordingly exposed to some risk of loss if a tenant defaults prior to the expiration of the lease term, and the rental income that was expected to cover the cost of the tenant improvements is not received.  As of April 30, 2010, the Company is committed to fund approximately $5.3 million in tenant improvements, within approximately the next 12 months.

Purchase Options. The Company has granted options to purchase certain IRET properties to tenants in these properties, under lease agreements.  In general, the options grant the tenant the right to purchase the property at the greater of such property’s appraised value or an annual compounded increase of a specified percentage of the initial cost of the property to IRET. The property cost and gross rental revenue of these properties are as follows:

2010 Annual Report F-25

NOTE 15 • continued

	(in thousands)
			Gross Rental Revenue
Property	Investment Cost		2010		2009		2008
Edgewood Vista-Belgrade, MT	$	2,135	$	196	$	196	$	31
Edgewood Vista-Billings, MT		4,274		396		396		66
Edgewood Vista-Bismarck, ND		10,903		1,008		1,008		985
Edgewood Vista-Brainerd, MN		10,667		988		988		971
Edgewood Vista-Columbus, NE		1,481		136		136		21
Edgewood Vista-East Grand Forks, MN		4,996		465		464		78
Edgewood Vista-Fargo, ND		26,322		2,387		2,065		310
Edgewood Vista-Fremont, NE		588		72		72		69
Edgewood Vista-Grand Island, NE		1,431		132		132		20
Edgewood Vista-Hastings, NE		606		76		76		69
Edgewood Vista-Hermantown I, MN		21,510		2,359		2,040		1,557
Edgewood Vista-Hermantown II, MN		12,359		1,144		1,144		1,127
Edgewood Vista-Kalispell, MT		624		76		76		72
Edgewood Vista-Missoula, MT		999		96		96		132
Edgewood Vista-Norfolk, NE		1,332		124		124		19
Edgewood Vista-Omaha, NE		676		80		80		77
Edgewood Vista-Sioux Falls, SD		3,353		312		312		52
Edgewood Vista-Spearfish, SD		6,792		628		628		612
Edgewood Vista-Virginia, MN		17,132		2,008		1,736		1,381
Fargo 1320 45th Street N - Fargo, ND		1,164		0		0		0
Fox River Cottages - Grand Chute, WI		3,808		0		388		387
Great Plains - Fargo, ND		15,375		1,876		1,876		1,876
Healtheast St John & Woodwinds - Maplewood & Woodbury, MN		21,601		2,152		2,052		2,032
Minnesota National Bank - Duluth, MN		2,104		164		211		205
Sartell 2000 23rd Street S -Sartell, MN		12,693		1,173		1,292		1,292
St. Michael Clinic - St. Michael, MN		2,851		241		240		229
Stevens Point - Stevens Point, WI		15,020		1,356		1,356		1,279
Total	$	202,796	$	19,645	$	19,184	$	14,949

Income Guarantees. In connection with its acquisition in April 2004 of a portfolio of properties located in and near Duluth, Minnesota, the Company received from the seller of the properties a guarantee, for five years from the closing date of the acquisition, of a specified minimum amount of annual net operating income, before debt service (principal and interest payments), from two of the properties included in the portfolio. The income guarantee expired on April 30, 2009, and the final payment of approximately $215,000 was received in July 2009.

Restrictions on Taxable Dispositions.  Approximately 133 of the Company’s properties, consisting of approximately 7.5 million square feet of our combined commercial segment’s properties and 4,322 apartment units, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties.  The real estate investment amount of these properties (net of accumulated depreciation) was approximately $883.4 million at April 30, 2010.  The restrictions on taxable dispositions are effective for varying periods.  The terms of these agreements generally prevent us from selling the properties in taxable transactions.  The Company does not believe that the agreements mat erially affect the conduct of its business or its decisions whether to dispose of restricted properties during the restriction period because the Company generally holds these and its other properties for investment purposes, rather than for sale.  Historically, however, where the Company has deemed it to be in its shareholders’ best interests to dispose of restricted properties, the Company has done so through transactions structured as tax-deferred transactions under Section 1031 of the Internal Revenue Code.

Redemption Value of UPREIT Units.  The limited partnership units (“UPREIT Units”) of the Company’s operating partnership, IRET Properties, are redeemable at the option of the holder for cash, or, at our option, for the Company’s common shares of beneficial interest on a one-for-one basis, after a minimum one-year holding period.  All UPREIT Units receive the same cash distributions as those paid on common shares.  UPREIT Units are redeemable for an amount of cash per Unit equal to the average of the daily market price of an IRET common share

2010 Annual Report F-26

NOTE 15 • continued

for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of April 30, 2010 and 2009, the aggregate redemption value of the then-outstanding UPREIT Units of the operating partnership owned by limited partners was approximately $180.3 million and $198.2 million, respectively.

Joint Venture Buy/Sell Options.  Certain of our joint venture agreements contain buy/sell options in which each party under certain circumstances has the option to acquire the interest of the other party, but do not generally require that we buy our partners’ interests.  We have one joint venture which allows our unaffiliated partner, at its election, to require that we buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. The redeemable noncontrolling interests in this joint venture are presented on our consolidated balance sheets at the greater of their carrying amount or redemption value at the end of each reporting period. We have not recorded a liability or the related asset that would result from the acquisition in connection with the above potential obligation because the probability of our unaffiliated partner requiring us to buy their interest is not currently determinable.

Crosstown Circle Office Building, Eden Prairie, MN. The Company’s Crosstown Circle Office Building in Eden Prairie, Minnesota was acquired in October 2004 from Best Buy Company, which is leasing all but 7,500 square feet of the 185,000 square foot building under a master lease expiring September 30, 2010. Under the terms of the financing obtained by the Company for this building, the Company is obligated to fund a leasing reserve account in the event that a specified occupancy level is not met at the time the Best Buy master lease expires. The amount to be deposited in the leasing reserve account would be calculated by multiplying a specified amount per square foot by the difference between the specified occupancy level and the building’s actual occupied square feet. The maximum amount the Company would be required to deposit in such leasing reserve account is $4,625,000. Funds in the leasing reserve account would be released as leases for vacant space in the building are executed.

Pending Acquisitions and Dispositions.  The Company has signed an agreement for the purchase of two medical office buildings: a one-story, approximately 14,705 square foot medical building located in Billings, Montana, and a one-story, approximately 14,640 square foot medical building located in Missoula, Montana, for a purchase price totaling approximately $5.2 million, of which approximately $4.3 million would consist of the assumption of existing debt, with the remaining approximately $957,000 paid in cash.  This proposed acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the transaction will be completed.  The Company has also signed an agreement for the purchase of a two-building senior housi ng complex located in Minot, North Dakota, consisting of two single-story facilities containing approximately 93,708 square feet and 9,693 square feet, respectively, with a combined total of approximately 184 units/beds, for a purchase price of approximately $15.2 million, of which approximately $5.7 million would consist of the assumption of existing debt, with the remaining approximately $9.5 million to be paid in cash. This pending acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the acquisition will be completed.

The Company is marketing for sale its 504-unit Dakota Hill multi-family residential property in Irving, Texas.  A sales agreement for the property was terminated by a prospective buyer during the third quarter of fiscal year 2010; during the fourth quarter the Company signed a sales agreement for the property with a different prospective purchaser.  During the fourth quarter of fiscal year 2010, the Company refinanced the Dakota Hill property, replacing existing mortgage debt of approximately $22.4 million with new debt totaling approximately $23.5 million, with a maturity date of February 1, 2017. The Company has also signed agreements for the sale of three multi-family residential properties in Colorado: the Company’s 210-unit Miramont and 195-unit Pinecone Apartments in Ft. Collins, Colorado and its 192-unit Neighb orhood Apartments in Colorado Springs, Colorado.  These proposed dispositions are subject to various closing conditions and contingencies, and no assurances can be given that these transactions will be completed.

2010 Annual Report F-27

NOTE 16 • FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Mortgage Loans Receivable. Fair values are based on the discounted value of future cash flows expected to be received for a loan using current rates at which similar loans would be made to borrowers with similar credit risk and the same remaining maturities. Terms are short term in nature and carrying value approximates the estimated fair value.

Cash and Cash Equivalents. The carrying amount approximates fair value because of the short maturity.

Marketable Securities. The fair values of these instruments are estimated based on quoted market prices for the security.

Other Debt. The fair value of other debt is estimated based on the discounted cash flows of the loan using current market rates.

Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using current market rates.

The estimated fair values of the Company’s financial instruments as of April 30, 2010 and 2009, are as follows:

	(in thousands)
	2010				2009
	Carrying  Amount		Fair Value		Carrying  Amount		Fair Value
FINANCIAL ASSETS
Mortgage loans receivable	$	158	$	158	$	160	$	160
Cash and cash equivalents		54,791		54,791		33,244		33,244
Marketable securities - available-for-sale		420		420		420		420
FINANCIAL LIABILITIES
Other debt		1,000		1,142		1,000		1,129
Mortgages payable		1,057,619		1,015,879		1,070,158		1,301,071

NOTE 17 • COMMON AND PREFERRED SHARES OF BENEFICIAL INTEREST AND EQUITY

Distribution Reinvestment and Share Purchase Plan.  During fiscal years 2010 and 2009, IRET issued 1.4 million and 1.3 million common shares, respectively, pursuant to its distribution reinvestment and share purchase plan, at a total value at issuance of $11.9 million and $12.4 million, respectively. The shares issued under the distribution reinvestment and share purchase plan during fiscal year 2010 consisted of 1.2 million shares valued at issuance at $10.5 million that were issued for reinvested distributions and approximately 165,000 shares valued at $1.4 million at issuance that were sold for voluntary cash contributions. The shares issued under the distribution reinvestment and share purchase plan during fiscal year 2009 consisted of 1.2 million shares valued at issu ance at $11.4 million that were issued for reinvested distributions and approximately 108,000 shares valued at $1.0 million at issuance that were sold for voluntary cash contributions. IRET’s distribution reinvestment plan is available to common shareholders of IRET and all limited partners of IRET Properties. Under the distribution reinvestment plan, shareholders or limited partners may elect to have all or a portion of their distributions used to purchase additional IRET common shares, and may elect to make voluntary cash contributions for the  purchase of IRET common shares, at a discount (currently 5%) from the market price.

Conversion of Units to Common Shares.  During fiscal years 2010 and 2009, respectively, approximately 707,000 and 746,000 Units were converted to common shares, with a total value of $3.8 million and $5.0 million included in equity.

Issuance of Common Shares.  In September 2008, the Company filed a shelf registration statement on Form S-3 to offer for sale from time to time common shares and preferred shares.  This registration statement was declared effective in October 2008.  The Company may sell any combination of common shares and preferred shares up to an aggregate initial offering price of $150.0 million during the period that the registration statement remains effective.

2010 Annual Report F-28

NOTE 17 • continued

During fiscal year 2010, the Company issued 12.2 million common shares under this registration statement, for net proceeds of approximately $96.9 million, before offering expenses.  These shares were issued in two public offerings in June 2009 (3.0 million shares) and October 2009 (9.2 million shares), respectively.  Additionally, in fiscal year 2010 the Company sold 1.2 million common shares under this registration statement, under its continuous offering program with Robert W. Baird & Co. Incorporated as sales agent, for net proceeds of approximately $10.2 million, before offering expenses but after underwriting discounts and commissions.  As of April 30, 2010, the Company had available securities under this registration statement in the aggregate amount of approximately $33.4 million.  This a mount is reserved for issuance under the Company’s continuous offering program with Robert W. Baird & Co. Incorporated.

In April 2010, the Company filed a shelf registration statement on Form S-3 to register any combination of common shares and preferred shares up to an aggregate initial offering price of $150.0 million during the period that the registration statement remains effective.  To date the Company has not issued any common or preferred shares under this registration statement.

Series A Cumulative Redeemable Preferred Shares of Beneficial Interest.  During fiscal year 2004, the Company issued 1,150,000 shares of 8.25% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest for total proceeds of $27.3 million, net of selling costs. Holders of the Company’s Series A Cumulative Redeemable Preferred Shares of Beneficial Interest are entitled to receive dividends at an annual rate of 8.25% of the liquidation preference of $25 per share, or $2.0625 per share per annum. These dividends are cumulative and payable quarterly in arrears. The shares are not convertible into or exchangeable for any other property or any other securities of the Company at the election of the holders. However, the Company, at its option, may redeem the shar es at a redemption price of $25.00 per share, plus any accrued and unpaid distributions through the date of redemption. The shares have no maturity date and will remain outstanding indefinitely unless redeemed by the Company.

NOTE 18 • QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (unaudited)

	(in thousands, except per share data)
QUARTER ENDED	July 31, 2009		October 31, 2009			January 31, 2010			April 30, 2010
Revenues	$	59,441	$	58,220		$	58,815		$	60,916
Net Income available to common shareholders	$	1,424	$	(308	)	$	(141	)	$	654
Net Income per common share - basic & diluted	$	.02	$	.00		$	.00		$	.01

	(in thousands, except per share data)
QUARTER ENDED	July 31, 2008		October 31, 2008		January 31, 2009		April 30, 2009
Revenues	$	57,454	$	58,085	$	59,499	$	59,288
Net Income available to common shareholders	$	1,765	$	1,930	$	785	$	1,674
Net Income per common share - basic & diluted	$	.03	$	.03	$	.02	$	.03

The above financial information is unaudited. In the opinion of management, all adjustments (which are of a normal recurring nature) have been included for a fair presentation.

NOTE 19 • REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests on our consolidated balance sheets represent the noncontrolling interest in a joint venture of the Company in which the Company’s unaffiliated partner, at its election, can require the Company to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. Redeemable noncontrolling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to common shares of beneficial interest on our consolidated balance sheets.  As of April 30, 2010, 2009 and 2008, the estimated redemption value of the redeemable noncontrolling interests was $1.8 million, $1.7 million and $1.8 million, respective ly.  Below is a table reflecting the activity of the redeemable noncontrolling interests.

2010 Annual Report F-29

NOTE 19 • continued

	(in thousands)
	2010			2009			2008
Balance at beginning of fiscal year	$	1,737		$	1,802		$	994
Net income		60			53			35
Net (distributions) contributions		(177	)		(112	)		0
Mark-to-market adjustments		192			(6	)		773
Balance at close of fiscal year	$	1,812		$	1,737		$	1,802

NOTE 20 • SUBSEQUENT EVENTS

Common and Preferred Share Distributions. On June 30, 2010, the Company paid a distribution of 51.56 cents per share on the Company’s Series A Cumulative Redeemable Preferred Shares to preferred shareholders of record on June 15, 2010. On July 1, 2010, the Company paid a distribution of 17.15 cents per share on the Company’s common shares and units, to common shareholders and Unitholders of record on June 15, 2010.

Pending Acquisitions and Dispositions.  The Company has signed an agreement for the purchase of two medical office buildings: a one-story, approximately 14,705 square foot medical building located in Billings, Montana, and a one-story, approximately 14,640 square foot medical building located in Missoula, Montana, for a purchase price totaling approximately $5.2 million, of which approximately $4.3 million would consist of the assumption of existing debt, with the remaining approximately $957,000 paid in cash. This proposed acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the transaction will be completed.  The Company has also signed an agreement for the purchase of a two-building senior housing complex located in Minot, North Dakota, consisting of two single-story facilities with a combined total of approximately 169 units/beds, for a purchase price of approximately $15.2 million, of which approximately $5.7 million would consist of the assumption of existing debt, with the remaining approximately $9.5 million to be paid in cash. This pending acquisition is subject to various closing conditions and contingencies, and no assurances can be given that the acquisition will be completed.  

The Company is marketing for sale its 504-unit Dakota Hill multi-family residential property in Irving, Texas.  A sales agreement for the property was terminated by a prospective buyer during the third quarter of fiscal year 2010; during the fourth quarter the Company signed a sales agreement for the property with a different prospective purchaser.  During the fourth quarter of fiscal year 2010, the Company refinanced the Dakota Hill property, replacing existing mortgage debt of approximately $22.4 million with new debt totaling approximately $23.5 million, with a maturity date of February 1, 2017. The Company has also signed agreements for the sale of three multi-family residential properties in Colorado: the Company’s 210-unit Miramont and 195-unit Pinecone Apartments in Ft. Collins, Colorado and its 192-unit Neighb orhood Apartments in Colorado Springs, Colorado.  These proposed dispositions are subject to various closing conditions and contingencies, and no assurances can be given that these transactions will be completed.

Development Projects.  During the third quarter of fiscal year 2010, the Company acquired an approximately 6.8 acre parcel of vacant land located in Fargo, North Dakota for a purchase price of approximately $395,000. The Company has constructed an office/warehouse facility on this property occupied by a single tenant, with the lease for this property commencing on July 1, 2010.  The Company estimates that its final cost to construct the facility will be approximately $4.1 million, including the cost of the land plus imputed construction interest.

Subsequent to the fourth quarter of fiscal year 2010, on July 3, 2010, the Company signed an agreement for the construction of an addition to its existing Edgewood Vista assisted living facility in Spearfish, South Dakota.  This development project will add dining and garage facilities and approximately 23 senior housing apartments to the existing facility for an estimated total cost of $2.6 million.  Completion of the addition is expected in January 2011.

Fox River and Stevens Point Tenant Bankruptcy. The tenants in IRET’s Fox River senior housing project in Grand Chute, Wisconsin, and Stevens Point senior housing project in Stevens Point, Wisconsin, affiliates of Sunwest Management, Inc., declared bankruptcy in December 2008. IRET’s investment in the Fox River and Stevens Point properties leased to these Sunwest affiliates is approximately $3.8 million and $14.8 million, respectively.  Subsequent to the end of fiscal year 2010, IRET negotiated a Settlement and Lease Modification Agreement with the parent company of its tenants in these projects and with the court-appointed receiver; under the terms of this

2010 Annual Report F-30

NOTE 20 • continued

agreement, the effectiveness of which is subject to confirmation of the debtors’ Plan of Reorganization by the bankruptcy court, IRET would receive a cash payment of $2.2 million to settle its claims in bankruptcy against its tenants, and the Stevens Point lease would be modified to reduce the Annual Rent due under the lease to $1.0 million (or approximately $85,000 per month), compared to $1.4 million (or approximately $113,000 per month) under the lease as originally written.  The Stevens Point lease would be assigned to an acquiring entity formed by Blackstone Ventures.  The Fox River lease is not being assumed or assigned, and IRET is continuing to evaluate its options in regard to this project; at this time IRET considers that, subject to its analysis of market conditions, it will proceed to market the Fox River prope rty in an attempt to recover its investment and provide some return on investment.

Related Party Transaction.  Subsequent to the end of fiscal year 2010, on May 21, 2010, the Company closed on a mortgage loan from First International Bank and Trust, of which Stephen L. Stenehjem, a member of the Company’s Board of Trustees, is the President and Chief Executive Officer.  The loan, in the amount of $3.2 million, is secured by a first mortgage on the Company’s MedPark Mall property in Grand Forks, North Dakota, and has a 5-year term, a 20-year amortization, and an interest rate of 6.25% per annum. 

2010 Annual Report F-31

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Multi-Family Residential
17 South Main - Minot, ND	$	194	$	0	$	0	$	222	$	0	$	222	$	222	$	(22	)		2006	40 years
Apartments on Main - Minot, ND		681		71		334		892		75		1,222		1,297		(52	)		1987	24-40 years
Arbors Apartments - S Sioux City, NE		4,209		350		6,625		687		408		7,254		7,662		(777	)		2006	40 years
Boulder Court - Eagan, MN		3,880		1,067		5,498		1,880		1,272		7,173		8,445		(1,226	)		2003	40 years
Brookfield Village Apartments - Topeka, KS		5,603		509		6,698		874		583		7,498		8,081		(1,284	)		2003	40 years
Candlelight Apartments - Fargo, ND		1,354		80		758		1,045		221		1,662		1,883		(708	)		1992	24-40 years
Canyon Lake Apartments - Rapid City, SD		2,649		305		3,958		483		325		4,421		4,746		(932	)		2001	40 years
Castle Rock - Billings, MT		7,026		736		4,864		1,342		841		6,101		6,942		(1,819	)		1998	40 years
Chateau Apartments - Minot, ND		1,767		122		2,224		1,143		168		3,321		3,489		(942	)		1998	12-40 years
Cimarron Hills - Omaha, NE		5,071		706		9,588		3,278		1,136		12,436		13,572		(2,990	)		2001	40 years
Colonial Villa - Burnsville, MN		7,760		2,401		11,515		2,323		2,683		13,556		16,239		(2,464	)		2003	40 years
Colton Heights Properties - Minot, ND		526		80		672		309		111		950		1,061		(610	)		1984	40 years
Cottonwood Community - Bismarck, ND		16,460		1,056		17,372		2,340		1,278		19,490		20,768		(4,237	)		1997	40 years
Country Meadows Community  - Billings, MT		7,083		491		7,809		885		523		8,662		9,185		(2,469	)		1995	33-40 years
Crestview Apartments - Bismarck, ND		4,183		235		4,290		880		456		4,949		5,405		(2,161	)		1994	24-40 years
Crown Apartments - Rochester, MN		2,566		261		3,289		0		261		3,289		3,550		(3	)		2010	40 years
Crown Colony Apartments - Topeka, KS		8,697		620		9,956		1,567		745		11,398		12,143		(3,017	)		1999	40 years
Dakota Hill at Valley Ranch - Irving, TX		23,401		3,650		33,810		2,425		3,843		36,042		39,885		(9,321	)		2000	40 years
East Park Apartments - Sioux Falls, SD		1,562		115		2,405		563		154		2,929		3,083		(630	)		2002	40 years
Evergreen Apartments - Isanti, MN		2,131		380		2,720		56		380		2,776		3,156		(113	)		2008	40 years
Forest Park Estates - Grand Forks, ND		8,149		810		5,579		4,899		1,159		10,129		11,288		(3,584	)		1993	24-40 years
Greenfield Apartments - Omaha, NE		3,650		578		4,122		305		619		4,386		5,005		(257	)		2007	40 years
Heritage Manor - Rochester, MN		4,595		403		6,968		1,577		442		8,506		8,948		(2,573	)		1998	40 years
Indian Hills Apartments - Sioux City, IA		0		294		2,921		2,572		327		5,460		5,787		(410	)		2007	40 years
IRET Corporate Plaza Apartments - Minot, ND		0		793		0		14,796		793		14,796		15,589		(489	)		2009	40 years
Kirkwood Manor - Bismarck, ND		3,492		449		2,725		1,307		537		3,944		4,481		(1,300	)		1997	12-40 years
Lancaster Place - St. Cloud, MN		1,080		289		2,899		768		438		3,518		3,956		(1,002	)		2000	40 years
Landmark Estates - Grand Forks, ND		1,583		184		1,514		797		271		2,224		2,495		(706	)		1997	40 years
Legacy Community - Grand Forks, ND		17,125		1,362		21,727		4,914		1,989		26,014		28,003		(6,435	)		1995-2004	24-40 years
Magic City Apartments - Minot, ND		2,598		370		3,875		1,623		511		5,357		5,868		(1,748	)		1997	12-40 years
Meadows Community - Jamestown, ND		2,754		590		4,519		997		632		5,474		6,106		(1,376	)		1998	40 years
Minot 11th Street 3-Plex - Minot, ND		97		11		53		5		11		58		69		(3	)		2008	40 years

2010 Annual Report F-32

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Multi-Family Residential - continued
Minot 4th Street 4-Plex, Minot ND	$	97	$	15	$	74	$	1	$	15	$	75	$	90	$	(4	)		2008	40 years
Minot Fairmont Apartments - Minot, ND		389		28		337		1		28		338		366		(17	)		2008	40 years
Minot Westridge Apartments - Minot, ND		1,944		68		1,887		22		70		1,907		1,977		(95	)		2008	40 years
Miramont Apartments - Fort Collins, CO		10,672		1,470		12,765		1,301		1,581		13,955		15,536		(4,771	)		1996	40 years
Monticello Apartments - Monticello, MN		3,086		490		3,756		323		605		3,964		4,569		(653	)		2004	40 years
Neighborhood Apartments - Colorado Springs, CO		9,630		1,034		9,812		3,080		1,160		12,766		13,926		(4,256	)		1997	40 years
North Pointe - Bismarck, ND		2,080		144		2,244		218		160		2,446		2,606		(889	)		1995	24-40 years
Northern Valley - Rochester, MN		0		110		610		0		110		610		720		(1	)		2010	40 years
Oakmont Apartments - Sioux Falls, SD		3,673		423		4,838		220		430		5,051		5,481		(1,044	)		2002	40 years
Oakwood - Sioux Falls, SD		3,410		543		2,784		3,412		759		5,980		6,739		(2,468	)		1993	40 years
Olympic Village - Billings, MT		7,530		1,164		10,441		1,696		1,404		11,897		13,301		(3,062	)		2000	40 years
Olympik Village Apartments - Rochester, MN		4,909		1,034		6,109		782		1,094		6,831		7,925		(924	)		2005	40 years
Oxbow - Sioux Falls, SD		3,715		404		3,152		2,197		475		5,278		5,753		(2,006	)		1994	24-40 years
Park Meadows Community - Waite Park, MN		8,897		1,143		9,099		4,467		1,492		13,217		14,709		(5,118	)		1997	40 years
Pebble Springs - Bismarck, ND		0		7		748		94		37		812		849		(231	)		1999	40 years
Pinecone Apartments - Fort Collins, CO		9,636		905		12,105		1,414		1,034		13,390		14,424		(5,055	)		1995	40 years
Pinehurst Apartments - Billings, MT		375		72		687		109		74		794		868		(169	)		2002	40 years
Pointe West - Rapid City, SD		2,869		240		3,538		1,154		340		4,592		4,932		(1,857	)		1994	24-40 years
Prairie Winds Apartments - Sioux Falls, SD		1,533		144		1,816		353		208		2,105		2,313		(937	)		1993	24-40 years
Prairiewood Meadows - Fargo, ND		2,530		280		2,531		891		336		3,366		3,702		(862	)		2000	40 years
Quarry Ridge Apartments - Rochester, MN		12,384		1,312		13,362		226		1,320		13,580		14,900		(1,244	)		2006	40 years
Ridge Oaks - Sioux City, IA		2,572		178		4,073		1,604		254		5,601		5,855		(1,502	)		2001	40 years
Rimrock Apartments - Billings, MT		3,535		330		3,489		1,160		401		4,578		4,979		(1,091	)		1999	40 years
Rocky Meadows - Billings, MT		5,480		656		5,726		772		750		6,404		7,154		(2,237	)		1995	40 years
Rum River Apartments - Isanti, MN		3,859		843		4,823		22		844		4,844		5,688		(369	)		2007	40 years
SCSH Campus Center Apartments - St. Cloud, MN		1,480		395		2,244		105		398		2,346		2,744		(189	)		2007	40 years
SCSH Campus Heights Apartments - St. Cloud, MN		0		110		628		19		110		647		757		(54	)		2007	40 years
SCSH Campus Knoll Apartments - St. Cloud, MN		986		266		1,512		43		266		1,555		1,821		(129	)		2007	40 years
SCSH Campus Plaza Apartments - St. Cloud, MN		0		54		311		18		54		329		383		(27	)		2007	40 years
SCSH Campus Side Apartments - St. Cloud, MN		0		107		615		45		108		659		767		(54	)		2007	40 years
SCSH Campus View Apartments - St. Cloud, MN		0		107		615		43		107		658		765		(52	)		2007	40 years
SCSH Cornerstone Apartments - St. Cloud, MN		0		54		311		24		54		335		389		(27	)		2007	40 years
SCSH University Park Place Apartments - St. Cloud, MN		0		78		450		18		78		468		546		(38	)		2007	40 years

2010 Annual Report F-33

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Multi-Family Residential - continued
Sherwood Apartments - Topeka, KS	$	13,048	$	1,145	$	14,684	$	2,195	$	1,486	$	16,538	$	18,024	$	(4,421	)		1999	40 years
South Pointe - Minot, ND		9,391		550		9,548		1,812		1,247		10,663		11,910		(3,807	)		1995	24-40 years
Southbrook & Mariposa - Topeka, KS		3,150		399		5,110		291		419		5,381		5,800		(737	)		2004	40 years
Southview Apartments - Minot, ND		713		185		469		272		219		707		926		(279	)		1994	24-40 years
Southwind Apartments - Grand Forks, ND		5,997		400		5,034		1,986		694		6,726		7,420		(2,403	)		1995	24-40 years
Sunset Trail - Rochester, MN		7,620		336		12,814		1,900		481		14,569		15,050		(3,382	)		1999	40 years
Sycamore Village Apartments - Sioux Falls, SD		878		101		1,317		400		149		1,669		1,818		(369	)		2002	40 years
Terrace On The Green - Moorhead, MN		2,261		24		1,490		1,884		130		3,268		3,398		(2,228	)		1970	33-40 years
Thomasbrook Apartments - Lincoln, NE		6,311		600		10,306		2,526		773		12,659		13,432		(3,072	)		1999	40 years
Valley Park Manor - Grand Forks, ND		3,482		294		4,137		1,913		418		5,926		6,344		(1,744	)		1999	40 years
Village Green - Rochester, MN		1,485		234		2,296		419		329		2,620		2,949		(456	)		2003	40 years
West Stonehill - Waite Park, MN		9,212		939		10,167		3,903		1,197		13,812		15,009		(5,262	)		1995	40 years
Westwood Park - Bismarck, ND		2,093		116		1,909		1,464		237		3,252		3,489		(884	)		1998	40 years
Winchester - Rochester, MN		3,636		748		5,622		1,144		974		6,540		7,514		(1,165	)		2003	40 years
Woodridge Apartments - Rochester, MN		2,269		370		6,028		1,443		444		7,397		7,841		(2,621	)		1997	40 years
Total Multi-Family Residential	$	330,743	$	40,017	$	409,710	$	107,140	$	48,545	$	508,322	$	556,867	$	(129,922	)
Commercial Office
1st Avenue Building - Minot, ND	$	0	$	30	$	80	$	588	$	33	$	665	$	698	$	(327	)		1981	33-40 years
2030 Cliff Road - Eagan, MN		468		146		835		90		158		913		1,071		(192	)		2001	19-40 years
610 Business Center IV - Brooklyn Park II, MN		7,336		975		5,542		2,886		980		8,423		9,403		(667	)		2007	40 years
7800 West Brown Deer Road - Milwaukee, WI		11,212		1,455		9,267		1,510		1,475		10,757		12,232		(2,159	)		2003	40 years
American Corporate Center - Mendota Heights, MN		9,208		893		16,768		3,210		893		19,978		20,871		(5,152	)		2002	40 years
Ameritrade - Omaha, NE		3,848		327		7,957		65		327		8,022		8,349		(2,212	)		1999	40 years
Benton Business Park - Sauk Rapids, MN		746		188		1,261		78		188		1,339		1,527		(245	)		2003	40 years
Bismarck 715 East Broadway - Bismarck, ND		0		389		0		1,622		389		1,622		2,011		(55	)		2008	40 years
Bloomington Business Plaza - Bloomington, MN		4,170		1,300		6,106		697		1,305		6,798		8,103		(1,753	)		2001	40 years
Brenwood - Minnetonka, MN		7,410		1,762		12,138		2,927		1,771		15,056		16,827		(3,654	)		2002	40 years
Brook Valley I - La Vista, NE		1,423		347		1,671		81		347		1,752		2,099		(201	)		2005	45 years
Burnsville Bluffs II - Burnsville, MN		1,200		300		2,154		898		301		3,051		3,352		(875	)		2001	40 years
Cold Spring Center - St. Cloud, MN		4,034		588		7,808		751		592		8,555		9,147		(2,100	)		2001	40 years
Corporate Center West - Omaha, NE		17,315		3,880		17,509		303		4,167		17,525		21,692		(1,595	)		2006	40 years

2010 Annual Report F-34

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company							Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition			Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Office - continued
Crosstown Centre - Eden Prairie, MN	$	14,568	$	2,884	$	14,569	$	525		$	2,887	$	15,091	$	17,978	$	(2,128	)		2004	40 years
Dewey Hill Business Center - Edina, MN		2,583		985		3,507		920			995		4,417		5,412		(1,259	)		2000	40 years
Farnam Executive Center - Omaha, NE		12,160		2,188		11,404		0			2,188		11,404		13,592		(1,033	)		2006	40 years
Flagship - Eden Prairie, MN		21,565		1,899		21,638		710			2,013		22,234		24,247		(2,189	)		2006	40 years
Gateway Corporate Center - Woodbury, MN		8,700		1,637		7,763		89			1,637		7,852		9,489		(728	)		2006	40 years
Golden Hills Office Center - Golden Valley, MN		14,345		3,018		24,482		(3,260	)		3,018		21,222		24,240		(4,628	)		2003	40 years
Great Plains - Fargo, ND		4,254		126		15,240		10			126		15,250		15,376		(4,082	)		1997	40 years
Highlands Ranch - Highlands Ranch, CO		8,700		1,437		9,549		930			1,437		10,479		11,916		(1,675	)		2004	40 years
Highlands Ranch I - Highlands Ranch, CO		8,832		2,268		8,362		8			2,268		8,370		10,638		(724	)		2006	40 years
Interlachen Corporate Center - Edina, MN		9,590		1,650		14,983		361			1,652		15,342		16,994		(3,339	)		2001	40 years
Intertech Building - Fenton, MO		4,728		2,130		3,968		3			2,130		3,971		6,101		(236	)		2007	40 years
IRET Corporate Plaza - Minot, ND		0		389		5,218		3,359			590		8,376		8,966		(282	)		2009	40 years
Mendota Office Center I - Mendota Heights, MN		3,965		835		6,169		339			835		6,508		7,343		(1,479	)		2002	40 years
Mendota Office Center II - Mendota Heights, MN		5,859		1,121		10,086		1,374			1,121		11,460		12,581		(2,881	)		2002	40 years
Mendota Office Center III - Mendota Heights, MN		4,026		970		5,734		253			970		5,987		6,957		(1,294	)		2002	40 years
Mendota Office Center IV - Mendota Heights, MN		4,787		1,070		7,635		578			1,070		8,213		9,283		(1,757	)		2002	40 years
Minnesota National Bank - Duluth, MN		979		287		1,454		4			289		1,456		1,745		(220	)		2004	40 years
Minot 2505 16th Street SW - Minot, ND		0		372		1,724		0			372		1,724		2,096		(23	)		2009	40 years
Miracle Hills One - Omaha, NE		8,895		1,974		10,117		950			2,120		10,921		13,041		(1,243	)		2006	40 years
Nicollett VII - Burnsville, MN		3,968		429		6,931		140			436		7,064		7,500		(1,601	)		2001	40 years
Northgate I - Maple Grove, MN		5,660		1,062		6,358		822			1,067		7,175		8,242		(1,020	)		2004	40 years
Northgate II - Maple Grove, MN		997		359		1,944		142			403		2,042		2,445		(574	)		1999	40 years
Northpark Corporate Center - Arden Hills, MN		13,390		2,034		14,584		991			2,034		15,575		17,609		(1,680	)		2006	40 years
Pacific Hills - Omaha, NE		16,770		4,220		11,988		1,146			4,478		12,876		17,354		(1,281	)		2006	40 years
Pillsbury Business Center - Bloomington, MN		908		284		1,556		102			284		1,658		1,942		(386	)		2001	40 years
Plaza VII - Boise, ID		1,159		300		3,058		414			351		3,421		3,772		(715	)		2003	40 years
Plymouth 5095 Nathan Lane - Plymouth, MN		1,301		604		1,253		40			604		1,293		1,897		(90	)		2007	40 years
Plymouth I - Plymouth, MN		1,269		530		1,133		27			530		1,160		1,690		(173	)		2004	40 years
Plymouth II - Plymouth, MN		1,269		367		1,264		41			367		1,305		1,672		(197	)		2004	40 years
Plymouth III - Plymouth, MN		1,561		507		1,495		350			507		1,845		2,352		(273	)		2004	40 years
Plymouth IV & V - Plymouth, MN		7,730		1,336		12,693		1,317			1,338		14,008		15,346		(3,383	)		2001	40 years
Prairie Oak Business Center - Eden Prairie, MN		3,540		531		4,069		1,456			563		5,493		6,056		(1,260	)		2003	40 years

  2010 Annual Report F-35

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Office - continued
Rapid City 900 Concourse Drive - Rapid City, SD	$	2,387	$	285	$	6,600	$	276	$	321	$	6,840	$	7,161	$	(1,665	)		2000	40 years
Riverport - Maryland Heights, MO		19,690		1,891		18,982		12		1,903		18,982		20,885		(1,721	)		2006	40 years
Southeast Tech Center - Eagan, MN		1,795		560		5,496		298		569		5,785		6,354		(1,658	)		1999	40 years
Spring Valley IV - Omaha, NE		847		178		916		60		186		968		1,154		(129	)		2005	41 years
Spring Valley V - Omaha, NE		931		212		1,123		223		212		1,346		1,558		(157	)		2005	42 years
Spring Valley X - Omaha, NE		864		180		1,024		32		180		1,056		1,236		(126	)		2005	43 years
Spring Valley XI - Omaha, NE		847		143		1,094		36		152		1,121		1,273		(131	)		2005	44 years
Superior Office Building - Duluth, MN		1,472		336		2,200		2		336		2,202		2,538		(333	)		2004	40 years
TCA Building - Eagan, MN		8,378		627		8,571		730		685		9,243		9,928		(1,763	)		2003	40 years
Three Paramount Plaza - Bloomington, MN		0		1,261		6,149		1,776		1,298		7,888		9,186		(1,665	)		2002	40 years
Thresher Square - Minneapolis, MN		0		1,094		10,026		1,538		1,104		11,554		12,658		(2,452	)		2002	40 years
Timberlands - Leawood, KS		13,155		2,375		12,218		459		2,478		12,574		15,052		(1,348	)		2006	40 years
UHC Office - International Falls, MN		1,247		119		2,366		80		119		2,446		2,565		(374	)		2004	40 years
US Bank Financial Center - Bloomington, MN		14,288		3,117		13,350		565		3,119		13,913		17,032		(1,785	)		2005	40 years
Viromed - Eden Prairie, MN		1,170		666		4,197		1		666		4,198		4,864		(1,176	)		1999	40 years
Wells Fargo Center - St Cloud, MN		6,624		869		8,373		936		869		9,309		10,178		(1,226	)		2005	40 years
West River Business Park - Waite Park, MN		746		235		1,195		46		235		1,241		1,476		(223	)		2003	40 years
Westgate - Boise, ID		0		1,000		10,618		1,680		1,000		12,298		13,298		(2,169	)		2003	40 years
Whitewater Plaza - Minnetonka, MN		4,013		530		4,859		437		577		5,249		5,826		(1,154	)		2002	40 years
Wirth Corporate Center - Golden Valley, MN		4,025		970		7,659		773		971		8,431		9,402		(1,893	)		2002	40 years
Woodlands Plaza IV - Maryland Heights, MO		4,360		771		4,609		685		837		5,228		6,065		(488	)		2006	40 years
Total Commercial Office	$	353,267	$	69,802	$	472,649	$	40,492	$	71,423	$	511,520	$	582,943	$	(88,656	)
Commercial Medical
2800 Medical Building - Minneapolis, MN	$	5,931	$	204	$	7,135	$	2,018	$	229	$	9,128	$	9,357	$	(1,210	)		2005	40 years
2828 Chicago Avenue - Minneapolis, MN		8,800		726		11,319		5,624		728		16,941		17,669		(894	)		2007	40 years
Airport Medical - Bloomington, MN		1,887		0		4,678		0		0		4,678		4,678		(1,146	)		2002	40 years
Barry Pointe Office Park - Kansas City, MO		1,519		384		2,366		96		384		2,462		2,846		(190	)		2007	40 years
Burnsville 303 Nicollet Medical (Ridgeview) - Burnsville, MN		7,725		1,071		6,842		697		1,071		7,539		8,610		(401	)		2008	40 years
Burnsville 305 Nicollet Medical (Ridgeview South) - Burnsville, MN		4,828		189		5,127		534		189		5,661		5,850		(318	)		2008	40 years
Casper 1930 E 12th Street (Park Place) - Casper, WY		0		439		5,780		0		439		5,780		6,219		(54	)		2009	40 years

2010 Annual Report F-36

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company							Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition			Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Medical - continued
Casper 3955 E 12th Street (Meadow Wind) - Casper, WY	$	0	$	338	$	5,881	$	0		$	338	$	5,881	$	6,219	$	(55	)		2009	40 years
Cheyenne 4010 N College Drive (Aspen Wind) - Cheyenne, WY		0		628		9,869		0			628		9,869		10,497		(93	)		2009	40 years
Cheyenne 4606 N College Drive (Sierra Hills) - Cheyenne, WY		0		695		7,455		0			695		7,455		8,150		(70	)		2009	40 years
Denfeld Clinic - Duluth, MN		1,952		501		2,597		1			501		2,598		3,099		(393	)		2004	40 years
Eagen 1440 Duckwood Medical - Eagan, MN		1,931		521		1,547		519			521		2,066		2,587		(166	)		2008	40 years
Edgewood Vista - Belgrade, MT		0		35		779		0			35		779		814		(41	)		2008	40 years
Edgewood Vista - Billings, MT		2,082		115		1,782		(15	)		115		1,767		1,882		(98	)		2008	40 years
Edgewood Vista - Bismarck, ND		6,197		511		9,193		36			511		9,229		9,740		(1,065	)		2005	40 years
Edgewood Vista - Brainerd, MN		6,125		587		8,999		34			587		9,033		9,620		(1,042	)		2005	40 years
Edgewood Vista - Columbus, NE		0		43		824		0			43		824		867		(44	)		2008	40 years
Edgewood Vista - East Grand Forks, MN		3,171		290		1,383		(31	)		290		1,352		1,642		(75	)		2008	40 years
Edgewood Vista - Fargo, ND		14,113		792		21,050		0			792		21,050		21,842		(1,118	)		2008	40 years
Edgewood Vista - Fremont, NE		639		56		490		42			56		532		588		(116	)		2000	40 years
Edgewood Vista - Grand Island, NE		0		33		773		0			33		773		806		(41	)		2008	40 years
Edgewood Vista - Hastings, NE		658		49		517		40			49		557		606		(125	)		2000	40 years
Edgewood Vista - Hermantown I, MN		17,646		288		9,871		1,502			288		11,373		11,661		(2,452	)		2000	40 years
Edgewood Vista - Hermantown II, MN		7,097		719		10,517		33			719		10,550		11,269		(1,218	)		2005	40 years
Edgewood Vista - Kalispell, MT		660		70		502		52			70		554		624		(121	)		2001	40 years
Edgewood Vista - Missoula, MT		937		109		854		36			109		890		999		(290	)		1996	40 years
Edgewood Vista - Norfolk, NE		0		42		722		0			42		722		764		(38	)		2008	40 years
Edgewood Vista - Omaha, NE		417		89		547		40			89		587		676		(127	)		2001	40 years
Edgewood Vista - Sioux Falls, SD		1,192		314		1,001		(27	)		314		974		1,288		(54	)		2008	40 years
Edgewood Vista - Spearfish, SD		3,858		315		5,807		35			315		5,842		6,157		(673	)		2005	40 years
Edgewood Vista - Virginia, MN		15,010		246		11,823		76			246		11,899		12,145		(2,164	)		2002	40 years
Edina 6363 France Medical - Edina, MN		7,969		0		12,675		20			0		12,695		12,695		(958	)		2008	40 years
Edina 6405 France Medical - Edina, MN		9,120		0		12,201		0			0		12,201		12,201		(799	)		2008	40 years
Edina 6517 Drew Avenue - Edina, MN		1,219		353		660		524			372		1,165		1,537		(282	)		2002	40 years
Edina 6525 France SMC II - Edina, MN		9,719		755		8,054		5,943			755		13,997		14,752		(3,308	)		2003	40 years
Edina 6545 France SMC I - Edina MN		21,625		3,480		30,743		10,588			3,480		41,331		44,811		(9,370	)		2001	40 years
Fox River Cottages - Grand Chute, WI		2,266		305		2,746		756			305		3,502		3,807		(310	)		2006	40 years
Fresenius - Duluth, MN		898		50		1,520		2			50		1,522		1,572		(230	)		2004	40 years
Garden View - St. Paul, MN		2,691		0		7,408		484			0		7,892		7,892		(1,596	)		2002	40 years

2010 Annual Report F-37

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Medical - continued
Gateway Clinic - Sandstone, MN	$	1,131	$	66	$	1,699	$	1	$	66	$	1,700	$	1,766	$	(257	)		2004	40 years
Healtheast St John & Woodwinds - Maplewood & Woodbury, MN		13,731		3,239		18,362		0		3,239		18,362		21,601		(4,571	)		2000	40 years
High Pointe Health Campus - Lake Elmo, MN		2,950		1,305		10,528		962		1,308		11,487		12,795		(1,619	)		2004	40 years
Laramie 1072 N 22nd Street (Spring Wind) - Laramie, WY		0		406		6,634		0		406		6,634		7,040		(62	)		2009	40 years
Mariner Clinic - Superior, WI		2,473		0		3,781		21		20		3,782		3,802		(573	)		2004	40 years
Minneapolis 701 25th Avenue Medical - Minneapolis, MN		6,711		0		7,873		0		0		7,873		7,873		(418	)		2008	40 years
Nebraska Orthopedic Hospital - Omaha, NE		13,151		0		20,272		240		0		20,512		20,512		(3,054	)		2004	40 years
Park Dental - Brooklyn Center, MN		1,082		185		2,767		0		185		2,767		2,952		(528	)		2002	40 years
Pavilion I - Duluth, MN		6,516		1,245		8,898		31		1,245		8,929		10,174		(1,315	)		2004	40 years
Pavilion II - Duluth, MN		11,990		2,715		14,673		1,937		2,715		16,610		19,325		(3,166	)		2004	40 years
Ritchie Medical Plaza - St Paul, MN		7,099		1,615		7,851		856		1,647		8,675		10,322		(1,015	)		2005	40 years
Sartell 2000 23rd Street South - Sartell, MN		5,321		0		11,781		912		0		12,693		12,693		(2,488	)		2002	40 years
St Michael Clinic - St Michael, MN		2,038		328		2,259		264		328		2,523		2,851		(194	)		2007	40 years
Stevens Point - Stevens Point, WI		11,006		442		3,888		10,495		442		14,383		14,825		(1,259	)		2006	40 years
Wells Clinic - Hibbing, MN		1,725		162		2,497		1		162		2,498		2,660		(377	)		2004	40 years
Total Commercial Medical	$	256,806	$	27,050	$	357,800	$	45,379	$	27,151	$	403,078	$	430,229	$	(53,641	)
Commercial Industrial
API Building - Duluth, MN	$	998	$	115	$	1,605	$	3	$	115	$	1,608	$	1,723	$	(243	)		2004	40 years
Bloomington 2000 W 94th Street - Bloomington, MN		3,986		2,133		4,097		15		2,133		4,112		6,245		(349	)		2006	40 years
Bodycote Industrial Building - Eden Prairie, MN		1,251		198		1,154		799		198		1,953		2,151		(711	)		1992	40 years
Cedar Lake Business Center - St. Louis Park, MN		2,439		895		2,810		47		895		2,857		3,752		(208	)		2007	40 years
Clive 2075 NW 94th Street - Clive, IA		2,284		408		2,610		49		408		2,659		3,067		(47	)		2009	40 years
Dixon Avenue Industrial Park - Des Moines, IA		7,548		1,439		10,758		1,017		1,439		11,775		13,214		(2,442	)		2002	40 years
Eagan 2785 & 2795 Highway 55 - Eagan, MN		3,703		3,058		2,570		0		3,058		2,570		5,628		(144	)		2008	40 years
Lexington Commerce Center - Eagan, MN		2,493		453		4,352		1,679		480		6,004		6,484		(1,775	)		1999	40 years
Lighthouse - Duluth, MN		1,048		90		1,788		7		90		1,795		1,885		(272	)		2004	40 years
Metal Improvement Company - New Brighton, MN		1,720		240		2,189		78		240		2,267		2,507		(465	)		2002	40 years
Minnetonka 13600 County Road 62 - Minnetonka, MN		2,456		809		434		2,459		809		2,893		3,702		(91	)		2009	40 years
Roseville 2929 Long Lake Road - Roseville, MN		5,862		1,966		7,272		1,474		1,980		8,732		10,712		(737	)		2006	40 years
Stone Container - Fargo, ND		2,743		440		6,597		104		440		6,701		7,141		(2,105	)		1995	40 years
Stone Container - Roseville, MN		3,965		810		7,440		0		810		7,440		8,250		(1,558	)		2001	40 years

2010 Annual Report F-38

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company							Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition			Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Industrial - continued
Urbandale 3900 106th Street - Urbandale, IA		10,800		3,680		10,089		369			3,721		10,417		14,138		(801	)		2007	40 years
Waconia Industrial Building - Waconia, MN		954		165		1,492		383			187		1,853		2,040		(570	)		2000	40 years
Wilson's Leather - Brooklyn Park, MN		6,945		1,368		11,643		1,197			1,368		12,840		14,208		(2,490	)		2002	40 years
Winsted Industrial Building - Winsted, MN		453		100		901		48			100		949		1,049		(244	)		2001	40 years
Woodbury 1865 Woodlane - Woodbury, MN		2,870		1,108		2,628		1,617			1,108		4,245		5,353		(229	)		2007	40 years
Total Commercial Industrial	$	64,518	$	19,475	$	82,429	$	11,345		$	19,579	$	93,670	$	113,249	$	(15,481	)
Commercial Retail
17 South Main - Minot, ND	$	0	$	15	$	75	$	197		$	17	$	270	$	287	$	(139	)		2000	40 years
Anoka Strip Center - Anoka, MN		0		123		602		19			134		610		744		(111	)		2003	40 years
Burnsville 1 Strip Center - Burnsville, MN		521		208		773		205			208		978		1,186		(171	)		2003	40 years
Burnsville 2 Strip Center - Burnsville, MN		414		291		469		202			294		668		962		(126	)		2003	40 years
Champlin South Pond - Champlin, MN		1,846		842		2,703		47			866		2,726		3,592		(429	)		2004	40 years
Chan West Village - Chanhassen, MN		14,031		5,035		14,665		1,723			5,606		15,817		21,423		(2,970	)		2003	40 years
Dakota West Plaza - Minot , ND		409		92		493		28			107		506		613		(52	)		2006	40 years
Duluth Denfeld Retail - Duluth, MN		2,802		276		4,699		15			276		4,714		4,990		(719	)		2004	40 years
Duluth NAPA - Duluth, MN		848		130		1,800		3			130		1,803		1,933		(272	)		2004	40 years
Eagan Community - Eagan, MN		1,452		702		1,588		858			703		2,445		3,148		(366	)		2003	40 years
East Grand Station - East Grand Forks, MN		220		150		1,235		309			151		1,543		1,694		(346	)		1999	40 years
Fargo Express Community - Fargo, ND		1,088		374		1,420		121			385		1,530		1,915		(250	)		2003-2005	40 years
Forest Lake Auto - Forest Lake, MN		0		50		446		13			50		459		509		(83	)		2003	40 years
Forest Lake Westlake Center - Forest Lake, MN		4,644		2,446		5,304		458			2,480		5,728		8,208		(1,039	)		2003	40 years
Grand Forks Carmike - Grand Forks, ND		1,851		184		2,360		2			184		2,362		2,546		(915	)		1994	40 years
Grand Forks Medpark Mall - Grand Forks, ND		0		681		4,808		231			720		5,000		5,720		(1,310	)		2000	40 years
Jamestown Buffalo Mall - Jamestown, ND		1,333		566		3,209		2,408			864		5,319		6,183		(810	)		2003	40 years
Jamestown Business Center - Jamestown, ND		646		297		1,023		1,299			326		2,293		2,619		(503	)		2003	40 years
Kalispell Retail Center - Kalispell, MT		1,483		250		2,250		973			254		3,219		3,473		(525	)		2003	40 years
Kentwood Thomasville Furniture - Kentwood, MI		356		225		1,889		(698	)		225		1,191		1,416		(626	)		1996	40 years
Ladysmith Pamida - Ladysmith, WI		1,044		89		1,411		(818	)		89		593		682		(242	)		2003	40 years
Lakeville Strip Center - Lakeville, MN		1,084		46		1,142		803			94		1,897		1,991		(420	)		2003	40 years
Livingston Pamida - Livingston, MT		1,241		227		1,573		0			227		1,573		1,800		(283	)		2003	40 years
Minot Arrowhead - Minot, ND		2,435		100		1,064		6,057			722		6,499		7,221		(2,292	)		1973	15 1/2-40 years
Minot Plaza - Minot, ND		612		50		453		121			72		552		624		(240	)		1993	40 years
Monticello C Store - Monticello, MN		0		86		770		37			118		775		893		(144	)		2003	40 years
Omaha Barnes & Noble - Omaha, NE		2,816		600		3,099		0			600		3,099		3,699		(1,124	)		1995	40 years

2010 Annual Report F-39

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Commercial Retail - continued
Pine City C-Store - Pine City, MN	$	322	$	83	$	357	$	2	$	83	$	359	$	442	$	(65	)		2003	40 years
Pine City Evergreen Square - Pine City, MN		1,977		154		2,646		582		385		2,997		3,382		(594	)		2003	40 years
Rochester Maplewood Square - Rochester, MN		0		3,275		8,610		474		3,294		9,065		12,359		(2,371	)		1999	40 years
St. Cloud Westgate - St. Cloud, MN		3,537		1,219		5,535		86		1,242		5,598		6,840		(868	)		2004	40 years
Weston Retail - Weston, WI		0		79		1,575		27		80		1,601		1,681		(288	)		2003	40 years
Weston Walgreens - Weston, WI		3,273		66		1,718		672		67		2,389		2,456		(233	)		2006	40 years
Total Commercial Retail	$	52,285	$	19,011	$	81,764	$	16,456	$	21,053	$	96,178	$	117,231	$	(20,926	)
Subtotal	$	1,057,619	$	175,355	$	1,404,352	$	220,812	$	187,751	$	1,612,768	$	1,800,519	$	(308,626	)

  2010 Annual Report F-40

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)

			Initial Cost to Company						Gross amount at which carried at close of period
Description	Encumbrances		Land		Buildings & Improvements		Costs capitalized subsequent to acquisition		Land		Buildings & Improvements		Total		Accumulated Depreciation			Date of Construction or Acquisition		Life on which depreciation in latest income statement is computed
Unimproved Land
Bismarck 2130 S 12th St - Bismarck, ND	$	0	$	576	$	0	$	12	$	588	$	0	$	588	$	0			2008	40 years
Bismarck 700 E Main - Bismarck, ND		0		314		0		541		855		0		855		0			2008	40 years
Eagan Unimproved Land - Eagan, MN		0		423		0		0		423		0		423		0			2006	40 years
IRET Corporate Plaza Outlot - Minot, ND		0		568		0		4		572		0		572		0			2009	40 years
Kalispell Unimproved Land - Kalispell, MT		0		1,400		0		24		1,411		13		1,424		0			2003	40 years
Monticello Unimproved Land - Monticello, MN		0		95		0		2		97		0		97		0			2006	40 years
Quarry Ridge Unimproved Land - Rochester, MN		0		942		0		0		942		0		942		0			2006	40 years
River Falls Unimproved Land - River Falls, WI		0		176		0		5		179		2		181		0			2003	40 years
Urbandale Unimproved Land - Urbandale, IA		0		5		0		108		113		0		113		0			2009	40 years
Weston Unimproved Land - Weston, WI		0		812		0		0		812		0		812		0			2006	40 years
Total Unimproved Land	$	0	$	5,311	$	0	$	696	$	5,992	$	15	$	6,007	$	0
Development in Progress
Fargo 1320 45th Street N - Fargo, ND	$	0	$	395	$	0	$	2,436	$	396	$	2,435	$	2,831	$	0			2009	40 years
Total Development in Progress	$	0	$	395	$	0	$	2,436	$	396	$	2,435	$	2,831	$	0
Total	$	1,057,619	$	181,061	$	1,404,352	$	223,944	$	194,139	$	1,615,218	$	1,809,357	$	(308,626	)

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule III

REAL ESTATE AND ACCUMULATED DEPRECIATION

Reconciliations of total real estate carrying value for the three years ended April 30, 2010, 2009, and 2008 are as follows:

	(in thousands)
	2010			2009			2008
Balance at beginning of year	$	1,729,585		$	1,648,259		$	1,489,287
Additions during year
Multi-Family Residential		4,270			23,215			11,159
Commercial Office		2,096			8,573			14,473
Commercial Medical		38,125			19,084			82,233
Commercial Industrial		3,066			4,337			27,132
Commercial Retail		0			0			0
Improvements and Other		29,343			27,971			25,787
		1,806,485			1,731,439			1,650,071
Deductions during year
Cost of real estate sold		(1,217	)		(49	)		(1,812	)
Impairment charge		(1,678	)		(338	)		0
Other(1)		(3,071	)		(1,467	)		0
Balance at close of year(2)	$	1,800,519		$	1,729,585		$	1,648,259

Reconciliations of accumulated depreciation/amortization for the three years ended April 30, 2010, 2009, and 2008, are as follows:

	(in thousands)
	2010			2009			2008
Balance at beginning of year	$	262,871		$	219,379		$	180,544
Additions during year
Provisions for depreciation		48,152			44,227			39,806
Deductions during year
Accumulated depreciation on real estate sold		(737	)		(36	)		(971	)
Other(1)		(1,660	)		(699	)		0
Balance at close of year	$	308,626		$	262,871		$	219,379

(1) Consists of miscellaneous disposed assets.

(2) The net basis of the Company’s real estate investments for Federal Income Tax purposes is approximately $1.3 billion.

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

April 30, 2010

Schedule IV

INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE

						(in thousands)
	Interest Rate			Final Maturity Date	Payment Terms	Prior Liens			Face Amt. of Mortgages			Carrying Amt. of Mortgages			Prin. Amt of Loans Subject to Delinquent Prin. or Int.
First Mortgage
Liberty Holdings, LLC		7.00	%	11/01/12	Monthly/ Balloon			0			167		161				0
							$	0		$	167	$	161			$	0
Less:
Allowance for Loan Losses												$	(3	)
												$	158

	(in thousands)
	2010			2009			2008
MORTGAGE LOANS RECEIVABLE, BEGINNING OF YEAR	$	160		$	541		$	399
New participations in and advances on mortgage loans		0			0			167
	$	160		$	541		$	566
Collections		(2	)		(381	)		(25	)
Transferred to other assets		0			0			0
MORTGAGE LOANS RECEIVABLE, END OF YEAR	$	158		$	160		$	541

EX-99.4

Exhibit 99.4

Computation of Ratio of Earnings to Fixed Charges

and Earnings to Combined Fixed Charges

and Preferred Share Dividends

The following table sets forth our ratios of earnings to fixed charges and earnings to combined fixed charges and preferred share dividends for the periods indicated.  The ratio of earnings to fixed charges was computed by dividing earnings by our fixed charges. The ratio of earnings to combined fixed charges and preferred share dividends was computed by dividing earnings by our combined fixed charges and preferred share dividends.  For purposes of calculating these ratios, earnings consist of income from continuing operations before noncontrolling interests plus fixed charges.  Fixed charges consist of interest charges on all indebtedness, whether expensed or capitalized, the interest component of rental expense and the amortization of debt discounts and issue costs, whether expensed or capitalized. 
60;Preferred share dividends consist of dividends on our Series A preferred shares.

	Fiscal Year ended April 30,
	2010	2009	2008	2007	2006
Consolidated ratio of earnings to fixed charges	1.08x	1.15x	1.23x	1.25x	1.22x
Consolidated ratio of earnings to combined fixed charges and preferred share dividends	1.05x	1.11x	1.18x	1.20x	1.16x